International Trade Project “Doing Business with Korea”

Eka Darmadi Lim – 3094802

Eric Ariawan - 3094808

Kevin Pratama – 3094004

International Business Networking

Universities of Surabaya

2011

Introduction:

Korea (/kəˈriːə/ kə-ree-ə; Korean: 한국 Hanguk [hanɡuːk] or 조선 Joseon [tɕosʌn] – (see

etymology)) is an East Asian geographic region that is currently divided into two separate

sovereign states — North Korea and South Korea. Located on the Korean Peninsula,

Korea is bordered by the People's Republic of China to the northwest, Russia to the

northeast, and is separated from Japan to the east by the Korea Strait and the Sea of Japan

(East Sea), and separated from the Republic of China (Taiwan) to the south by the East

China Sea.

Korea was united by Emperor Taejo of the Goryeo Dynasty in 936. Goryeo was a highly

cultural state and created the Jikji in the 14th century, using the world's first movable

metal type printing press. The Mongol invasions in the 13th century, however, greatly

weakened the nation which was forced to become a tributary state. After the Mongol

Empire's collapse, severe political strife followed and Goryeo was replaced by the Joseon

Dynasty in 1388.

The first 200 years of Joseon were marked by relative peace and saw the creation of the

Korean alphabet Hangul by King Sejong the Great in the 14th century and the rise in

influence of Confucianism in the country. During the latter part of the dynasty, however,

Korea's isolationist policy earned it the Western nickname the "Hermit kingdom". By the

late 19th century, the country became the object of the colonial designs of Japan. In 1910,

Korea was annexed by Japan and remained so until the end of World War II in August

1945.

In 1945, the Soviet Union and the United States agreed on the surrender of Japanese

forces in Korea and Soviet troops occupied north of the 38th parallel, while U.S. troops

took surrender south of it. This decision by allied armies soon became the basis for the

division of Korea by the two superpowers, exacerbated by their inability to agree on the

terms of Korean independence. The two Cold War rivals then established governments

sympathetic to their own ideologies, leading to Korea's current division.

The Geography, The Population, and The Economic Indicator:

The Geography:

Korea is located on the Korean Peninsula in North-East Asia. To the northwest, the

Amnok River (Yalu River) separates Korea from China and to the northeast; the Duman

River (Tumen River) separates Korea from China and Russia. The Yellow Sea is to the

west, the East China Sea and Korea Strait is to the south, and the Sea of Japan is to the

east. Notable islands include Jeju Island (Jejudo), Ulleung Island (Ulleungdo), and

Liancourt Rocks (Dokdo).

The southern and western parts of the peninsula have well-developed plains, while the

eastern and northern parts are mountainous. The highest mountain in Korea is Mount

Paektu or Paektusan (2,744 m), through which runs the border with China. The southern

extension of Mount Paektu is a highland called Gaema Heights. This highland was

mainly raised during the Cenozoic orogeny and partly covered by volcanic matter. To the

south of Gaema Gowon, successive high mountains are located along the eastern coast of

the peninsula. This mountain range is named Baekdudaegan. Some significant mountains

include Mount Sobaek or Sobaeksan (1,439 m), Mount Kumgang or Kumgangsan (1,638

m), Mount Seorak or Seoraksan (1,708 m), Mount Taebaek or Taebaeksan (1,567 m), and

Mount Jiri or Jirisan (1,915 m). There are several lower, secondary mountain series

whose direction is almost perpendicular to that of Baekdudaegan. They are developed

along the tectonic line of Mesozoic orogeny and their directions are basically northwest.

Unlike most ancient mountains on the mainland, many important islands in Korea were

formed by volcanic activity in the Cenozoic orogeny. Jeju Island, situated off the

southern coast, is a large volcanic island whose main mountain Mount Halla or Hallasan

(1950 m) is the highest in South Korea. Ulleung Island is a volcanic island in the Sea of

Japan, whose composition is more felsic than Jeju-do. The volcanic islands tend to be

younger, the more westward.

Because the mountainous region is mostly on the eastern part of the peninsula, the main

rivers tend to flow westwards. Two exceptions are the southward-flowing Nakdong River

(Nakdonggang) and Seomjin River (Seomjingang). Important rivers running westward

include the Amnok River, the Chongchon River (Chongchongang), the Taedong River

(Taedonggang), the Han River (Hangang), the Geum River (Geumgang), and the

Yeongsan River (Yeongsangang). These rivers have vast flood plains and provide an

ideal environment for wet-rice cultivation.

