South Korea has emerged as a global economic powerhouse, with exports playing a vital role in its economic growth. Ranked tenth in global exports, the country has gained international attention for its diverse range of goods and services in international markets. To gain a deeper understanding of South Korea's export environment, it is crucial to explore the export process and the government and other organizations' role in fostering these successes.
South Korea’s success with exports can be attributed to several factors. The country’s investment in research and development, focus on nurturing technological innovation, and cultivating dynamic industries allow them to maintain a competitive edge. Individuals can more accessibly pursue export-related activities through a robust manufacturing sector, ideal geographic location, and government support to facilitate and streamline the export processes through policies and initiatives.
Government Support & Incentives
Before exporting, it is valuable to familiarize oneself with the various resources and institutions created to support and promote the export sector of the economy. The South Korean government has established promotion agencies, such as the Korea Trade-Investment Promotion Agency (KOTRA) and Korea Export-Import Bank (KEXIM), to facilitate these processes.
KOTRA provides comprehensive services to assist exporters in market research, business matching, and trade facilitation. Their market support is invaluable for any individual or business exporting to Korea. KEXIM, on the other hand, is an organization that offers financial products, export credit insurance, and advisory services to guide exporters involved in international trade who wish to invest overseas.
The government also regulates promotion programs, which facilitate business networking, domestic and international exhibitions, business matching, and create global platforms to enhance and support exporters. Furthermore, establishing free trade agreements (FTAs) with numerous countries and regions worldwide seeks to eliminate or reduce trade barriers and create a favorable export environment for South Korean exporters. The government also offers tax benefits, grants, and export promotion initiatives to further incentivize exporting activities.
Getting Started: Exporting
Once exporters are aware of the available resources, the first step is registering themselves or their business with the Korea Customs System (KCS) to obtain a unique exporter customs code (ECC).
It is important to note that the South Korean government generally does not impose tariffs, additional taxes, or charges on exported goods, unlike imports. However, before exporting, exporters must be well-versed in specific regulations or restrictions applicable to their products or goods and the destination country’s business market and regulations.
After receiving an ECC, exporters must prepare industry-specific documents to support their export declaration. These documents ensure the goods are properly declared and usually consist of general forms such as the export documentation form, invoices, bill of lading or airway bill, certification of inspection, and more. South Korea’s online-based electronic clearance system, UNIPASS, helps facilitate these steps.
Goods Classification and Customs Clearance
Once documented, the declared goods are submitted to the Head of customs, who will ensure the declaration follows the Customs Act and other regulations. Exporters must classify their goods using the Harmonized System (HS) code, a 6-digit, internationally accepted system for classifying products to determine customs duties, restrictions, and requirements.
The goods then undergo physical inspection by the KCS to verify information, detect prohibited items, and guarantee adherence to regulations. For restricted goods, products such as stolen or registered used cars or lost or stolen smartphones cannot be exported and will be reported.
Within thirty days of acceptance of the export declaration, the exporter must load their goods onto a means of transport. South Korea emphasizes after-sales support and customer service, ensuring exporters are equipped to address any concerns and ensure customer satisfaction once the goods are shipped.
Challenges for Exporting
Exporting in the competitive Korean market can present challenges for foreign exporters. Language and cultural differences can be difficult, posing communication and trade complexities when engaging with Korean customers or stakeholders.
While South Korea generally does not impose taxes or tariffs on exported goods, exporters may encounter tariff barriers, such as quotas, technical barriers to trade, or sanitary regulations, which can impact the cost-effectiveness of exporting goods. Exporters must comply with relevant customs procedures, documentation requirements, and trade regulations at the destination country of their products and obtain the necessary licenses or permits.
South Korea’s export process has helped to drive economic growth and adapted to evolving market dynamics, emerging technologies, and consumer preferences. With the government’s steadfast support and commitment to innovation and exporting, South Korea can navigate and thrive in the global market for years to come.
BLT & Partners has the most extensive business network in Korea and a team of top-notch professionals, including IP attorneys, lawyers, financial experts, marketers, and more. If you’re looking to enter the Korean market, we have everything you need to succeed. Contact us today to learn more about how we can help you achieve your goals in Korea.