South Korea is a stable democracy and an established industrial powerhouse. In just a few decades, it has turned from a developing country to the world’s tenth-largest economy (fourth in Asia after China, Japan, and India), with a per capita income reaching $36,289 in 2025. With over 50 million inhabitants, the country is a global leader in innovation, investing as much as 5.21% of its GDP (2023) in research and development (second in the world).
The economy is highly export-led and dominated by large conglomerates, the so-called Chaebols (such as Samsung, Hyundai, LG, and SK). Key sectors are manufacturing and high-tech: semiconductors, ICT, automotive, robotics, and artificial intelligence. Korea aims to become a regional artificial intelligence hub, also thanks to a national plan of public investment and industrial collaborations to strengthen computing capacity, storage, and local expertise. The recent agreements reached with NVIDIA and BlackRock need to be seen in this context. These sectors are complemented by strategic sectors such as chemicals (the fifth-largest market in the world), shipbuilding (the port of Busan is the sixth busiest in the world), and a growing defence industry.
Particular attention is paid to aerospace, a sector in which Korea is strengthening its position thanks to the development of the domestic rocket Nuri (KSLV-II) – with the decisive role of a private company, Hanhwa Aerospace – and the establishment in 2024 of the Korea AeroSpace Administration (KASA), which has set the goal of reaching the lunar surface and then Mars with a spacecraft within the next two decades. In this context, prospects for bilateral cooperation open up in crucial sectors such as Earth observation, telecommunications, space exploration, innovation and technological development.
To support its export-oriented vocation, South Korea has built one of the world’s most extensive networks of free trade agreements. In addition to agreements with the United States and China, and participation in the RCEP involving 15 Asia-Pacific countries, the EU-South Korea Free Trade Agreement (FTA) has been crucial for Europe since 2011. This is the most advanced agreement ever reached with a third country by the regional bloc, making it South Korea’s third-largest trading partner, behind China (the largest for both exports and imports) and the United States. Indeed, this agreement has significantly boosted bilateral trade, which has grown at a 7.3% average annual rate over the last decade. Furthermore, Italy’s performance within the EU is extremely positive, confirming its position as Korea’s second-largest export partner in 2023 (it was third in 2021), preceded only by Germany.
Domestically, South Korea faces significant challenges. The first is geopolitical, due to the ongoing tension with neighbouring North Korea. The second is internal: a severe demographic crisis, with a fertility rate that plummeted to 0.72 in 2023 (the lowest in the world), and a high level of private debt (283.78% of GDP).
Looking to the future, the current Administration is aiming for an energy mix by 2038 that reverses the previous phase-out policy, boosting renewable energy production from 9.6% to 33% and nuclear energy from 30.7% to 35.2%. The share of LNG (liquefied natural gas) shall decrease from 26.8% to 10.6% and that of coal from 31.4% to 10.1%.
At the same time, South Korea is investing in its global influence through soft power. Thus, for 2023 alone, the Ministry of Culture, Sports and Tourism has strategically allocated a total sum of 6.74 trillion won (equal to nearly $5 billion) to various initiatives aimed at strengthening the competitiveness of the domestic content industry, such as productions for streaming services, proaactively promoting Korean culture globally, and revitalizing international tourism.
Trade with Italy
Italy holds a leading position in South Korea, which is the third largest export market for Italian products in the Asia-Pacific region, after China and Japan. In the January-August 2025 period, Italy was the third largest EU country in terms of exports to South Korea (with a market share of 1.22%), surpassed only by Germany (3.38%) and France (1.34%). The trade balance favours Italy, with a surplus of €963 million in 2024 – out of total trade of €11.4 billion – and €315 million in the January-August 2025 period.
In 2024, Italian exports reached over €6 billion, dominated by high-quality consumer goods. This is evidenced by the fact that, in the first eight months of the year, the “Fashion” sector (textiles, clothing, leather, and accessories) alone accounted for over a quarter of total exports (25.7%) in that market particularly interested in high-quality Italian products.
Machinery (machinery and equipment) follows with over 14% (€566 million), a sector with some potential, although the Korean market is considered “closed” and requires a stable local presence. Other important items include medicines and pharmaceutical preparations (4.8%) and motor vehicles (3.9%, €149 million). Made in Italy products are appreciated and, in 2023, ranked second for exports of olive oil and pasta, third for coffee and tomato preserves, fourth for chocolate, and sixth and eighth for cheese and baked products and pastries.
The Italian presence includes 120 companies (as of December 31, 2022), operating primarily in the manufacturing, transportation and logistics, wholesale, and retail sectors. They employ approximately 5,500 people and have a total turnover of €3.2 billion. Companies with local production facilities include Mapei, Arneg, and the ENI Versalis-Lotte joint venture. Italian net FDI in South Korea amounted to €2.7 billion at the end of 2024, while Korean FDI in Italy exceeded €1 billion. The greatest opportunities, in addition to the luxury segment, lie in industrial and technological partnerships, as demonstrated by collaborations in the chemical and defence sectors.
