KOREA’s Trade Policy Direction

and
Cooperation With GMS Countries

Ministry of Knowledge
Economy

Table of Contents

1 K o r e a ’ s T r a d e S t a ti s ti c s

2 K o r e a ’ s T r a d e P r o m o ti o n P o li ci e s

3 Cooperation With GMS Countries

The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or
policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does
not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their
use. Terminology used may not necessarily be consistent with ADB official terms.
 . Korea’s Trade Statistics

1. Trade and industry trends in Korea

Korea has experienced rapid growth over the past 40

years
* Korea’s nominal GDP soared to $832.9 billion in 2009 from $8 billion in 1970

Korea’s trade volume, and its dependence on trade,

have also increased at phenomenal rates
* Trade volume : $2.8billion in 1970 → $686.6 billion in 2009; trade/GDP : 35.2 in 1970 → 82.4 in 2009

<Nominal GDP growth rate> <Trade volume>

(1 billion USD) (1 billion USD)

Exports
Imports
Total trade
 1. Trade and industry trends in Korea

Korea’s manufacturing industries, including its IT and heavy and

chemical industries,
occupy leading positions in the global market on the basis of
their advanced technologies
< Korea’s status in the global market>

Factors behind the impressive growth of

Korea’s industries
C o n c e n t r a ti o n o f c a pi t al a n d R & D i n v e s t m e n t i n IT , a u t o m o b ile s a n d s h i p b uil di n g h a s h e l p e d
t h e s e i n d u s t ri e s s e c u r e g l o b al c o m p e titiv e n e s s .
A c ti v e e x p o r t s i n t h o s e i n d u s t ri e s h a v e d riv e n t h e n a ti o n ’ s e c o n o m i c g r o w t h .
* T h e t o p 1 0 e x p o r t i t e m s a c c o u n t f o r a b o u t 5 0 % o f t o t al e x p o r t .

2. Trade between Korea and the GMS

Trade with the GMS quadrupled between 2000 and 2009

- From $37.3 billion to $159.1 billion.

Trade with the GMS accounted for 23.2% of Korea’

Korea’s total
trade volume
- Up from onlyin 2010
11.2% in 2000.

< Korea’s trade volume : national breakdown for 2009>

Imports Exports Total trade

China $ 5 4 . 2 b illio n $ 8 6 , 7 b illio n $ 1 4 0 . 9 b illio n ( 2 0 . 5 )
Vietnam $ 2 . 4 b illio n $ 7 . 1 b illio n $ 9 . 5 b illio n ( 1 . 4 )
Thailand $ 3 . 2 b illio n $ 4 . 5 b illio n $ 7 . 8 b illio n ( 1 . 1 )
Myanmar $ 7 8 m illi o n $ 4 0 6 m illi o n $ 4 8 4 m illi o n ( 0 . 0 7 )
Cambodia $ 1 8 m illi o n $ 2 7 3 m illi o n $ 2 9 1 m illi o n ( 0 . 0 4 )
Laos $ 1 8 m illi o n $ 5 6 m illi o n $ 7 4 m illio n ( 0 . 0 1 )
Total $ 6 0 b illio n $ 9 9 b illio n $ 1 5 9 b illio n ( 2 3 . 2 0 )
2. Trade between Korea and the GMS (item-by-
(item-by-
item
item breakdown)
breakdown)

Main export items to GMS countries : flat display panel sensors,

semiconductors
and automobiles
Main import items fro GMS countries : semiconductors,
clothes and natural rubber
<GMS >

1 2 3 1 2 3

Fl a t d i s pl a y Fl a t d i s pl a y
S e micon - S e miconduc -
China p a n el s a n d
Ductors
M o bil e p h o n e s
tors
C o m p uters p a n el s a n d
s en s ors s en s ors

Vietnam A u t o m o b il e s O il p r o d u c t s K nit t e d - f a b ri c s C r u d e o il Clothe s C o al

Fl a t d i s pl a y
Thailand S t e el pl a t e s p a n el s a n d S y n t h e s ti c r e si n s S e mic onductors N a t u r al r u b b e r C o m p uters
s en s ors
T e x til e
Cambodia K nit t e d - f a b ri c s
pro du cts
A u t o m o b il e s Clothe s N a t u r al r u b b e r Al u m i n u m

