Some of the challenges faced by U.S. companies attempting to conduct business in Korea include unique industry standards, less than transparent regulations, resistance to foreign business models, and competition and price pressures from domestic manufacturers. In addition to these challenges, U.S. exporters of agricultural commodities must navigatemultiple import regulations and testing requirements.
Despite these challenges, firms that are innovative, patient, and committed to entering the Korean market will find business to be rewarding and Koreans to be eager and loyal customers. For example, Korean consumers are quick to adapt to new technologies, and many U.S. firms have found their technological products to be well-received in the country.
The Korea-U.S. Free Trade Agreement (KORUS FTA), last amended in March 2018, has helped facilitate bilateral trade, making Korea an attractive market for U.S. companies to enter.
However, in addition to U.S. products, EU products have enjoyed reduced or no tariffs since 2011. Australia, Canada, and China have also entered free trade agreements with Korea. Consequently, U.S. products must compete on a relatively equal footing in Korea.
U.S. small- and medium-sized enterprises (SMEs) must remain flexible with Korean business counterparts pertaining to contract terms, such as renegotiating price, quantity, and delivery terms, following business deals or bilateral contractual agreements. The traditional approach to business deals in Korea, where the signing of a contract is perceived as just the beginning of a business relationship, differs significantly from that in the United States. That said, U.S. SMEs hoping to succeed in Korea should familiarize themselves with tactics and strategies to sustaining positive relationships with their Korean counterparts.