You’ve seen the headlines and viral videos out of Korea, but how well do you really know the country?
Here are a few stats and facts to help you understand why Korea today is one of the most competitive economies in Asia and an emerging startup hub.
Density is Destiny
Korea has a population of just over 50 million people, packed into a country about the same land area of Iceland, England (not the entire UK), or the U.S. state of Indiana. Due to the mostly mountainous terrain and far greater opportunity in cities versus the countryside, Koreans tend to stack themselves into large, highrise-filled cities like Seoul. Half the population of the country lives within 50 km of Seoul, with endless satellite cities orbiting the capital.
All of this density gives Korea some advantages that less compressed countries lack. When Korea started wiring itself for the internet in the 1990s, economies of scale meant it could go straight to broadband, bypassing the dial-up era. This advantage has also kept Korea ahead as it has upgraded its wireless networks to 2G, 3G and LTE services covering every cranny of the country, far faster than similarly populated ports of call.
It also means that the country’s entire value chain is compressed into an area that can be traversed in just two or three hours by high speed train or a couple hours more by car.
From Exporting Goods to Exporting Goodness
As of January 2017, Korea has 15 free-trade agreements (FTAs) covering 52 countries; more are in progress. This warm welcome for international partnerships results in Korea consistently placing in the Top 15 Global Economies, with a GDP over USD 1.4 trillion (1 USD = 1135 KRW). One of the key factors to Korea’s economic success is its government’s global focus and support.
Previously ravaged by war, Korea’s economy took off in the 1960s when it established an export-oriented economy that sent products of ever-increasing value all over the world. Trade makes up 70% of Korea’s GDP and numbers continue to rise. Exports were up 13.7% year-on-year as of March of 2017.
Now, Korea exports more than just products. The Korean International Cooperation Agency (KOICA), established in 1991, sends Korean volunteers and development experts around the world to build friendships with developing countries. KOICA’s mission is to foster economic growth and self-sufficiency, helping other nations rise to Korea’s level of prosperity.
No longer a “peripheral” country as some previously believed, Korea has joined the world’s decision-makers. As Korea’s international status rises, so does its sense of duty to the international community.
Started with a Big Bang
It’s nearly impossible to escape the Hallyu wave that has rocked the globe. Hallyu or the Korean Wave first appeared in the mid-1990s after Korean TV dramas (K-dramas) and pop music (K-pop) found widespread popularity in China. In 2013, My Love From the Star gained over 2.5 billion views in China alone, becoming one of the most influential K-dramas of the last five years and jumping Korea’s inbound arrivals to a record 12.2 million visitors.
Since then, the audience demand for K-entertainment has surged. From Asia to Europe to North America and the world, one can’t escape names such as Twice, BTS or Big Bang. Over 1,000 hallyu-related organizations are officially registered with a combined global membership of over 10 million people. PSY’s Gangnam Style still reigns as the most viewed YouTube music video in the world with almost 3 billion views.
Cult followings for K-dramas and K-pop have given rise to the most successful K-industry yet: K-beauty (Korean skincare products). Korean women spend twice as much of their income on beauty products and make-up than Americans, and Korean men spend more on skincare than those in any other country.
This has paved the way for extremely successful Korean startups that specialize in commercializing K-beauty products. The Korean beauty industry has grown at a rate of 9.2%, 3.5 times the rate of the whole economy. Memebox, a K-beauty startup, was, for a time, the fastest growing beauty brand in the world. Yearly sales hit USD 4.7 million by 2013, helping the company attract USD 100 million in investments and a spot in Y Combinator.
Asia’s Unicorn Breeding Grounds
While many people associate Korean tech with global brands like Samsung, LG and Hyundai, innovative startups and SMEs are passionately working to also change the world in significant ways. Korea’s tech giants are recognizing the importance of startups and are heavily investing in breeding and fostering further innovation.
Many successful startup ventures have hatched from Korea’s plentiful incubators and accelerators. Samsung launched Creative Lab (commonly referred to as C-Lab) to incubate ideas from employees. Such programs are becoming more common as Korea continues to set the world’s pace for technological advances and innovation. Naver, Korea’s sixth largest company and biggest web portal, is also pursuing advanced technologies. Earlier this year, Naver committed USD 443 million in related research and development for the next five years, vowing to step up support for creators and small businesses.
This kind of development perfectly matches the highly educated and driven population. Korea’s PISA scores for math, science, and reading are among the highest in the world; Korea also is one of the biggest education investors in the world. On average, Korea spends roughly 7.4% of its GDP on education, which is the third-highest percent spent after Iceland and Denmark. Coupled with heavy investments by family and private donors, this builds an exceptionally strong foundation for academic success.
According to UNESCO, almost 100% of all potential students are enrolled at every level of education and 65% of Koreans earn Bachelor’s degrees or beyond. All this adds up to creating one of the world’s most educated workforces.
The Customer is Always Right
Highly competitive products from homegrown companies such as Samsung and Hyundai, paired with exceptional customer service, have raised what many believe to be the pickiest and most sophisticated consumers in the world. Famous for spouting the world’s fastest internet and one of the highest smartphone market penetrations (which is 97.7% amongst 18 to 24 year olds), Koreans set the bar for global consumer demands.
Many global companies have already acted on the crucial role Korean shoppers play in final product design. L’Oréal, Philips and Nikon are just a few international corporations using Korea as a testing ground for innovative products or for product refinement before mass production. The Korean population and average household income means the perfect sample size every time.
Not only are Koreans picky about product design, they are exceptionally vocal. With 90% of broadband internet penetration coupled with the fastest speeds to date, consumer trends spread quickly and widely. The number of online reviews, viewers and comments are 10 times higher than similar products and blog reviews in the United States.
Such vocal consumers, with high expectations and an eye for detail, cannot be found elsewhere. For companies that want to be competitive in customer service, Korea is the best training ground.
Success is never guaranteed, but in Korea, the odds are built in your favor. Whether it’s exploring the royal palace, discovering new exhibits, or pitching your greatest invention yet, experience it all in Korea.