KOTRANews 3p

Yangju

Pocheon

June 2017www.kotra.or.kr www.investkorea.org EXPRESS

Introducing Korea's 15p SMEsEconomic Indicators

IndustryEconomicAnalysis

Zone

EventOverview

J-NOMICS:THE GATEWAY TO

A NEW MIRACLE

STRONGERFDI POLICY TO BE

PURSUEDUNDER NEW

ADMINISTRATION

THE LATESTTRENDS AND

PROSPECTS OF KOREA'S FASHION

INDUSTRY

GYEONGGI-DO THINKS

FASHION-FOWARD

KOREA'S LARGEST INTERNATIONAL FOOD INDUSTRY EXHIBITION

SATISFIES PALATES WORLDWIDE

Ombudsman'sOffice

Read on page 10 >>

Korea News 4pTrade News,Government &Policy

5p 8p 12p 13p

6p

KOTRA's Services 14p

Tony Choi Country DirectorPatagonia Korea

ECO-FRIENDLY FASHIONBy creating eco-friendly apparel and workingwith the community to preserve the environment,Patagonia is setting the new industry standard

Greetings From KOTRA

02

Sincerely,

As you may know, Seoul is an exciting city but it can also

be a hectic place to live. Time seems to move much faster

here and sometimes we forget to stop and smell the flowers.

That’s why in May, Invest KOREA (IK) held this year’s Get

to Know Korea (GTKK) program at Jinkwansa Temple.

GTKK is an annual event that helps members of Korea’s for-

eign business and press community, along with their fami-

lies, get familiar with the country’s rich history and culture.

Under the theme ‘Serenity in Seoul’, GTKK participants learned about traditional Buddhist teaching and eti-

quettes. They also had a chance to try a delicious temple meal and engage in conversation with monks over tea.

IK fully recognizes the contribution that foreign-invested companies make to the country on a daily basis, and

we want to make Korea a more comfortable place for investors to call home through such events.

On another note, KOTRA and IK will be holding the Pinpoint Investment Meeting-Future Vehicle on June 8

to promote cooperation and spread awareness of Korea’s future vehicles, a key driver of the upcoming Fourth

Industrial Revolution. Participants will include 100 representatives from Korea’s automobile, auto parts and

vehicle system companies and local governments, as well as 30 prospective investors in the future vehicle

industry. The event will provide participants an in-depth look at the status and trends of the domestic automo-

bile market. It will also host consultation sessions for participants interested in M&A or Korea’s Free

Economic Zones (FEZ). A tour of the country’s automobile clusters and its promising companies will be made

available for those interested.

I ask for your continued support and should you have any suggestions on how we can improve our programs

to better suit your needs, please let us know. Thank you.

Dear Readers,

Yong Kook Kim / Head of Invest KOREA

03

On May 10, the Korea Trade-Invest-ment Promotion Agency (KOTRA) andthe Korea Electric Engineers Association(KEEA) jointly kicked off Power-TechKorea 2017 in Seoul. About 60 foreignbuyers attended the event held on thesidelines of the Global Electric PowerTech 2017, and had business meetingswith 150 Korean SMEs. The buyers con-sisted of mainly electric companies andengineering, procurement and construc-tion (EPC) contractors from 24 countriesinvolved in power generation projects. Inparticular, Indonesia Energy Group andsix other Indonesian firms paid their first

visit to the event. They came to purchaseKorean electric equipment and materialsto carry out the government’s ten-yearplan for the development of power gener-ation systems. The national plan aims todramatically increase the country’s elec-tricity supply by 2025. President DirectorAri Rahim of the Indonesia EnergyGroup explained that he participated inthe event to learn from Korea’s premierelectricity system and to buy a wide arrayof Korean products in power transmis-sion and distribution, as well as renew-able electricity generation.

Seoul Career Vision 2017 kicked offon May 11 in Goyang-si in a bid to pro-mote employment and help the Koreanyouth enter the global market. KOTRAand the Human Resources DevelopmentService of Korea co-organized the two-day event hosted by the Ministry ofEmployment and Labor. About 200renowned multinational companies from13 industries and 18 countries attendedthe job fair. A total of 505 jobs wereavailable in participating companiesincluding Nissan, Amazon Japan,Bloomberg Hong Kong and the Bank ofMontreal.

The event provided comprehensivesupport for those who want to workabroad, from one-on-one mock interviewsessions to a speech contest where jobcandidates could evaluate their capability.

“KOTRA helped some 476 people toland a job overseas, which is a 15.8 per-cent increase from the previous year,”said KOTRA’s CEO and PresidentJaehong Kim. He added that the agencywill further cooperate with a greaternumber of foreign companies in morediverse sectors so that Korean youth canfulfill their potential on the global stage.

KOREAN SMES BREAKINTO POWEREQUIPMENT ANDMATERIALS MARKET INEMERGING COUNTRIES

GLOBAL COMPANIESCOME TO KOREA TOFIND PREMIER TALENT

PROMISING KOREANSTARTUPS VISIT NORTHAMERICA

On May 15, KOTRA opened its KoreanPavilion for promising domestic startupsat OCE Discovery 2017, the largest of itskind in Canada. 10 startups armed withadvanced technologies including Ana-logue Plus (wearable bluetooth headsets),12cm (smart stamps), and Globepoint (VRsoftware), participated in the pavilionjointly run by the Gyeonggi Center forCreative Economy and the GyeonggidoBusiness & Science Accelerator.

Various programs were provided at thisyear’s event to support startups, includingshowcases, business meetings, seminarsand lectures. KOTRA also providedKorean startups with tailored consultations

on attracting investment and signingexport deals to help them make inroadsinto the global market.

Five out of the 10 participating firmswent to the New York-based ERA, arenowned venture incubator, to join men-toring and IR pitching sessions with 20local venture capitalists and accelerators.

Seok-Gi Seon, Executive Vice Presidentfor SME Support of KOTRA, stated thatKOTRA will expand support for greaterengagement of Korean startups in inter-national startup conferences and continueto provide a platform for their globalmarket entry.

KOTRA News

At Export Gateway Biz Plaza 2017held on May 18, KOTRA’s 127 overseasoffices identified global buyers wantingto import the products of Korean SMEs.Communications including video confer-encing between Korean vendors and for-eign buyers were supported by KOTRAso that they could have one-on-one busi-ness meetings at the event. The eventoffered about 1,600 export consultationsessions engaging 661 Korean vendors

and 217 foreign buyers from 51 coun-tries. A total of 30 export deals andMOUs were signed during the event.

