Australia-Korea: Strengthened Economic Partnership

Cross Sectoral Issues

This chapter brings together some of the issues raised in earlier chapters where they are of particular cross sectoral relevance.

5.1. Profile of Australian Capabilities

The lack of an Australian profile in Korea affects many industry sectors, especially those sectors not involving agricultural and mineral commodities (The level of understanding in Australia about Korea is also low, where the opportunities are seen to be in Japan and China and South East Asia. Korea was rarely even on the “radar” of many organisations).

A Korean who has not spent much time in Australia or who has not focussed on Australia, would think of Australia as a quarry and a farm and a nice place to visit — what a Korean taxi driver described as "paradise". To those Koreans, Australia is not thought of as a "clever country", as a source of technically or intellectually advanced inputs to assist in Korean development. This perception is captured in an Australian Education International (AEI) report of October 1998 on Korean Perceptions of Australian Education, which presented the results of quantitative and qualitative research in Korea on perceptions of Australian education. The report said:

On the basis of the research results those Korean students who choose Australia as a study destination are more likely to do so for reasons such as a perceived better living and study environment and low cost, rather than for the quality of its education product. Unless Australia’s quality profile is raised and English language is linked more strongly with study in other sectors, for most Korean students Australia will remain as an ELICOS (i.e. English Language) destination and little else.

Tied in with the education image is a complex of other factors, such as the perceived level of development of Australia’s science, technology, art, culture and sport. Given this, no one institution can "go it alone" in Korea, no matter what its size or standing elsewhere. To turn Korean perceptions around will require a coordinated, long-term promotional strategy at the institutional level, tied in with a national strategy based on the proven quality of the Australian education and training product.

A more recent study of Korean students in Australia said:

Koreans’ perceptions of Australia are poorly informed and inaccurate, as are their perceptions of Australia’s achievements in science and technology. Koreans do not think of Australia as comparable to the United States or Japan in terms of high technology (O Yul Kwon and See-Gyoon Park, Australia-Korea Relations in Education: Issues and Prospects (2000).

This is not to say that all Koreans are unaware of Australia’s technological strengths. Koreans directly involved in R & D, especially basic R & D, are aware of Australian capabilities. But this awareness does not often extend to the management of Korean companies involved in technology areas. Koreans regard the USA, and to a lesser extent Western Europe and Japan, as the technology rich countries.

The suggestions made under Technology and Education and Training in the previous chapter go some way towards overcoming those perceptions of Australia.

In addition, there is scope to use the media to highlight the existing successful economic relationship between Australia and Korea. This can be done through publicising case studies and sponsoring the relevant media both in Korea and Australia. This media attention should be encouraged to shift focus to highlighting the new economy developments and the potential for opportunities to expand the economic relationship.

The benefits of Australia as a low cost, high quality provider of information and communications technology and software applications, as well as a provider of systems integration services, photonics, biotechnology, resource and environmental management and technological research and development should be marketed to key Korean Government and industry policy makers and influencers as well as to the "man on the street".

5.2. Intellectual Property

Over the years there has been concern amongst Australian exporters about the lack of safeguards on intellectual property rights (IPR) in some countries. These concerns relate not only to the possibility of resulting inferior products and thus possible damage to the reputation of the company concerned: IPR concerns can also reduce the chances that an innovative company can recoup its investment in research and development and release enhanced new products.

Companies also need to be on the alert to ensure that pirated copies of their own product produced in countries where intellectual property laws are not fully enforced, do not turn up in their home market or in third countries.

Case Study -"Protecting property rights at customs

One of the most serious issues in the field of intellectual property rights in Korea is the fact that there are still many counterfeits produced in the Korean market. In terms of the total number of counterfeit imports seized by U.S. and Japanese customs, cases originating from Korea ranked 3rd and 1st, respectively. Similarly, the Korea Customs Service (KCS) reported an increase of 169 percent in counterfeit commodity imports and 146 percent in counterfeit commodity exports based on the number of cases compared with the previous year…"

"Pursuant to its international obligations, the Korea Customs Service announced that they have made significant gains in the interception of imported and exported IPR infringing goods, including counterfeit commodities in accordance with the WTO TRIPs and the Korea Customs Act.

