How to enter the South Korean market

South Korea is Australia’s fourth largest two-way trading partner, with total exports reaching AUD 42.3 billion in 2023 - 24. Coal, natural gas, iron ore, crude petroleum, food and agribusiness dominate Australian exports but emerging trends offer opportunities in other sectors such as health and defence solutions.

Market entry models for exporting goods and services

Choosing an appropriate market entry model is essential for businesses looking to export to South Korea. Any choice should be informed by factors such as the overarching business strategy, target sector, and business size and maturity. Market entry models frequently evolve over time.

A. Direct exporting

In direct exporting, businesses sell directly to a South Korean customer from Australia. Exporting directly to South Korea requires a significant level of involvement in the export process, including market research, marketing, distribution, sales, product registration and approval, import-export licencing and receivables.

Direct exporting has some advantages, including:

• Greater control of commercial processes, including sales
• Better margins, as middlemen are avoided
• More direct customer relationships

While there are advantages, direct exporting may ultimately involve higher establishment costs in South Korea, as employing dedicated in-house staff and other resources may be necessary to manage the complexities of exporting and sales. Businesses using this model may need to consider ways to offset these costs, including employing an agent or distributor to handle local product registrations, while still maintaining control over other aspects such as marketing and supply chain.

This approach will require businesses to engage with customers regularly to build awareness and understanding of the products they are selling on your behalf. In return, their understanding of the South Korean market can be applied to product development, pricing and marketing. Selling directly to local retailers can generally cut commissions, reduce expensive travel and create an effective conduit to market.

B. Agents and distributors

Many Australian firms doing business internationally rely on agents or distributors. The roles of agents and distributors differ, and they can vary across industry. It is therefore critical that roles and responsibilities are clearly defined early in any agreement.

Agents: Agents act as representatives of suppliers and do not take ownership of the products they sell. They are usually paid on a commission basis, which provides an incentive for them to drive sales. Being based in South Korea, they will often represent several complementary products or services. They can be retained exclusively as the sole agent for a company’s goods or services or as one of several for the exporter.

Distributors: Unlike agents, distributors buy the goods from exporters and then resell them to local retailers or direct consumers. In some cases, a distributor may sell to other wholesalers who then on-sell to retailers or consumers. Distributors may carry complementary and competing lines and usually offer after-sales service. They earn money by adding margins to product prices. Distributor margins are generally higher than agent fees because distributors have costs associated with carrying inventory, marketing and extending credit for customers.

Choosing an agent or distributor: Whether using an agent or distributor, building a close working relationship is essential. Due diligence when selecting an agent or distributor is important – ask for trade references and seek a credit check through a professional agency. It is best to meet any potential agents or distributors in South Korea; this will give them a chance to demonstrate knowledge of the market and provide an early opportunity to build the relationship.

Time in market is an important consideration when choosing a distributor in South Korea. As distributors have a high rate of closure, engaging an established distribution business reduces the risk of disruption to a business relationship. On the other hand, established distributors can lack the dynamism of younger companies.

C. Online Sales

South Korea has one of the world’s largest e-commerce markets, valued at AUD 354 billion in 2024 and expected to grow to AUD 518 billion by 2027 It is also the world’s fourth largest market in terms of B2B and B2C e-commerce sales.

Its e-commerce dominance reflects the immense digital connectivity of South Korean society, underpinned by the country’s robust internet infrastructure. 

Accessing digital consumers: South Korea has some of the highest rates of digital penetration and technology adoption globally. In 2025, 97.9 per cent of the population was online and there were 60.9 million active cellular mobile connections across the country.

In South Korea, e-commerce transcends generations, with 78.6 per cent of South Koreans of all ages making some form of online purchase in 2024.

Older South Koreans respond well to user-friendly platforms with which they can easily connect.

Top categories for online sales includes clothing, cosmetics, daily necessities and electronics, food delivery and travel services.

Mobile e-commerce accounted for 76.4 per cent of South Korea’s online sales in 2024.

South Korea’s chat apps like KakaoTalk and Naver’s Line have become important channels for product discovery and validation.

Currency volatility in 2022 saw South Koreans e-commerce habits change, moving away from US sellers to purchase from a wider variety of markets, especially from those in Japan and China.

Consumer expectations have also changed with South Koreans expecting prompt delivery times from online sellers.

Figure 2: E-commerce spending on consumer goods (2025), AUD billion

Search engines: Google is the top search engine in South Korea with 52 per cent of the market share. It is followed closely by Naver at 38.3 per cent with approximately 40 million active users. Naver offers a popular shopping feature that aggregates searches from other e-commerce platforms. Other key search engines with smaller market shares include Bing, Daum, Yandex and CocCoc. Search engines are an important tool for product and brand discovery in South Korea, with nearly 49 per cent of shoppers using them to expand their purchase options.

