South Korea’s expanding aerospace industry
South Korea’s aerospace industry has been growing rapidly in recent years, driven by both government and private sector R&D investment. The aerospace industry is largely driven by key players such as the Korean Aerospace Industries (KAI), and Korean Air, the largest commercial airline and national carrier for South Korea. In 2021, Korean aerospace companies reached $1.9 billion in combined revenue and the country is the 18th largest destination for U.S. aerospace exports — worth over $1.2 billion — and with the U.S. Korea Free Trade Agreement in force since 2012, all U.S. aerospace exports to Korea receive duty-free treatment.
While the Korean market can present some challenges, the Korean government aims to further its country’s aerospace industry, bolstered by the Fourth Industrial Revolution, focusing particularly on emerging areas such as urban air mobility (UAM), drones and the space industry, with key opportunities for U.S. companies to support their efforts.
Areas of opportunity
UAM
The Korean government is planning to invest $197 million between 2025 and 2030 to commercialize UAM services through the K-UAM Grand Challenge (GC) project. The project is a phased demonstration program to test and ensure safety measures for UAM platforms and traffic management systems for urban environments. The project is run and funded by the Ministry of Land, Infrastructure and Transport, and supported by the Korean Aerospace Research Institute (KARI).
Further investment of $7.7 million will establish the infrastructure for the GC testbed and build a Mobility-as-a-Service (MaaS) Station, enabling transfers between railway, bus, and UAM platforms by 2025.
Major Korean companies including Hyundai, LG, GS, Hanwha and numerous other infrastructure and service providers and operators are forming consortia to take part in the project. This government initiative presents significant opportunities to partake for Washington-based companies operating in the UAM ecosystem — from UAM platforms to traffic control and safety measures.
Drones
In the commercial drone sector, delivery services have been launched in Korean cities including Busan and Gapyeong, while additional areas are set to join soon. Companies like 7-Eleven and numerous e-commerce platforms are actively taking advantage of these services as well; many municipal offices are using drones for surveillance and emergency situational awareness purposes.
As the Korean government plans to transform 64 mid-sized cities into smart cities, the demand for drones and related systems will grow. Drone surveillance to ensure safe operation and maintenance is a crucial component of offshore wind farms being built along Korea’s southeastern coast.
Companies with technologies for automating drone flight paths, advanced avionic drone sensors and ground sensors to reinforce flight safety would be of great interest to Korean companies and the government.
Space
The Korean government is set to spend $674 million this year alone on programs to expand its domestic space industry, and it is planning to invest $1.2 billion by 2031 to boost the sector further.
The “Big Three” aerospace companies in Korea are leveraging their respective strengths in the Korean “space race.” Hanwha Group is investing in LEO satellites and launcher capabilities; LIG Nex1 is promoting the Korea Positioning System, an ambitious government scheme to deploy positioning satellites by 2035; while Korea Aerospace Industries (KAI) is aiming to develop cube satellites.
As Korea is a nascent power in the global space industry, local companies are eager to work with international players to strengthen their capabilities.
A role to play for U.S. companies
Korea, as a close ally of the United States, tends to follow American regulations and technological trends — especially in the aerospace field — which leads to many areas for cooperation between the two countries across the entire technology spectrum: from aircraft platforms to passenger safety systems, avionics and vertiport infrastructure.
Likewise, in context of the drone industry, military grade devices that can be commercially utilized are in demand. Some functionalities that the Korean market is keen to develop include performing counter-UAS operations and other surveillance such as urban, industrial and forestry monitoring.
The space industry also presents opportunities for companies with satellite navigation and communication technologies, as well as space data analysis and software.
Challenges
While Korea is an interesting destination, the market is not free of challenges. U.S. businesses should expect to face language and cultural barriers as they enter the market. Both government entities and Korean system integrators prefer to work with people on the ground who speak their language and understand the “Korean way” of doing business — including being able to call your supplier in the middle of the night expecting impeccable and timely support.
Often, the “Korean way” includes forming consortia with other companies to take part in bids for Korean government tenders. Being able to navigate the sea of stakeholders and to understand internal politics and procedures is crucial to achieving success. In short, to establish a strong foothold in the Korean market, it is wise to find a reputable local partner with whom to pursue opportunities and carve out a market presence.
Breaking into new markets or creating further expansion can be overwhelming but the Washington State Department of Commerce is here to help. We have a team of international consultants that can provide small businesses with market intelligence reports and business-to-business matchmaking in over 20 markets worldwide.
For more information on opportunities in South Korea or on Washington State Department of Commerce exporting services, please contact Joanna Boatwright, Joanna.boatwright@commerce.wa.gov.
