South Korea: The Asian economy that’s open to the world

South Korea, home of brand giants Samsung, LG and Hyundai, is a nation punching above its weight when it comes to matters digital and e-commerce – but what should online retailers outside Asia know before setting up store?

It has a population of over 50 million, making it the 27th largest country by population and is one of the most innovative and open economies out there – in fact it topped the Bloomberg Innovation Index again in 2017.

Its ultra-high internet speeds are the envy of the world and mobile is most emphatically the way its citizens choose to connect and spend online. Already its e-commerce market is the seventh largest worldwide (behind China, the US, UK, Japan, Germany and France) and it is expected to double by 2021 to £25.5bn.

Add to that South Korea’s free trade agreements with 75% of the world economy, its position as part of the wider Asia-Pacific region and the fact that it is the only G20 nation to trade freely with the US, China and the European Union and it’s easy to see why South Korea should be on every international business’s map.

However, it’s not a case of merely transposing your UK, European or US operations like-for-like as several well-known brands can attest. As with China and Japan, South Korea has market-specific idiosyncrasies and challenges – from local social media sites and search engines to next-gen payment methods and its mobile-first culture.

South Korea has the highest average broadband speed in the world, and the heaviest data usage worldwide. It leads the world in 4G mobile usage, with plans to invest USD1.7 billion in a 5G mobile network by 2020. A staggering 81.6% of all internet access comes from smartphones, predicted to increase to 88% by 2021.

Google, the near-dominant search engine in the UK and US, is almost irrelevant here, attracting just 2% of searches in 2015, while Naver dominates with a 77% share of all searches and Daum with just over 19%.

Naver’s search results are displayed in groupings of results, similar to Google’s Universal Search. There are more elements in Naver’s results, particularly the Wikipedia-like Naver Encyclopaedia and Naver Blog, and these should inform a targeted SEO strategy. Both feature prominently in search results and the presence on each will help with rankings. Content is important and should be unique and in Korean – not English, and sites must be mobile friendly with fast loading speeds.

Similar to markets like China, Hong Kong and Taiwan, social commerce is big in South Korea with over two-thirds of internet users participating, again predominantly through smartphones.

The big social networks to consider (along with Facebook, Twitter and Instagram) are Kakao including KakaoTalk, a free mobile instant messaging application and KakaoStory a service for image video and music sharing and Line, a Japanese messaging cross-platform application and subsidiary of Naver. There is also Naver Café which is a native South Korean social media platform and heavily influences visibility.

Credit card payment is commonplace in South Korea, but the authentication process which most banks use, using Active X in browsers, has recently been abolished, leading to a surge in e-wallet accounts such as PayPal and Alipay.

International brands wanting to set up shop in South Korea have plenty to play for in an Asian economy that’s open to the world – but to thrive they must understand the digital culture of the world’s seventh biggest e-commerce market.

Greig Holbrook is founder of Oban International, which published a report about the e-commerce opportunities of South Korea, China and Japan called 3 Asian growth markets for 2017.

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