Expanding Opportunities for Australian Business in Innovative Korea · in developing new drugs with high market potential in areas such as oncology and the central nervous system

DEPARTMENT OF FOREIGN AFFAIRS AND TRADE • SEPTEMBER 2018

Connecting DFAT’s diplomatic network to Australian business

Also in this issue:

POPULOUS - Winning designs and

architecture p6

Financial services find their footing in Korea p11

AustCham – Doing Business in Korea p14

Medical Science and Technology Innovations p22

DEPARTMENT OF FOREIGN AFFAIRS AND TRADE • OCTOBER 2018

Expanding Opportunities

for Australian Business in

Innovative KoreaJames Choi

Australia’s Ambassador to the Republic of Korea

Korean-born Australian Dami Im,

showcasing creative and diverse Australia p4

Department of Foreign Affairs and Trade

Expanding Opportunities for Australian Business in Innovative Korea

James Choi Australia’s Ambassador to the Republic of Korea

The Republic of Korea (also known as South Korea) is an economic and trade

heavy-weight. It is the world’s 11th largest economy and the sixth largest exporter.

Korean corporations are leaders in research, development and innovation, and are

deeply integrated into global value chains.Australia and Korea enjoy a long-standing and complementary trade relationship. Australia’s resource exports have traditionally underpinned our bilateral trade, with our coal, iron ore and gas fuelling Korea’s steel and energy sectors.

But this resources narrative will gradually change as Korea transitions from capital intensive manufacturing and prepares for the economy of the future.

The Korean Government, business sector and universities are making a big play in start-ups, artificial intelligence (AI), robotics, block chain, big data, the internet of things, biotechnology and renewable energy.

Korea ranks first on the Bloomberg Global Innovation Index 2018, reflecting its performance in science and technology, research and development spending, education and patents.

These investments will ensure that Korea will be at the forefront of developments in self-driving cars, smart cities, smart homes and smart factories.

As it prepares to be the first in the world to deploy commercial 5G mobile technology in early 2019, Korea is creating the enabling environment for it to be a leader in the digital economy.

Given these trends, it is clear that science, technology and innovation, and the services underpinning the new economy, will become key themes for our bilateral trade relationship.

The Australian Government’s National Innovation and Science Agenda dovetails well with Korea’s priorities.

Australia is ranked equal first in The Economist’s Technological Readiness Ranking, which forecasts which economies are best prepared for the digital disruption that is transforming the global economy.

This complementarity paves the way for a new phase in the bilateral trade partnership with Korea under the banner of the “Fourth Industrial Revolution”.

The entry into force of the Korea-Australia Free Trade Agreement (KAFTA) in December 2014 is providing a strong platform to diversify our trade relationship by creating new opportunities in services and investment.

KAFTA guarantees Australian services providers access to key areas of commercial interest, including financial services, health services, telecommunications and legal services.

Contents


3

On the cover Dami Im 4

POPULOUS - Winning designs and architecture

4

Korea and Australia time to join forces for the Fourth Industrial Revolution.

6

Global Insights Dispatches from Australia’s global diplomatic network

8

Financial services find their footing in Korea 11

Australia in the Republic of Korea 12

AustCham Doing Business in Korea 14

Australia-Korea Foundation fostering greater understanding 15

The Australia-Korea Business Council enriching bilateral relations

21

Medical Science and Technology Innovations 22

Australia’s trade with the Republic of Korea 23

Department of Foreign Affairs and Trade 3


James Choi Australia’s Ambassador to the Republic of Korea

Services account for around 60 per cent of Korea’s GDP and 70 per cent of Australia’s – but amount to only 5.8 per cent of bilateral trade. There is significant scope to expand our bilateral services trade.

With five rounds of tariff cuts since the entry into force of KAFTA, we have also seen strong export growth in our traditional areas of strength such as energy, minerals, agriculture, food and beverage.

It is encouraging that a recent PricewaterhouseCoopers (PwC) study showed that more than 80 per cent (by value) of eligible Australian merchandise exports to Korea were benefiting from KAFTA tariff preferences.

The level of investment between Australia and Korea is modest but growing. The stock of Korea investment in Australia increased from $4.9 billion in 2006 to $26.3 billion in 2017, but Korea still only ranks as Australia’s 15th-largest foreign investor.

By raising the screening threshold for Korean private investors in non-sensitive sectors, KAFTA has helped reduce barriers to Korean inbound investment and delivered the clear message that Australia is open for business.

This dedicated Republic of Korea edition of Business Envoy showcases the changing nature of our bilateral trade relationship and the success stories of Australia firms who have taken advantage of KAFTA.

It highlights some of the opportunities on offer in one of the world’s most innovative countries. There has never been a better time to do business with the Republic of Korea.

The Some Sevit complex is made up of three man-made floating islands located close to the southern end of Banpo Bridge in downtown Seoul.

On the cover

Department of Foreign Affairs and Trade4

The Australian Music Industry has experienced its strongest growth since 1996 with the uptake of streaming music services. ARIA (Australian Recording Industry Association) reported a 10.5 per cent increase in the value of the Australian recorded music industry to $391 million in its annual wholesale figures for 2017.

Korean born Australian singer-songwriter Dami Im has contributed to the Industry’s expansion with her rise to pop stardom over the last five years. She walked off The X Factor stage in 2013 victorious and strode, without delay, into the #1 spot on the ARIA charts with her platinum self-titled album Dami Im. Since then, she’s released two more acclaimed studio albums.

In 2016, she represented Australia at The Eurovision Song Contest in Sweden, placing Australia centre stage with her stellar performance of Sound of Silence. The European juries awarded her second place, confirming her status as a true international star.

“I fly to countries such as Korea, China, Singapore, America and Sweden to perform my songs and to write new ones” says Im.

Her most recent visit to Korea in August 2018 saw her travel from Seoul to Chun Cheon doing radio and TV appearances, which included King Of The Mask (TV) All That Music / KBS (TV), Morning Garden (TV) & 7080 (TV) and pretty much every possible radio interview in-between. Dami Im’s new album I Hear a Song is available now on your favourite streaming service.

POPULOUS – Winning designs and architecture.

As an aesthetically-conscious and tech-savvy country, Korea places a premium on innovative design.

Image caption: NC Dinos Baseball Park Image Credit: POPULOUS.


