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06 OCT 2019

Weekly Business Korea – Week 40

Korea is among the happening places in East Asia. Let us take a look at what has been going on this week in the Republic of Korea.


Korea and Japan - The Trade Tiff

Lately, the bilateral ties between South Korea and Japan have taken a plunge for the worse after Japan decided to remove Korea from its supposed ‘white-list’ of trade restrictions.

According to a judgment issued by South Korea’s Supreme Court at the end of 2018, quite a few Japanese companies must provide compensation to a group of South Koreans (or their future generations) who were pressurized for working for them at the time Japan had occupied Korea from 1910 to 1945.

 

Boycotts on Japanese beer and cars are already widespread in South Korea, resulting in the sudden dip down of the sale of these products. With the close of summer, almost 7 out of every 10 Japanese supported the tech-trade restrictions against Seoul; on the other hand, more than 50% of South Koreans favored the Moon administration in its handling of Japan.

 

During August, the trade war also raked up security issues as Seoul declared its refusal to reopen a knowledge exchange agreement with Tokyo. This came as bad news for the US that trade has become admissible ammunition in a nation’s diplomatic armoury.

 

The chances of either Moon or Shinzo Abe taking an initiative towards settlement are farfetched (as each is more difficult than the other).


 Business in Korea, Korea Business, Korea Business News



Xoom Customers Can Zoom their Money to South Korean Accounts

PayPal’s global transfer of funds service, Xoom, has made it public that people in the US, Canada and the UK and also 31 other markets in Europe, can transfer funds directly into bank accounts in South Korea.

In a press statement, Xoom announced that money sent from the app to Shinhan Bank, Woori Bank, Kookmin Bank and can be extracted in minutes. The release also added that the global payment market was valued at $689 billion in 2018 and South Koreans living outside the country, contributed to $6.2 billion of this figure. 

According to estimates, the US is home to 1.4 million Koreans and the majority of them send money back to their country of origin.

With Xoom, South Korean foreign nationals can get quicker and more convenient service at reasonably competitive rates. Xoom eliminates the long wait in queues to fill out forms or pay higher fees or to send money back home.

Xoom has got into a partnership with PayPal with the intention of providing their modern global payment service to South Koreans residing in Canada, Europe and the U.S.

More than 160 nations all over the world have access to Xoom.

Xoom was rolled out in the UK previously this year and its success was the logical reason to believe that that it was bound to expand globally. 

In Korea, PayPal’s Xoom business and PayPal itself has experienced a lasting tendency of digitization and now deployment of the managers and flow of funds.

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Launching Your Online Business in South Korea: A Comprehensive Guide