Ti m b e r , s t e el
R a il s a n d s t e el C o n s t r u c ti o n / m i G r ai n s a n d
Myanmar bars a n d
s tru ct ure s ni n g e q ui p m e n t
Clothe s N a t u r al r u b b e r
fr uit s
ir o n n b a r s
S t a ti c e l e c t ri c C o pper
Laos A u t o m o b il e s C ar p arts
d e vi c e s
Crude c o pper Lu m b er
pro du cts

. Korea’s Trade Promotion

Policies
1. Advanced infrastructure for trade

Expanded insurance
coverage

Export
insurance
E x p o r t i n s u r a n c e c o m p e n s a t e s e x p o r t e r s f o r l o s s e s i n t h e e v e n t t h a t t h e y f ail t o r e c ei v e d u e p a y m e n t
a s a r e s ul t o f u n f o r e s e e n c ir c u m s t a n c e s , s u c h a s a n i m p o r t e r ’ s b a n k r u p t c y

* C o v e r a g e e x t e n d e d t o K o r e a n c o m p a ni e s e n g a g e d i n t r a d e w it h G M S n a ti o n s
- A m o u n t u n d e r w ritt e n : $ 1 . 6 b illio n ( 2 0 0 7 ) , $ 1 . 9 billio n ( 2 0 0 8 ) , $ 2 . 1 b illio n ( 2 0 0 9 )
- C o m p e n s a ti o n p r o vi d e d : $ 1 8 . 2 ( 2 0 0 7 ) , $ 6 . 2 m illio n ( 2 0 0 8 ) , $ 1 0 . 6 m illi o n ( 2 0 0 9 )

Import
insurance
I m p o r t i n s u r a n c e , i n t r o d u c e d i n J ul y 2 0 1 0 , c o m p e n s a t e s i m p o r t e r s f o r l o s t r e v e n u e , i n cl u di n g f r o n t
m o n e y , a s a r e s ul t o f a n y e m e r g e n c y ri s k s o r c r e dit ri s k s

1. Advanced infrastructure for trade

Training for trade

professionals
Specialist Trading
Company(STC)
Trading companies with extensive know-how in exports are recognized as “Specialist
trading company(STC)”(K O R E A ’ s 2 5 0 S T C a r e a c ti v e i n a b o u t 1 0 0 c o u n t ri e s )
Their role is to support SMEs that have yet to acquire such capabilities
- A STC serves as an export agent for and an advisor to an SME.
- It purchases and exports the SME’s products on its behalf and provides guidance regarding
business

Training programs

K o r e a o f f e r s t r ai ni n g p r o g r a m s t o s u p p o rt t h e c o n ti n u al e x p a n si o n o f t r a d e a n d i n v e s t m e n t ,
a n d t o h e l p b u s i n e s s e s c o p e w i t h t r e n d s s u c h a s t h e ri s e o f i n t r a - r e gi o n al c o o p e r a ti o n a n d
c o m bine s d tr ad e.
e x t e n si v e t r a d e e d u c a ti o n p r o g r a m s a n d o n - s i t e t r ai ni n g p r o g r a m s a r e a v ail a bl e t h r o u g h 2 5
c o ll e g e s l o c a t e d i n d i f f e r e n t p a r t s o f K o r e a .
- I n 2 0 1 0 , 8 0 0 s t u d e n t s f r o m 2 5 c o ll e g e s s t u di e d t r a d e - r e l a t e d b u s i n e s s a n d m a r k e ti n g p r a c ti c e s
- A n o v e r s e a s i n t e r n s hip p r o g r a m a ll o w e d 1 , 0 0 0 t r ai n e e s t o p a r ti ci p a t e i n o v e r s e a s c o n s t r u c ti o n p r o j e c t s a n d t r a d e
e x h i biti o n s
 1. Advanced infrastructure for trade

World-
World-class e-
e-trade
system
Initial
Initial Development
Development Trans
Trans formation
formation
phase(‘
phase(‘91~’
91~’96)
phase(‘91~’96) Phase(‘
Phase(‘97~’
97~’02)
Phase(‘97~’02) Phase(‘
Phase(‘02~’
02~’09)
Phase(‘02~’09)