In particular, the cutting-edge tech-nologies of Korean SMEs were wellreceived by participating buyers, leadingto an increase in export deals. In theshowcasing rooms, new products basedon technological innovation as well asKorean pop culture were introduced by48 Korean companies.

KOTRA PROVIDESSPRINGBOARD FOR KOREANSMES TO ENTER EXPORTMARKET

04

South Korea will come up with recalland examination standards for autonomousvehicles by 2020 so as to allow everydayoperations of driverless cars.

At a global conference on autonomousvehicles held in Seoul on May 16, KimChae-gyu, Director General of theBureau of Motor Vehicles Policy at theMinistry of Land, Infrastructure andTransport (MOLIT), said the governmentplans to also formulate an insurance poli-cy that can cover self-driving vehicles bythat year.

For autonomous vehicles to become

viable, there should be an ultra-preciseelectronic map system in place, along witha cooperative-intelligent transport systems(C-ITS) and a host of other related stan-dards to cope with accidents, he said.

MOLIT has allowed 19 autonomousvehicles to run the streets in pilot projectsafter being created by companies anduniversities. They include the country'sbiggest auto parts maker Hyundai MobisCo., mobile phone and computer chipgiant Samsung Electronics Co., the coun-try's biggest portal service providerNaver and the Seoul National University.

S.KOREA STEPS UPPREPARATIONS FORAUTONOMOUS CARS

Korea News Trade News

NEW BUDGET GUIDE-LINES FOCUS ON JOBCREATION,INCOMEHIKE

Government & Policy Following the inauguration of PresidentMoon Jae-in on May 10, the Ministry ofStrategy and Finance revised the budgetguidelines for next year to reflect themain policies of the president, who hasput his policy priority on reviving theeconomy through job creation andincreased income. The 2018 budget isexpected to amount to KRW 420 trillion(USD 376 billion), up from KRW 400trillion earmarked for 2017.

The earlier 2018 budget scheme, whichwas made in March, was about the Fourth

Industrial Revolution, as well as improv-ing job creation, tackling the low birthrateand economic polarization.

Under the updated guidelines, the gov-ernment will give preference to govern-ment-led projects that create more jobsand reduce temporary workers, andexpand government spending on finan-cial support programs for needy families.

Also, government expenditure on tack-ling low birth rate and improving air pol-lution will be high on the agenda.

In an event to celebrate the 55thanniversary of diplomatic relationsbetween Israel and South Korea, IsraeliAmbassador to South Korea ChaimChoshen emphasized that strengtheningcollaboration in the fields of military,defense and highly advanced technologywould be beneficial for both countries.

The event in Seoul was also designedto mark the 69th Independence Day ofIsrael, which falls on May 2 this yearunder the Hebrew calender. AmbassadorChoshen expressed hopes that SouthKorea and Israel could further increase

their trade through a free trade agreement(FTA) currently under negotiations.

"Today the trade volume between ourtwo countries is 1.7 billion dollars. I hopethat we will complete soon the FTAnegotiations between us and reach a goodagreement which will not only enable usto increase trade volume but will alsoencourage more investment and coopera-tion in innovation," he noted.

He also cited student exchange,research and development and tourism asother fields for the potential for greaterbilateral collaboration.

ISRAEL AND KOREAHOPES TO INCREASEBILATERAL TRADETHROUGH FTA

A Korean delegation led by Director-General for FTA Negotiations YooMyung-hee of the Ministry of Trade,Industry and Energy (MOTIE) attendedthe 18th round of negotiations for theRegional Comprehensive EconomicPartnership (RCEP) from May 8 to 12 inManila, Philippines.

In this round of negotiations, participat-ing countries exchanged offers on goodsand services in accordance with the resultsof the 17th round of negotiations held inKobe, Japan in March. In addition, thedelegations spurred efforts to accelerate

negotiations for agreements on 12 differ-ent areas of the RCEP including intellectu-al property rights, sanitary and phytosani-tary measures (SPS) and rules of origin.

Officials agreed that the trade pactgives meaningful opportunities for Koreaas well diversify the country’s trade andinvestment markets to include large,promising economies with massivegrowth potential such as ASEAN andIndia. By unifying trade norms and easingnon-tariff barriers in the region, officialsexpect the partnership to help Koreaincrease its export volume.

18TH ROUND OF RCEPNEGOTIATIONS HELDIN MANILA

The inauguration speech byPresident Moon Jae-in on May10 was more than just moving.The new president proclaimed

that all conflicts among regions, incomeclasses and generations will be removed.He also pledged to usher in an era of zeroirregular employment and zero discrimi-nation, creating equal opportunities forall. He promised to make South Korea abetter country by being transparent andfair.

Throughout Moon’s presidential cam-paign, fairness, reform and unity werethree heavily emphasized points in hiseconomic vision for 2017, more widelyknown as ‘J-nomics’. Referring to theConstitution, he pinpointed the dignityand value of human beings (Article 10),the right to work (Article 32) and theright to enjoy a dignifying life (Article34). He also stressed the respect of libertyand creativity of the private sector(Article 119 (1)) and balanced and stablegrowth with equitable income distribution(Article 119 (2)).

After his inauguration, Moon’s firstexecutive order was to launch a specialpresidential committee on creating jobs.This administration, not unlike all theothers, is expected to put employmentpolicies as its top priority. But the differ-ence is very clear this time—the newgovernment is committed to directlybeing involved in allocating resourcesrelated to job creation. The government isexpected to hire more than 10,000 publicemployees, including fire fighters, police-men, public health experts and educationspecialist in just this year alone. 810,000and 174,000 jobs are expected to be cre-ated in the public field during the five-year administration. The work environ-ment in the private sector is also likely toimprove by reducing the maximum legalwork hours.

Amid criticism from various sides,however, we can’t deny that more capa-

ble public workers are desperately neededto make Korea safer and more secure. Inthat respect, his action of creating a widerange of public jobs is more than justi-fied. The president’s first action was topromise to regularize all non-regularworkers at Incheon International Airportby the end of this year. President Moon’saction symbolizes his dedication to abol-ish injustice in Korean society, especiallywhen it comes to employment.

