Market and Trade Data
South Korea, Already a
Major Market, Offers Further Opportunities for U.S.
By Seh Won Kim
South Korea is the world’s 10th largest economy, 12th
largest exporter, and 13th largest importing country for
all products. The demands of South Korean consumers have
become very similar to the demands of U.S. consumers:
high quality, low cost, healthy, and convenient foods.
Increasing affluence, more women in the workforce, and a
well-traveled younger generation looking for goods with
an international flavor are promoting the rise of
convenience stores, retail outlets, and Western-style
In 2005, South Korea was the fifth largest market for
U.S. agricultural products. Its total agricultural
imports reached $15.4 billion. South Korea imports about
60-70 percent of its agricultural needs because less
than 20 percent of its total land is arable and its
farms are small and inefficient.
In February 2006, South Korea and the United States
announced their intentions to negotiate a bilateral FTA
(free trade agreement), an effort expected to give new
impetus to U.S. agricultural trade. South Korea has the
economic potential to greatly expand purchases of U.S.
farm and food products. By enhancing market access and
eliminating remaining trade barriers, the FTA could
significantly increase U.S. exports to this market.
South Korea imports 60-70% of its agricultural
Traditionally, South Korea has imported large amounts of
bulk and intermediate products, such as cotton and
hides. The market for these types of products is fairly
flat as industries such as tanning and textiles
increasingly shift their processing facilities to China.
South Korea’s total imports of bulk and intermediate
products declined by 2.4 percent in 2005, whereas
imports of consumer-ready products rose by 20 percent.
South Korea’s total imports of U.S. agricultural
products were $2.9 billion in 2005, down from the
previous year due to declines in corn and soybean sales
and sanitary and phytosanitary concerns about beef and
citrus. However, imports of U.S. poultry, pork,
pastries, mineral water, dairy products, fresh fruits,
and nuts are all showing significant growth.
South Korea’s GDP (gross domestic product) growth for
2005 was 4 percent. Its economy, which grew 4.6 percent
in 2004, is slowing under the weakening pace of export
growth and the rising value of the won. The overall
economic performance will depend greatly on external
conditions, including international oil prices and
appreciation of the won.
Start With Seoul
South Korea has 48 million people, making it the third
most densely populated country in the world. Seoul, the
nation’s capital, has grown into a global metropolis.
Currently 23 million people live in Seoul, Incheon, and
Kyunggi Province, about 48 percent of the total
population. The metropolitan area around Seoul houses
about 84 percent of government agencies and institutes,
88 percent of 30 largest companies, and 65 percent of
the 20 most popular universities in the nation.
This concentration in Seoul, along with its efficient
distribution system, allows U.S. suppliers to realize
benefits from their promotional efforts very quickly.
Less conventional marketing approaches such as online
selling, home shopping channels, and home delivery of
groceries also work well in Seoul.
An exporter considering the South Korean market should
conduct preliminary research. ATO Seoul (the FAS
Agricultural Trade Office in Seoul) provides market
intelligence to help U.S. suppliers and exporters get
started. Information from South Korean importers and
U.S. state departments of agriculture also could be
helpful. The next step might include sending catalogues,
brochures, product samples, and price lists to
prospective importers to introduce them to a company and
Once contact with an importer is established, a
prospective supplier should meet the importer in person
to increase the company’s credibility with the importer
and to evaluate the market firsthand. In South Korea,
the clichés about “seeing is believing” and “one visit
is worth a 1,000 faxes” are especially true. There is no
substitute for face-to-face meetings. The supplier or
exporter should bring samples, product and company
brochures, price lists, shipping dates, available
quantities, and any other information needed to
negotiate a contract. While information in English is
acceptable, having it in Korean is helpful. A general
overview of your firm in the Korean language is a good
place to start.