CASE STUDY

This explains why the edgy global architecture and design firm POPULOUS, which has its Asian headquarters in Australia, has been successful in winning competitions to design creative sporting venues in Korea.

POPULOUS won a competition to design the NC Dinos Baseball Park in Changwon, in the south of Korea. The 22,000 seat NC Dinos Baseball Park features rooftop gardens stretching the length of the building area, and is set to become the social and recreational hub of the region.

The stadium is surrounded by interactive parklands, and to maximise efficiency, all the commercial and

retail spaces in the stadium (restaurants, shops, function room and café) have been designed for use outside game days. The project is scheduled for completion for the 2019 season.

POPULOUS also designed the winning scheme (which was then implemented by a local architect) for the Incheon Asian Games Stadium, the main arena for the 2014 Asian Games. The multipurpose stadium held some 60,000 people during the games. Its unique ‘collapsible’ design means it can be re-purposed into a single-sided grandstand for 30,000 people as part of a more frequently usable public open space.

Korea’s Fourth Industrial Revolution is the next phase in the transformation of the Korean economy. Within 40 years, Korea has shifted from an agricultural based economy to a high tech sophisticated manufacturing economy with the rise of household names like Samsung, LG and POSCO, known as the chaebol, who account for 80 per cent of the economy. Korea is now investing heavily in the Fourth Industrial Revolution - the new wave of industrial development.According to the OECD, Korea has the second highest gross domestic spend on research and development globally, with the government reportedly investing over USD2 trillion. Other contributors to research and development to foster new innovation and technology are the global companies, smaller firms and start-ups, universities and research institutes.

Korea’s chaebol are also investing upwards of USD4 trillion in research and development to fast track technology convergence. Korea is making headway in batteries, autonomous cars, new fuel cars such as hydrogen fuel cell vehicles, biologics, the internet of things and 5G to name a few. Global expansion of the chaebol and manufacturers, seeking new technology and solutions, provides opportunities for Australian businesses and research organisations to partner with Korea.

Other key triggers and trends in the Korean economy which support increased bilateral commercial partnerships include:

• Korea’s financial institutions, pension funds, insurance companies and banks, seeking higher yields offshore;

• Food safety and security concerns leading to investment interest in agribusiness assets;

• The expansion of the global value chains of Korea’s chaebol;

• Korea’s sophisticated engineering and construction capability seeking overseas growth;

• Ten research-driven Korean hospitals looking for international partnerships;

• A push by the Korean Government to develop start-ups and an environment conducive to scaling-up;

• Entry into force of the Korea Australia Free Trade Agreement (KAFTA) in 2014, reducing tariffs and providing a competitive edge for items such as horticulture; and

• A demand for vocational skill training and international higher education.

Some examples of where Australian and Korean companies are reshaping the relationship include:

Financial services – Korea’s large pool of pension funds is seeking higher yields offshore through investment. With

the lowest birth rate in the OECD, Korea’s rapidly aging population now needs increased financial security from personal investment. See ‘Case Study: Financial services find their footing in Korea’ on page 11.

Infrastructure, construction and engineering: Korean Engineering and Construction (E&Cs) firms have high interest in Australian infrastructure projects - GS E&C, Samsung C&T and POSCO E&C are now firmly established in Australia. On infrastructure financing, Korean pension funds are seeking to invest in non-traditional asset classes. GS E&C was shortlisted as part of a consortium bidding to build the Cross River Rail in Brisbane. See ‘Case Study: Building links – WestConnex, Samsung C&T and Lendlease’ on page 10.

Life sciences – Life science units of the chaebols as well as major research and development spenders in the Korean pharmaceutical industry are increasingly showing interest in developing new drugs with high market potential in areas such as oncology and the central nervous system. See ‘Case Study: science, innovation and technology’ on page 20.Resources, energy and renewables – The Korean Government is planning on gradually reducing the country’s dependence on fossil fuel for energy – including coal, LNG and petroleum. The Korean Government has a long-term objective of transitioning to a cleaner energy mix, with


Korea and Australia - time to join forces for the Fourth Industrial Revolution.Amanda Hodges Senior Trade and Investment Commissioner, Korea As Korea transitions its economy, Australia is well positioned to play a complementary role and move from a traditional supplier of raw materials and commodities, to a partner in innovation, services excellence and technological advancement.


more emphasis on LNG and renewables. Combined with scientific breakthroughs in energy technology, this shift presents new opportunities for cooperation in energy generation, capture, distribution and consumption. See ‘Energy and resources – renewing the relationship’ on page 17.Agribusiness and food – Korea is a net importer of food and agricommodities due to a fragmented and ageing farming sector. Consequently, the Korean Government and business have traditionally focused on developing solid trade relationships. Korea currently has 15 free trade agreements in place covering more than 50 markets. These imports diversify and secure food sources in the international market, with Australia one of Korea’s leading partners for agribusiness and food trade. See case studies promoting Australian food and beverages in Korea on page 18.E-commerce and consumers – Australian company Sanitarium is supplying “Weet-Bix” cereal online as well as through major retail chain Olive Young. The chain also stocks Australian body care company “Nad’s” hair removal products, which this year grew to the number one best seller its category. You can access Austrade’s E-commerce Korea Guide online.Austrade Seoul office works closely with key federal, state and territory government stakeholders, industry associations and bilateral business chambers to support the commercial growth of Australia and Korea.

Other areas of opportunity Austrade maintains a strategic focus on include:

EducationWith nearly 30,000 Korean students studying in Australia, demand for Australian higher education courses continues, albeit in a subdued market. Enrolment figures increased by 2.2 per cent in 2017. In the same period, Vocational Education and Training (VET) student enrolments increased by over 10 per cent.

TourismKorea was Australia’s ninth largest market for visitor arrivals in 2017 and sixth largest market for total spending. Korean investors are seeking investment opportunities in tourist attraction locations, particularly outside the major cities.

Defence Korea has one of the highest levels of defence expenditure in Asia, and has one of the fastest growing defence industries in the world. Korea is also looking to develop indigenous solutions and not simply purchasing ‘off the shelf’, an area where Australia can play a role.

Immersive technologiesKorea’s introduction of fifth generation wireless systems (5G) has seen an abundance of gaming content and shopping services integrated with virtual reality and augmented reality. This market is expected to grow immensely by 2020.

