Market Analysis of South Korea

This report provides a comprehensive analysis of the political, economic, and social environment of South Korea, highlighting the growth opportunities in the market. It discusses the country's stability, infrastructure, demographic trends, cultural analysis, and political-legal environment. The report also offers recommendations for businesses planning to expand operations in South Korea.

Running head: INTERNATIONAL BUSINESS
International Business
6/9/2019

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Executive Summary
The aim of this report is to discuss regarding the political, economic, and social environment
of the South Korea in order to analyse the present growth opportunities in the market. The
analysis has highlighted that the country not just have political stability but it also maintain
economic stability which depicts that the country is growing and offering increasing number
of benefits to the businesses operating in the country. In addition to this, the country is
incorporated with most advanced infrastructure which makes business operations simple and
easy. The country enjoys low terrorism and also considered as the low violence country
which reflects that the businesses can without any fear operate their business. However, there
is lack of English language speaking skills which makes tough for the businesses to
communicate their message; however, if the government can introduce different campaigns
for the skill development of the people, this problem can be solved.

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Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Overview of South Korea.......................................................................................................3
Economic-Geographic Environment......................................................................................5
Current economic conditions.............................................................................................5
Infrastructure......................................................................................................................5
Factors that can influence exchange rates..........................................................................6
Social- Cultural environment.................................................................................................6
Demographic trends...........................................................................................................6
Cultural analysis.................................................................................................................7
Political-Legal Environment..................................................................................................8
Government and Politics....................................................................................................8
Formal trade barriers..........................................................................................................8
Tariff..................................................................................................................................9
Recommendation......................................................................................................................10
Conclusion................................................................................................................................10
References................................................................................................................................12

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Introduction
The intent of this paper is to discuss the environment and market analysis of South Korea in
order to identify the available growth opportunities for businesses planning to expand
business operations in the country. The country analysis is being presented in order to
analyze the position of the country and the possible challenges for the businesses to expand
operations. The analysis of the country supports in identifying the accessing the national
environment. The business environment of the country is vital in defining business success in
a country. The assessment of the business environment of the country is known as country
analysis (Townsend, 2014). The framework of the country analysis is comprised of three
components that are performance, context, and strategy. The strategy is comprised of a
number of goals of the nation and policies are framed to attain those goals. The context is
comprised of the accessible resources in the nation, the competitors, and set of rules that
determine the operations of the country. Performance of the policy should be assessed
depending on some of the standards (Gaston-Breton and Martín Martín, 2011). These
standards could be the performance of any other nation, past performance, and stated goals.
Overview of South Korea
South Korea is the southern part of the Korean peninsula country, placed in the north each
zone of Asia. Seoul is the capital city of the country. The Republic of Korea is said to be the
official name of the country. South Korea is one of the astonishing nations with a number of
beautiful beaches, ancient temples, ancient history, thriving cities, and remarkable natural
scenery. The dense urban center of Korea, recreation facilities and developed parks, modern
transportation systems, and high tech infrastructure are some of the things that have
developed Korea as one of the most known hotspots for travel and international business.
Due to its increasing economic growth, the country is developed as one of the wealthiest

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nations of the Asian region. South Korea is the developed nation and the 11th biggest
economy in the world in terms of GDP. The citizens of the country enjoy the fast speed of the
internet connection and the second most equal availability of quality healthcare (Cheol
Seong, Kim, and Lee, 2016).
South Korea is said to the home of a number of attractions and annual festivals that enjoyed
by locals as well as foreigners every year. It is generally said that South Korea has something
for everybody and an individual can spend years traveling the nation and exploring
everything the country has. The country has the largest international airport, the third fastest
train, and the third biggest subway system. The transportation in the country is very advanced
as well as fast.
The country is generally said as the law-abiding nation of the Asian region, leaving
foreigners in the nation, women and men are given equal opportunity and position, and
metropolitan as well as a rural area of the country is also very much safe. People of Korea
always take an interest in new things but do not have an aggressive nature. However, it is
better to be aware while moving to a foreign nation. The country has the highest internet and
broadband users across the world, which is considered as a token of the country's
achievements as the high tech economy. South Korea is the largest builder of the cargo ship
in the world, which has supported the country to become the 12th largest economy of the
world. Sometimes people of Korea make stare and stop their attention over westerners, but
this does not mean to scare them. This is just because they find westerners fascinating and
take interest in their appearance, attitude, and culture. It is generally not rare for the people of
Korea to offer drinks or food at a restaurant to notice people while practicing their English
(Gone to Korea, 2019).

