Exporter Guide 2012

An Expert's View about Agriculture and Animal Husbandry in South Korea

Posted on: 24 Nov 2012

Korean imports of American food and agricultural products are on track to reach $6.8 billion.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 10/29/2012 GAIN Report Number: KS1246 Korea - Republic of Exporter Guide 2012 Approved By: Michael J. Fay, ATO Director Prepared By: Sangyong Oh, Marketing Specialist Report Highlights: South Korea is the fifth largest export market for American agriculture. Korean imports of American food and agricultural products are on track to reach $6.8 billion, down over 10 percent from 2011, mainly due to a sluggish local processing sector. Nevertheless, the United States should continue a solid export growth in the consumer-oriented product segment of the market, and as a result is expected to remain the leading supplier with a 22.4 percent market share. The Korea-United States Free Trade Agreement, implemented in March 2012, coupled with anticipated recovery trend of the Korean economy should generate greater export opportunities for American suppliers in the coming year. Post: Seoul ATO Author Defined: TABLE of CONTENTS SECTION I MARKET OVERVIEW SECTION II EXPORTER BUSINESS TIPS A. Where to Start Market Research Establishing Korean Partners Meeting Local Tastes B. Local Business Customs & Practices Initial Communication Relationship Building & Social Networking Language Name Cards Meetings Evening Gatherings Dress Code Resolving Conflicts C. General Consumer Tastes and Trends SECTION III IMPORT FOOD STANDARDS & REGULATIONS SECTION IV IMPORT PROCEDURES A. Customs Clearance B. Documents Generally Required by the Korean Authority when Food is Imported C. Import Inspections D. Tariffs and KORUS FTA E. Sample Shipments F. Trademarks and Patents SECTION V MARKET SECTOR STRUCTURE AND TRENDS A. Supply Chain and Product Flow B. Retail Food Sector C. Hotel, Restaurant and Institutional (HRI) Food Service Sector D. Food Processing Sector SECTION VI KOREA’S AGRICULTURAL & FOOD IMPORTS A. Agricultural & Food Import Statistics B. Best High-value, Consumer-oriented Product Prospects SECTION VII KEY CONTACTS AND FURTHER INFORMATION A. USDA/FAS Offices in Korea B. USDA/FAS’ On-line Supplier List C. Strategic Trade Regional Groups (STRG) D. Additional Sources of Information & Support APPENDIX KEY SOCIO-ECONOMIC INFORMATION OF KOREA Disclaimer This report was prepared by the Agricultural Trade Office of the U.S. Embassy Seoul, Korea. Korean government policy and regulation are subject to change and revision. Please check for updated reports and verify Korean import requirements with your Korean business partners to ensure that you have the most up-to-date information prior to shipping. FINAL IMPORT APPROVAL OF ANY PRODUCT IS SUBJECT TO THE IMPORTING COUNTRY’S RULES AND REGULATIONS AS INTERPRETED BY BORDER OFFICIALS AT THE TIME OF PRODUCT ENTRY. SECTION I MARKET OVERVIEW South Korea (herein after referred to as Korea) was the world’s 13th largest economy in 2011 with a GDP of $1.57 trillion and per capita GDP of $32,100 on a purchasing power parity (PPP) basis (CIA World Factbook). Despite the impact of the global economic crisis since 2009, the Korean economy has maintained a relatively stable growth partly due to the strong performance of its export industry. The International Monetary Fund has recently forecast that the Korean economy would grow 2.7 percent in 2012 and 3.6 percent in 2013. Korea is the fifth largest export market for American agriculture. Korea by nature relies heavily on imports to fulfill its food and agricultural needs. Korea is about the size of the state of Indiana, and over 70 percent of its land is not suitable for commercial farming. Much of the limited farm land is dedicated to rice production. Its 50 million population makes Korea the world’s third most densely populated country, and almost 50 percent of the population resides in the Seoul metropolitan area. Increased consumer wealth coupled with diversified taste has expanded the market for imported products in Korea over the years. Korea’s imports of agricultural and food products from the world for 2012 are forecast to total $30 billion, down 2.5 percent from the previous year. Imports from the United States are also forecast to see a decline mainly due to slow down of local processing industry. Nevertheless, the United States should continue a solid export growth in the consumer-oriented product segment of the market, and as a result is expected to remain the leading supplier with a 22.4 percent market share (or $6.8 billion in value) in 2012. Current consumption trends in Korea reflect important on-going socio-economic changes, which includes retirement of baby boomers, more women in the workforce, downsizing of the family, well- traveled younger generation, urbanization, information technology, and inflation pressure. As a result, products and businesses that offer good value, high quality, health or nutritional benefits, new taste, and convenience are showing a strong growth in the market. The Korea-United States Free Trade Agreement (KORUS FTA), implemented in March 2012, coupled with anticipated recovery trend of the Korean economy should generate greater export opportunities for American suppliers in the coming year. Table 1: South Korea’s Agricultural Imports by Category ($Million, CIF Value) C From World From the U.S. ategory 2011 2012(F) /1 Growth 2011 2012(F) Growth Mkt Share BASIC COMMODITY 7,014 6,802 -3.0% 3,330 2,368 -28.9% 34.8% INTERMEDIATE 8,612 8,486 -1.5% 1,324 1,266 -4.4% 14.9% CONSUMER-ORIENTED 9,237 9,003 -2.5% 2,781 2,842 2.2% 31.6% FOREST PRODUCTS 2,417 2,426 0.4% 202 152 -24.6% 6.3% SEAFOOD PRODUCTS 3,833 3,627 -5.4% 142 171 20.6% 4.7% GRAND TOTAL 31,113 30,343 -2.5% 7,779 6,799 -12.6% 22.4% Source: Korea Trade Information Service (KOTIS), compiled by the U.S. Agricultural Trade Office Seoul (ATO) /1 2011 (F) is based on January-September KOTIS import data trend analysis. Table 2: Advantages and Challenges for U.S. Suppliers in the Korean Market Advantages Challenges Korea is an emerging market where new ideas and Consumers are generally biased toward trends are eagerly tried and accepted, leading to locally produced agricultural greater opportunities for new-to-market products. products. Many consumers still maintain an idea that local products are superior in quality and safety to imported products. Korea, by nature, depends heavily on imports for its High cost of shipping, documentation, food and agricultural needs. In addition, consumers inspection, and labeling, coupled with high are looking for new and international tastes as the distributor mark-ups deteriorate price income level continues to rise. competitiveness of many imported products. Partly due to the long tie between Korea and the Imports of many American products are United States, the United States is likely to remain currently subject to restrictive trade barriers, the leading exporter of agricultural products to including high import tariffs, tariff rate Korea. The United States remains a preferred and quota, and complicated food safety/labeling trusted origin of agricultural products to many regulation. Koreans. Implementation of KORUS FTA generates new Limited knowledge and experience of opportunities for American suppliers by significantly business between traders in Korea and the reducing the tariff barrier on most products. United States restrict them from fulfilling new business ideas and opportunities. SECTION II EXPORTER BUSINESS TIPS A. Where to Start Market Research: The first step recommended for new-to-market American suppliers is preliminary research to determine if there is a potential market for its product in Korea. The research should cover key issues including consumption trends, size of the market (imports), major