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MIDDLE MARKET  ADVISORY   / KOREA DESK The Korean market for Australian SME's: Opportunities, realities and access Edward ...
Agenda  <ul><li>The Australia – Korea Connection </li></ul><ul><li>Opportunities </li></ul><ul><li>Overcoming Challenges <...
The Australia / Korea Connection
Korea: A world leading economy
Strong connections with Australia <ul><li>T he trading relationship is in excellent shape, with Australian exports to Kore...
Strong connections with Australia, cont. <ul><li>Australia has invested some $4.4 billion in Korea </li></ul><ul><ul><li>m...
Opportunities
Why Korea? <ul><li>Large, increasingly wealthy population (densely populated)  </li></ul><ul><li>Cleaner market than many ...
Australia has a strong brand image in Korea <ul><li>Clean, green, natural, organic, healthy </li></ul><ul><li>Fresh, new, ...
Many Australian companies are performing very well <ul><li>Macquarie Bank has performed exceptionally well in Korea, diver...
Many opportunities exist for Australian SMEs <ul><li>While commodities still represent the majority of Australian exports ...
Many opportunities exist for Australian SMEs <ul><ul><li>Internet services, software / games, telecommunication equipment ...
Many opportunities exist for Australian SMEs <ul><ul><li>Cosmetics </li></ul></ul><ul><ul><ul><li>Strong demand for natura...
…  and there are a number of emerging industries in Korea <ul><li>Tourism / leisure  </li></ul><ul><ul><li>Lifestyles chan...
The FTA effect <ul><li>Korea and Australia currently studying a possible free trade agreement, expected to be completed by...
Selected SME success stories in Korea  <ul><li>Jurlique </li></ul><ul><ul><li>Entered the market in 2002 via Korean distri...
Selected SME success stories in Korea  <ul><li>Helen Kaminski </li></ul><ul><ul><li>Internationally recognised designer of...
Overcoming Challenges
It is not all smooth sailing… <ul><li>A large Australian bank exited the Korean market </li></ul><ul><li>One of Australia’...
SMEs can overcome the challenges <ul><li>Finding information and identifying good opportunities </li></ul><ul><ul><li>Talk...
SMEs can overcome the challenges, cont <ul><li>Access to finance & insurance </li></ul><ul><ul><li>EFIC Helps Australian b...
Get to know the culture and the people <ul><li>While there are cultural differences, Australians and Koreans share similar...
Get to know the culture and the people, cont. <ul><li>Know your counterparts </li></ul><ul><ul><li>Essential to perform ba...
Market Access
Now is the time... <ul><li>Develop trading relationships in Korea for viable products / services </li></ul><ul><li>Form “w...
Business facilitation <ul><li>Identifying business opportunities </li></ul><ul><ul><li>Austrade / DFAT </li></ul></ul><ul>...
Summary
Summary <ul><li>There are challenges inherent in trade international trade, but the benefits and opportunities for growth ...
KPMG’s support network
Dedicated Korean desk and middle market advisory group <ul><li>Korea desk in Australia </li></ul><ul><ul><li>Phil Hennesse...
Presenter’s contact details Edward Kim KPMG  Korea +  82 2   2112 0770 edwardkim @ kr. kpmg.co m www.kpmg.com The informat...
