Expanding into Asia-Pacific Series: Korea
This is part one of Shipwire’s multi-part blog series: Expanding into Asia-Pacific. In this series we’ll look at the different Asia-Pacific markets, what makes them special, and how to start expanding your business into them with the greatest success. Today, in Part 3 of the series, we look at Korea.
Understanding the Region
One issue that many North American and European businesses might have when they consider expansion into the Asia-Pacific region is that they just don’t understand the region well enough to be aware of the opportunities. This is particularly true when considering Korea. It’s big enough to be part of the G-20, but for many businesses it gets lost in the shuffle behind Japan, Australia, and China. That’s unfortunate, because it’s a major market in its own right.
The most important thing to remember about Korea is that it’s not Japan. Yes, both economies have structural similarities, but the best way to shut yourself out of the Korean market is to consider it a smaller duplicate of the Japanese market.
The first thing to remember is that Korea is a very connected country. On average, South Koreans enjoy the greatest amount of bandwidth of any population on Earth, and more importantly, they use it. Most Korean consumers, particularly younger consumers, rely on the Internet for the vast majority of their product information, particularly in the form of blogs.
According to Tom Tucker, author of Doing Business in Korea, another very important factor regarding the Korean market is that while Korea is now a modern advanced economy, it only reached that stage very recently. Prior to that, Korea was a developing economy, growing on the strength of being able to produce inexpensive copies of foreign products for both local and international markets. On the consumer front, that meant accepting that products might have issues and brought service to the forefront of the Korean consumer’s mind. Since Korean consumers expected products would break down, they wanted to know that the company stood behind their products and would repair or replace them quickly without any fuss. That being the case, if you want to succeed in the Korean market you need to be able to offer the same kind of service and a similar response time.
Fit in Locally
Another factor is localization. If you are looking to expand into the Korean market you are going to find yourself facing stiff competition from established local brands, that are in tune with the local market. If you want to compete with them, you need to provide a compelling alternative that fits the needs of the local consumer and that means you cannot underestimate the importance of localization. You need to give your Korean customers a reason to buy your product rather than a local alternative made by a company they know will provide a good fit for their specific needs and give them the support they require.
Half-trillion Dollar Market
The question that follows, is why go into Korea when the market presents all these challenges? The answer is simple: it’s a very big pie. According to the UN, Korea’s consumer market ranks 15th in the world at $452 Billion, and according to Economy Watch it ranks 11th in equivalent purchasing power. That’s an almost half-trillion dollar market that’s very close to Japan. It’s just too big to ignore.
According to Tom Tucker, you should also consider that the Korean consumer market is very female-driven. Women make most major purchasing decisions in the household, even when the intended user of the product is male. That means that advertising should reflect the needs of women, regardless of the product because if your advertising campaign turns them off, they won’t buy it – even if they aren’t your intended market.
Even though Korea needs to be considered as its own market, it does share some commonalities with the Japanese market. One of those commonalities is the importance of appearance to many Korean consumers. This comes from the fact that for many Koreans their self-image is intimately connected to image they project of their position in society. One result of this is that the Korean consumer market makes up more than a quarter of their total GDP, which by the 2011 estimates is growing at 3.9% per year. At this rate, it should be well past half a trillion dollars before the end of the decade
If you are looking for a new market to expand into, don’t forget Korea. That’s where Shipwire can help. As a global leader in shipping and fulfillment, we can get your products to the new customers you need to serve.