INTRODUCTION
This report aims to provide our team with a comprehensive understanding of how to successfully introduce a company's products to international markets In response to Ms Thuy Anh's request, our team has focused on the topic "Bitis Brings Sports Shoes to the Korean Market," conducting thorough research and analysis This project not only presents an opportunity for team members to enhance their collaboration skills but also allows for in-depth exploration of the Korean shoe market.
Our three years of research have significantly informed this report, allowing us to analyze the PESTEL model in Korea to understand the business environment that Bitis will enter, identifying potential opportunities and risks By examining the Marketing Mix, we aim to help Bitis grasp the true needs of Korean customers, enabling the development of optimal marketing strategies Additionally, we employ the Balanced Scorecard model to establish, implement, monitor, and measure the outcomes of the proposed strategy, facilitating learning from experience and the formulation of more effective strategies.
To evaluate the effectiveness and fulfillment of our members, our team has set three goals, which are presented below:
• Objective 1: the group members do the homework according to the group's progress
• Objective 2: improve skills in researching, analyzing and searching for information on the internet about the Korean sports shoe market in detail
• Objective 3: Know how to plan marketing,IMC, PR, market assessment… in the most optimal way
This report outlines our team's marketing plan and strategy for introducing Bitis shoes to the Korean market Throughout the report's development, we focused on key insights and approaches tailored to effectively penetrate this competitive landscape.
During our intensive summer program on International Marketing, our team integrated knowledge from various subjects, including Marketing Basics and SWOT analysis, to assess Biti's customer segmentation for the Korean market We utilized insights from Marketing Strategy and Integrated Marketing Communication (IMC) to craft a detailed marketing and communication plan for Biti Additionally, we gathered secondary data from journals, books, and online resources to enhance our report and support our strategic recommendations.
MAIN CONTENT
INTRODUCE BITI’S
Founded in 1982, Biti's originated from two production complexes, Van Thanh and Binh Tien, employing 20 individuals focused on rubber sandal manufacturing These complexes eventually merged to form the Binh Tien rubber cooperative, which specializes in producing high-quality rubber footwear for both domestic sales and export to the European market.
In the late 1980s, Biti's faced significant challenges due to the unstable political climate in Eastern Europe, leading to a decline in its export market share and increased competition from Thai and Chinese firms within Vietnam To enhance its production capabilities, Biti's adopted Taiwan's EVA technology by acquiring a new production line The company also registered its trademark in Vietnam to strengthen its presence in the domestic market, focusing on China as its primary export destination during this period To build consumer trust, Biti's implemented a "one price" policy, which received positive feedback from customers.
Biti's extensive shoe distribution network spans across Vietnam, featuring 7 branch centers, 156 stores, and over 1,500 intermediaries, creating jobs for more than 9,000 workers nationwide In China, Biti's has established 4 representative offices and 30 sales outlets, with over 300 points of sale, positioning itself to dominate this vast market In Cambodia, Biti's partners with official distributor Cambo Trading to ensure product availability throughout the country The brand has also made its presence known in key international markets, including the UK, France, USA, Japan, Mexico, and Russia, solidifying its status as a global player.
THE MARKET
Consumer demand for Vietnamese goods is notably high, as evidenced by the Vietnam Goods Week organized by the Ministry of Industry and Trade and Emart Group in Seoul on June 8, 2015 Emart representatives highlighted that products like seafood, coffee, towels, and furniture from Vietnam are popular among Korean consumers due to their quality, affordability, and alignment with local tastes The implementation of the Vietnam-Korea Free Trade Agreement is expected to further enhance the presence of Vietnamese products in the Korean market.
2 Characteristics of consumer target group
South Korea is experiencing a significant demographic shift, with a median age of 44.8 years The population distribution reveals that only 14.8% are under 18, while the majority, 67.8%, fall within the 18 to 64 age range, and 17.5% are aged 65 and older (Data Reportal, 2022) This trend underscores the challenges posed by an aging population and the need for policies to address the implications of these demographic changes.
