Weekly Business Korea – Week 48

TOPIC : Business in Korea

Hyundai set to reach the Skies with South Korea's tallest building

The Seoul City government has given the nod for constructing the long-awaited Hyundai Motor Group’s à la mode headquarters in the swanky Gangnam district. This will come up as South Korea's highest skyscraper, after its completion in 2026.

The construction of the 569-metre building will commence at the start of 2020.

Hyundai Motor Group, South Korea's second-biggest conglomerate, bought the proposed land for US$10 billion in 2014, at more than three times its market price, beating Samsung Electronics and triggering a stock sellout.

A contract was also signed between Hyundai and the Defence Ministry to address operational constraints till the building has reached 260m in height, as per an official. He also added that the construction can be halted if Hyundai is unable to do so.

The building, comprising 105 floors, will have offices, a car theme park, a hotel, a concert hall and a conference hall, as per its 2014 layout. It is slated to house 18,000 employees from 30 associates of the conglomerate.

Hyundai Motor is making efforts to bounce from its sixth successive yearly profit drops while speeding up its investments in advancing technologies. Hyundai has pledged to work together with the Seoul Metropolitan Government to continue with the project in compliance with the administrative procedures".

South Korean Economy Makes Headway with 464,000 more jobs in Q2

South Korea hit another economic landmark by adding 464,000 jobs during the second quarter of 2019 since the previous year. This was confirmed by government statistics on Thursday.

The Republic had 18.68 million salary-based jobs in the second quarter, as against 18.22 million in the previous year, in line with the figures from Statistics Korea.

A decline was seen from the initial quarter of 2019 when 503,000 jobs were generated.

The statistics agency said the economy added 162,000 jobs in the sectors of health care and social welfare and 77,000 jobs in the wholesale and retail segment.

On the contrary, the economy reduced 86,000 jobs in the construction and 5,000 jobs and manufacturing sectors, in turn.

PHL, South Korea Sign MOU on Fish Trade

South Korea and the Philippines signed a memorandum of understanding (MOU) for expansion of fisheries trade and collaboration between the two nations, as per a statement from the Department of Agriculture (DA).

The agreement was part of the agreements and contracts signed between both the nations at their last bilateral meeting in Busan, South Korea.

This is the first time that an MOU on fisheries cooperation was signed between the Philippines and South Korea.

According to the MOU, DA and MOF will engage in and encourage scientific and technical, economic, and trade collaboration in fisheries and aquaculture.

The DA declared that the MOU was all about the first agriculture cooperation that was inked in 2018 with South Korea’s Ministry of Agriculture, Food and Rural Affairs (MAFRA) at the time of the first state visit of President Duterte, to Seoul.

DA said that it is consistently cooperating with MAFRA and farming-related organizations to build new liaisons resulting in projects that will reinforce the development of agricultural and rural areas and help in making the Philippine agricultural products market accessible.

The DA also highlighted that the MOU was signed between the Agriculture Secretary, William Dar and Minister Seong-Hyeok Moon of the Korean Ministry of Oceans and Fisheries.

Dar emphasized the government’s commitment to be a participant in and add to the strength of bilateral relations with South Korea. This, according to Dar, is one of the foremost food importers of the world, with imports of approximately $30 billion in value of food, every year. Dar describes South Korea is one of the most profitable markets for Philippine agro-fisheries products.

The DA described South Korea as one of the Philippines’s rising markets for high-yield marine products and fish.

After 2016, more high-value seafood and fisheries products are being exported to Korea, and this is consistently growing at an average of almost 17 per cent, churning out an income of $28-million for the Philippines in 2018. This was communicated by the DA.

The list of key fishery exports from the Philippines to Korea include; tuna, abalone, sea cucumber, octopus, shrimps and prawns, seaweeds and carrageenan.

The MOU on fisheries cooperation was a constituent of the Philippine side sessions through the 2019 ASEAN-Republic of Korea Commemorative Summit, convened on November 25 and 26, organized as a commemoration of the 30th anniversary of the dialogue association between ASEAN and the Republic of Korea, according to the DA.

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Korea Company Formation: Navigating Joint Ventures for Success