distribution channels, current import tariffs and local taxes, and Korean government regulations and standards. The research, together with consultations with partner Korean importers down the road, should help the supplier to tell if any modifications to the existing product would be needed to meet the demand and regulations in Korea. The Foreign Agricultural Service (FAS) under the United States Department of Agriculture (USDA) is a useful source of information and resources available to the supplier. In particular, the Attaché reports for Korea that cover various products and industries are available on the FAS website (www.fas.usda.gov). Offices in Korea under USDA/FAS can also provide the supplier with catered assistance for both market intelligence as well as links to other relevant sources of support (please see Section VII of this report for contact information). Additionally, the United States Department of Commerce is another important source of information for non-agricultural products. In particular, the “Country Commercial Guide” published by the department includes a wide range of useful information (the supplier should register for access to the guide at: www.buyusa.gov/korea/en/). Establishing Korean Partners: While executing the preliminary market research, the supplier is recommended to develop dialogues with potential business partners (importers) in Korea. Lists of Korean importers by product or by industry are available from the USDA/FAS offices in Korea. The lists are based on the offices’ own contact database. Korean importers in general are seeking new business opportunities with foreign suppliers and would be willing to provide in-depth market intelligence if they are interested in the supplier’s product or business offers. An effective tool for developing contacts with Korean importers is exhibiting in established food trade shows. Korean business people place high value on personal interaction when developing business with new foreign suppliers. In particular, the Seoul Food & Hotel, the only show officially endorsed by USDA/FAS in Korea, has been an outstanding venue for new-to-market American suppliers to meet with a large number of key importers and distributors in Korea. Registration information to join the U.S. Pavilion of the show is available from the organizer (www.seoulfoodnhotel.co.kr, E-mail: rhood@oakoverseas.com). Other international food trade shows that attract a sizable number of Korean food importers include FoodEx Japan (www3.jma.or.jp/foodex/en/), National Restaurant Show (http://show.restaurant.org), Natural Products Expo West (www.expowest.com), Fancy Food Show (www.specialtyfood.com), SIAL Show France (www.sialparis.com), and ANUGA Show Germany (www.anuga.com). Another tool recommended is joining official trade delegations to Korea organized by various American agricultural export promotion organizations, such as Strategic Trade Regional Groups (STRG, e.g., Food Export Association of the Midwest USA), State Departments of Agriculture, and USDA Cooperators (e.g. U.S. Dairy Export Council). Some of the states and USDA cooperators maintain representative offices or contractors in Korea. Contact information of these organizations is available from USDA/FAS Korea offices. Korea has well established regulations and procedures on food imports, as well as complex tariff and tax codes, which often make the entry of a new-to-market product time and resource consuming process. Working with reputable importers is the approach that has been proven most efficient to overcome these barriers. Established importers are well aware of market demand/supply intelligence, local business laws and practices, distribution channels, and most of all are the best source for up-to- date government regulations on imported foods. As the dialogue develops further and the potential business partner is narrowed down, the supplier would be asked to submit product sample and preliminary price offer. Sample products shipped to Korea are subject to the same local regulations and import inspections, and therefore should allow the supplier and the importer to check if the product meets local standards. It also helps verify the Harmonized Tariff (HS) Code (and subject import duties) that the product is classified to by the Korean authority. Once the test sample shipment finds no issue against local regulations, and an agreement on price and transaction terms is reached, both parties would move forward to sign a contract for actual business. Letter of credit (L/C) is the most common and recommended payment terms used between new business partners. The type of business relationship agreed between the U.S. exporter and the Korean importer may vary from a market exclusive, long-term business agreement to a non-binding, one-time purchase order mainly depending on how the exporter sees the role of the import partner in market development. The most common practice is maintaining a non-binding seller-buyer relationship during the test-market period and then upgrading to a more binding option if the partner shows bigger potential. It is also recommended that the contract include an agreement on the method of resolution for any trade dispute that may arise from the transaction. Meeting Local Tastes: One of the common mistakes that new-to-market American suppliers often make is viewing Koreans as the same category of consumers in the neighboring countries, Japan and China. Although it is true that people in these three far eastern Asian countries share some parts of their histories and cultures, Koreans’ tastes for foods are different in many ways from the neighbors. Consequently, products that are catered to the taste of Korean consumers will have higher chance of making a successful entry into Korea. Personal visits to Korea should be the best way to develop understanding about the local tastes. Information gathering through Internet or associating with Korean American communities in the states could also be an efficient tool. Meeting local tastes could mean anything from modifying package design to reformulating the recipe. Package design, in particular, is a very important factor in Korea, and exporters should consider developing a new design that can better attract Korean consumers. Although many Koreans can read English, adding Korean language on the label can significantly improve the level of exposure on the shelf. Another noteworthy issue in packaging is the separate Korean language label required on imported products. This added stick-on label can detract from the appearance of the product. Exporters should discuss the design of the Korean language label with the importer for a better look. Korean language label is in general designed and printed by the importer and hand-attached to the product in the duty free warehouse at the port of entry before the customs inspection. B. Local Business Customs & Practices Korea is a country of tradition. While Korean importers understand international business customs and practices, paying attention to cultural differences and localities will facilitate building a trusted business relationship. The following are some business tips that American suppliers should keep in mind when associating with Korean businessmen. Initial Communication: Partly because of the strong influence of Confucianism philosophy running through the society, Koreans try to be formal when they develop contacts with new people. As such, cold calling (or cold e-mailing) could be problematic in Korea. Koreans would take extra steps or efforts to make the initial communication as formal as possible. For example, e-mails or letters would include unnecessary ‘protocol’ information, such as lengthy greetings or elaborated introduction about the person in charge, less critical to the business subject. Initial communication may not be considered