As of 2022, 17.5% of the population is over the age of 65, with a modest annual growth rate of 0.1% according to World Bank data The average household consists of 2.4 individuals, with only 27% of households being single-person units The gender ratio stands at one man to one woman, and a significant 81.5% of the population resides in urban areas The most densely populated province is Gyeonggi, which encircles Seoul, while Gangwon is the least populated Major cities include Seoul, Busan, Incheon, Daegu, Daejon, and Gwangju Education levels are high, with 89% of adults aged 25 to 64 completing secondary education, surpassing the global average By 2020, nearly 70% of the population aged 25-34 held higher education degrees, significantly above the OECD average of 45% The labor force is predominantly engaged in administration and accounting, followed by sales and food service roles.
3 Consumer preferences and buying habits
South Korea's consumer culture emphasizes purchases not just for basic needs but also for enhancing personal image and status Despite an economic slowdown and high debt levels prompting cautious spending, luxury goods continue to be in vogue Popular products often feature successful brands with noticeable detailing, as consumption increasingly serves as a form of expression Shopping typically occurs in department stores, shopping malls, and innovative retail formats, including food retailers.
Korean consumers exhibit minimal brand loyalty, prioritizing technology and brand recognition With over 98% of households online daily and more than 85% owning smartphones, South Korea is a highly connected nation (Data Reportal, 2022) E-commerce is thriving, with around 90% of the population utilizing online shopping, a figure projected to rise to 94.4% by 2023 The internet facilitates product research before in-store purchases, while social media plays a crucial role in product reviews and buying decisions Influencers and product testers significantly impact consumer preferences, leading to a growing trend of purchasing foreign goods over domestic products (SA, SOUTH KOREA: REACHING THE CONSUMER, 2022).
SHOOPEN shoes are widely available in major cities and are known for their affordability The brand offers a diverse range of styles that cater to all age groups, including white sneakers, athletic shoes, leather boots, and snow shoes, ensuring there’s something for everyone.
Fila has successfully leveraged popular sports brand ambassadors to enhance its brand visibility and appeal The innovative combination of diverse fabric components has led to the creation of unique sportswear, contributing to the brand's strong image Fila's motivational designs and recognizable, colorful logo further bolster its identity in the market With over 100 stores globally, the brand has established a significant presence since its founding in 1911 Additionally, Fila has diversified its offerings by expanding into clothing and children's apparel, alongside its footwear line.
KOLCA, a brand popular among young people and university students in Korea, is comparable to the American athletic company Vans With a focus on ease of use and a minimalist color palette, KOLCA sneakers are perfect for daily wear, combining trendy and sporty designs that appeal to the youth.
While KOLCA may not be as budget-friendly as brands like SHOOPEN, it is experiencing significant growth in Korea, attracting a loyal customer base among young Koreans The brand's continuous expansion of its product lines has resulted in a diverse selection of sneakers and clothing for customers to choose from.
5 Market size and sales estimates
For our Sale estimates, we based on the available market size of 2,700.00 and have the following estimates:
- Investment Cost: Initial investment and Promotional Spend
STATEMENT OF PROBLEMS AND OPPORTUNITIES
South Korea operates under a republican political system, with the president serving as the head of state The president is elected directly by the citizens for a single five-year term, with no possibility of re-election The country's governance is structured into three branches: the executive, the legislative, represented by the National Assembly, and the judiciary.
Yoon Suk-yeol, elected with 48.56 percent of the vote, will assume the presidency on March 9, 2022 He advocates for market-driven approaches to stimulate economic growth, with the Korean government committed to unrestricted policy support, which is expected to enhance the footwear industry.
The government aims to lay the groundwork for economic unification through its five-year plan, focusing on revitalizing inter-Korean collaboration and establishing a unified market between Seoul and Pyongyang The goal is to achieve peace and unity by 2045, which could significantly benefit businesses if both cities agree to form a joint market.