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Kpmg Presentation Sm Efinal

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  1. 1. MIDDLE MARKET ADVISORY / KOREA DESK The Korean market for Australian SME's: Opportunities, realities and access Edward Kim, Partner KPMG Korea July 26, 2007
  2. 2. Agenda <ul><li>The Australia – Korea Connection </li></ul><ul><li>Opportunities </li></ul><ul><li>Overcoming Challenges </li></ul><ul><li>Market Access </li></ul>
  3. 3. The Australia / Korea Connection
  4. 4. Korea: A world leading economy
  5. 5. Strong connections with Australia <ul><li>T he trading relationship is in excellent shape, with Australian exports to Korea and imports from Korea both at record levels. </li></ul><ul><ul><li>Trade surplus stands at $5.4 billion ($6.6 billion taking into account services) </li></ul></ul><ul><ul><li>Coal, crude oil, iron ore and aluminium are four of Australia’s top five. Beef is the fifth. </li></ul></ul><ul><ul><li>Services: T ourism and education major industries - a quarter of a million Koreans visited Australia for holidays , education or business last year. </li></ul></ul><ul><li>At the end of 2005, Korea had invested over $900 million in Australia, with around two-thirds of this Foreign Direct Investment </li></ul><ul><ul><li>includes Posco, SK and Kores’ investment in coal mines </li></ul></ul><ul><ul><li>t he Korea zinc refinery in Townsville </li></ul></ul><ul><ul><li>Daesung Group’s macadamia plantations in Queensland. </li></ul></ul>(Source: Australian Department of Foreign Affairs and Trade / Invest Australia)
  6. 6. Strong connections with Australia, cont. <ul><li>Australia has invested some $4.4 billion in Korea </li></ul><ul><ul><li>most notably through the Macquarie Group’s involvement in infrastructure and other funds here. </li></ul></ul><ul><li>A USTRADE continu ing to assist first-time exporters considering the Korean market. </li></ul>(Source: Australian Department of Foreign Affairs and Trade / Invest Australia)
  7. 7. Opportunities
  8. 8. Why Korea? <ul><li>Large, increasingly wealthy population (densely populated) </li></ul><ul><li>Cleaner market than many other markets in Asia (Source: Transparency International Corruption Perception Index - 2006) </li></ul><ul><ul><li>Selected rankings: New Zealand 1; Australia 9; Japan 17; Korea 42; China 70; Vietnam 111; Philippines 121; Indonesia 130 </li></ul></ul><ul><li>Well developed legal system </li></ul><ul><ul><li>Better contract enforceability rating (cost of enforcing a contract) than Japan, Singapore, other Asian countries and the OECD average (Source: World Bank; Export Finance and Insurance Corporation report) </li></ul></ul><ul><li>Strong liking of Australia and Australian products / services </li></ul><ul><li>Possible FTA, which will improve competitiveness and access for Australian products </li></ul><ul><li>Safety: Very safe country; low personal risks; North Korea risk has little business impact </li></ul>
  9. 9. Australia has a strong brand image in Korea <ul><li>Clean, green, natural, organic, healthy </li></ul><ul><li>Fresh, new, colourful, exciting, innovative, creative </li></ul><ul><li>Sporting giant, the great outdoors </li></ul><ul><li>Strong R & D, excellent core technology base </li></ul><ul><li>Desirable lifestyle and world-class education </li></ul>(Source: AUSTRADE)
  10. 10. Many Australian companies are performing very well <ul><li>Macquarie Bank has performed exceptionally well in Korea, diversifying its investments from roads to a broad range of industries </li></ul><ul><li>Leighton has recently entered the Korean market, and is already making strong inroads into large infrastructure projects and is actively seeking to develop partnerships </li></ul><ul><li>Wilson Parking has quickly made inroads into the market, and is looking to expand its range of services </li></ul><ul><li>Many SMEs have identified profitable niche markets in Korea </li></ul><ul><li>And… </li></ul><ul><li>The New Zealand Center for Culture and Education recently won the Australia New Zealand Chamber of Commerce in Korea’s (ANZCCK) “Best SME” award </li></ul>
