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  • “To make a world without barriers for business expansion.”
  • Feed yourself with more in-depth insights on doing business in Korea.
  • Feed yourself with more in-depth insights on doing business in Korea.
  • Feed yourself with more in-depth insights on doing business in Korea.
  • Feed yourself with more in-depth insights on doing business in Korea.
  • Feed yourself with more in-depth insights on doing business in Korea.
  • Feed yourself with more in-depth insights on doing business in Korea.
  • Feed yourself with more in-depth insights on doing business in Korea.
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13 AUG 2019

Korea Free Trade Zone: Qualifications and Incentives

TOPIC : Business in Korea Incorporation

Qualifications for Korea Free Trade Zone Occupancy

-       Domestic and foreign-invested companies in the manufacturing business mainly for export

-       Companies in the wholesale business mainly for import and export trade

-       Companies in the logistics business such as warehousing, exhibitions, loading, transportation, etc.

-       Businesses supporting tenant companies through finance, customs clearance, data processing, etc.

 

Prioritized businesses

-      High-tech businesses designated by the Minister of Trade, Industry & Energy

-      Businesses accompanying high technology and industry-supporting service businesses under the Restriction of Special Taxation Act

-      Businesses subject to foreign investment promotion, associated with regional strategic industries

-      Manufacturing businesses with significant technology transfer and job creation effects



Incentives

Tax reduction or exemption

Eligibility

-       Businesses accompanying high technology & industry-supporting service businesses

-       Manufacturing businesses investing USD 10 million or more

-       Logistics businesses investing USD 5 million or more


Details

-      Corporate tax reduction or exemption for five years (tax reduction rate: equal to the foreign investment ratio for the first three years, 50% of the ratio for the following two years

* Reduction for seven years in the Masan Free Trade Zone (100% for five years, 50% for the following two years)

-      Local tax (acquisition tax, registration tax) exemption for 15 years



Customs duty benefits

Eligibility

-      Customs duties are exempted for construction materials, raw materials and other goods necessary for fulfilling business objectives that are imported from overseas for use and consumption in a free trade zone.

-      Customs duties are exempted or refunded for domestic goods declared as carried into a free trade zone.


Zero rate of VAT

Eligibility

-      For domestic goods declared as carried into a free trade zone

-      Foreign goods and services supplied or provided among companies in free trade zones



Rent reduction or exemption

Eligibility

Rent reduction/ exemption is granted in the following cases. The foreign investment ratio should be at least 30% or the largest shareholder should be a foreigner. (The condition should be satisfied for 10 years from the date on which rent reduction or exemption applies.)

- 100% exemption: Foreign-invested companies in a business accompanying high technology or an industry supporting service business* with new foreign investment of USD 1 million or more

- 100% exemption: Foreign-invested companies in a parts and materials business with new foreign investment of 5 million or more

- 75% reduction: Foreign-invested companies in a manufacturing business with new foreign investment of USD 5 million or more

- 75% reduction: Foreign-invested companies in a manufacturing business with new foreign investment of USD 5 million or more



Korea Free Trade Zone, Korea Tax Free Zone, Korea Business


Designation status

Korea Free trade zones are divided into industrial complex-type and airport or seaport-type. There are seven industrial complex-type free trade zones in regions such as Masan, Iksan, Gunsan and Daebul and six airports and seaport-type free trade zones in Incheon airport, Busan port, Pohang port, Pyeongtaek-Dangjin Port and Gwangyang Port. Distribution complexes and cargo terminals can also be designated as a free trade zone.



Category

Masan

Gunsan

Daebul

Donghae

Yulchon

Ulsan

Gimje

Date of designation

Jan. 1 2007

Oct. 6 2000

Nov. 21, 2002

Dec. 12, 2005

Dec. 12, 2002

Dec. 8, 2008

Jan. 6, 2009

Area

(1,000 m2)

957

1,256

1,157

248

344

837

991

 

Category

Busan Port

Pohang Port

Pyeongtaek and Dangjin Ports

Gwangyan Port

Incheon Port

Incheon Int’l Airport

Date of designation

Jan. 1, 2002

Dec. 8, 2008

Mar. 30, 2009

Jan.1, 2002

Jan.1, 2003

Apr. 6, 2005 (Phase 1)

Dec. 31, 2007 (Phase 2)

Area (1,000m2)

9,363

724

1,429

8,880

2,014

3,015



For more information on starting your business in Free Trade Zone in Korea, contact us.