Despite past economic challenges, South Korea's online business sector has flourished, bolstered by reforms and government backing. It has earned favorable ratings for online business friendliness, owing to effective regulations and a hospitable environment for foreign investment. Beginning an online business in South Korea is a prudent choice. We'll delve into essential considerations to guide you through the process.   Qualifications for Initiating an Online Business Commencing an online business is among the most precise methods to tap into the South Korean market. The geographical location of the residence doesn't pose a constraint, which is advantageous. In South Korea, individuals from any location can establish and own an online business. Before devising your online business strategy, it's essential to note that operating an online business in South Korea necessitates a visa. At present, there are four distinct visa options available: F-2, F-4, F-5 and F-6.   Options for Selling Products to Customers Online If you intend to sell products to South Korean customers online, you face a choice between utilizing the E-commerce market or establishing a website. E-commerce solutions are advantageous for newcomers, while some online business proprietors prefer to cultivate their brands. However, opting for a website entails additional responsibilities such as managing marketing, advertising, and addressing technical matters. E-commerce, facilitated by the Internet, facilitates online transactions for goods and services. Most e-commerce platforms typically require identification, address, financial details, and VAT numbers. Once your information is verified, you can access your e-commerce marketplace account. There are several excellent e-commerce platforms available for online stores in South Korea, similar to those found in e-commerce marketplaces. The top five most popular E-commerce and Shopping platforms as of February 2024 are: - coupang.com - shopping.naver.com - adison.co - 11st.co.kr - gmarket.co.kr Guidance for Achieving Success with Online Business Strategize Your Online Business Launch Initiating your business registration marks an initial step towards establishing an online presence in South Korea. However, before embarking on this journey, several crucial aspects demand attention. Primarily, defining your business and determining the specific products or services you intend to offer in the South Korean market is paramount. Additionally, devising a unique business name is essential. Once you've clarified these details, visiting your local tax office to inquire about business registration procedures is necessary. Acquiring a certificate of business registration entails presenting essential documents such as your passport, relevant visas, and any other required paperwork. If your business model involves online product sales, utilizing an e-commerce platform is imperative. To conduct online commerce in South Korea, obtaining a mail-order business certificate from your metropolitan office is mandatory. This certificate enables you to engage in mail-order sales. Furthermore, establishing a business bank account under your business name is a prerequisite for operational readiness. Preparation through Market Research Conducting thorough market research is crucial before launching your business venture. To ensure its success, focus on two key aspects: understanding your target customers and analyzing your competitors. By gaining insights into these areas, you'll be better equipped to meet customer needs effectively. Understanding Your Target Audience Recognize that there is no one-size-fits-all product. Identifying your target customers and their preferences is essential to capturing their interest. Take the time to research the demographics of your prospective customers before devising strategies to address their preferences, requirements, or problems. Consider why your customers need your product and how it can enhance their lives or resolve their issues. Providing answers to these questions will enable you to offer solutions that resonate with your target audience. Analyzing Your Competitors Acknowledging your competitors is equally vital for success. Understanding their strategies can help you develop a better plan to differentiate your company effectively. Start by determining if other online businesses offer similar goods or services in the South Korean market. Compile a list of your primary competitors, including those within the same niche if applicable. Take the time to scrutinize each competitor's website or online store. Evaluate what they excel at and what improvements could enhance their offerings from a consumer's perspective. Identifying both the strengths and weaknesses of your competitors is essential for distinguishing your business in the market.   Accepting Digital Payments from Customers Now that you're familiar with the diverse avenues to kickstart your online business in South Korea, you might wonder about payment methods. There's a plethora of options for online transactions. PayPal stands out as one of the most globally recognized platforms. Additionally, South Korea offers other popular payment methods such as Payco, NaverPay, 2checkout, KSNET, Asia Bill, and Nice Pay for online shopping.   Conclusion Commencing an online business venture in Korea poses considerable challenges, especially for expatriates or foreign investors. Establishing a company in Korea entails navigating through potentially unfamiliar procedures compared to those in your home country. It's crucial to thoroughly understand these nuances before initiating your business, as ignorance may result in penalties for non-compliance. Engaging a professional partner can be invaluable in addressing these complexities. At Pearson & Partners, we specialize in improving business operations. With extensive experience in advising on business incorporation in Korea, we're here to assist you in navigating the complexities of setting up your online business in South Korea. Reach out to us for expert guidance.

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Establishing a Travel Agency in Korea: Preparing for Company Registration