official or meaningful unless done in a formal way (e.g., use of official letterheads or seals) or by a proper person in charge. Communication exchanged between the working level staffs may not take effect until the senior level staffs are introduced to the discussion later and give reconfirmation on the preliminary agreement already made. Therefore, the American supplier should try to match the formality of the Korean counterpart particularly during the initial stage of contact. As a result, progress of the initial communication could be slow. Relationship Building & Social Networking: Koreans put high value on personal interaction when developing a new relationship, so they prefer to deal face-to-face. The American supplier may see little progress in negotiation until there is a face-to- face encounter made with the Korean counterpart. As a tool to supplement the personal interaction, Koreans seek introductions or comments by mutually connected third parties. Koreans love socializing and participate actively in various bodies of social media such as religious organizations, school alumni groups, political parties, and birth place associations. Any of these bodies of social network can help the American supplier develop and expand relationship with the Korean business partner. It is notable that many Koreans are also actively engaging in on-line social network media such as Blogs, Internet Cafes, Facebook, and Twitter. Language: Although English is the most common foreign language used in Korea and is officially taught in public schools, many Koreans find it difficult to communicate in English. Therefore, the American supplier should be very careful when writing or talking to the Korean counterpart in English. For every communication, try to use plain words, make the sentences as simple and clear as possible, avoid using slangs or trendy expressions, and ask for confirmation that the Korean counterpart has fully understood the idea. When corresponding through written communication, start with words of appreciation, clearly mark the recipient’s name, title, and division (as many Koreans have the same last name), indicate a reasonable time frame for a response, and close with additional words of appreciation. By cultural nature, Koreans rarely say, "no" directly. Instead they often say the issue is "difficult." If there is anything unclear or confusing, it is best to ask directly and clearly what additional information or explanation is needed. When there is no satisfying reply, there is nothing wrong with politely asking again. Name Cards: Exchange of name cards is usually the first item of business expected at the very beginning of a face-to- face encounter. In Korea, people seldom call others by their first names. Instead, they use surnames (such as Mr. Lee) or title and surname together (such as President Lee). Never use a first name unless the person specifically asks to be called by his/her first name. Having the back side of a business card translated and printed in Korean should help the Korean recipient better understand and remember you. One thing to note is that Koreans put their surnames ahead of first names when they write their names in Korean. For example, in a Korean name ‘Hong Gil-Dong’, the surname is ‘Hong’. Korean names are difficult for Westerners to tell if the contact is a male or a female. Title of job is much diversified in a Korean organization, so the title of job on a Korean business card could be misleading as there could be limited matching titles in an American organization (for example, ‘Manager of Sales Department’ title on a Korean business card could mean ‘Sales Executive’ up to ‘Vice President of Sales’ in an American company). Meetings: Clearly defined and listed agenda provided in advance helps the meeting stay focused and generate successful outcomes. It is likely that the meeting will include a senior staff member who speaks little English, so usually a designated junior staff member of the Korean company translates on behalf of the Korean party. However, regardless of the fluency of the translator from the Korean side, the American supplier should be prepared to provide all materials in writing. For important meetings, the American supplier should also consider hiring a professional interpreter to avoid confusion or misunderstanding. Take time before the meeting to ensure that your interpreter is familiar with the terms that you will use. Small talk is a good way to break the ice at the beginning of a meeting. Allow the Korean party to talk enough before giving your reply, but it should not be seen impolite to stop the talk and ask for clarification or further information. Evening Gatherings: Korean businessmen often gather after work over dinner and drinks not only for socialization but also for business. As an old Korean saying goes, “real businesses develop in (unofficial) evening gatherings after work”, Korean businessmen tend to extend the official talk started during the work hour into the dinner or even to a late ‘drinking gathering’ following the dinner particularly when they want to make significant progress in the negotiation. Therefore, American suppliers are encouraged to actively participate in evening gatherings especially when dealing with the older generation Korean businessmen. Although Koreans are wary of people who refuse to drink or who drink moderately, foreigners are given some flexibility especially if you explain that you have health or religious reasons for abstaining. A useful, cultural point to note in this situation is that it is impolite to pour one's own drink. As such, participants should not be bashful about pouring for others in the table. Dress Code: Koreans take first impression from the look of a person very importantly. It is recommended to wear a business suit and tie when meeting or visiting Korean importers for the first time regardless of the weather (in the heat of summer most Koreans do not wear a tie) unless you intend to deliver a specific idea by wearing special attire. Resolving Conflicts: Koreans do not like to appear "lost face" when dealing with conflicts. Therefore, even a small concession offered by the American supplier will help resolve the conflict more quickly. Visible anger is not useful in a confrontation. Instead, silence is a more effective method of conveying displeasure. Apologizing can also be useful and does not always mean that you feel you were wrong. Lastly, never point your criticism directly at one specific person, but try to share the issue with the entire group of staffs involved in the Korean company. Law suits are very expensive and time consuming way to resolve conflicts. Therefore, it is always recommended to include an alternative measure in the contract how potential business disputes would be resolved. The following is a clause often used by the Korean traders - “All disputes related to this contract shall be finally settled by arbitration in the country of the respondent. In case the respondent is a Korean importer, the arbitration shall be held at the Korean Commercial Arbitration Board. In case the respondent is an American supplier, the arbitration shall be held at an American commercial arbitration association.” The internet home-page of the Korean Commercial Arbitration Board contains some useful information: http://www.kcab.or.kr/servlet/kcab_adm/memberauth/5000 C. General Consumer Tastes and Trends Represented by steamed rice, Kimchi (fermented cabbage), and Bulgogi (marinated beef), traditional Korean cuisine is still the mainstream of the Korean diet. However, globalization of the market and change of consumer lifestyle have made today’s Korean diet quite different from what it was 5 years ago. Like consumers in developed countries everywhere, Koreans are looking for new taste, better value, convenience, high quality, and