Analysis of South Korea's Socio-Technological Brewery Market

This report provides a comprehensive analysis of the South Korean brewery market for an Australian craft brewery considering international expansion. It examines the global business environment, focusing on socio-technological factors and their impact on the brewery market. The report assesses South Korea's international integration, trade balance, and import/export dynamics, highlighting the country's open economy status. It explores opportunities such as growing demand for foreign beer brands and the benefits of the Korea-Australia Free Trade Agreement (KAFTA). Simultaneously, it addresses threats like competition from domestic and foreign breweries. The report also discusses the strategic decision of exporting via a distributor, outlining the necessary steps for market entry. Ultimately, the report aims to provide the brewery with a clear understanding of the South Korean market's attractiveness, enabling an informed decision on expansion.

Running head: GLOBAL BUSINESSS ENVIRONMENT
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Report on South Korea, (the socio-technological trends)
Student’s name
Name of the university
Author’s note

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Introduction
A global business environment refers to surrounding of various countries having
differing trading, technological, social and economic aspects influencing the profitability of a
particular business. Therefore in order to transact and carryout business effectively and in a
more efficient manner, the company should understand the prevailing conditions in terms
of the above aspects. For the brewery company intending to expand its market to South
Korea, these are as well some of the key factors that will influence their decision ultimately.
The major purpose of this paper will therefore be to established report to the
brewery company reflecting the impacts of the socio-technological factors concerning the
Korean brewery market. In addition to this, an analysis of the brewery market in terms of
consumption trends among the people of South Korea will be highlighted. Possible ways to
overcome the hindrances surrounding the market in South Korea will similarly be part of the
report to the brewery company.
The other relevant part that this paper will cover is the aspect of assessing South
Korea’s international cooperation. This particular aspect will however take into account the
ratio of the country’s imports to exports over the last few years. It is upon this analysis that
the paper will base to determine whether the country is a closed or an open economy. With
these particular part covered, the brewery company should be in a better position to either
carry on with expanding into the South Korean beer market or to abandon the market with
immediate effect.

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Discussion
Korea’s international integration/cooperation
In terms of global trade, South Korea is one of the top most rated countries globally.
This country is ranked as the 5th largest exporter of commodities and it is rated to be as the
world’s 9th biggest importer. In terms of services, the country is said to be the 16 th all over
the world. By the year 2017, trade within and outside the country contributed to about 81%
of its total Gross Domestic Product (GDP). it conducts trade with a number of countries such
as china, America, among other nations. During the year 2017, it was estimated that the
country had about 573.6 billion dollars in terms of exports and 478.4 billion in terms of
imports. The Korean ministry of trade further reported that exports were increased by a 5.5
percentage whereas the imports had an 11.8 percentage increase as well during 2018.
It is also clear that since 2012, South Korea’s balance of trade has been on the
increase and it is similarly expected to maintain the trend. In looking at the common
markets perspective, South Korea has been involved in a number of common markets over
the years. For example South Korea is part of the countries in the ‘Asia-Pacific Economic
Cooperation’ and it is as well a signatory of the Asia-Europe Meeting and many other
agreements with other nations. Additionally, South Korea has moved further to sign trade
agreement European states such as Australia in the year 2014, the United States of America
in 2010, and the European Union as well. All these types of co operations significantly reflect
the global integration levels of South Korea as a country. This therefore represents the
country as a free trade economy on a global scale (United States department of agriculture,
2018).

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In relation to imports into the South Korean economy, the import duties charged on these
goods entering the economy are some of the least all over the globe. This means that the
country encourages more trade with other neighboring states. This rate is predetermined at
an average of about 8% on the total amount of goods imported. For certain countries with
which Korea entered into agreements, these tariffs are significantly reduced. For example by
2018, 92.3% of commodities from the united stated states imported into Korea were not
taxed at all. The country similarly imposes a flat 10% on value added tax on all goods
brought into the country. For business men intending to import luxurious goods into the
country, at tax between 10 -20% is what is charged which are paid fifteen days after
importation has been completed (United States department of agriculture, 2018).
For the beer market in South Korea, the imports from the different parts of the
world were further estimated to be at $263 million during 2017 which showed an increase
of up to 45% from that of 2016. The beer imports from the United States of America have
been estimated to account for over 17 million dollars in 2017 thus reflecting a 79% increase
from 2016. Basing on these facts, the Korean beer market offers a credible place for the
beer producer. This similarly reflects the level of economic benefits that a brewery company
can generate from the export and expansion of its market into the Korean economy.
However, since this is a new market of exploration, there are a number of threats to take
into consideration and opportunities to consider. Therefore some of these threats and
opportunities are analyzed as well below.
Over the years, the relationship between Australia and the republic of Korea has
been on the rise. This creation of an outstanding relationship has resulted into a number of
mutual under standings. It is these that have effectively led to the signing of a number of