Ensuring the prosperity of your business in Korea requires skillfully crafting a Korean joint venture, beginning from the establishment of your relationship with joint venture partner(s). Merely relying on downloaded joint venture contracts or partnership agreements from the internet is insufficient. It's vital to delve into your partner's mindset and background, understanding their specific needs. In many cases, non-Korean entities can succeed in Korea without entering a joint venture with a Korean partner. Conversely, Korean entities may not prioritize or adhere to the criteria outlined in joint venture agreements. This article offers an overview of critical aspects of joint venture agreements in the Republic of Korea, emphasizing the importance of a customized approach to ensure success in company formation. Considerations for Company Formation Before embarking on a joint venture in Korea, your consultant must meticulously address several vital aspects related to your company formation and incorporation instruments.1. Clearly define the obligations, tasks, roles, securities, and expectations of each partner.2. Establish guidelines for dispute resolution, including language and medium.3. Determine the governance hierarchy within the joint venture.4. Plan for assessment, conclusion, and potential termination of the joint venture.5. Outline recourse mechanisms for any infringement issues.6. Develop a contingency plan for unforeseen challenges.7. Evaluate the inclusion of external investors in the joint venture.8. Define the duty of care expected from each partner.9. Restrict the authority of the representative director in company formation.10. Specify the authority to hire and dismiss the representative director.11. Clearly articulate the development goals of the joint venture.12. Decide whether to maintain majority control or include minority protection clauses.13. Plan for the reinvestment of earnings generated by the joint venture.14. Consider hiring an independent accountant and employing an impartial legal auditor.15. Evaluate the anticipated benefits from the joint venture.16. Determine the financial implications associated with the joint venture. 17. Define the mission and objectives of the joint venture.18. Explore various financing options available for company formation.19. Select the appropriate business structure, such as Chushik, Yuhan, etc. This list covers essential considerations, and additional factors may apply based on the unique circumstances of your company formation in Korea. Successful Business Ventures in Korea Achieving success in joint ventures in Korea hinges on specific circumstances that carry significance for all parties involved. Several critical scenarios often lead to prosperous joint ventures: 1. Utilizing Established Channels: When the Korean party can directly access established distribution channels or logistics chains and the non-Korean party offers a compatible product, a distribution/license agreement may be preferable to a joint venture. However, careful consideration is advised to avoid potential harm to the relationship. 2. Industry Restrictions and Specialization: In industries less open to foreign involvement, such as publishing, a joint venture becomes relevant when the Korean party requires specialization or financial capital from the non-Korean side for industry success. It's crucial to acknowledge that industry-specific regulations may lead to significant financial losses, and reliance on government connections doesn't guarantee favorable outcomes. 3. Financial Constraints and Innovation: When the non-Korean party lacks funds to commercialize an innovation, and the Korean side has a new product line or manufacturing capabilities, a joint venture can facilitate collaboration. However, careful consideration is necessary, as the learning curve and collaboration requirements may be time-limited. 4. Dominance in Niche Industries: In industries with few players but high activity levels, joint ventures offer advantages like instant access to key stakeholders for the non-Korean party and access to technology for the Korean side. Often observed in joint ventures between Korean corporations (chaebols) and multinational firms, these collaborations are temporary and involve extended negotiation periods. Critical Considerations for Effective Business Ventures Several significant scenarios significantly impact joint ventures, underlining the importance of well-crafted shareholder agreements and association instruments: 1. Legal Disputes among Shareholders: Effective joint venture planning is crucial when a client, holding a small share in a company reliant on foreign investment in Korea, becomes embroiled in legal disputes with other shareholders over majority and fellow stockholders' issues. 2. Misuse of Company Profits: Situations where the majority shareholder, controlling the representative director, excessively uses company profits for personal expenses and conducts business between the company and private ventures pose challenges to equitable distributions. Meticulously crafted shareholder agreements can mitigate such risks. 3. Challenges in Finalizing Joint Ventures: Many cases witness challenges in finalizing joint ventures due to poorly designed shareholder agreements and association instruments. A well-structured shareholding approach is vital to prevent such complications. 4. Importance of Legal Counsel: Engaging a qualified attorney to draft a Korean shareholder agreement and association instruments is prudent, particularly for individuals with affluent lifestyles. Ensuring the attorney possesses expertise and tailors the approach is crucial to avoid generic agreements that may lead to conflicts. 5. Avoiding Generic Agreements: It's imperative to avoid attorneys who offer generic form agreements at low costs. Each joint venture agreement in Korea is unique, and generic forms may indicate a lack of diligence, potentially leading to conflicts. Investing in a well-crafted and tailored approach is essential for effective joint ventures. Essential Aspects in Business Ventures1. Focus, prudence, and thorough investigation;2. Restricting the authority of the representative director;3. Retaining the right to hire and dismiss the representative director;4. Safeguarding control over the company seal;5. Upholding majority control or including minority protection clauses; and6. Appointing an Independent Accountant and utilizing an impartial statutory auditor. Conclusion To conclude, the success of business endeavors in Korea, particularly through joint ventures, relies on thorough planning, understanding partner dynamics, and tailoring agreements to specific circumstances. The comprehensive considerations outlined for company formation highlight the intricate nature of the Korean business environment and the necessity for a strategic approach. The success scenarios presented illuminate specific contexts where joint ventures offer advantages, underscoring the nuanced dynamics of international collaborations. Pearson & Partners, a consulting firm specializing in facilitating expansion into Korea, is poised to assist in this intricate process. With expertise in incorporation and tax accounting services, Pearson & Partners ensures a seamless and comprehensive entry into the Korean market. Their dedication to excellence aligns with the nuanced requirements discussed, offering invaluable support for businesses navigating the complexities of joint ventures and company formation. Get in touch with us to embark on a successful journey in establishing and expanding your presence in Korea.