No doubt, the removal of non-regularworkers from Korean economy is one ofthe most crucial and immediate tasks ofthe administration. But the regularizationprocess of public workers requires verycareful planning and preparation. Morechallenging is the regularization of pri-vate sector employees. The governmenthas little authority to forcefully intervenein private hiring practices. This is one ofthe most cumbersome and controversialareas in government policy. No matterhow legitimate it may be, governmentintervention in private sector employmentpractices could easily be deemed uncon-stitutional, causing tense legal battles forboth sides. So, the success of PresidentMoon’s pledges hangs heavily on howquickly and actively the private sectorwill choose to be on the same page. Thisis why his leadership and capability ingetting private sectors to voluntarily fol-low his agenda is so important.

In addition, Korea’s economy wasmore focused on growth and output whilenot paying as much attention to the socialaspects of such rapid growth. MakingKorea an equal country for all of its peo-ple is important not just for the sake offairness but also for efficiency. Removingunfairness and unequal practices generatesocial trust, also known as social capital,which makes an economy more produc-tive and fruitful.

After experiencing the Miracle of theHan River in the 1980s and 1990s, Koreais on the verge of undergoing a new mira-cle caused by the wave of candlelight vig-ils held on October 2016. This timearound, the new economic miracle won’tjust produce shimmering skyscrapers andraise GDP; it’ll be a major transformationfor human welfare and justice.Spearheaded by the new president, alleyes are on Korea as it moves toward abrighter future.

By Professor Se Don ShinDean, Sookmyung Women’s University

Former Senior Economist,Bank of Korea

seshin@sm.ac.kr

* The opinions expressed in this articleare the author’s own and do not reflect

the views of KOTRA

05

J-nomics: The Gateway to A New Miracle

Economic Analysis

06

It was an exciting week for culinaryconnoisseurs, as Seoul Food 2017kicked off from May 16 to 19 in thecity of Goyang, Gyeonggi-do. Seoul

Food is Korea’s largest international foodindustry exhibition and the fourth-largestof its kind in Asia. The four-day eventcelebrated its 35th anniversary, satisfyingthe palate of over 50,000 participantsfrom around the world. The large turnoutwas testament to the growing popularityof Asian and Korean cuisine.

According to the country’s Ministry ofAgriculture, Food and Rural Affairs, theglobal food industry is growing annuallyby 2 percent, and is expected to reachUSD 7.3 trillion in 2019, a significantincrease from USD 6.3 trillion in 2016.And behind this rapid growth lies theKorean food market. Korean food exportshave increased rapidly since 2006 at anannual average rate of 10 percent to aboutUSD 4.1 billion in 2015.

In a bid to help Korean food companiesenter the global market and further boostdemand, Seoul Food 2017 provided anopportunity for 660 overseas buyers and740 promising Korean companies toestablish close network through its one-on-one business meetings, showcases andseminars. Visitors had the chance to wit-ness the latest technological develop-ments in the food industry, as well as tastesome of the hottest food products in

Korea.New to this year’s event was the Global

Food Trend & Tech Conference, whichoffered participants in-depth analyses andmarket strategies. Most notably, the con-ference took a closer look at food innova-tion and the impact of early start ups onthe food industry, the future of the indus-try and recent market trends in Asia. “Theconvergence of pharmaceuticals andbiotechnology has given birth to a widerange of functional foods, and the surgingsingle-person households have causedrapid changes in the food market,” saidKOTRA’s CEO and President Jae HongKim during his opening remarks. “All ofthese factors are transforming the foodindustry into high value-added one.”

The Startup Assistance Seminar was ofparticular interest to SMEs, with some ofKorea’s most successful startups in thefood industry presenting on their experi-ence. One of the presenters was SophieKim, founder and CEO of Market Kurly,a website that delivers high-quality andeco-friendly ingredients to consumers.Since its launch in 2015, the company’shas recorded KRW 3 billion (USD 2.7million) in sales every month. The key toMarket Kurly’s success isn’t just its freshand organic products or fast delivery serv-ice, but also the company’s ability to takefull advantage of mobile technology, bigdata and social media. “About 80 percentof our customers place their order throughtheir cellphones and we’re also utilizing

Korea’s Largest InternationalFood Industry Exhibition

Satisfies Palates Worldwide

Event Overview

Gourmands and global businesses alike gathered atSeoul Food 2017 in a four-day eventpacked with food tasting exhibitions,

business meetings and cooking contests

07

big data to predict the purchasing patternsof our customers", said Kim.

Turnout was also high at the SeoulFood Awards, held on the sidelines ofSeoul Food 2017. Five food items wereselected each in the three categories of‘Healing’, ‘Innovation’ and ‘Dessert’.Award winners were granted diverse ben-efits, including certificates, public relationsupport, on-site special exhibitions andexclusive meetings with buyers. Equally

popular was the Seoul Food CulinaryChallenge, a cooking contest whererenowned chefs and students and gradu-ates from culinary schools competedhead-to-head.

“We prepared a variety of programsthat are more diverse than ever so thatmore Korean food companies can makeinroads into the global market,” said KimDoo-young, Executive Vice President forStrategic Marketing at KOTRA. He also

expressed his future hopes for greater par-ticipation and increased exports ofKorean food suppliers.

By Esther OhExecutive Consultant/

Investment Public Relations TeamKorea Trade-Investment Promotion

Agency (KOTRA)estheroh@kotra.or.kr

On the occasion of Seoul Food 2017, KOTRA Express sat down withone foreign buyer, Mr. Paul J Kim, Director of International Operation& Strategic Sourcing at Purity Wholesale Grocers, Inc. Here’s what hehad to say about the event.

Please introduce us to your com-pany.

Purity Wholesale Grocers was foundedin 1982 in Boca Raton, Florida by JeffLevitetz. We distribute grocery productsand general merchandise in the UnitedStates. We service retail chains like StaterBrothers, Walmart, Safeway and LuckySupermarkets. We’re a market leader indiverting distribution, which essentially isa different angle of distribution that ismuch more cost effective for the retailer.

What companies are you lookingto find at Seoul Food 2017?

This is my third time participating atSeoul Food. I’m looking to see both inno-vative and high-quality products on theinternational market. I’m currently in the

works of talking with a cosmetics compa-ny and a seafood company.

What kind of advantages doKorean products have in the U.S.market?

