A look at German-Korean economic ties
October 9, 2015
DW: How significant are German-South Korean trade ties?
Barbara Zollmann: Despite its slowing economic growth, South Korea is now one of the most important buyers of German goods in Asia, ahead of Japan, and right behind China. Germany is also Korea's most important trading partner in Europe
Since the signing of free trade agreements between the European Union and South Korea in 2011, both countries have benefitted from duty-free trading. In 2014, German exports to Korea rose 10.1 percent to $21.3 billion. During the same period, Germany imported Korean products worth around 7.6 billion.
Which German industries in South Korea are doing well, and why?
In recent years, the automotive industry has performed very well. The import of German cars into South Korea has been massive, with more than 140,000 automobiles imported last year alone. By now, nearly 80 percent of all imported luxury class cars in South Korea are from Germany.
In other sectors, German products have also done quite well, for instance, in the fields of medical technology and pharmaceuticals.
How many German companies, or firms using German assistance, are currently operating in South Korea?
Currently there are about 450 such companies operating in South Korea. German firms continue to show interest in the South Korean market, but only in certain areas. Still, there are sectors that could receive a bigger German participation, such as renewable energy.
Why are German entrepreneurs interested in South Korea?
For German entrepreneurs, South Korea is an interesting market for a number of reasons. The market is very receptive to innovative technologies and is open to new trends. In addition, the prevailing positive image of Germany, as well as its insistence on quality, provides us with excellent sales opportunities.
Also, thanks to an increasing number of Korean consumers, the demand for German food and beverages has also risen. It is, therefore, not surprising that South Korea was chosen by Germany as one of the top export markets last year.
How many South Korean companies operate in Germany?
There are some 155 South Korean companies in Germany. Again, there is a potential for expansion, given that South Korea's small and mid-sized enterprises (SMEs) are interested in increasing their presence in Germany and the whole of Europe.
How different are the German and South Korean economic models?
In the 1970s and 80s, then President Park Chung-hee - father of incumbent President Park Geun-hye – launched a five-year plan for economic development. That resulted in the emergence of companies like Samsung, Hyundai and LG, which are now leading companies globally.
However, the transformation from a poor agrarian country into a modern industrial nation was not without problems and contradictions, which demands a change in the current economic approach.
President Park is trying to boost the economy under the slogan of "Creative Economy." She wants to initiate a process of change in South Korea's economic structures and strengthen SMEs. Germany owes its economic success to innovative ideas and a powerful economic model focused on the middle class.
We are following the same route and supporting the efforts of SMEs. In addition, the government is focusing on training the youth given the high level of youth unemployment and the high percentage of university graduates in South Korea.
Barbara Zollmann is the Managing Director of the German Chamber of Commerce in Seoul, South Korea.