Overview

According to the Korea Institute of Construction Technology
(KICT), energy consumed by buildings account for 25 percent of all
energy consumed in Korea. Industry forecasts indicate that Korea
will be consuming 250 percent more energy by 2020 compared to 1990.
For a nation that is 97 percent dependent on imported sources of
energy, these estimates and forecasts have resulted in the Korean
government taking a series of preventative measures to avoid a
major energy crisis in the future. Many of these measures involve
energy management and energy efficiency investments in new and
existing buildings. This research is designed to explain the impact
of these efforts and the opportunities they will create for U.S.
exporters of equipment and services.

Over the next decades, Korea has major plans to promote green
and energy efficient citywide housing developments. Dubbed the Two
Million Green Home Initiative, the current President Lee Myung-Bak
administration plans to build one million and renovate an
additional one million homes to meet stringent environmental and
energy consumption standards by 2018. Under the same initiative, by
2025, it will be mandatory for all buildings to be energy
self-sufficient by installing systems such as solar thermal,
photovoltaic, geothermal, biomass, or wind power systems. The
government estimates expenditures to amount to 7 trillion won
(approx. USD 6.3 billion) between the years 2008 and 2012 alone to
facilitate the initial steps of this process.



Considering the scale of the ultimate goal of supplying two million
energy self-sufficient and environmentally friendly houses by 2018,
there are numerous business prospects for U.S. companies to
explore. The following figure published by the Ministry of Land,
Transport and Maritime Affairs (MLTM) displays an example of a
green home. The various components of a green home as it has been
displayed in the figure demonstrate the potential business
prospects to consider.

In addition to the Two Million Green Home Initiative, several
ongoing new city development plans have incorporated green and
environmentally friendly city developments. The New Songdo City
project, which is a multi-billion dollar real-estate development 50
miles west of Seoul, will be designed to be completely LEEDND
certified. Energy efficient buildings, recyclable building
materials, pollution control, and waste reduction were all taken
into careful consideration during the planning stages of the
project.

Market Demand

According to guidelines published by the Ministry of Land,
Transport & Maritime Affairs (MLTM), by 2012 newly constructed
residential buildings are mandated to reduce levels of energy
consumption by 30 percent compared to current consumption. This
figure is to be increased to 60 percent by 2017. Ultimately, by
2025, all residential buildings will be required to achieve 100
percent self sufficiency in energy consumption. Due to these bold
objectives and the emphasis placed on a self-sufficient supply of
energy for the Two Million Green Home Initiative, new and renewable
energy has emerged as a key phrase in the Korean housing
construction industry. According to the Korea Energy Management
Corporation, new and renewable energy currently accounts for only
one percent of total energy cnsumed in Korea. With a separate goal
of having new and renewable energy account for a double digit
percentage of energy consumed in Korea by 2030, the government is
making major strides to develop the new and renewable energy
industry as a major catalyst for economic progress into the future
and this aspect has been especially incorporated in housing
projects such as the Two Million Green Home Initiative.

Sector developments



A number of construction related research centers and institutions
have been focused on trends in the construction industry concerning
the environment. The Construction & Economy Research Institute
of Korea (CERIK), an affiliate of the Construction Association of
Korea, is an example of such an institution. In a report published
by CERIK in April 2009 entitled ‘Market Trends and Prospects for
Low Energy Sustainable Housing’, CERIK categorized and provided an
analysis of several different sectors related to environment
friendly sustainable construction. Sectors that have been analyzed
in the report include, roof-top landscaping, water-permeable
pavements, wastewater recycling systems, water-saving toilets,
paints, thermal insulation materials, flooring materials,
soundproof materials between floors, balcony windows, heat recovery
ventilations, geothermal heat systems, and solar heat
systems.



According to the report, with the exception of water-saving
toilets, competition is generally high across all sectors and is
especially high in the flooring material, heat recovery
ventilation, geothermal heat, solar heat, and water permeable
pavement sectors. This is due to cross-sectoral competition as is
the case of the geothermal heat and solar heat sectors. In the case
of ” heat recovery ventilation systems,” a smaller number of
potential clients have resulted in high competition. Conversely, a
diverse range of competing products has also resulted in high
competition in the flooring materials sector. The CERIK report also
states that, on average, the products offered by Korean
manufacturers are at 80 percent the level of technical advancement
when compared to imported products from developed countries. The
following graph published by CERIK demonstrates the level of
technical advancement across these sectors. It is interesting to
note that Korea’s level of technical advancement regarding heat
recovery ventilation systems, paints, and renewable energy systems
is relatively high while the level of technical advancement
regarding landscaping, flooring materials, and windows are
relatively low. When considering that all sectors will invariably
experience growth due to the launch of the Two Million Green Home
Initiative, sectors with relatively lower technical sophistication
are deemed to be

positive points of entry into Korea.

Best Prospects

• New and renewable energy technologies (waste, biomass, wind,
  hydro and solar energy technologies)



• Sustainable architectural design



• Energy efficient & energy conservation products (energy
  efficient LEDs, energy conserving windows & fenestration
  systems)



• Sustainable city planning consulting services



• Green building certification services



• Timber (radiated pine log, hardwood log, hardwood sawn timber,
  hardwood woodchip, softwood sawn timber) and timber-related
  products (MDF, particle board)



• High-end eco-friendly home remodeling products 

 Market Entry Strategy



The Korean Government is currently in the process of soliciting
major Korean engineering and construction firms to expand into
renewable energy technologies as well as environmentally friendly
building materials. Considering the competitiveness and level of
technology of Korean firms engaged in alternative energy
technologies, environmental friendly architectural design and
energy conserving building materials, many U.S. firms may find
opportunities by partnering with major Korean engineering and
construction and architectural design firms to supplement their
efforts regarding the Two Million Green Home Initiative.



There are four main components for entering the building and
construction market in Korea:

• Understand Korea’s product standards, pricing, and build
  customer references.



• Have a clear price and quality advantage over competitors in
  Korea.



• Focus on building long-term relationships with potential
  customers as this is a relationship-based market.



• Appoint capable agents and work with them to modify products if
  needed to meet local standards.

Also, distribution in construction industry is generally made
from overseas supplier to distributor, who then sells directly to
end users in the construction trade, including builders and
construction companies. For example, a brick importer (distributor)
imports pavers from the U.S. and then sells them directly to a
builder. Therefore, successful marketing of products and services
requires a reliable and well-connected distributor.

Trade exhibitions are also a good way to gauge market
acceptance. To market effectively you need to
consider: Producing brochures in Korean
language, Designing product to meet Korean standards. Bringing
buyers to the U.S. periodically, Examining alliances with
manufacturers in Korea Advertising in industry news, Meeting
specific buyer requirements, Having a regular presence in the
market to support your agent

Extracts from Korea - Green Cities and Buildings US
Commercial Service, December 2009