uk-korea trade: maximising the relationship
TRANSCRIPT
1
UK-KOREA TRADE: Maximising the Relationship
1. Goods and Services Trade: A Strong and Diverse Relationship
The bilateral trade relationship between the UK and Korea is strong. Korea is the UK’s 4th largest trading partner1 in Asia, excluding transport hubs Hong Kong and Singapore in 2012 (23rd among all countries – 16th in goods, 28th in service). Chart1: UK’s top 10 trade partners in Asia (2012, £ million)
Source: ONS
The UK is Korea’s 2nd largest trading partner among EU countries and 9th largest
trading partner among all countries in 2012 excluding transport hubs (HK, Singapore)
and oil export countries (Saudi, UAE and Russia). The UK’s trade position is much better
placed than other major EU competitors such as France (20th), Netherland (19th), and
Italy (21st) although our performance lags quite significantly behind Germany (7th).
Chart2: Korea’s top 10 trade partners in 2012 (USD million)
Source: Bank of Korea
1 Sum of exports and imports in goods and services trades
10,125
0
10,000
20,000
30,000
40,000
50,000
1. China 2. Japan 3. Hong Kong
4. India 5. Singapore 6. Korea 7. Saudi 8. Taiwan 9. Thailand 10. Israel
22,867
0
50,000
100,000
150,000
200,000
250,000
1. China 2. US 3. Japan 4. Australia 5. Indonesia 6. Taiwan 7. Germany 8. Vietnam 9. UK 10. India
2
Korea is the 5th largest destination for UK goods and services exports in Asia
excluding transport hubs (HK and Singapore) in 2012. Korea is 19st largest destination among all countries in 2011, notching up from 24th in 2011 excluding HK and Singapore. Chart3: UK goods and services exports to Asia (2012, £ million)
Source: ONS
Chart4: UK goods and services exports to the world (2012, £ million)
Source: ONS
Total UK goods and services exports to Korea performed strongly, growing 57% to £6,367 million in 2012 - nearly on par with total exports to India. Goods exports have contributed more to an increase in total UK’s exports to Korea than service exports. Chart5: Trend of UK goods and services exports to top 5 Asia & Oceania (£ million)
Source: ONS
Korea is the 3rd largest destination for UK goods exports in Asia and Oceania excluding the transport hubs (HK and Singapore). UK goods exports to Korea increased rapidly from 2011 to 2012 (84%, y-o-y), surpassing its exports to Australia and India.
6,367
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1. China 2. Japan 3. Saudi 4. Hong Kong 5. Singapore 6. India 7. Korea 8. Thailand 9. Malaysia 10. Israel
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
China
Australia
Japan
India
Korea
3
Chart6: Trend of UK goods exports to top 5 countries in Asia & Oceania (£ million)
Source: ONS
However compared to other countries, UK service exports to Korea have increased moderately. Korea is 5th largest destination for UK service exports in Asia and Oceania, excluding HK and Singapore (26th in the world). Chart7: Trend of UK service exports to top 5 countries in Asia & Oceania (£ million)
Source: ONS
In light of above, UK goods exports largely determine the direction of total export growth to Korea. The share of goods exports increased to 77% in 2012 from 66% in 2011 mainly due to oil exports while the share of service exports decreased to 23% from 34% in the same period. Chart8: Trend of UK goods and services exports to Korea (2002-2012, £ million)
Source: ONS
0
2,000
4,000
6,000
8,000
10,000
12,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
China
Japan
Korea
Australia
India
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Australia
Japan
China
India
Korea
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Services Exports to Korea
UK Goods Exports to Korea
4
Chart9: Share of UK goods and services exports to Korea (2002-2012, %)
Source: ONS
The share of UK service exports to Korea of total exports is 30% on an annual average in 2002-2012. This trend is similar to the one for China and India in the same period. Chart10: Trend of UK goods and services exports to China (2002-2012, £ million)
Source: ONS
Chart11: Trend of UK goods and services exports to India (2002-2012, £ million)
Source: ONS
74 75 61 67 65 65 69 69 67 66
77
26 25 39 33 35 35 31 31 33 34
23
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Share of Service Share of Goods
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Services Exports to China
UK Goods Exports to China
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Services Exports to India
UK Goods Exports to India
5
However, the share of UK’s service exports to Australia and Japan is more than 50% each on an annual average in 2002-2012. Chart12: Trend of UK goods and services exports to Australia (2002-2012, £ million)
Source: ONS
Chart13: Trend of UK goods and services exports to Japan (2002-2012, £ million)
Source: ONS
2. UK Service Exports to Korea
UK services exports grew 5% to £1,448 million in 2012. UK is the largest service exporter in Korea among EU countries and 4th largest among all countries after US, China and Japan over the past 5 years and in 2012 alone2.