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Economic-Geographic Environment
Current economic conditions
After the relative weakness period of South Korea, the country has majorly grown strongly
due to increasing investment in the country and intensity of exports. The rebound has been
driven by strong demand at the global level, particularly for electronics. Japan, Europe, and
the United States have conveyed the growth acceleration, whereas China has registered
growth stabilization. In the 2018 first quarter, there was increasing the GDP of South Korea
by 1.1% in comparison to the 2017 fourth quarter. The rate of inflation in the country is low
(Kalish, 2018).
The economy of South Korea contributes around 2% in the GDP of the world and is the
economy is being developed in order to compete with Japan's income level. According to the
views of Jim O'Neill, South Korea is one of the leading nations in terms of growth potential
(Santander, 2019).
Infrastructure
South Korea possesses modern and advances infrastructure, which is regularly being
expanding from the year 1960. The government of the country and private sector both are
involved in different construction, operation, and financing of different services and projects
of infrastructure. According to the announcement of the government, it will spend around
US$300 Billion on the development of mega-resorts, airports, railways, and roads. In addition
to this, there will be an investment of US$60 Billion on the power-generation facilities
construction (Global trade, 2012). This increasing involvement and investment of the
government over the country's infrastructure offer increased opportunities to the businesses
and make their operations smooth.

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Factors that can influence exchange rates
Inflation – The rate at which the service and goods price level are increasing is called an
inflation rate. It is one of the factors that influence the exchange rate. However, the inflation
rate of South Korea is considerably low (Fexco Unlimited Company, 2019).
Interest rate - There is a correlation between interest rates, exchange rates, and inflation.
Depositing money in South Korea becomes attractive and valued if the rate of interest also
rises in South Korea relative to any other nation.
Social- Cultural environment
Demographic trends
The people of South Korea are considered to be the most homogeneous population of the
earth. Although there are a number of nations entered and occupied Korean and few of them
have also left behind their genetic marks, for the maximum of the portion the people of Korea
have successfully upheld their racial purity. Though racial purity is one of the main due to
which the people of Korea have endured as a country until today. The key reason for the
Korean people prosperity and survival in the most challenging environment is their religion,
philosophical traditions, and religions (Asia Society, 2019). There is a number of people from
Asia who have been shifted to the Korean Peninsula in past centuries. The South Korea
population is rapidly increasing since its establishment. The increasing population of the
country offers an increased number of opportunities for the businesses to cover the market
and offer their services.
The population of South Korean in the year 2012 reached to around 50 million and according
to the reports, its population surpassed around 51 million people in the year 2016 (East West
Center, 2019).