South Korea has implemented reforms and embraced economic freedom, leading to a stable average growth rate and favorable financial conditions due to prompt political actions The ongoing government influence plays a crucial role in the country's development Furthermore, as of 2019, South Korea has established diplomatic relations with 191 nations, enhancing its political system's effectiveness and focusing on economic growth, which in turn attracts international capital.
Despite supply chain disruptions in China and the impact of Russia's war on Ukraine driving energy prices higher, South Korea's GDP rose by 0.7% in the second quarter of 2022, an improvement from the previous quarter's 0.6% growth Additionally, the annual GDP increase of 2.9% surpassed economists' expectations.
Footwear Users in South Korea: The average volume of footwear sold per person in
In 2022, Korea is projected to achieve 2.9 pairs, driven by a robust GDP that positively influences the market The continuous growth in user numbers each year presents a significant opportunity for Biti to penetrate this expanding market (Statista, 2022).
Figure 4 Footwear Users in South Korea
Statistics data, charts on exports and export footwear in the Korean market in recent years, show the volatility of the market
Export: From 5773 USD million in June 2022, South Korea's exports grew to 6070 USD million in July (Korea T B., South Korea Exports, 2022)
During 2020, South Korea exported footwear, gaiters, and similar items worth
According to the UN's COMTRADE database, South Korea's exports of footwear, gaiters, and related items amounted to US$408.66 million, with the latest data and historical statistics updated in August 2022.
In 2019, South Korea's leading footwear export destinations were China, Vietnam, the United States, Japan, and Indonesia Notably, Vietnam secured the second position, highlighting a strong economic partnership in the footwear sector between Vietnam and South Korea, which presents significant opportunities for both nations' footwear markets.
In 2020, Korea will export the following major commodity groups of footwear:
69% (71 million US dollars): - Footwear with textile mat uppers and rubber or plastic outer soles (excluding waterproof footwear)
24% (24 million US dollars): Sports footwear, including gym shoes, training shoes, tennis shoes, and basketball shoes with outer soles made of rubber or plastic and textile mat uppers
6.07% (6.24 million US dollars): Footwear with textile mat uppers and outside soles made of leather or composition leather
From USD 63222 million in May 2022, Korea's imports decreased to USD 60203 million in June
According to the United Nations' COMTRADE database on global commerce, South Korea imported footwear and related parts worth US$3.08 billion in 2020
In 2019, the top partner countries from which Korea, Rep Imports Footwear include China, Vietnam, Italy, Indonesia and India (Korea T B., South Korea Exports of
Top trading partners ( import Footwear) of Korea in 2020:
• Vietnam with a share of 44% (468 million US$)
• China with a share of 29% (307 million US$)
• Italy with a share of 11.6% (122 million US$) (WITS, 2022)
• 2020 imports of footwear from Korea will mostly consist of the following commodity groups:
• 58% (610 million US dollars): - Footwear (excluding waterproof) with rubber or plastic outer soles and textile mat uppers
• 38% (402 million US dollars): - Sports footwear, such as gym shoes, training shoes, tennis shoes, and basketball shoes, with outer soles made of rubber or plastic and textile mat uppers
• 3.56% (37 million US dollars): Shoes with textile mat uppers and outside soles made of leather or composition leather
• According to statistics of the General Department of Vietnam Customs, in 2016 alone - the first year of VKFTA implementation, Vietnam's exports to South
Korea increased sharply by nearly 30% compared to 2015
• The South Korean economy slowing growth from 2017 through 2019, negative growth in 2020, and recovery in 2021
• Korea always considers Vietnam as a potential export market, especially raw materials for textiles, footwear, leather, and footwear
• Biti's in will increase job opportunities for Korean people
• Korea is creating all conditions to promote economic development, so Biti's can enter the market during Korea's economic recovery period
The Korean aesthetic encompasses four key elements: pure formality, naturalistic simplicity, symbolic decoration, and playful spontaneity Emphasizing appearance, this aesthetic significantly influences the fashion trends among young people, particularly through the personal styles of Korean idols Consequently, it may prove challenging for Biti's to meet the expectations of the Korean market.
