Monthly Archive: July 2010

About the GyeongGi Province Experience

Telling the Story of GyeongGi Province

 After being appointed an official FDI advisor to GyeongGi Province by Governor Kim Moon-Soo (see photo above), one of the first things I did was set up this weblog. But coming up with original content which would also be relevant to investors was harder than I expected since various agencies within GyeongGi Province, as well as other Internet-based information sources, are already doing such an excellent job producing English-language materials about opportunities in GyeongGi. (For links to a wealth of information, check out this post or click on the links in the right and left columns of this weblog.)

Sure, investment decisions are based on data; business information is crucial in this process. But numbers without context often lack the ability to motivate or underpin a sense of excitement about what’s possible. 

6a011279704a5b28a40133ee99880a970b-800wi  I have been based out of Ansan City, GyeongGi Province (click photo at left), during my entire Korea experience (Click here for my story.) and have developed a unique perspective on what it means to live, work and study here as a non-Korean. It is the subjective side of experiencing GyeongGi to which this weblog and my work in the province focuses; thus, my goal here is to help potential investors and others doing business in GyeongGi gain insights that go beyond printed brochures, business meetings and visits to production sites. 

The posts categorized under the “GyeongGi Province Experience” are, in a sense, a commentary on some of my travels within the province. But this “travel log” takes an organic view, looking at snippets of GyeongGi Province and linking them to the greater context to which business is connected in order to tell a story which is more compelling than mere facts and figures alone.

The GyeongGi Province Experience is a Real, Customized Tour

6a011279704a5b28a4013481caeb49970c  This is also more than just a weblog series; it is the basis for a customized tour of the areas of the province on which I can guide you in person. Contact me before your next trip to Korea and if you can break way from the business meetings for one day, we’ll plan an itinerary for a small enough geographical area that we can get to it all within the constraints of your schedule. 

During your very own “GyeongGi Province Experience” tour, we will visit places and meet people to complement what I share with you about business, politics, economy, culture, history and more. In other words, we won’t just sit down around a conference table to talk about Korean business; we’ll learn and discuss the context for understanding business in GyeongGi Province as we visit significant locations together. 

Imagine standing in the middle of the Korean War battlefield at Chipyongni to discuss Korean modern history (click photo at right); or sitting with officials of the GyeongGi Provincial government to learn about the Korean political system and how it relates to business. How about lunch at a place your Korean hosts probably wouldn’t have thought to take you? Or drop in on a Buddhist temple (click photo above) that’s just down the road from North Korea… and the massive LG Display industrial complex (click photo at left)!

To really see and understand GyeongGi Province on a new level, give me a day to take you around. You’ll see why local politics, the economy and Korean history and culture influence the total investment equation of doing business here. More than that, once you get to know me, you’ll be glad that you’ve got a resource here who understands, is connected and relates to the overall picture which you see.

This is what the GyeongGi Province Experience is all about!

Overcome with Emotion From Singing the Hymn to Kim-Il Sung

7-22-2010 1-11-46 PM I'm reading Under the Loving Care of the Father Leader: North Korea and the Kim Dynasty, by Bradley K. Martin. 

Here's an account of the composition and first singing of the hymn to Kim Il-sung on his 60th birthday, as told and interpreted for Kim Jong-il's official biographers.

Apparently Kim Jong-il was in charge of arranging the birthday party for his Dad and as part of that, he commissioned lyricists and composers to spent fifteen months writing a song.

p. 256

"Many songs were written but none of them appealed to Kim Jong-il."

"With the deadline approaching, Kim Jong-il visited the composers late at night…. Despite all those sacrifices by the Great Leader, '[the composers] had not yet produced a single song that would pray for [Kim Il-sung's] long life.' Kim Jong-il continued:"

"… This song must not be a mere ballad; it should be a hymn of the entire people expressing their ardent hopes and wishes."

"Bingo! The writers 'felt inspiration'…"

"Kim Jong-il pronounced the hymn 'flawless.'"

p. 257

"[At the banquet], the performers stood to sing… but they could not, they were sobbing so hard."

"Both the conductor and the orchestra were similarly affected and everyone at the banquet gave way to tears. Dear Comrade Kim Jong-il… called in several other singers.. but the voices of these singers also faltered and the audience, who were standing up, began to join them, singing between their sobs. The whole house plunged into a whirlwind of excitement…. The sound of weeping could be heard everywhere."

Wow! I think I'd like to get a recording of that hymn…

Introduction to PR Company (Korea & Singapore)

PR I was contacted by a consulting firm in Singapore looking for a PR agency in Seoul to help with a road show for a Middle East destination. I discussed this with a colleague (and member at and he suggested I forward the inquiry to an associate of his in Hong Kong (also a member at who also works in Korea. The Hong Kong company is pursuing the opportunity.

[Photo of Soong Huh campaigning for mayor of Ansan on May 31. Mr. Huh did not win the election.] 