Fintech, cybersecurity and block chain Korea is well known to have the world’s fastest and most mobile IT infrastructures and strong network connectivity, making it especially susceptible to cyber-attacks. Following several major attacks, cyber security is regarded as a matter of national security and a high priority issue for the Korean Government and banking industry. The current Moon Administration is set to abolish outdated security software ActiveX and foster innovation such as block chain and new cybersecurity solutions. This represents an opportunity for Australia to supply innovative security solutions such as file encryption and simulation hacking. See financial services case studies on page 11.

Screen/audio-visual co-productionKorea’s film and TV production sector presents considerable opportunities to partner with Australian production houses, but also to promote Australia’s diverse filming locations, studios, special FX and animation technology. KAFTA includes an audio-visual co-production agreement, and Austrade and DFAT are working to raise the profile of the agreement and Australian capability through activities in Korea.

Austrade looks forward to working with you to identify commercial opportunities for your business. Austrade can be contacted at www.austrade.gov.au/contact/offices/korea


Global insightsDispatches from Australia’s global diplomatic network

From Moscow: Australian wins prestigious energy awardThe “Father of Photovoltaics”, Australian Scientist Professor Martin Green, has edged out Tesla’s Elon Musk and battery technology scientist Khalil Amine among 44 contenders from 14 countries to win the 2018 Global Energy Prize. The UNSW Sydney Professor has “revolutionised the efficiency and cost of solar photovoltaics, making this now the lowest cost option for bulk electricity supply”.

Professor Green also previously invented the PERC solar cell, which accounted for more than $US10 billion (24 per cent) of the world’s silicon cell manufacturing capacity in 2017.

Professor Green will travel to Moscow this October to receive the energy award from President Putin (or a nominee). He shares the 39 million-Ruble ($823,095) prize with Russian scientist Sergey Alekseenko for his work in thermal power engineering.

From Addis Ababa: Australian agribusiness soughtAustralia’s status as a world leader in dry-land agriculture and livestock management has been endorsed by the Ethiopian Government. Ethiopia is proactively seeking investment in agriculture, heavy industry and manufacturing to create jobs and boost its economy, and its Government is developing a prospectus describing opportunities for Australian business. Ethiopia has lowlands similar in hydrology and geology to Australia. Australia’s embassy in Addis Ababa is helping the Ethiopian Investment Commission develop the prospectus and is keen to hear from Australian businesses interested in investment in Ethiopia. The Embassy can be contacted at [email protected]

From Brussels: EU FTA negotiations commenceAustralian negotiators have begun seeking a competitive edge for Australian exporters through access to a larger export market in the European Union (EU) and greater access to goods and services at lower prices.

Australian negotiators were in Brussels in early July for the first round of negotiations for an ambitious and comprehensive trade agreement with the European Union. Following a negotiation mandate received from EU Members States on 22 May, the talks were formally launched by Commissioner Malmström, former Australian Prime Minister Turnbull and then Trade Minister Ciobo on 18 June in Canberra. Public submissions are welcome and can be addressed to [email protected]. More information and updates on negotiations can be found at dfat.gov.au/fta and the European Commission website.

AUSTRALIA - EUROPEAN UNIONFREE TRADE AGREEMENT


From Jakarta: IA-CEPA unlocks vast potentialAustralia and Indonesia have announced the substantive conclusion of negotiations for the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA). In fostering economic cooperation between businesses, communities and individuals, IA-CEPA creates a framework for Australia and Indonesia to unlock the vast potential of the bilateral economic partnership. Indonesia is one of the largest economies in the world, and this partnership is a major boost for both Australian and Indonesian businesses. Australian farmers in the grains, dairy and horticulture sectors will benefit from greater certainty of access and lower tariffs. Australian service industries, including health, mining, telecommunications, tourism and education, will also have greater access to Indonesia’s growing economy.

Once the agreement has been translated and formally signed, Australia will table the text of the agreement in Parliament and hold an inquiry process by the Joint Standing Committee on Treaties before bringing IA-CEPA into force.

From Lima: Kicking economic goalsFootball fever overtook Peru after the country qualified for its first FIFA World Cup since 1982. The Australian Embassy in Lima used local media interest around the Socceroos v Peru match to promote growing economic ties and our gender equality agenda. At centre-stage was the Australian Embassy Cup: an eight-week, 68-team, women’s soccer 7’s competition co-hosted with Peru’s largest women’s football league. This was accompanied by a festival of short-form plays about Australia and football and a live screening of the Australia-Peru match.

Alongside these events, the Embassy generated 55 media appearances that reached over 4.5 million Peruvians, pressing the message that Australia offers Peru the expertise it seeks as it modernises, including in natural resource development.

In a boost for business, Australia signed Free Trade Agreements with Peru and the TPP-11 this year.

From Dubai: Pork on your fork

There has been an unexpected demand for pork in the UAE from the expat population and high end supermarkets with non-halal shopping sections. In good news for Australian pork exporters, the Dubai port is now accepting imports of Australian pork after approval from the local authorities.


150 Aussie jobs created by Korean vitamin manufacturerIn January 2018, Korean nutritional supplement producer Nutribiotech chose Melbourne as the location for its newest global manufacturing facility, creating 150 new full-time jobs.

Nutribiotech makes vitamins, minerals and nutritional supplements for several major Australian brands. It also produces its own products and exports to more than 25 countries around the world.

Nutribiotech’s investment demonstrates Korea’s confidence in Australia as a great place to invest and do business. In particular, the company pointed to the highly skilled workforce and proven excellence in medical technologies and pharmaceuticals as key reasons for choosing Australia.

According to AusBiotech’s 2017 Snapshot, Australia is among the world’s top five countries for biotechnology innovation. The Australian life sciences sector employs around 232,000 people across more than 1,600 organisations.

Koreans’ increasing awareness of the importance of a healthy lifestyle, along with the tariff elimination on Australian-made pharmaceuticals under KAFTA, has directly benefitted Australian exporters of vitamin supplements such as Blackmores and Cenovis.

The Korean Government has set its sights on being a world leader in biotechnology and Australia is well positioned to attract Korean investment.

