SME

By Wonbin Park | September 10, 2025

Amid tariff pressures and shifting supply chains, South Korea is accelerating its shift toward ASEAN. But with many players vying for opportunities in Southeast Asia, how can Korean businesses stand out?

• Korean businesses are deepening their presence in the ASEAN region, thanks to lower trade barriers and rising import and export opportunities.
• However, tariff pressures are reshaping broader trade dynamics across Asia Pacific (APAC), challenging Korean companies to grow and differentiate themselves.
• By tapping into robust logistics connectivity from providers like FedEx, businesses can adapt effectively to shifting trade flows and stand out from the competition.

During a 2024 trip to Singapore, Ambassador Park Cheol-hee eloquently described South Korea’s relations with ASEAN as a “lifeline and not a luxury item”. Today, the growing trade ties between South Korea and ASEAN are fueling more promising opportunities than ever.

As uncertainties around US tariffs continue to reshape global trade flows, South Korea is increasingly turning to the ASEAN region as a growth engine for exports.

ASEAN is emerging not only as a vital market for Korean goods, but also as a strategic partner in building resilient supply chains. For Korean businesses, this shift signals increased opportunities for growth across ASEAN’s diverse markets.

Here, we explore the rising importance of ASEAN in driving intra-Asia trade, the broader regional dynamics at play, and how Korean businesses operating in Southeast Asia can strengthen their competitive advantage.

Decoding ASEAN’s trade dynamics

Before diving into Korea’s own pivot to ASEAN, it’s important to first understand the broader regional dynamics. Over the past decade, China-ASEAN trade has expanded rapidly.

China has been ASEAN’s largest trading partner since 2009, and the feelings are mutual – ASEAN is also China’s biggest trading partner. In 2023, the region made up 15.9% of China’s total foreign trade, with bilateral trade between the two growing by 10.5% compared to the previous year.

Two factors underpin this growth. First, the global shift in manufacturing is driving supply chain diversification, with Southeast Asia quickly emerging as a key production hub. ASEAN countries such as Indonesia, Vietnam, Thailand, and Malaysia have attracted significant attention due to their competitive labor costs, favorable investment policies, and skilled workforces.

Second, the China-ASEAN Free Trade Area (CAFTA) has played a pivotal role in deepening economic ties. Since its launch in 2010, bilateral trade in goods has nearly tripled. Looking ahead, CAFTA 3.0, which is expected to be signed before the end of 2025, will extend cooperation into areas like digital infrastructure and green energy.

These developments highlight the ongoing integration between the two massive markets, driving intra-Asia trade growth.

The growing trade ties between Korea and ASEAN

As China’s ties with ASEAN continue to strengthen, Korean businesses are simultaneously expanding their footprint across Southeast Asia.

This momentum has been largely driven by the ASEAN-Korea Free Trade Agreement (AKFTA), which continues to lower tariffs and broaden market access between the two regions. Korea’s exports to ASEAN reached a high of USD 47.88 billion in the first five months of 2025, marking a 4.3% increase from the previous year.

Recent high-level diplomacy has further bolstered these economic links. When South Korean president Lee Jae-myung visited Vietnam in August 2025, both nations pledged to expand bilateral trade to USD 150 billion by 2030, with joint efforts focusing on manufacturing, green energy, and the digital economy.

For Korean manufacturers and businesses, these developments create new import and export opportunities. Exporters of intermediate goods, such as electronics and automotive parts, can tap into rising demand from ASEAN’s fast-growing industries. At the same time, businesses can import competitively priced raw materials and components from ASEAN producers, diversifying their supply chains within APAC.

By taking advantage of greater market access to ASEAN, Korean businesses will be well-placed to ride the wave of intra-Asia trade growth. However, it’s crucial to come prepared, as many players are vying to capture ASEAN’s rich opportunities.

China’s pivot toward Southeast Asia: What it means for Korean businesses

Earlier, we highlighted how trade between ASEAN and China has grown rapidly in the last decade. This growth will accelerate, spurring Korean companies to explore new ways to stand out in a competitive landscape.

Evolving US tariff policies are reshaping China’s export flows, creating ripple effects on Korea’s exports of intermediate goods. As China’s exports of finished goods to the US face disruptions due to tariffs, demand for Korea’s intermediate goods – components and materials supplied to Chinese manufacturers – is also shifting.

As a result, Korean suppliers of intermediate goods may need to adapt and explore new markets for growth.

Meanwhile, higher US tariffs are propelling Chinese exporters to seek alternative markets, creating new regional dynamics that Korean companies will need to navigate. China is increasingly focusing on strengthening trade with ASEAN, especially in sectors such as petroleum products, automobiles, electronics, steel, and non-ferrous metals.

For Korean businesses expanding into Southeast Asia, these shifting trade patterns raise a critical question: how can they stand out as trade priorities evolve?

Winning with logistics in intra-Asia trade

One solution lies in fast and reliable order fulfillment. Asian consumers today demand speedy delivery, and this expectation has extended to the B2B sector as well. In an era of rising supply chain uncertainty, businesses that provide timely and consistent delivery can establish themselves as trusted partners.

At FedEx, we’ve seen firsthand how efficient fulfillment can help businesses grow. That’s why we’re continually transforming our network to enhance logistics connectivity across APAC. In 2025, we launched our first direct flight connecting Korea with Taiwan, supporting greater supply chain efficiency and flexibility for importers and exporters in both markets.

We’ve also introduced a dedicated same-day delivery service for fresh fruits from Korea to Hong Kong, enabling these temperature-sensitive shipments to reach consumers in pristine condition.

If your business is thinking about expanding in the ASEAN region, working with a reliable logistics provider like FedEx to streamline your supply chain can help build customer trust and give you an edge over the competition. As intra-Asia trade continues to evolve, businesses that adapt their logistics strategies will be best positioned to succeed.

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