most of all, safe and healthy products in their daily diet. Due in part to the aging population, there is a heavy emphasis among the general public on healthy eating, which is interpreted into a strong demand for organic and functional foods. In particular, 'Well- being', a theme that has evoked new consumer movement of seeking both physical and psychological health by adopting more wholesome way of life, remains one of the most influential ideas in the market. As an old Korean proverb "food and medicine are from the same source" says, Korean's long- held belief in health-improving efficacy of foods still prevails and contributes to the on-going popularity of functional foods as well as regular foods that target specific health concerns. It is important to note that Korean consumers are extremely sensitive to food safety issues as they have been exposed to many big and small food safety scandals over the years, including BSE, Avian Influenza, GMO, and Melamine risk from Chinese processed foods. Internet has become a handy source of food safety information for many Koreans in spite of the fact that it is often misleading. Food safety issues of any magnitude can potentially develop into a “food scare” rumor on the Internet and have a detrimental impact on the reputation and sales of the associated products over night. Korean consumers’ general preference for national brand products is partly rooted in concerns for food safety. Table 3: Aging Korean Population (unit: 1,000 people) 1995 2010 Age Group Numbe Growth r Share Number Share 0-14 10,236 23.0 % 7,907 16.2% -22.7 % 15-64 31,678 71.1 % 35,611 72.9% 12.4 % 65 + 2,640 5.9 % 5,357 11.0% 102.9 % Source: Korea Statistics Office Improved economic conditions allow Korean consumers to pay more attention to quality and diversity in diet. In particular, better-traveled young consumers, many of whom are educated in foreign countries, are ushering more international products and food culture into the market. While Japan served for many years as a reference market for Koreans to monitor and adopt new foreign food culture, today’s Korean consumers are tracking more diverse international markets, including California, New York, and Paris, for new foreign food ideas and trends. However, at the same time, the call for better value is also emphasized in the market mainly due to the on-going retirement of the Korean baby boomer generation as well as the slow-down of the local economy under the recent global financial crisis. Convenience is a strong driving force behind many consumer trends as everyday life of Koreans gets busier. For example, rapid increase of dual-income families and single parent households has led to a growing demand for Home Meal Replacement (HMR) products in retail stores as well as for quick service restaurants. Delivery service is extremely well developed in Korea as people do not want to waste time in traffic. Rapid growth of on-line shopping is also rooted partly in the demand for convenience (of course, high real estate cost is another factor that drives stores to go into ‘cyber space’). SECTION III IMPORT FOOD STANDARDS & REGULATIONS For detailed information regarding standards and regulations that imported food and agricultural products are subject to in Korea, including Labeling, Packaging, Export Sanitary Certificates, MRL (Maximum Residue Level) Code, and Food Additive Code, please refer to the following annual reports produced by the Agricultural Affairs Office, FAS Seoul. (1) “FAIRS (Food and Agricultural Import Regulations and Standards) Country Report Annual 2012”, KS1206 dated February 3, 2012 (or visit www.fas.usda.gov for more recent update). (2) “FAIRS Export Certificate Report Annual 2012”, KS1151 dated January 27, 2012 SECTION IV IMPORT PROCEDURES A. Customs Clearance The Korea Customs Service (KCS), the Korea Food and Drug Administration (KFDA), and the Animal Plant & Fisheries Quarantine Inspection Agency (QIA, this is a new agency launched on June 15, 2011 by merging of the National Veterinary Research & Quarantine Service, the National Plant Quarantine Service, and the National Seafood Quality Inspection Agency) are the agencies involved in the import clearance process. Imports of agricultural products may require clearance from several of these agencies and are, thus, more likely to encounter port delays than other imported products. Delays can be costly due to the perishable nature of many agricultural products. In addition, other entities may be involved in regulating imports through the administration of licenses or, in some cases, quotas for agricultural products. KCS is responsible for ensuring that all necessary documentation, including inspection results, is in place before the product is released from the bonded area. KCS operates the Electronic Data Interchange (EDI) system for efficient flow of documents, which is connected to electronic data management systems of KFDA and QIA. Inspection results of KFDA and QIA are transmitted to KCS via the EDI system, thus shortening the clearance time. For details about KCS customs clearance procedures, please visit the agency’s Internet home-page (http://english.customs.go.kr/). Chart 1: KCS Import Clearance Procedures Source: Korea Customs Service (KCS) B. Documents/Information Generally Required by the Korean Authority When Food is Imported (1) Commercial Invoice (2) Bill of Lading (or Airway Bill) (3) Packing List (4) Certificate of Origin (5) Names of all ingredients with composition percentage of major ingredients (6) Names and contents of all food additives (7) Processing Flow Chart (8) Export sanitary certificate (for meat, fruit, nuts, vegetables, plants, grains, etc.) (9) Other relevant certificates, such as USDA organic certificates for processed organic products C. Import Inspections All new-to-market products are subject to mandatory laboratory testing conducted by the relevant inspection agency. Subsequent shipments of the product that passed the first laboratory testing may be exempt from mandatory laboratory testing. The respective quarantine inspection authorities must clear products subject to plant or animal quarantine inspection before KCS will clear them. The import inspection application must be written in Korean and submitted to the relevant agency. Below charts summarize the inspection procedures taken by agencies involved. Chart 2: KFDA Import Inspection Procedures Source: Korea Food & Drug Administration (KFDA) 1. The importer or the importer’s representative submits the “Import Declaration for Food, etc.” 2. The type of inspection to be conducted is determined in accordance with the guidelines for inspection of imported food products. The types of inspection that a given food product may be subject to include: document inspection, organoleptic inspection, laboratory inspection, and random sampling examination. 3. If a product is subject to organoleptic inspection, laboratory inspection, or random sampling examination, the KFDA inspector will conduct a field examination and take samples for laboratory testing. 4. KFDA conducts the conformity assessment from the information collected, using such items as test results, document inspection results, etc. 5. If a product complies with the Korean standards, KFDA issues a certificate for import. The importer can clear products with a KFDA import certificate. 