SOURCE: USDOC, International Trade Administration SOURCE KEY: IT PROGRAM KEY: IT MARKET PROGRAM: Market Research Reports UPDATE: Monthly ID NUMBER: IT MARKET 111103415 TITLE: KOREA - OUTBOARD MOTORS & SPORTING BOATS - ISA9209 DATA TYPE: TEXT END YEAR: 1992 UPDATED: 12/17/92 KEYWORDS 1: | 9209 | BEST|PROSPECTS | CC580 | COMPETITION | DISTRIBUTION | END|USERS | ISA | ISA9209 | KOREA | MARKET|ACCESS | MARKET|ASSESSMENT | OUTBOARD|MOTORS | SPORTING AND RECREATION GOODS | SPORTING|BOATS | SPORTING|GOODS | SPT | STATISTICS | TRADE|CONTACTS | TRADE|PROMOTION COUNTRY: | KOREA | SOUTH KOREA | ASIA | EAP | EAST ASIA | EAST ASIA & PACIFIC | EAST ASIAN COUNTRIES | EAST ASIAN GROUP | FAR EAST | FAR EASTERN COUNTRIES | FAR EASTERN GROUP | NEWLY INDUSTRALIZED COUNTRIES | NICS | PACIFIC | PACIFIC RIM | PACIFIC RIM COUNTRIES | PACIFIC RIM GROUP TEXT KOREA - OUTBOARD MOTORS & SPORTING BOATS - ISA9209 SUMMARY This article is derived from a report titled: "The Outboard Motors & Sporting Boats Market in Korea", dated September 1992, prepared by Sung In Cho, American Embassy - Seoul. This article consists of 05 pages and contains the following subtopics: OVERVIEW STATISTICAL DATA MARKET ASSESSMENT BEST SALES PROSPECTS COMPETITIVE SITUATION MARKET ACCESS TRADE PROMOTION OPPORTUNITIES OVERVIEW Growing per capita income and interest in leisure activities has increased the Korean demand for sporting equipment 10 to 15 percent over the past three to four years. Sporting boats which include inflatables, canoes, yachts, motor boats, FRP boats, pedal boats and oar boats, among others, are a relatively undeveloped industry and considered as luxury items. Although Korea is a peninsula with obvious potential for pleasure/sporting boats, the local seashores available for water sports are extremely restricted by military zones. As for inland facilities, some 20 lakes and rivers are available. The major sites for sporting boats include the Han River, which crosses in the middle of Seoul area, Chung Pyung Lake, Kyunggi-do which is one of the largest resort areas in Korea and the seashores adjacent to important port cities including Pusan, Incheon and Kang Reung. The market for sporting boats has an estimated value of some USD 10 million and will increase 10 - 15 percent annually for the next three years. The demand for outboard motors is estimated to increase some 20 percent per year due to the growing demand for sporting boats, official guard ships and commercial boats such as rental boats for amusement parks and fishing. While Korea is one of the most important worldwide shipbuilding exporters, local manufacturing of sporting boats is relatively undeveloped and some 120 related small firms produce inflatables and FRP boats on an order basis. Imports for sporting boats from the U.S.A. ranked first with USD 892 thousand for 1991 and will increase some 15 percent for the next two-three years. For outboard motors, the market is wholly supplied by imported goods, wiht U.S. and Japanese products leading in market acceptance. B. STATISTICAL DATA: Outboard Motors and Sporting Boats (USD Million) (Percent) Previous Last Current Est.Avg.Annual Year Year Year Real Growth - 1990 1991 1992 Next 3 Years Import Market 5.9 6.1 7.6 20 Local Production 12 11 10 Exports 8.1 5.3 4 Total Market 10 12 13.6 15 Imports from U.S. 3.4 2.9 3.5 15 Exchange Rates 708 733 780 Future Inflation Rate Assumed: 9 percent Last Year's Import Market Share (Percent for USA and Major Competitors): U.S.: 48 percent Japan: 38 Germany: 3 U.K.: 2 Receptivity Score (1-5): 4 5 = extremely receptive 4 = very receptive 3 = fairly receptive 2 = somewhat receptive 1 = not receptive C. MARKET ASSESSMENT The facilities for sporting boats are located at some 20 lakes/rivers and seashores adjacent to important port cities including Pusan, Incheon and Kang Reung. The major sites include Hangang Misari Park, Seoul; Tancheon, Kangwon-do; Sooyoung Yachting Center, Pusan; Yeochun Yachting Center, Chunnam; and Sachun Jinri Yachting Center, Kangwon-do. According to sporting boats associations, there are no professionals in Korea, but the number of amateurs for sporting boats including row boats, yachts and canoes is estimated at some 2,000. The popularity of sporting boats, along with water skiing, continues to increase. However, this sport is still being introduced and has the image of an unfamiliar, special sport. The following are official sporting boat events in Korea. SPORTING BOAT PERIOD SPONSORED BY Row Boats 1. the beginning of May Chief of Naval Operation 2. the end of May, the Korean Amateur Rowing Summer tournament Association (KARA) 3. July ROK President 4. the end of August Minister of the Ministry of Sports & Youth (MOS) 5. the end of August, KARA Championship contest 6. October National Athletic Meeting Yachts 1. March - April the Korea Yachting Spring game Association (KYA) 2. May ROK President 3. July KYA Summer game 4. August University Yachting Tournament 5. October National Athletic Meeting Canoes 1. before June Chairman of the Korean Canoe Federation 2. June - July Chief of Naval Operation 3. August - September Minister of MOS 4. October National Athletic Meeting D. BEST PROSPECTS HS Code: Product Description: 8903.10 Inflatables 8903.92 Motor boats other than outboard