Unlocking South Korea's Trade Potential: The Complete Guide

South Korea (Republic of Korea) – Overview

Originally published on June 28, 2018. Updated on October 1, 2025.

Unlocking South Korea’s Trade Potential: The Complete Guide. South Korea remarkably transitioned from being among the world’s poorest nations to a high-income, technologically advanced country within just one generation’s time span. Today, South Korea ranks as the 13th largest economy in the world. With its stable government, strong rule of law, and effective regulatory system, it is also considered one of the easiest countries in which to do business.

South Korea has a population of over 52 million people. In addition, over 69% of the population ranges from the ages of 15-64 years of age (source cia.gov).

Strengths of the South Korean Economy include:

It has 22 Free Trade Agreements (FTAs) in force with 59 countries.
It is a world leader in electronics, shipbuilding, steel, and automotive.
Seventy-four % of South Koreans pursue higher education, with 4.8% of the Gross Domestic Product (GDP) allocated to education.
In addition, South Korea has an excellent level of broadband penetration, with speeds exceeding 100 megabytes.

South Korea’s Business Culture

With a modernized and business-friendly environment, South Korea still has some cultural differences to be aware of:

South Korea has a respect for hierarchy.
A slight bow, followed by a handshake, is the preferred way of greeting.
Most South Korean business people are not comfortable until your position and company name is known. Business cards should be left on the table in front of you for easy reference. Translating your company name as well is often appreciated (at least into Hangul). Many foreign firms provide bilingual cards (English front, Korean back)
Companies in South Korea prefer to do business with people they have a personal connection with. It can help if you are introduced to a prospective business associate through an intermediary. The higher the social standing of the intermediary, the more successful you are likely to be at making contact with the right people.
Cold calling on businesses will most likely have limited success.
Be prepared for expectations of fast delivery and occasional last-minute alterations.
South Korean businesspeople are renowned for their exceptional negotiating skills. Expect tough but respectful negotiations. Koreans are known for their persistence and admire partners who negotiate with patience and consistency.
Korea’s numerical system counts differently from other countries, so make sure all numbers are written down and fully understood in negotiations.
Work culture – Long working hours have historically been common, but there’s been a recent government push to cap hours and encourage work–life balance. Still, many professionals expect responsiveness outside of standard hours.
Meetings – Punctuality is essential. Often, the most senior person speaks first; juniors may not openly disagree in front of them.
Gifts – Small, thoughtful gifts are still appreciated when visiting a company (e.g., quality fruit, tea, or something representative of your country). Avoid overly expensive gifts, as they can create awkwardness.
Technology use – South Korean businesspeople rely heavily on KakaoTalk (messaging app) as much as email. Following up on KakaoTalk is increasingly common at the moment.

Setting up in South Korea

The most common way for foreign companies to enter the South Korean market is by working with a local agent or distributor. This approach offers clear advantages:

Immediate access to the agent’s established networks and clients.
Insights into local business practices and consumer preferences.
Savings in time, overhead, and initial market-entry costs.

However, there are drawbacks:

Commissions and mark-ups can increase your final product cost.
You may lose visibility and control over how your brand is marketed and sold.

Alternative Market-Entry Options
Companies that wish to establish a direct presence in Korea have several legal structures to choose from:

Representative Office – Can conduct market research and liaison activities, but cannot generate revenue.
Branch Office – Can engage in profit-making activities but remains legally an extension of the parent company.
Joint Venture – Partnering with a Korean company, often beneficial for accessing distribution networks or government contracts.
Foreign-Invested Company – The standard corporate form under Korea’s Foreign Investment Promotion Act (FIPA), which can be either partly or wholly foreign-owned.
Wholly Foreign-Owned Subsidiary – Offers full control but requires significant compliance and investment commitments.

In recent years, foreign companies have also entered South Korea through e-commerce platforms (such as Coupang, Naver Shopping, and Gmarket) or by forming strategic alliances with Korean conglomerates. Regardless of the approach, success in Korea often depends on localizing your brand, providing Korean-language support, and adapting to fast-moving consumer expectations.

Banking and Finance

The South Korean Won (KRW) is the currency of South Korea. The Financial Services Commission (FSC) is responsible for supervising and examining all banks, including specialized and government-owned banks, as well as securities and insurance companies.

South Korea – Tariffs and Non-Tariff Barriers

Tariff

South Korea has trade agreements with many countries, which eliminate tariffs on numerous goods and services and reduce tariffs on many others. You should research this through your local government trade support office.

It is worth visiting the Korean Customs Service to determine any customs or import taxes in South Korea for your goods or services.

South Korea has a basic Value Added Tax (VAT) rate of 10%.

