Korea is considered as one of the world’s most dynamic economies, placed at the 11th position in terms of being the biggest in the world. It is also classified as the 4th biggest economy in the Asian sub-continent.
Korean big star economy can be called as among the most amazing model to be followed by any country up to the present, bearing in mind the fact that even its economy underwent a relapse through the tough times of the world economy.
The nation houses several technological giants such as Samsung, Hyundai, LG and a whole bunch of other vehicle, television and semi-conductor chip fabricating firms.
In view of these factors, it looks as if Korea is in fact, a profitable place to do business and offers a market of high stability and reliability to companies that intend to penetrate the Korean market. This reality has already attracted many businesses who have started their undertaking in the Korean market. This favorable disposition has also improved because of the FTAs (Free Trade Agreements) of Korea with other countries, leading to generous freedom of starting a business in South Korea.
This article takes into consideration five reasons, explaining why entrepreneurs register a company in Korea:
Korea has formulated policies that favor trade and business. As per one policy, the duty charged on the trade of goods is significantly low. This shows the Korean government’s initiatives of laying the ground for other foreign enterprises to relocate and do business in Korea, minus the difficulties caused by heavy-duty on goods that have been imported.
The relevant normal customs duty rates are presented in the Harmonized System of Korea that can be accessed at unipass.customs.go.kr/clip/index.do. The normal customs duty in the case of commercial goods imported into Korea is 8% of the value, whereas the customs duty charged on farm produce is usually considerably more.
A relief for low-value deliveries is applicable to commodities worth US$150 or lower if they are categorized as self-use goods.
Based on the imported goods, Korean importers may require a specific certification, notification or consent essentials prescribed by numerous legislations and regulations regulating the import of such goods (i.e., apart from the Customs Act), including the Pharmaceutical Affairs Act, the Medical Devices Act and the Chemicals Control Act, etc.
Though as a rule, for imports no advance notice is required, Korean importers who want to import specific pharmaceutical and medical gadgets need to submit a pre-importation report to the concerned domain fraternity before acquiring clearance through customs and the affected sector’s receiving of such report is a prerequisite for customs clearance.
Importers inclined on importing any goods that attract extra provisions as per the legislations apart from the Customs Act. They are highly recommended to make sure that there is complete compliance owing to the KCS’s aggressive implementation measures.
Korea is highly focused on the security of intellectual property protection by way of framing enough rules and legislations. This takes away the stress of companies related to matters of their intellectual property and allows them to do business without being worried about breaching copyrights or loss of their professional privacy and approach.
Because of the Government of Korea’s supportive policy framed for SMEs and undertakings, venture investment and resource mobilization were at the top in 2015, at KRW 2,085.8 billion and KRW 2,626.0 billion, correspondingly. This led to the sharp rise in the number of ventures, from the figure of 8,798 in 2000 to reach the figure of 31,260 by the close of 2015.
Startups in Seoul got the support of around 467 accelerators, venture capital funds and government agencies that stand up for startups in Seoul and its neighboring countries in the year 2018, a few supported by larger enterprises like Samsung and Naver.
Seoul alone has 85 accelerators and the amount of angel investment rose from about US$170m ($250m) in 2015 to US$250m in 2017.
From 2015, the Government of South Korea has made provisions worth $4bn for the benefit of startups. According to reports from Forbes, this is the largest government support of startups, per capita, in the world. Seoul’s mayor, Park Won-soon, expressed the vision to add Seoul to the world’s top five startup cities by 2022.
Korea holds a special appeal for startups on account of its high-speed broadband connections, the early launch of the 5G network and the high absorption of technology.
The fuel that drives seeking and attracting startups has been driven by the slowdown in growth from the conventional big businesses, as confirmed by Seoul’s Startup Hub co-founder, Matt Kang.
In its yearly report in January 2019, the global agency, We Are Social, quotes South Korea’s total population to be 51.52 million, with 95% internet access rate or around 49 million users of the internet.
Because of the fact that the South Korean government has invested heavily in academics, it has an outstanding literacy rate of 98%. This means that it has highly-qualified manpower resources and a digitally savvy market.
In addition to this, the good deal of dynamic social media users within the country can be anticipated at 43.66 million with a degree of penetration reaching 85%. The figures are similar even in the case of mobile social media users.
