SPAIN
AND SOUTH KOREA – The Beginning of a beautiful friendship
The free trade
agreement between the European Union and Korea was the beginning of a new era
for their trade relations. Even though the FTA is the first agreement of its
kind, it is a great example of how successful an union like this can be. It
offers benefits and growing possibilities for both sides. Especially Spanish
companies have used this possibility to grow new markets on the other side of
the world, enriching Korea’s choice of products and satisfying needs of a new
customer group.
This agreement is expected to not only boost bilateral trade and economic
growth in both the EU and Korea, but also to have a wider impact in Asia and
everywhere else by showing the EU’s willingness to do business with other countries.
The most important companies
from Spain or multinational companies with Spanish participation are:
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Lantek: Company which constructs
metal working machines.
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Fagor: Household appliance firm.
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Izasa scientific: Electronic medicine
firm, which designs machines for medical investigation or for the environment.
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Grupo Antolin: Firm for designing and
producing components for the automotive industry.
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BBVA: One of the most important banks
in Spain.
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Inditex: One of global players in
fashion (with many sub brands like Zara, pull and bear, oysho etc.)
The presentation
focused on:
BBVA – BBVA is a global financial group with
presence in 35 countries. It is Spain’s most important bank and an
influential company with assets of more than 750 billion Euro. Francisco Gonzalez
Rodriguez is the chairman of the company since 2000. The Korean office of BBVA
is located in Seoul and was the first Spanish bank with presence in South Korea
and has 14 employees.
Next up was Borsao,
one of many Spanish wineries. After the
implementation of the Free Trade Agreement Korea has become a priority market
for many Spanish wineries. The growing interest of the Korean public resulted
in an increase of 14% of exports of Spanish wine in 2012, and nearly 40% during
the next year. The most important reason for the increase is the affordability
and accessibility caused by the FTA which allowed Spanish wine to compete with
wines from different countries like Chile or Argentina. Examples of Spanish
wines in Korea are Marqués de Cáceres or Freixenet.
The last part of
the presentation focused on the fashion company INDITEX. It hosts some famous
brands like Zara, Pull&Bear and Bershka. INDITEX stores are represented
worldwide. They are operating in over 90 markets and in 2008 they entered the market in South Korea and opened the first store
in Seoul. Currently, INDITX has 70 stores
in South Korea and Zara is by far the most common one.
INDITEX always uses
a similar method when they enter a new market. They buy buildings in the most commercial
areas in the city and search for a partner that knows the regional market well.
They made their debut to the Korean market through a joint venture with Lotte
Group, Korea's biggest department store operator. This venture helped Zara to
develop its business in Korea, with a big thanks to Lotte's knowledge of the
Korean market. The brands that INDITEX includes are high-fashion
orientated and the prices in Korea are quite expensive compared to Europe which is
because of the export costs, including tariffs and
currency fluctuations.
By presenting us these different companies that made
an impression on Korea and its customers this group managed to show the impacts
of the FTA in an approachable and understandable way.
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European Food I
The presentation started with some general
facts. European agricultural and processed food products have a very good
reputation with Korean consumers and the EU has substantial agricultural
exports to the Korean market, which is why the group chose to enlarge on this
topic. July 2016 marks the fifth anniversary of the EU-South Korea Free Trade
Agreement (FTA) that took effect in July 2011. It goes further than any
previous agreements in lifting trade barriers and it is also the EU's first
trade deal with an Asian country. The agreement
eliminates duties for industrial and agricultural goods in a progressive,
step-by-step approach. The EU and South Korea are important trading partners.
South Korea is the EU's ninth largest export destination for goods, whereas the
EU is South Korea's third largest export market. Later in this presentation, the group talked
about a selection of products or brands that have a European-Korean
relationship, focusing on five countries: Netherlands, Spain, Italy, France and
Austria.
One of the products
presented was Red Bull, very prominent nowadays in Korea. The Swiss brand
started importing their energy drink in 2011 after the ban on energy drinks was
lifted and is introducing their signature sports event in a very unique way to
introduce it to Korean culture. Continuing with drinks, another drink that was
presented was Heineken from the Netherlands. The last couple of years Heineken
is becoming more and more popular in South Korea. One reason why it is becoming
popular is because it is getting more accessible. However since it is an
imported beer, because Heineken does not own a brewery in South Korea, the
prices of Heineken are still quite high compared to local beers. Heineken tries
to focus more on the marketing in Asian countries such as South Korea through
several campaigns such as ‘’Cities of the World’’. By doing so they will gain
more popularity in those cities. The group also focused on trade between France
and South Korea threw two significant example of the French culture. With the
example of Paris Baguette, one of the largest bakery chain worldwide, they
highlighted how Korean companies use French image (high quality and luxury in
Asia) in their marketing strategies. Then, with the example of wine, they
focused on the importance of alcohol trade in Korea (third highest Asian
country in consumption of wine) and the expertise image of France in this field
but also on the difference of prices (more expensive) because of a 30% tax on
alcohol and mandatory Korean quality test costs before entering the country. The
Spanish brand chosen for the presentation is Urzante, a Spanish company that distributes olive oil.
Urzante began as a small company with a craft production in the small town of
"Cascante", in Navarra. The Spanish favorable climatic conditions do
not require special interventions for pests, and only certified organic
fertilizers from organic olive cultivation are used. Urzante, 60 years later,
remains the preferred brand in the region, having also successfully spread to
more than 60 countries worldwide, including Korea. The olive grove has an area
close to reaching 100 hectares, with more than 50,000 trees planted in both
traditional mechanized and intensive systems. You can check the exact origin of
the oil by simply reading the batch on the label. The group finished up their
presentation by going into detail about the Italian
company Ferrero and their chocolate products that are distributed all around
the world, it was a sweet treat, literally speaking!