Online sellers and marketplaces: Considering South Korea’s first-mover advantage in the e-commerce space, it is not surprising that local platforms are the top choice for consumers. Coupang is South Korea’s most popular e-commerce platform, boasting nearly 31 million active users in 2025. Not far behind is Naver Shopping, which integrates its search engine capabilities with e-commerce services.

Foreign businesses advertising on Naver or other South Korean shopping websites require an e-commerce digital marketing registration. Registration can be carried out at the businesses’ local district office by providing their Korean business registration number and a safe shopping certificate. Once these documents are submitted, it takes approximately three working days to process the e-commerce digital marketing registration.

Social media: With 49.3 million users, South Korea has a highly active social media environment. On average, South Koreans spend 5 hours 19 minutes online a day, either on social and chat apps or browsing shopping channels. This makes platforms like KakaoTalk important channels for businesses to market and sell products. The top social media platform in South Korea is KakaoTalk, followed by Instagram and Tik Tok. Social media is used by 13.6 per cent of users to discover products, to view branded content (13.6 per cent of users) and for finding content (26 per cent of users). Social commerce is a growing trend, especially the livestreaming market. In 2024, South Korea’s live commerce market generated AUD 1.03 billion in revenue and is projected to grow at an annual rate of 36 percent through 2030 to reach nearly AUD 6 billion, underscoring its rapidly expanding role in e-commerce. This channel is particularly impactful and popular in the fashion and beauty sectors. Social platforms have also made Korean influencers powerful tastemakers with significant sway over consumer choice. In terms of business-to-business social media platforms, LinkedIn is less prevalent in South Korea than Australia and other markets.

Investment environment

South Korea’s technological prowess, strong digital and physical infrastructure, highly skilled workforce and open trade policies have made it an attractive destination for foreign investment. The Ministry of Trade, Industry and Energy (MOTIE) of the Republic of Korea announced that foreign direct investment (FDI) pledged to Korea in 2024 reached a total of AUD 51.5 billion (up 5.7 percent year-on-year), surpassing the previous high of 2023. Australian investments into South Korea have grown increasing from AUD 27.3 billion in 2022 to AUD 29.6 billion in 2024.

South Korea actively encourages foreign investment with a slew of incentives and reforms designed to encourage investors. The South Korea TradeInvestment Promotion Agency (KOTRA) with offices in Sydney is responsible for facilitating foreign investment through its Invest KOREA department. 

FDI growth in South Korea has primarily been driven by strong performance in semiconductor and battery manufacturing, as well as transportation. While the country faces intensifying competition from lowercost manufacturers in other markets, the government aims to encourage FDI through cash reimbursements of up to 50 per cent in relation to critical sectors like chips and vaccines. In its 2024 budget, the South Korean government significantly increased cash incentives for foreign businesses from AUD 58.4 million (KRW 53 billion) to AUD 233.4 million (KRW 212 billion).

The South Korean government offers a range of business incentives to encourage foreign investment into the country.

• Reductions or exemptions on properties (land, buildings) owned or acquired since the date of business commencement.

• Foreign engineers offering services in South Korea are eligible for a 50 per cent tax reduction on income earned for 10 years from the date of offering service. Foreign engineers engaged in parts, materials and equipment businesses prescribed by Presidential Decree are eligible for a 70 per cent income tax reduction for three years from the date of offering services. Thereafter, they are eligible for a 50 per cent reduction for two years.
• Companies in Special Research and Development Zones and Enterprise Cities are eligible for a 100 per cent tax exemption for three years and a 50 per cent tax reduction for two years thereafter.
• Companies that increase full-time employment are eligible for a tax credit between AUD 4,412 (KRW 4 million) to AUD 14,330 (KRW 13 million) per additional employee depending on the type of company.

Investment rules and regulations

Foreign businesses can establish enterprises and engage in business activity across the South Korean economy. Foreign investments are primarily governed by the 1998 Foreign Investment Promotion Act (FIPA) and the Foreign Exchange Transaction Acts (FETA). However, the FETA imposes foreign ownership restrictions on 30 industrial sectors including three which are closed to foreign investment – radio broadcasting, nuclear power generation and terrestrial broadcasting. Other sectors have partial restrictions with limits on the percentage of foreign equity.

The Ministry of Trade, Industry and Energy (MOTIE) and KOTRA organise a yearly event to attract foreign investments into South Korea. To encourage global companies to invest in R&D in South Korea, cash grants of up to AUD 220.5 million (KRW 200 billion) are offered by the government to companies that are investing locally and significantly impacting the economy.

