B. C. missing out on opportunities in South Korea

Canada needs to step up its game, Harvey Enchin writes.

By chance, U. S. President Donald Trump’s visit to South Korea last week coincided with a major conference held annually to promote foreign investment in the country. But if the 2,500 participants at Invest Korea Week 2017 were feeling any uneasiness about Trump’s attack on a five- year- old free- trade agreement between the two countries that he described as “horrible,” they weren’t showing it.

In fact, economics sat on the sidelines as the threat of a belligerent, nuclear- armed North Korea overshadowed trade issues during Trump’s summit with Korean President Moon Jae- in.

Yet foreign investment is the lifeblood of the Korean economy. Foreign, direct investment amounted to US$ 21.3 billion in the third quarter this year, representing about 1.5 per cent of GDP. Foreign companies operating in Korea account for as much as 20 per cent of the country’s exports. Accordingly, the government spends millions of won to spread the message that Korea is a good place to invest — indeed, the sixth- easiest place to do business in the world, according to a survey by The World Bank.

With a population of more than 51 million, purchasing power per capita equivalent to US$ 34,000, and a highly educated workforce, the world’s leading exporters, importers and investors — from China, the U. S., Japan, Hong Kong, Singapore, Taiwan, Indonesia, India, Russia, Germany, Australia, and Britain among them — have established a presence here.

Notably missing from this list is Canada. Not that Canadians have no interests here, they do; but Canada is seen as a second- tier supplier of raw materials — coal, wood pulp, ores, slag and ash. That amounted to $ 2.7 billion in the first six months of this year. Korea sent back $ 4.3 billion worth of motor vehicles, electronics, bicycles, mechanical appliances and other highvalue manufactured goods.

It seems clear that Canada should step up its game. For a start, the Korean economy is expected to be robust over the next few years, with GDP topping US$ 1.6 trillion in 2020, suggesting an annual growth rate of 3.2 per cent. Other countries have tapped into that growth, while Canada continues to be obsessed with China, a country that, unlike Korea, doesn’t share Canadian values of democracy, freedom and human rights. Nevertheless, B. C. Forest Minister Doug Donaldson led a trade mission to China and Japan this week while exports to both countries have been on the wane.

For B. C., in particular, Korea should be a more important trading partner. More than half of all Canadian exports to Korea originate in this province and 5.5 per cent of all commodity exports from B. C. are shipped there. Canada’s forestry sector, led by B. C., is the good- news story in the Korea- Canada investment relationship. Canada Wood Group, an industry association comprised of B. C.’ s and Canada’s major forest firms ( backed by government funding), is actively promoting the use of Canadian structural lumber in the Korean construction industry as a building material to replace the concrete housing hastily built after the Korean War.

Moreover, if B. C. is serious about getting a liquefied natural- gas industry off the ground, advocates should take note that Korea, given its dearth of energy resources, is the secondlargest importer of LNG in the world.

Education is a top priority in Korea and companies pay generously to send employees to management or technical- training courses, something B. C. universities have a reputation for doing well. Indeed, one of the few British Columbians represented at Invest Korea 2017 was from the University of B. C.’ s Sauder School of Business executive education program.

Otherwise, the small B. C. contingent to the investment conference was comprised of independent venture capitalists sniffing out opportunities. Unlike other countries — Germany, Britain and Australia delivered presentations on their companies’ investments in Korea — B. C. had no major players on the field.

A free- trade agreement between Canada and Korea that came into force in 2015 is phasing out tariffs on most goods traded between the two countries, opening up business possibilities for B. C. companies in technology, transportation and agri- foods, and levelling the playing field for B. C.’ s forestry and mining firms that compete against international rivals already covered by free- trade deals.

Korea may not be B. C.’ s biggest trading partner but it has the potential to grow in volume and value if it were given a little more attention.