Potential export fields boom in South Korea

By DANIEL RIORDAN

New Zealand exporters should not get too carried away at the prospect of reunification between North and South Korea, according to New Zealand's ambassador to Seoul, Roy Ferguson.

Mr Ferguson, who was back in New Zealand for a fleeting visit last week, said it would take time for the benefits of the "Sunshine Policy" to feed through to the South's trading partners.

"The message I've been giving to New Zealand businesspeople is, 'Don't overestimate the North's potential and keep looking South. Things are happening fast there'."

Leaders of the two Koreas met for the first time last month, agreeing in principle to find ways of promoting economic cooperation, reconciliation and, eventually, reunification.

Combining the two markets would add 23.8 million consumers to South Korea's 46.8 million, although incomes in the North are much lower.

Even without full unification, the greater level of cooperation offers long-term opportunities for New Zealand to supply goods and services to South Korean companies looking to invest above the 38th parallel, particularly in infrastructure projects.

South Korea is New Zealand's fifth-biggest export market - sixth if Hong Kong is regarded as separate from China - and its ninth-biggest source of imports.

In the year to March, New Zealand exported goods and services worth $1.03 billion to South Korea, up 25 per cent from the year before. It imported goods worth $674 million, up 42 per cent.

Mr Ferguson said the potential for boosting exports as South Korea continued to recover from the Asian crisis was immense.

South Korea's economic growth last year was 10.7 per cent.

While New Zealand's main exports were commodities, particularly logs, aluminium, animal hides and skins, the opportunities for higher value-added exports were increasing all the time.

Mr Ferguson said one of the major challenges for New Zealand's trade representatives was to change Koreans' perceptions of New Zealand as a commodity supplier or "food basket" to include recognition of its capabilities in technology, services and related exports.

The key to long-term export success was boosting non-traditional exports. Mr Ferguson said the greatest of those opportunities were in education, telecommunications, computer software and biotechnology.

Rationalisation of the South Korean telecommunications industry was under way and New Zealand high-tech exporters stood to gain. South Korea's software market, estimated at $14 billion, imported $328 million of product last year, up 32 per cent on 1998. Most of that was from the US.

South Korea has the world's highest per capita internet usage and New Zealand's growing stature as a software developer bode well for its exports there.

The South Korean Government had targeted the biotechnology industry as a key future industry and would be investing $2 billion to establish adequate infrastructure.

The market was already estimated at $2.4 billion and imports were expected to make up one third of that.

Recent Kiwi export success stories included winning market access for cherries, the use of merino wool by leading suit manufacturers, the supply of baggage weighing scales for the new Inchon international airport and the introduction of bungi jumping.

Other successes were the building of an aquarium in Pusan in a joint venture with an Australian company, the supply of management software and handheld radios and the launch of Zespri Gold kiwifruit.