We mostly distribute Korean productsto stores in the west coast and the eastcoast. Although it is a bit difficult to pro-mote Korean products on a wide scale inthe United States, they are very promis-ing.

The Asian food industry is definitelygrowing and you can see new trendsemerging due to the influence of Koreanculture, like K-pop. Especially in theUnited States, which is a multiculturalcountry, Korean dramas and songs havehelped promote Korea’s products.

Do you have any suggestions forhow Korean SMEs can partner upwith American companies?

I think each manufacturer should cometo the United States to spend a lot of timelearning about the American market sothey can further develop their products. Alot of companies just want to sell theproduct, but they should instead spendmore time on market research because theKorean and American market are verydifferent. They should also conduct prod-uct comparisons with similar items thatare already in the market. I highly adviseKorean companies to see for themselveswhat is going on in the U.S. food industry.

Buyer Interview

08

IntroductionConsumer demands in the fashion market are growing more

complex and diverse by the day due to increased consumptioncaused by higher incomes and rational consumption caused bythe economic recession. Other reasons include the demand forindividuality and personalized fashion, the expansion of life-enriching consumption such as leisure and cultural activities, theincrease in online purchases, the aging population and the shiftof core consumers.

With this polarization, a variety of fashion brands are expand-ing into the global market, from high-end luxury brands likeBurberry and Louis Vuitton, to mid to low-end fast fashionbrands, such as Zara, H&M and UNIQLO, which have a strongadvantage in design, planning and distribution.

While global brands are competing in domestic and overseasmarkets, the competition in global production is intensifyingthrough strengthened production and technological prowess.This is a result of increased foreign investment into China andSoutheast Asian countries. Fashion products are also highly sus-ceptible to seasons and trends, thus making their life cycle shortwhile bringing in continuous demand. This creates sustainablegrowth for the industry as consumers and preferences diversify,so new products are developed to meet the changing needs ofcustomers.

Current state of the industryThe global fashion market has achieved an average annual

growth rate of 4.2 percent between 2009 and 2013, reachingUSD 1.54 trillion in 2013. The market is expected to grow atapproximately 4 percent annually until 2020.

By clothing type, the womenswear market is worth USD638.1 billion, accounting for the largest share in the total marketat 41.5 percent. Menswear accounts for 27.6 percent and chil-dren's clothing for 14 percent. Furthermore, products with newlyconverged technology are growing at a rapid rate. The “smart”trend is not only being developed in clothing which integrates ITtechnology but also in the production and fashion distributionprocess as well.

By region, the fashion market in America is worth USD 560.6billion, accounting for 36.3 percent of the total fashion market,while Europe accounts for 33 percent with USD 507.6 billion,and the Asia Pacific region for 27.2 percent with USD 417.8 bil-lion.

By country, the market size of the United States stands atUSD 445.7 billion (29 percent), China at USD 194.1 billion(12.6 percent), Japan at USD 116 billion (7.6 percent), Russia atUSD 82.7 billion (5.4 percent) and South Korea at USD 31.8billion (2.1 percent).

In Korea, the domestic fashion market continues to growdespite uncertainties like sluggish domestic demand. Thisgrowth is attributed to the rise of online and mobile shopping,the diversification of new distribution channels and the diversifi-cation of consumers. The focus of the fashion market is alsoshifting from the sportswear market to the casual wear market,while casual wear, menswear, womenswear and underwear areshowing consistent growth.

Production in the domestic fashion industry increasedbetween 2010 and 2014 because of the continued growth indomestic demand and export volume. However, in the shortterm, production volume has been on the decline since 2012because of worsening domestic production conditions andweakening demand for locally produced goods.

As a result, ever-changing local fashion trends, the continuedgrowth of fast fashion brands and increased exports of hallyu(Korean Wave) content serve as positive factors for domesticproduction. But production has somewhat dwindled as thegrowing demand in the domestic market is involved more withimported products than domestic ones.

Looking at the changes in the production structure of fashionapparel, the share of shirts/workout clothes increased the most

Industry

U.S.A Europe

Brazil

Mexico Americas560.6bn

Asia Pacific417.8bn

Russia

ChinaJapan

Korea

IndiaSingapore

Taiwan

Australia

445.7bn 507.6bn82.7bn

194.1bn

18bn3.3bn

7.9bn

19.6bn

116bn

31.8bn

8.4bn

50.5bn

Data: Ministry of Commerce, Industry and Energy, Report on the 2014 Korean FashionMarket; requoted. (Source: Market Line)

Status of Fashion Market by Region (2013)

The Latest Trends andProspects of Korea’s Fashion Industry

09

with 28 percent of the total production in 2014. This is due tothe rise in the number of consumers who are interested in leisureand health, as well as changes in lifestyle. In addition, theboundary among the types of clothing such as casual style insportswear and outdoor wear has blurred.

While the export of fashion apparel increased by 4.4 percentsince 2010 because of the rising popularity and recognition ofKorean brands brought about by hallyu and improved productcompetitiveness, clothing materials like textiles and fabrics,showed a downward trend.

The increased export volume of such fashion apparel wasattributed to export growth in countries influenced by hallyusuch as Vietnam (24.2 percent), Taiwan (16.0 percent),Indonesia (10.8 percent), Myanmar (9.34 percent) and China(3.2 percent).

In particular, exports to Japan, which accounted for the largestportion of fashion apparel in 2010, grew by 1.5 percent between2010 and 2016, while exports to Vietnam surged by more than20 percent during the same period.

Foreign Direct Investment in the industryForeign direct investment (FDI) in the Korean fashion indus-

try has somewhat slowed down since 2013 but remains stable.Unlike in the past when global fashion companies preferredJapan or Hong Kong as their base for entering the Asian market,they recently preferred to go straight to the Korean market forChinese and Korean consumers.

FDI, however, tends to be concentrated more on the distribu-tion of global fashion brands than on apparel manufacturing,and it mainly includes joint ventures with global fast fashionbrands such as UNIQLO and Zara. Burberry and Gucci areamong the luxury brands that have directly entered the Koreanmarket to benefit from the sustained growth in the Korean fash-ion industry and attract foreign tourists.

Locational competitivenessThe most concentrated locations for the fashion industry in

Korea include Seoul, Incheon and Gyeonggi-do, which are lead-ing the trend and distribution sector and possess the largest con-sumer market. The knitting industry is concentrated in the north-ern part of Gyeonggi-do and Jeollabuk-do.