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agreements such as the Free Trade Agreement that was entered into around the year 2014.
This agreement played a major role in terms of promoting cross-border trade between the
Korean republic and the Australian government. This agreement provided a favorable
trading atmosphere for the Australian exporters to the Korean economy due to the fact that
the agreement eliminated the existing customs duties were originally imposed on all goods
entering the Korean republic.
The Korea –Australia Free Trade Agreement (KAFTA) is an important factor for a beer
producing company based in Australia in such a way that it acts as a shield to all Australian
producers who intend to export their commodities to the Korean economy. A point to note
as well is that this agreement was signed on the basis that even the Korean exporters had
free access to the Australian market. This aspect therefore made the KAFTA a mutual
benefit for the two economies involved. An Australian beer producing company such as the
Australian craft brewery would derive benefit from such an agreement. This benefit will be
in terms of scrapped duties on exports to Korea and the removal of these duties implies that
even the trading costs will be reduced thereby giving the company an added advantage.
Such an advantage is of significant influence to the benefit of the Australian company
intending to join a beer company that is fully occupied by competitors such as those from
Germany, America, china Belgium and so many others.

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Opportunities and threats
The first opportunity that the company can explore lies in the fact that the South
Korean beer market has been continuously growing over the past few years. This is due to
the fact there is a general increase in the demand for different brands of beer on the South
Korean beer market. The other possible argument for this increase in demand can be
explained by the fact that South Korean citizens perceive foreign beer brands as the best
that they can drink or take.
The country being an open economy, many of its citizens have had opportunities to
travel to foreign countries. These people therefore have had chances to taste some of the
foreign beer brands from the countries that they have travelled to. When they come back to
their home country, in most cases they have continued to demand for the importation of
the same type of beer brands from abroad. This factor alone also makes the demand for
foreign beer very persistent and high.
In Korea it is established that beer is the most preferable beverage. In recent years,
the consumption of beer has increased as result of high demand for value even during the
recession period of the economy. The need to protect peoples’ health created the desire to
have high quality brands of beer on the market, a scenario that created favorable ground for
foreign beer producers to explore even further into the economy. Ultimately this demand
for a variety and quality among beer brands led to an increase in the consumption of beer
and other alcoholic substances even among the ladies altogether.

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Threats
The threats in the Korean beer market on the other are as well highly
pronounced. These therefore are some of the major considerations that any beer producing
company has to evaluate with great caution before making a decision to enter into a new
market. For example, the South Korean market is predominantly influenced by domestic
large scale breweries. Irrespective of high the volumes of imported beer into the country,
these local beer manufactures still have significant control over the total sales in the
country. This means that the company intending to enter the new market needs to assess
the alternatives carefully and come up with effective strategies to win market share in South
Korea.
Competition from the other foreign breweries still stands a great threat or challenge
the company will face in the market. The South Korean beer market has a number of foreign
beer importers such as Germany, America, Belgium and many other importers into the
economy. Unlike the new company, these beer producers have known the market in South
Korea much better. Such an advantage in terms of better understanding of the market
dynamics stands to be a great threat which could result into disaster if not properly
addressed when making the decision of either expanding or not expanding further into the
South Korean market.

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Decision to export via a distributor
The decision to use a distributor for the purpose of exporting beer to the Korean
market would require a number of steps to be carried out. Without going through these
kinds of steps, the company is most likely to fall victim of an unfavorable outcomes.
Therefore, one of the first things to carry out would be getting ready for the market. By
doing this, the company should carry out a research about the Korean market so as to
determine if the market is favorable to the product. The researcher must similarly establish
if there can be any possibility of selling the same product in two different markets at
different prices.
Knowing that selling out to the consumers directly would be a difficult activity, the
option to use a distributor is a better decision to undertake. However this type of person
will be working n behalf of the company and be paid a commission depending on the
number of sales made. Similarly, in Korea many of the importers who carryout business, do
it through an agent. These agents can best found through formal meetings or introductions.
The major key determinant of finding the right person is basically dependent on having the
rightful mode of introduction. The alternative way could be through social gatherings such
as those where different products are brought out to the notice of the public. These
products can include food, beverages etc. these events however tend to create possibilities