Dongil Grain transforms Aussie Corn into DoritosGrowers from the Ord region of Western Australia have scaled up their collective production capacity of premium corn for the world’s largest importer of Australian corn, Korea’s Dongil Grain.

In 2017, more than 11,000 tonnes of Ord corn was shipped from Wyndham to Seoul as part of a new deal with Dongil Grain. The food manufacturer processes Australian maize at its Korean factory to supply local consumers with a wide variety of corn snack foods, such as Doritos corn chips.

Building Links – WestConnex - Samsung C&T and LendleaseLendlease Samsung Bouygues Joint Venture (LSBJV) was selected by the NSW Government to construct the mainline tunnel of the M4-M5 WestConnex Tunnel Link. LSBJV is comprised of Samsung Construction & Trading Corporation (Samsung C&T), Lendlease Engineering and Bouygues Construction.

CEO of Samsung C&T Corporation Youngho Lee said: “It is a privilege to continue to work with the NSW Government to deliver this crucial project, increasing local training opportunities and employment whilst addressing Sydney’s future transport needs.”

The mainline tunnel will include up to 7.5 kilometres of twin tunnels, associated ramps and supporting operational facilities.

CASE STUDIES


Financial services find their footing in Korea

With major demographic pressure building, South Korea offers substantial opportunities for Australia’s financial services sectorAustralia’s financial services firms are stepping in to meet demand for higher and more reliable returns on pension and investment funds. Australia’s strong funds management capabilities are recognised in Korea as part of the solution, and several Australian funds have attracted large institutional investments.

IFM Investors, an Australian global infrastructure funds management company, opened an office in Seoul in November 2017. In partnership with Samsung Asset Management, it established a USD480 million (AUD632 million) investment fund: the first partnership of its kind between Australian and Korean asset managers.

IFM join Macquarie, ANZ, Millinium Inmark and Pepper Savings Bank as Australian financial services providers with a local presence, further building the strength and competitiveness of Australia’s financial services industry.

The size of the investment opportunity is substantial. The value of assets under management by Korea’s National Pension Service – the third largest pension fund in the world – is AUD761 billion (2018) and projected to grow to AUD830 billion by 2020. Korean pension funds are increasingly seeking to invest into non-traditional asset classes, including commercial real estate, infrastructure and renewable energy. This is where Australian funds have a competitive edge in the global market.

The fintech sector is forecast to grow by 20 per cent annually until 2020Korea’s enthusiasm for adopting new technologies has fuelled the rise of fintech. Korea has the highest level of smartphone penetration and the fastest mobile broadband services in the world. The non-banking sector is seeking innovative ways to disrupt traditional players by providing, non-traditional solutions for wire transfers, settlements, loans, crowdfunding, authentication and e-payments.

KAFTA unlocks market accessUnder the Korea-Australia Free Trade Agreement (KAFTA), Australian financial services providers have gained better market access. From a base of just $4 million in 2012, the value of two-way financial services trade increased to $74 million in 2017.

The Australian Government continues to support the development of Australia’s financial services in Korea through establishing the Asia Region Funds Passport initiative.

Once implemented, the passport will provide a framework to facilitate the cross border marketing of managed funds across participating economies in the Asia region, including Australia and Korea.

Last year, Austrade arranged a delegation of 20 Korean asset management Chairmen and CEOs, including the President of the Korean Financial Investment Association (KOFIA), to visit Sydney. Accompanied by the Australian Ambassador to Korea, James Choi, the visit promoted partnership opportunities and showcased the strengths of Australia’s regulatory environment.

In 2017, a reciprocal visit to Seoul by Australian fund management executives from the Financial Services Council, led by Senator the Hon Mathias Cormann, Minister for Finance, promoted new investment opportunities which will be created by the Asia Region Funds Passport. The bilateral program focused on promoting financial services exports, and included meetings with senior Koreans in government and business.

Visit to Seoul by senior Australian asset managers, led by Finance Minister, Senator the Hon Mathias Cormann. Photo Credit: Financial Services Council.

SEOUL

BUSAN

Department of Foreign Affairs and TradeDepartment of Foreign Affairs and Trade12 13

Capital: SeoulLand area 97,350 sq kmOfficial language KoreanPopulation (2017) 51.5 millionCurrency Won

Head of State President HE Mr Moon Jae-inPrime Minister HE Mr Lee Nak-yon

Australia in the Republic of Korea

Major Australian exports, 2017 $mCoal 6,883Iron ores & concentrates 3,858Beef – fresh, chilled, frozen 1,099Sugars, molasses & honey 965

Major Australian services exports, 2017 $mEducation-related travel 966Personal travel excluding education 922

Major Australian imports, 2017 $mShips, boats & floating structures 18,074Refined petroleum 5,631Passenger motor vehicles 2,902Electrical machinery & parts 233

In 2017 Korea was Australia’s 3rd largest merchandise export destination and Australia was Korea’s 6th largest.

Major Australian services imports, 2017 $mTransport 410Personal travel excluding education 192


The Australian Chamber of Commerce in Korea (AustCham Korea) is the representative body for the Australian business community in Korea. It supports Australian trade, innovation and business growth in the Korean market by facilitating beneficial networks between members, government institutions, trade organisations, business councils and the local business sector.

It represents more than 240 members from Australia’s services, manufacturing, primary, energy and finance sectors, as well as a large and rapidly growing number of Korean and other national firms.

The AustCham Business Awards celebrate and recognise exceptional companies and individuals that have contributed to the expanding Australia-Korea business relationship and longstanding friendship.

Crowned the ‘2017 Business of the Year’, Re-Clean Holdings, a wholly owned subsidiary of Macquarie Capital, is a renewable energy and environmental services company that develops and operates waste-to-energy and waste treatment facilities in Korea. Re-Clean Holdings was awarded the prestigious title for their success in creating over 60 jobs in 12 months; investing in local infrastructure; and their focus on work place health, safety and environmental best practice.

In addition to the Business Awards, AustCham Korea hosts up to 40 networking events per year. 2018 events have included an Economic Panel Discussion with ANZ Chief Economist, Richard Yetsenga; Breakfast Seminar on Renewable Energy with ACT Chief Minister, The Hon. Andrew Barr MLA; NextGen Mentors Night; Australia Day celebrations event; and our premium social networking event, the Mid-Year Sundowner: Aussie Summer Night, which showcased Australian food and beverage.