The northern part of Gyeonggi-do is the world's top knittingproduction area, and accounts for about 40 percent of the worldmarket for high-quality knitwear (golf wear, sportswear/leisurewear, etc.), while accounting for about 90 percent of the domes-tic knitting production. It is also the largest consumer of yarn,consuming 60 percent of the locally produced yarn.

Jeollabuk-do is home to various producers, from the spinningindustry to the sewing and clothing manufacturing industry. Italso has a production structure mainly based on natural fiberssuch as cotton yarn, knitting yarn and sewing, among others. Interms of products, knitwear (which mainly includes underwearand kids wear) is the mainstay of the textile industry in theregion.

In Busan, large-scale apparel companies, such as Parkland,Indian, Colping and Greenjoy, operate a sewing factoryequipped with automation facilities. Facilities for OEMs arelocated within a 50 km radius of Busan. The city's geographicalcharacteristics, its proximity to the sea, ports and an internation-al airport allow the fast introduction of global trends, givingBusan strong logistics competitiveness and ease in promptlyresponding to global demands. It has an abundant source oftechnology personnel on standby and new skilled workforcewith its universities.

Industry outlookThe global fashion apparel market volume in 2013 was esti-

mated to be worth USD 1.33 trillion, and it is expected to showan annual growth rate of about 4 percent by 2020. As the marketboundaries between countries fall and the online-to-offline(O2O) business strategies link online and off-line shopping, theglobalization and centralization of the supply chain from pro-duction to distribution will accelerate.

The Korean fashion industry is also expected to grow steadily.The country possesses world-class synthetic fiber materialscompanies and infrastructure, and has the potential to utilizeconvergence technologies such as information technology andnew technology.

As fashion apparel shifts to a small-quantity production struc-ture, the markets for fashion apparel are expected to be diversi-fied and converged with the growth of highly functional, design-oriented and smart clothes. Meanwhile, the increasing demandfor high performance and eco-friendly textiles and the diversifi-cation of apparel consumption are expected to be a driving forceof the fashion market in the future.

By Im-Ja RheeResearch Fellow

Korea Institute for IndustrialEconomics and Trade (KIET)

ijrhee@kiet.re.kr

Clothing Type

Casual wear

Sportswear

Shoes

Menswear

Womenswear

Bags

Underwear

Kids wear

Fashion market

13.81

7.32

6.47

4.82

3.77

2.6

2.14

1.27

42.21

2016 Estimate(in KRW trillion)

5.4%

-7.9%

-5.9%

11.8%

2.8%

3.6%

13.6%

8.9%

1.8%

Year-on-Year

6.4%

-2.3%

-1.5%

6.3%

7.1%

1.9%

10.4%

0.8%

3.5%

Year-on-Year

13.81

7.32

6.47

4.82

3.77

2.6

2.14

1.27

42.21

2017 Prospect(in KRW trillion)

Data: Korea Federation of Textile Industries (KOFOTI)

Fashion Market Scale in 2016 and 2017

10

When it comes to beingfashion-forward, outdoorclothing brands usuallydon’t come to mind. For

many years, outdoor performance apparelhas been associated with being durablebut bulky, sacrificing fashion for func-tionality. But Patagonia is breaking downthese stereotypes. Founded in 1973 inCalifornia by rock climber YvonChouinard, this American-based apparelbrand caters to both traditional and trendyoutdoor adventurers. And if there’s onecountry that knows anything about trends,it’s Korea. So it comes as no surprisewhen the company opened up its Koreabranch in July of 2016.

With Koreans becoming more healthconscious, “well-being” products andexercise apparel are always in highdemand. Although Korea’s overall fashionmarket has fluctuated in recent years, theoutdoor clothing industry has shown rela-tively steady growth. Thanks to suchdemand, Korea boasts the second largestoutdoor goods market in the worlddespite the country's diminutive size.

“Korean consumers are very interestedin outdoor culture,” says Tony Choi,Country Director of Patagonia Korea.“Awareness of environmental issues isalso growing. Patagonia’s philosophy ofcreating environmentally-friendly anddurable products combined with Korea’sinterest in outdoor activities meshedtogether really well.”

In a nutshell, Patagonia’s vision is tomake high-quality apparel without harm-ing the environment. Most notably, ittransforms used plastic water bottles intopolyester fabrics and uses organic cottonfree of pesticide or chemicals. The com-pany also works closely with the localcommunity, including grassroots groupsto protect the environment. Last year, thecompany launched the ‘Worn Wear’campaign, fixing worn out shoes andfrayed clothes for customers to minimizethe effect that unnecessary spending hason the environment.

But it’s not just nature that Patagonia ispassionate about. The company knowswell that Korean consumers are heavilydriven by trends. To meet the ever-chang-ing demands, Patagonia released anexclusive line of limited edition productsfrom its ‘Pataloha’ (a combination of thewords 'Patagonia' and 'aloha') collectionfor the Korean market. Due to its deft eyefor style, Patagonia recorded a 15 percentgrowth in the first quarter of this yearalone. On average, each of the 31 stores

in Korea saw sales rise by 20 percent.Following an intricate step-by-step strate-gy, Patagonia opens three to five storesevery year. In 2017, the company plans toexpand the total number of stores to 35.

Another reason for Patagonia’s successin Korea is the appeal it has to consumersfrom all walks of life. Choi says that mostKorean consumers used to buy outdoorproducts related to light activities likehiking. The trend is changing, as Koreansare showing a growing interest in moreextreme sports, like mountain biking,climbing and surfing. And to meet such

Eco-Friendly Fashion

By creating eco-friendly apparel and working withthe community to preserve the environment,

Patagonia is setting the new industry standard

Interview

Tony ChoiCountry DirectorPatagonia Korea

11

shifting demands, Patagonia has expand-ed its product line to include swimwear,skiwear, sundresses and underwear. Fromsocks and sweatshirts to wetsuits andwaders, it’s clear that Patagonia Korea isredefining the outdoor apparel industry.

Like any company entering unchartedterritory, there were a number of obsta-cles facing Patagonia when it initiallycame to the Korean market. “Korea’s out-door product market was stagnant whenwe first tried to enter. And as a new brandin Korea, operating a stable business wasa bit of a challenge. But despite all thesefactors, Patagonia has become the onlyoutdoor apparel brand that has shownpositive growth,” says Choi. “Just likethere are so many different cultures, thereare also many different markets. To be a

successful company, you need to imple-ment a flexible business strategy thattakes into consideration such diversity.”

