This is a best prospect industry sector for this country. Includes a market overview and trade data.
ITA CODE: TBD
Since Korea began its industrial expansion in the mid-1960s, the construction industry has been an important local and export industry for Korea. It remains as a key economic driver and a critical source of foreign currency and invisible-export earnings. According to the Construction Association of Korea (CAK), Korea’s construction related industry, including public and private infrastructure and civil engineering services, generated revenue estimated at $148 billion (KRW166 trillion) in 2019. Revenue categories include residential construction of $58.4 billion, commercial and industrial infrastructure at $45.4 billion and civil engineering services $44.2 billion. Korea’s local construction market is nearly equal to its construction business in overseas markets and an a vital part of the economy primarily led by large conglomerates, “chaebol” companies. Korean builder Hyundai E&C expanded into construction projects overseas in 1965 by constructing a two-lane, 98-kilometer highway between the cities of Pattani and Narathiwat in Thailand in a contract for $5.2 million with the Thai government. Fifty-five years later, Korea’s cumulative value of construction contracts from overseas exceeded $848 billion mainly attributed to the construction boom in the Middle East and Asia Pacific. Approximately 13 percent of Korean construction firms’ total revenue in 2019 was generated from services overseas. Korea continues to put heavy emphasis on increasing revenues from overseas projects.
Source: Construction Association of Korea (CAK) and International Contractors Association of Korea (ICAK)
Due to the new coronavirus outbreak that has impacted the global economy, many experts in Korea expect that many industries are not likely to rebound immediately in the post-pandemic era. The Korean President recently announced a range of measure to address the mounting economic challenges. These measures include infrastructure projects such as building new satellite cities, industrial complexes, roads, transportation networks and renovating aging national infrastructure with artificial intelligence and digital embedded technology. Based on this outlook, over the next few years, Korea has the potential to offer business opportunities to international players in project financing and project management services.
The U.S. is considered a global leader in project management for engineering, procurement and construction (EPC) projects. Companies with price-competitive technologies and services should have the potential to successfully penetrate the market in the following areas:
- Project management (PM)
- Project financing
- Building Information Modeling (BIM) software
Although the Korean construction industry has been monopolized by large Korean conglomerates, “chaebol” companies, these companies also actively partner with international companies for engineering, procurement, and construction EPC projects overseas. To identify consortium and partnership opportunities, U.S. design firms should partner with a qualified Korean firm which maintains existing sales networks to serve end-users and which are fully aware of the regulatory changes that drive the market. Also, developing and maintaining an ongoing relationship with these firms is an effective way for U.S. firms to tap into the market. The relationship a firm is engaged in, combined with the relationships of its consortium partners, can build an important and vast business network across markets and national boundaries. This network can help a firm connect to potential customers. Although many projects get awarded through competitive or prequalification processes, some opportunities are provided directly through clients with a high preference for contracting with either U.S. or Korean contractors. Therefore, establishing close contacts and maintaining a vast network of industry leaders, academics who have project knowledge and commonly involved in the decision-making procurement process, and associations that have knowledge of the global construction market is very important.
Global Infrastructure Cooperation Conference, September 2020 https://www.gicc.kr/eng/index.php
Construction Association of Korea (CAK) http://www.cak.or.kr
International Contractors Association of Korea (ICAK) http://www.icak.or.kr
Ministry of Land, Infrastructure, and Transport (MOLIT)
Korea Agency for Infrastructure Technology Advancement (KAIA) https://www.kaia.re.kr/eng/main.do
Senior Commercial Specialist
U.S. Commercial Service, Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongno-gu
Seoul 03141 Korea