AustCham Korea also hosts regular ‘Doing Business in Korea’ education seminars that aim to help Australian enterprises succeed in the Korean market.

AustCham Korea contributed to the Australian Government’s Foreign Policy White Paper with a written submission on the opportunities in the commercial relationship. The submission was welcomed by the Australian Finance Minister Sen. Mathias Cormann during his visit to Seoul in October 2017.

With a busy 2018-19 ahead, AustCham will continue to work with its members to build a vibrant and connected Australian-Korean business community. For more information, please visit www.austchamkorea.org

AustCham – Doing Business in KoreaChris Raciti Chairman, AustCham

The 2017 winners were:

Business of the Year: Re-Clean Holdings Pty Ltd.Business Growth Initiative: Macquarie CapitalAustralia-Korea Partnership: IFM Investors &Samsung Asset ManagementMarketing Campaign: Wilson Parking KoreaInnovation Start Up: M3dicine Pty Ltd.Agriculture, Food & Beverage: Sool CompanyTourism: JinAirEducation Services: TAFE QueenslandKorean Recognition & Acknowledgement: POSCO

2017 AustCham Business Awards held in January 2018 Photo credit: The Australian Chamber of Commerce in Korea.

Since 1992, the Australia-Korea Foundation (AKF) has been increasing Australians’ capacity to effectively engage with Korea, enhance understanding about the mutual benefits of the bilateral relationship and building greater public awareness of Australia in Korea and of Korea in Australia.

Established by the Australian Government, the AKF fosters understanding and builds people-to-people and institutional links. An annual grants program helps support exchanges, partnerships and other collaborations in the areas of business, education, academia, arts & culture and society.

This year sees a number of successful AKF grants provided to:

• A documentary featuring an all-Korean baseball team during four months of training and playing in the Australian Baseball League (Baseball Australia);

• A program supporting former North Korean students to develop their English language skills (UTS:Insearch);

• A collaborative cybersecurity workshop between the University of Western Australia, Sungkyunkwan University, Korea University, and Seoul Women’s University;

• A project to enhance information exchange on Antarctic matters between Australia and Korea; and

• A data analytics project on making cities safer for women and children in Australia and Korea.

The Grants Program is open to suitably qualified individuals and organisations in Australia and Korea. Rounds open in February and successful applicants are notified in mid-July.

For more information about the Grants Program or work of the AKF visit: www.dfat.gov.au/akf


Australia-Korea Foundation – fostering greater understandingPeter Coleman Chair, Australia-Korea Foundation Advisory Board


CASE STUDIES

Start me up! – accelerating partnerships between Australian and Korean start-upsThe Australian Embassy in Seoul hosted an event called “Start me up! Understanding the Australian Start-up Ecosystem” in April this year at Seoul’s most successful start-up accelerator, D.CAMP. The event – the first of its kind hosted by Australia in Korea – offered a glimpse into Australia’s start-up culture and the Sydney Startup Hub.

The event was attended by more than 100 guests from major corporates such as POSCO, LG and Samsung, as well as, of course, the local start-up community. During the panel discussion, there was strong interest from Korean companies in partnering with the most promising Australian start-ups, and to explore how their solutions could be applied to the broad range of business and economic challenges in Korea.

Keynote speakers gave first-hand accounts of the Australian tech scene. Peter Park, Co-founder of Assurety, a Brisbane-based investment and transaction advisory firm, and Jean LK, Director & Co-founder of EDWY, a Sydney-based Edtech, described the diverse opportunities presented by the Australian market.

Yoojin Kim, Director NSW Trade & Investment in Korea, gave an overview of Australia’s largest start-up hub in Sydney and spoke in general about the benefits of co-locating within an Australian incubator or accelerator.

As a follow up to this event, Austrade Seoul will host a webinar to discuss opportunities in Korea for the Australia-based start-ups and promote collaboration between Australian and Korean accelerators and incubators. The Korean start-up ecosystem has an extensive and established network of private and public incubators, accelerators and angel investors across a number of sectors, including e-commerce, ICT, the internet of things, block chain, virtual reality and digital health.

Energy and resources – renewing the relationshipBrand new opportunities in trade, investment and technological cooperation present themselves for Australia as Korea shifts focus to renewable energy.

Korea’s Hanwha Group is leading the global solar business through two entities within its business arms. The first is Hanwha Q CELLS (NASDAQ: HQCL), one of the world´s largest and most recognised photovoltaic manufacturers for its high-performance, high-quality solar cells and modules. Hanwha Q CELLS has built its local presence in the Australian clean energy market from its office in North Sydney since 2009 with its primary role as solar module providers in residential, commercial and utility segments. Next, Hanwha Energy has made a number of equity investments in Australia, including the Barcaldine project (25MW) in Queensland and the Bannerton project (110MW) in Victoria. These projects have continued

Above: Jean LK, EDWY Director and Co-founder presenting on Australian education technology.


to drive Hanwha Energy’s appetite for Australian renewables, resulting in the establishment of a permanent Hanwha Energy office in North Sydney, alongside Hanwha Q CELLS, earlier this year.

As renewable energy’s share of the global energy mix continues to increase, so will the role of battery storage. Korea is poised to capitalise on this market. Leading Korean companies such as POSCO, LG, Samsung and SK will ensure Korea becomes one of the world’s largest manufacturers of batteries. These Korean conglomerates are increasingly looking to Australia in order to secure supply of critical minerals such as lithium, cobalt and nickel.

In February 2018, POSCO took a $80 million direct equity stake in Pilbara Resources to secure its supply of lithium. This Australian lithium will be used in their PosLX processing facility, which uses POSCO patented technology to process lithium in just eight hours with 99 per cent purity, compared to existing processes which take several months.

Hydrogen is another energy source that looks likely to play an increasingly prominent role in the bilateral trade and investment relationship. The Korean Government has increased its focus on renewable hydrogen as it seeks to reduce its reliance on fossil fuels and adopt a more sustainable energy mix. Hydrogen can be used as a fuel source for cars and ships, and as an energy source. Korea’s National Assembly will debate the “Hydrogen Energy Bill” this year and it is anticipated to be legislated early in 2019, providing strong government direction to invest in the industry. To capitalise on Korea’s commitment to hydrogen, the Australian Embassy in Seoul is working to position Australia as a potential supplier of clean hydrogen, and as a first-choice collaboration partner in the development of a commercially viable hydrogen export industry.

