3 things to know about South Korea
The rise of K-pop, K-drama, K-beauty, and Korean food has sparked a wave of international interest in all things South Korean. Here are three things to know about Asia’s 4th largest economy:
South Korea has the lowest birth rate in the world
In 2022, 249,000 babies were born in South Korea. That was a fall of 4.4% from the previous year, and the third year in a row that deaths have exceeded births in the country. South Korea’s birth rate now stands at 0.78 children per woman – the lowest since records began in 1970 – which makes it the only country in the world with a birth rate below 1. A country needs a birth rate of 2.1 to maintain a stable population size. In 1960, Korean women had on average 6 children.
The average age at which South Korean women give birth to their first child now stands at 33. Young people are choosing to delay starting families, or are giving up on having children altogether. They cite the high cost of raising children, the rising cost of housing, and poor job prospects amid an economic slowdown. South Koreans also work some of the longest hours among developed countries and the country is ranked in the Economist’s annual glass ceiling index as the worst OECD country for women to pursue equal opportunities in the workplace.
A growing number of women have ruled out finding a marriage partner altogether. The number of marriages in South Korea reached an all-time low of 193,000 in 2021. Marriage and children are more closely linked in South Korea than nearly anywhere else, with just 2.5% of children born outside of marriage in 2020, compared with an OECD average of more than 40%.
The combination of a low birth rate and a rapidly ageing population mean that South Korea’s population shrank for the first time on record in 2021. On the current trajectory, South Korea’s population is forecast to be 38 million by 2070 – down from today’s 52 million.
These demographic trends have big implications for South Korea’s economy and pension system, which is why the government has launched programmes to encourage people to have children, including:
- Cash handouts (since 2022, mothers receive payments worth $1,510 on the birth of a child, with ongoing child benefit payments that are generous by international standards)
- Financial help with fertility treatments and medical expenses
- Attempts to make housing more affordable
Controversially, some rural governments have funded bachelors seeking foreign brides. In 2016, the government published an online birth map, showing how many women of reproductive age lived in different regions. The map was taken down after a feminist backlash. In total, South Korea has spent over $150 billion to encourage more babies to be born.
Critics say these efforts don’t go far enough to address very high living costs, or the work/life balance which can make starting a family difficult. While high living costs are undoubtedly a factor, so too are the high aspirations that many South Koreans have for their children. In 2022, South Koreans’ spending on private education hit a new record, with total annual spending reaching 26 trillion won ($19.6 billion) and almost 80% of students receiving some form of private tuition.
To counter population decline, South Korea’s government has said it will seek to loosen restrictions on migrant labour, a move opposed by some conservative South Koreans.
Super apps are big in South Korea
The tech eco system in Asia has long been dominated by super apps – platforms such as WeChat, Alipay, and Meituan, which combine multiple functions into one app. This is in contrast to the West where similar services – such as messaging, online shopping, and financial services – tend to be distributed amongst a larger number of websites and apps each focused around a particular need.
One reason for this difference is that Western – mainly US – services were built before the widespread adoption of smartphones and were focused on desktops. This led to a fragmented landscape, built around singular services. By contrast, many Asian consumers’ first experience with the internet were with mobile platforms designed as super apps from the ground up.
Another factor is legacy payment systems. In the US, reliance on credit and debit cards have slowed the rise of mobile fintech solutions. But in many Asian markets, card payments never became widespread, creating space for mobile payment systems that underpin many super app eco systems.
There are other factors at play – such as lighter regulation around data privacy in Asia which has allowed super apps to develop, and potentially also cultural factors, such as the difference between high context and low context societies.
The best example of a super app in South Korea is Kakao. It started life as a messaging app company, with the introduction of digital banking – Kakao Pay – in 2014. Today, Kakao services include music streaming, investments, ride hailing, video games, social networking, and more. It boasts an active user base of 87% of the country.
Naver, South Korea’s home-grown search engine, has plans to become a super app too, combining search with e-commerce, entertainment, fintech, cloud, and robotics.
The rise of the cherry-sumer
A South Korean retail trend for 2023 is the rise of the so-called consumer cherry-sumer. The term cherry-sumer – derived from cherry-picker – refers to a consumption strategy to purchase limited resources at the minimum amount. In other words, low-cost buyers looking for extreme utility. Supermarkets have responded to this trend by providing small capacity, small packaging items – i.e. portions aimed at one or two users – while the travel industry has responded with lower-cost packages, more flexible booking (and cancellation) options, and trips aimed at solo travellers. Both the current gloomy economic backdrop plus the rise of one-person households are driving the rise of the cherry-sumer.
South Korea at a glance
- Asia’s 4th largest economy
- Search engine Naver has a 37% market share in South Korea
- Internet penetration of 95%, the highest for any Asian country outside the Middle East
- Home to electronics giants Samsung and LG
- Number 1 in the world for smartphone ownership
- Regularly ranks first globally for internet speed
- Home to the world’s largest department store, Shinsegae (it’s not uncommon for bars and restaurants to close at 11pm but for shopping malls to stay open much later)
- Home to the ‘penis park’ – Haesindang Park, located in the city of Samcheok. The park features penis statues – about 50 in total – all for the ancient folklore purpose of charming a virgin bride
- South Koreans used to be a year older than Westerners, even if they were born on the same day/year. That’s because South Korean babies were considered one year old from the moment they were born. However, thanks to a new law, from 2023, a person’s age starts from zero – the same system as used in most countries
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