The relationship between the United Kingdom and South Korea has grown significantly in recent years, with both countries seeking to enhance their economic and political ties. It was uncertain how this relationship would be after Brexit, but after a few years, it is clear that South Korea should not be worried. The relationship with Britain has not changed after Britain’s exit from the European Union. As far as UK-South Korea relations are concerned, it has risen since the 2018 bilateral trade between South Korea and the United Kingdom. However, the UK only accounts for $14 billion of South Korea’s exports which only makes up a little over 1%.
This article will explore the different aspects of the UK-South Korea relationship, the factors contributing to its strength, and the potential opportunities for further cooperation.
UK-South Korea Relations – Post Brexit
Back in 2019 saw, the conclusion of the Korea-United Kingdom Free Trade Agreement (FTA). In the agreement, the two countries agreed not to add new tariffs on major products, including auto parts and automobiles. The Korean government completed the ratification procedures, such as the National Assembly’s approval to make the Korea-United Kingdom FTA go into effect immediately. However, it was not until 2022 that the UK launched an 8-week public consultation on an enhanced FTA with South Korea. This can potentially increase UK technology exports to South Korea in 2023.
This is excellent news, as the economic relationship between the UK and South Korea has been a critical driver of their growing partnership. South Korea is the UK’s 7th largest non-European trading partner, with a bilateral trade worth £15.7 billion in 2022. The UK is also South Korea’s second-largest trading partner in Europe. South Korean companies, such as Samsung, LG, and Hyundai, have a significant presence in the UK. In contrast, UK companies such as BP, Shell, and Standard Chartered have also made significant investments in South Korea.
Startups in the UK Could Enter the South Korean Market in 2023
It is estimated that 20% of workers for London-based startups are from the EU. This means that Britain’s startup/tech sector could lose many highly skilled workers in the coming years. Due to the uncertainty of immigration laws due to Brexit, many might leave Britain on their own accord and look for work in EU countries. This short talent supply could cause UK startups to expand outside the EU to find talent. Most experts feel that importing and exporting costs will increase, which means many startups will need to grow out of the UK market and into new markets to find other means of growth. South Korea could be the right country to expand many London-based startups as it is a great gateway into the Asian market.
There are several areas where startups in the UK could benefit from entering South Korea. South Korea is known for developing and implementing new technologies like 5G networks and artificial intelligence. Startups in the UK can help Korean companies tackle global challenges, such as climate change, cybersecurity, and global marketing. In addition, the two sides can strengthen their cooperation in the cultural and educational fields by promoting entrepreneurial and academic exchanges.
Support Programs for Foreign Startups in Korea
One thing is clear; there will be less demand to start a startup in London due to these uncertain conditions and high expenses. Entrepreneurs with great ideas in the UK will look towards other countries to launch their businesses. The Korean government offers many startup support programs for global entrepreneurs looking to start a business in South Korea. These programs include the K-Startup Grand Challenge and the Seoul Global Startup Center. These programs are for non-Korean founders looking to bring their products/service into the Korean market. South Korea is the perfect country for any tech startup because South Korea is not only a tech-friendly country but also has a vital IT infrastructure.
For startups in the UK to survive, they will need to expand into new markets, Asia in particular. Investment funding in the UK is seeing a decline. Since 2017, there has been a 15% fall in seed-stage funding, devastating for startups. This will significantly affect the UK innovation scene for years since seed funding is the lifeline for many innovative startups. With the potential loss of investors in the EU, Britain needs to start looking towards the Asian market, and entering South Korea is one of the best ways to this transition.
UK-South Korea Political Relations
The UK and South Korea have also been working closely on political issues. The two countries share common values and interests, including promoting democracy, human rights, and the rule of law. The UK has been a key ally of South Korea in the international arena, supporting its efforts to promote peace and stability on the Korean Peninsula. President Yoon even traveled to the UK for the Queen’s funeral.
South Korea is one of Britain’s key allies in the Asia-Pacific region. The U.K. has always been for tough sanctions against North Korea and against their provocative nuclear rhetoric. Britain is a part of the U.N. Security Council and will continue to have a strong voice concerning human rights and security issues.
The UK and South Korea have also been cooperating on security issues. The two countries are members of the United Nations Command, which oversees the armistice agreement ending the Korean War. The UK has also been involved in joint military exercises with South Korea, and the two countries have signed many agreements on defense cooperation.
Should startups in Korea expand into the UK?
Digital technology is a crucial contributor to the UK’s economy and employment. Brexit has left many people in Britain worried about the loss of jobs and innovation. The digital tech sector alone contributes over $100 billion a year. As mentioned above, many startups in the UK will look to expand into new markets. This could be an opportunity for startups in Korea that were looking to expand into the UK market. Particularly fintech startups in Korea because even after Brexit, London will remain one of the leading financial centers in the world. It is home to some of the largest financial institutions. These include the Bank of England, Barclays, HSBC, and the London Stock Exchange. HSBC and Barclays are the two largest banks in the world.
Increase in demand for foreign talent.
While seed funding is declining, tech startups in Britain get around $7 billion in VC funding per year. This is more than all the EU countries combined. The two hottest sectors are fintech and AI. Many innovative fintech and AI startups in Korea should enter the UK market. The demand to bring in foreign startups and talent will increase as more and more British tech startups leave London. In addition, London is one of the most attractive destinations in the world for fintech experts, data scientists, and machine learning engineers. The only issue could be the language barrier. English is the universal language in the UK which could be an issue for some startups in Korea.
The relationship between the UK and South Korea has come a long way in recent years, and there are many opportunities for further cooperation. The two countries can create a stronger, more resilient partnership that benefits both nations by working together on economic, political, security, and cultural issues. As the UK seeks to establish new relationships outside the EU, South Korea can enhance its position as a global player.
