By Cathy Rose A. Garcia
Staff reporter
British businesses will benefit by some 500 million pounds ($822 million) a year, as a result of the Korea-European Union free trade agreement which is expected to be implemented next year, according to the British Chamber of Commerce in Korea (BCCK).
In an interview with The Korea Times on Friday, BCCK chairman Rob Edwards said British fashion and luxury goods companies are looking to be ``certain winners,'' as tariffs are dropped to zero upon the agreement's implementation.
``Overall, it is reckoned that U.K. business could profit by some 500 million pounds per year, as a result of the removal of tariffs and non-tariff barriers. Of course other European and Korean businesses will benefit too,'' he said.
Aside from fashion, other sectors that are expected to benefit are legal and financial services, pharmaceuticals and advanced engineering.
``It's very positive indeed. Britain and its fellow EU member countries have been looking for some time to expand the already significant trade between Korea and the EU. The FTA now affords both sides an opportunity to expand trade to a very significant level,'' Edwards said.
Korea is the U.K.'s 26th largest export market, with goods exports amounting to 2 billion pounds in 2009.
In 2009, U.K. firms invested 1.2 billion pounds in Korea, more than any other European country. Aside from Burberry, other major British companies here are Tesco, which partnered with Samsung to become the second largest retailer in Korea; Standard-Chartered Bank; Dunhill; Marks & Spencer; and Diageo, whose brands including Johnnie Walker, accounts for nearly 40 percent of the Korean whisky market.
But perhaps a visual example of the ties between the U.K. and Korea is the Incheon Bridge. ``The Incheon Bridge ― that's British engineering with Korean construction,'' Edwards said.
With the free trade agreement, more British companies are expected to invest in Korea. However, Edwards is well aware of the challenges facing foreign businesses when dealing with the ``large, complex and Confucian-structured bureaucracy'' in the country.
``One of the most common challenges can be setting-up an operation in Korea. Depending on what the business venture is, it can mean either a relatively smooth entry, or conversely a difficult one. This is usually due mainly to the interpretation of rules and regulations by a government employee ― interpretations can regularly vary ― even where expert legal guidance has been received in advance of the exact entry requirements,'' he said.
His advice for dealing with these challenges is ``patient negotiation.'' ``Very often (government) does not want to be negative. In fact, there is a lot of pressure to be as positive as possible with foreign business because foreign direct investments are very important to Korea,'' he said.
Edwards said Korea's main competitive advantage is its literate and numerate work force. ``The secret of success for the foreign investors is how to harness all these advantages and stay clear of trouble, it's a win-win situation,'' he said.
The Chamber, which promotes the development of British trade, commerce and investment in Korea, has grown from just seven businessmen in 1977 to over 150 member companies.
Edwards who has lived here in the 1970s, the 1990s and since 2004, currently considers Korea as home. He has witnessed Korea's economic evolution in the last few decades, but he feels that the Chamber still has more work to do to promote Korea as an investment site.
``You can never say you've done enough. It's a constant work in progress because it is such an evolutionary situation. Take the FTA, it alters the paradigm so it offers new opportunities,'' he said.