In acknowledging the need to control IPR infringing commodities from its source, KCS has developed a measure on "Strengthening Trademark Protection including the Trademark Search System". KCS explained that the import/export of a good by any person without trademark rights will be detected by a computerised trademark searching system. Also, for import/export enforcement on trademark infringing goods, even if a trademark is not reported at the time of import/export declaration, the declaration will not be processed if there are doubts about the authenticity of the product…"

"Also, the American Chamber of Commerce (AMCHAM) and the European chamber of Commerce in Korea (EUCCK) have continuously requested the strengthening of KCS’s IPR enforcement role. The office of the Investment Ombudsman (OIO) also expects this system to be useful for facilitating and improving the interception or IPR-infringing goods during the import/export clearance stage. Not only will this help dispel Korea’s international image as an IPR infringing country but it will also help protect its consumers, thus enhancing the overall foreign investment business environment..." (Source – The Korea Herald, 26th June 2001. The author, Lee Hyun-seob, is a tariff, tax, and clearance counsellor at the Office of the Investment Ombudsman).

It has generally been accepted that the Australian software industry has been at the forefront of worldwide development of applications. However, while realising the potential opportunities of their software products overseas, the software industry participants have been reluctant in general to export to those markets where it has been perceived that software products may be subject to copyright infringements.

The protection of intellectual property has been hard to police and even harder to enforce through some legal systems. The problems are being addressed at many levels: the developers are introducing increasingly sophisticated protective measures for their own products while the countries in question, realising the negative impact to their economies (from an investment point of view), are also implementing stronger legal frameworks to protect IPR.

The Korean Government addressed these issues in June 2000 when it identified a concept of digital copying of materials, established rights for the digital transmission of materials, and enforced the punishment for infringement of digital copyright. The Government allows the IPR holder to claim compensation for damages, even in the case of unintentional infringement. The Government is promoting the use of digital copyrighted materials by allowing digital copying and transmitting in libraries. (Source – 2000 Korea Internet White Paper, Ministry of Information and Communication)

Nevertheless, there remains a perception among some Australian exporters, particularly potential exporters, that their IPR will not be adequately protected in Korea. There is scope for initiatives to be taken in this area to address this perception.

5.3. Standards and Compliance

An issue that arises for elements of the Australian elaborately transformed manufactures sector is the standards and compliance regimes in Korea (as well as in other Asian countries). The actual processes for obtaining approvals or certificates that the Australian goods comply with the various standards and regulations are time-consuming and often do not readily acknowledge that the goods in question meet internationally accepted standards.

In some elements of the Australian manufacturing sector, there is a willingness to work towards Mutual Recognition Agreements.

Korea will come under increasing pressure by major developed countries to take initiatives in these areas. It could be in Korea’s longer term interests to be seen to be willing to move forward in these areas by working with Australia which, as a smaller developed country, will not pose the same potential threat to Korean businesses.

There is therefore scope for the Australian and Korean Governments to work together, perhaps on a sector-by-sector basis, to establish mutually beneficial arrangements in relation to standards and compliance regimes.

5.4. Commercialisation of Technology

The commercialisation of technology in Australia is not maximised due to the lack of sufficient capital to develop new Australian ideas and technologies through the initial commercialisation stage and into full-scale production. The existence of many leading innovative companies in Australia, combined with Australia’s well educated and trained workforce, means that the advanced technology and manufacturing sectors have potential for further growth. In recent years this sector has diversified, particularly in technologically advanced products based on the application of innovative technologies. The manufacturing and services companies are increasingly attuned to export markets, with many producers in Australia developing strong niche markets in international arenas.

New developments in advanced technology manufacturing are also growing, including biotechnology, new materials technology, medical and scientific instrumentation, aerospace and defence. A number of innovative firms are producing leading edge scientific communications, military and industrial products, radar systems, optic fibre connectors, spaceborne communications and electronic warfare equipment.

The need to assist in the commercialisation of technology has been recognised by the Australian Government. It has taken a number of initiatives in the technology area, especially the support of R&D.

When Australian technology companies look for overseas support for the commercialisation of their technologies, they tend to look to the USA and to a lesser extent Western Europe and Japan. Korea should be an emerging source of support as the Korean Government places greater emphasis on becoming a knowledge based economy. Some Korean companies and organisations are already using Australia as a base to develop new products. The examples to date are limited, which means there is scope for the Australian and Korean Governments to foster a greater interest in each other’s country: Australia as a source and a place to develop technologies and Korea as a source of funding and a partner in the development of successful technologies.

5.5. Investment

With the current restructuring in Korea there is considerable opportunity for investing in Korea by Australian organisations. The liberalisation of Korea’s foreign investment policies, coupled with the ongoing regulatory reforms and the need for Korean firms to dispose of surplus assets and attract foreign capital, is enhancing the investment opportunities in Korea. The complementary opportunities for Korean firms to invest in collaborative research with Australian companies where the resultant manufacturing and marketing and distribution could be carried out by the Korean partners, is an attractive proposition.