  11. 11. Many opportunities exist for Australian SMEs <ul><li>While commodities still represent the majority of Australian exports with Korea, many other opportunities exist for Australian goods and services: </li></ul><ul><ul><li>Agriculture: Beef, dairy (inc. processed cheese and milk), certain fruit and veg items, seafood, other processed foods </li></ul></ul><ul><ul><ul><li>Clean and green image driving growth for Australian products </li></ul></ul></ul><ul><ul><li>Wine </li></ul></ul><ul><ul><ul><li>Australian brands well recognized, and growing wine culture </li></ul></ul></ul><ul><ul><li>Health products (organics, vitamins, supplements, outdoor lifestyle, fashion, art and culture) </li></ul></ul><ul><ul><ul><li>In line with “well-being trend” </li></ul></ul></ul>(Source: AUSTRADE; KPMG Analysis)
  12. 12. Many opportunities exist for Australian SMEs <ul><ul><li>Internet services, software / games, telecommunication equipment </li></ul></ul><ul><ul><ul><li>Early adopters of new technology </li></ul></ul></ul><ul><ul><li>Building and construction materials </li></ul></ul><ul><ul><ul><li>Strong construction outlook post 2007 </li></ul></ul></ul><ul><ul><ul><li>Increasing wealth driving demand for imported construction materials / furniture </li></ul></ul></ul><ul><ul><li>Auto parts </li></ul></ul><ul><ul><ul><li>Korean buyers now have a much better understanding of Australian capabilities </li></ul></ul></ul>(Source: AUSTRADE; KPMG Analysis)
  13. 13. Many opportunities exist for Australian SMEs <ul><ul><li>Cosmetics </li></ul></ul><ul><ul><ul><li>Strong demand for natural cosmetics </li></ul></ul></ul><ul><ul><li>Travel / tourism </li></ul></ul><ul><ul><li>Education </li></ul></ul><ul><ul><ul><li>Growing number of Korean parents want their children educated overseas </li></ul></ul></ul><ul><ul><ul><li>Early childhood and on-line education services also hot in the Korean market </li></ul></ul></ul><ul><ul><li>Horse racing </li></ul></ul>(Source: AUSTRADE; KPMG Analysis)
  14. 14. … and there are a number of emerging industries in Korea <ul><li>Tourism / leisure </li></ul><ul><ul><li>Lifestyles changing following the start of the 5 day work week, and emergence of the “well-being” trend </li></ul></ul><ul><ul><li>Korea still lacking advanced tourism / leisure infrastructure </li></ul></ul><ul><ul><li>Strong growth in hotels and support services </li></ul></ul><ul><li>Healthcare / aged care </li></ul><ul><ul><li>Korea’s population is aging, driving strong demand for healthcare and aged care goods and services </li></ul></ul>
  15. 15. The FTA effect <ul><li>Korea and Australia currently studying a possible free trade agreement, expected to be completed by year end </li></ul><ul><li>Both governments may be in a position to decide whether to proceed with negotiations by mid-2008 </li></ul><ul><ul><li>Easier access for Australian companies to the Korean market </li></ul></ul><ul><ul><li>Lowering or eliminating tariffs, making Australian goods more competitive without impacting your profits </li></ul></ul><ul><ul><li>Updated and enforced IP laws to protect SMEs in the technology sector </li></ul></ul><ul><ul><li>Customs facilitation, harmonizing customs procedures, standards, and licensing and inspection requirements. This reduces fees, delays, and unnecessary paperwork. </li></ul></ul>(Source: Australian Department of Foreign Affairs and Trade)
  16. 16. Selected SME success stories in Korea <ul><li>Jurlique </li></ul><ul><ul><li>Entered the market in 2002 via Korean distributor, Inchant Korea. </li></ul></ul><ul><ul><li>Now it has six street shops as well as five department store concession shops. </li></ul></ul>(Source: AUSTRADE)
  17. 17. Selected SME success stories in Korea <ul><li>Helen Kaminski </li></ul><ul><ul><li>Internationally recognised designer of high quality accessories </li></ul></ul><ul><ul><li>Designs inspired by the beauty of Australia's natural environment </li></ul></ul><ul><ul><li>Korean distributor, DNH Korea, has successfully marketed brand since May 2003; now in top level department stores in Seoul. </li></ul></ul><ul><ul><li>Participated in the Australia Day 2005 fashion show in Seoul. </li></ul></ul>(Source: AUSTRADE)
  18. 18. Overcoming Challenges
  19. 19. It is not all smooth sailing… <ul><li>A large Australian bank exited the Korean market </li></ul><ul><li>One of Australia’s largest manufacturing investors in Korea currently in exit talks </li></ul><ul><li>Difficult for SMEs to find market information, identify opportunities, and develop a Korea business strategy </li></ul>
