KOTRA Goes from Strength to Strength, Keeping Up Global Changes
-Korea celebrates exports surpassing the $200 billion mark

Korea's exports surpassed the $200 billion mark on Oct. 22 for the first time in history, an unprecedented milestone the nation has achieved in the shortest period of time in the world -- 40 years after it posted exports worth $100 million in 1964. The government-initiative is one of the many reasons behind the remarkable achievement to increase exports. Now that Korea has become the 12th largest exporter in the world, the nation endeavors to make its way toward achieving a vision of raising the per capita national income to $20,000. To achieve this lofty goal, experts say annual exports need to rise to the level of $400 billion.
Look into the export-driven Korean economy retrospectively. In 1962, Korea launched the first five-year economic development plan. During that year, the Korea Trade Promotion Corporation, a non-profit organization, the predecessor of KOTRA, was established to develop the economy into an exporting powerhouse.
Korea has gone to great pains to reach the goal with export-driven policies considered the best option for a nation lacking natural resources: The country has crossed the $200 billion mark in exports, similar to the combined export total of 38 nations in South America, which stood at $211.9 billion in 2003.
Said Kim In-shik, executive vice president for trade promotion at KOTRA said "exports serve as the underpin of the Korean economy as the percentage of overseas shipments contribute to the annual economic growth amounts to about 90 percent, the world's highest trade dependence rate". The domestic export industry has undergone tremendous changes as businesses go global thanks to rapid technology advancement and borderless competition. Things have changed with the mainstay export items shifting from cushions and mats, and squids in the 1960s; to heavy-industry products in the 70s; to high-tech items in the 90s. "What KOTRA explored as the first export item since its inception with the help of the people was the wig that later managed to emerge as Korea's hot export item, and Korea has now evolved into a high-tech exporting country", Kim said. Korea's export destinations have been diversified with the number of her exporting nations rising to 230, he noted.
Korea Trade-Investment Promotion Agency (KOTRA) is charged with another mandate of inducing foreign investments on top of promoting trade. The KOTRA executive vice president said, "The two duties seem to be two sides of the same coin."
KOTRA is exerting itself to explore new markets, said Kim, adding that such knowledge and service while exporting cultural items have become new markets in specialized sectors.
One of the exemplary cases is the global procurement market that Korea targets as one of its new mainstay exporting arenas in the wake of the market-opening measures that have taken effect according to the World Trade Organization's Government Procurement Agreement (GPA).
KOTRA has focused on exploring the lucrative North American procurement market valued at about $70 billion, EU and Latin American markets, he said.
Hauri succeeded in establishing a bridgehead in the procurement market of the U.S. federal government by acquiring a contract to supply $85 million software to the government, with which launching business were considered a difficult task. The deal was inked when Hauri participated in FOSE 2004, an IT-related U.S. government procurement exhibition. CC Electronics, another participant of FOSE 2004, landed a deal to supply 15-inch LCD monitors worth $200,000 for the installation of post offices.
The Seoul Standard and another company took part in negotiations with L3 Communication on the supply of notebook PCs for military use while attending the U.S. Invitational Government Vendors Consultation Meeting. The two companies are expected to sign a deal with the American company.
KOTRA has provided support to Korean companies foray into the procurement market for EU international organizations. Auto3D Corp. signed a contract with BUK Auto of Denmark to export 10 vehicles worth $300,000 during the prime contractor invitational session for the EU procurement market held on June 3, 2004. Saracom negotiated a deal with Zenitel Belgium NV of Brussels to supply maritime communication equipment worth $3 million, while Hanwha is participating in BDP Wehr technik's bid for $6.9 million worth of military supplies.
Thanks to the help from Latin America Korea Trade Center of KOTRA, CK Dental has come to conclude a 420 million deal on the supply of dental injection needles with the Chilean health authorities.
What KOTRA does for the support of its main clientele, small and medium exporters is to provide on-line, off-line information on its surveys on overseas markets through its extensive network of overseas Korea Trade Centers. Korea has a staff of 1,200 employees with 102 overseas Korea Trade Centers and 12 others in Korea that are operated around the clock.
KOTRA dispatches trade missions to explore foreign markets, being formed based on specialized sectors, regional autonomous bodies, or invite foreign buyers. The KOTRA executive vice president said KOTRA arranges Korean companies' participation in 177 foreign exhibitions annually while organizing two exhibitions domestically - Seoul International Good and Food Expo.
Multinational corporations' outsourcing of parts is one of the most active projects KOTRA implements annually. Fifteen negotiation sessions for multinationals outsourcing Korean parts were held in the first nine months of this year with 79 foreign buyers and 429 Korean companies participating. The participants negotiated contracts worth $545,835,000 and deals worth $62,802,000 were inked during the sessions.
Dong-A Hwa Sung Co. Ltd. signed a contract to export $600,000 gaskets to Polytec of Germany since the Korean company contacted its German business partner during a session for outsourcing by European automotive part makers, held last April 28. Dong-A Hwa Sung is holding negations with four other participants, including Valeo of France.