Hanwha Q CELLS, Mugga Lane Solar Farm, Australian Capital Territory Photo credit: Hanwha Q CELLS.


Safe, clean and green – Koreans savour premium Australian flavoursFood and eating out are a big part of Korean life. With busy lifestyles and around 50 per cent of households composed of singles and couples, there is a bias towards ‘convenience’. But this does not mean just fast food: Koreans want healthy, safe, and tasty food. While Hansik (Korean food) is the dominant cuisine, changes in dietary culture present expanding opportunities for quality Australian agriculture and food and beverage.Australian produce is recognised in the Korean market as ‘safe, clean and green’. Australia is a trusted supplier, with a strong supply history to the wholesale sector (food processing and service) and a growing retail presence. There are opportunities for Australia to increase and diversify further the range of agricultural and consumable products exported to Korea, and also opportunities in agri-services, agtech and investment, especially under KAFTA.Due to favourable KAFTA outcomes, consumer demand and improved technical market access, the breadth of Australian vegetables into Korea continues to increase. A trial shipment of broccoli arrived in July 2018 and the first shipment of Australian fresh potatoes was imported earlier in the year. Australia is also now able to export a range of fresh herbs to Korea.Korean consumers can more readily access sun-ripened Australian fruit with the immediate elimination of tariffs on cherries and halving of tariffs on mangos (from 30 to 15 per cent) which will fall to zero by 1 January 2023. At the end of 2017, the Australian mango industry was further assisted with Korea removing the requirement for pre-export inspection of all consignments.

Buy from me!

– Attracting Market attentionWell-coordinated market development activities are critical for gaining the attention of Korean consumers and increasing market share. The Australian Embassy in Seoul has been working closely with the Australian food and beverage industry to capitalise on the improved market access to Korea achieved under KAFTA.

One example of outreach to consumers promoting Australia’s high quality, safe and clean agricultural products has been the efforts of Meat and Livestock Australia (MLA), with support from the Australian Embassy and the Australian beef exporters, to promote the ‘True Aussie’ beef brand, which is highly trusted in the Korean market. Activities have included retailers using the ‘True Aussie’ mark on packaging, an in-store promotion campaign with Homeplus (one of Korea’s largest supermarket chains), bus stop advertising, media and social media outreach and catalogue advertisements.

Annual Australian

Wine Grand TastingAustrade and Wine Australia delivered the fourth annual Australian Wine Grand Tasting 2018 in Seoul, which showcased more than 240 Australian wines from 40 wineries. The event attracted more than 380 sommeliers, importers and opinion leaders, and promoted the quality, diversity and personalities of Australian wine. This was the first time that the event also paired Australian wine with specially prepared gourmet Australian food.

TAMS GOLDThe import duty on Australian grapes was eliminated this year under KAFTA. To maximise the benefits, Austrade led a project to rebrand Australian green table grapes in the Korean market as ‘TAMS GOLD’ – a combination of the Korean word “Tams-rubda”, meaning attractive, ripe and delectable, and the English word “Gold”. This market-specific branding promotes the product in a way that appeals to local consumers. Australian Ambassador to Korea, the Austrade Trade Commissioner and the Embassy’s Agriculture Counsellor took part in the brand launch event and in-store promotions.

Australian Wine Directory 2018.

Australian Grand Wine Tasting 2018.

CASE STUDIES

19

Australian Open in Seoul - Centre Court to be re-created in KoreaIn 2019 the Australian Embassy’s theme for its biennial Australia Day event, will be the ‘Australian Open in Seoul,’ with the atmosphere and entertainment of centre court recreated in Korea - complete with Australian hospitality, food and drink. Interested Australian exporters and Korean commercial partners may contact Sue-Lyn Norrie at the Australian Embassy on: [email protected]

In the Know – Korean accessible directories for Australian Wine and Food and Beverage DirectoriesAustrade recently published a Wine Directory and an Australian Food and Beverage Directory in Korean. The directories were distributed to local hospitality, food manufacturing and retail businesses to increase awareness of the depth and breadth of Australia’s high quality Food and Beverage products.

Australian Wine Directory 2018.

The Korea-Australia Free Trade Agreement (KAFTA) is delivering real benefits for Australian businesses and consumers following its entry into force on 12 December 2014. KAFTA is a living agreement, with its ongoing implementation guided by a number of in-built committees and review mechanisms. These committees facilitate engagement and dialogue between Australia and Korea and ensure the agreement continues to deliver.

The KAFTA Trade in Goods Committee met in August 2018, and meetings of other Committees including the KAFTA Rules of Origin and Trade Facilitation Committee and the KAFTA Joint Committee are being arranged for later this year. The KAFTA Joint Committee, co-chaired by the Trade Ministers from each country, previously met in November 2015 and November 2016.

Written submissions from businesses and relevant organisations are encouraged ahead of the Joint Committee meeting, addressed to [email protected] KAFTA, Australian goods and services exporters have benefitted from tariff cuts and improved market access. A research report by PricewaterhouseCoopers (PwC) released in March this year found Australia’s Free Trade Agreements (FTAs) are seeing high rates of business utilisation. The research found more than 80 per cent (by value) of eligible merchandise exports were benefitting from tariff preferences under KAFTA.

Businesses can check what tariff reductions and services provisions they are eligible for under KAFTA by checking the FTA Portal website at ftaportal.dfat.gov.au. For further information on KAFTA, please see the DFAT website at dfat.gov.au/ftaKAFTA is supported by initiatives such as the Australian Trusted Traders program, which offers a range of benefits to accredited Trusted Traders, including streamlined border clearances, duty deferral, advanced rulings, and other measures saving time and money. Following full implementation of the Mutual Recognition Agreement with Korea, Trusted Traders receive priority treatment of goods at the border through expedited clearance, reduced documentation and cargo inspections, and minimised disruption to trade flows. Australian businesses are encouraged to become Trusted Traders, with further information available at www.abf.gov.au/trustedtrader

KAFTA


Inaugural Joint Workshop between CSIRO and Korea’s NSTCommonwealth Scientific and Industrial Research Organisation (CSIRO) and the National Research Council of Science and Technology (NST) held their first joint workshop on 21-22 March 2018 in Daejeon, Korea, to promote bilateral research activities and commercialisation. The workshop was the first outcome under the MoU between CSIRO and NST facilitated by Austrade under the CSIRO - Austrade collaboration agreement.

