The value of ÎÚÑ»´«Ã½ and ÎÚÑ»´«Ã½’s trade relationship with South Korea is expected to grow, following a record ÎÚÑ»´«Ã½-Korea trade year in 2022 and relatively strong activity in 2023.
Electric vehicles, artificial intelligence and hydrogen are among the main drivers of trade value growth between both countries. The technology and energy sectors will continue to be priorities, according to Hyunsoo Choi, chief trade commissioner for the Korea Trade-Investment Promotion Agency (KOTRA) Vancouver.
“Imports from Korea to ÎÚÑ»´«Ã½ reached their highest last year. The main driver of growth is that electric cars are booming in the Canadian market and Korea is really good at manufacturing electric vehicles,” said Choi.
“For example, Hyundai has introduced different types of electric vehicles customized for Canadian consumers that hit the Canadian market, then trade volume skyrocketed last year.”
The value of South Korean imports to ÎÚÑ»´«Ã½ reached $13.9 billion in 2023, the highest in history and a 4.5-per-cent increase from 2022, the second-strongest year. Motor vehicles and parts accounted for $6.8 billion—nearly half of the total import value, and a 39-per-cent increase from 2022.
Korean cosmetic products and food such as kimchi and ramen are the other areas that saw significant growth in import value to ÎÚÑ»´«Ã½, according to Choi, who said he has focused on helping premium Korean beauty products enter Canadian department stores such as Holt Renfrew.
“Korean cosmetics are very popular among Canadian consumers, partly because of Korean drama,” said Choi. “Especially on the West Coast, where there is a large population of immigrants from Asia, people are more familiar with Korean cosmetic products and are willing to buy them at a premium price.”
Exports from ÎÚÑ»´«Ã½ to South Korea in 2023 totalled $6.9 billion, a 21-per-cent decrease over 2022, which is the record highest export year on record.
The decline is associated with a slower economic growth in South Korea last year, according to Choi. Despite that, 2023 marked the second-highest year on record for total trade value between both countries.
Energy products, as well as metal ores and non-metallic minerals, were the main export sectors, and accounted for nearly 80 per cent of ÎÚÑ»´«Ã½’s total export value to South Korea.
Following the national trend, ÎÚÑ»´«Ã½-Korea trade values reached their second-highest level in 2023 at $5.5 billion, following a record year in 2022. This made Korea fourth among the province’s biggest exporters and sixth among its top importers in 2023, according to KOTRA statistics.
“I hope this year the trade volume will reach its highest,” said Choi.
Prioritizing growth in hydrogen and AI collaboration
In addition to electric vehicles, ÎÚÑ»´«Ã½ and South Korea have deepened their collaboration in the areas of hydrogen and AI in recent years, and Choi said he will continue to prioritize promoting partnerships in these areas—which are where he sees some of the largest opportunities.
“The energy sector is very important to both the Korean and Canadian governments with an emphasis on developing renewable energy. Korea and ÎÚÑ»´«Ã½ have a complementary industry structure in the energy sector, especially hydrogen, so we can cooperate with each other to make a synergy,” said Choi.
Korea’s advanced manufacturing technology can help ÎÚÑ»´«Ã½ better develop its rich natural resources, he said. For example, Korea Gas Corp. (KOGAS) (KRX:036460) is manufacturing pipelines that can carry an increased mix of hydrogen efficiently. And six hydrogen heavy-duty trucks delivered by Hyundai to the ÎÚÑ»´«Ã½-based hydrogen energy company HTEC have recently hit the road.
Meanwhile, Korean companies have been investing in Canadian energy projects. KOGAS holds a five-per-cent stake in ÎÚÑ»´«Ã½’s LNG ÎÚÑ»´«Ã½ project and is slated this year to start importing 700,000 tonnes of liquefied natural gas per year into South Korea.
SK ecoplant Co., Ltd., owned by SK Group (KS:034730), has also announced a plan to invest in Project Nujio’qonik, ÎÚÑ»´«Ã½’s first commercial green hydrogen plant. It has acquired a 20-per-cent stake in the first phase of the project, which is based in Newfoundland and Labrador.
“Many energy companies [in Korea] are looking to cooperate with a Canadian company and invest in hydrogen projects in ÎÚÑ»´«Ã½ Some new projects or facilities in ÎÚÑ»´«Ã½ are already in discussion,” said Choi.
AI is another sector identified by Choi as having opportunities for collaboration between South Korea and ÎÚÑ»´«Ã½ He said he will focus on setting up networking events and seminars where people can exchange experience and knowledge, and support AI research and development between the two countries.
South Korea is well-positioned to partner with ÎÚÑ»´«Ã½ businesses, said Choi, given friendly political relations, the fact that Vancouver is the closest port in North America to Korea and the ÎÚÑ»´«Ã½-Korea Free Trade Agreement (CKFTA), which currently gives about 99 per cent of ÎÚÑ»´«Ã½’s exports duty-free access to the South Korean market.
Still, some trade challenges also exist.
ÎÚÑ»´«Ã½’s bilingual labelling requirement for imported products has made some Korean businesses hesitant to enter the Canadian market. The U.S. is also an attractive market, said Choi.
“To be honest, the most challenging thing I face as a trade commissioner in ÎÚÑ»´«Ã½ is the United States,” said Choi. “When I tried to explain the Canadian market to Korean companies, they would show interest and then say, ‘Oh I would like to go to the U.S. market first which is much bigger.’
“I always tell them ÎÚÑ»´«Ã½ is composed of a lot of ethnic groups speaking different languages and having different cultural backgrounds. We can test the products in the Canadian market and then expand into the U.S. market. It’s an equally important market for Korean consumers.”