6. If a product does not comply with the Korean standards, KFDA will notify the applicant and the regional customs office about the nature of the violation. The importer decides whether to destroy the product, return the shipment to the exporting country, or use it for non-edible purposes. If a minor violation can be corrected, as with labels, the importer can reapply for inspection after making the corrections. For perishable agricultural products, such as fresh vegetables, fruits, etc., the importer can clear the products prior to completion of the laboratory test with a pre-certification authorization from KFDA. In this case, however, the importer must be able to track distribution of the given product so the products can be recalled should the laboratory test indicate a violation. For more information about KFDA’s inspection process, please visit the agency’s Internet home-page (http://eng.kfda.go.kr/index.php). Table 4: KFDA Inspection Duration Document Inspection 2 days Visual Inspection 3 days Laboratory Inspection 10 days Random Sampling Test 5 days Incubation Test 14 days Chart 3: QIA Inspection Procedures on Animal and Animal Products Source: Animal Plant & Fisheries Quarantine Inspection Agency (QIA) Table 5: QIA Inspection Duration for Animal and Animal Products Document Inspection 3 days Visual Inspection 5 days Laboratory Inspection 18 days Incubation Test 18 days For details about quarantine and inspection of animal and animal products, please refer to the English website provided by QIA (http://www.qia.go.kr/english/html/indexqiaEngNoticeWebAction.do?clear=1). Chart 4: QIA Inspection Procedures on Plant Products Source: Animal Plant & Fisheries Quarantine Inspection Agency (QIA) For details about plant quarantine inspection, please refer to the English website provided by QIA (http://www.qia.go.kr/english/html/indexqiaEngNoticeWebAction.do?clear=1 ). D. Tariffs and KORUS FTA Korea utilizes a 10 digit Harmonized Tariff Code System (HSK), and the local authority maintains an exclusive right to classify an imported product to a specific tariff code. Tariffs charged on imported agricultural and food products vary considerably from product to product. In general, tariff rates are higher for products that are produced domestically (for such products, there might be additional safe guard measures such as Tariff Rate Quotas). Ingredient products and bulk commodity products needed for local industries generally have lower tariffs. Identifying a HSK code particularly for processed products could be a challenge. The Korean Customs Service offers a service through which traders can submit a sample and receive a preliminary ruling on the HSK code classification. Suppliers may contact the USDA/FAS offices in Korea for help in identifying HSK codes and additional measures related to import. The Korea-United States Free Trade Agreement (KORUS FTA), implemented on March 15, 2012 will significant reduce tariffs on many American products imported into Korea. ATO Seoul homepage has a special section (http://www.atoseoul.com/fta/fta_page2_final.asp) that offers detailed information and links related to the KORUS FTA, including: (1) Full Text of the Agreement: http://www.ustr.gov/trade-agreements/free-trade-agreements/korus- fta/final-text (2) “Korea Tariff Schedule”: http://www.ustr.gov/sites/default/files/uploads/agreements/fta/korus/asset_upload_file786_12756.pdf You will find the base tariff rate and the phase out category for all agricultural and food products, organized by HSK code. Phase-out categories include: A Immediate tariff elimination E 6 year B 2 year phase-out F 7 year C 3 year G 10 year D 5 year H 15 year (3) Country of Origin Certification: http://www.atoseoul.com/fta/KORUS%20FTA%20COO%20FAQ_clean%20(2).pdf (4) Tariff-rate Quotas: http://www.atoseoul.com/fta/step4.asp (5) FTA Briefs on Top 40 Products: http://www.atoseoul.com/fta/fta%20product%20briefs.asp E. Sample Shipments Shipping small amount of sample product is highly recommended before starting a regular export to Korea as it allows the supplier/importer to test if the product meets the Korean standards. Importers can verify the conformity by having the sample inspected by Korean government accredited test labs. Please note that if the volume or the market value is deemed above sample purpose, the shipment will be subject to regular import requirements. In addition, export sanitary certificates are required for products subject to quarantine inspections (e.g., meat, cheeses) even they are shipped as samples. F. Trademarks and Patents New-to-market U.S. exporters should pay attention to protecting the company/product trademarks and patents, which can be easily handled by working with the Korean partner or through local attorneys. The Korea Industrial Property Office is responsible for registration of trademarks and for review of petitions related to trademark registration. In accordance with the Trademark Law, trademarks are registered in Korea on a “first file, first registered” principle. A person who registers a trademark first has a preferential right to that trademark, and Korean law protects the person who has the right over the trademark. To prevent trademark disputes, U.S. companies considering conducting business in Korea are encouraged to register their trademarks as early as possible. For more information, see the Korea Industrial Property Rights Information Service website (http://eng.kipris.or.kr). SECTION V. MARKET SECTOR STRUCTURE AND TRENDS A. Supply Chain and Product Flow The supply chain for imported agricultural and food products involves multiple layers of middlemen and distributors, which is part reason for high consumer price of many imported products in Korea. It takes at least two weeks for a container ship from a western American port, and four weeks from an eastern port, to arrive in a port in Korea. In general, most imported consumer ready products enter the country through the port of Busan, the second largest city in Korea at the southeastern tip of the peninsula. Port of Inchon, which is much closer to the Seoul metropolitan area, is another important entry point. In rare occasions, small-volume-high-value products, such as premium wine and live lobsters, are brought via air cargos through Inchon International Airport (ICN). Chart 5: Flow of Imported Food and Agricultural Products Once the products are cleared from the customs, they are transported to the importer’s warehouse for temporary storage. Importers may have warehouses in more than one location. Small, independent importers in general use third party logistics service providers for warehousing and trucking because of the high overhead cost. The importer usually supplies directly to the large-scale customer’s warehouse but may use wholesalers or independent sales brokers when supplying to small customers or to distant regional markets. Large-scale retailers and franchise food service (restaurant) companies in general operate a network of "distribution-hubs" across the country, each of which services all the branch stores and end-user restaurants in the given regional market. The city of Seoul (capital city of Korea) and its surrounding area within 60 miles radius account for over 50 percent of the total Korean population and 70 percent of total retail sales in Korea. Although the government maintains a strong policy initiative to develop other regions of the country for balanced growth, Seoul metropolitan area is expected to maintain a dominant share of the food market sales in Korea in the coming years because it should continue to draw people for jobs and education. Regional markets that are likely to see a growth include Busan, Inchon, and Daejun (Daejun area, located in the middle section of the peninsula, has been designated as the new home of the Korean government offices). B. Retail Food Sector The retail sector in Korea has evolved dramatically ever since opening of the first hypermarket store in 1993 (E-Mart by Shinsegae Co.) and the liberalization of large-scale retail business to foreign ownership in 1996 (MACRO, a Dutch retailer was the first one to enter the market). Modern format, large-scale retail businesses such as hypermarket chains, grocery supermarket chains, convenience store chains, and on-line retailers have grown rapidly at the expense of traditional retail