Expanding into the Korean market through sales on the Coupang Marketplace.

If you aim to engage in commerce with consumer goods in South Korea, understanding how to collaborate with Coupang is crucial. Additionally, it would help if you decided whether to operate domestically or internationally. If you lack a local partner in Korea, utilizing Coupang Global Marketplace presents an attractive opportunity for accessing the Korean food, beverage, and fashion market. About Korea Coupang Coupang is a South Korean e-commerce company that was founded in 2010 by Bom Kim, a Harvard Business School dropout. The company's name is derived from the Korean word "쿠팡," which means "rocket." Coupang started as a daily deals platform, similar to Amazon, offering discounted products and services to customers in South Korea. However, it quickly evolved into a full-fledged e-commerce marketplace, offering a wide range of products including electronics, fashion, beauty, groceries, and more. One of Coupang's key innovations is its logistics infrastructure, particularly its own delivery network known as "Coupang Logistics." This infrastructure includes automated warehouses, fulfillment centers, and a large fleet of delivery vehicles. Coupang's focus on improving delivery speed and reliability has been a significant factor in its success, allowing it to offer same-day and next-day delivery services to customers across South Korea. Over the years, Coupang has attracted significant investment from various sources, including SoftBank, Sequoia Capital, and BlackRock, among others. The company has used this funding to fuel its expansion and innovation efforts. In 2014, Coupang launched its "Rocket Wow" service, which offers guaranteed delivery within 24 hours for select items in certain areas. This service further solidified Coupang's reputation for fast and reliable delivery. In 2018, Coupang expanded its reach beyond South Korea by launching Coupang Global, an international shipping service that allows customers in other countries to purchase products from the Coupang platform. In 2021, Coupang made headlines with its highly anticipated initial public offering (IPO) on the New York Stock Exchange (NYSE), raising over $4 billion and becoming one of the largest IPOs by an Asian company in the United States. As of my last update in January 2022, Coupang continues to be a dominant force in the South Korean e-commerce market, known for its innovative technology, extensive product selection, and efficient logistics operations. Coupang's Distinctive Edge: Revolutionizing Logistics and Customer Experience Coupang stands out among other platforms primarily due to its exceptional logistics services and unwavering dedication to enhancing the customer experience. The founder's vision was to tackle issues such as lengthy delivery times, costly shipping with restrictions on products and cutoff times, and excessive packaging waste alongside unrestricted returns. The solution emerged as an end-to-end integrated system utilizing state-of-the-art technology to impress both customers and vendors alike. Employing a data-driven approach, Coupang ensures that customer and vendor satisfaction is consistently monitored and enhanced throughout every stage of the process, resulting in significantly improved tracking efficiency. In essence, consumers are provided with a premium purchasing experience at a reasonable cost. Rocket Wow Rocket Wow is a subscription-based service akin to Amazon Prime, priced at approximately €2 monthly. It encompasses complimentary deliveries and returns, exclusive discounts on select items, standard one-day delivery, and the added perk of receiving Rocket Fresh products (such as food and beverages) by 7 am for orders placed before midnight. Elevating Customer Experience: The Impact of Coupang's Obsession with Service Coupang's relentless dedication to enhancing the customer experience is evident through the remarkable impact on spending observed among Rocket program members. This underscores the effectiveness of prioritizing loyal customers. Korean clientele particularly appreciates the convenience and swift delivery, even on weekends and holidays. Moreover, features like Coupang Pay and the extensive use of reusable packaging, accounting for 75% of materials, contribute to the overall appeal of shopping on the platform. Food Selections Coupang boasts an extensive array of fresh produce and international cuisine sourced globally. Additionally, Coupang Eats offers convenient delivery options from a variety of restaurants. Amid the pandemic, the platform introduced live-streamed content covering cooking tutorials and entertainment, coupled with product sales. Coupang's Global Marketplace Coupang's Global Marketplace was established to meet the increasing need for premium imported goods, providing numerous benefits for both buyers and sellers. While cross-border selling can be lucrative for international brands and serve as a valuable market testing avenue, certain product categories are restricted. In the realm of "food and beverage," prohibited items include refrigerated or frozen products, alcohol, cigarettes, and medicine. Becoming a Vendor on the Global Marketplace We can assist you in registering as a global seller on Coupang through Pearson Partners Korea. Feel free to reach out to us for inquiries. Documentation A copy of your business license proof of your ID the proof of who owns your business Provide the contact person's name and phone number for verification A bank letter or statement showing your account in the same name as your business license Do you want to be a successful seller on Korea Coupang?Please refer to this article “How to Become a Successful Seller on Coupang." About the fees & payments?When it comes to selling on the Global Marketplace, the costs are quite economical compared to other Asian marketplaces like Alibaba’s T-mall, jd.com, or Shopee. The commission rates vary by category, typically falling between 4% to 11%. Additionally, there are no additional fees involved. Vendors receive their earnings from deliveries monthly and have the option to receive payments in major currencies such as GBP, EUR, or USD. Conclusion Entering the Korean market through sales on the Coupang Marketplace presents a lucrative opportunity for global sellers. With its innovative logistics infrastructure, extensive product selection, and commitment to customer satisfaction, Coupang continues to dominate the South Korean e-commerce landscape. Our consulting company, Pearson Partners Korea, is here to facilitate your registration as a global seller on Coupang and guide you through the process. As you consider this endeavor, it's important to understand the fees and payment structure, which are notably competitive and transparent. By leveraging our expertise and the resources provided in this article, you can position yourself for success in the thriving Korean e-commerce market.