Participating in a local food show is another way to
showcase your products to a larger audience. Many South
Korean importers attend these shows to establish
reliable long-term relationships. Show participation
enhances initial contacts with importers, agents,
wholesalers, distributors, retailers, and others in the
food and beverage industry. Food & Hotel South Korea,
the only USDA-sponsored and only trade-only food show in
the country, presents an excellent way to explore
possible market opportunities. This show targets
importers, wholesalers, distributors, retailers, hotels,
restaurants, food processors, and media. In the past,
there have been two food shows in South Korea, a
domestic and an international show; but starting next
year the two shows will be merged into the Seoul Food &
Hotel Show. The first show, which will be held April
24-27, 2007, is expected to attract two to three times
the number of exhibitors as either of the shows in 2006.
U.S. companies should be sensitive to the uniqueness of
the South Korean market: an approach or product that
succeeded in another market will not necessarily work in
South Korea. It will be necessary to renew the product
design, packaging, and market approach for the South
Korean situation, requirements, and tastes. A
well-developed relationship with a South Korean importer
is an asset when determining how best to market a
Never take anything for granted in the South Korean
market. Be ready for the unexpected. Just because the
first container cleared customs does not mean the second
one will. Be attentive, patient, and willing to provide
Business Customs: Etiquette Matters
South Korea is a country of tradition. While its
importers understand international business, observing
the cultural nuances will facilitate business
relationships. Here are some tips U.S. suppliers should
keep in mind when dealing with South Korean business
To get information from a South Korean importer, it is
best to ask directly and explain why you need it. South
Koreans may require more explanation before responding
to information requests than U.S. business people are
used to providing; for instance, a lengthy discussion
about the selling firm and its history may be required.
If you do not receive a successful reply, there is
nothing wrong with politely asking again. In South
Korea, it is often seen as a sign of seriousness to
continue presenting your request. South Koreans will
rarely say “no” directly; instead they will say
something is “very difficult.”
South Koreans prefer to deal face-to-face. Establishing
a relationship through cold calling (or cold faxing or
e-mailing) is very difficult in South Korea. When first
corresponding, start with words of appreciation, clearly
mark the recipient’s name, title, and division (many
South Koreans have the same last name), avoid using
long, complex sentences and slang, indicate a reasonable
timeframe for a response, and close with additional
words of appreciation.
As indicated above, personal relationships are very
important. South Koreans like to maintain long-term
relationships and are often very loyal. Developing a
relationship with a potential partner is vital to
establishing your credibility. If a seller has already
entered this market, established contacts can help to
build trust with a new one.
It is very helpful to have a formal introduction to the
person or company with whom the seller wants to do
business. Meeting the right person in a South Korean
company almost always depends on having the right
Name Cards and Addresses:
The exchange of name cards is usually the first item of
business. In South Korea people seldom call others by
their first names. Instead, they use surnames (such as
Mr. Hong) or title and surname (President Hong). Never
call a person by his or her first name unless he or she
specifically asks you to do so. Surnames are often
written first on a South Korean business card: for
example, Hong, Gil Dong would be referred to as Mr.
Hong. For Westerners, it is difficult to tell from the
given name whether the contact is a man or a woman.
Small talk is a good way to break the ice at the
beginning of a meeting. A short, orderly meeting with an
agenda provided in advance will go a long way toward
making it a success. The meeting will likely be with a
senior staff member whose English may not be very good.
At times, a junior staff member might translate, but be
prepared to provide all materials and fulfill all
requests in writing. When making initial visits, hiring
a translator can be a valuable investment. Take time to
educate the translator beforehand with terms likely to
come up. Pay attention to the seating arrangement; the
senior staff member will usually sit at the head of the
table. Decisions are typically made from the top down in
The office may not be the best place to discuss business
matters or propose new ideas, especially when dealing
with the older generation. It is helpful to get together
in the evening for a less formal, but no less important,
meeting. South Korean business people often gather with
friends after work over drinks. Many hierarchical
traditions may slacken on such occasions: the rules and
mores of society heavily influence South Koreans’
behavior, and meeting over drinks is one of the few
times they can be themselves.
It is advisable to wear formal business attire when
meeting or visiting South Korean importers for the first
time. First impressions are important.
