S'pore exporters set off on scouting mission to S.Korea

WHAT does a home-grown firm need to penetrate the South Korean market?
Eleven bosses of medium-sized home-grown enterprises yesterday set off on a first-of-its-kind business mission to answer that question - a year or so after a bilateral trade deal took effect.

Organised by trade agency IE Singapore, the week-long trip is the first official Exporters' Business Mission from Singapore to South Korea.

It follows the implementation of the South Korea-Singapore free trade agreement (FTA) in March last year, which cut average duties for Singapore products by up to 22 per cent for food, and 7 per cent for electronics and precision engineering.

The companies hail from industries as diverse as wine distribution, precision engineering and real estate, and include Hock Tong Bee and Allied Technologies.

'The purpose of this trip is to take new exporters to Korea - those who don't know Korea very well - to understand the business environment,' said Mr Thian Tai Chew, the director of IE Singapore's trade and enterprise groups.

South Korea is Singapore's 11th largest export market; the main Singapore products imported include electronic valves, petroleum and telecommunications equipment.

Bilateral trade in the first seven months of this year came to $19.4billion, up nearly 10 per cent over the same period last year.

What small and medium-sized enterprises (SMEs) in Singapore might not know is that there is a growing appetite in South Korea's affluent economy for services such as spa treatments. Other promising sectors include food, furniture, digital media and lifestyle services, said Mr Thian.

'But they need to invest the necessary time and resources to understand the Korean market,' he added. This is where Exporters' Missions come in.

Joining this trip as a partner is Standard Chartered Bank (Stanchart).

It aims to corner the market in cross-trade financing for Singapore-based SMEs heading to South Korea - capturing 10 per cent of bilateral flows in three to five years. Trade financing services include letters of credit, import-export collection and outward bills.

There has been spectacular growth in demand for South Korea-Singapore trade financing, said Mr Victor Lee, Stanchart Singapore's general manager for SME banking.

'We're starting to get a lot of inquiries from customers asking: 'How do we get in?''

South Korea, like Japan, has a difficult culture to break into, he noted. Still, he feels the bank is well-placed to woo this lucrative market following its 2005 purchase of Korea First Bank. This lifted Stanchart's South Korean presence from 'negligible' to a network of more than 300 branches, of which 89 are SME-focused, said Mr Lee.

He noted, for example, that if a customer has a $5 million credit line in Singapore and needs $2 million in working capital in South Korea, 'we'll be able to assign those lines into Korea, so he can kick off banking and borrowing relationships straight away'.

--------------------------------------------------------------------------------

Money-spinners

South Korea is the 11th largest market for Singapore's exports. The most popular imports include electronic valves, petroleum and telecommunications equipment.

Bilateral trade between the two countries reached $19.4 billion for the first seven months of this year, nearly 10 per cent stronger than in the same period last year.
Promising sectors include food, furniture, digital media and lifestyle services, says IE Singapore director Thian Tai Chew.

Trade financing services are also on a sharp growth path, according to Mr Victor Lee, Stanchart Singapore's general manager for SME banking. These include letters of credit, import-export collection and outward bills.