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In the region of South Korea, there is a number of diverse people of Asian zone who have
mitigated to the Korean Peninsula.
Cultural analysis
The modern culture of the country has been developed from its traditional culture which was
predominant in the Korean nomadic tribes. The westernization, urbanization, and
industrialization of South Korea, particularly Seoul, have brought many alterations in the way
people of Korean live (Countries and their cultures, 2019). Altering lifestyles and economies
have resulted in extending the concentration of the people towards major cities where people
separate from the trend of multi-generational households and adopting nuclear family living.
In the present era, several cultural elements of Korea particularly popular culture, have been
spread all over the globe and became the most protruding cultural forces.
Language – The official language of the nation is North Korea and South Korea. Polyglots
consider that the language of Korea is the part of the Altaic languages family which invented
in the region of Northern Asia. The businesses that are operating in the country or planning to
operate have to consider both the official languages while promoting the products or services
of the company (Nour, 2017).
On the other side, there are a number of people who take education from foreign countries
but still, there is a lack of good English language skills. This raises a huge barrier for
businesses to operate in the country.
Culture – In spite of the political discontent, which resulted in the region separation of the
region, these two nations still have the same culture, values, and tradition. Korea is generally
said as separated by boundaries, but yet it is united by culture. The people of South Korea
give major importance and respect to their culture, values and ancient believes, hence, in

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order to operate the business properly in the region, businesses have to follow all the norms
of the society (Nour, 2017).
Political-Legal Environment
Government and Politics
The legislative and executive divisions work majorly at the national level, though there are a
number of departments in the executive brand who are responsible for carrying local
operations. Local government or legislation are considered as the semi-autonomous and
comprised of legislative and executive bodies. The judicial branch of the country works at
local as well as national levels (World Population, 2019).
In regards to the political stability, the World Bank is responsible for presenting the statistics
regarding the political situation of the country from 1996 to 2017. During this time period,
the average value of the nation was 0.35 points which reached to its least value of 0.11 points
in 2014. Besides this, the high value was 0.57 points in 1996 (Global Economy, 2018).
Through this data, it could be said that the political condition of South Korea is stable in fact
the country one of those nations which enjoys a violence-free environment and there is no
terrorism in the country.
Formal trade barriers
The verification of the products imported from the United States is regularly becoming an
issue because the customs officers of Korea constantly ask for length documentation for the
manufacturing companies of United States in order to confirm that the products are
manufactured under proper supervision and are of good quality. The United States embassy
regularly remains in tough and updated in the ROKG on KORUS implementation and
recognizes technical trade barriers (TBT) to evade any concern or challenge. The technical

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barriers to trade are comprised of detailed description regarding the product labeling new
standards, and transparency requirements (Export. Gov, 2018a).
Unique standards of the industry, resistance to the foreign models of the business, the
pressure to decrease the prices in order to match the prices of the local firms, transparent
regulations, and competitive production in various sectors are few of the challenges influence
different nations especially United States businesses operating in Korea. Though businesses
that carry a competitive advantage through innovation are patient and show a strong
commitment to the market of Korea usually find a business to be satisfying and people of
Korea to be loyal consumers. The firms of Korea are very fast in adopting new technologies
and number of United State companies has identified good friendliness to bring new products
in the market (Export. Gov, 2018b).
The products from the European Union have been allowed low or zero-tariff access into the
South Korean market from 2011. Australia, China, and Canada also hold FTAs with Korea.
The free trade agreement between South Korea and the European Union has been under
discussing from 2011 but was officially approved in the year 2015. The agreement between
both the countries is still under existence than other preceding agreements in bracing trade
barriers. This agreement was considered to be the first trade contract of the European Union
with any of the Asian country (Agriculture and Agri-food Canada, 2015).
Tariff
South Korea has a tariff quota system in order to improve the commodity market of the
country. The legislation bodies can make updates in the Customs duties after every 6 months
with basic rates. In addition to this, the nation is involved in introducing Value Added Tax of
flat 10% on each imported and domestic product. Further, the excise duty is charged from 10
to 20% over luxury and durable importation of the consumer products. According to the