Market entry models for investing

Choosing an appropriate market entry model is essential for businesses looking to invest in South Korea. A business’ size, sector and growth strategy will help determine which market entry model fits best. Investment models frequently evolve over time as businesses enter and expand in a market. Seek professional advice on the best structure for your business.

A. Liaison office

Establishing a liaison office is governed by the Foreign Exchange Transaction Act. A liaison office is restricted from conducting business activities and therefore exempt from taxation. It may conduct non-taxable activities for its overseas head office. The overseas head office is fully liable for the South Korean liaison office’s liability.

The liaison office is exempt from corporate income tax payments as it does not generate income in South Korea. However, it is responsible for withholding payroll income tax for employees’ receiving compensation from the liaison office.

Establishing a Liaison office in South Korea

B. Branch office

Branch offices are subject to the Foreign Exchange Transaction Act (FETA). A foreign entity intending to engage in business activities may establish a branch in South Korea. Since branch offices are permitted to conduct business activities, they are subject to corporate income tax and VAT. Net income can be remitted abroad from South Korea after completing accounts for a fiscal year. However, funds remitted to a branch for operations may not be repatriated until liquidation of the branch.

Establishing a branch office in South Korea

C. Limited company (Yuhan Hoesa)

Limited companies are subject to the Foreign Investment Promotion Act. They are taxed on earnings generated and their members are taxed on the dividends distributed. A limited company is required to have one or more directors and need not constitute a board. The articles of incorporation may restrict the transfer of equity shares. A limited company is not permitted to list its securities on a stock exchange or issue bonds. An external audit is mandatory for limited companies with annual earnings or total assets beyond a specified limit.

Establishing a limited company in South Korea

D. Joint Stock company (Jusik Hoesa)

Joint stock companies are subject to the Foreign Investment Promotion Act. They are subject to taxes on earnings and shareholders are taxed on distributed dividends. The equity capital of a joint stock company is funded by the issue of shares which are freely transferable. Shares of a joint stock company may be listed on a stock exchange subject to meeting certain requirements. Joint stock companies are permitted to raise funds from external investors by issuing bonds. Shareholders are liable to the extent of their contributions but not liable to the company’s creditors. A joint stock company with a capital of AUD 1.1 million (KRW 1 billion) or more is required to form a board of directors and appoint a statutory auditor. An external auditor must be appointed for listed companies that meet a threshold in terms of annual revenue, total assets, total debt and number of employees.

Establishing a joint-stock company in South Korea

Success in South Korea requires businesses to tailor their product or service to the market. This should be based on detailed analysis of consumer trends, price consciousness, branding, marketing and advertising.

South Korea’s strong innovation capacity is expected to drive robust economic growth increasing annual incomes of consumers by 50 per cent. GDP per capita is forecast to increase to AUD 68,276 (KRW 61.91 million) by 2030. This growth has resulted in the rapid expansion of South Korea’s middle-class from 27.51 million to 32.19 million people over the last decade.

South Korea’s middle class, with steady incomes and substantial discretionary purchasing power, plays a vital role in its economic growth and stability. South Korean consumers are trend-conscious, their tastes and preferences are constantly changing in response to global developments and technological shifts. Businesses must customise their offerings to meet South Koreans’ evolving consumer preferences and aspirations.

Consumer trends in 2024

Figure 3: Median disposable income per household (2016-2026f), AUD, current prices

Price consciousness

Despite ranking among the world’s high-income countries, average incomes in South Korea are modest in comparison to other wealthy economies. The average South Korean household’s annual disposable income is AUD 59,891 (KRW 54.3 million)). South Koreans have a cultural inclination towards saving money and bargaining to find the best deal. Older consumers, those in their sixties, are often in lower income groups and tend to be cost-sensitive shoppers. Whereas middle-aged South Koreans in their 40s are the country’s most affluent consumers with a high affinity toward premium goods and services. Businesses must remember that price points designed for the middle class in one market may be out of reach for the middle class in another - slight price modifications to an already successful product can significantly boost sales.

Branding

Branding is essential for product differentiation and businesses should conduct research to understand consumer preferences. Social status is important among affluent South Koreans who are often willing to pay a premium for prestigious established brands. Brands play a vital role in influencing purchasing decisions and for many South Koreans consumption serves as a status symbol. Brand reputation, pop culture and peer pressure drive younger generations to display their brand affinity on social media. Effective marketing initiatives should focus on communicating brand exclusivity, luxury and status. Growing healthconsciousness among South Korean customers is creating opportunities for Australian products which are considered high-quality, premium and sustainable.

Austrade’s Nation Brand toolkit provides a range of free branding assets for businesses looking to export.

