Outline of opportunities in South Korea
An overview of one of the fastest growing economies
South Korea is Canada’s sixth largest trading partner, and is one of the fastest growing economies in the world with C$1.81 trillion gross domestic product (GDP) in 2016, up 29% since 2010. South Korea is Canada’s 7th largest merchandise trading partner and our 3rd largest in Asia, after China and Japan. Canada-South Korea two-way merchandise trade is robust, reaching nearly $11.9 billion in 2016. Approximately C$871 million worth of agricultural trade, annually. It builds on our proficiencies and creates a more competitive and integrated agri-food sector.
South Korea is a net importer of agri-food and seafood products. In 2016, the South Korean agri-food and seafood trade deficit was C$28.5 billion with imports valued at C$37.2 billion, and C$8.7 billion in exports. South Korea imported a wide variety of agri-food and seafood products with their top imports being grains, meats, and edible fruit and nuts. The top three supplying countries are United States, China, and Australia. Canada continues to be one of the main agri-food supplying countries to South Korea and has seen little fluctuation in market share over the last few years.
Major sector opportunities in South Korea
Discover more information, strengths, opportunities and considerations for Canadian agri-food and seafood. Read our Asian agri-food market intelligence!
Are you interested in learning about how we select priority sectors?
Sectors were prioritized using a quantitative modeling approach. Using the Global Trade Tracker database, the top 100 products prioritized represented, in 2016, 53% of South Korea’s total imports from the world (excluding the products that Canada does not have the capacity to produce), and 83% of Canada’s exports to South Korea.
In phase one of the modelling approach, all agri-food and seafood products went through a quantitative assessment, where each product was evaluated based on a series of quantitative criteria (i.e. size of market, market growth, Canada’s trade intensity, and tariff reductions), all of which were ranked over ten years of historical trade data.
Our analysis focused on assessing opportunities from a strengths and challenges perspective:
- Strengths were defined by high performance in large South Korean import sectors, and high growth. Other sectors of interest were those involving free trade agreements such as the Canada-Korea Free Trade Agreement (CKFTA), which is expected to result in the elimination of tariffs on 86% of agricultural tariff lines.
- Challenges were defined by the issues that industry might face while trying to take advantage of market opportunities.
In phase two, the products were further categorized into twenty super sectors and were assessed by Agriculture and Agri-Food Canada (AAFC) and ten provincial experts through a survey. The experts assessed the opportunities and identified the challenges that may remain.
All priority agri-food and seafood products are both imported by South Korea and within Canada’s capacity to produce and supply internationally.
Growth through processing
While South Korea is an important market for commodity exports, it is one of the few markets in the world where Canada can grow exports of processed food products, given its wealth and relatively stable economy. As of 2016, Canada supplied C$494 million in processed foods to South Korea, a figure that has been growing steadily since 2012. High performing products include pork products, canola oil, beef, and frozen French fries.
Processed food exports provide an income multiplier; exporters can compete in a growth environment, which is less sensitive to market share and price point. Margins tend to be higher for processed food products. Exporting these products also tends to be less volatile than commodities would be.
Processed foods currently represent 63% of all Canadian agri-food and seafood exports shipped to South Korea.
It is in Canada’s interest to position differentiated, high-value, unique and niche products. The South Korean market offers an opportunity for Canadian businesses to position products that consumers identify with Canada, such as bison meat, cranberries, blueberries, ice wine, wild rice, lobster, maple products. Canadian businesses can take advantage of Canada’s brand and positive image to enhance their product offerings to the South Korean market.
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|Frozen pork meat||14%|
|Fresh pork meat||8%|
|Raw hides and skins of beef||6%|
|Others (frozen French fries, frozen lobster, etc.)||39%|
|Source: Global Trade Tracker – October 2017|
Canada has a significant comparative advantage in the production of many high-quality commodities in the grains and oilseed sectors as well as other areas, such as pulses. Another opportunity would be products ranging from smaller portions of packaged food to smaller, apartment-sized appliances. The growing number of consumers choosing to live alone, often in apartments in urban areas, has increased demand for a variety of products and services catering to singles.
As of 2016, Canada showed a market share of 2.1% of the South Korean agri-food and seafood market. Products where Canada has a strong presence in the processed food sector have been able to maintain strong market presence because competitors are more focused on products where Canada has less interest. There is, however, strong competition in pork, bovine meat, food preparations, and various oilseed products.
|Country||Percent of total Korean processed food imports||Top three processed food exports (% share of country's processed food exports)|
|United States||26.8%||Food preparations (15.0%), frozen beef cuts (9.8%), frozen boneless beef (8.3%)|
|China||12.6%||Frozen vegetables (10.0%), frozen octopus (7.1%), brown rice (6.9%)|
|Australia||9.5%||Frozen boneless beef (38.3%), fresh boneless beef (20.3%), frozen bone in beef cuts (7.2%)|
|Brazil||5.0%||Canola meal (72.2%), frozen cuts of chicken (21.6%), coffee extract (1.1%)|
|Germany||4.0%||Frozen pork meat (39.2%), sugar confectionary (8.4%), baby food (6.7%)|
Opportunities for Canada: Canada-Korea Free Trade Agreement
The Canada-Korea Free Trade Agreement (CKFTA) provides new market-access opportunities for Canadian exporters. The Agreement recognizes the integrated nature of several industries in the North American economy, providing for rules of origin that will allow these products to benefit from preferential treatment in South Korea. This is important to allow Canada to continue competing with other countries exporting goods to South Korea, including the United States and the European Union, competitors that have benefited from lower tariffs since the implementation of the Korea-U.S. and Korea-EU FTAs.
For more information: Canada-Korea Free Trade Agreement.
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South Korea has strict import requirements for many products and Canadian exporters are responsible for determining these import conditions by working with their South Korea importer. However, the Market Access Secretariat (MAS) of Agriculture and Agri-Food Canada is also available to assist in providing export-related information and support. This service offers a single point of contact with the goal of helping the Canadian food industry and businesses reach international markets.
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