The southern and southwestern coastlines of Korea form a well-developed ria coastline,

known as Dadohae-jin in Korean. Its convoluted coastline provides mild seas, and the

resulting calm environment allows for safe navigation, fishing, and seaweed farming. In

addition to the complex coastline, the western coast of the Korean Peninsula has an

extremely high tidal amplitude (at Incheon, around the middle of the western coast. It can

get as high as 9 m). Vast tidal flats have been developing on the south and west

coastlines.

The Population:

The Population Of North Korea

The capital and largest city is Seoul, with a population of 10,421,78.

Special city (Teukbyeolsi) :

1 Seoul-teukbyeolsi (서울특별시) = 10,421,782

Metropolitan cities (Gwangyeoksi) :

2 Busan-gwangyeoksi (부산광역시) = 3,635,389

3 Daegu-gwangyeoksi (대구광역시) = 2,512,604

4 Incheon-gwangyeoksi (인천광역시) = 2,628,000

6 Daejeon-gwangyeoksi (대전광역시) = 1,442,857

5 Gwangju-gwangyeoksi (광주광역시) = 1,456,308

7 Ulsan-gwangyeoksi (울산광역시) = 1,087,958

Provinces (Do) :

8 Gyeonggi-do (경기도) = 10,415,399

9 Gangwon-do (강원도) = 1,592,000

10 Chungcheongbuk-do (Northern Chungcheong) (충청북도) = 1,462,621

11 Chungcheongnam-do (Southern Chungcheong) (충청남도) = 1,840,410

12 Jeollabuk-do (Northern Jeolla) (전라북도) = 1,890,669

13 Jeollanam-do (Southern Jeolla) (전라남도) = 1,994,287

14 Gyeongsangbuk-do (Northern Gyeongsang) (경상북도) = 2,775,890

15 Gyeongsangnam-do (Southern Gyeongsang) (경상남도) = 2,970,929

Special self-governing province (Teukbyeoljachi-do)

16 Jeju-teukbyeoljachi-do (Jeju-do) (제주특별자치도) = 560,000

I. The Population Of North Korea

1 Pyongyang = 3,255,288

2 Hamhung = 768,551

3 Chongjin = 667,929

4 Nampho = 366,815

5 Wonsan = 363,127

6 Sinuiju = 359,341

7 Tanchon = 345,875

8 Kaechon = 319,554

9 Kaesong = 308,440

10 Sariwon = 307,764

GDP of Korea

$1.459 trillion (2010 est.)

country comparison to the world: 13

$1.375 trillion (2009 est.)

$1.373 trillion (2008 est.)

note: data are in 2010 US dollars

The Regulation related international Trade

I. Procedures for Korea’s Import

A. Free import

For over 19 year olds:

• 200 cigarettes

• 50 cigars

• 250g of tobacco.

• 1L of alcohol

• 2oz of perfume

• Other personal items (gifts, new items) worth up to US$ 400,-

B. Prohibited

• Narcotics

• Pornography

• Subversive material

• Treasonous material

• Counterfeit goods or materials

C. Restricted

• Weapons (including imitation), ammunition and explosive material (fireworks)

only with permission from Commissioner General of National Police Agency

• Drugs(Narcotics and Psychotropic substance)

• Animals, plants and products thereof including foodstuff is subject to quarantine

and may not be allowed to enter. For more information contact nearest embassy or

consulate or appropriate authority –plant or animal for required certificates and

prohibited items

• Pets - valid good health certificates as well inoculation proofs are need. For a

detailed outline of how the process of bringing your pet animal please see our

Contact Tab

• Endangered animals and plants and products thereof as outline by the CITES

convention will require permit from CITES

• Person carrying more than US$ 10,000 worth of any means of payment (cash,

cheque etc.) needs to declare it to the customs. If you plan to bring large amount

of money please contact nearest embassy for more detailed information.

II. Procedures for Export in Korea

A. Prohibited

• Pornography

• Subversive material

• Treasonous material

• Counterfeit goods or materials

B. Restricted

• Goods designated as natural assets and those of cultural importance will

require permit from

• Specialty or rare goods from Korea.

• Means of payment – up to the amount declared when entering the country.