Although an internationally recognizedbrand with a global network, Patagonia’sKorea office works closely with localbusinesses to promote its fashionable yetfunctional apparel. With the exception ofmanufacturing, all other aspects of busi-ness operation and management are con-ducted with domestic companies. Choiemphasizes that Patagonia actively planson establishing long-term partnershipswith them to help Korea’s economygrow.

When asked about the company’svision beyond Korea, Choi says Patago-nia has already entered the Japanese andAustralian market. It is also actively

doing business in other Asian countrieslike China, Hong Kong and Taiwan.Considering that Asia makes up a signifi-cant portion of the global market, it planson actively engaging and investing in theAsia region. And with its unwaveringpassion for creating green fashion,Patagonia Korea is sure to help the rest ofthe fashion industry clean up its act.

By Esther OhExecutive Consultant

Investment Public Relations TeamKorea Trade-Investment Promotion

Agency (KOTRA)estheroh@kotra.or.kr

Pinpoint InvestmentMeeting-Future Vehicle

In a bid to promote investment andspread awareness of Korea’s future vehi-cles, a key driver of the upcoming FourthIndustrial Revolution, KOTRA will holdthe Pinpoint Investment Meeting-FutureVehicle on June 8 at the InterContinentalSeoul COEX in South Korea. Participantswill include 100 representatives fromKorea’s automobile, auto part and vehiclesystem companies and local govern-ments, as well as 30 prospective investorsin the future vehicle industry.

The event will provide participants anin-depth look at the status and trends ofthe domestic automobile market, and dis-cover new modes of technological coop-eration. It will also host consultation ses-sions for participants interested in M&Aor Korea’s Free Economic Zones (FEZ).A tour of the country’s automobile clus-ters and its promising companies will bemade available for those interested.

Astana Expo 2017From June 10 to September 10,

KOTRA and MOTIE will jointly operatethe Korea Pavilion at Astana Expo inAstana, Kazakhstan. Under the theme

‘Future Energy, Smart Life’, the pavilionseeks to promote Korea as an innovativecountry with technological prowess in thefield of future energy. It will also show-case some of Korea’s most advancedtechnologies in the areas of wind power,solar panels and energy storage systems.

Astana Expo 2017 is an internationalexposition which aims to create globaldebate on future energy among countries,nongovernmental organizations, compa-nies and the general public. The expo willshare knowledge on solutions tacklingsocial, economic and environmental chal-lenges. Approximately 5 million peoplefrom over 100 countries are expected toattend.

Korea Brand & EntertainmentExpo 2017

On June 22 to 24, Korea Brand &Entertainment Expo (KBEE) 2017 will beheld in Taipei’s World Trade Center. Theevent seeks to foster cooperation betweenChinese-speaking countries and Korea inthe fields of cosmetics, fashion, house-hold goods and other highquality prod-ucts related to the Korean Wave. Now inits 8th year, KBEE will provide the per-fect opportunity for interested companies

to see the hottest trends in Korean culturalsector. This year’s event in particular willlook at the convergence of new mediaand marketing through product place-ment. Over 400 Chinese companies and80 Korean companies will participate.

Global Mobile Vision 2017Organized by KOTRA and hosted by

MOTIE and the Ministry of Science, ICTand Future Planning (MSIP), GlobalMobile Vision 2017 (GMV) will kick offfrom September 13 to 15 in the SouthKorean city of Goyang.

As South Korea’s leading ICT industryexhibition and business meeting event,this year’s GMV will focus on cutting-edge technologies and businesses thatwill lead the Fourth Industrial Revolution.Since its launch in 2008, GMV hasplayed a vital role in the global ICTindustry as an international marketplacefor both foreign and domestic companies.Along with large-scale exhibition andconferences showcasing mobile and IoTtechnology, one-on-one business meet-ings and startup events like GMVCreative Startup Korea will take placethroughout the three-day program.

Upcoming KOTRA Events

12

With President Moon Jae-in’s administration havingjust launched on May 10,foreign investors might be

wondering what will be the majorchanges to South Korea’s social and eco-nomic policy—particularly those relatedto foreign direct investment (FDI) policy.

Moon has not yet appointed all of hisnew cabinet members and we cannot tellexactly how different the new policies aregoing to be. It seems that there may besome changes in priority among the vari-ous policies.

During the election campaign, policyadvisers in each of the presidential elec-tion camps disclose a package of theirpolicy promises. Once their candidate iselected, however, they tend to make rea-sonable policy adjustments in order toaccommodate better plans proposed byother election camps.

The new government will implement agood variety of policies in the areas ofdiplomacy, security, welfare and theeconomy. These four areas are all impor-tant for the nation as a whole. But ordi-nary people pay more attention to theissues of welfare and the economybecause these issues critically affect theireveryday life. So the new administrationtends to make greater efforts to design thebest possible social policies as well aseconomic policies.

Social policy refers to guidelines, prin-ciples and legislation that affect the livingconditions of the people. These policiesaim to meet human needs such as educa-tion, health care, housing, pensions, childprotection, urban development and crimi-nal justice, among others. Compared tothe previous governments, the currentgovernment places a heavier weight onsocial policy as it seeks to improve thequality of life for ordinary people. Socialpolicy is usually pursued by the non-eco-nomic ministries.

Economic policy, meanwhile, refers to

government actions undertaken in theeconomic field. It involves changing tax-ation and spending, money supply andinterest rates, trade and market liberaliza-tion. Economic policy aims to attain fiveeconomic goals—three macroeconomicgoals and two microeconomic ones. Themacroeconomic goals refer to fullemployment, price stability and sustainedeconomic growth. The microeconomicgoals are production efficiency and equi-table distribution.

The government should bear in mindthat the pursuit of one goal often restrictsattainment of other goals. For instance,policies that promote the microeconomicgoal of production efficiency by tighten-ing up the hiring of new workers mightobstruct the attainment of full employ-ment which is a macroeconomic goal. Bythe same reasoning, policies that improveanother microeconomic goal of incomedistribution might interfere with theattainment of higher growth and greateremployment.