Korea is emerging as the new cultural capital of the world, with influential music bands and blockbuster films captivating global audiences The country's entertainment industry heavily promotes various products, including shoes, making it challenging for brands like Biti's to penetrate this competitive market.
Confucianism, Buddhism, and Christianity are the primary religions in Korea, with Buddhism being the most widely followed This religion significantly influences Korean lifestyle, culture, and art Additionally, Biti's demonstrates a remarkable ability to adapt to the Korean religious landscape Marketers effectively analyze customer behaviors and motivations, as highlighted by KOIS (2020).
Shoe production utilizes RFID technology and sensor monitoring to gather big data across manufacturing processes This study specifically examined the roughing and cementing robots The complexity of the information system necessitates a highly skilled Management Information Systems (MIS) team, enabling Bitis to streamline production and inspection exports effectively.
South Korea's predominantly mountainous topography features small valleys and narrow coastal plains, creating ample opportunities for hiking and climbing This landscape encourages a high engagement in outdoor activities, with approximately three Koreans participating in hiking for every one person, highlighting a market potential for sports shoe development focused on walking and climbing.
Transportation in South Korea is facilitated by a comprehensive network of railways, highways, bus routes, ferry services, and air routes, allowing businesses to efficiently transport goods through various channels.
South Korea experiences a temperate climate characterized by four distinct seasons, with long, cold, and dry winters, and short, hot, and humid summers The pleasant yet brief spring and autumn seasons make it essential for Biti's to offer a diverse range of products tailored to the unique weather conditions in Korea.
INTERNATIONAL MARKETING OBJECTIVES
- Have pricing strategies, continuously improve product quality, designs and have marketing strategies suitable for Korean consumers
- Since then, Biti's products have been available throughout the Korean market
- Building a distribution channel and promoting Biti's products in Korea
=> Built in the minds of customers, Biti's is a high-quality Vietnamese product
- 5% increase in total Biti's sales revenue in the first year
Increase effectiveness when dealing with customers
- Build systems, customer care and support
- Always listen and solve customer problems to increase service quality in the eyes of consumers
Expanding distribution and reseller networks
- Biti's increases distribution of goods sold in supermarkets and major commercial centers
- Having a nationwide distribution system to help reach more customers, thereby helping the product become more familiar in the minds of Korean consumers
Expanding sneaker market share in Korea
To gain market share, Biti's needs to implement a penetration pricing strategy -> to increase market share -> attract target customers to familiarize themselves with the brand and start using the product.
The goal of pricing strategy is to offer a low price that makes it easy for the product to penetrate the field and entice customers from competitors.
- Reached 4.5% market share in the first year
- Reached 5.82% market share for the second year
- Biti's captured a significant market share, creating competition against big players such as MLB, Fila, Nike, Adidas,
INTERNATIONAL MARKETING PROGRAM
1 Market Segmentation and target market
Biti's breaks down the target market by specific age or generation is 18 to 35 age
These are collectively known as MZers, which is a pairing of two groups - Millennials (born 1981-1995) and Generation Z (born 1996-2005) According to Statistics Korea, the
MZ generation, which includes millennials (25-39 years old) and generation Z (15-24 years old), was 16.96 million in 2019 It makes up 32% of the country's population (Chang-Woo Kim, 2021) Some characteristics of this generation:
• Both want brands to mirror their values and dynamically cater to their preferences (Waltzer, 2021)
Consumers prioritize the design and color of products, seeking a simple yet stylish aesthetic that remains polite and elegant This design approach should evoke a sense of comfort and friendliness Additionally, affordability is a key consideration for buyers.
