Speaking at the World Economic Forum’s annual meeting in Davos, Switzerland on Jan 19, Yoon said South Korea “boasts the world’s top-notch production technologies and manufacturing capabilities in semiconductor, rechargeable batteries, steelmaking and biotechnology,” and is now ready to play the role of “a key partner in the global supply chain.”

Before attending the Davos conference, Yoon visited the United Arab Emirates, where he secured investment deals totalling US$30 billion from the Gulf country. Under the agreements, the UAE will invest in a broad range of South Korean projects in such fields as nuclear, hydrogen and solar energy, as well as defence.

Yoon was accompanied by top executives of over 100 South Korean companies, including 30 major businesses and conglomerates, such as Samsung Electronics, Hyundai Motor and SK Group. The delegation – called “a super-large trade mission” by South Korean media – also included top management from smaller companies in such growth industries as gaming, smart homes and tourism.

In 2022, South Korea drew much attention in the global arms market. Overseas orders more than doubled from the previous year to about US$15 billion, thanks largely to sales of some 1,000 K2 tanks and over 600 K-9 Thunder self-propelled howitzers to Poland.

When Russia invaded Ukraine in February 2022, Seoul hesitated to take a stance on the invasion due to its ties with Moscow in space and other areas. But when Russia’s aggression became widely criticised, South Korea made its opposition clear, and after Yoon took office in May, the country launched a spirited diplomatic campaign to export defence and other strategic products.

South Korea’s success in commercial diplomacy stems from its savvy deal making and expertise in foreign relations, according to experts.

During his visit to the UAE, Yoon travelled to the Barakah Nuclear Energy Plant – the first commercial nuclear power plant in the Arab World – in the Al Dhafra region of Abu Dhabi. The complex was built by a South Korean consortium under a contract won in 2009, when Lee Myung-bak was South Korea’s president. It represented the country’s first export of nuclear power technology.

One decisive factor in closing the deal was the dispatch of South Korea’s army unit to help train UAE forces to guard the nuclear facility. The 100-strong unit, which operates under the name Akh, or “brother” in Arabic, was first deployed in 2011. Yoon visited the troops during his trip to the UAE.

A few years ago, the plant deal caused a stir in South Korea when it was reported that an undisclosed military pact was signed to seal the contract, including a clause that would obligate the South Korean military to help protect the UAE in the event of a security emergency. The alleged deal came to light during the administration of Moon Jae-in, who became president in 2017.

While the validity of the report has not been confirmed, it is not surprising if it is true, given South Korea’s aggressive sales drive in the Middle East – a highly competitive and geopolitically complex market.

After deepening ties with South Korea, the UAE began to buy defence equipment from the country. During the five years after the Akh unit was dispatched in 2011, South Korea’s defence exports to the nation rose 30 times over the preceding five years, according to South Korea’s ministry of national defence.

South Korea has also won the trust of foreign customers through years of private commercial deals and export of civilian products. Poland has placed large orders for tanks from Hyundai Rotem because the country has confidence in the quality of South Korean products after years of Hyundai Motor’s operations there. Finland and Estonia have also bought K-9 howitzers from South Korea following an extensive marketing effort by Hanwha Defense, their manufacturer, after Russia annexed Crimea in 2014.

Yoon has pledged to export 10 nuclear reactors by 2030. South Korea will likely target the Middle East and Eastern Europe, including the Czech Republic and Poland, which have been reluctant to adopt Russian nuclear power technologies.

“Seoul has managed to turn the crisis caused by the Russian invasion of Ukraine into an opportunity,” said a senior South Korean government official. Last June, South Korea took part in a Nato summit in an apparent effort to raise its international profile and increase commercial diplomacy.

South Korea’s arms export drive, initiated by the Lee administration to raise the utilisation rate in the defence industry, has finally begun to bear fruit, said one military expert. Yoon’s quick decision-making and execution have also helped.

Kotaro Ito, senior research fellow for the Canon Institute for Global Studies and an expert in South Korean security, said “a confluence of factors” are behind the country’s successful arms exports.

“The South Korean government orders military attaches at its overseas diplomatic missions to gather information about not just the defence capabilities of foreign countries but their procurement policies as well,” Ito said. “South Korea’s sales strategy has been known for its aggressive marketing and stellar presentations.”

“Seoul seeks to build good working relationships with countries that have shown interest in South Korean products and technologies,” Ito said. “It provides about 1,000 personnel for the United Nations peacekeeping operations to ramp up its international presence and promote arms sales.”

Immediately after he was elected president last March, Yoon said his growth strategy is “to support state-of-the-art innovations as a key driver of the country’s growth and revitalisation.”

Yoon’s policy of promoting cutting-edge technology is focused on artificial intelligence, big data, drone technology and space development. While boosting arms exports, Yoon is also pushing major military reforms at home to create a technologically advanced army and other forces.

Yoon’s defence initiative reflects a conservative agenda to overwhelm North Korea with superior technological power, but it also indicates growing concern about the South Korean economy.

South Korea’s real gross domestic product grew 2.6% in 2022, down from 4.1% in the previous year, according to the Bank of Korea’s preliminary report released on Jan 26. The country posted its largest trade deficit last year, with exports in the October-December quarter shrinking 5.8% from the previous three months.

Among the country’s leading export industries, computer chip manufacturers and steelmakers saw sharp declines in profit, while earnings in the chemicals, automobile and shipbuilding sectors remained weak.

Higher prices of natural resources combined with a sliding won, the nation’s currency, have led to larger losses at energy companies. In a recent survey of Japanese, Chinese and South Korean business leaders conducted by Nikkei along with leading Chinese and South Korean newspapers, over 60% of South Korean chief executives said they expect a further deterioration in the business environment in 2023 – a far larger ratio than among their Japanese and Chinese counterparts.

Given the dismal economic outlook, Yoon may not be able to quit his post as the country’s top salesman any time soon.