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of great meetings and interactions with the person who can then be used as a distributor
(seonghoon, 2016)
After all the necessary agreements are made, the company can proceed with the
necessary activities such as sending test samples to check out how the market will react,
prices for the beverage and among other requirements. One of the most important points
to take note of is the fact that the importer or distributor must have a license allowing him
or her to import alcoholic products. The South Korean national tax service is solely
concerned about the importation of beer products and inspection is normally into aspects.
The first type of inspection is concerned with checking the quality of the product whereas
the other type is concerned with paper work (documents about the beverage).
Social /technological trends
In assessing the social/technological trends, the paper will cover some of the social
and technological factors that have an influence on the type of decision made. For example
when looking at the consumption trends of South Koreans, their social characteristics can be
assessed. When their behaviors are analyzed, then conclusions can be made to determine
whether the product will sell on the market or not. In South Korea, the culture of alcohol
consumption is a vital part of well being. For example alcohol is consumed specifically
during special events although this is done on a daily routine. Additionally the consumption
of alcohol normally takes place when people are done with their daily activities. This means
that it is a form of getting people to come together and relax after a long day of hard work.
Socially the people look at this practice as one way of building unity and togetherness

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among themselves. Such social trends are some of the major reasons explaining the
increasing rates at which people in South Korea consume alcohol and these other related
beverages such as beer (chao and gooch, 2016).
The working culture further facilitates the drinking habit of Koreans. In this particular
country, people work for an average of twelve hours a day. This means that much of their
time is spent in the office and less of it with their families. Likewise the cost associated with
buying other alcoholic drinks such as wines, specialty beers and spirits is quite high.
Therefore buying beer for leisure is much cheaper and cost saving as well. The changing
demographics in terms of age have significantly affected the consumption trend of people in
South Korea. For example as people grow older, the more they tend to turn away from beer
as a beverage and they resort to alcoholic types of drinks or start to drink much less than
they used to drink. With these changes among the aged, the youth especially the ladies turn
to drinking beer. The higher the demand for beer and other beverages with low alcohol
contents similarly explains the increasing beer market in the country (Shelley, 2017).
The changing tastes and preferences among the people of South Korea has been
another explanation for the increasing demand for foreign beers. Many South Koreans have
become used to the high quality beers from other parts of the world. Where there is
demand, supply must be provided. That is to say, the forces of demand and supply
automatically become active on the market. That is why when demand for high quality beer
was realized, foreign companies were ready to exploit the market and satisfy customer
needs (ko and sohn, 2018).

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In technological advancements, Korea has similarly registered great improvement. It is rated
one of the most advanced countries when it comes to on line trading. The rampant changes
in consumer tastes and preferences facilitate a more efficient mode of shopping of a
number of items online for at least over the past decade. However this mode of shopping
South Korea is prohibited for alcoholic products and beer. This is rather an outstanding
challenge in relation to effective movement of beer products.
According to the desires and needs of the Korean people, quality is a must if they are
to accept any type of beer brand on their beer market. This means that the brewery
company should ensure that the beer is of the best quality. However the quality of any
given product is determined by a number of different factors and technology is one of those
factors. Therefore the company should consider the type of technology used in processes
such as production, packaging, and transportation and many other operations. A high
quality product will attract more market share and yet on the other hand, a poor quality
product is most likely not to attract market share. This implies that the product will be
abandoned on the market.
As a means of boosting sales on the new South Korean beer market, it is imperative
to note that technology plays a significant role. The company can increase advertisements
with the help of online channels and certain television companies within the South Korean
market. This method of online promotion and advertising is likely to create awareness
among the public about the new beer brand on the market. This is one way through which
technological trends can be useful to the company. In doing this, the business should ensure
even a closer relationship with its distributor living within the economy.
Recommendation

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Statistics such as the 52.3% coverage of the Korean beer market gives the beer
product a worthwhile trade venture in the country of South Korea. It further reflects reliable
trends in terms of offering trade opportunities to other goods from other countries. On top
of that South Korea is ranked as the world’s 9th largest importer of items from other parts of
the world. All these factors together with the predetermined 4.9% annual increase in the
level of alcohol consumption in South Korea prove to be a promising country to invest.
Therefore, the decision to undertake South Korea as an alternative to expand the market by
the brewery company is significantly likely to be the right choice. The exportation of beer
products to this market through the distributor is at the same time the best option that will
yield better outcomes. On the other hand however, venturing into a new and competitive
market is a difficult task. Therefore it would be a lot easier for the company to take cautious
steps and first test how the market will react to the product and at the same time create
market awareness so as to create a favorable environment.
Conclusion
New market ventures are an opportunity for any firm just such as the Australian craft
brewery to expand its customer base. It is among the criteria for assessing the success and
performance of the company. This can be in terms of branches owned in different countries,
level of income generated annually and the total assets that a company owns among others.
Therefore, the Australian craft brewery would certainly be making the right decision by
deciding to explore outside the home economy.
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