Again compared to previous govern-ments, the new government would placegreater weight on equitable income distri-bution. So there would be some readjust-ments to the weights assigned to the fiveeconomic goals. But steady growth andgreater employment should not be put onthe back burner. It would need to strike abalance by setting proper targets for thefive economic goals.

These days Korea’s FDI policy hasbeen drawing the world’s attention.International organizations such as theWorld Bank Group, the IMF and theUNCTAD have long urged that develop-ing countries ought to attract foreigndirect investment because it expeditesindustrialization and enhances theirgrowth potential. They quote Korea as asuccess story for FDI and advise that theforeign-investment hosting countries pro-vide incentives to the foreign companiesthat bring in advanced production tech-

nology. Recently even the advancedcountries are trying to attract FDI toincrease domestic employment.

It may take a while before the new gov-ernment reveals its entire policy package.So far as economic policy is concerned,basic economy policy would not be drasti-cally different from what they used to be.Senior economic advisers to the presidentare known to be top-notch economistswho have been trained in prestigious uni-versities in the United States. They fullyunderstand the merits of foreign directinvestment so the new government is verylikely to strengthen FDI policy.

Based on these compelling reasons, thenew government would emphasize FDImore than ever before. Therefore, FDIpolicies should be strengthened toimprove the investment environment.More effective FDI incentives, properreforms and strengthened deregulationwill have to be pursued.

By Dr. Jeffrey I. KimForeign Investment Ombudsman

jeffikim@kotra.or.kr

Stronger FDI Policy To Be PursuedUnder New Administration

Ombudsman's Office

The Foreign InvestmentOmbuds-man and his griev-ance resolution body collectand analyze information con-cerning problems facing for-eign firms, request coopera-tion from relevant governmentagencies, propose new poli-cies to improve the foreigninvestment promotion systemand carry out other necessarytasks to assist foreign-investedcompanies in resolving theirgrievances.

Who is the Ombudsman?

The 2017 Fall Winter Hera SeoulFashion Week attracted some280,000 visitors, attesting toSouth Korea's burgeoning fash-

ion industry. Coupled with the KoreanWave, the country's innovative approachto fashion has taken the world by storm.As a future growth engine tapped by theKorean government, the country's appareland textile industry promises to growtremendously in the coming years.

At the heart of the industry's incubationprocess is Gyeonggi-do. Literally translat-ed into "the area surrounding the capital,"Gyeonggi-do is located next to thenation's capital of Seoul. It is also themost populous province in South Koreawith more than 12 million people as of2014.

With the recent shift of the country'sfocus from heavy manufacturing to softpower industries like service and retail,Gyeonggi-do has stepped up to the task ofbecoming the hub of the textile industry.Over 2,800 textile-related factories arelocated in the province, which produces59 percent of Korea's textile exports and83 percent of the country's knit exports.

Yangju-siLocated northeast of Gyeonggi-do,

Yangju-si is poised to become the meccaof the textile industry. Tapped to becomethe base of the textile industry complexby the government, Yangju broke groundfor the G-Textopia in 2011 and is nowhome to the Korea High Tech TextileResearch Institute (KOTERI), the TextileStartup Business Incubation Center, theGreen Knit Research Center and theGyeonggi Textile Center (GTC).

The G-Textopia's KOTERI is a uniquegovernment organization fully involvedin everything from textile manufacturingto distribution. It is the only institute of itskind to have a research and development(R&D) sector. The institute is especiallyknown for its Cold Pad Batch (CPB), an

innovative eco-friendly dyeing processand the world's first liquid ammoniaprocess technologies to produce knit tex-tiles. KOTERI signed a memorandum ofunderstanding (MOUs) with major textileand apparel companies like KolonFashion Material and Huvis, and morerecently with Korea Mingbao Textile andCHTC HELON.

The GTC was also established to pro-mote the provincial Gyeonggi textile andapparel industry in the United States fol-lowing the Korea-US free trade agree-ment. Its operations and services includetrade promotion, new product sourcingand development, vendor introductionand consultation. It also set up an office inLos Angeles to further promote trade.

Thanks to its ideal business environ-ment, Yangju-si is already teeming withtextile, apparel and textile manufacturingcompanies, including Daejin Textile Co,Dowel International Co. Ltd., Elzion,Heasung Textile, Kwang Il Textile Co.Ltd., Nam Kwang Textile Co. and YoungShin Textile Co.

Pocheon-siBordering Yangju is the mountainous,

up-and-coming city of Pocheon. Home toroughly 2,166 small and medium-sizedmanufacturers of textiles and metal prod-ucts, including Hyesung KnittingMachinery Co., Ltd., Seong Shin TextileCo., Ltd. and Samheung Co., Ltd.,Pocheon is quickly developing into anindustrial powerhouse.

The city is currently focusing on devel-oping industrial complexes for the fiberand furniture industries, including theJangja Industrial Complex and thePocheon Eco Development Co. Ltd.(Yongjeong Industrial Complex), both ofwhich are expected to revitalize the localeconomy by forming a system of knittingand dyeing factories, deregulation andincentives. The Jangja Industrial Complexalone is expected to produce an economic

effect of KRW 166.5 billion (USD 148.02million) and a USD 167 million increasein exports. The provincial government isalso working to further deregulate andamend ordinances to develop a morebusiness-friendly ecosystem.

In 2015, Pocheon also landed the K-Design Village Project, a joint operationwith the Gyeonggi Province, the Ministryof Land, Infrastructure and Transport andthe Korea Fashion Designers Association.The project, a combination of a 500,000 ㎡industrial complex and a 300,000 ㎡ park,will foster the region's textile and furni-ture industry as well as promote tourism.A total of KRW 700 billion (USD 622.3million) will be invested in the project,including KRW 200 billion (USD 177.8million) in government spending andKRW 500 billion (USD 444.5 million) inprivate capital. Pocheon is currentlyfocusing on creating transportation net-works by creating and expanding roadsand is expected to be completed by theyear 2022.

Gyeonggi-do Thinks Fashion-Foward

Zone

Yangju

Pocheon

13

KOTRA's Services

Find an easier and cheaper way to import quality productsfrom Korea through KOTRA’s FTA Support Center!

14

Did you know?