A Recap of Young Ham’s Exclusive Interview on Korea Business Central – “The Nuts and Bolts of Setting Up and Running a Company in Korea”

Author_yhYoung Ham is a founding and managing partner of Hanmi Accounting Corporation in Seoul, where  he leads the Global Services Division for foreign clients worldwide. He was the ninth interview in the ongoing Korea Business Interview Series at

To listen to the interview, download the .mp3, subscribe on iTunes, read the transcript and/or discuss his interview and this topic with members of Korea Business Central (you might even get a direct response from Young!), visit the following discussion link:

(The full list of interviews in the Korea Business Interview Series he kept here:

Main Points of the Interview:

Topic #1 – Current Situation Regarding Foreign Companies Entering the Korean Market

  • There are about 3,000 FDI cases reported every year in Korea and of those, about 30% involve new companies being set up in Korea.
  • There are almost 100X as many FDI investments to Korea of less than $1 million, then of $100 millions or more. But in the current economy, multinational companies are increasing their investments, while small to medium-sized ones are reducing them.
  • Approximately 2/3 of FDI cases are from Asia (mostly Japan, in terms of dollar values), with about 1/6 from the US and 1/6 from Europe (mostly Gmany and the UK).
  • By industry, manufacturing accounts (mostly electronics and machinery) for 15% of total FDI, with about 80% in the service industry (mostly wholesale and retail)
  • The key to getting special incentives or benefits in the Korea market is to have a business that improves the competitiveness of Korean industry. For example, for high tech businesses, tax incentives can run up to to five- and seven-year tax exemptions on corporate income tax, and also include free land for a factory, as well as cash grants for employment.
  • There are currently 16 complex-type foreign investment zones in Korea for attracting foreign capital to specific locations in Korea.
  • Korean tax rates and incentives compare favorably to places like Hong Kong and Singapore. And efficiency and the general environment of Korea are much superior to China.
  • The Korean government also provides help desks for foreign companies to help them with paperwork in setting up a business, as well as to help with employee training and arbitration expenses.
  • The maximum tax rate for expatriates in Korea is 16.5%.
  • Green businesses are currently the most open in Korea to foreign companies. Parts and materials industries to help Korean automakers and others source local products rather than purchase from outside, such as Japan, are also welcomed.

Topic #2 – Setting Up and Running a Company in Korea

  • The Korean Commercial Code is the law that regulates the opening and running of a company in Korea. This is supplemented by the Foreign Investment Promotion Act (FIPA), which promotes foreign direct investment.
  • Foreigners establishing a company in Korea must report the incorporation to the designated bank under FIPA for getting special incentives. Otherwise, the process of setting up a company in Korea by a foreigner is the same as for a Korean.
  • Setting up a basic corporation (capital of $45,000) involves about $700 in taxes and government fees. Using a professional incorporation service provider normally adds another $400 or so. Running costs for a virtual company come to around $3,000/year, which doesn't include office rent and employee salaries, etc.
  • KOTRA runs a help desk to provide assistance in this area; another good resource is
  • Setting up a company takes two or three days. Then reporting under FIPA adds another 2-3 days.
  • There are several types of businesses which can be set up. A liaison office isn't taxed in Korea at all, but it cannot engage in any sales. A branch is taxed only on its Korean income, whereas a subsidiary is taxes on global income because it is regarded as a global company. A subsidiary also faces double-taxation issues when remitting profits to the parent company.
  • Foreign investment is not allowed in the defense, broadcasting, nuclear energy and telecommunications businesses. Others, such as finance, asset management, construction and import of motor vehicles, require government license or permission to set up.
  • For tax reporting, payroll tax return is filed monthly, a value-added tax return is filed quarterly and a corporate income tax return is filed semi-annually.
  • The Korean accounting system is being harmonized with international standards and this takes a big burden off of companies doing business in Korea.
  • As for social insurance programs, the national pension is 9% of gross income, with half paid by the employer and half by the employee. Medical insurance is 5.6%, with the same employer/employee breakdown. Workers compensation is 1.3% (half/half), and there are also national unemployment insurance liabilities.
  • Employers can fire employees with 30-day notice with cause. Maternity leave is three months, where two months are paid by the company and one month by the government. The employee must be accepted back to the equivalent position.
  • Severance pay comes to one month full pay of severance for every year the employee worked.

Topic #3 – Success Factors in the Korean Market

  • Foreign companies must make sure to do enough preparation in market research and information gathering rather than expect to be able to do what they did back home. Otherwise, they may spend their initial capital and get discouraged before getting results.
  • According to KOTRA, the biggest success factor in Korean market entry is communication by transparent management. 
  • In terms of accounting, it is important to choose the right accounting firms to match ones needs. Certain tasks need to be done by the big four, but others can be handled much more cheaply through smaller accounting firms.