2 To compare the UK service exports to Korea with competitors, we used the Bank of Korea data. As
such, the value of service exports can differ from the ONS data due to different methodology.
0
2,000
4,000
6,000
8,000
10,000
12,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Services Exports to Australia
UK Goods Exports to Australia
0
2,000
4,000
6,000
8,000
10,000
12,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Services Exports to Japan
UK Goods Exports to Japan
6
Chart14: Top 10 service exporters to Korea in 2012 (million USD)
Source: Bank of Korea Chart15: Trend of service exports to Korea (2008-2012, million USD)
Source: Bank of Korea
UK service exports comprise more than 1/3 of total EU service exports to Korea on an annual average in the past 5 years. The share of UK service exports of total service exports to Korea is 6% on an annual average over the same period. Chart16: Breakdown of global service exports to Korea by country
Source: Bank of Korea
Chart17: Breakdown of EU service exports to Korea by country
6,089
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1. US 2. China 3. Japan 4. UK 5. Singapore 6. HK 7. Germany 8. UAE 9. Vietnam 10. Australia
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2008 2009 2010 2011 2012
US
China
Japan
UK
France
US 27%
China
11%
Japan 9% UK
6%
HK 5% Germnay
4%
Singapore 4%
France 2%
Others 32%
7
Source: Bank of Korea
UK’s service exports to Korea continued to increase the past 10 years, although not as fast goods exports. The UK service exports to Korea grew faster than its non-oil goods exports to Korea. UK service exports to Korea almost tripled in 2012 since 2002 (2.8x), while non-oil goods exports doubled (1.9x) in the same period. Including oil, UK’s goods exports to Korea more than tripled (3.3x). Chart18: Trend of UK goods and services exports to Korea (2002-2012, £ million)
Source: ONS
Chart19: Trend of UK service exports to Korea (2002-2012, %)
Source: ONS
UK’s top 3 service exports are professional services, transportation and financial. The share of these sectors compromise of 74% of the total UK service exports to Korea
UK 31%
Germnay 23%
France 9%
Netherland 5%
Italy 4%
Slovakia 3%
Belgium 2%
Spain 2%
Others 22%
1,464
4,919
2,894
505
1,448
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Goods Exports to Korea (incl. oil)
UK Non-oil Goods Exports to Korea
UK Services Exports to Korea
-3%
92%
-15%
16% 7%
16%
-15%
21%
17%
6%
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
0
200
400
600
800
1,000
1,200
1,400
1,600
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UK Services Exports to Korea
Growth Rate of UK Service Exports to Korea
8
1. Other business services: professional/technical services such as legal, accounting, consulting, advertising, market research, R&D, architectural, engineering, surveying and mining on-site processing
2. Transportation: sea/air transport for passenger and freight on UK exports
3. Financial services
Monetary financial institutions: commissions and fees, spread earnings
Loans & deposits: interest differential between borrowing and lending
Fund managers: commissions/fees for securities dealers and spread earnings
4. Travel: business expenditure by seasonal/border workers, personal health, education
5. Royalties and license fees: film and television, other royalties and license fees
6. Insurance: life insurance, pension funds, freight insurance, reinsurance, insurance brokers
7. Computer and information services: IT related service
8. Government: expenditure by foreign embassies and consulates
9. Construction: construction projects (if operate for over a year, the enterprise becomes part of the host economy and its transactions are excluded from the trade in services account, rather, recorded under FDI.