So you're keen on launching your own travel agency? No hesitations allowed! The travel sector is expansive and profitable, consistently expanding, with increasing demand ensuring its enduring presence. The global tourism industry contributes to the growth of travel companies worldwide. Embarking on the journey of starting a travel agency, especially one crossing international borders, presents both excitement and challenges. Specifically, we're delving into initiating a travel business in South Korea! Congratulations on contemplating this venture, and best of luck navigating the forthcoming obstacles. From navigating Korean company registration procedures to grasping market dynamics, you'll encounter numerous hurdles.    Opportunities to establish a travel agency in South Korea  South Korea emerges as a prime destination for entrepreneurs and investors eyeing opportunities within the travel sector. As one of "The Four Asian Tigers," South Korea holds significant global economic prowess. Its diversified economy and advanced infrastructure present a plethora of prospects for both domestic and foreign investors alike. Venturing into the travel agency business in South Korea presents an enticing opportunity, given the country's rich cultural heritage, picturesque landscapes, and bustling urban centers. Below are key reasons why establishing a travel services company in South Korea is a strategic move: Thriving Tourism Industry: South Korea has witnessed a substantial surge in tourism in recent years, attracting both domestic and international visitors. This heightened demand for travel services underscores the favorable conditions for launching a travel agency. Distinct Cultural Landscape: South Korea boasts a blend of traditional and contemporary cultural offerings, catering to diverse interests ranging from historical sites to K-pop concerts. As a travel agency, crafting tailor-made itineraries showcasing the country's cultural richness can be a lucrative endeavor. Robust Infrastructure and Transportation: The nation boasts a robust transportation network comprising high-speed trains, buses, and well-connected airports, facilitating seamless travel across various destinations. Leveraging this infrastructure, travel agencies can design convenient and efficient travel packages for their clientele. Government Backing and Financial Support: The South Korean government actively fosters the growth of the travel and tourism sector through financial assistance and incentives tailored for travel agencies. This supportive environment further enhances the attractiveness of starting a travel business in the country.   Guidelines for initiating a travel agency in South Korea Conduct Market Research: Engage in thorough market analysis to gauge the demand for travel services in South Korea. Assess existing travel agencies and their offerings, pinpointing areas where you can provide exceptional services to meet unmet needs. Acquire Requisite Licenses: Ensure compliance by obtaining the necessary legal licenses and permits for initiating a travel agency. Essential requirements include Korea company registration, business name registration, and tax registrations to kickstart your venture. Define Your Specialization: Determine the niche and target audience for your agency. Explore various travel niches such as corporate travel, adventure tours, honeymoon getaways, destination weddings, culinary experiences, and family vacations to identify the best fit for your business model.  Develop and Promote Your Website: Create a user-friendly website that showcases your services and facilitates online booking for customers. Additionally, devise a comprehensive marketing strategy to effectively promote your agency to prospective clients. Conclusion  In conclusion, venturing into the travel agency business, particularly in the dynamic landscape of South Korea, presents a wealth of opportunities alongside its unique set of challenges. Aspiring entrepreneurs and investors are encouraged to capitalize on the country's thriving tourism industry, distinct cultural offerings, robust infrastructure, and government support. By adhering to the outlined guidelines, including thorough market research, acquiring necessary licenses, defining a niche, and implementing strategic marketing initiatives, you can navigate the complexities of starting a travel agency successfully. Embrace the journey ahead with determination and innovation, and may your endeavors in the vibrant realm of travel bring forth fruitful outcomes. For further assistance or inquiries, feel free to contact us.

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2024 Korea Company Formation Guide: Navigating Legal, Tax, and Cultural Terrain