CSIRO researchers from the land and water, energy, minerals, manufacturing and futures business units met their Korean counterparts to discuss joint research projects, and to identify projects that would qualify for the Korean Government’s Convergence Research program. This program provides individual project funding of up to USD10 million for research collaborations with international institutes, academia and industry. A follow-up CSIRO-NST joint workshop was held on 27-30 August in Australia.

KAIST collaboration with CSIRO and ANUThe Korean Advanced Institute for Science and Technology (KAIST) – the ‘MIT of Asia’ – is at the forefront of global research and development.

KAIST has a strong record of accomplishment in commercialisation, not least in its current collaboration with Australia’s leading research and development institutions to increase the impact of science and technology research in both countries.

KAIST signed an MoU with the CSIRO for joint research collaboration and a teaching exchange agreement in January 2014.

In March this year, the KAIST Global Commercialisation Centre (GCC) visited Australia and met with the Australian Renewable Energy Agency (ARENA) and CSIRO. ARENA and CSIRO also participated in the KAIST GCC international conference and workshops to explore opportunities for collaboration and commercialisation.

Following this, the Australian National University (ANU) Vice Chancellor and Nobel Laureate Brian Schmidt, visited Korea to sign a MoU with KAIST for further engagement between the two institutions and to identify opportunities for greater research cooperation.

Cutting edge science and technology on showAustralian researchers had the opportunity to travel to Seoul in June to showcase their cutting-edge science and technology projects. Delivered in collaboration with Korean tertiary institutions and the Australian Embassy, the Australia-Korea Research and Innovation Collaboration Workshop was attended by over 70 Korean and Australian researchers and delegates from the Australian Academy of Technological Sciences and Engineering (ATSE).

A green car technology project produced by Macquarie University and Seoul National University, and a helicon plasma project used for computer microcircuits emerging from ANU’s collaboration with KAIST, were two of the highlights.

The new Endeavour Leadership Program was also showcased, which supports research programs for overseas study education, training and research for Australia’s highest performing students, researchers and professionals.

The Korean-language version of Partnering with Australia on Science, Innovation and Research booklet was promoted to workshop attendees. The booklet, produced by the Australian Department of Industry, Innovation and Science, outlines opportunities for international organisations to invest in and collaborate with Australian organisations on science, research and innovation projects.

The workshop proved to be a valuable forum to promote Australia’s innovation and science credentials and to sow the seeds for future Australia and Korea collaborations and partnerships.

CASE STUDIES

MoU signing ceremony between KAIST President, Professor Shin Sung-chul and ANU Vice Chancellor, Professor Brian Schmidt Photo credit: Australian National University

Science, technology and innovationAustralia and Korea share a collaborative approach to scientific research. This has the potential to deepen in coming years as both Australia and Korea seek to build new partnerships in science, technology and innovation.


The Australia Korea Business Council (AKBC) is a private, member-based organisation that works closely with Australian businesses, government and education institutions to promote the Australia-Korea bilateral relationship.

The Council provides a national focus to assist and support Australian and Korean businesses to capitalise on opportunities arising from the bilateral relationship. Through its relationship with key Australian and Korean stakeholders in industry, government and academia, the AKBC increases awareness of opportunities in the Australia-Korea corridor, educates on how to successfully engage with Korea and helps position Australian businesses effectively in the Korean market.

AKBC regularly hosts events to profile and promote the Australia-Korea relationship including private dinners with the Korea business community, briefings with senior government and business executives, and networking functions.

Recognising the important role that culture plays in doing business in Korea, the AKBC has recently started offering business-focused cultural workshops that take participants through Korean history, economy, government, social life and business etiquette.

Australia-Korea Business Council – Korea-Australia Business Council Joint Meeting.The Council’s program of activities culminates with the annual Korea-Australia Business Council Joint Meeting. The Joint Meeting provides a forum for senior Australian and Korean business leaders and influencers to share insights about the growing business relationship between the two countries, opportunities for further collaboration and discussion about the increasing significance of our bilateral relationship. The Joint Meetings have been held since 1978 and carry the reputation as the premier platform for senior business engagement in the Australia-Korea corridor.

Strongly supported by the Australian government, attendants at the previous Joint Meeting included such key representatives as the CEO of POSCO, President of Daewoo International, President of Korea Resources Corporation, President of Mirae Asset Group, Managing Director of KT and Managing Director of LG Electronics.

Attending the Joint Meeting is an effective way for participants build a wider network in Korea and engage with senior government officials and industry heavyweights. The Joint Meeting offers an opportunity to gain the latest insights from subject matter experts and to hear inspirational stories of the latest business collaboration between Australia and Korea.

This year’s conference will be held on 29-30 October 2018 in Busan and will focus on growing opportunity and collaboration between Australia and Korea in key areas of energy and resources, technology, services, innovation and entrepreneurship.

For more information on the AKBC and its Joint Meeting conference in October, please email [email protected]

The Australia-Korea Business Council – enriching bilateral relationsHon Mark Vaile AO Chairman, Australia-Korea Business Council.

38th annual joint meeting of the Australia and Korea Business Councils, Brisbane, 2017 Photo credit: Australia-Korea Business Council


With around 14 per cent of Korea’s population aged over 65, increasing to 20.8 per cent by 2026, the demand for services in Korea’s aged care industry will grow significantly. Australian and Korean medical companies are working together to develop and deliver ever more sophisticated medical services to meet this demand.

Stethee provides a new level of diagnostic capabilityStethee, an Australian innovation, is the world’s first wireless, artificially intelligent (AI) stethoscope. It was launched in Korea in 2018. Stethee was designed by Australian company M3DICINE in collaboration with experts from MIT, the Mayo Clinic and Texas A&M University.

The Stethee line actually comprises three separate products: the US FDA-approved Stethee Pro for medical and healthcare professionals, Stethee Vet for veterinarians and animal professionals, and Stethee Ai, developed specifically as an education and research tool.