Biti's products are aimed at all genders thanks to the diversity in design and features
Bitis targets all types of customers with an average salary who has a higher income This target customer group spends comfortably and tends to shop more
- In 2021, the number of marriages was 193 thousand, which decreased by 9.8% (-21 thousand) from 2020
- In 2021, the number of divorces was 102 thousand, which decreased by 4.5% (-5 thousand) from 2020
In South Korea, the Constitution guarantees freedom of religion, allowing individuals to practice their faith openly A 1995 social statistics survey revealed that 50.7 percent of the population adheres to a specific religion, with Buddhists making up approximately 46 percent, followed by Protestants at 39 percent and Catholics at 13 percent of the religious demographic (KOIS, 2020).
Because Korean people are very interested in religion, Biti's is very suitable to put cultural beauty on products to attract and honor religion here (Hackett, 2012)
South Koreans are renowned for their strong work ethic, often prioritizing work over leisure, which is evident in their culture from a young age Children are immersed in a fast-paced environment, dedicating numerous hours daily to various subjects such as Math, Arts, English, and Science This deep commitment to education underscores the significant investment in science and technology in South Korea, which ranks among the highest globally.
The data analysis utilized statistical methods including Chi-square tests, t-tests, ANOVA, and regression analysis Key findings revealed that 50% of the staff engaged in regular exercise, with three-quarters participating in activities such as walking, jogging, and mountain climbing, which require no equipment The frequency of exercise was predominantly 1-2 times per week for 64% of participants, and 38% exercised for less than 30 minutes per session Additionally, the average self-efficacy score related to walking exercise was 3.6 points.
The study revealed that self-efficacy regarding walking exercise had a low correlation with the ability to adhere to an exercise plan, with only 14% of the variance explained in a regression analysis Factors such as regular walking routines, health examinations, overall health status, and breakfast habits may contribute to this relationship (Kim Y I., 2000).
Understanding Korea's social class will help Biti's target the right customers and create appropriate marketing strategies
In Korea, prime shopping destinations extend beyond major malls, encompassing various districts that cater to diverse consumer needs Strategically placing products in these areas ensures effective outreach to the targeted audience.
The shops here often come from expensive and luxury brands The appearance of a brand with a cheaper price and novelty like Biti's will be a novelty for consumers here
The current population of the Republic of Korea is 51,362,290 as of Sunday, August 14,
2022, based on Worldometer elaboration of the latest United Nations data
The population density in South Korea is 527 per Km2 (1,366 people per mi2)
81.8 % of the population is urban
Korean, also referred to as Hangul, is the national and official language in South Korea as well as North Korea The language is drastically different from western languages
The Korean language is part of the Koreanic language family and has evolved over time Modern Korean emerged from Middle Korean, which in turn developed from Old Korean, tracing its roots back to the speech used in Prehistoric Korea.
English: Almost all of Koreans under 40 years have participated in English lessons as part of their schooling
During the holidays in Korea, the practice of gifting shoes is often avoided by various age groups, including Biti's target demographic of 18 to 35-year-olds This hesitation stems from the belief that giving shoes can symbolize a departure from relationships, leading many to seek alternative gifts during this festive season.
Camping and hiking have gained popularity among South Koreans as activities that promote social distancing This trend has increased the demand for suitable outdoor apparel, particularly hiking boots, to navigate the country's mountainous landscape.
The rise in workplace injuries and changing social dynamics in Korea have led to a significant growth in the popularity of sports-inspired footwear, particularly sneakers, which saw a rebound in sales in 2021 after a decline the previous year Sneakers, known for their comfort and style, have transcended their initial appeal to younger consumers and are now being embraced by a broader audience They are increasingly being paired with various outfits, including jeans and blazers or suits and t-shirts, offering a polished alternative to traditional office attire.
The increasing demand for sneakers and sports footwear in South Korea is fueling a vibrant resell culture, driven by retro styles and limited edition releases that serve as a form of currency among dedicated enthusiasts.
