Bilateral trade between Kenya and South Korea, guided by a rules-based international trading system, is critical to enhancing diplomatic relations, established on February 7, 1964. It is also critical in ensuring citizens of both countries enjoy the benefits accruing from the vibrant accord.
Recently, I have received phone calls from Kenyans who wish to export broccoli and unripe bananas to the Republic of Korea. This trend has been triggered by a letter dated April 29, 2021, by Amb Johnson Weru, Industrialisation PS, addressed to all 47 counties.
He confirms that the “Korean government granted market access authorisation for Kenya to export unripe bananas and broccoli to South Korea”. These two products do not require Pest Risk Analysis, to enter the Korean market. He further points out that: “In spite of the offer, we have noted that the volume of exports of these two products is dismally small”.
The callers are asking two questions: One, What is the size of Korean market for broccoli and unripe bananas? Two, Do I know someone in South Korea who can buy Kenyan fruits and vegetables?
Let us start with the trade balance and logistics. The trade is nearly one way, and the few Kenyan exports to the ROK are declining. Last year, Korean exports to Kenya were valued at $221 million. This was an increase of 45 per cent from the 2019 exports of $151 million.
On the other hand, 2020 Korean imports from Kenya were valued at $37 million. This was a decline of 15 per cent from 2019 imports of $44 million, which was also a decline of 14 per cent from the 2018 imports of $51 million. This shows that the Market Access Authorization secured by Foreign Affairs CS Monica Juma on October 8, 2018, was visionary.
Now, the ROK with a population of nearly 50 million people, is more or less the same as that of Kenya. But, Kenya is almost six times bigger than ROK. In fact, out of the 47 counties of Kenya, the ROK is just smaller than Kitui and Turkana combined.
Kenyan fruits and vegetables can be delivered to ROK via sea or air. The main seaports are Busan and Incheon. The Port of Busan is the fifth largest cargo port in the world. However, Incheon Port (64km) is closer to Seoul, the capital of the ROK, than Busan (325km).
The ROK has 15 airports out of which eight are international. Kenya Airways and Korean Air have code-sharing arrangement under a Bilateral Air Service Agreement.
South Korea imports both headed broccoli (Brassica oleracea var. botrytis) HS Code 070410, and sprouting broccoli (Brassica oleracea var. italica) HS Code 070490. The combined average annual import value is $18 million.
According to Korea International Trade Association, last year, Korean imports of HS Code 070410 were $12,063,000, while those of HS Code 070490 were $10,581,000. The broccoli imports accounted for seven per cent of total vegetable average imports of $253 million.
Imports of bananas, HS code 0803 or 080390, on average are $253 million. However, the value has been declining since 2017 as follows: 2017-$365,146k, 2018-$360,222l, 2019-$301,548K, and 2020-$275,864k. However, the imports of the first four months of 2021 are $101,184k, an indicator that the market is heading back to imports of over $300 million. Imports of plantains, HS Code 080310 are negligible.
On entry strategy, I recommend three steps. The first step is preliminary market research. The issues to be covered include: Korean government regulations and standards, Korean current tariffs and other local taxes, size of imports and source of imports-this is very important because the ROK has many suppliers from countries with Free Trade Agreements, and wholesale and retail prices.
The second step is establishing Korean importers or distribution partners. The best way is to participate in Korean food trade shows such as Seoul Food & Hotel exhibition. These attract Korean food importers who prefer face to face discussions. It is also an opportunity to ship market test samples.
The other approach is to contact large grocery distributors. A review of the latest Service Industry Survey by Korean Statistical Information Service, covering the period 2017 to 2019, shows that there are 585 Large Stores, 97 Department Stores, and 488 Discount Stores, in South Korea. The large stores account for 50 per cent of annual revenue, followed by discount stores 36 per cent, and finally department stores 16 per cent.
In conclusion, therefore, Kenyans should take advantage of this Market Access Authorization. South Korea remains one of the largest destinations for agricultural exports. This is because rising incomes and a growing, advanced economy continue to fuel Koreans' appetite for quality and healthy food.
First Kenyan Ambassador to the Republic of Korea (2009-2014). [email protected]