About KOTRA’s FTA Support CenterTo help global buyers take full advantage of

Korea’s free trade agreements, KOTRA has nine FTASupport Centers—seven in China (Beijing, Shanghai,Qingdao, Chengdu, Guangzhou, Dalian, Tianjin) andtwo in Vietnam (Hanoi, Ho Chi Minh). We plan tolaunch two more in Bogota, Colombia in June andJakarta, Indonesia in September 2017. The new cen-ters will support companies in their utilization of theKorea-Colombia FTA and the Korea-ASEAN FTA.

FTA, a gateway to successFTA reduces tariffs and enhances the price com-

petitiveness of your products. It also opens up theservice market and contributes to trade facilitation,dramatically improving business environments in FTA

partner countries. Factoring in the impact of FTAs isnow mandatory, and not an option, in formulatingyour business strategies. Let KOTRA be a reliable part-ner connecting you to Korea’s FTA network.

KOTRA’s full-fledged supportKOTRA’s FTA Support Center provides counseling

services not only for Korean companies but also forlocal buyers to help you tackle non-tariff barriers andmake the most of Korea’s free trade agreements.We offer a full range of support, from issuing a certifi-cate of origin to addressing any grievances in thecustoms and certification procedures. You can alsoapply for seminars and on-site counseling services.Please feel free to contact a center near you for fur-ther information.

Contact Information

LocationBeijing

ShanghaiQingdaoChengdu

GuangzhouDalianTianjinHanoi

Ho Chi MinhBogota

Telephone(86-10) 6410-6162(86-21) 5108-8771(86-532) 8388-7931(86-28) 8672-3501(86-20) 2208-1600

(86-411) 8253-0051~3(86-22) 2329-6631~3

(84-4) 3946-0511(84-8) 3822-3944(57-1) 637-5099

Emailpekktc@kotra.or.kr

shanghai@kotra.or.krqd_kotra@daum.net

ctuktc@kotra.or.krcanton@kotra.or.krkotradlc@kotra.or.kr

tianjin@kotra.or.krkotrahanoikbc@gmail.com

kotrasgn@hanmail.netktcbog@kotra.org.co

Homepagewww.kotra.or.kr/KBC/beijing

www.kotra.or.kr/KBC/shanghaiwww.kotra.or.kr/KBC/qingdaowww.kotra.or.kr/KBC/chengdu

www.kotra.or.kr/KBC/guangzhouwww.kotra.or.kr/KBC/dalianwww.kotra.or.kr/KBC/tianjinwww.kotra.or.kr/KBC/hanoi

www.kotra.or.kr/KBC/hochiminhwww.kotra.or.kr/KBC/bogota

15

April 20171,132.7

20121,126.9

20131,095.0

20141,053.2

20151,131.5

20161,160.5

KRW-USDForeign Exchange Rate

GDPNominal (USD million)

PPP (USD million)GDP Growth Rate

(Y-o-Y) (%)

201698,677.4

March 20175,931.8

201250,835.0

201381,148.2

201484,373.0

2015105,939.6

Balance of Current Account

(Unit: USD million)

(Unit: USD)Source: The Bank of Korea, April 2017

(Unit: USD million)

(Unit: KRW)

Foreign TradeExportsImports

Trade Balance

201527,10536,390

201627,539 37,740

201729,115 39,447

201427,811 35,211

GDP Per CapitaNominal

PPP

2016495,426 406,19389,233

April 2017183,092154,21828,874

2012547,870519,58428,285

2013559,632515,58644,047

2014572,665525,51547,150

2015526,757 436,49990,258

20151,382,4001,749,804

2.6

20161,411,0001,822,162

2.8

20121,222,4001,611,273

2.3

20131,305,4001,644,777

2.9

20141,411,0001,706,689

3.3

Source: The Bank of Korea, April 2017

Source: The Bank of Korea, April 2017

Source: International Monetary Fund, April 2017

Source: Korea International Trade Association, April 2017

Address: 2F, 385, Jong-ro,Jongno-gu, Seoul, South KoreaTel: +82-(0)70-4457-9322/

070-4457-9396Fax: +82-(0)2-2233-6387E-mail: alicemartha@naver.comWebsite: en.alicemartha.com

Alice Martha

Contact Info:

Alice Martha is a brand synonymous with the finest quality products forwomen. Since its launch in 2014, the company has quickly been recognized as aleader in the global leather handbag industry. By successfully utilizing both theonline and offline marketing strategies, it has clinched major distribution con-tracts with both domestic and international companies, especially those in Chinaand Europe.

Alice Martha is currently preparing to export its high-quality bags to Australiaand Hong Kong. Most notably, it participated in the 2017 Hong Kong FashionAccess Exhibition, a semi-annual international fashion trade fair for bags, shoes,leather goods and a wide selection of accessories. Additionally, it won an awardat the ‘Best of APLF Awards’ at APLF, the world’s leading leather trade show.

Alice Martha’s extensive product line is also available through major fashionretail stores, including Lotte Department Store.

Economic Indicators

Introducing Korea's SMEs

Every month, KOTRA Express introduces one Korean SME that seeksto expand its network by working with foreign partners. In the Juneissue, we take a look at one of Korea’s most promising fashion com-panies.

Operated by KOTRA, buyKOREA isKorea's premier e-marketplace. If youwant to find out more about the prod-ucts mentioned above, please visit

WEB VER. IOS VER. ANDROID VER.www.buyKOREA.org

KOTRA Worldwide

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KOTRANews 3pKOTRA & Invest KOREA

December 2016www.kotra.or.kr www.investkorea.org EXPRESS

Introducing Korea's 15p SMEsEconomic Indicators

Michael Grund Managing Director Merck Korea

IndustryEconomicAnalysis

Zone

EventOverview

WHAT DOES A TRUMPVICTORY MEAN FOR

KOREA?

KOREA’S FOREIGNINVESTMENT

OMBUDSMAN SYSTEMINTRODUCED AT

WORLD BANK GROUPFORUM 2016

TRENDS ANDPROSPECTS OF

KOREA’S AI INDUSTRYIN 2017

POHANG CITY, THEDRIVER OF ALL

THINGS SCIENCE

INTERNATIONALBUYERS AND KOREAN

COMPANIES FORGENEW PARTNERSHIPS AT

GP KOREA 2016

Ombudsman'sOffice

Read on page 10 >>

AACCCCEELLEERRAATTIINNGGDEVELOPMENT

Korea News 4pTrade News,Government &Policy

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For Merck,Korea isn’t just a place for business—

it’s a place forstrong collaboration andinnovation

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