The Expansion Strategy for the New Route between Korea and Hungary

Purpose - The competitiveness of logistics in the 21st centuryrests on ensuring the efficiency and effectiveness of its localhub. While considering entry into a niche market in local logistics,it is pertinent to note that Budapest is emerging as a hubin EU enlargement in Eastern Europe. Big, small, and medium-sized businesses in Korea entered Hungary in the early1990s since then, there has been a significant increase inKorean presence, of approximately 130 times. This study aimedto identify the key distribution issues that have emerged in relationto Eastern Europe. Research design, data, and methodology - This study indicatesthat 33 major Korean companies were located inHungary, which serves as an out post to enter the Europeanmarketplace. However, Korea's exports to Hungary have declined(-32.0% in 2012) because of a loss of competitivenessagainst multinational corporations, due to factors such as therise in current local distribution costs and wages. Hungary, onthe other hand, through diversification and expansion of foreigntrade with the non-EU markets, including Korea, is increasing itsexports. Strategies of emerging countries are compared and reviewedin this study, by examining the vicissitudes of Hungary’sdistribution methods. Results - There are issues regarding Hungary's innovativeability. Hungary has a history of low wages and high skilledlabor. However, the outflow of high-quality human resources forhigh-wages has become more extensive, and this underlinesconcerns that the CEE’s trade hub is moving to neighboringcountries. After the European financial crisis in 2010, theHungarian economy is now developing, because of the IMF’smeasures, and it is being transformed into a trade surplus nation,while regaining distribution volumes rapidly. However, ifthere is continued lack of investment, the supply chain is weakenedand exports decline amidst competition with TNCs or with China’s distribution networks. Conclusions - It is necessary to create a new logistics approachfor increasing trade between Korea and Hungary. First,Korean small and medium enterprises (SMEs) should build trustby working with advanced Hungarian talent, and they should expandinto state-of-the-art fields instead of being confined to traditionalsectors. Second, this study focuses on limiting and loweringtheir high expectations for success according to foreign directinvestment (FDI) inflows and the role in the CEE distributionhub Korea should try to strengthen the distribution hubwith its centralized population, using better, more highly educatedhuman resources, thereby sustaining more innovativeability. Further, the positive effects of these measures are manifestedin enhanced business on both sides of Hungary, namely,the EU and non-EU nations such as Turkey and emerging marketsaround Europe, and a better engagement in the coreplacement of culture and industry. For this, Korea can contributeto, and benefit from, a Hungarian logistics center, for adoptingthe high-tech cluster systems and commercializing distributiontechnology such as RFID·USN.

keywords: CEE Hub, New Route, Non-EU Trade, Distribution-Egde, SME Supply Chain, Technlogy-Cluster.

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Article Contents

Vol.12 No.6

The Expansion Strategy for the New Route between Korea and Hungary

Abstract

Reference

The Journal of Distribution Science