South Korean users are on the internet for an average period of 5 hours and 14 minutes each day; nevertheless, out of this time, only 1 hour and 9 minutes are used on social media. The larger part of the time is spent on watching videos at 2 hours and 47 minutes.
Along the lines of its superlative IT infrastructure and high-speed technology, 98% of Korean homes have uninterrupted access to the Internet. This has helped the country to have one of the largest internet penetration rates around the world.
As mobile phones are the most widely used and popular gadgets, South Korea is among the countries with the maximum smartphone rate of utilization in the world.
This caused the e-commerce market to make it big, by way of which the residents express comfort and convenience in online shopping. Many times, Korean online shoppers even get into a comparison mode on the pricing levels between domestic and global brands, exhibiting how in-tune they are with this domain.
Korea has technologically advanced its creative industry to a very extraordinary level, surpassing all the previous benchmarks and setting new benchmarks in the industry by coming up with the concept of design.
In this connection, Korea is doing everything it takes, in terms of endeavors with other international brands that are well-known in the international market of innovations. This greater creativity is bound to turn Korea into a highly proficient and potent market with techniques and strategies; therefore, giving more prospects to the businesses to lure and draw prospective clientele.
What does ‘South Korea’, remind you of? Premium appliances giants such as Samsung, LG, Hyundai. Apart from these, the republic is synonymous with K-POP and Korean drama that has made and is making waves around the world.
However, the fact that surpasses all these goodies is the wonderful and best-for-business environment that Korea presents to all startups.
Contact us to help you set up your startup in Korea right from the base to the best.
In the aftermath of the Asian financial crisis in 1997, South Korea committed to liberalizing its economy and promoted foreign direct investment (FDI) to open its market to foreign investors. FDI allows foreign investors to acquire and own stocks or shares of Korean companies. According to UNCTAD's 2020 World Investment Report, South Korea’s FDI stocks increased from US$ 135 billion in 2010 to US$ 238.5 billion in 2019. Other forms of FDI include a contribution to Non-Profit Organizations (NPO) and offering long-term loans to domestic companies. Acquisition of stocks or shares of a domestic company guarantees your participation in technology transfer and the management of the company you invested in. As a foreign investor, your investment in South Korea will be facilitated and legally supported by the Foreign Investment Promotion Act. You can also rely on the Rules on Foreign Investment to guide your business operations or Consolidated Public Notice to protect your investment. The South Korean government has cultivated a conducive environment for doing business, with robust measures and policies to help you make the most out of your investment and business capabilities. These measures have enticed investors from across the world and increased inbound investment steadily in the past 15 years. Now is the perfect time to invest in South Korea. Why Invest in South Korea? South Korea is appealing for foreign direct investment for many reasons. The Korean Government has been reducing tax incentives and increasing cash grants. In January 2019, the government increased cash incentives for foreign companies to around $46 million (50 billion KRW) to entice investors. Cash grants now drive the government’s comprehensive incentive program for foreign investors, which include industrial site support, financial support for staff training, and many more. Companies that invest in the IT sector and related industries qualify for generous cash grants provided by the central and local governments of Korea on a matching fund basis. From January 2020, the number of eligible technologies was expanded to 2,990 in 33 fields, which now includes high-tech products like IoT emotional diagnosis and biometric authentication payment. But South Korea has more to offer foreign investors than FDI cash incentives. Investors are also attracted by the country’s rapid economic development, specialization in ICT, and strong industrial base, high-potential emerging sectors, and expanding market. Factors to Consider Before You Invest in South Korea In 2009, financial, insurance, and other services made up 64% of inbound investments, compared with 35% invested in manufacturing. Investment opportunities have diversified over the years to include trade, hospitality, real estate, ICT, transportation, and many more. Industries like semi-conductors, auto manufacture, logistics, displays, and environmental products and services are attracting more investors. Under the Foreign Investment Promotion Act, foreign investors can set up a company, foreign branch, or liaison office. Even you'll need to invest in opening a branch in South Korea; it will not fall under FDI since it is not locally incorporated. A liaison office conducts functions like market research and R&D but cannot undertake profit-generating business in South Korea. To set up a local corporation, you’ll need to invest a minimum of around US$ 100,000 (100 million KRW) and does not have a maximum limit. On the other hand, establishing a domestic branch of a foreign company