outlets of street markets and family-operated small retailers over the years. Expansion of these new retail channels, coupled with introduction of new information technologies, has significantly changed the way Korean consumers purchase daily necessities, including food. Retail market sales in Korea totaled W276 trillion Korean won (approximately $240 billion) in 2010, up 9.7 percent from the previous year. Overall, the growth of the Korean retail sector has been limited by the global economic crisis since mid 2008. However, the economic slow-down took a bigger toll on traditional retailers, while providing an opportunity for modern format, large-scale players to further expand their market shares. Figure 1: Total Retail Sector Sales in Korea Source: Retail Industry Sales Statistics, Korea National Statistics Office Hypermarkets, armed with aggressive pricing, one-stop shopping convenience, and efficient product assortment have stepped up to the largest retail force in Korea since 2002, replacing the former leader, department stores. Hypermarkets accounted for a 12.2 percent of overall retail sector sales, or W33.7 trillion in 2010. Hypermarkets are likely to maintain a strong performance in the coming years as on- going renovation of old metropolitan areas as well as development of new residential areas across the country will provide space for a significant number of new stores. On-line retailers, including internet shopping, TV home-shopping, and catalog shopping businesses, have stepped up to the second largest retail force in Korea since 2007. Sales of on-line retailers grew 15.5 percent in 2010 to take 11.4 percent, or W31.3 trillion of retail sector sales. On-line retailers, internet shopping malls in particular, are expected to remain the fastest growing retail channel in Korea for years to come as more and more consumers are attracted to this innovative shopping tool for convenience and price. Korea has the right mix of socio-economic environment, in particular high population density and high affinity toward new information technology that fosters strong growth of on-line retail business. Department stores and grocery supermarkets maintained a solid growth between 2007 and 2010. In particular, department stores were one of the most successful retail channels under the recent economic slow-down. Leading players in the segment have successfully realigned their market positions by up- scaling store layouts and luxury product offerings, which reflected the evolving taste of their target consumers. Grocery supermarkets have found a new growth momentum in recent years in ‘Super Supermarket(SSM)’ business. SSM is grocery supermarket that targets congested metropolitan residential areas where larger scale hypermarket stores cannot infiltrate. Despite the protest by independent small grocers and NGO voices, leading players are likely to open more SSM stores in the coming years. Convenience stores also showed an outstanding growth between 2007 and 2010, reflecting busier lifestyle of Korean consumers. Although convenience stores offer very limited product assortment by nature, it is the most wide spread retail channel in Korea today (the number of outlets under the top seven franchises were over 16,000 at the end of 2011). Although on a decline, traditional retailers such as street markets and family-operated small grocers still account for a significant retail force particularly in areas where modern format, large-scale retailers have yet to penetrate. Table 6: Breakdown of Retail Sector Sales in Korea 2010 Segment 2009 Growth Sales M/S Sales M/S Hypermarkets W31.3 trillion 12.4% W33.7 trillion 12.2% 7.7% On-line Retailers /1 W27.1 trillion 10.8% W31.1 trillion 11.4% 15.5% Grocery Supermarkets W22.4 trillion 8.9% W23.8 trillion 8.6% 6.3% Department Stores W21.6 trillion 8.6% W24.3 trillion 8.8% 12.5% Convenience Stores W6.2 trillion 2.5% W7.3 trillion 2.7% 17.8% Others /2 W146.2 trillion 56.8% W155.7 trillion 56.4% 6.5% Total W251.6 trillion 100% W275.9 trillion 100% 9.7% Source: Retail Industry Sales Statistics, Korea National Statistics Information Service /1 On-line shopping in this report refers to Internet shopping, TV home-shopping, catalog shopping, and other types of retailing over communication tools that replace physical stores. /2 ‘Others’ includes specialty retailers such as automobiles and furniture as well as traditional retailers such as family- operated small grocers and paddlers in the street markets. Sales of food products in the retail sector totaled W61.3 trillion in 2010, up 8 percent from the previous year. In other words, food products accounted for about 22 percent of overall retail sector sales in Korea. Figure 2: Share of Food Products in Retail Sector Sales Source: Retail Sales Statistics by Category, Korea National Statistics Office Table 7: Breakdown of Monthly Household Expenditure on Grocery Foods Year 2009 2011 Number of Household Members 3.33 3.28 Spending Item Amount Share Amount Share Growth Grains 21,971 7.2% 20,647 5.9% -6.0% Processed Grains 14,774 4.8% 16,661 4.8% 12.8% Bakery & Rice Cakes 18,019 5.9% 20,979 6.0% 16.4% Meat 43,938 14.3% 49,161 14.1% 11.9% Processed Meat 7,922 2.6% 10,881 3.1% 37.4% Fresh Seafood 21,542 7.0% 22,616 6.5% 5.0% Salted Seafood 6,432 2.1% 7,641 2.2% 18.8% Other Processed Seafood 6,104 2.0% 7,032 2.0% 15.2% Dairy & Eggs 28,651 9.3% 30,458 8.7% 6.3% Oils & Fats 2,810 0.9% 2,759 0.8% -1.8% Fresh & Processed Fruits 35,377 11.5% 39,841 11.4% 12.6% Fresh & Processed Vegetables 31,310 10.2% 37,634 10.8% 20.2% Fresh & Processed Seaweeds 3,885 1.3% 4,366 1.3% 12.4% Confectioneries & Snacks 19,891 6.5% 24,665 7.1% 24.0% Spices & Seasonings 11,024 3.6% 14,991 4.3% 36.0% Other Processed Foods 8,676 2.8% 9,909 2.8% 14.2% Coffee & Tea 6,109 2.0% 7,968 2.3% 30.4% Juice & Beverages 9,828 3.2% 11,160 3.2% 13.6% Alcohol Beverages 8,347 2.7% 9,400 2.7% 12.6% Total 306,610 100% 348,769 100% Source: Monthly Household Spending, Korea Statistics Information Service Unit: Korean Won Grocery supermarkets were the leading retail channel for food products with an estimated W19.2 trillion of food sales in 2009, followed by hypermarkets. Despite the rapid growth, on-line retailers still offer a very limited assortment of food products. However, sales of food products through on-line retailers are likely to increase rapidly in the coming years because most of the leading off-line retail companies, in particular grocery supermarkets and hypermarket chains, are currently making heavy investment into on-line stores. Table 8: Estimated Sales of Food & Agricultural Products by Retail Channel Year 2009 Estimated Share of Food Products in Store Sales Total Food Sales Grocery Supermarkets 85.6 % W19.2 trillion Hypermarkets 51.5 % W16.1 trillion Convenience Stores 50.0 % W3.1 trillion Department Stores 11.7% W2.5 trillion On-line Retailers 9.0% W2.4 trillion Others N/A W13.6 trillion Total W56.9 trillion Source: Monthly Household Spending, Korea Statistics Information Service Rapid expansion of modern format, large-scale retailers has heightened the competition in the sector, resulting in mergers and acquisitions (M&A) not only of small, regional retailers by larger national retailers but also consolidations among large retailers. For example, Shinsegae E Mart, the leading player in the hypermarket segment, acquired 23 grocery supermarkets from NS Homeshopping in July 2012. Industry analysts forecast that consolidation trend will continue in the industry as leading players strive to achieve dominant control of the market. Part of the force behind consolidation trend is leading players’ strategy to achieve a 'horizontally integrated' retail force that encompasses the whole spectrum of retail business. For example, both Shinsegae Group and Lotte Group, the top two retail conglomerates in Korea, now operate almost all