SOUTH KOREA: THE RISING ECONOMIC STAR. WORLDCLASS PLAYERS EXCELLENT WORKFORCE. ENABLING VALUE FOR YOU WITH OUR OFFICE IN SEOUL.

Transcription

1 SOUTH KOREA: THE RISING ECONOMIC STAR. WORLDCLASS PLAYERS EXCELLENT WORKFORCE. ENABLING VALUE FOR YOU WITH OUR OFFICE IN SEOUL.

2 Management Summary and content. South Korea is the only developed country included in the group of Next Eleven countries (declared by Goldman Sachs to become the world's largest economies in the 21 st century), having promising outlooks for investment and future growth. Besides of the very strong automotive industry (ranked 5 th worldwide), especially in terms of high-technology South Korea has become one of the major leaders in the world (ranking first in ICT development), with international players like Samsung and LG and big R&D investments in the areas of Internet of Things / 5G. With our office in Seoul we can offer great support entering and establishing this attractive market, building up bridges from and to Europe and providing any help needed through our well established network on site: e&co. is a management consultancy for complex change situations and your partner to create value. CONTENT OF THIS PRESENTATION ASIAN TIGER SOUTH KOREA: the economic heavyweight at a glimpse CHALLENGES: utilizing business opportunities with the right approach YOUR PARTNER: e&co. mission statement people and office in Seoul WHY TO INVEST: profit from innovation and technology leadership CONTACT: we are pleased to help you on site 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 2

3 1 THE ASIAN TIGER AT A GLIMPSE: KEY FACTS MARKET OVERVIEW

4 The most promising Asian Tiger provides strong opportunities. Most developed country in East Asia 11 th largest economy in the world (estimation: 7 th in 2030) Leads OECD nations in graduates (science & engineering) World's most innovative country (Bloomberg Index) First place in business R&D intensity and patents filed per GDP 5G World s best infrastructure: Ranked 1 st in ICT development Ranked 2 nd worldwide for highest avg. annually worked hours 5 th largest exporter and 7 th largest importer worldwide Very high educational level, healthcare and life quality Highest household income in Asia, 8 th worldwide 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 4

5 Market overview: South Korea as an economic heavyweight. The top four chaebol* generate 90% of South Korean conglomerate profits (Samsung, LG, Hyundai, SK Group). Main import and export partners: China, Japan, United States and Germany. Main industries: AUTOMOTIVE INDUSTRY Fifth-largest automotive industry in the world (measured by unit production and export volume). Korean cars have a global market share of about 8 percent (4 th worldwide). 5 th LARGEST HIGH-TECH & ELCTRONICS World leader in patent activity, along with information and communication technology as well as in electronics manufacturing, including semiconductors and televisions. Samsung is the second largest tech company worldwide. WORLD LEADER SHIPBUILDING INDUSTRY 2 nd largest shipbuilding industry worldwide and also the world s top shipbuilding companies are located here. 2 nd LARGEST *South Korean type of business conglomerate, oftentimes family-controlled. 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 5

6 ICT: South Korea is leading the global race for 5G. 5 EUROPE Very active in terms of 5G initiatives (e.g. EU funding) but missing common standards block development. 2 JAPAN Launch of 5G trial network for the Summer Olympic Games in 2020 in Tokyo. 3 CHINA 4 NORTH AMERICA US operator Verizon Wireless wants to carry out field trials of 5G technology in 2016, expecting limited commercial deployment of 5G services by Development of 5G technology as key issue for government: But the country s internet infrastructure is still relatively undeveloped. 1 SOUTH KOREA Most advanced market in terms of 5G development. Government expects its local mobile operators (SK Telecom, KT and LG U+) to be able to trial 5G services during 2017 and introduce commercial services in December > The available infrastructure in South Korea can easily support 5G, as penetration of LTE/4G connections is very strong (close to 63 %), also owning the world's fastest internet speed and highest smartphone per person rate. EU and South Korea agreed for the future joint development of 5G networks. Large companies and ventures are actively promoting businesses with the help of governmental support. Foreign businesses are going to utilize Seoul as a test bed for the 5G market. SUMMED UP: LOTS OF PROMISING OPPORTUNITIES! 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 6

7 Culture and mentality matter: creating a leading country. During the past five decades South Korea has shown an incredible economic growth to become a hightech industrialized economy, and remains one of the fastest growing developed countries (South Koreas GDP went from billion USD in 2006 to an all-time-high of billion USD in 2014). The reasons lie in careful governmental macro-engineering, sound business practice and a quite unique culture: Masters of change, rebuild and reinvention: can attitude Diligent, respectful, very eager and hard-working (on average 60 hours per week), punctual, concrete, highly educated (7% of GDP is spent on education), flexible, loyal, target-oriented, global thinking Developing, sustaining and growing network: professional and personal life is built on relationships Confucian values: family, respect, virtuosity, work and learn hard, avoid extremes and live moderately Kibun ( face ): Koreans strive for harmony in their business and personal relationships. 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 7

