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Korean alcoholic beverage market

This report will consider the opportunities and restrictions involved in exporting a single premium malt whisky such as Glen Sporran into the Korean alcoholic beverage market. A number of factors will be considered when entering into the market, such as cultural differences, traditional customs and the Korean business etiquettes. The economic condition and situation of Korea will also be examined, as this has great effect on consumer consumption and expenditure. Barriers to Glen Sporran such as import tax, tariff and custom duties will in addition be considered.

The Geographic’s of South Korea South Korea is formally known, as the Republic of Korea is located in the southern half of the Korean Peninsula bordering the Sea of Japan and the Yellow Sea. The capital of South Korea is Seoul; other major cities in South Korea are Busan, Daegu, Incheon, Gwangju and Daejeon. 1 South Korea consists mostly of hills and mountains. The total area of land is 98,480 sq km. South Korea is slightly larger than Indiana. The climate is temperate with rainfall heavier in the summer than in the winter.

The coldest months are in January and February and the hottest months are in July and August 2 The population of South

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Korea is approx 48,598,175 (estimated in July 2004). 20. 4% of the population is between 0-14 years old, 71. 4% is between 15-64 years and 8. 2% are over 65. Koreas population is one of the most ethically and linguistically homogenous in the world (except for the small Chinese community approx 20,000), virtually all Koreans share a common cultural and linguistic heritage South Korea has one of the world’s highest densities. 3 1. 3 The overview of the Korean economy

“Since the early 1960s, South Korea has achieved an incredible record of growth and integration into the high-tech modern world economy. Four decades ago GDP per capita was comparable with levels in the poorer countries of Africa and Asia. Today its GDP per capita is 18 times North Korea’s and equal to the lesser economies of the European Union”. 4 This achievement through the late 1980s was achieved by a system of close government/business ties, including directed credit, import restrictions, sponsorship of specific industries, and a strong labour effort.

The government promoted the import of raw materials and technology at the expense of consumer goods and encouraged savings and investment over consumption. “The Asian financial crisis of 1997-99 exposed longstanding weaknesses in South Korea’s development model, including high debt/equity ratios, massive foreign borrowing, and an undisciplined financial sector. Growth plunged to a negative 6. 6% in 1998, and then strongly recovered to 10. 8% in 1999 and 9. 2% in 2000. Growth fell back to 3.

3% in 2001 because of the slowing global economy, falling exports, and the perception that much-needed corporate and financial reforms had stalled. Led by consumer spending and exports, growth in 2002 was an impressive 6. 2%, despite anaemic global growth, followed by moderate 2. 8% growth in 2003. In 2003 the National Assembly approved legislation reducing the six-day workweek to five days”. 5 As of 2004 looks less promising than in the years before, however due to increasing trade with China it is Koreas economic position is meant to increase amongst Asia’s developed economies.

Korea’s economic indicators pointed to a deepening slump in October 2004. There was a modest improvement in the economy in August; however this may be a short mirage as current economic indicators suggest that the economic conditions are worsening. The index of leading economic indicators have had a six-month decline, this suggest that the economy might have entered into a recession. 7 2. Culture 2. 1 Korean commercial and cultural characteristics Korean culture can be seen as the most homogenous and traditional in the world. There is no other culture truly like it in the world.

“Koreans appreciate a show of interest in matters that are important to them. They appreciate a foreigner’s effort in expressing a hello (an-yang-ha-say-ho) or a thank you (gam-sa-ham-ni-da)”. 8 The tradition ways of thinking, in many areas are still practiced in Korea. Family and hierarchy are highly respected. Traditional family homes are highly respected as in most cases the father is the sole bread owner while the mother stays at home. The Majority of working women have university degrees however they are not given a chance to work upwards in the organisational hierarchy.

Single women generally receive less respect than married women. Most women are engaged in secretarial job, assembly or education work. Foreign businesswomen however seem to be exempted from these traditional ways of thought. Businesswomen especially (non-Asian looking women) are seen as equals to foreign businessmen. Foreigners are generally exempt from the above societal classification system. 9 Koreans have great respect for any senior in age, and intuitively establish their hierarchical position based on age. Whenever a Korean greets a person that older than he/she there normal custom would be to bow or nod.

It can be seen as disrespectful if this is not practiced, this will be the usual greeting ritual even though there may only be a one-year gap between the two greeting parties. Foreigners should be ready to mix business with pleasure, as Koreans base their business relationships on personal ones. 10 Koreans often hold a business drinking meeting and that can be seen as bringing business people together. It is also important for Koreans to use two hands when giving or receiving something. For example, when giving or receiving a business card both hands should be used.

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