Milestones
Milestones

(A pril 2 0 1 0 ) : K o r e a e s t a bli s h e s e - N e g o , t h e w o rl d ’ s fir s t e l e c t r o ni c e x p o r t b ill p u r c h a si n g

s y s t e m , t o p r o c e s s e l e c t r o ni c a p p li c a ti o n s a n d p a y m e n t s )

K o r e a h a s e x p o r t e d i t s e - t r a d e s y s t e m s a n d r el a t e d s o l u ti o n s ( a p p r o xi m a t e v al u e $ 1 4
m illi o n ) t o L i b y a a n d M o n g oli a a n d p r o vi d e d e - t r a d e c o n s ul ti n g s e r vi c e s ( a p p r o xi m a t e
v a l u e $ 1 . 2 m illi o n ) t o R o m a n i a , U z b e kis t a n , K y r g y z s t a n , A z e r b aij a n , M o n g oli a a n d
K azakhstan.

2. Support for overseas marketing

activities

KBC Transformation
Project
To transform KOTRA’s Korea Business Centers(KBC)s into oversea
Purpose
of Korean SMEs, in order to encourage more SMEs to become ex

Provide individualized support for SMEs’ overseas marketing e

Provide “total marketing services” : share overseas market info
Activities
assistance in various areas such as contracts, communication
identification of potential buyers

99KBCs are active in 72 countries, including 15 in GMS countrie

* 1 0 i n C h i n a ( S h a n g h a i, B eijin g a n d o t h e r c i ti e s ) , 2 i n Vi e t n a m ( H o C h i M i n h C i t y a n d H a n oi) , 1 e a c h i n
T h ail a n d ( B a n g k o k ) , M y a n m a r ( Y a n g o n ) a n d C a m b o di a ( P h n o m P e n h )
status
The number of member companies increased from 543 in 200 to 2
* M e m b e r c o m p a n i e s i n G M S c o u n t ri e s : 2 3 4 i n C h i n a , 1 8 i n M y a n m a r , 7 2 i n Vi e t n a m , 2 4 i n T h ail a n d
a n d 6 i n C a m b o dia
 2. Support for overseas marketing
activities
Export Incubator Project

To mitigate risks and provide support for SMEs in the initial s

Purpose
ment into overseas markets
Help companies save money by leasing office space overseas at
Activities Provide legal and accounting consulting services to help SM
local market
17 Export Incubators in 11 countries including the United Sta
Status the Middle East
* i n cl u di n g f o u r i n C h i n a ( B eiji n g , G u a n g z h o u , S h a n g h a i , C h e n g d u ) a n d 1 i n Vi e t n a m ( H o C hi Mi n h C i t y )

covering world-
world-class products

Support for overseas marketing activities, technology developme

Outline products that rank among the world’s top five in terms of market
products with the potential to reach that level within five years

Objective To diversify Korea’s exports and develop new growth engines for t
As of 2009, a total of 584 items have been designated for support ; of
status
are already world-class products and 197 have potential to becom

2. Support for overseas marketing

activities

blishing joint overseas logistics centers

Support for local logistics service providers so that Korean

Outline
obtain affordable logistics services

To increase exports by Korean SMEs and encourage the punctu

Objective freight by allowing companies with limited capital and perso
direct and indirect logistics costs

As of 2009, 21 centers were in operation in 12 countries and had

308 companies
Status As of 2010, five additional centers are in the works with Ho Ch
Guangzhou and Dalian under consideration as potential loc
* Logistics centers operating in GMS countries(2010) : eight in China, includin
Shanghai ; one in Ho Chi Minh City, Vietnam
 2. Support for overseas marketing
activities
Participation in overseas
exhibitions
Participation as a group : 150 exhibitions, 2,645 companies, contract
Results Individual participation : 656 companies, contracts worth $680 mil
For Support for special overseas exhibitions held by Korean agencies
2009 * Examples : Preview in China, Asia Electronics Exhibition in Shanghai(AEES), Korea Machinery Fair Shanghai
Environment and Energy Tech Hanoi, Vietnam International Shop + Franchise Show