Towards Strengthening Industrial Cooperation
Bilateral relations have gained new momentum thanks to recent diplomatic initiatives, culminating in the Italy-South Korea Business Forum, organized by the Italian Trade Agency’s Office in Seoul in close coordination with the Embassy of Italy, and jointly with Confindustria and the Federation of Korean Industries (FKI). The event, which was attended by the Deputy Minister of Enterprise and Made in Italy, Valentino Valentini, and over 370 business representatives from nearly 180 Italian and Korean companies, aimed to strengthen a lasting industrial and business partnership to play a leading role globally in advanced technologies and innovation.
The shared desire is to seize the opportunities provided by the complementarity of the two production systems. On the one hand, Italy’s strength in SMEs and high-quality supply chains; on the other, Korea’s power in large technology groups. Strategic sectors identified for future collaboration include artificial intelligence, semiconductors, robotics, green transition, energy security, and life sciences (healthcare and pharmaceuticals), in addition to well-established sectors such as shipbuilding and precision machinery.
The Forum ended with as many as 150 B2B meetings between participating companies and the signing of several Memoranda of Understanding (MoUs) aimed at strengthening trade relations, joint investment in emerging markets, and technological cooperation, thus laying the foundation for further integration between the two countries in the field of innovation.
Interview with the Ambassador of Italy to South Korea, Emilia Gatto
Your Embassy has recently published “ Diplomazia della crescita: destinazione Corea del Sud” (Growth Diplomacy: Destination South Korea). Can you explain the benefits of this new tool for Italian companies?
Following the developments in the trade negotiations between the United States and South Korea on the sidelines of the APEC Summit, with the Korea Composite Stock Price Index (KOSPI) having surpassed the 4,000-point threshold in recent days, this country confirms it is worth of the attention our government and our companies are paying to it.
The guide “Diplomazia della crescita: destinazione Corea del Sud” (Growth Diplomacy: Destination South Korea) – drafted by the Embassy of Italy in Seoul, with the contribution of the Italian System in Korea (ITA, ENIT Office, Italian Cultural Institute, Italian Chamber of Commerce in Korea), jointly with Cassa Depositi e Prestiti, SACE, and SIMEST – is part of the initiatives of the Action Plan to Support Italian Exports to High-Potential Markets, launched in March 2025 by the Deputy Prime Minister and Minister of Foreign Affairs and International Cooperation, Antonio Tajani. Minister Tajani identifies South Korea and the Asia-Pacific region as priority areas for Italy’s economic growth globally.
It is hoped that this document will serve as a flexible and operational tool for our companies, providing a comprehensive overview of the country’s development trajectory, the opportunities offered by this market and its key sectors, current tax, customs, and labour regulations, and the key steps to take to launch or strengthen economic activities in Korea.
Once the MIMIT-MOTIE MoU of November 8, 2023, on bilateral industrial cooperation in the semiconductor, critical minerals, automotive, and new green technologies sectors becomes operational, what opportunities will it open up for Italian companies?
On September 5, 2025 we hosted the first Italy-South Korea Business Forum in Seoul. It was opened by the Deputy Minister of Enterprise and Made in Italy, Valentino Valentini, and was attended by over 380 representatives from 36 Italian and 207 Korean companies. The Deputy Minister effectively summarized our interest in this market, expressing his hope for a lasting partnership between Italy and Korea that seizes the opportunities for cooperation offered by existing complementarities in various fields, including artificial intelligence, sustainable mobility, industrial automation and robotics, biotechnology and advanced medical services, semiconductor research and development, carbon neutrality, the green transition, and energy security. Indeed, the message we wanted to convey with the Business Forum is that we are ready to embark on a new phase in bilateral economic relations, leveraging precisely the sectors mentioned above.
One of the outcomes and follow up of the Business Forum should be renewed momentum toward implementing the Memorandum of Understanding mentioned in the question. We believe this MoU has the potential to strengthen Italy’s industrial presence, improving access to Korean markets and enhancing the reputation of Made in Italy products in technology-intensive sectors. We are interested in joint research and development programs and in exploring the sharing of technologies and expertise in complementary areas between the two countries. The agreement could also stimulate Korean direct investment in Italy and increase the participation of Italian companies in high-level industrial tenders and partnerships in Korea.
We ultimately aim to establish a framework to promote structured, innovative, and sustainable collaboration between Italy and Korea in key sectors for industrial competitiveness and long-term economic security.
Italy’s clothing and textile sector can rely on strong demand in South Korea. How can this success be explained?
The Korean people are sensitive to refinement and the pursuit of harmony. This sense of elegance, rooted in the country’s culture and probably stemming from the Confucian ethic of order and moderation, manifests itself through consumer choices focused on design, quality, and visual coherence. Korean consumers tend to prefer products that combine functionality, beauty, and innovation.
It is therefore not surprising that the excellence of Italian design continues to be a unique factor of attraction for local consumers. Italian fashion, with its impeccable craftsmanship and use of high-quality materials, stands out on the international scene. Despite a decline in our fashion exports that began in 2024, Italy maintains its position as the leading supplier of leather goods to Korea, thanks to the excellent craftsmanship and distinctive design that characterize our premium segment.
On the other hand, Korea is Asia’s leading per capita importer of Made in Italy consumer goods.