Non-tariff barriers

Most commodities, except rice, can be freely imported into South Korea. However, some commodities may be subject to special registrations and import approvals.

The exporting country’s authority must issue certificates of authority to manufacture for shipments of pharmaceuticals, medical instruments, sanitary materials, and cosmetics.

Only licensed pharmaceutical companies may import pharmaceutical products, subject to the approval of the Korean Ministry of Food and Drug Safety.

The South Korean Ministry of Food and Drug Safety require the submission of ‘Technical Documents’ for the certification and approval of medical devices.

Product labelling, certification and packaging

Commercial shipments entering South Korea must include country of origin labelling. Importers must present Korean-language labels at customs clearance, and they may attach these labels locally in the bonded area, either before or after clearance.

South Korea has specific labelling and marking requirements for certain products, such as pharmaceuticals, organic foods, functional foods and food produced through biotechnology.

Labels on most foods must show:

Dates of manufacture.
Expiry dates.
Ingredients in descending order of composition.
Importer’s name, address and phone number.
The return address where the product can be returned or exchanged.
Manufacturer’s name.
Methods of preservation.
Product name (generic and trade).
Type of product.
Weights or quantities

(South Korea uses the metric system)

More information on South Korea’s food labelling regulation can be found in the Ministry of Food and Drug Safety (in English).

Health Foods

Health food packaging requires labelling in Korean. An original copy of test reports or test certificates should also be provided.

Furthermore, South Korean authorities may require the manufacturer to provide the following documents:

Ingredient specifications.
Details of the manufacturing procedures.
A Certificate of Analysis.

Pharmaceutical products

According to the Korea Pharmaceutical Traders Association, companies must submit certificates of manufacture and free sales, a safety and efficacy test report, and a test standards and methodology report when registering pharmaceutical products.

Exceptions include non-biological products that are:

Included in the South Korean pharmacopoeia and national formulary authorised by the Minister of MFDS.
Listed in the South Korean herbal medicine codex.
Relevant to the MFDS manufacture standards.
Applicable to the test standards and methodology separately notified by the Minister of MFDS.
Manufactured by the same manufacturers as previously registered products.

Organic Food

All imported food labelled as organic must be accompanied by an organic certificate.

BSE Free Certification

South Korean authorities may require a Certificate of Bovine Free Declaration (BSE Free) for foods and food additives containing ruminants and by-products of ruminants (except for milk and dairy products and collagen casing).

Methods of quoting and payment

By and large most quotes are usually provided in US$. Payment is usually by letter of credit, document against payment (D/P), document against acceptance (D/A) or telegraphic transfer (T/T).

Payment terms should be written down and signed off by all parties.

The best practice for sellers dealing with new customers is to use secured payment terms such as 100% payment prior to shipping, letters of credit, sight drafts or bills of exchange.

Documentary & Clearance Requirements

Documentation required

South Korean Customs require the following documents from companies exporting to South Korea:

Commercial Invoice.
Certification or Origin.
Waiver of Certification of Origin (If applicable).
Pro-forma Invoice.
Bill of Lading/ Airway Bill.
Packing List.
Insurance Certification (If applicable).
You may need to provide additional documents for
- Agricultural Products
- Health Foods
- Medical Devices
- Organic Foods
- Pharmaceutical Products

Customs process

Presently Exporters can file an export notice to Korean Customs using computer-based shipping documents at the time of export clearance.

According to the Korean Customs Service (KCS), Importers can make an import declaration online using their Electronic Data Interchange (EDI) system for paperless import clearance.

Business Risks – Unlocking South Korea’s Trade Potential: The Complete Guide

Companies wishing to operate in South Korea should commit to the highest level of corporate behaviour and familiarise themselves with the laws of their country and the penalties pertaining to bribery of foreign officials.

Intellectual Property Protection

You should register your patents and trademarks with the Korean Intellectual Property Office (KIPO) before you commit to any important deals with South Korean companies. So, ultimately the Republic of Korea Intellectual Property Office (KIPO) is the government body responsible for the registration of trademarks, patents and designs.

The KIPO website provides a searchable patent database along with online intellectual property application facilities.

Consequently, the patent and trademark registration system in South Korea favours the first company to register successfully with KIPO.

Dispute resolution

South Korea has an established legal system. Therefore hiring a local legal representative is common practice.

South Korea Web Resources – Unlocking South Korea’s Trade Potential: The Complete Guide

Invest Korea
Korea Importers Association (KOIMA)
Korea.net
Korean Institute for International Economic Policy (KIEP)
Seoul Global Centre for Foreigners
Korean Agency for Technology and Standards (KATS)
Korean Ministry of Food & Drug Safety