Support will be provided for Korean Businesses to participate

Plan exhibitions ; for 2,500 companies to participate in exhibitions in
For for Korean agencies to organize seven special exhibitions over
2010 * C o m p a ni e s a r e e n c o u r a g e d t o p a r ti ci p a t e i n e v e n t s h o s t e d n o t o nl y b y a d v a n c e d c o u n t ri e s b u t a l s o b y h e B RI C s
a n d o t h e r e m e r gi n g c o u n t ri e s Æ 2 7 e x hi biti o n s w ill t a k e p l a c e i n C h i n a a n d 1 1 i n o t h e r A si a n c o u n t ri e s

Helping SMEs enter overseas

markets
Meetings with buyers : SMEs will enjoy opportunities to consult with
interested in Korean products
* A s o f 2 0 0 9 , 6 8 s u c h e v e n t s h a d t a k e n p l a c e w i t h t h e p a r ti ci p a ti o n o f 9 , 1 5 5 c o m p a ni e s , r e s ulti n g i n c o n t r a c t s w o r t h $ 1 . 6 9 b illio n

Tr a d e d e l e g a ti o n s : Tr a d e d e l e g a ti o n s w ill b e o r g a ni z e d , a n d m e e ti n g s a r r a n g e d w i t h l o c a l
b u y er s , t o a s sist S M E s t h a t wis h t o e n t er o v er s e a s m a r ket s .
* R e s ul t s f o r 2 0 0 9 : A t o t a l o f 2 1 2 t r a d e d e l e g a ti o n s w e r e d i s p a t c h e d i n cl u di n g 7 3 t o C h i n a , o t h e r p a r t s o f A si a a n d O c e a ni a .

. Cooperation With GMS Countries

 1. Korean companies operating in GMS
countries

Regional Breakdown Sectoral breakdown

Others(1%)
1 2 3 Construction (2%)

W h ol e s a l e
M a n u f a c t u ri n g S e r vi c e s Transportation
C hi n a (65. 2%) ( 1 3. 1%)
A n d r e t ail
( 1 2. 1%) and logistics(5%)

W h ol e s a l e Fi n a n c e a n d
M a n u f a c t u ri n g
Vi e t n a m (8 5 . 0%)
a n d r e t a il in s u r a n c e
( 1 1 . 2%) ( 2. 3%)
Servoces (11%)
W h ol e s a l e Tr a n s p o r t a ti o n a n d Manufacturing
M a n u f a c t u ri n g (67%)
Th ail a n d ( 7 0 . 0%)
a n d r e t a il lo gi s ti c s
( 1 3 . 6%) ( 7 . 0%)
Wholesale and retail
W h ol e s a l e (12%)
M a n u f a c t u ri n g S e r vi c e s
Myan m ar (6 4 . 0%) ( 2 0 . 9%)
a n d r e t a il
( 3. 5%)

Fi n a n c e a n d
Cam - M a n u f a c t u ri n g C o n s t r u c ti o n
in s u r a n c e
B o di a (3 2 . 2%) ( 2 8 . 8%)
( 1 3 . 6%)

* The main sectors within manufacturing are electrical items, electronics, precision instruments, components, textiles and garments.

2. Strategies for intensified

cooperation
GMS market
trends
The GMS is emerging as a new driving force for the world economy
in their aftermath of the global crisis.
T h e G M S h o l d s s i g nifi c a n t a d v a n t a g e s : a lar g e p o p ul a ti o n , h i g h e c o n o m i c g r o w t h r a t e s
a n d a bundant resources.
A m i d r a pi d e c o n o m i c g r o w t h , t h e G M S a l s o b o a s t s a b u r g e o nin g m i d dl e c l a s s w i t h g r e a t
p o t e n ti al a s a n a c tiv e c o n s u m e r b a s e

The increasingly sophisticated industrial structure within the GMS

GMS h
created lucrative markets for machinery and capital goods.
goods
W i t h i n c r e a si n g f o r ei g n i n v e s t m e n t a n d a g r o wi n g n u m b e r o f i n f r a s t r u c t u r e c o n s t r u c ti o n
p r o j e c t s , t h e r e gio n al e c o n o m y i s g e t t in g s t r o n g e r a n d s o i s t h e d e m a n d f o r m a c hi n e r y ,
h e a v y e q ui p m e n t a n d c a p i t al g o o d s .