South Koreans do not like to appear to have “lost face.”
It is important always to try to give something, to make
a concession, even if you think you are in the right: it
will help to resolve the conflict more quickly. Visible
anger is not useful in a confrontation: silence is a
more effective method of conveying displeasure.
Apologizing can also be useful and does not always mean
you believe you were wrong.
One idiosyncrasy of the Korean language is that speakers
say “yes” when they may mean “no,” and vice versa. For
instance, in Korean, “Wouldn’t you like to go home?” if
answered with a “yes” means “That’s right, I would not
like to go home.” To avoid confusion, reply with a full
sentence, e.g., “Yes, I would like to go home.”
Consumer Tastes and Dining Preferences
South Korean consumers’ eating habits have changed
dramatically in recent years. A diet long been based on
rice has become progressively more centered on wheat and
protein. Consumers are also seeking more diversity and
are becoming more quality-oriented. Consumption of fish,
fruits, and vegetables has increased.
Increasing affluence and greater demand from
consumers for high-quality, low-cost, healthy,
convenient foods equate to good opportunities for
Consumer preferences are shifting toward foods that are
convenient rather than those that require lengthy
preparation. Home preparation is becoming increasingly
rare. Monthly expenditures on food and beverages per
household in cities averaged $519 in 2004, 23 percent of
a household’s total expenditures. The eating-out portion
of expenditures, which has been rising very fast,
accounted for 46.6 percent of the total.
Working members of a household often have business
dinners five nights a week, which is one reason that
restaurant consumption has continued to grow despite
South Korea’s generally lackluster economic situation.
Busy consumers can purchase ready-made, local-style food
items such as kimchi or bulgogi (barbecue) at grocery or
Consumers prefer products that have a national brand
and/or have long been recognized in the market.
Nevertheless, the younger generation has had a lot of
exposure to Western-style foods, especially U.S.
products. Approximately 40,000 South Korean elementary
and middle school students study in the United States
every year and are somewhat accustomed to U.S. brands
Consumers are becoming more health- and safety-conscious
in their food buying habits; ingredients, packaging, and
shelf life are becoming important determinants of
purchasing behavior. Demand for greater quality in
flavor and nutrition has increased. Spending habits are
also becoming more diversified as individual preferences
and foods become more varied.
South Korean consumers also like natural, fresh food
products, such as health, functional, and diet foods.
The organic market has been developing rapidly. South
Koreans have always looked to their food to provide a
functional or health benefit, and foods produced without
the use of pesticides or insecticides appeal to them.
South Korean consumers are very sensitive to food safety
issues. Once a food scare gains publicity, the food
concerned is affected, and its reputation can be quickly
Retail Food Sector
In 2004, sales growth of the South Korea’s overall
retail market slowed due to the sluggish economy and
shrinking sales of traditional retailers. But in 2005,
department store sales are expected to have grown
slightly, and hypermarket sales to have enjoyed
Online retailing is growing rapidly. More people are
shopping online for convenience and better assortment.
Most leading mass retailers now operate Internet stores
and offer home delivery to stay competitive. In 2004,
total sales of food and agricultural products accounted
for about 9 percent of total online shopping sales,
about $656 million.
Most retailers purchase imported food products from
importers and/or wholesalers; few retailers import
directly. This situation is not expected to change in
the near future. U.S. exporters should contact
distributors, importers, and retailers to market their
South Korea’s customs clearance process is cumbersome
and costly; it is generally not cost-effective to
bringing in mixed container loads. Instead, distributors
bring in full containers of a particular product, and
either store it in-country or distribute it to retailers
or other distributors.
South Korea’s HRI (hotel, restaurant, and institutional)
sector garnered $41.2 billion in sales in 2003, up 9
percent from the previous year. The total number of
restaurants rose 2 percent to 605,614. However, 90
percent of restaurants are small family-owned
The hotel segment, especially 5- and 4-star hotels with
in-house, premium restaurants, constitutes an important
market for foods and beverages. Food and beverage sales
comprise 40-50 percent of total sales in such hotels.
