(Tiểu luận) topic evaluating the factors impacting on the growth of mice in south korea

NATIONAL ECONOMICS UNIVERSITYFACULTY OF TOURISM AND HOSPITALITY INTERNATIONAL HOSPITALITY MANAGEMENT PROGRAM —————— ASSIGNMENT REPORT Subject: MICE Tourism Management Topic: Evaluat

NATIONAL ECONOMICS UNIVERSITY

FACULTY OF TOURISM AND HOSPITALITY

INTERNATIONAL HOSPITALITY MANAGEMENT PROGRAM

——————

ASSIGNMENT REPORT

Subject: MICE Tourism Management

Topic: Evaluating the factors impacting on the growth of MICE in South Korea Class: IHME 62

Group members:

Nguyễn Bích Ngọc

Lê Ngọc Quỳnh Phạm Thị Ánh Tuyết

Ha Noi, September 2023

4 Power of suppliers (to businesses in the industry) 18

III MICE INDICATOR 20

of South Korea By the time of its establishment, South Korea is significant in thesectors like education, cultural and economical The Tourism Department of Korea iswell developed and the main motivation of this development is the country's economicgrowth In South Korea, cultural tourism plays an important role in increasing theeconomic growth of the country

In the short time following its dramatic and impressive development, it has managed

to maintain the delicate balance between preserving its impressive history andtradition whilst embracing all the conveniences and technology of the modern world

As a top convention destination, it offers world-class MICE infrastructure, a safe andsustainable meeting location, a variety of unique sights and experiences provided byKorea’s MICE cities, and much more Thanks to its modern development ininfrastructure, excellent services and accessibility, Korean MICE destinations havebecome one of the best meetings and conferences tourism trends in the world

B FACTORS AFFECTING SOUTH KOREA MICE

I PESTEL ANALYSIS

1 Political factor

Industrial policies are aimed at both promoting industrial restructuring and developingspecific industries Tax support for target industry is one such industrial policyinstrument Stagnating growth in the manufacturing industry and economy-wide trend

of servitization highlighted the importance of the service industry itself as well asmanufacturing-service convergence As a result, policies that sought to foster growth

in the service industry were established to promote the transition to a highvalue-added service economy

The service sector eligible for income tax reductions and exemptions for SMEemployees10 have been extended to include industries faced with labor shortages andlow wages For example, in the revision of February 2020, creative activities, arts,recreation and sports service sectors were added to the target industries To wrap up,

we summarize the policies that extended tax support to the service sector in the tablebelow:

The Extension of the Service Industries Eligible for Tax Support

2 Economic factor

2.1 Economic growth

South Korea’s economy expanded 0.6% in the second quarter of 2023, acceleratingfrom a 0.3% growth in the first quarter and exceeding market expectations for a 0.5%expansion, advance estimates showed On the expenditure side, private consumptionfell by 0.1%, as expenditures on services (e.g., restaurants & accommodations)declined while expenditures on goods maintained the previous quarter’s level.Government consumption also decreased by 1.9%, due to a decline in expenditures onsocial security benefits in kind Construction investment contracted by 0.3% as well,driven by a decrease in civil engineering Facilities investment fell by 0.2%, asinvestment in transportation equipment decreased, despite increased investment inmachinery Exports decreased by 1.8%, owing to reduced exports of petroleumproducts and transportation services, although semiconductors and motor vehiclesincreased Imports dropped by 4.2%, mainly due to decreased imports of crude oil andnatural gas

South Korea GDP Growth Rate

As Asia’s fourth-largest economy – and the world’s tenth – re-numerating this losswas vital accordingly Statistically, the MICE industry in Korea has created an output

of around $80.6bn in terms of economic impact on the country Total expenditures by

foreign delegates and convention hosts were estimated to be about US$130 million in

2000 This US$130 million created US$217 million of output, 13,702 full timeequivalent jobs, and US$47.4 million of personal income to the residents Theseresults mean that the convention industry can be a high- value-added area

2.2 Interest rate & Inflation rates

2.2.1 South Korea Interest Rate

The Bank of Korea kept its base rate unchanged at 3.5% during its August meeting, aswidely expected, maintaining rates for the fifth straight time as inflation continued toease The board began its post-pandemic tightening campaign in August 2021 and

lifted borrowing costs by a total of 300 bpsuntil January 2023 Thursday's move alsocame amid concerns about surginghousehold debt and signs of moderation ineconomic recovery due to slowing privateconsumption The committee kept the

2023 GDP growth projection at 1.4,unchanged from May's forecasts, butslashed next year's to 2.2% from 2.3%

2.2.2 South Korea Inflation Rate

Meantime, headline inflation is expected to pick up from August and fluctuate around3% until the end of the year The

annual inflation rate in 2023 is

expected to be consistent with earlier

estimates of 3.5% The board added it

will keep a restrictive policy stance for

a considerable time, emphasizing price

stability while making a judgment

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regarding the need to raise rates further.