Online shopping transaction value of leading footwear categories in South Korea in 2021 is more than 3 million won thanks to increasing demand for hiking shoes
The demand for footwear in South Korea is expected to stagnate throughout the forecast period, remaining below pre-pandemic retail volume levels This trend is primarily influenced by a decline in children's footwear sales due to falling birth rates, as well as lower demand for men's footwear, since men typically own fewer pairs of shoes than women Conversely, women's footwear is projected to fully recover by 2022, driven by pent-up demand and a greater propensity among women to buy various styles of shoes and boots for different occasions.
In Korea, brand loyalty is not guaranteed, as it relies on the ability of local brands to meet consumer expectations Reliable product quality fosters brand trust, making it essential for Biti's to focus on how customers perceive both service and product quality This perception acts as an indirect factor influencing loyalty, while direct factors such as customer trust, satisfaction, and cost play a crucial role in establishing a loyal customer base.
Consumers seek subjective rewards and positive expectations from product consumption, which encompass hedonistic, affective, and psychological benefits.
Biti's initial focus is on raising awareness among consumers in Korea, as this new market presents a crucial entry stage that will influence future strategies.
Knowledge: In this stage, potential customers will begin researching our products and what are we
Liking: This is the stage Biti's need to make customer aware about the products and acquire a sufficient amount of knowledge about it
Buying: At this final stage, the potential customer has enough databases and appropriate responses to their interests and needs to make a decision to buy a product
Figure 14 South Korean Footwear Market
The growth rate of the South Korean Footwear Market is 8.1%, with an estimated value
In this segment Biti's has many competitors and similar product lines including local and global brands
Local brand in Korea: MLB
Global brands in Korea: Nike
Biti's needs to improve its product into a product that is hard to replace to help it last longer and be more successful in the marketplace
Substitute products that may threaten Biti's brand can be mentioned as low-priced technology shoes like Biti's
2.1 Product adaptation and modification, based on:
EVALUATION AND CONTROL
We utilize the Balance Scorecard (BSC) model to assess the future of the business, focusing on key metrics such as profit, total revenue, growth potential, and marketing costs, which were previously analyzed using the ATAR model.
Key Financial Metrics indicate that our profit contribution after expenses varies annually by +/- 9%, reflecting our commitment to building a Sustainable Company Utilizing the ATAR model, we project a consistent revenue growth of 5% to 23% year over year during our initial five years, underscoring our focus on achieving steady Revenue Growth.
We strive to increase our new customer base by at least 5% annually while maintaining a customer retention rate of 30%, reflecting our commitment to fostering loyalty among existing clients.
Starting from year two, we anticipate a reduction in production costs following our break-even point, driven by a deeper understanding of market dynamics and distribution processes This strategic approach aims to lower both product and supply chain expenses, enhancing overall efficiency.
We invest $1,000,000 in research and development to provide training and development opportunities for our team, enabling them to mentor and guide new actors This initiative is vital for achieving our goals and aligns with our commitment to leadership excellence through innovation, as outlined in our Balanced Scorecard (BSC) framework.
CONCLUSION
Globalization offers significant benefits, providing numerous development opportunities for businesses in international markets By expanding their scale and business models, companies can enhance their brand visibility and reputation globally As Vietnamese businesses enter foreign markets, they contribute to the nation's economic landscape and foster domestic economic growth.
Entering the international market presents significant risks and challenges, including economic and political instability, as well as competition from established brands To navigate these complexities successfully, businesses must conduct thorough research and analysis of the target country, focusing on competitors, market segments, cultural nuances, and political landscapes This preparation is essential to minimize potential losses and enhance the likelihood of success in foreign economies.
Bitis recognizes the Korean market as a prime opportunity for its first international expansion, given the presence of approximately 137,600 Vietnamese residents who are active in various terrains With Korea's hilly landscape and a culture that embraces running and mountain climbing, this demographic aligns perfectly with Bitis' sports shoe offerings Successfully establishing a foothold in Korea will serve as a significant launching pad for Bitis to further penetrate additional global markets.
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