What war threat? Our ag trade options flourish in Korea

Korean flashpoint a noisy distraction as ag trade quietly flourishes


Agribusiness
US President Donald Trump and North Korean President Kim Jong-un trading verbal firepower and fury on the news screen at a South Korean railway station .

US President Donald Trump and North Korean President Kim Jong-un trading verbal firepower and fury on the news screen at a South Korean railway station .

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Despite nuclear missile threats, the mood and trade opportunities in South Korea are as good as ever, especially for agricultural products

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The demented rhetoric grows more colourful by the week and the danger of all-out war has unnerved global sharemarkets, but Korea’s headline-grabbing tensions barely seem to raise an eyebrow for Australians doing business with Seoul.

In South Korea –  Australia’s third biggest export market –  trade sentiment and opportunities are seemingly as good as they’ve ever been, especially for agricultural goods.

A newly-elected South Korean president with fresh economic objectives and a steady rise in agribusiness openings stirred by the December 2014 free trade agreement (FTA) with Australia have fuelled the positive sentiment.

However, Australian and Korean-base trade leaders and analysts are frustrated.

Most feel rogue state North Korea is more a silly, super-sized distraction than a serious risk of triggering a superpower showdown embroiling the US and its allies.

Maverick communist North Korea's President Kim Jong-un.

Maverick communist North Korea's President Kim Jong-un.

The Australia-Korea Business Council (AKBC) is particularly disappointed the North Korean headlines are almost the only thing many Australians know about the Korean Peninsula, despite our strong 60-plus year trade relationship with the South Korean Republic.

Australia’s $18.1 billion in exports of minerals, beef, sugar, grain, horticulture and processed foods, coupled with our imports of Korean cars, electrical goods, petroleum and machinery parts make South Korea our fourth most valuable trading partner.

The two-way relationship was worth about $30b last year, and mostly in Australia’s favour.

Despite some strict import protocols and a tradition of agricultural import tariffs, Korea is still our third biggest buyer of beef –  a market worth $1.35b in 2016.

In fact, beef is Australia’s third biggest commodity export (behind coal and iron ore) to the world’s 11th largest economy.

Fresh Australian horticultural produce is finding increasing market demand in South Korea.

Fresh Australian horticultural produce is finding increasing market demand in South Korea.

“But almost every day there’s hype about Donald Trump’s tweets and the man with the missiles in North Korea, so there is a tendency for us to forget our strong ties with the south, while the potential of our economic relationship with South Korea is not well understood,” said AKBC executive director, Liz Johnston.

She said even the new export options created by the FTA with South Korea tended to attract less public discussion here than similar FTAs recently signed with China and Japan.

South Korea's potential is not well understood says Australia Korea Business Council boss, Liz Johnston.

South Korea's potential is not well understood says Australia Korea Business Council boss, Liz Johnston.

“It’s a lot less dangerous and much safer to do business in Korea than just about anywhere in Asia.”

Queensland based fruit exporter, Marie Piccone, couldn’t agree more.

“We like Korea,” said Mrs Piccone, whose Manbulloo mangoes from North Queensland and Northern Territory are in hot demand.

“There are no grey channel trade issues, it’s a very stable and relatively prosperous economy and it has very little corruption.

I’ve never felt unsafe over there and we certainly wouldn’t consider dropping any of our business to Korea. - Marie Piccone, Manbulloo Limited

“We’re watching what’s happening each day, but we have not noticed any signs of other Australian businesses, or our Korean partners, feeling in danger in recent months.

“I’ve never felt unsafe over there and we certainly wouldn’t consider dropping any of our business to Korea.”

Staying calm and carrying on

In Seoul, Australian trade and investment specialist, Daniel Kim, said the build up in ferocious threats and long-range missile tests from maverick Kim Jong-un’s North Korean communist regime during the past nine months had created “very little” visible impact on people in neighbouring South Korea.

Nor did all the hoo-ha appear to have hurt the country’s attraction as a market for new Australian business interest.

Mr Kim, the trade commissioner with Trade and Investment Queensland, said the facts spoke for themselves.

“The travel warnings from Canberra have not changed for Australians visiting here  –  ‘exercise normal safety precautions’,” he said.  

“Yes, we’ve had some Australian CEO’s asking questions with regard to North Korea, but only two of the 40 business visits from Australia I’ve been associated with (this year) have been postponed.

“Most exporters realise South Koreans just get on with their lives –  they’ve been living with this situation in the north since the 1950s.”

He said fortuitously for Australia, “enormous demand” was emerging for overseas food and beverage imports as modern Korea’s overall self sufficiency in agricultural production declined.

Seoul-based trade commissioner with Trade and Investment Queensland, Daniel Kim, says South Koreans, and their Australian business partners, are "just get on with their lives".

Seoul-based trade commissioner with Trade and Investment Queensland, Daniel Kim, says South Koreans, and their Australian business partners, are "just get on with their lives".

“That’s translating into deals for many countries – Korean food imports increased to be worth $16b last year,” Mr Kim said.

Exports from Queensland alone jumped about 30 per cent.

One notable new player was Bundaberg Brewed Drinks which sold 1 million bottles of ginger beer within six months of landing its first container shipment.

Mr Kim said opportunities for Australian processed poultry were now on the cards in the wake of Australian egg producers getting a foot in the door with fresh and processed egg products this year after bird flu forced about 30 million birds (almost a third of the Korean flock) to be culled in the past year.

Our good reputation counts

South Korea’s high priority on food security and safe products had already fostered close relationships and subsidiary businesses within Australia, including beef processing contracts and value-added exports which originated during the Mad Cow disease scare overseas in the 1990s.

Nutriceuticals had become a new active area for Korean investment in Australia.

“Korean investors like Australia’s credentials, but they’re not interested in a land grab,” Mr Kim said.

“The focus is on strategies to deliver safe, premium quality products and innovative food technology to sell in their home markets and globally.”

“There are also shared values in relationships with Korean businesses which tend to create a level of intimacy that’s much more solid than just the transactional function of buying and selling goods.”

Manbulloo managing director, Marie Piccone, with her Australian produce in Seoul.

Manbulloo managing director, Marie Piccone, with her Australian produce in Seoul.

Mrs Piccone, whose Manbulloo operation grows about 800 hectares of mangoes, mostly for domestic markets, agreed the Korean market was less hyped up and more meaningful than other fast rising Asian export destinations.

“Provided you stick to your commitment to deliver what you promise it takes a lot for Korean partners to want to break that relationship,” she said.

“Koreans don’t get highly strung or agitated about what’s going on in the news –  they may be a bit more concerned at times, but they live with this sort of noise from the North every day.”

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