10. Communications: Postal and courier services, telecommunications services
on annual average in the past 5 years. The largest service export in value is professional services – see chart18 for details. But breakdowns of professional services are unknown. Chart20: Share of UK’s top 10 service exports to Korea (2008-2012, annual average)
Source: ONS
Chart21: What are services in trade?
Except for financial sector, most service exports continued to increase in the past 5 years. Chart22: Trend of UK’s top 10 service exports to Korea (2008-2012, £ million)
28%
26%
20%
12%
4%
6%
1% 2% 2%
1. Other business services - professional services
2. Transportation
3. Financial
4. Travel
5. Insurance
6. Royalties and license fees
7. Communications
8. Computer and information
9. Construction/recreational/government
9
Source: ONS
Chart23: UK’s top 10 service exports to Korea in 2012
Source: ONS
Chart24: Share of top 10 service exports of total UK service exports to Korea in 2012
Note: Figures for construction and government are combination of the two since both are unknown – subtraction of the rest sectors from the total service exports. Source: ONS
3. UK Goods Exports to Korea in 2012
UK exports to Korea made the largest contribution (15%) to growth in UK’s total exports to the world in 2012. UK goods exports to Korea increased 82% to £4,919 million in 2012 from 2011. When stripping out oil, Korea made the 8th largest global contribution (3%) to total UK export growth excluding transport hubs such as Netherlands and Singapore.
0
50
100
150
200
250
300
350
400
450
2008 2009 2010 2011 2012
1. Other business services Professional services
2. Transportation
3. Financial
4. Travel
5. Royalties/license fees
6. Insurance
1,448
11
13
20
42
79
145
194
233
337
374
0 200 400 600 800 1,000 1,200 1,400 1,600
Total services
10. Personal, cultural and recreational
9. Communications
8. Construction and Government
7. Computer and information
6. Insurance
5. Royalties and license fees
4. Travel
3. Financial
2. Transportation
1. Other business services - professional services
26%
23%
16%
13%
10%
5%
3% 1% 1% 1%
Other business services
Transportation
Financial
Travel
Royalties and license fees
Insurance
Computer and information
Communications
Personal, cultural and recreational
Others
10
Chart25: Which country contributed largest to growth of UK total exports to world in 2012?
Source: HMRC
Chart26: Contribution of UK exports to Korea (excl. oil) to growth of UK exports to world
Source: HMRC
UK exports to Korea reached a new historical peak in 2012. Korea ranked 16th largest destination for UK goods exports in the world in 2012 (15th largest excluding transport hub Hong Kong), upgrading 10 notches up from 2011. Korea is ahead of India, Australia and Canada. When stripping out oil, Korea ranked 27th in 2012. In Asia and Oceania, Korea ranked 4th (3rd largest excluding transport hub Hong Kong) upgrading 3 notches up from 7th in 2011. When stripping out oil, Korea ranked 7th in 2012. Chart27: UK’s goods exports to Korea in 1996-2012 (£)
Source: HMRC
15%
9% 9% 8% 8%
5% 4%
4% 3% 3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
KOREA NETHERLANDS USA SWITZERLAND CHINA RUSSIA SINGAPORE THAILAND UAE NORWAY
11% 11% 10% 9%
6% 5%
4% 4% 3% 3% 3% 2% 2%
0%
2%
4%
6%
8%
10%
12%
0
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
11
Chart28: Rank - UK’s goods exports to World, by country in 2012 (million £)
Source: HMRC
Chart29: Rank - UK’s goods exports to Asia & Oceania, by country in 2012 (£)
Source: HMRC
Total UK goods exports to Korea increased 82% in 2012 from 2011 (14% in 2011). When stripping out oil, the UK exports to Korea increased 15% in 2012 (1% in 2011). Crude oil contributed to 80% of the total increase in exports (59% in 2011), comprising 44% of the total UK’s exports to Korea (11.8% in 2011).
