Key Growth Sectors

Korea’s Diversified Economy Is Built on Several Key Pillars…

Information Technology and Electronics: Korea is the most connected country in the world, with an internet penetration rate of 97% and a population particularly fond of online services, mobile applications, and connected devices (IoT). This is a constantly evolving sector, with new hardware and software innovations emerging regularly. Two Korean companies rank among the global leaders in this field: Samsung and LG.
The Railway Industry: The sector is experiencing renewed momentum thanks to policies aimed at revitalizing rail transport and the government’s commitment to promoting “green growth.” Current projects include modernizing the railway network, expanding urban rail systems, and developing the KTX (Korea’s high-speed rail system). Since the opening of the Honam KTX line in the southwestern part of the country on April 2, 2015, the journey from Seoul to Gwangju takes only 1 hour and 30 minutes. The KTX was originally designed based on France’s TGV Atlantique and was later redesigned by Hyundai Rotem, while many components are produced by French suppliers to the SNCF.
The Automotive Industry: Korea is the world’s 6th-largest automobile producer, with more than 4.2 million vehicles manufactured in 2016. Production declined slightly in 2016—a temporary decrease partly due to labor disputes at Kia Motors. The market also offers favorable opportunities for foreign manufacturers, as demonstrated by the success of Renault Samsung.

…and Some Particularly High-Growth Sectors at Present

Robotics: Korea has a strong interest in the robotics sector, and numerous government initiatives are designed to facilitate research and development of new technologies in this field, particularly research into nanomaterials. The French presence is also significant, with the French Tech Hub Korea inaugurated in Seoul at the end of 2015, of which the FKCCI is one of the founding members.
Biotechnology: The sector is driven by the development of new biological medicines and functional foods, as well as significant investment in new medical technologies, particularly through the development of innovation clusters bringing together companies, hospitals, universities, and research laboratories.
Healthcare and the “Silver Economy”: With an aging population, and people aged 65 and over expected to account for 16% of the population in 2020, Korea naturally offers numerous opportunities in the healthcare sector. The number of hospitals and clinics has increased by 32% over the past ten years, and in the medium term, 7 million Koreans are expected to use e-health services, including remote diagnosis, telecare, home treatment, and more.
Tourism: With more than 13 million international tourists in 2017, Korea is the second most visited country in Northeast Asia after China, ahead of Japan and Taiwan. Korean culture, which enjoys exceptional popularity across Asia, attracts many tourists from throughout the continent. Korea is also a popular destination for medical tourism, particularly for healthcare and cosmetic surgery.
Luxury: Despite its relatively small size compared with its neighboring countries, Korea is the third-largest luxury goods market in Asia, after China and Japan. Korean consumers are particularly fond of French products, which alone account for approximately 50% of the market.
Duty-Free: The duty-free market is highly developed in Korea and is the largest in the world. In 2016, it generated USD 10.6 billion in sales, representing an increase of 30.9% compared with the previous year. This figure had been steadily increasing for more than three years and was expected to continue growing. The two largest duty-free operators are Lotte and Shilla, both of which were planning numerous new store openings in Seoul and other parts of the country. Incheon Airport also ranks among the world’s top ten airports in terms of passenger traffic and handles 25% of Korea’s trade by value. Opened in 2001, Incheon Airport was named the world’s best airport every year from 2005 to 2013 according to various rankings, and has continued to expand, with its fourth development phase planned for 2020 and a target capacity of 100 million passengers and 7 million tonnes of freight. Chinese and Japanese travelers are the main consumers, while the purchasing power of Southeast Asian tourists is also expected to continue growing. Incheon Airport opened a new terminal in early 2018 featuring retail spaces for three of the country’s largest duty-free operators: Lotte, Shilla, and Shinsegae, each covering different product categories. With this new terminal and Koreans increasingly traveling abroad (+18.4% in 2017), duty-free product sales were therefore expected to continue growing in the following years.
Cosmetics: Since 2006, the sector has recorded average annual growth of 10%, making Korea the world’s leading market for cosmetics consumption per capita. The country has become a global testing ground, and products that succeed in Korea are highly likely to perform well across the Asian market. Korean products rank among the leaders in the Asian cosmetics market. It is also worth noting that Korea is the country where men spend the most on facial skincare, according to the Korea Health Industry Development Institute.
Textiles and Ready-to-Wear: The Korean ready-to-wear market has been expanding since 2010, with average annual growth of 3.5%. The sector was worth €22.6 billion in 2016. Long considered lower-end compared with European—and particularly French—products, Korea’s ready-to-wear market is undergoing significant transformation, with Korean designers becoming increasingly prominent and appreciated. The market is strongly oriented toward womenswear, which accounts for 42% of the total value of the South Korean ready-to-wear market.
Sports: Korea is a highly sports-oriented country that has hosted numerous major international sporting events, including the 1988 Summer Olympics, the 2002 FIFA World Cup, the 2011 World Championships in Athletics, the 17th Asian Games in 2014, and the 2018 Winter Olympics. Koreans are particularly enthusiastic about football, baseball, golf, hiking, and mountain sports, with around 75% of the country being mountainous. Tennis was also expected to gain significant popularity following the success of Korean player Chung Hyeon, who reached the semifinals of the 2018 Australian Open before losing to Roger Federer. There is therefore strong demand for sports equipment and sporting goods.
Food and Agriculture: Between 2005 and 2011, food expenditure increased by 11% per year, reaching a total market value of USD 73.3 billion. Korea has relatively limited arable land, making it approximately 70% dependent on imports, particularly in sectors such as gourmet food and wine.