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Exploring the Korean E-commerce Scene: Why You Should Join

Are you looking to boost your product's exposure and expand into new markets? Are you seeking fresh audiences and advertising approaches? Want to grow your business without getting lost in overcrowded markets? Consider South Korea. This article aims to show you the untapped opportunities in the Korean e-commerce market.   1. South Korean e-commerce is positioned among the globe's largest markets. South Korea's e-commerce scene, despite its population of 51 million, rivals that of the United States, which boasts a population over six times larger. This achievement is remarkable, especially considering South Korea's historical context. Having embarked on the path to democracy in the late 1980s, the country experienced rapid economic growth between 1960 and 1990, following a struggle for independence against neighboring empires, China and Japan. According to Statista, a staggering 92% of Koreans were internet users in 2020, compared to 81% of Poles. Further evidence of Koreans' affinity for online shopping includes the fact that over 50% of Koreans aged 60 or older are active internet users, while in the United States, this figure stands at a mere 30%. Therefore, launching products in South Korea presents companies with a significant opportunity to expand their customer base exponentially. A product that fills a niche in the domestic market could potentially become a major success in Korea. Delving deeper into this opportunity is definitely worthwhile.   2. The Korean online shopping market follows a consumer-driven society.The inherent nature of Korean consumers' shopping habits offers numerous advantages from the start. Koreans tend not to stick to particular brands and are open to trying new things. To stay relevant in this fast-paced market and maintain customer interest, companies must consistently update their image, leading to frequent changes in packaging and the introduction of new product lines.  It's projected that by 2023, approximately 94% of Koreans will utilize e-commerce platforms. Often, online purchases aren't just about fulfilling daily needs but also serve as a way for buyers to showcase their social or financial status.   3. Interest from international suppliers is on the rise. Year after year, we witness a consistent increase in the funds flowing from Korean consumers into the accounts of foreign companies, with industries like fashion and beauty being particularly receptive. While entering the Korean e-commerce market demands thorough analysis, even a modest effort can lead to a warm reception for your products or services, along with the added allure of a "premium" aura often associated with foreign brands.    Navigating the Challenges and Rewards of the Korean E-commerce Market Entering the Korean e-commerce market is undoubtedly more challenging compared to European markets. It requires extensive preparation and detailed market analysis, encompassing various aspects such as consumer behavior, commercial communication regulations, effective marketing strategies, and specific SEO needs. Despite the demanding nature of this endeavor, it offers significant profit potential. The Korean market is receptive and embraces novelty, with ample opportunities for foreign brands. It has the potential to create a remarkable impact that is often difficult to achieve in markets similar to our own.   The Top Online Order Categories Based on data from Statista for 2020, food and beverages were the highest-spending category for Koreans. Following closely were home appliances, electronics, and telecommunications equipment. Lower down on the list were dining services, clothing, household items, and cosmetics.   Commonly Used Korean E-commerce Platforms Koreans typically conduct their online shopping through platforms such as: - Gmarket, - 11 Street, - Coupang (referred to as "the Korean equivalent of Amazon") Conclusion Exploring the Korean e-commerce market reveals a landscape ripe with potential for businesses seeking growth and expansion. With its position among the world's largest markets, a consumer-driven society, and increasing interest from international suppliers, South Korea presents lucrative opportunities for those willing to navigate its challenges. By understanding the preferences of Korean consumers, leveraging effective marketing strategies, and utilizing popular e-commerce platforms like Gmarket, 11 Street, and Coupang, businesses can establish a foothold in this dynamic market.   Ready to tap into the vast potential of the Korean e-commerce market? Our company specializes in assisting global sellers with incorporation in Korea. Let us guide you through the process with our expertise in communication services, market analysis, and strategic planning. Reach out to us today to start your journey towards success in South Korea.

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Navigating the K-Culture Industry for Foreign Investors in Korea