in Korea does not have any limits. Before setting up a business in South Korea, you have to consider how the implications of identification. The act recognizes foreign investors and foreign-invested companies as separate entities and requires independent accounting and settlement. The Foreign Exchange Transactions Act identifies a branch and headquarters as a single entity, which requires consolidated accounting and settlement. The foreign-invested company pays taxes based on domestic and overseas income, while taxes for the branch and liaison office considers income from domestic sources only. How to Establish a Company in South Korea Since the early 2000s, the government has focused on simplifying the FDI process and established a one-stop services platform to help foreign investors and multinationals invest in South Korea. The FDI procedure starts with foreign investment notification, which is conducted by your foreign exchange bank or accredited agencies like Pearson & Partners. Then, you remit your investment via customs or exchange bank before proceeding to the registration of incorporation at the court registry office. You will be notified once your business registration and incorporation process is completed. Then, you transfer your paid-in capital to a corporate account and wait for a notification confirming the establishment of your foreign-invested company. How to Set Up a Stock Company in South Korea The Commercial Act of South Korea recognizes five forms of companies, and three types of business forms are available to foreign companies, including the stock company. Each of these business forms has distinct registration requirements, minimum investment limit, and differ in terms of scope. The procedure for establishing a company may differ slightly depending on the degree of commitment or how much you invest in South Korea. There are two ways of setting up a stock company in South Korea. You can use either promotion or subscriptive incorporation, but both procedures involve registration of incorporation that takes about two weeks to complete. Registration tax is charged for both promotion and subscriptive incorporation, which costs around 0.4% of the capital you’ll be investing. You will also have to pay 20% of the registration tax for local education tax. If you invest in stock companies established in overconcentration control areas, the total costs accrued from both taxes can increase by up three times more. Other charges include registration application fee to get revenue stamp of the Supreme Court and notarization fee. The most important step in this procedure is filing your business registration, which should be completed within 20 days from the day your stock company opens its doors for business. To avoid issues down the line, hire an expert in South Korea’s FDI like Pearson & Partners to help you establish a company. South Korea is ranked 5th globally in the Doing Business 2020 ranking by the World Bank. It has laid a solid foundation across all sectors that will guarantee its position as a global business hub for many years to come. You can rely on Pearson & Partners to help you become part of South Korea’s inspiring journey and join the long list of the success stories of the FDI. Contact us today to start your journey.read more
Seoul, the capital city of South Korea, belongs to the league of Asia Pacific’s highly sustainable workplace markets, along with being a cultural hub of the region. Korean cuisine, cinema and pop music have an immense influence all over Asia, transforming the city into a tourist resort of global appeal, while Seoul’s rank as a business hub, depends on the might of its financial services sector and the power of Korean chaebols (corporations) makes it a well-liked investment terminus. Close to 10 million people have their homes in Seoul, but the bigger built-up area houses 25 million, which is close to 50 per cent of the population of South Korea. The city’s key sectors are finance, manufacturing and retail. The internet speed provided within the country is among the worlds fastest and public WiFis can be easily reached. The city proudly carries three primary office districts: the CBDGwanghwamun, the Yeouido Business District (YBD) and the Gangnam Business District (GBD). These CBDs are the country’s heart and soul and longest-serving business districts and also the major shopping areas of Seoul. They take account for a diverse range of businesses. Though research statistics show a CBD vacancy rate of 16.7%, however, it has exhibited a significant rise in rents since the past few months. Gwanghwamun – Rise through the Ranks as Seoul’s Premium Business District Gwanghwamun, in the heart of Seoul, rules the topmost position in the listing of the country’s business districts, on the parameters of annual sales and sales volume per individual. Business districts can be ranked on the basis of the statistical data of geography, population, sales, type of business and consumer’s trends of consumption, as well as information on a map. According to a report, places around Gwanghwamun Station registered the highest sales of 5.8 trillion won ($4.6 billion) in a single year, around approximately eight times hike as against the 2013 review. The area’s separate sales were reported at 3.9 million won. After blending with the sale figures of adjoining areas like City Hall Station and Jonggak Station, the overall sales figure in the area would exceed 12.7 trillion won. The swift upsurge of sales near the Gwanghwamun region can be ascribed