7 Korean Products that Make Profits | KR SOURCING
Updated: Feb 9
When you talk about emerging financial markets, it is hard to look past South Korea. The country is emerging as a huge trade force with major stakes in several vital industries.
After starting as one of the poorest countries on the globe, they have turned their fortunes entirely in just one generation and are now fifth in the world at exports with $617 Billion in Exports in 2018. When you think of the lack of natural resources and the small geographic size of the country, this figure becomes even more impressive.
Since the economy of South Korea is heavily dependent on exports, major geopolitical events influence the economy directly. The biggest recipient of exports from South Korea is China but dealing with them has been tough for South Korea with trade disputes rising over recent years.
So South Korea is trying to build new relations and encourage new enterprises as they try to create businesses of different kinds with the collaboration of business people worldwide.
For companies that want to work in South Korea, it is a great time to build partnerships. While the labour is available at a lower cost than comparable Asian markets, the trade regulations may be much more strict for the domestic counterparts.
A good alternative is to look at products produced in South Korea and compare them with local rates followed by getting a supplier of those goods.
For this, you will need to have an accurate understanding of the biggest goods produced by Korea. So here is a list of the 7 Korean Products that Make Huge Profits.
These industries have stood the test of time and continue to be relevant in challenging economic conditions. Becoming a cog in the wheel of these industries would be a good investment for anyone trying to invest in South Korea.
But before doing that, there needs to be a thorough understanding of each industry, how that has grown to be what it is, its major players, and prospects in the future. Let us get started.
While it is not the biggest Korean export in terms of revenue, K-Beauty is the most famous one. It is one of the most significant cultural phenomena of recent times, and the name of South Korea is synonymous with this industry.
The secret to the success of South Korea in this industry has been the innovation that they have shown. They have been on the quest to find better products with proven benefits.
And when you talk about their products, they are of exceptional quality and are made of natural products that carry significant benefits. The prices of South Korean cosmetics are also much lower, which has helped take them where they are at present.
The K-Beauty industry also made themselves quite niche specific with more focus being in skincare products than hair care or other types of cosmetics.
With time, global brands started to join hands with local producers making South Korea a hub of the skincare industry.
K-Beauty appealed a lot to the international audience with their quality, with exports of about $625 Million to the USA alone in 2019. The reason also seems to be that Korean products promote a holistic approach where you try to prevent any skin damage rather than covering it.
They talk about maintaining a good diet, exercising, and then using the famous 10-step formula. What it does is build credibility in the consumer’s eyes, which is exactly why K-Beauty products made it big in international markets.
Another thing they did well was to use modern tools of marketing like Instagram. They sent their products to influencers who reviewed them, informed the public how to use them, and helped the public trust the products because of the trust they had on the influencer. This was a game-changer and remains a viable marketing strategy even today.
So at every possible juncture, there has been a use of modern methods and intelligent marketing to ensure these products stay relevant and in business.
While clothing used to be the major export of South Korea in its early days, it has since been overshadowed by the automobile industry and integrated circuits. That being said, the industry is slowly establishing itself again and a major reason has been the boom in Korean pop culture.
The total amount of Textile exports by South Korea reached $13.7 Billion in 2018, while the local fashion market is valued at around $44.32 Billion. Also, this industry is experiencing steady growth as time progresses.
The main reason for this increase in exports has been the saturation in the Western markets and increased cost of skilled labour in those countries. So logically, brands turned to Asian markets, and one market that has highly benefited from it has been that of South Korea.
Moreover, South Korea also acts as a buffer between the Western culture and Asian culture. This is especially true since the emergence of K-Wave, which has taken the world by storm.
In recent times, Korean celebrities and pop stars have become cultural icons. When you consider the kind of eyeballs K-pop gets to Korea and its fashion, that is bound to generate huge sales.
One trend that may hamper the clothing industry is that as South Korea develops further, labour costs will likely increase, and ultimately, companies would move to even cheaper markets. Such a move may take several years though to come together.
The Electronics industry of South Korea became the third biggest in the world in 2017 only behind the USA and China. This reflects the kind of growth South Korea is experiencing in this genre.
Two major players in the Electronics industry of South Korea are LG and Samsung. Samsung and LG are the two biggest TV manufacturers on the planet and both companies are also in the top five mobile phone producers as well.
Samsung also has a major share in the semiconductor industry, which is the biggest export of South Korea, but to the masses, the exploits of Samsung are more visible on the electronics front.
While there have been reports of both LG and Samsung moving their factories elsewhere as they try to achieve lower labour costs to match competitors, it doesn't necessarily represent bad news for the electronics market since the skilled labour may be employed by other factories that are moving to South Korea for the skilled work.
A positive for Korean electronics manufacturers is their greater freedom in recent years. Samsung and LG used to import electrical chemicals from the USA and Japan but have, in recent years, started to produce those chemicals themselves.
All in all, electronics will remain a viable industry in times to come and a major player in the exports of South Korea.
4.Refined Petroleum Products
It is a major feather in the cap of South Korea being such a major petroleum exporter despite not having any major oil reserves. The refineries convert crude oil into useful variants like kerosene, diesel and gasoline. South Korea then exports them to other countries like China and the USA.
This industry is especially handy for the economy of South Korea when you consider the fact that surrounding countries like Vietnam and Indonesia that have significant oil reserves have to re-import their oil after getting it refined from South Korean refineries.
The value of the exports in the refined petroleum products sector is about $43.6 Billion. This makes them the fifth biggest refined petroleum exporter in the world.
This industry is thriving in South Korea, and even locally, there is an increased competition, which ultimately leads to better products and competitive pricing.
In this industry, South Korea is the fourth largest export market in the world. Especially in the semiconductor niche, South Korea and especially Samsung are the leading innovators and have a 19% market share after the USA.
It is the leading export of South Korea of about $113 Billion in 2018 having a major demand in the USA and other markets. As said before, Samsung is the market leader in this field.
This industry requires a great deal of expertise, and due to the expertise of South Korea in this field, other innovative countries like Japan are one of their major customers.
The Automobile Industry of Korea is truly huge. Korea produced 3.61 Million passenger car units in 2019. The largest car producer in the country is Hyundai which was also the third biggest company in the production of cars worldwide as of 2017. Other companies like Kia and Renault Samsung are also major shareholders.
While this industry has seen a few challenges over the years, it is still a major contributor to the Korean economy.
The Korean government also gives support to the automobile industry with tax incentives. Also, certain companies created in free economic zones get a further reduction in taxation making them even more affordable.
While the shipbuilding industry of South Korea has suffered tremendously during COVID times with China taking most of the market share, it is bound to return to normalcy post the pandemic.
South Korea became world leaders in this industry in 2018 after a six year wait replacing China. The back and forth is bound to continue with both Asian countries having a 90% market share in this industry, be it passenger ships or cargo ships.
It is a tough industry to do business in with significantly heavy expenditures making it tougher each day to remain profitable as the demand for shipbuilding continues to dwindle.
Some of the major exports of South Korea include skincare products (the famous K-Beauty), automobiles, refined petroleum products, shipbuilding services, integrated circuits, and the clothing industry.
While all these industries may see an upward or downward trend each year, the fact is that most of them have stood the test of time and continue to be relevant.
If you want to do business in South Korea, finding a niche in these industries would not be ill-advised. It is, however, necessary to do the research beforehand and consult with experts about the local market
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