CASE STUDY: Macquarie Bank / Shinhan Bank Joint Venture

The recently established joint venture between Macquarie Bank and the Shinhan Bank and the resultant special business unit has created opportunities for Australian organisations to be in touch with Korean organisations. It is staffed by executives from Macquarie and Shinhan, and is based at Shinhan’s head office in Seoul. The combination of Macquarie’s financial innovation and infrastructure expertise together with Shinhan’s extensive network of Korean clients and project financing capabilities, creates a new presence in the Korean financial market.

Source: Macquarie Bank

While there has been a substantial increase in foreign investment in Korea from foreign investors keen to capitalise on mergers and acquisitions, investment opportunities are still available and the promotion of these opportunities within Australia could provide new opportunities for some Australian organisations. While the Australian Government has been promoting Korean investment in Australian manufacturing and resources development projects, it would seem logical to initiate an awareness program both in Korea and Australia about the various mutually beneficial investment opportunities in both countries.

5.6. Making Connections

The current economic relationship between Korea and Australia is on the one hand impressive due to the success of the traditional commodities sectors and several key niche areas where entrepreneurial organisations have capitalised on the potential for complementarity, such as the automotive components sector and software in the financial and Internet related areas. On the other hand, it seems incongruous that such successful economic relations between two countries could be achieved with so little relative knowledge and social contact between the countries. It is our understanding that from a media perspective, currently there is only one Korean correspondent working in Australia, for the Donga Ilbo in Sydney. From the Australian point of view the Australian Financial Review has a stringer based in Seoul while most other Australian media outlets cover Korea from Tokyo.

The government-to-government relationship and co-operation between Australia and Korea has been strong for quite a few years and the interaction and the vision for mutually beneficial enhanced economic relations is also being propagated at strategic levels in both Governments. The obvious anomaly is the lack of people to people contact. The personal, social, cultural and sporting links are in need of innovative ideas and strategies. Such links will underpin a strengthened economic relationship.

Korea is viewed by many Australian business people as a "difficult" market. In some cases this view is based on actual experience, but in many cases the information is based on hearsay.

Discussions with representatives of the Australia New Zealand Chamber of Commerce in Korea identified issues regarding the difficulties of Australian expatriates working in Korea, in particular issues with superannuation, taxation and work visas for foreign workers in Korea. There were several instances of difficulties in the recognition of defacto relationships where Korea’s recognition of these relationships is different to that in Australia.

The Australia — Korea Foundation has been actively engaged in broadening the relationship between Australia and Korea, with a particular emphasis on promoting individual and group visits and exchanges between the two countries, especially in the areas of commerce, industry and sports, education, science and technology, the arts and the media. These initiatives should be continued and if possible extended with a greater emphasis on publicising these initiatives through the Australian and Korean media outlets.

In August 1999 the AKF co-hosted an inaugural Australia-Korea Media Forum with the Korea Press Foundation. The forum was co-chaired by Mr Mack Williams the Deputy Chairman of the Australia-Korea Foundation and Mr Moon-Won Kim Chairman of the Korean Press Foundation. The meeting issued a number of recommendations:

(i) the Australian-Korea Media Forum, with the participation of senior level journalists, should be held on a rotating basis in the Republic of Korea and Australia, with the support of the Korea Press Foundation and the Australia-Korea Foundation;

(ii) in order to enhance the understanding between the two countries, an exchange program between a number of journalists from the two sides should be carried out for, say, one semester at an assigned university. The arrangements for this exchange program should be carried out under the agreement of the two Foundations;

(iii) the two Foundations should encourage tie-up relations between media organisations of the two countries; and

(iv) the two Foundations should urge their respective governments to ease visa requirements for stringers.

CASE STUDY: Korean Students to Study Sport and Language in ACT.

It is anticipated that about 20 students will be arriving from Korea in February 2002 to attend Kambah High School and participate in the Soccer Program developed at the school. The Korean students would also be part of the educational and cultural community of the school and graduate at the end of year 10 with an ACT High Schools Certificate. The usual pathway for elite sports students graduating from Kambah High School (16-17 years of age) is to Erindale Secondary College which has a "Talented Sports Program" which includes soccer.

During their stay in Australia it is the intention of the program to not simply concentrate on their soccer development. It is equally important that the students develop as individuals and as young men. It is proposed that the program would take advantage of the opportunities for the students to come to understand Australia and Australians.

Students would be a part of Kambah High School and would be included in all other aspects of education which includes educational excursions to places in Canberra and outside the ACT, participation in school soccer and futsal teams and in all other sports teams which include tennis, hockey, softball, rugby, badminton, volleyball, cycling, triathlon, cricket etc.

Source: Mr Chris Conti, Kambah High School ACT.

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