South Korean Export Business Plan

1. South Korean Export Business Plan By: Denece Oplinus

2. Table of Contents • Introduction • Michele Cosmetics: Our Product • South Korea: Our Target Market • Basic Needs Potential • Exchange Rates • Import Restrictions & Price Controls • Government & Public Attitude • The Competition • Cultural Attitudes & Beliefs • Language & Education • Marketing Strategies • Promotions • Conclusion • References

3. Introduction • Our product chosen to export is our makeup line • South Korea is the target market • Stable exchange rates with the U.S. dollar and the Korean Won • Koreans want the American lifestyle • Positive government and public attitudes • No import restrictions for American products • Marketing and promotional strategies • Final recommendations

4. Michele Cosmetics: Our Product • Full line of low priced designer makeup • Products are tested on artificially grown skin • Specialized product categories • Moisturizer line • Anti-aging line • Acne line • Current packaging is acceptable: red case with gold lettering

5. South Korea: Our Target Market • Terrain has mountains, deep valleys, and cultivated plains • Climate is temperate with heavy summer rainfalls • Population is 48.3 million with annual growth rate of 0.26% • Capital is Seoul with population of 10.3 million • GDP purchasing power parity for 2007 is $1,201 trillion • GDP growth rate for 2007 is 5% • Market Segment: over 17 million females ages 15-64 (U.S.D.S. 2008)

6. Basic Needs Potential • Per capita GNI was $20,045 in 2007 (U.S.D.S. 2008) • U.S. government says cosmetics are wanted in South Korea (U.S.C.S. 2008)

7. Exchange Rates • Current exchange rate is 1$ to 1,483.45 South Korean Won (OANDA Co., 2009) Exchange Rate Trends for the KRW and US Dollar (OANDA Co., 2009)

8. Import Restrictions & Price Controls • No Import restrictions for U.S. companies • No price controls for U.S. companies • South Korea has a 10% sales tax (U.S.C.S. 2008) • Passage of KORUS-FTA lifts current tariffs & barriers (U.S.T.R. 2007)

9. Government & Public Attitude • U.S. and South Korea have relations since 1953 (U.S.D.S. 2008) • Structural reforms in 1998 improved access to markets (U.S.D.S. 2008) • U.S. and South Korea have concluded negotiations for FTA (U.S.C.S. 2008) • Koreans are fascinated with the American lifestyle (U.S.C.S. 2008) • Koreans place a high quality on American products (U.S.C.S. 2008)

10. The Competition • Several chain stores with cheap alternatives • Main competition on our level is Avon • Avon’s total gross sales in 2007 were $9.8 billion (Avon 2007) • Avon’s Asian sales in 2007 were $850.8 million (Avon 2007) • Avon has a very high debt ratio of 87.6% (Avon 2007) • Avon only sells door to door

11. Cultural Attitudes & Beliefs • Self sufficiency is valued by Koreans • Ethnic majority is Korean with 20,000 Chinese minority • Half of Koreans practice religion • Korea’s two major religions are Christianity and Buddhism • A quarter of all Koreans practice Buddhism (U.S.D.S. 2008) • With Buddhism, material things are frowned upon (Ball et al, 2006)

12. Language & Education • National language is Korean (U.S.D.S. 2008) • Language barrier & established social circle require Korean representation (U.S.C.S. 2008) • English is widely taught in elementary and high school (U.S.D.S. 2008) • Korean literacy rate is 98% (U.S.D.S. 2008)

13. Marketing Strategies • Same marketing plan is used • Exchange rates determine the price of product • Use Korean representative for distribution within existing department stores (U.S.C.S. 2008) • Product name needs to be translated (Ball et al, 2006) • Hire local legal counsel to file for trade name license (U.S.C.S. 2008)

14. Promotions • Same product with the same message (Ball et al, 2006) Michele Cosmetics – Beautifying Women Everywhere • Must register with authorities in order to advertize in South Korea • Advertize online! Korean E- commerce sales over $400 billion • Advertize with the nine television stations and shopping channels (U.S.C.S. 2008) • Advertize with the three major newspapers (U.S.D.S. 2008) • Use dollar-off coupons to promote our product (Ball et al, 2006) • Public relations are important in South Korea (U.S.C.S. 2008)

15. Conclusion • South Korea is our ally • KORUS-FTA reduces red tape and increases profit • Avon is our main competition at home Let’s hit them in their international markets too!

16. References • Avon (2007). 2007 Annual report. Retrieved March 13, 2009 from the Avon Web site at • http://www.avoncompany.com/investor/annualreport/pdf/annualreport2007.pdf • Ball, D. A., McCulloch, W. H. Jr., Frantz, P. L., Geringer, J. M., & Minor, M. S. (2006). • International business: The challenge of global competition (10th ed.). New York: McGraw- • Hill. • OANDA Co. (2009). FX History: Historical currency exchange rates. Retrieved March 14, 2009 • from the FX History Web site at http://www.oanda.com/convert/fxhistory?date_fmt=us&date=03/09/05&date1=03/09/04&exch=USD&expr=KRW&format=HTML&lang=en&margin_fixed=0 • United States Commercial Service. (2008). Doing business in Korea: A country commercial • guide for U.S. companies. Retrieved March 14, 2009 from the U.S. Commercial Service Web • site at http://www.buyusainfo.net/docs/x_3151071.pdf • United States Department of State. (October 2008). Background note: South Korea. Retrieved • March 15, 2009 from the U.S. Department of State Web site at • http://www.state.gov/r/pa/ei/bgn/2800.htm • United States Trade Representative. (June 30, 2007). United States and the Republic of Korea • sign landmark free trade agreement. Retrieved March 13, 2009 from the U.S. Trade • Representative Web site at http://www.ustr.gov/Document_Library/Press_Releases/2007/June/United_States_the_Republic_of_Korea_Sign_Lmark_Free_Trade_Agreement.html