South Korea’s dynamic market is renowned for its rapid technological advancements and robust economy. As the world’s 10th largest economy, the country owns a highly skilled workforce and a strong emphasis on innovation. Thanks to extensive free trade agreements, the country provides great access to both Asian and global markets. Mr. Christophe Muser, CEO and Founder of MUSER Company, with whom Source of Asia has forged an exclusive partnership, shared with us the country’s trendy sectors, its assets as well as what you might not think about before entering the South Korean market.
Interview by Source of Asia
Could you please give an introduction about yourself and explain Muser Company’s objectives and missions?
My name is Christophe Muser, Founder, and CEO of Muser Company, where we support businesses wishing to set up businesses in South Korea.
After I majored in Korean language in the 90s, I went to South Korea for a few months, as part of a student exchange program, and went to university here in Seoul. After this, many of my French friends became French teachers at universities here, but since the beginning, I have always wanted to create a link between Korean business and foreign countries.
At that time, it was mandatory at my age to go to military service, and I had the chance (it was really a chance!) to work for the Economic Counsellor at the French Embassy in Seoul (what we call nowadays V.I.E./ V.I.A.). Afterwards, I worked for a Japanese company in South Korea, to set up a liaison office here in order to manage the brand licensing in fashion accessories. Later, I worked for a multinational managed in Korea. And in 2005, I was receiving more and more requests from Korean and foreign companies to set up businesses in licensing and in importing, as well as making the link between them and foreign firms. That’s why I decided to set up my own company specialized in the promotion, development and management of the activities of foreign firms who want to start a business in Korea. Our core activities include market studies, importation and distribution among others, in both B2B and B2C domains.
“I was very impressed about the speed of the capital Seoul when I came for the first time, and it was even before internet!”
We are in April 2024, and my very first trip to Korea was exactly 30 years ago, in April 1994. All combined, it has been 25 years that I have been living here.
As the fourth biggest economy in Asia, which sectors/ industries are the ones that contribute most to South Korea’s GDP and thanks to which factors?
By sector, the manufacturing sector is the largest portion of total GDP, accounting for approximately 25% this year. This may be a natural figure since Korea is an export-oriented economy, and there is currently a lot of talk about the need to increase the ratio of other industries, such as the service industry.
Top 3 sectors contributing to South Korea’s GDP in 2024:
The manufacturing industry includes mostly computers, electronics, mobile phones and of course, semi-conductors, with a growth contribution rate of 23.9% over the past five years all combined. This manufacturing sector’s share is higher than that of any G7 country and higher than that of all OECD (Organization for Economic Co-operation and Development) member countries.
In addition, the “12 major industries” promoted by the government are contributing greatly to the Korean economy; these 12 major industries are as follows:
While economic growth was achieved through government leadership in the 70s and 80s, companies play an important role nowadays: investment and job creation are taking a central stage, and R&D investment keeps growing. As of 2021, Korea’s total R&D investment is 100 billion USD, of which private investment accounts for 76.4%.
According to OECD data, the contribution of Korean companies to GDP over the past 50 years is 20%, compared to major advanced countries such as the United States (10.8%), Japan (16.6%), the United Kingdom (10.7%), Germany (12.1%), and France. (11.6%), Canada (10.7%), and Italy (10.3%).
What is South Korea’s biggest asset that benefits developing countries in the Southeast Asian area?
As Korean companies’ production bases are relocated to ASEAN, they are steadily contributing to job creation and average wage increases in ASEAN countries. Technology transfer can occur naturally during this process.
The five ASEAN countries (Vietnam, Malaysia, Indonesia, Philippines, Thailand) import a lot of intermediate goods from Korea, and these intermediate goods are processed and exported to the United States as consumer goods or re-exported as intermediate goods used in production in China. Broadly speaking, Korea plays a role in procuring intermediate goods needed for exports from ASEAN countries.
“The more countries import from Korea, the more they can re-export it to other countries: it creates what we call a virtuous cycle.”
The point is, the more they import intermediate goods from Korea, the more they will have a strong relationship and re-export more finished goods.
For example, in the case of Korea’s exports to Vietnam, semiconductors account for 24%; Vietnam imports these intermediate goods from Korea, makes finished products, and exports the final goods to other countries.
Plus, in 2022, Korea, China, and Japan account for 42.3% of imports across the ASEAN 5, and most of the items imported from these three countries are intermediate goods. Among the items imported from Korea, they account for 89%.
