South Korea shows way on virus and is promising market for Irish firms
SOUTH KOREA is one of the first countries to come out of the Covid-19 crisis. People here are going back to work and schools are scheduled to reopen from next week. Businesses are using flexible hours and a degree of remote working, but lots of companies are calling people back to work.
South Korea never went into lockdown in the way other countries have. We did have social distancing, a need to stay two metres apart and the wearing of masks, but people could still go outside and there were no curfews.
South Korea has a population of 51 million and, as of this week, had 11,000 Covid-19 cases and 260 deaths. The government did well in terms of utilising technology to track, trace and isolate people, allowing it to contain the virus.
People were able to go outside or to shopping malls, so life was not as heavily affected as it was in Europe and the US. In recent days, Korea has experienced a new surge and the government has acted swiftly.
But the economic impact of Covid-19 saw a dramatic fall in domestic consumption and international travel. Jobs in aviation and aerospace were lost. Korea’s tourism sector — not as significant as Ireland’s, but still important — was also impacted. For hotels and airlines, there was simply no demand. Korean Air, the largest airline, is looking to restart some of its international services but that depends on international markets.
Domestic tourism is now picking up, however. In the long weekend here in May, a lot of people travelled to Jeju Island, one of the best-known destinations, and hotels recorded occupancy rates of above 88pc, as domestic confidence grows.
Public transport is operating as usual here. Seoul’s massive subway system, while not at pre-Covid-19 levels, is reasonably crowded as people are happy to travel by public transport. Everybody using it must wear a facemask.
Pre-Covid-19, GDP growth of about 2pc was predicted for South Korea this year. Now, however, we are looking at edging into the negative which, compared to some other countries, doesn’t look too bad. But this is still quite a fast-moving situation and IMF predictions are being revised more frequently than usual.
South Korea is known for brands such as Samsung and industries such as car manufacturing and, like Ireland, is heavily export-dependent. Global demand has dropped dramatically including in major markets China, EU, US and Japan.
Some positives have emerged. One was the way in which government, companies and society worked together to embrace change. For example, telemedicine has for many years been illegal in South Korea, with competing views unable to find a consensus. It was introduced temporarily and, in the last two months, 130,000 prescriptions have been generated this way. Now there is a growing movement to make it legal, part of a trend towards the digitisation of the health service generally.
A lot of sectors are accelerating their digital transformations. A Korean credit card company has just produced a fully digitised credit card which doesn’t just do away with plastic but is operated digitally end to end, from customer application to service. Samsung SDS, a Samsung IT solutions affiliate, is moving fast to capture a newly created opportunity to help companies achieve digital transformation with new services in cloud, AI and smart logistics.
We are seeing an acceleration of contactless technologies. Consumers now are more than happy to buy online. South Korea was found by one industry survey to have had the second-highest online purchasing activity during Covid-19, after China. On average 5.1 purchases are being made a week of groceries and daily necessities.
It was happening before but it will now become the norm. As a result, companies are developing their e-commerce platforms to be more user-friendly and are coming together with payment platforms to make innovative changes.
As South Korea accelerates transformation efforts, the demand for innovative healthcare products/services and advanced digital technologies will expand, and this is where Irish companies can add value to the Korean economy, as Enterprise Ireland’s client companies such as Novaerus and Ding are already doing in Asia’s fourth-largest market.