Marketing

Trade marketing to distributors and retailers is a popular and effective way for businesses to gain traction in the South Korean market. A trade show can be a useful starting point. These are productive ways to reach out to new consumer bases and potential clients, while also offering insights into the operations of competitors. Given South Korea’s strategic position as a global trade and business hub, trade shows are especially effective strategies to showcase products and attract potential customers. In 2024-2025, South Korea hosted more than 130 trade shows for several sectors including automotive, agriculture, building and construction, energy, education, entertainment, food and beverages, life sciences and healthcare. The Australia-Korea Business Chamber and its counterpart Korea-Australia Business Chamber also host regular events.

Given South Korea’s technological advantage and high social media penetration, local customers increasingly depend on internet searches to make informed purchase decisions. South Korea is one of Asia’s foremost digital marketing ecosystems, one in which local platforms have often beaten global entrants. English proficiency in South Korea is moderate, with consumers preferring to engage in local languages, making it important to localise marketing communications.

Advertising and media

South Korea has strong technology adoption with high smartphone and internet penetration. In 2025, YouTube advertisements reached 42.9 million people followed by Instagram (25.6 million),Facebook (7 million) and TikTok (11.8 million). Digital ad spend was AUD 26.8 billion (KRW 24.3 trillion) in 2025 accounting for 74 per cent of total ad spend that year. Influencer marketing is popular as South Koreans follow trends. Over 70 per cent of South Korean consumers make purchase decisions based on social media content, while 86 per cent of women browse social media platforms prior to making purchasing decisions.

Advertising is regulated by a framework aimed at ensuring fairness, decency and honesty. The Fair Labelling and Advertising Act mandates that advertisements should not deceive consumers regarding the quality and performance of the products. All claims made in advertisements must be verified, clear and substantiated.

The South Korea Fair Trade Commission is a regulatory body responsible for monitoring and enforcing advertising laws. Tobacco, pharmaceuticals and alcohol are subject to specific advertising restrictions. Violations can attract fines, corrective orders and public notice. The increasing use of digital platforms for advertising has necessitated guidelines for online advertising including rules on data privacy and direct marketing. Australian businesses looking to promote their products or services in South Korea can seek professional help from local and international advertising and media companies.

Figure 4: Digital advertising audiences in South Korea (2025)

Digital payments

South Korea has high rates of digital payments adoption, with cards and digital wallets accounting for over 90 per cent of e-commerce transaction value in 2024. Cards are widely used by South Korean consumers, but digital payments platforms like KakaoPay, Toss, Samsung Pay, Naver Pay and Payco have become mainstays. Digital payments are popular for enabling cost effective, safe and convenient transactions, massively accelerating the growth of e-commerce in South Korea. As digital payment options continue to expand and evolve, businesses should consider integrating them into their business model.

The Bank of Korea is exploring the feasibility of implementing a Central Bank Digital Currency. The country’s strategy to expand trade into other parts of Asia Pacific has resulted in partnerships with other countries to enhance access to cross-border payments. For example, South Korea and Indonesia have partnered to establish a cross-border QRcode based payment system and integrating local currency schemes.

Figure 5: Payment methods for B2C e-commerce (2025), %

A well-considered market entry strategy should take a systematic approach that supports long-term success. This section distils the factors businesses should consider when formulating an approach to the South Korean market into a series of key questions.

Asialink Business provides advisory services and capability training programs to help organisations understand and access opportunities in Asian markets. Should you have questions about any aspect of your South Korea market entry strategy, please contact us. Austrade’s South Korea office also provides services and support to Australian businesses with an interest in South Korea (details can be found in Section 5.2).

Calibrating Ambition

• What is your company’s aspiration for the market?
• What are the challenges and risks you will need to mitigate?

Consumers

• What is the current or potential demand for your product or service in South Korea?
• Who are the primary customers / consumers for your product or service in the market?
• How will you tailor your product or service to local preferences?

Competitors

• Who are your competitors in the market, and what is their offering?
• How does your product or service compare to competitors on price?

Sales, Brand and Marketing

• What is your unique value proposition for the market?
• What is the ideal mix of marketing and sales channels to reach your target customers?
• Is your marketing strategy aligned with your identified consumer base and value proposition?

Mode of Entry

• What is the right market entry model for your business?
• What are the specific geographies you should target?

Delivery Partners

• Does your team have the right mix of skills and expertise to support your market entry?
• What partnerships will contribute to your business’ success in the market?
• What external advice do you need to commission?

Operating Model

• What changes do you need to make to your business across areas such as operations, HR, finance and IT?

← Back to Understanding South Korea  |  Go to Business practicalities in South Korea →