In fact, Korea is investing a lot in the ASEAN region. Until 2022, the proportion of Korea’s FDI to China was the highest, but from 2023, the ASEAN 5 region will be where the most Korean FDI takes place after the United States. However, it is still focused on production facilities rather than FDI for entering the local Southeast Asian market (much more FDI investing in).
On the other hand, what assets/ industries from the developing countries bring value to the South Korean industries?
As mentioned earlier, as ASEAN countries process intermediate goods exported by Korea and export them into final goods on their end, Korea’s exports increase, through the indirect route, as they follow the trend of ASEAN’s exports that are also rising.
The ASEAN 5 region is a major overseas production base and export market for Korean companies, and its importance is growing. As production costs in China have increased since 2010, numerous Korean companies have already steadily moved their production bases to the ASEAN 5. In fact, Vietnam is Korea’s third largest export country (China 19.7%, USA 18.3%, Vietnam 8.5%). The area is an attractive market for Korean companies due to its high potential as a consumer market based on its abundant population.
Considering the South Korean business landscape, what specific obstacles do foreign investors often encounter that set their success back?
The regulations in South Korea are numerous and very strict compared to other countries, but not impossible to cope with.
According to the experience we have been sharing with other foreign importers (and not only my own experience), but in my opinion, the administrative procedure is very rational. It can be time consuming but once you filled the right cases as requested, if it is well done, nothing is impossible.
Another point is that the country and the market atmosphere are very fast.
“Trends change rapidly, so you must be reactive quickly and with good sense.”
Everything is made on adaptation, reaction, production. If foreign companies or partners don’t have the ability to follow this speed, it could be a problem as they will easily fall behind.
Last question: according to your expertise and experience, what is the best strategy you would recommend for foreign investors looking to grow their business in South Korea?
On the cultural part, and according to my own experience, listening to your partners is essential. I would probably not have been able to answer this question 15 or 20 years ago; but if you listen to them, they are likely to provide you with the solution you are looking for. If they come up with a business proposal or an idea, often, just by listening, you’ll end up with an answer. It’s about listening and communicating. For instance, I remember 20 years ago, regarding some good business we developed, here in Korea: I was coming up for a meeting with some files about the brand and the project, not asking anyone to develop the project with me, but at the end of the discussion, they gave me the solution. Simply by listening, the project went forward. It was smooth and enriching. It’s important to be humble and listen to the person you are interacting with and in many cases, they will help you develop the project without even realizing.
Another point to consider is the language. In our office and mostly in Korea, meetings are held in the Korean language. Being differently structured in terms of grammar and syntax, the verbal exchanges are not the same; you do not conduct a meeting the same way you will conduct a meeting in English or in French. When a sentence in French provides a lot of information, it will sometimes be necessary to use more sentences and exchange more information in Korean for this same information. The rhythm is unalike and because of this difference, the way of exchanging, leading and guiding a meeting/ a business, is different. Even if the person you are talking with is speaking English, you will have a “loss in the translation”, so to say. It is about how to adapt yourself in the way you will work: if you think in English and speak in Korean, it will be a problem. And if you think in Korean and speak in English, you may not understand each other.
The last point is about the structure of the society, based on the legacy of Confucianism; this fundamental moral system is shaping the way of life, the social and professional relationships, therefore having a direct impact on companies. It guides you in every way of working, acting, interacting with others. You must respect your elders as well as people’s position in the company. You must also respect many names, since you don’t call people the same way according to their position in the company. This is regulated everywhere and a base of Korean society.
“For me, the most important point is to breathe in the society and listen to the people you meet.”
As a final word, Korea is an extremely competitive and fast-paced market. If you follow the trends and know how to harmonize the culture, the language, the adaptation aspects, Confucianism, and if you have the adequate team, you will be successful in this fascinating and leading country on the international scene!
I had an interview a few years ago, for a radio in the Philippines, who asked me how it is to be a CEO. At the beginning, I thought the question was a bit strange, because I have never thought about that, and I don’t really have an idea of what could be a feeling of being a CEO. But there is no ego about that, and actually, it’s about being second in the projects you undertake: you’ll never be the first one, you always have to satisfy someone, whether your clients or your partners. In our position, you must always put yourself in the second position. This is my vision of doing business and how I see partnerships and success, based on my experience.
Thank you for your answers Mr. Christophe Muser!
In partnership with Muser Company, Source of Asia now has an official desk in Seoul. If you are looking to expand your products/ services in South Korea, contact us at southkorea@sourceofasia.com.
