The basis of this country attractiveness report is to identify the most suitable target market to launch a sea food enterprise. The two countries within our scope are South Korea and Singapore. In this report we evaluate the level of attractiveness on the basis of political variables, economic variables, and socio-cultural variables. This report includes an analysis of the suitability of the selected markets via an exploration of the already existing seafood market as well as information that is required for the market entry.
The basis of this country attractiveness report is to identify the most suitable target market to launch an sea food enterprise. The two countries within our scope are South Korea and Singapore. In this report we evaluate the level of attractiveness on the basis of political variables, economic variables, socio-cultural variables. This report includes an analysis of the suitability of the selected markets via an exploration of the already existing seafood market as well as information that is required for the market entry.
At the moment, South Korea imports over 70% of its food (Gillman, 2007). Several factors like an ever growing population, changes in consumer demand for a healthier meals, increasing wealth, lower prices as well as convenience are noted to have contributed to an ever increasing and heavily dependent upon food imports. The level of food imports to South Korea is noted to have grown rapidly since the 1990s. South Korea's food sector is increasingly exhibiting trends common in the developed economies. These trends include attractive marketing, convenience as well as other attributes. Processed food, animal products and beverages are noted to be becoming an integral element of the country's food consumption.
The South Korean retail sector
A review of the South Korean retail sector is noted to be experiencing a dramatic evolution ever since the very first hypermarket was opened in 1993. The liberalization of the nation's large scale retail business since 1996 to foreign ownership is another factor for the fast evolution of the retail market. The modern day large scale retail businesses like hypermarket chains, convenience stores, grocery supermarkets as well as online retailers have grown so fast an surprised the growth of the traditional retail outlets like the family owned ones over the years. The expansion of the retail channels when coupled with the use of new information technologies have transformed the way the Koreans purchase their consumer products.
The global financial crisis had an effect on Korea between 2008 and 2009. This resulted in a slowdown in the retail sector. The economic slowdown took a great tool on the traditional traders but provided an opportunity for the modern format players like hypermarkets to further expand their dominance. Korea has a seafood trade deficit. The imports are exceeded by the exports as a result of the nation's continued depletion of resources (USDA,2011).
The South Korean seafood market
The Korean seafood market is noted by ASDA (2011) to be outstanding and is posed to growth with time. The domestic supply of seafood is decreasing as a result of the depletion of most of the near sea fishery resources as well as restrictions on the concept of international deep sea fishing. South Korea is noted to be a major market for sea food in the greater Asian region (Smith, Dennis, and Proctor,2006).The South Korean seafood market offers a great investment opportunity in the long-term. This is supported by the strong economic growth which is expected in the nation coupled with a strong demand for seafood. Most of these are associated with the nation's high level of economic growth as well as increases in the level of disposable income (Smith, Brown and McKelvie, 1992)
Rabobank (2006) noted that South Koreans form one of the world's largest consumers and lovers of seafood products. For instance in 2002, the per capita seafood consumption was at around 45.5 kg while the average expenditure of an urban household on seafood products was estimated to be around $372. In South Korea, the most popular species are squid, Alaskan Pollack, yellow corniva as well as hair tail. The South Korean seafood market is a multi-billion dollar industry and is the 3rd largest in Asia. Irrespective of state of the South Korean economy, the level of consumption of seafood is predicted to increase at the very expense of other animal products.
It is widely expected that the nation's fishery production will continue experiencing a decline over the next couple of years due to overfishing. The South Korean government in reaction has accelerated the process of downsizing the nation's fishing fleet with plans underway to further reduce it over the next couple of years. This is noted to be in addition to close to 14.7% decline in the level of total capacity that was experienced in the 2001-2003 period.
Most of the key players in the South Korean seafood industry are companies, grocery stores as well as wet market sellers.
The South Korean seafood market is heavily regulated. The Korean Ministry of Health and Social Affairs and the Korean Fishery Inspection Authority have placed several benchmarks that must be met by companies that deal with seafood. They also have strict quality assurance laws that dictate standards to be used for bacteria count, radioactivity, mercury, lead as well as the level of oxytracyclene in the case of farmed salmon. The Korean Government maintains very strict regulation on various food imports. The government also requires certain certifications on product labeling,
This is a quantitative restriction on the actual volume of imports of a certain fish/seafood category. This imposes a certain level of uncertainty on the exporters of the seafood products to the nation. The general lack of assurance on the level of access to the market makes it difficult in establishing a reliable seafood establishment. Under this import licensing scheme, there is a need to get prior approval from the South Korean Ministry of Fisheries.
The South Korean government applies tariffs on imported seafood products. These tariffs are very high as compared to the standards of most countries in that region. The tariff rate which is applied to most fisheries imports is 20% percent ad valorem even though for the prepared and preserved seafood like canned mollusks and crustaceans, the rate is 30% . The high tariff generally reduces the attractiveness of the South Korean seafood market.
The lifting of various imports barriers like high import tariffs, bilateral phytosanitary agreement and import tariff, and import volume quota has lead to a change in the nation's competition structure. These can allow for easier importation of fresh seafood to be sold in the South Korean territory.
Ban on certain fishing activities
Due to the rapid depletion of sea resources, the domestic supply of seafood is decreasing as a result of the depletion of most of the near sea fishery resources as well as restrictions on the concept of international deep sea fishing. The government therefore banned certain fishing practices
The South Korean economy has seen a considerable level of growth since the 1997 Asian Financial crisis. The country's GDP stands a $1.01 Trillion and is projected by OECD (2012) to be poised for a 4.25% growth in 2013.A strong GDP is good since it encourage consumer and raises the level of consumer spending index. The GDP has seen a considerable reduction in 2012.It is therefore worth waiting to see what 2013 and beyond will offer before launching a product into this market
The average monthly expenditure of a South Korean urban household on fishery product by 2005 was $35.
Koreans are noted to prefer live fish to the fresh ones. They also prefer fresh fish to the frozen ones. They also believe that the fresh fish tastes better that the frozen ones even after being cooked. This means that the price of fresh fish is quite higher than that of the frozen one. The demand of precooked, preserved and prepared food has been on the rise due to the increasing number of women in the workforce.
Koreans are very aware of food safety and healthy living. These ideas affect their consumption of seafood products. The Koreans appreciate the health benefits of seafood and their level of safety as compared to other animal product that are often drawn off shelves due to cases of diseases like mud cow disease and Avian flue for cow meat and chicken meat respectively.
Singapore is an Asian nation with a population of 4.5 million.
The Singaporean seafood market is noted to be experiencing a rapid decline in size over the years with the level of per capita consumption reducing to 20.8 kg (2006) down from its 2001 value of 23.3 kg. A 7 kg reduction in per capita consumption is noted to have taken place since the…