Luge firm: Korea one big learning curve
Opportunities there for those who put in time, says Skyline
Afast-charging New Zealand tourism business which has succeeded in breaking into South Korea says taking it slow is key in the market of more than 51 million people.
Skyline is building its second luge in the country after its first was opened in 2017.
Chief executive Geoff McDonald said the company first started talking with authorities in the luge location, Tongyeong, seven years earlier. It had a headstart when the mayor of the city — with a navy port that was winding down — saw the need for a way of invigorating the area.
The mayor had a background and interest in tourism, he had been to Rotorua, where he rode Skyline’s first luge and decided he had the right hills and overlooking a bay.
“We were lucky we had the sponsorship of the mayor and his enthusiasm — it was a big factor in what was a fairly foreign environment, especially outside of Seoul.”
The luge, about 400km south of Seoul, employs about 80 to 90 staff, including about half a dozen Kiwis who have been posted there, and has been a great success, he said. McDonald was part of a New Zealand business delegation flown to Seoul on Air New Zealand’s first flight there in 22 years.
The airline believes the business market — travelling in both directions — will be an important part of the relaunched service.
And the Dreamliner used on the route has capacity for up to 20 tonnes of freight, which can be the cream on top of revenue for airlines — and the belly of the plane on the first flight on Saturday was near-full. Seoul’s Incheon airport is in the top five freight hubs in the world, with good links for New Zealand exporters to other Asian cities and Europe.
McDonald said the Air New Zealand flights — three to five times a week — would make travelling to South Korea more convenient.
Although Korean Air flies between Auckland and Seoul, flights were often full, meaning Kiwi travellers had to fly through other Asian cities and many would prefer to fly with the home carrier because of its loyalty scheme.
Skyline is on the USX and has a turnover of more than $200 million from increasingly global operations. It is now building a second South Korean luge which will be part of an amusement complex in Busan that McDonald visited yesterday.
He says patience is important for doing business in South Korea.
“Clearly the language is a challenge,” he said.
As was finding local partners for accounting and legal advice.
Working with big local partners in Busan was a step up and a challenge to “learn how to work through the hierarchies of those organisations because they are all very different — you can’t short circuit the process of building the relationship”.
Big family-owned conglomerates dominate business in South Korea.
The planning and the regulatory environment could be surprising, he said.
“You think you’ve got a handle on things and suddenly something comes out of the ether. You can very easily be kicked around by local politics — that’s why regular visits are important.”
He sees similarities between Korea and China, where he lived for two years about 15 years ago.
“There were people flocking in thinking there were gold coins on every corner — just like in Korea, you have to invest time. It’s a big market with big opportunities — you can’t just jump on a plane and think the opportunity is there.”
New Zealand exports about $2.1 billion of mainly primary produce to South Korea, with which it has a Free Trade Agreement.
A luge complex costs from $20m up to $60m to build. He says there have been rival operations start up in Korea since Skyline arrived.
They ranged in quality and he said Skyline had a long pedigree and was continually evolving its equipment, working with engineers at Canterbury University.
“Anyone can find a hill and put some concrete down but we’re on our eighth incarnation.”
Besides New Zealand and Korea, the company has tracks in Canada and Singapore, one under construction in Malaysia and two planned for Britain.