High inflation and interest rates are significant factors affecting tourism demand and the MICE sector The inflationary consequences of tourism can arise in several different ways It can put MICE organizers into a struggling situation due to increased operational cost and chance of supply chain disruptions.

2.3 Disposable income

In 2021, South Korea's per capita disposable income amounted to around 21.77million South Korean won, up from about 21.19 million South Korean won in theprevious year Per capita net disposable income in South Korea has risen steadily inrecent years

2.4 Employment rate & Wages

Total employment in Korea has been on an upward path since the beginning of 2021,and surpassed its pre-crisis high in February 2020 The employment rate (aged 15-64)was 68.6% in July 2022, up 3 percentage points from July 2020 and 2 percentagepoints from July 2021, indicating a rapid recovery Yet, since May 2022, employment

growth has been flat

The unemployment rateonly rose modestly duringthe crisis to 5.2% inJanuary 2021, and it hassince fallen below itspre-crisis level to 2.9% inJuly 2022

Unemployment rate in Korea

Although the overall recovery in the Korean labor market has been rapid, there aredifferences by sector Employment growth in some service sectors (e.g sales,

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accommodation, food) and for daily workers is lagging behind In addition, there isincreasing uncertainty about the sustainability of the labor market recovery because ofgreater inflationary pressures and external instability.

The gross salary range for people working in South Korea in Tourism, Gastronomy,Hotel Business is typically from 2,030,064 KRW (minimum salary) to 5,013,155KRW (highest average, actual maximum salary is higher)

This is the total monthly salary including bonuses Salaries can vary dramatically

among different job positions.

3 Social factor

3.1 Population growth rate

From 1960 to 2022 the population of South Korea increased from 25.01 million to

51.63 million people This is a growth of 106.4 percent in 62 years The highest

increase in South Korea was recorded in 1961 with 3.01 percent The biggest decrease

in 2022 with -0.23 percent

In the same period, the total population of all countries worldwide increased by 162.2percent The average age in South Korea rose by 4.35 years from 2012 to 2021 from38.85 to 43.20 years (median value) Around 81 percent of the inhabitants live in the

country's larger cities This trend of urbanization is declining, decreasing by -0.2percent per year.

In recent years, there has been a pushback against such a culture, with young Koreansdemanding shorter hours Changes are slowly taking place and a proposed governmentpolicy to allow a 69-hour working week did not go as planned, necessitating a strategyrethink.

3.4 Safety emphasis

Most parts of Korea are safe to freely roam around day and night, even for womentraveling alone As long as basic safety precautions are taken, like avoiding darkalleys and parking lots, it is very unlikely you will encounter dubious or troublesomeindividuals

3.5 Health consciousness

Medical care is excellent and generally a 7.09% rate (which is increasing annuallybecause of the aging population) of Korean monthly salary is applied to pay fornational health insurance, half of which is contributed by Korean company if you are

in full-time employment

This means that medical costs are never prohibitively expensive and people are neverfar from a specialist clinic that can see almost immediately Several large hospitalsprovide multilingual services for larger procedures

3.6 Lifestyle

Korea has an intense work-hard, play-hard culture The booming metropolis fusestradition and modernity Korea citizens have a deep respect for higher rankingindividuals and pride in their venerable country At the same time, retail therapy andcutting-edge technology—Wi-Fi even in parks—reign in Seoul, Korea The countryintegrates an urban landscape with large green spaces, making it a great destination fornature buffs and country fans Despite a relatively small international community,Korea is experiencing a growing multicultural influence

3.7 Cultural Barriers

South Korea is still largely conservative and experiences as a foreigner in South Koreacan be influenced by factors such as perceived social status, skin color, country oforigin and gender

4.2 Level of innovation

Over the past 25 years, Korea’s National Innovation System (NIS) has continued todevelop spectacularly By 2019 R&D spending – most of which is focused onexperimental development – had reached a level of twice the OECD average

