Kotra advises Korean companies on how to expand abroadThe global economic outlook for this year is growing gloomy.
Last week, the Korea Trade-Investment Promotion Agency (Kotra) held a meeting with 10 of its regional heads at the agency’s headquarters in Yangje, Gangnam, southern Seoul, to discuss strategies companies can use to expand overseas.
Kotra projected that export growth in the first three months of this year will likely be slower than in the fourth quarter of 2018. Trade negotiations between the United States and China are not yet resolved, and Brexit remains a very big uncertainty in the global market.
“The most efficient strategy in the United States is to utilize omni-channels, as merging of online, mobile and offline markets is becoming active,” said Sohn Soo-deuk, head of Kotra’s North America office.
Park Han-jin, head of the China branch, said this year technologies related to the fourth industrial revolution, such as artificial intelligence (AI) and Internet-of-Things, will become major export items.
“While there are some who predict growth in China to slow down to between 6.2 percent and 6.4 percent, that’s not necessarily the case,” Park said. “If, in the past, China was busy expanding in size, starting this year it is entering a phase of smart economic growth.”
Europe is expected to be the biggest challenge for Korea’s exports due to Brexit and the refugee situation.
However, Kim Yoon-tae, head of Kotra’s Europe branch in Frankfurt, said there are still opportunities in tech-based new industries.
“This year’s Europe economic growth is expected to be the same as last year, around 1.8 percent,” Kim said. “However, there are opportunities if Korean companies form business alliances as new industries [in Europe] are expanding.”
This year, Korea’s exports to neighboring Japan are expected to be favorable since Japan is preparing for the 2020 Tokyo Summer Olympics.
“Japan is the original Hallyu market,” said Jo Eun-ho, Kotra’s regional director in Japan, referring to the “Korean Wave” of cultural content, such as television dramas and K-pop. “Even if the diplomatic relationship between the two countries deteriorates, it won’t have a huge influence on young Japanese consumers. As such, there wouldn’t be a problem in exporting Korean food and beverages, as well as consumer goods.”
Additionally, last year over 30 million people traveled to Japan from around the world.
“As tourism to Japan is growing,” Jo said, “that is an opportunity for Korean companies to target foreign travelers in Japan, including duty free shops.”
There are also strong opportunities in South America, where economies are growing thanks to the rising raw material prices.
Jair Bolsonaro, Brazil’s new president, has announced business-friendly policies that will likely offer more opportunities for Korean companies.
“We expect stable economic growth in Mexico, Brazil, Chile, Peru and Colombia,” said Yang Kook-bo, Kotra’s South America director.
Southeast Asia is another promising market, particularly Vietnam where, thanks to the Vietnamese national soccer team’s coach Park Hang-seo, a major Korean sports Hallyu is booming.
“In Southeast Asia, IT services like Grab are growing and this is a good opportunity for Korean companies to expand into new industries that converge with IT services.” said Kim Ki-joon, head of Kotra’s Southeast Asia and Oceania office.
According to Lee Kwan-seok, head of Kotra’s Middle East office, oil producing countries are expected to expand their energy facilities this year, especially with Dubai crude prices expected to stabilize around $60 per barrel.
“There are great opportunities in exporting infrastructure-related materials,” Lee said.
India is also an attractive market as exports to South Asia have been growing rapidly since India’s Prime Minister Narendra Modi adopted a more open economic policy. In recent years, India has been enjoying yearly economic growth of 7 to 8 percent.
“Multinational companies are busy rushing in to India,” said Park Han-soo head of Kotra’s South Asia office.
Kim Jong-kyung, regional director in Moscow, said Korean companies hoping to expand into Russia and the neighboring Commonwealth of Independent States need to look for niche opportunities as Russia has been trying to diversify its business opportunities to counter sanctions imposed by the United States and the European Union.
This year, Africa is already seeing changes with the launch of the African Continental Free Trade Area (Afcfta).
Lee Seung-hee of Kotra’s Africa office said there are huge opportunities in Africa’s mobile service market.
“Even Uganda, which is the poorest country in the world, has 31 million people using mobile phones,” Lee said. “This is a good business opportunity.”
BY OH WON-SEOK [firstname.lastname@example.org]