8 2 CHALLENGES TO BE CONSIDERED WHEN DOING BUSINESS IN SOUTH KOREA

9 Challenges to utilize your business opportunities in South Korea. EU AND KOREA HAVE A VERY GOOD STRATEGIC BUSINESS RELATIONSHIP: The FTA (Free Trade Agreement) entered into force in July 2011, going further than any previous agreement in lifting trade barriers. It is also the EU's first trade deal with an Asian country, creating many opportunities for market access with specific focus on the automotive and electronics sectors. But still, some challenges need to be considered: CULTURAL DIFFERENCES: major South Korean companies are still run along regimented, hierarchical lines and face (kibun) is of greater importance than in almost any other country in Asia. BUSINESS ENTRY: local advisors with deep knowledge of the business culture are necessary; also Korean language is a requirement for a foreign market entrant, as Korean is still the main business language. PERSONAL RELATIONSHIPS: everything depends on this, so it is important to spend time establishing a good own working relationship and building trust with South Koreans. It is central to demonstrate that you have a long-term commitment to the relationship (and market) rather then aiming only at quick profits. CONTRACTS: are seen as a starting point rather than as the final goals of a business agreement and as the parameter within which the working relationship will be conducted. ACCOUNTING AND FINANCE PRACTICES: credit measuring methodology differs to obtain finance in South Korea, greater emphasis is placed on the debt to equity ratio, profitability and liquidity. GEOPOLITICAL TENSION: the difficult relationship between North Korea and South Korea remains tense. 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 9

10 3 YOUR IDEAL PARTNER: WE SUPPORT YOU WITH KNOW-HOW AND NETWORK

11 Mission statement e&co. South Korea. OUR EXPERTISE FOR YOU Insight view into the Korean business structure: we have access to small and medium sized enterprises and their technologies We know and live the Korean corporate culture and have a strong regional government approach Broad network to academic, governmental (central and local) and company landscape Bridge to other Asian countries and companies/institutions MAIN INDUSTRIES Automotive Mechanical Engineering ICT, Electronics TYPICAL PROJECTS Market studies & technology assessments Accelerator for investment and venture opportunities Subject matter expert for local network structures Enabling B2B and federal network structures Government s regulation and policy in the future OUR CUSTOMERS OEM and Tier 1/2/3 Government institutions Regional governments Small and medium enterprises 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 11

12 Some current developments in the Korean automotive industry. Strategic Partnership Hyundai- Samsung and Hyundai-LG for Auto-ICT future Samsung and LG with new department E&E (Electric & Electronic) in Vehicle to foster connected business Government focusing on fuel cell and EV for eco-friendly cars (supported by subsidies) BMW is starting to reduce promotion options and targets building premium Vehicle-Infra- Cloud platform is a highly rising system in South Korea South Korea is Daimler sedan s (E-Class) 2 nd biggest market and S-Class s 4 th biggest market in the world 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 12

13 It s not the question why to invest, but rather when: very quick. VERY HIGH-SKILLED AND HARD-WORKING LABOR South Korea is one of the most highly educated countries in the world. HIGHLY INNOVATIVE ENVIRONMENT A global innovation leader in many fields, ranking first in ICT innovation, R&D spending & patents. The government has been pushing to establish a creative economy ecosystem by building platforms. CENTRAL BRIDGE TO EAST-ASIA Strategically located between China and Japan, South Korea is positioned within an average air travel time of three hours to over 81 cities with a population of one million or more. EASE OF DOING BUSINESS South Korea is ranked 4 th in ease of doing business by the World Bank. South Korea is especially recognized for its superiority in trading across borders (1 st world wide). TECHNOLOGICAL HIGHLY DEVELOPED GLOBAL TEST-BED MARKET Ranking first in ICT Development, e-government and 4G/LTE coverage. One of the leading industries for Internet of Things and 5G development. Test-bed for new concepts by Microsoft, Intel, Google, and others. ATTRACTIVE INCENTIVES FOR FOREIGN INVESTORS South Korea provides tax reliefs, cash grants and free land provision to foreign investors. 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 13

14 4 YOUR CONTACT IN SOUTH KOREA: OUR OFFICE IN SEOUL

15 Enabling value for you in South Korea and from Germany. MIN HO PARK e&co. Ltd. 7th Fl. Sambo Bld Yeoyido-Dong Youngdeungpo-Gu Seoul T: M: F: E: Minho.Park@eandco.com VISIT US AND KEEP UPDATED: GEZA BRUGGER e&co. AG Hubertusstraße Saarburg Germany T: M: F: E: Geza.Brugger@eandco.com 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 15

16 Interesting trivia: did you know that the OECD declared South Korea to be the country with the highest estimated national IQ on Earth? that almost half of the population in South Korea has the same three surnames? that people with the same surname can t marry each other? that a child is considered to be one year old when it is born? that South Korea totally dominates liquor consumption per capita? that Seoul residents get the least amount of sleep of any residents of major cities in the world (less than six hours a night)? that South Korea passed a law that requires all online shopping and banking to be done using Internet Explorer? that in South Korea your blood type determines the type of your personality? 8/22/2016 e&co. AG ENABLING VALUE KOREAN MARKET APPROACH 16

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