Dymos was in negotiations on exporting $100 million worth of real axle assemblies during GM-KOREA Autopart Plaza. The Korean company will set up a tech center in Detroit, the United States. General Motors executives showed a keen interest in the navigation system of Daewoo Precision Industries Co. during the session.
Dae Myung Engineering Industry Co. Ltd. held negotiations with Berlin Metals LLC during the parts session for U.S. manufacturers last June 3 and concluded a $280,000 deal two months later after the American buyer visited Dae Myung's plant. The Korean company is in the final stage of landing an additional $109,000 order.
Yoon YoungOs $23 million OEM deal with GM Holden is part of KOTRA's efforts to diversify automotive parts exports to Asia and Oceania. The Australian companies made an inspection tour to Yoon Young's automotive parts makers, including Hyundai Dymos. Kowoo Co. landed an order to supply inner shaft and gear case from Matushita Electric.
Four Korean companies have managed to foray into the Japanese parts outsourcing markets through the support from KOTRA so far this year. Shin Shin Machinery, one of the four parts makers, obtained recognition over two auxiliary oil pumps to IHI, supplied to a Japanese company of shipbuilding, power generation, and heavy electricity parts, for an experiment. Shin Shin is expected to export 70 pumps worth $50,000.
Han Yang Bender Co. is one of the two Korean companies who has penetrated the parts outsource market for multinationals through the help of KOTRA. Han Yang Bender signed a $1.5 million contract with Valeo's Chinese headquarters to supply automotive parts, including cnc pipe, pipe end former.
KOTRA operates a regular 3-D cyber trade negotiations service, a cost-saving arena with no space and time limitations, Kim said. Through the regular cyber space, 251 foreign buyers and 266 Korean companies have discussed negotiations on trades worth $138,473,000 so far this year, of which $4,390,000 has been concluded or is still under discussion. Six hundred and sixty-seven foreign buyers have contacted 463 Korean companies for 909 trade negotiations worth $88,358,000 through 13 cyberspace exhibitions held in Korea and abroad. Out of the total amount, $7,967,000 has been concluded or is still on going for conclusion.
KOTRA is focusing on strengthening Korea's presence in machinery and plant markets in the Middle East and Africa, according to Kim. KOTRA has arranged trade missions or organized trade negotiations sessions for machinery and plant buyers from the regions. Daewoo International has supplied $2 million worth of transformers to Ghods Niroo after the relevant officials of the Iranian power distribution company were invited to Korea in 2003. Hyundai Heavy Industries Co. landed a $986,000 order on power generation facilities in Dominica, outbidding a Finnish company, while Poongsan exported $1.16 million worth of military supplies to CAVIM, a military supplies company in Venezuela.
A Korean company concluded a contract to export $8 million worth of noise- and heat-proof panels at an unmanned telecommunications station in India. The deal was the outcome of the Korean company's participation in the West Asian bidding explanation session organized by KOTRA and follow-up measures. Yoon Jin Engineering Co. succeeded in acquiring a $40 million hydroelectric power project in Nigeria. Daewoo International is in negotiations on a production joint venture with Electronics General Co., a Libyan state-run electronics company, after they have already inked a $2 million deal through consultations sessions. Doosan Heavy Industries and Construction plans to participate in a $200 million power plant construction project for the Libyan electricity authorities. The delegates from the two Korean companies were among the participants of a machinery and plant trade mission who was dispatched to Libya and Iran between Sept. 18 and Sept. 25.
Under a logistics pilot program for Korean small and medium enterprises (SMEs), KOTRA has operated the European Consolidated Logistics Center for Korean SMES, a subsidiary of the Amsterdam Korea Trade Center since its inception last April.
Fourteen Korean companies are participating in the program, aimed at building a European logistics infrastructure for Korean SMEs with a minimum cost, Kim said.
Under the program, Cedodis-Vitesse, a Rotterdam-based logistics company, is commissioned for warehouse and transportation, while KOTRA's 26 trade centers in Europe support marketing activities for the participating Korean companies. The Dutch company has a warehouse of 200,000 sq. meters with an extensive network of 682 logistics centers in 120 countries.
Kim said KOTRA is contemplating to expand the consolidated logistics center program to such areas as the United States and Eastern Europe. KOTRA has arranged Korean SMEs participation in negations session with invited foreign distributions juggernauts as part of efforts to explore foreign markets as they find themselves hard to conduct their own marketing abroad due to huge costs and the difficulty of gaining trust.
One of the projects in which KOTRA extends a helping hand to SMES is to assign some staff members of overseas Korea Trade Centers to a task of conducting the duties as SMEs virtual overseas branches. KOTRA has expanded the number of the SMES participating in the program to more than 1,600 this year from 1,555 last year. About 75 percent of the SMEs from the provincial areas take part in the program. KOTRA plans to reinforce its domestic supporting group as well as the staff members in charge of the program, he said. nw