South Korea's E-commerce Landscape: Innovations and Challenges

In the realm of digital commerce, South Korea stands out as a pioneering force, distinguished by its innovative strategies and swift adaptation to consumer demands. Its e-commerce landscape reflects not only technological advancement but also a consumer-driven economy that seamlessly blends tradition with modernity. Delving into this dynamic market, we uncover the driving forces behind its expansion, the distinctive behaviors of its consumers, the technological innovations shaping its trajectory, and the challenges confronting businesses entering this vibrant domain. Market Growth and Scale South Korea's e-commerce market, a powerhouse in the digital realm, boasts a formidable position as the sixth-largest globally, with annual revenues surpassing $92 billion. This market is on a trajectory of robust growth, projected to soar to approximately $389.89 billion by 2026, with a compound annual growth rate (CAGR) of 19.92%. This remarkable surge is fueled by a combination of factors, including advanced digital infrastructure, widespread internet access, and a strong consumer appetite for online transactions. Together, these elements propel the market forward, rendering it a hub for digital retail innovation and investment. Diverse Consumer Engagement Diverging from traditional e-commerce demographics, South Korea's digital marketplace showcases remarkable inclusivity, engaging a broad spectrum of consumers across all age groups. This broad appeal necessitates businesses to devise strategies tailored to resonate with diverse audiences, spanning from digitally adept youths to more mature demographics. In South Korea, the integration of e-commerce into daily life transcends generational boundaries; it permeates throughout society. This cultural shift signifies that digital shopping is not merely a convenience but a lifestyle choice embraced by individuals of all ages, reshaping the consumer landscape for online retailers. Advancement of Payment Systems and Retail Dynamics A key driver of South Korea's e-commerce triumph is its progressive approach to payment systems. Spearheaded by innovative non-bank entities like Kakao and Samsung Electronics, these systems have redefined online transactions, fueling the rise of mobile payments. Simultaneously, traditional retail experiences undergo a transformative shift. Brick-and-mortar establishments transcend mere transaction points, evolving into immersive hubs offering experiential shopping. The emergence of concept stores and pop-up shops, prioritizing engaging customer interactions, signals a paradigm shift in retail strategy. This fusion of digital payment convenience and experiential retailing is reshaping the retail sphere, establishing new standards for consumer expectations and purchasing behaviors. Obstacles for International Entrants The allure of South Korea's e-commerce landscape is undeniable, yet it presents distinctive hurdles, particularly for foreign enterprises. A significant challenge lies in navigating the intricacies of payment processing, largely due to the dominance of local credit card brands. Furthermore, foreign firms encounter regulatory and institutional complexities that can hinder market entry and operations. Successfully maneuvering through these challenges necessitates a profound comprehension of local market dynamics, regulatory frameworks, and consumer preferences. Flourishing in this market demands not only a robust business model but also the adaptability to thrive within a multifaceted and evolving ecosystem. In Summary South Korea's e-commerce arena shines as a beacon of innovation, growth, and opportunity in the digital era. It embodies expansive growth, diverse consumer engagement, pioneering payment solutions, and distinct challenges. For businesses aspiring to thrive in this dynamic milieu, a nuanced understanding of these diverse facets is indispensable. As South Korea continues to lead in digital retail innovation, its e-commerce realm remains fertile ground for both domestic and international enterprises, brimming with prospects for those equipped to navigate its dynamic landscape. Pearson & Partners - Streamlining Market Entry into Korea At Pearson & Partners, we specialize in facilitating seamless market entries into Korea. Our services encompass visa acquisition and tax accounting, tailored to navigate the intricacies of Korean business regulations. With our expertise, your business endeavors in Korea are not only compliant but also efficient. Reach out to us for personalized assistance that aligns perfectly with your unique business needs and objectives.

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