South Korea’s consumer goods are emerging as main exports as the country harnesses its cultural soft power, namely the global influence of Korean TV shows, movies and music.
Korea used to rely on cheap labor to manufacture and export textiles and household goods during its industrialization period in the 1970s and 1980s. But the country is now producing high-quality consumer products that are gaining popularity in global markets.
Exports of Korean consumer goods, such as cosmetics, soap, seaweed, and instant noodles, increased significantly last year to reach 30 percent of total exports, the highest share in three decades. This indicates a shift in the country’s traditional export base. The share of IT products in total exports fell below 20 percent last year, the lowest in three decades.
While Korea’s export-led economy used to focus on capital-intensive industries such as semiconductors, shipbuilding and automobiles, some analysts predict that the country is entering a new era of a more consumer-oriented “light industry 2.0″. Korean consumer goods companies are branching into new markets, including the Middle East, South America and Africa, leading this export transition.
The share of exports of consumer goods such as food, clothing, and footwear reached 29.8 percent last year, the highest since 1993 (30 percent), according to data released by the Korea International Trade Association on Jan. 21. Cosmetics exports increased 34.9 percent in the last five years. Hair product exports jumped 40.8 percent, and bag exports rose 38 percent during the same period.
The popularity of Korean food is also on the rise, fueled by the international appeal of Korean dramas and movies. Exports of instant noodles soared 112.6 percent and seaweed exports rose 52.9 percent in the past five years.
Korea’s consumer goods exports used to be highly dependent on China, but this changed after the U.S.-China conflict intensified over the past five years, forcing Korean companies to diversify into new markets such as Vietnam and other ASEAN countries.
As Korean companies expand into diverse markets, they are tailoring products to local preferences. For instance, cosmetics companies have formulated sunscreens with less “white cast” for African markets. Food companies are selling sauces with different levels of spiciness, such as “spicier gochujang” and “less spicy gochujang”. Halal ramyeon for the Middle East and chicken ramyeon for India are also examples of region-specific items.
