Trade relations between Finland and South Korea: Room for new innovations and cooperation

Eero Suominen,
Ambassador of Finland to the Republic of Korea

South Korea is considered to be a miracle on the Han River – a nation with economic development curve so steep it is nearly impossible to match with any other country in the world. Today, South Korea is a buzzing nation of over 50 million people and the world’s 11th biggest economy. What does Finland have to offer the homeland of high-tech giants such as Samsung, LG, and Hyundai?

High level of technological development, world class education, appreciation for classical music, and esthetic fondness for pragmatic Nordic design are only a few things that South Koreans and Finns have in common. From Seoul, Finland looks fresh: innovative yet close to nature. Especially younger South Koreans find Finland’s world-famous work-life balance attracting. The opportunity to all genders to thrive a successful career and still make it home from work by 6pm has so far not been an option for most South Koreans, who consistently work some of the longest hours among the OECD countries. Furthermore, only 50 percent of South Korean women are active in the labor force.

Both countries are market economy-based democracies that depend on foreign trade. In fact, over 80 percent of South Korea’s GDP comes from trade. In Finland’s trade statistics, South Korea is the 17th biggest trading partner, yet is Finland’s 3rd largest export destination in Asia after China and Japan. South Korea’s largest trading partners are China and the United States. The country is looking to expand its trade destinations with further cooperation especially with ASEAN and the EU. The EU-South Korea Free Trade Agreement (FTA) entered into force in 2015, and has since contributed to growing trade numbers between the areas as well as lowering tariffs for companies.

In recent years, South Korea’s economy has not been growing at the same pace as before and growth has eased to steady 2 percent annually. Yet statistics do not reveal the whole picture. Annual exports of goods from Finland to South Korea amount to approximately 900 million euros – and the outlook for growth is positive. In trading goods, traditional maritime industry and heavy machineries still top the charts.

Export of services has also gradually risen during recent years. The total amount is not quite yet parallel to export of goods but comes surprisingly close, adding to approximately 800 million euros.

In recent years, some of the fastest growing trade sectors between the two countries have been food exports and tourism. Finnish food is known and appreciated in South Korea for its purity and quality. Nutritious, antibiotic-free, and safe food of the highest standards is in increasing demand among Korean consumers. Trends of organic food and plant-based proteins are beginning to catch tailwind in South Korea – both to which Finland will have plenty to offer.

Tourism between the countries has seen a steady increase in numbers for years. More and more South Koreans travel to and via Finland, with Korean overnights growing at an annual average of 19.5 percent since 2015. South Koreans seek Nordic lifestyle and unique experiences from Finland: closeness to nature, high quality design, new flavours and Lapland nostalgia with aurora borealis and Santa Claus.

In the beginning of a new decade, the South Korean market has plenty of space for more innovations from Finland in various sectors. Finland has potential to capitalize on this momentum particularly in the fields of bioeconomy and circular economy, where South Korea is only at the early stages of creating an action plan for scaling up more sustainable solutions in the industry and consumer markets. Meanwhile, South Korea was the second country in the world to roll out commercial 5G network. Finland has an excellent reputation in the field of ICT, which offers many opportunities for pioneering Finnish companies. Research and business-level collaboration is already taking place in the fields of artificial intelligence, robotics, autonomous driving, and wireless technology, including 5G and 6G.

Heading into a new decade, now is the ideal time to identify and advance opportunities for fruitful and actionable collaboration between Finland and South Korea. President Moon Jae-in’s state visit to Finland last June laid important groundwork for tightened economic cooperation at both the state and corporate level. Work has already begun at for example health sector, as well as foods and beverages. The two countries will also be joining forces in startup development with Korea Institute of Startup & Entrepreneurship Development and Aalto Startup Center launching their collaboration in spring 2020, bringing Korean innovators to learn from Finland’s startup scene. In this era of intensified technological competition, Finland and Korea have great potential for tightened exchange that will help advance the economic competitiveness and high-tech innovations of both countries in the years ahead.

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