available formats of retail business from convenience stores to grocery supermarkets, department stores, outlet malls, hypermarkets, and on-line shopping businesses. Expanding into foreign markets has been another area that leading Korea retailers have also invested heavily in recent years in an effort to find new growth opportunity. For example, Lotte Mart, which currently operates 97 hypermarket stores in Korea, has increased its stores in foreign markets to 132 as of September 2012, including 100 in China. Korean retailers in general rely heavily on independent importers for imported food and agricultural products. Although leading players are currently seeking ways to increase direct importing for lower cost and improved product assortment, their attention is mainly targeted on a limited number of large volume products such as fresh oranges and walnut because of lack of experience and expertise. On the other hand, retailers of international origin, Costco Wholesale Korea in particular, procure a larger part of the imported products that they sell directly through their international sourcing networks. Leading retailers maintain heavy efforts to expand private label brand (PB) business on both local and imported food and agricultural products for higher profit and customer loyalty. Growth of modern retail business in Korea has coincided with development of modern large-scale logistics service industry. Leading retailers are equipped with temperature controlled distribution network of trucks and warehouses that cover the entire market. On the other hand, small to medium size retailers in general rely on third party logistics service providers. Logistics service industry is likely to continue a rapid growth in the coming years particularly due to a rapid rise in demand for home delivery service, which is now widely offered not only by on-line retailers but also by conventional retail stores. For further detailed information about the retail food sector in Korea, please refer to the Korea Retail Food Sector Biennial Market Brief 2011, KS1108 dated February 15, 2011. C. Hotel, Restaurant and Institutional (HRI) Food Service Sector Changes in lifestyle and dietary culture coupled with increased income level have stimulated a rapid growth of the food service industry in Korea. Monthly per capita household spending on eating outside of the home has more than doubled in the last ten years, reaching W74,654 won in 2010, up 2.3 percent from the previous year. In other words, each household spent 48.1 percent of its food and beverage expenditure, or 12.4 percent of total consumption expenditure on eating outside the home. It is expected that spending on eating outside the home will remain strong in the coming years as Korean consumers face ever busier lifestyle with increased number of dual-income families and single-member households. Figure 3: Monthly Per Capita Household Spending on Eating Outside the Home Source: Monthly Household Income & Expenditure Survey (Korea National Statistics Office) Figure 4: Share of Eating Outside the Home in Household Spending Figure 5: Breakdown of Household Food & Beverage Expenditure by Item According to the Korean government statistics, the restaurant and bar industry earned W66.9 trillion in cash register sales in 2010, down 4.5 percent from the previous year. This means that Korean consumer’s spending on eating outside the home is being diverted from conventional restaurant industry to alternative sources. In particular grocery supermarkets and convenience stores are increasing sales of take-out meals and Home Meal Replacement (HMR) products backed by strong consumer demand for affordable meal options under the sluggish economy. The Korean government maintained a policy up until mid 1990’s that prohibited large corporations from entering the food service business. In addition, the sector was a major refuge to many of those individuals who lost or retired from corporate jobs during the Asian economic crisis in late 1990's and again over the last couple of years under the global economic downturn. As a result, the sector has largely been composed of small-scale, family-operated businesses, evidenced by the fact that 90 percent of restaurants and bars in Korea were small establishments that hired less than five employees as of 2010. In addition, over 40 percent of restaurants and bars earned less than W50 million in annual cash register sales. However, market analysts point out that the sector has finally reached a saturation point in terms of the total number of restaurants and bars, as indicated by the stagnant growth in the number since 2003. Roughly speaking, currently there is one restaurant per every 100 Koreans. Figure 6: Annual Sales and Total Number of Restaurants & Bars in Korea Source: Annual Industry Survey (Korea National Statistics Office) Figure 7: Breakdown of Restaurants and Bars by Annual Sales (Unit: Won) As a result, distribution of products in the food service sector still relies heavily on traditional channels, which involve multiple layers of small-scale middlemen between the producer and the restaurant. However, restructuring of the sector, mainly fueled by the entry of large corporations into the food service business, has led to a rapid growth of restaurants and bars under the umbrella of large- scale management at the expense of small-scale, independent establishments over the last ten years. Streamlining of the supply chain is another area in which the sector has made a significant progress over the years along with the growth of the large-scale restaurant business. Large-scale broad- line distributors, which offer lower cost and more efficient service, should show a strong growth in the coming years. Recently, the social initiative of protecting small businesses from large corporations has gathered many supporting voices. The policy makers are under pressure to consider introducing regulations that restrict expansion of large corporations in the food service industry once again. However, despite the anti- corporation sentiment, restructuring force in the sector that favors large-scale business is likely to remain strong in years to come because economy-of-scale is a vital tool for the sector to meet the taste of today’s Korean consumers at an affordable price. Marketers point out that changes in consumption trends in Korea are becoming more frequent and shorter-spanned. It is not surprising to observe that many of the newly open restaurants in Korea take totally different approaches from existing stores next door in terms of recipes, services, and interior design. Consequently, food service business today requires heavier input of cash investment and management skills, and bigger part of the sector is expected to join the large-scale operation to remain competitive and efficient. The evolvement of the food service sector is generating new opportunities for imported products that offer new tastes, healthy recipes, added-value, stable supply, and specifications catered to the food service industry use, characteristics where U.S. products are competitive. For further detailed information about the HRI food service sector in Korea, please refer to Korea HRI Food Service Sector Biennial Market Brief 2012, KS1219 dated March 28, 2012. D. Food Processing Sector Korea maintains a strong processing industry that manufactures a wide variety of processed agricultural and food products. There were over 4,000 agriculture/food processing businesses in Korea, which generated an estimate of 69.4 trillion won of cash register sales in 2011, up 5.5 percent from the previous year. Figure 8: Annual Sales of Agriculture/Food Processing Industry in Korea Source: Food Distribution Yearbook 2012, Monthly Food Journal, Korea National Statics Office Table 9: Output of Korean Agriculture/Food Processing Industry (by