The top 5 UK’s exports to Korea (71% of total exports) performed well in 2012. Except for crude oil, an increase in machinery3 exports was the largest in value among top 5 exports. Most UK’s medium-term (5 yrs) strong exports performed well in 2012 except for electronics.
Chart30: Top 7 UK’s goods exports by value in 2012 (£)
Source: HMRC
3 The largest exports of HS 84 were (i) automatic data-processing machines (ii) turbo-jets/propellers, gas
turbines, and (iii) taps, valves and boilers. (HS 84: machinery parts, nuclear reactor, boilers, etc.)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
1. China 2. Hong Kong 3. Japan 4. Korea 5. India 6. Australia 7. Singapore 8. Thailand 9. Malaysia 10. Taiwan
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
1. Crude oil 2. Nuclear reactors, boilers, machinery parts
3. Pharmaceutical
products
4. Electrical machinery (TV/mobile
phones/recorder)
5. Vehicles 6. Optical, photographic,
medical instruments
7. Beverages
2012 2011
12
Chart31: Top 7 UK’s goods exports to Korea by value change in 2012 (£)
Source: HMRC
Chart 32: UK’s goods exports by sectors in 2012 (share of total exports)
Source: HMRC
Chart33: The UK’s medium term export performance (in order of total exports in ‘08-‘12)
Source: HMRC
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
1. Crude oil 2. Nuclear reactors, boilers, machinery parts
3. Inorganic chemicals
4. Articles of iron or steel
5. Pharmaceutical
products
6. Road vehicles 7. Aircraft, spacecraft, and
parts
2012 2011 Change 2012-2011
Crude oil 44%
Nuclear reactors, boilers, machinery
parts 14%
Pharmaceutical products
5%
Electrical machinery parts (TV/cell
phone/recorder) 4%
Vehicles 4%
Optical, photographic, medical instruments
3%
Beverages 3%
Others 23%
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2008 2009 2010 2011 2012
1. Crude oil
2. Nuclear reactors, boilers, machinery parts
3. Electrical machinery parts
4. Pharmaceutical products
5. Beverages
6. Optical, photographic, medical instruments parts
7. Road vehicles
13
Chart34: The UK’s medium term exports excluding oil
Source: HMRC Chart35: The UK’s medium term strong exports excluding oil and machinery
Source: HMRC Chart36: Assessment on UK’s medium term strong exports in 2012
Change 2012 (£) 2011 (£)
Share of total exports in ‘08-‘12
Share of total exports in ‘12
1. Crude oil 582% 2,024,383,119 296,748,980 20% 44%
2. Nuclear reactors, boilers, machinery parts 38% 649,391,516 469,713,704 17% 14%
3. Electrical machinery parts -4% 199,948,618 209,336,818 7% 4%
4. Pharmaceutical products 18% 229,757,706 194,461,459 7% 5%
5. Beverages 1% 149,259,624 148,196,208 5% 3%
6. Optical, photographic, medical instruments parts 0% 156,785,707 156,658,465 5% 3%
7. Road vehicles 13% 191,720,458 169,064,856 5% 4%
Total 67% 79%
Source: HMRC
Chart37: UK’s oil exports to Korea in 2000-2012
Source: HMRC
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
2008 2009 2010 2011 2012
2. Nuclear reactors, boilers, machinery parts
3. Electrical machinery parts
4. Pharmaceutical products
5. Beverages
6. Optical, photographic, medical instruments parts
7. Road vehicles
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
2008 2009 2010 2011 2012
3. Electrical machinery parts
4. Pharmaceutical products
5. Beverages
6. Optical, photographic, medical instruments parts
7. Road vehicles
0% 0% 0% 0% 0% 0% 0% 0%
13%
6% 0%
12%
44%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Share of Total Exports (%) - Right
Crude Oil Exports (£) - Left
14
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solely for information purposes. No representation or warranty, either express or implied, is
provided in relation to the accuracy, completeness or reliability of the information contained
in this document. The Information is not intended to be a complete statement. The Embassy
does not undertake to update or keep current the Information. Any opinions expressed in this
document may change without notice. All data used is publicly available via the ONS, HMRC
and Korean data sources.