(North Korea GDP)

Country 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009

North Korea 1 -3 1 1 1 1 1.8 -1.1 3.7 -0.9

II. Per Capita Income Of Korea

1. South Korea = 30,000

2. North Korea = 1,800

III. Inflation Rate Of Korea

1. 2009 = 2,8 %

2. 2010 = 3 %

IV. Unemployment Rate Of Korea

1. 2009 = 3,7 %

2. 2010 =3,7 %

V. Korea’s Export

1. semiconductors

2. wireless telecommunications equipment

3. motor vehicles

4. computers

5. steel ships

6. petrochemicals

VI. Primary export partners:

1. China (23.2 percent of total exports),

2. US (10.1 percent),

3. Japan (5.8 percent),

4. Hong Kong (5.3 percent)

VII. Korea’s Import

1. machinery

2. electronics and electronic equipment

3. oil

4. steel

5. transport equipment

6. organic chemicals

7. plastics

Total value of imports: US$ 417.9 billion

The Busiest port in Korea Located at Busan is the fifth busiest seaport in the world, with

transportation and shipping among the most high profile aspects of the local economy.

Since 1978, Busan has opened three container ports including Jaseungdae, Shinsundae,

and Gamman. Busan has one of the world's largest ports and can handle up to 13.2

million TEU shipping containers per year.

The Busan-Jinhae Free Economic Zone Authority, one of two such administrations (the

other in the harbor of Incheon), was created to reassert Busan's status as a traditional

international trading centre. The port attracts ships from all over the globe and the

surrounding area aspires to become a regional financial center.

Opportunities for foreign companies to invest in South Korea exist in some markets, such

as:

- Geographic Information Systems (GIS) – because of South Korean government's ten-

year plan dedicated to the development of its national spatial data infrastructure.

- Software and Internet based solutions – due to the large use made by South Koreans of

Internet and IT solutions.

- Non-memory semiconductors – these are in high demand in South Korea.

- Pollution control and safety and security equipment at an industrial level – this is due to

South Korean government increasing concern about pollution control and safety issues at

the work place.

- Aircrafts parts and equipment – these are still largely imported by South Korea and the

demand is increasing due to an increase in air travel.

- Education – more and more South Koreans travel abroad to complete their studies,

mostly to Canada and the USA but also to the EU. English teaching training programmes

and business training programmes are becoming more popular every day.

South Korean international trade – Import and Export

Import – South Korea imports mainly mineral fuels, electric and mechanical equipment, iron and

steel. South Korea’s main trade partners for imports are China, Japan, the European Union and

the USA.

Export – South Korea’s most important export partners are again China, Japan, the European

Union and the USA, and the products that South Korea exports are: electric and electronic goods,

machinery, vehicles, ship and boats. For Freight Rates to South Korea RSJ International of the

UK organise freight to and from Korea, to locations around the world. Also interested in Chinese

business and trade?

OVERVIEW OF TRADE, INVESTMENT, AND ECONOMIC RELATIONS BETWEEN

INDONESIA AND KOREA

Korea and Indonesia are the two amongst the largest economies in Asia. The links

between them have developed within a wider region where trade and investment linkages have

generally been growing rapidly. Their economies have proven to be resilient against profound

shocks, most notably the East Asian economic crisis of 1997-98 and the current global economic

crisis. Identifying the nature of the links between the two economies, which is the task of this

Chapter, is an important step in assessing the possible gains from a bilateral CEPA.

Indonesian GDP stands at USD 1,032.95 billion and Korean GDP recorded USD

1,466.13 billion in 2010. Both countries manage to grow by around 6.11 percent in 2010. In

terms of income per capita, there is a wide difference due to different sizes of population of the

two countries. In 2010, Korean income per capita reached USD 20,756.25 and Indonesian

income per capita amounted to USD 2,974.03.

The Indonesian economy is dominated by the contribution of manufacturing industry that

contributes to 47 percent of Indonesian GDP. However, Korean economy is dominated by the

contribution of services, which constitute to 58.2 percent of Korean GDP.

Bilateral trade volume between Korea and Indonesia has dramatically increased during

the period of 2006-2010. Total trade volume has doubled from USD 10.57 billion in 2006 to

USD 20.28 billion in 2010 with about 15.97 percent annual growth rate on average. This sound

growth in trade volume reflects the complementarities of the two countries. Both countries’

export growth is driven by growth in non oil exports. Both countries’ total trade on oil and gas

has been showing substantial annual growth with an average of 4.75 percent during 2006- 2010.

As for 2011, up until July, trade balance between both nations accounted for US $ 15.9 billion.