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regulations of South Korea, tariffs and taxes must be paid within 15 days when goods have
been cleared from all the Custom duties (Siles-Brügge, 2011).
Recommendation
The above discussion is representing that South Korea has strong political stability which
reflects that the government of the country is focused towards the development of the country
and for that, it offers increased opportunities to different national and international businesses
to operate. Besides this, the country enjoys economic stability and has a low inflation rate due
to which there is low poverty. There are limited trade barriers for the firms of the foreign
market except for the United States. The country charges low or no trade duties from the
European Union, due to its trade agreement that took place to reduce the pressure of trade
duties. Despite some many benefits and opportunities offered by the country, there are some
challenges too. The lack of good quality speaking skills of English language which is
presently considered as one of the official languages for operating the business at
international level is one of the major challenges for the businesses to operate a business in
the market. Hence, in order to overcome this challenge of language, the government of South
Korea needs to get involved in the development of English language speaking and writing
skills of the citizens for grabbing huge growth opportunities. In addition to this, the
government of the country can organize different campaigns for the people of the nation
especially youngsters to develop the skills of the English language.
Conclusion
The above report has discussed the political, social, cultural environment of South Korea in
order to analyze the available growth opportunities for the businesses in the country. The
above analysis is comprised of a detailed description of the political, economic, and social

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environment of the country. From the analysis, it has been identified that the economy of the
country contributes around 2% in the GDP of the world, which reflects that the country has
strong economic stability. South Korea possesses a modern infrastructure. The government of
the nation and the private sector businesses are involved in different construction, operation,
and financing of different services and projects of infrastructure. The report has also
investigated that people of South Korea are considered to be the most homogeneous
population of the earth. Today, people of Korea are being attracted to western culture. In
addition to this, the country has imposed increased pressure over the firms of the United
States in terms of trade tariffs and duties such that the manufacturers of the US provide a
high-quality product to the customers.

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References
Agriculture and Agri-food Canada (2015) Business Environment of South Korea [online].
Available from http://www.agr.gc.ca/resources/prod/Internet-Internet/MISB-DGSIM/ATS-
SEA/PDF/6631-eng.pdf [accessed 11 June 2019]
Asia Society (2019) Population Change and Development in Korea [online]. Available from
https://asiasociety.org/education/population-change-and-development-korea [accessed 11
June 2019]
Cheol Seong, S., Kim, Y.Y., and Lee, E.J. (2016) Data resource profile: the national health
information database of the National Health Insurance Service in South Korea. International
journal of epidemiology, 46(3), pp.799-800.
Countries and their cultures (2019) South Korea [online]. Available from
https://www.everyculture.com/Ja-Ma/South-Korea.html [accessed 11 June 2019]
East West Center (2019) Political Challenges In Korea [online]. Available from
https://www.eastwestcenter.org/research/visiting-fellow-programs/posco-visiting-fellowship-
program/political-aspects-of-korea-related-issues [accessed 11 June 2019]
Export. Gov (2018) Korea - Trade Barriers [online]. Available from
https://www.export.gov/article?id=Korea-Trade-Barriers [accessed 11 June 2019]
Export. Gov (2018b) Korea - Market Challenges [online]. Available from
https://www.export.gov/article?id=Korea-Market-Challenges [accessed 11 June 2019]

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Fexco Unlimited Company (2019) 5 factors that influence exchange rates [online]. Available
from https://fexco.com/fexco/news/5-factors-that-influence-exchange-rates/ [accessed 11
June 2019]
Gaston-Breton, C. and Martín Martín, O. (2011) International market selection and
segmentation: a two-stage model. International Marketing Review, 28(3), pp.267-290.
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Gone to Korea (2019) A Brief Summary of an Extraordinary Country [online]. Available
from https://www.gone2korea.com/about-south-korea/ [accessed 11 June 2019]
Kalish, I. (2018) South Korea: Economy showing signs of resilience [online]. Available from
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outlook.html [accessed 11 June 2019]
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[accessed 11 June 2019]

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Siles-Brügge, G. (2011) Resisting protectionism after the crisis: Strategic economic discourse
and the EU–Korea free trade agreement. New Political Economy, 16(5), pp.627-653.
Townsend, P. (2014) International analysis poverty 1st ed. U.S: Routledge.
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