to the clustered population who went out in public through the whole-month duration torchlight procession and other end-of-the-year events conducted at Gwanghwamun Square. On the other hand, Apgujeong Station in the swanky Gangnam district was placed at 19th position, a sensational drop from number three, five years ago. Areas near Gangnam Station that registered its best volume of sales in 2013, were positioned at 13th. Apart from key business districts in Seoul; Nam-gu in Ulsan, Jung-gu in Busan, places adjoining Seohyun Station in Seongnam and Beomgye Station in Anyang, Gyeonggi Province showed up in the top 20 list. Yeouido This YBD is present on a tiny island of the Han River, has been in the limelight for its financial residents – the Korea Stock Exchange lives there along with media firms. Lately, it has turned into a hub for foreign-owned businesses, majority of them have shifted to Seoul IFC development; having a combination trio of office high-rises, a hotel and a shopping arcade. Built by AIG, presently it belongs to Brookfield. The office market in the YBD is still getting used to Seoul IFC’s working premises and Q1 vacancy was 24.4%. Yeouido sprawls across 8.4 square kilometers of island sculpted by the Han River in western Seoul. The island gets its fame as the big economic district of Seoul, a registered address for several investment enterprises and banks. Additionally, the island holds the National Assembly where the regulations and political decisions of paramount importance to Korea are conceptualized and framed, the governing agencies of the Korean financial sector just like Financial Supervisory Service, Korea Financial Investment Association and the exemplary buildings like IFC SEOUL and 63. Yeouido has grown up and matured as a financial district from the last 70's when the KRX (Korea Stock Exchange) shifted base to Yeouido from CBD. Because the district identity looks similar to a financial and banking nuclear center of the city that is geographically placed on an island with a park, YBD is usually known as the Wall Street of Korea. Gangnam Gangnam is stationed in Seoul, south of the Han River, which splits through the city. It is among the several bridges of the city that bridges Gangnam with the adjoining areas to the north of the Han and also city centers. GBD (Gangnam Business District) used to be a farming area running in the reverse gear until 40 years ago. Nevertheless, this area has made its footprint as the educational, commercial and focal point in Korea and is armed to the teeth with administrative buildings on Gangnam-daero and Teheran-ro, centered on the Gangnam Station area. Every kid who loves to dance is familiar with ‘Gangnam Style’, - YouTube has more than 3 billion official views of this video. However, a considerably smaller number of people are aware that Gangnam belongs to Seoul in the capacity of a major office district. Gangnam houses several hi-tech and media agencies and another name for it is the Beverly Hills of Seoul. It is a highly robust office market, owing to limited resources and available positions of only 5.1%. GBD is at number two, on the scales of biggest business districts in Seoul, with reference to the entire leasing area of grade A & B office buildings. Conclusion Seoul has numerous universal districts. The evolution in the number of foreign nationals is most likely to hit the roof with schemes for foreign investment sectors throughout the town. When global firms make an entry into the Korean market, one of the initial choices to decide where in Seoul to set up their office. Now we have an overview of the three major business districts that are high-density areas, dotted with office buildings. Seoul’s Metropolis area comprises 400 logistics centers of area 10,000 sqm or more, with 25% of overall retail online sales. With these statistics, exceeding expectations for the sector is an understatement. Contact us for clarity and in-depth knowledge of the best place for your new company to operate.read more
Who can apply for D-7 visa?D-7 visa is issued to “dispatched foreign professional/supervisor/employee of a firm that is engaged in the business activities in Korea.”Eligibility and requirements Foreign professionals at a Korean branch office sent from the foreign company Foreign professionals at the domestic headquarters of a Korean company that has advanced into the overseas market. - Worked at a foreign company/organization and sent to the foreign company’s affiliate/subsidiary company, branch, or other offices in Korea as an “indispensable professional specialist.“ - The applicant is waived for the one-year work experience, 1) If planning to work in key industries or in national projects or, 2) the employer company has inducted $500,000 or more of business operational fund into its Korean office. - Worked at an overseas branch office of a listed Korean corporation or public organization for at least one year and was dispatched to the main office in Korea. - However, if the Korean headquarter has invested less than $500,000 into its overseas branch/local office, one is not eligible to apply for the D-7 visa. How long is it valid?When granted a D-7 visa, the maximum length of stay is 2 years, but it can be extended upon application. Dispatch orders should be issued by the company headquarters, even if the employee is dispatched from a branch. The dispatch order should state the dispatch period.Are you applying for your visa in Korea? Contact our Korea visa expert Team in Pearson & Partners.read more