In the dynamic realm of global business, the K-culture industry in Korea shines as a beacon of innovation and opportunity. Tailored for discerning foreign investors and entrepreneurs eyeing expansion into Korea, this comprehensive article delves deep into the vibrant tapestry of K-culture. Through meticulous analysis, industry insights, exploration of investment advantages, and strategic guidance, it offers a thorough understanding while emphasizing the importance of credibility and respect in navigating this expansive market. Exploring the K-Culture Industry Landscape The K-culture industry has undergone a remarkable evolution, with 2022 revenues exceeding 148 trillion won, marking a 7.7% increase from the previous year, as reported by the Korea Creative Content Agency. Spanning gaming, beauty, broadcasting, music, and more, this multifaceted industry not only captivates global audiences but also serves as a robust economic driver for Korea. A deep dive into its interconnected sectors reveals a dynamic ecosystem fostering continuous expansion and innovation, essential knowledge for potential investors. Insights into Future Industry Prospects The future of the K-culture industry appears promising, solidifying its place among the top global contenders. With its adaptability to emerging technologies and innovative trends, the industry remains poised for sustained growth. The fusion of tradition with cutting-edge technology offers unique avenues for market expansion, engaging audiences worldwide in immersive experiences and creating diverse investment opportunities. Advantages of K-Culture Investment Investing in K-culture extends beyond economic gains, enhancing Korea's global image and facilitating cross-cultural exchanges. With export revenues surpassing imports, the industry offers stability and profitability for foreign investors. Moreover, it aligns with the global trend of cultural appreciation, allowing investors to contribute to a rich cultural narrative while reaping financial rewards. Understanding these advantages empowers investors to navigate the K-culture landscape confidently, aligning their strategies with its dynamic future. The Sociocultural Influence of K-Culture K-culture's profound impact extends beyond entertainment, fostering cultural diversity and inclusivity on a global scale. The widespread popularity of K-dramas, K-pop, and other cultural exports has created a shared cultural language that transcends borders, uniting people from diverse backgrounds. This interconnectedness enriches the global entertainment landscape and promotes a more harmonious society, breaking down cultural barriers and fostering mutual understanding. Furthermore, K-culture's sociocultural influence extends beyond entertainment, shaping various aspects of daily life such as fashion trends and beauty standards. Korean cultural exports serve as a bridge between East and West, fostering cross-cultural dialogue and appreciation. This cultural exchange promotes diversity and enhances global cultural understanding, contributing to a more interconnected and inclusive world. In essence, the sociocultural impact of K-culture showcases its ability to shape perceptions, bridge cultural divides, and promote global harmony. As investors explore opportunities in the K-culture industry, recognizing its broader societal contributions is essential for understanding its profound and lasting influence on a global scale. Guidance for Strategic Investment 1. Harnessing the Global Reach of K-Pop and Gaming: The global success of K-pop groups like BTS and popular games such as "League of Legends" highlights the importance of strategic investment in talent development and international expansion. By strategically guiding talent and establishing overseas footholds, investors can capitalize on the immense global appeal of K-content. 2. Maximizing Revenue through Merchandising: The monetization of K-content through merchandise offers a lucrative opportunity for investors. Groups like BTS have successfully expanded their reach and revenue streams through carefully curated merchandise lines. This merchandising strategy not only boosts financial returns but also enhances the cultural influence of K-content, catering to the growing demand for K-pop and gaming-related products worldwide. 3. Leveraging Cultural Diplomacy and Soft Power: K-culture plays a significant role in South Korea's cultural diplomacy efforts and soft power expansion. Through the global reception and appreciation of Korean entertainment and cultural exports, Korea has elevated its global standing and influence. Strategic investment in creating content that resonates with international audiences fosters cultural exchange and enhances a nation's soft power on the world stage. Conclusion In conclusion, the K-culture industry in Korea presents a wealth of opportunities for investors seeking to tap into its global appeal and economic potential. Tailored for foreign investors and entrepreneurs looking to expand into Korea, this article provides a comprehensive exploration of K-culture, highlighting its revenue growth and diverse sectors. Recognizing the broader societal impact of K-culture beyond its economic contributions is essential for informed decision-making and strategic planning. Pearson & Partners, a consulting firm specializing in aiding expansion into Korea, offers strategic guidance for investors seeking to capitalize on the opportunities in the K-culture industry. With expertise in incorporation and tax accounting services, Pearson & Partners ensures a seamless entry into the Korean market. For personalized assistance in navigating the complexities of K-culture investment and maximizing returns, contact us today.

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South Korea FDI: What is it?

The Significance of Foreign Direct Investment (FDI)  Foreign Direct Investment (FDI) refers to the establishment of a new corporation by a foreign entity or individual, or the acquisition of shares or equity in domestic enterprises, to establish continuous economic relations and participation in management.   Types of Foreign Direct InvestmentAcquisition of shares or equity in domestic enterprises: The investment amount must be at least 100 million won.Ownership of 10% or more of the total voting shares or total investment amount is required.*Exception for not meeting the investment ratio: Dispatch of executives or contract for appointing executives. Long-term Subsidiaries Refers to subsidiaries overseas (foreign direct investment corporations) of foreign invested companies or foreign investors (individuals), or companies with capital investment relations with such overseas subsidiaries or foreign investors, which have provided support for five years or longer. Contributions to Non-profit Corporations Reinvestment of undistributed retained earnings of domestic foreign-invested companies.   Required Documents for Foreign Direct Investment Declaration - Two copies of the Foreign Investment Report Form for each type of investment (attached format) - One copy of nationality proof document of the foreign investor (passport or official certificate of entity issued by the government of the investing country) - Notarized power of attorney and identification of the representative (if representing the foreign investor) - Consent form for collection and use of personal information and unique identification information (for foreign direct investment) - Other documents for each type of investment   Flowchart of Foreign Direct Investment Procedures 1. Consultation and preparation of investment declaration form (Bank) 2. Submission and issuance of investment declaration certificate (Bank) 3. Inflow of foreign capital (Telegraphic transfer/Cash importation) 4. Handling of investment funds (Payment of share capital/Bank) 5. Incorporation registration and business registration (Court Registry Office/Tax Office) 6. Issuance of certificate of registration for foreign-invested enterprise (Bank)   Conclusion Embark on your journey into South Korea FDI with confidence. Whether you're considering investment opportunities, navigating documentation requirements, or seeking expert guidance through the registration process, our team is here to support you every step of the way. Contact us today to unlock the potential of foreign direct investment in South Korea.

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