Some leading chains, including the Shilla and the Westin
Chosun, have greatly expanded their food service
businesses and currently operate stand-alone outlets of
various formats outside their hotels, including
microbrew pubs, food courts, coffee shops, bakery shops,
and gourmet restaurants.
The hotel segment has played a leading role for
new-to-market food products and recipes. It has also
served as an efficient venue for promotional activities,
including menu promotions and product launchings and
seminars. Although the hotel segment’s role in the food
service sector is gradually declining due to growth of
other types of restaurants, it will likely remain the
leading distribution channel for premium, high-quality
imported food and beverage items in the near future.
Traditional South Korean food restaurants are still the
most numerous, although their number is declining due to
the rapid growth of restaurants serving other cuisines.
However, it is becoming more difficult to distinguish
South Korean menus from foreign ones, as more diverse
recipes and food styles are introduced, fusing
traditional dishes with new-to-market recipes and
ingredients. At the same time, foreign dishes are
somewhat “South Koreanized” in taste, ingredients, and
cooking style. For example, South Koreans prefer less
salt, fat, and oil, and more hot spices, vegetables,
seafood, and soups.
Institutional food service outlets are growing, as more
workers and students, seeking cheaper meal options,
switch to in-house restaurants for their lunches and
dinners. Sales for 2004 totaled $4.4 billion, about 50
percent of it taken by third-party commercial
institutional food service providers, and the rest by
restaurants directly operated by offices and schools.
Commercial institutional food service providers are
expected increase their market share in coming years, as
more organizations seek cheaper, more efficient ways to
provide quality meals for employees and students.
Promising Food Processing Sector
South Korea’s shifts toward foods that offer greater
quality, variety, convenience, safety, and health
benefits have also stimulated the growth of the domestic
manufacturing and processing industry. Total production
of foods, foodstuffs, and beverages was estimated at
$43.8 billion in 2003.
U.S. suppliers have a strong opportunity to export raw
materials and ingredients for food processing in South
Korea. The country’s food and beverage manufacturing and
processing industry is a major user of imported raw
materials, intermediate products, ingredients, and
additives. Imports are necessary because domestic
production cannot meet demand. Except for rice and
certain dairy products, South Korea imports almost all
types of agricultural products for processing. Corn,
soybeans, wheat, essential oils, frozen concentrated
orange juice, turkey meat, duck meat, almonds, walnuts,
powdered milk, whey powder, and beef tallow are good
examples of raw materials and ingredients that South
Korea imports for food processing.
Seh Won Kim is a senior agricultural marketing
specialist in ATO Seoul, South Korea. E-mail:
Several electronic resources exist that can help
U.S. suppliers prepare for and keep up with the
South Korean market.
For further information about South Korea’s
agricultural market, including lists of South Korean
importers by product:
U.S. Agricultural Trade Office
Office of Agricultural Affairs
Food standards and regulations in South Korea
are many, and subject to frequent change. U.S.
exporters need to ensure that all necessary customs
clearance requirements have been verified with local
authorities through the South Korean importer before
the sale conditions are finalized. Final import
approval of any product is always subject to the
standards and regulations as interpreted by the
South Korean official at the time of product entry.
South Korean import regulations and specific
FAS Report KS5037
Details on South Korea’s HRI sector:
Details on South Korea’s retail sector:
FAS Report KS4009
U.S.-South Korean FTA:
U.S. livestock and poultry products eligible for
export to South Korea:
USDA’s Food Safety Inspection Service
Sanitary and phytosanitary requirements:
USDA’s Animal and Plant Health Inspection Service
Distributor development service:
MIATCO (the Mid-America International Agri-Trade
Council) offers this service to assist U.S.
suppliers with specific information on whether and
how to approach the South Korean market. MIATCO also
can help U.S. food companies establish and solidify
contacts in the South Korean import, distribution,
retail, food service, and food processing sectors
through trade servicing and in-market assistance.
One-stop technical assistance in entering the
South Korean market:
Oregon Department of Agriculture’s Export Service