If you're exploring the possibility of establishing a company in South Korea, you're entering one of the globe's fastest-growing economies, attracting significant attention from international investors. With its advanced infrastructure, skilled workforce, and favorable business environment, South Korea offers abundant opportunities for entrepreneurs. However, navigating the intricate legal and regulatory landscape of South Korea can be daunting for foreign investors. This article serves as a comprehensive guide to setting up a business in South Korea, covering everything from company registration to tax obligations and investment incentives. Setting Up Your Business in South Korea Starting a business in South Korea begins with registering your company with the Korean government. Governed by the Korean Commercial Code and the Companies Act, this process can be completed through either the Korean Intellectual Property Office (KIPO) or the Korean Trade Register. For foreign investors considering company formation in South Korea, the following steps are essential: 1. Choosing Your Business Structure: Decide between a Limited Liability Company (LLC) or a Joint Stock Company (JSC), with LLCs popular among smaller enterprises and JSCs preferred by larger corporations. 2. Naming Your Company: Your chosen company name must be unique, written in Korean characters, and compliant with Korean laws and regulations. It should not already be registered with the KIPO. 3. Obtaining a Business Registration Number: Every company in South Korea is assigned a unique identification number. Foreign investors must submit a business registration application to either the Korean Trade Register or the KIPO. 4. Getting a Corporate Seal: A corporate seal is necessary for signing contracts and legal documents. It can be obtained from a registered seal maker in South Korea. 5. Registering for Taxes: All companies in South Korea must register for taxes with the National Tax Service (NTS), including obtaining a tax identification number and registering for value-added tax (VAT) and corporate income tax. Once your company is registered with the Korean government, you're ready to commence business operations in South Korea. Understanding Employment Regulations and Labor Laws Compliance with strict labor laws and employment regulations is vital for foreign investors involved in employee recruitment in South Korea. The primary legislative frameworks governing labor and employment matters are the Labor Standards Act and the Employment Permit System. Here are key regulations for foreign investors to consider: 1. Employment Contracts: Every employee in South Korea must have a written employment contract detailing essential terms such as job title, salary, working hours, and termination conditions. 2. Working Hours: The maximum working hours in South Korea are 52 hours per week, inclusive of overtime, with employees entitled to at least one day off per week. 3. Minimum Wage: As of 2023, the minimum wage in South Korea is KRW 9,160 per hour, and employers must pay their employees at or above this rate. 4. Employment Visas: Foreign employees need an employment visa to work in South Korea, with the employer responsible for applying for the visa on behalf of the employee. 5. Labor Unions: Labor unions are prevalent in South Korea, and employers must respect their employees' right to join a union, understanding its significance in the country's labor landscape. Tax Laws and Investment Benefits in South Korea To attract foreign investment, South Korea offers a range of tax incentives and investment advantages. Initiatives like the Foreign Investment Promotion Act (FIPA) and Free Trade Agreements (FTA) aim to bolster foreign investment. Here's a look at the tax incentives and investment benefits accessible to foreign investors: 1. Tax Incentives: These include reduced corporate income tax rates, exemptions for specific income types, and tax credits for research and development activities. 2. Investment Incentives: Foreign investors can benefit from financial support for projects, subsidies for land acquisition, and loan guarantees from government-affiliated institutions. 3. Free Trade Agreements (FTA): South Korea has FTAs with nations like the US, China, and the EU, offering reduced tariffs and trade barrier alleviation. 4. Foreign Investment Promotion Act (FIPA): FIPA streamlines administrative procedures, approval processes, and access to government support for foreign investors. 5. Special Economic Zones (SEZs): SEZs across South Korea offer tax incentives, streamlined regulations, and additional benefits to foreign investors. Understanding Business Culture in Korea Beyond legal structures, understanding Korea's business culture is crucial for foreign investors. Korea values hierarchy and collectivism, emphasizing authority and seniority. Here's how to navigate Korean business culture effectively: 1. Build Personal Connections: Invest time in developing personal relationships and understanding Korean counterparts. 2. Respect Hierarchy: Show respect for seniority and authority by addressing individuals by their job titles and using honorific language. 3. Be Patient: Business in Korea relies on trust built over time, so patience and persistence are essential. 4. Prepare for Negotiations: Thorough preparation and understanding of risks and benefits are key for successful negotiations. 5. Language Familiarity: While fluency isn't mandatory, basic Korean language skills can foster rapport and respect. Embracing these cultural nuances enhances foreign investors' effectiveness in Korea's business landscape. Conclusion This guide provides essential insights for foreign investors navigating South Korea's business landscape, covering economic opportunities, legal frameworks, taxation, and cultural considerations. Pearson & Partners offers tailored assistance for incorporation, tax accounting, and cultural insights. Contact us as you embark on your business journey in South Korea.

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