M3DICINE has an MOU with Korea Telecom for the distribution of Stethee Pro in Korea and a number of developing countries for remote telemedicine projects. It also has an exclusive distribution agreement with Cargill Korea for the supply and distribution of Stethee Vet to veterinarians in Korea.

Left: Ambassador James Choi using Stethee ProBelow: Stethee Pro Photo credit: M3DICINE

Brain Anaesthesia Response Monitor (BARM) – Cortical Dynamics in KoreaAustralian medical firm Cortical Dynamics signed an agreement to distribute its innovative Brain Anaesthesia Response Monitor (BARM) in hospitals throughout Korea by the end of 2018. BARM will assist anaesthetists and intensive care staff to monitor patients under anaesthesia and to minimise the incidence of side effects.

An adhesive sensor is applied to the forehead, helping to keep patients optimally anaesthetised. BARM uses the latest scientific understanding of how the brain’s electrical activity – the electroencephalogram (EEG) – is produced. BARM is more advanced than other EEG monitors as it can reliably quantify a patient’s anaesthetic state, rather than rely on statistical approaches.

Cortical Dynamics is the commercialisation technology arm of Swinburne University of Technology in Melbourne.

Medical Science and Technology Innovations

ROK's investment in Australia26,310

Australia's investment

in ROK19,890

46,200A$m

Services2,157

Other goods3,247

ETM522

STM844

Minerals& fuels

13,269

Agriculture3,353

23,393A$m

Othergoods488

Services1,071

ETM23,877

STM348

Minerals& fuels

5,817

Agriculture337

31,938A$m

Australia’s trade with the Republic of Korea

Australia’s Exports to the Republic of Korea 2017(a)

Totals may not add due to rounding.

Australia’s Imports from the Republic of Korea 2017(a)


Australia’s total investment with the Republic of Korea 2017(a)(b)

(a) Excludes some confidential items of trade.b) Includes DFAT estimates for 2017.

Source: Based on ABS data.

CASE STUDIES


ROK's investment in Australia26,310

Australia's investment

in ROK19,890

46,200A$m

Australia's trade and investment statisticsTOP EXPORT AND IMPORT COUNTRIES/REGIONS

A$ billion 2017

% growth year on year

EXPORTS (a) 386.7 uu 14.8China 116.0 uu 21.2Japan 47.2 uu 22.8Republic of Korea 23.4 uu 14.4United States 21.0 uu 1.8India 20.2 uu 32.6ASEAN 44.8 uu 13.8EU28 29.1 v 8.8IMPORTS (a) 376.9 uu 7.5China 67.4 uu 8.1United States(b) 47.5 uu 5.4Republic of Korea(b) 31.9 uu 167.8Japan 24.6 uu 8.0Thailand 17.2 uu 2.1ASEAN 59.7 uu 5.9EU28 71.6 uu 3.4

TRADE BY BROAD SECTORA$ billion 2017


EXPORTS 386.7 uu 14.8Rural 48.4 uu 13.7Resources 177.8 uu 26.6Manufactures 45.0 uu 2.9Other goods 12.6 uu 2.0Gold 18.3 v 8.9Services 84.7 uu 8.8IMPORTS 376.9 uu 7.5Two-way trade 763.6 uu 11.1Balance of trade 9.8 ..

TOP EXPORTS AND IMPORTSA$ billion 2017


EXPORTS 386.7 uu 14.8Iron ores & concentrates 63.1 uu 17.4Coal 57.1 uu 35.2Education-related travel 30.3 uu 17.3Natural gas 25.6 uu 43.0Personal travel (excl education) 21.3 uu 0.4IMPORTS 376.9 uu 7.54Personal travel (excl education) 40.0 uu 7.7Passenger motor vehicles 22.8 uu 6.6

Refined petroleum 19.2 uu 28.9

Ships, boats & floating structures(b) 18.9 ..Telecom equipment & parts 12.8 uu 6.8

AUSTRALIA’S INTERNATIONAL INVESTMENT POSITIONA$ billion as at 2017


FOREIGN DIRECT INVESTMENT IN AUSTRALIA 849.1 uu 6.5

United States 189.9 v 1.6Japan 92.5 uu 1.6United Kingdom 83.2 uu 11.4Netherlands 53.5 uu 3.3China 40.7 uu 5.1ASEAN 42.0 uu 13.4EU28 188.7 uu 8.6AUSTRALIAN DIRECT INVESTMENT ABROAD 590.6 uu 6.5

United States 127.3 uu 8.1United Kingdom 83.9 uu 14.3New Zealand 62.1 v 6.5Singapore 20.2 uu 0.5Papua New Guinea 16.3 uu 2.1ASEAN 40.3 uu 6.2EU28 117.8 uu 12.1

(a) Excludes some confidential items of trade.(b) Includes DFAT estimates for 2017.

Services2,157

Other goods3,247

ETM522

STM844

Minerals& fuels

13,269

Agriculture3,353

23,393A$m

Othergoods488

Services1,071

ETM23,877

STM348

Minerals& fuels

5,817

Agriculture337

31,938A$m

Australia’s trade with the Republic of Korea

Australia’s Exports to the Republic of Korea 2017(a)


Australia’s Imports from the Republic of Korea 2017(a)


Australia’s total investment with the Republic of Korea 2017(a)(b)

(a) Excludes some confidential items of trade.b) Includes DFAT estimates for 2017.

Source: Based on ABS data.

AcknowledgementsBusiness envoy brings insights from Australia’s global diplomatic network to the Australian business community. It considers global geopolitical events and trends, their economic implications and what they might mean for Australian business.

Business envoy is produced in the Free Trade Agreements Division of the Department of Foreign Affairs and Trade. Any views expressed within are those of DFAT officers and not the views of the Australian Government

DFAT does not guarantee, and accepts no legal liability arising from or connected to, the accuracy, reliability, currency or completeness of any material contained in this publication. DFAT recommends that readers exercise their own skill and care with respect to their use of this publication and should obtain professional advice relevant to their particular circumstances.

With the exception of the Commonwealth Coat of Arms and where otherwise noted, all material presented in this publication is provided under a Creative Commons Attribution 3.0 Australia licence. Material in this publication can be shared or adapted for any purpose in accordance with the licence terms available on the Creative Commons website.

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Expanding Opportunities for Australian Business in Innovative Korea · in developing new drugs with high market potential in areas such as oncology and the central nervous system