  20. 20. SMEs can overcome the challenges <ul><li>Finding information and identifying good opportunities </li></ul><ul><ul><li>Talk to Austrade, Invest Korea / KOTRA, state trade & investment agencies, professional advisory firms with a Korean presence </li></ul></ul><ul><ul><li>Perform in depth market study </li></ul></ul><ul><ul><ul><li>Size the market, develop growth projections, identify customers and competitors, understand the regulatory environment, select best market entry route </li></ul></ul></ul><ul><li>Initiating contacts - Introductions are vital! </li></ul><ul><ul><li>Again - Talk to Austrade, Invest Korea / KOTRA, state trade & investment agencies, professional advisory firms with a Korean presence </li></ul></ul><ul><ul><li>Participate in Korean trade delegations </li></ul></ul><ul><ul><li>Learn from the success of others by networking with companies conducting business in Korea </li></ul></ul>
  21. 21. SMEs can overcome the challenges, cont <ul><li>Access to finance & insurance </li></ul><ul><ul><li>EFIC Helps Australian businesses exporting and investing overseas by providing finance and insurance solutions beyond what is available in the commercial market. </li></ul></ul>
  22. 22. Get to know the culture and the people <ul><li>While there are cultural differences, Australians and Koreans share similarities: </li></ul><ul><ul><li>Some similarities </li></ul></ul><ul><ul><ul><li>Straight forward – to the point </li></ul></ul></ul><ul><ul><ul><li>Strong sense of “mateship” among close friends / business partners </li></ul></ul></ul><ul><ul><ul><li>Enjoy the outdoors, BBQs and drinking </li></ul></ul></ul><ul><ul><li>Some differences </li></ul></ul><ul><ul><ul><li>Language (the obvious one) </li></ul></ul></ul><ul><ul><ul><li>Koreans very formal in communication / dress </li></ul></ul></ul><ul><ul><ul><li>Decision making very centralized in Korea; complicated business hierarchy </li></ul></ul></ul>
  23. 23. Get to know the culture and the people, cont. <ul><li>Know your counterparts </li></ul><ul><ul><li>Essential to perform background checks on key people and corporate intelligence on companies </li></ul></ul>
  24. 24. Market Access
  25. 25. Now is the time... <ul><li>Develop trading relationships in Korea for viable products / services </li></ul><ul><li>Form “win-win” partnerships and joint ventures in Korea or Australia </li></ul><ul><li>Seek strategic investment from Korean companies </li></ul>
  26. 26. Business facilitation <ul><li>Identifying business opportunities </li></ul><ul><ul><li>Austrade / DFAT </li></ul></ul><ul><ul><li>KOTRA / Invest Korea </li></ul></ul><ul><ul><li>KPMG Strategic and Commercial Intelligence / Korea desk </li></ul></ul><ul><ul><li>Queensland Government Trade and Investment Office </li></ul></ul><ul><ul><li>Government of Western Australia Trade and Investment Office </li></ul></ul><ul><ul><li>Tasmanian Tourism Office </li></ul></ul><ul><ul><li>Australia New Zealand Chamber of Commerce in Korea </li></ul></ul><ul><li>Trade finance </li></ul><ul><ul><li>ANZ Bank (Offices in Seoul) </li></ul></ul><ul><ul><li>EFIC (Trade finance support) </li></ul></ul>
  27. 27. Summary
  28. 28. Summary <ul><li>There are challenges inherent in trade international trade, but the benefits and opportunities for growth in Korea are enormous </li></ul><ul><li>FTAs are proven to reduce the risks and lower the costs of exporting – start your homework now and get ahead of your competitors </li></ul><ul><li>There is a lot of support available for first time exporters to the Korean market. </li></ul>
  29. 29. KPMG’s support network
  30. 30. Dedicated Korean desk and middle market advisory group <ul><li>Korea desk in Australia </li></ul><ul><ul><li>Phil Hennessey, KPMG Queensland Chairman & Head of Korea Desk; Tel: +61 7 3233 9332; email: [email_address] </li></ul></ul><ul><ul><ul><li>Brisbane: Daniel Kim, Market Development Manager; Tel: + 61 7 3233 9321; email: [email_address] </li></ul></ul></ul><ul><ul><ul><li>Sydney: James Kong; Senior Manager; Tel: +61 2 9335 7119; email: [email_address] </li></ul></ul></ul><ul><ul><ul><li>Melbourne: Bo-Mi Kim, Senior Consultant; Tel: +61 3 9838 4137; email: [email_address] </li></ul></ul></ul><ul><li>Middle Market Advisory </li></ul><ul><ul><li>John O’Donnell, Partner and Head of Middle Market Advisory; Tel: 61 2 9335 8009; [email_address] </li></ul></ul>
  31. 31. Presenter’s contact details Edward Kim KPMG Korea + 82 2 2112 0770 edwardkim @ kr. kpmg.co m www.kpmg.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
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