Product Segment) Product Segment 2009 2010 (Estimate) 2011 (Estimate) Processed Meat 8,956 12,821 13,760 Processed Fish and Seafood 3,482 3,610 3,874 Processed Fruits and Vegetables 1,968 2,275 2,463 Fats and Oils 2,209 2,194 2,141 Dairy and Ice cream 6,629 6,913 7,001 Grain processing and Starch 5,129 5,491 6,186 Other Processed Foods 16,333 17,063 18,914 Alcoholic Beverages 4,524 4,669 4,771 Non-alcoholic beverages 3,368 3,767 4,146 Source: Food Distribution Yearbook 2012, Monthly Food Journal, Korea National Statics Office Unit: Billion Won Table 10: List of Major Agriculture/Food Processing Companies in Korea (2010) Rank Name of Annual Sales Key Products Company 1 CJ Cheiljedang 3,963 Billion Flour, Noodles, Sugar, Sauces, Flavors, Fat & Oils, Won Ready-to-serve food, Snacks, Beverages 2 Nongshim 1,895 Billion Instant noodles, Snacks, Beverages Won 3 Samyang 1,665 Billion Flour, Noodles, Sugar, Sauces Corporation Won 4 Dongsuh Food 1,422 Billion Coffee, Tea, Beverages Won 5 Lotte 1,416 Billion Snacks, Chocolates Confectionary Won 6 Ottoogi 1,373 Billion Sauces, Oils, Instant noodles, Ready-to-serve food Won 7 Paris Croissant 1,313 Billion Bakery products Won 8 Lotte Chilsung 1,302 Billion Beverages Won 9 Daesang 1,202 Billion Noodles, Sauces, Flavors, Fat & Oils, Ready-to-serve Won food, Beverages 10 TS Corporation 1,167 Billion Flour, Noodles, Sugar Won Source: Food Distribution Yearbook 2012, Monthly Food Journal Many of the Korean conglomerate business groups have agriculture/food processing business arms, and more of the Korean processors are trying to expand their sales to foreign markets. Korean government has also been providing the industry with a financial and promotional support under “globalization of Korean cuisine” campaign. However, the local processing industry relies heavily on imported products for raw materials, intermediate ingredients, and additives because of limited local resources. As a result, Korea is an outstanding buyer for almost all types of agricultural products for processing use from basic commodities such as corn, soybeans, wheat to intermediate ingredients such as hides, oils, whey powder, and fruit juice concentrate to food additives such as flavors, coloring agents, and preservatives. Table 11: Korea’s Self-sufficiency Rate for Major Grain (2009) Rice Wheat Barley Soy Bean Corn A 98.0% 0.5% 41.3% 8.4% 1.0% B 98.0% 0.9% 44.3% 32.5% 4.0% A: self-sufficiency Ratio including feed B: self-sufficiency Ratio for food only Source: Korea Agriculture Yearbook 2010/2011, Korea Agriculture Fishery Livestock Newspaper It is notable that the local processing industry is led by a small number of large-scale players, as indicated by the fact that only 1 percent of the 4,169 processors had over 300 employees. Table 12: Employment Size of Agriculture/Food Processors in Korea (2010) Number of Employees Number of Processors Less than 50 3,373 50 – Less than 300 750 Over 300 42 Total 4,169 Source: Report on Mining and Manufacturing Survey, Korea National Statistics Information Service For further detailed information about the food processing sector in Korea, please refer to the Korea Food Processing Ingredients Sector Biennial Market Brief 2010, KS1004 dated March 12, 2010. SECTION VI. KOREA’S AGRICULTURAL & FOOD IMPORTS A. Agricultural & Food Import Statistics Monthly updated statistics of Korea’s agricultural and food imports, organized by a 4-digit HS code based on the Korea Trade Information Service (KOTIS) database is available from the ATO Seoul’s Internet home-page (www.atoseoul.com). B. Best High-value, Consumer-oriented Product Prospects 3 Yr. 2011 Avg. Imports An Import Key Market nual Product HS ($ Mil) Tariff Constraints Attractiveness C Import ategory Code from Tota Growth Rates over Market for U.S. l USA Tota /1 Development Suppliers l USA Bee Stable supply, f 0201- 1,522 30% 37.3 BSE image, - ition, Good quality, 0202 559 40% Compet 40% High tariffs Competitive price 0% Stable supply, 1,438 38% Pork 0203 TRQ Competition, - 461 50% Hig Good quality, h tariffs 25% Competitive price 223 35% 15.4 - Poult Competition, Strong demand in ry 0207 130 71% 24.3% Fresh meat food service sector 1,490 16% 0% - Fis Competition, Reduced local h, Frozen 0303 86 10% 63% Local taste supply 0% C 358 30% Hig Stable supply, h tariffs, heese & Curd 0406 140 91% TRQ - EU Good quality, competitors 36% Competitive price N 181 25% 0% - High price, Health image, uts 0802 171 25% 42% Limited supply Good quality C 192 36% 0% - High tariffs, Stable supply, itrus 0805 181 39% 50% Sanitation protocol Good quality G 125 32% 0% - Chile, rapes 0806 Good quality 24 35% 42.4% Seasonal market C 48 29% herries, Fresh 0809.20 Short shelf life Good quality 45 31% 0% C 619 41% 0% - offee 0901 C Strong growth of ompetition 27 7% 6.4% café industry 383 18% 4.3% - Soy Competition, bean Oil 1507 32 4% 4.9% L Stable supply ocal processors Margarine, 76 18% 0% - Competition, 1517 upply Shortening 31 22% 6.4% L Stable socal processors Sausages & 26 10% 14.4% - Sim EU competitors, Good quality, ilar 1601 22 10% 20% Local processors Competitive price Products Sugar 1704 87 13% 6.4% - EU competitors, Good brand Confectionery 12 13% 7.2% Local processors recognition Chocolate & 252 25% 6.4% - Food EU competitors, Good brand 1806 29 28% 36.7% Local processors recognition Preparation Bread, Pastry, 194 23% 6.4% - EU competitors, Good brand C 1905 akes, etc. 46 1% 7.2% Local processors recognition Processed V 2001- 781 15% 0% - High tariffs, egetables & Good quality 2009 190 9% 27% Competition Fruits & Juices Sauces & 184 9% 0% - Competition, 2103 Good quality Preparations 22 6% 36% Additive issue Food 786 25% 0% - 2106 Preparations 356 28% 6.4% C Good brand ompetition recognition Flavored 44 21% 0% - Good brand Mi 2202 ipping cost neral Water 19 5% 8.1% High sh recognition B 58 19% Good quality eer 2203 5.7% Competition 6 -4% 2 Good diversity Wi 132 6% Competition ne 2204 0% 12 3% Hig Good quality h prices Spirits, 260 5% 0% - Lique 2208 competitors Unique products urs 7 2% 24% EU /1 For specific tariff rates for individual products in the category, please contact ATO Seoul. SECTION VII. KEY CONTACTS AND FURTHER INFORMATION A. USDA/FAS Offices in Korea 1. For information about the Korean agricultural market and regulations, please contact: U.S. Agricultural Trade Office Seoul (ATO) Korean Address: Room 303, Leema Building, 146-1, Susong-dong, Jongro-gu, Seoul, Korea U.S. Mailing Address: U.S. Embassy Seoul, Unit 15550-ATO, APO, AP 96205-5550 Telephone: +82-2 397-4188 Fax: +82-2 720-7921 E-mail: atoseoul@fas.usda.gov Internet homepage: www.atoseoul.com Agricultural Affairs Office, U.S. Embassy Seoul (AAO) Korean Address: U.S. Embassy, 82, Sejong-ro, Jongro-gu, Seoul, Korea U.S. Mailing Address: U.S. Embassy Seoul, Unit 15550-AgAff, APO, AP 96205-5550 Telephone: +82-2 397-4297 Fax: +82-2 738-7147 E-mail: agseoul@fas.usda.gov 2. For further information about sanitary/export certificate requirements, please contact: U.S. Animal Plant and Health Inspection Service Seoul (APHIS) Korean Address: Room 303, Leema Building, 146-1, Susong-dong, Jongro-gu, Seoul, Korea U.S. Mailing Address: U.S. Embassy Seoul, Unit 15550-APHIS, APO, AP 96205-5550 Telephone: +82-2 725-5495 Fax: +82-2 725-5496 E-mail: yunhee.kim@aphis.usda.gov Internet Homepage: www.aphis.usda.gov B. USDA/FAS’ On-line Supplier List The United States Department of Agriculture’s Foreign Agricultural Service (USDA/FAS) offers information and services that can be beneficial to both new and experienced exporters. For example, the U.S. Suppliers Service is a searchable database of over 5,000 U.S. exporters and their products, which is used by USDA/FAS to help facilitate connecting potential buyers with U.S. suppliers. This database is used by
Posted: 24 November 2012

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