5 Environmental factor

5.1 Weather & Climate

The climate in Korea is temperate, with four very distinct seasons South Korea has acontinental climate characterized by very cold, dry winters and very hot, humidsummers Spring and autumn are relatively short and temperatures are mild andgenerally quite pleasant, making these the most comfortable seasons to visit SouthKorea

5.2 Climate change

The change rate in temperatures to 0.23C (32.41F) per decade in 1954-1999,according to a 2021 report by the International Energy Agency (IEA) The ratedramatically increased to 0.5C (32.9F) per decade in 2001-2010

5.3 Environmental Policies

Korea has adopted a vast range of environmental policies to create a globally-leadingand pleasant urban environment Covering energy, waste management, air quality,noise, odor, and restoration of the ecosystem, Korea’s environmental policiesproactively address the climate change of international concern, providing a rolemodel for other countries

The amended Water Environment Conservation Act has expanded the scope ofdischarge facilities subject to the application of an eco-toxin managementsystem to include all industries.

● The amended Environmental Technology and Industry Support Act nowrequires listed companies with total assets worth KRW 2 trillion or more topublicly disclose information on their environmental impact

● The amended Act on Registration and Evaluation of Chemicals requiresregistration for the use of one ton or more per year of existing chemicals, andthe use of 0.1 ton or more per year of new chemicals

6 Legal factor

6.1 Industry regulation

South Korea has a civil law system, which has been historically influenced byJapanese and European laws and common law principles More recently, US law hasbecome influential in South Korean commercial law

South Korea is governed in large part by federal laws However, local governmentsalso have certain degrees of autonomy and can enact self-governing ordinances withbinding power

6.2 Consumer protection laws

Businesses must comply with consumer protection laws A business means “thosewho manufacture (including processing or packing), import or sell goods, or furnishservices” (Article 2(2), FAOC) Additionally, the “state and local governments” mustcomply with consumer protection laws, including the obligation to enact, amend, andabolish related laws and ordinances in order to realize the basic rights of consumers(Article 6)

Article 10 of the FAOC stipulates that the nation must set labeling standards forproduct names, specifications, quality assurance periods, etc to ensure that consumers

do not select or use products incorrectly due to the labeling or packaging Moreover,

Articles 48 to 50 of the FAOC stipulate recommendations and orders for the removaland destruction of goods Additionally, according to Articles 6 to 7 of the TCA,provisions that are unreasonably disadvantageous to consumers and provisions thatexclude or limit liability for quality assurances without significant reasons are invalid.

II 5-FORCES FRAMEWORK

1 Threat of new entrants to the industry

In general, the threat of new entrants to the MICE market is relatively low due to thefact that the MICE industry requires a significant amount of capital and resources toenter, such as investments in marketing, infrastructure, and technology Additionally,established firms have contacts with suppliers, vendors, and clients, making it difficultfor newcomers to capture market share However, cutting-edge technology and novelbusiness models can upend the sector and open doors for fresh competitors

2 Threat of substitute products

The threat of substitutes is relatively low, as the MICE market provides a uniqueexperience that is difficult to replicate However, there are alternatives to in-personMICE events, such as virtual meetings and conferences, which can be a substitute for -

in-person events The competition from substitutes is affected by the ease of withwhich buyers can change over a substitute consisting of these factors:

- Availability and Price attractiveness of substitutes: Typically, attending

meetings and activities in person can be costly, especially if they are heldsomewhere else Virtual meetings, on the other hand, are far more affordablebecause attendees may convene from the convenience of their homes, savingbusinesses money on secondary venues, employees money on travel expenses,and employees money on refreshments

- Compatibility of Substitutes (quality, performance, and other relevant attributes): It can be clearly seen that South Korea strives to maintain a

delicate balance between preserving history and tradition while embracing theconveniences of the modern world a trait that makes this destination even moreappealing to the MICE industry in general and in-person MICE in particularwith easy navigation, impressive MICE infrastructure and high-speed ITinfrastructure nationwide

Overall, the level of threat from substitutes is very likely to depend on theeffectiveness and acceptance of virtual events and the cost-benefit analysis ofin-person versus virtual events Regarding the South Korean MICE industry, thisnation acted just like it used to do; quick and trendy Instead of inviting foreigntourists, the South Korean government and local governments focused on digitalmarketing and producing content Several cities investing to become the SouthKorea’s best MICE city title are:

‘Virtual Seoul’ in Seoul is the

metaverse convention platform

where customers can open any

kind of event for free

It has 9 virtual event venues that

reflect Seoul’s most popular

MICE spots such as COEX, City They are not only rendered to 3D graphics, but