Infrastructure construction projects are increasing in number

G o v e r n m e n t s ti m ul u s p a c k a g e s h a v e p r o m p t e d m o r e c o n s t r u c ti o n , p l a n t a n d C D M
p r oje ct s t h an e v er b e f ore.
 2. Strategies for intensified
cooperation
Major cooperation channels

Interv
Title Main purposes Recent progress
als
Fifth session held
in April
T o s ti m ul a t e t r a d e a n d li m i t t h e u s e o f p r o t e c ti o ni s t m e a s u r e s
Korea-China 2007 at Zhengzhou
Annua T o f a c ilit a t e c o o p e r a ti o n o n n e w i n d u s t ri e s a n d s t a t e - o f - t h e - a r t
Committee on Sixth session held
l t e c h n ol o g y
Investment in
T o a d d r e s s d i f fi c ul ti e s f a c e d b y c o m p a n i e s o p e r a ti n g i n K o r e a a n d C h in a
November 2009 at
Korea-Vietnam Joint Shanghai
Committee on Energy T o e n s u r e s t a bl e p r o d u c ti o n i n b l o c k s 1 1 - 2 a n d 1 5 - 1
Every Ninth session held
and Mineral T o f a c ilit a t e c o o p e r a ti o n o n t h e p r e v e n ti o n o f m i n e d a m a g e
two in June
Resources T o f a c ilit a t e c o o p e r a ti o n o n a s u b m a ri n e g e ol o gi c s u r v e y a n d m i n e r al
years 2009
Consultations and r e s o u r c e s d e v el o p m e n t
Cooperation
Korea-Laos Joint Irreg
Committee on Energy ular
T o f a c ilit a t e t h e j oi n t d e v el o p m e n t o f m i n e r al r e s o u r c e s
and Mineral (Held
T o f a c ilit a t e c o o p e r a ti o n o n h y d r o p o w e r g e n e r a ti o n May 2009
Resources once
T o f a c ilit a t e c o o p e r a ti o n o n n e w a n d r e n e w a bl e s
Consultations and to
Cooperation
Korea-Myanmar Joint date)
Committee on Energy
Every Third session held
and Mineral T o f a c ilit a t e c o o p e r a ti o n o n t h e d e v el o p m e n t o f g a s f i el d s i n M y a n m a r
two in
Resources T o f a c ilit a t e m i n e r al r e s o u r c e s c o o p e r a ti o n
years March 2009
Consultations and
Cooperation
Korea-Cambodia
T o f a c ilit a t e c o o p e r a ti o n o n a j oi n t s u r v e y a n d o n t h e d e v el o p m e n t o f
Joint Committee on (Held
m i n e r al r e s o u r c e s
Energy and Mineral once
T o f a c ilit a t e c o o p e r a ti o n o n p o w e r g e n e r a ti o n , t r a n s m i s si o n a n d May 2009
Resources to
d i s t ri b u ti o n
Consultations and date)
- T o i m p l e m e n t a j oi n t r e s p o n s e t o c li m a t e c h a n g e
Cooperation

2. Strategies for intensified

cooperation

Major projects

Title/description Country
Business support sessions for Korean companies in
China
China
Korea-China information network on trade and
China
investment
Training for mid-level Chinese public officers China
Private-Public Joint Research Team on Great
China
Western Development
Cambodia, Laos,
Local training on production technology
Myanmar
Program to strengthen logistics services in ASEAN
Vietnam, Thailand, etc.
countries
Economic cooperation delegations
Vietnam, Cambodia
dispatched to Vietnam and Cambodia
Business training for CEOs of Korean companies
Vietnam, etc.
in other Asian countries
Introduction to Korean culture and business for
Vietnam, etc.
foreign managers
Technology support and seminars for Korean
Vietnam
companies in Vietnam
Korea-Vietnam Forum on Knowledge and Business Vietnam
Support for the establishment of an
Vietnam
oil quality management system in Vietnam
Road show on the need to revive idle facilities
Thailand, etc.
throughout the Asian region
Ministry of Knowledge
Economy