motorboats 8407.21 Outboard motors E. COMPETITVE SITUATION OUTBOARD MOTORS: Imports of outboard motors for 1991 were USD 4.2 million, 17 percent increase over 1990, and will grow some 20 percent on an annual basis for the next three-four years. Foreign brands which are found in the local market include Evinrude, Johnson, Sea Drive, Mariner, Mercruiser, Yamaha, Suzuki, Dohatsu, Nissan, and Honda among others. According to local business, Yamaha occupies some 50 percent of the total market share and Japanese products are considered to be competitive in price, service, promotional gifts and quality control. Imports from Japan increased some 70 percent between 1990 - 1991. In this market, local products are hardly found. Korea Mighty Co., Ltd. (120-1, Pyungsan-ri, Woongsang-myun, Yangsan-kun, Kyungnam Tel: 82/2/556-1793 Fax; 82/2/556-2317) is the only outboard motor manufacturer and exporter. SPORTING BOATS: Although HS 8903 is classified as an item for promotion and development of local manufacturing by the government, domestic production decreased some 10 percent and exports decreased some 35 percent between 1990 - 91. According to the Korea Shipbuilding Industry Cooperative, there are some 120 small manufacturers of inflatables and FRP boats in this field, and about 40 percent of manufactured goods are supplied to the local market. For 1991, Korean manufacturers exported USD 4.4 million worth of inflatables, which accounted for 84 percent of the total export. The production of motor boats nearly stopped due to discouraging sales during the late seventies. Large shipbuilders which are worldwide manufacturers for cruise, ferry, barge, cargo and specialty transportation ships recently attempted to produce sporting motor boats, however, this field remains unpromising for them. Important local manufacturers/exporters for inflatables and FRP boats include Dongyang Co. (FRP mira boat), Korea Mighty Co. (PVC inflatable), Woosung I.B. Co. (inflatables with Xebec brand), Acimex Corp. (PVC infaltables), Victory Boat (FRP and inflatabls), and Hwashin FRP Co.. For 1990, U.S. sporting boats represented some 60 percent of the total imports and 50 percent for 1991. Imports from Japan, Germany, PRC, Canada , U.K. and others share the remaining market. Imports from Germany, U.K. and Hungary are mainly competition boats including yachts, canoes and row boats. Among U.S. boats, Sea Eagle, Sea Rail, Sea Hawk, Hovercraft Scat, and OMC's (Outboard Marine Corporation) products including Chris Craft, Donzi, Cobra, King Cobra, Seaswirl, Stratos and Sunbird are found in the local market. U.S. products are expected to enjoy an overwhelming market share for the time being due to quality and reputation. F. MARKET ACCESS Before importation, inflatables are subject to mandatory inspection by the Industrial Advancement Administration (IAA). The import duty rate for outboard motors and sporting boats is 11 percent of CIF price for 1992 and is expected to decrease to 9 percent for 1993. Local taxes are assessed as follows: 30 percent for the special excise tax; 30 percent for the educational tax; and 10 percent for value-added tax. Thus, a total of 42.9 percent in local taxes is imposed on these products. According to a local business in a related field, import commission earnings are about 15 percent and distribution margins are around 10 percent, which is not considered to be a high profit business. KEY CONTACTS Korea Shipbuilding Industry Cooporative 91514, Pangbae-dong, Seocho-ku Seoul 137-060 Tel: 82/2/587-3121 through 3 Fax: 82/2/583-2922 Korea Marine Equipment Association 12-5, Yoido-dong, Youngdeungpo-ku Seoul 150-010 Tel: 82/2/783-6952 Fax: 82/2/785-7647 Association of Foreign Trading Agents of Korea Aftak Bldg, 218, Hangangro 2-ka, Yongsan-ku Seoul 140-012 Tel: 82/2/792-1581 through 4 Fax: 82/2/785-4373 Korea Foreign Traders' Association 159-1, Trade Center Bldg., 159-1, Samsung-dong, Kangnam-ku Seoul 135-757 Tel: 82/2/551-5114 Fax: 82/2/551-5100, 5200 Korean Amateur Rowing Association Rm. 410, Olympic Bldg., 88, Oryun-dong, Songpa-ku Seoul 138-749 Tel: 82/2/420-4275 Fax: 82/2/420-4276 Korean Yachting Association Rm. 1807, Daewoo Bldg., Namdaemun-ro 5-ka, Chung-ku Seoul 100-095 Tel: 82/2/777-1510 Fax: 82/2/773-8660 Korean Canoe Federation Rm. 608, Olympic Bldg., 88, Oryun-dong, Songpa-ku Seoul 138-749 Tel: 82/2/420-4282 Fax: 82/2/420-4283 Saehan Johnson Co., Ltd. Rm. 108, Daewoong Bldg., 617-2, Shinsa-dong, Kangnam-ku Seoul 135-120 Tel: 82/2/542-6363 Fax: 82/2/546-1951 G. TRADE PROMOTION OPPORTUNITIES SPOKOR.BOAT SHOW (Korea International Sports, Leisure and Boat Show) at the Korea Exhibition Center (KOEX) run by KOEX, International Exhibition Promotion Co., Ltd. (INTEREX) and the Hankook Ilbo and the Daily Sports should help promote U.S. products among Korean users. SPOKOR.BOAT SHOW, held annually in June, is sponsored by the Ministry of Sports & Youth (MOS), the Ministry of Trade & Industry (MTI), the Korea Amateur Sports Association (KASA), the Korea Foreign Trade Association (KFTA), the Korea Chamber of Commerce & Industry (KCCI), the Korea Federation of Small Business (KFSB), the Korea Trade Promotion Corporation (KOTRA) and the Korea Sporting Industry Coorperative (KSGIC).
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