Category: start and run a business

A few weeks ago, I was contacted by a former client asking how to market his ESL website to Korean consumers. He's tried various online approaches which haven't worked and my previous article discussed that in detail, including some concise tips at Korea Business Central)

In addition to the online aspects of his efforts, he also asked about how to connect to his market offline:

…To help my chances, I'd like to begin searching for someone in Korea who can help. This person might act as a recruiter, or even work together to launch a new online ESL business. I'm keeping a very open mind on this. So, if you think you might know anyone who'd be interested or can advise me on where to begin looking, please let me know.

Here's my answer:

As I pointed out in my previous post, the market for ESL education in Korea is big, but crowded. I don't think an online-only approach is likely to work in Korea for various reasons. I agree with your conclusion that you need someone on the ground to support you offline. I suspect that "someone" may need to be you, as I'll explain below.

The first reason you can't just market online is simply that there are so many ESL websites out there that, to get seen in your market, you've got to stand out from the crowd with a strategy that does more than just throw time and money at Google, Naver and Daum. 

But beyond that, while there may be a few lone rangers in Korea who are bypassing the offline options and are going to the Internet to resolve their English learning needs, the vast majority of Korean language learners start their search with resources closer to home.

Furthermore, the average student doesn't just call up institutes and English teachers in the local phone book; he/she goes where his/her friends are studying (for kids) or where his/her co-workers are studying (for adults). Though I'm not prepared to say with confidence that this is unique to Korea (or East Asia) because of the group-oriented culture (though this might be an aggravating factor), the normal way for someone to get into the English study track is through personal referrals (often the mothers of other students) or company directives, and usually to a local institute or teacher.

Not just that, while Koreans are certainly interested in learning English due to an internal desire to speak better, the short-term motivation is usually more down-to-earth: to get better grades at school or fulfill a career requirement. And so Korean ESL students will generally put priority on courses that take them over the shortest distance to these external goals, and once they've done that, very few have the time or energy left to also study online with a course that isn't directly linked to these immediate needs. 

Not only are you competing against other English programs geared toward pragmatic ends that enjoy an offline referral network, but you also have to contend with everything else in the average Korean student's schedule. Remember, Korean kids aren't just learning English, they also take after-school classes to learn a ridiculously long list of other subjects and by the time they reach middle school, the diligent students are often getting home from "cram school" at 10pm, 11pm or later… 

One more thing you're working against is the social benefits that kids get from going to the institute. Since they're studying so many hours during the day, the institute is an important place for spending time with friends. But an online option is presumably a one-on-one thing, or at best, a group discussion environment of people from a variety of places who don't know each other. A sizable portion of your market won't be interested in a study approach that removes the social aspects which are rooted in their existing social network. At least, I know that this has been an important factor in my kids' after-school study choices.

It seems to me, then, that you will have to get your business connected to a local network and be able to credibly present your service as an alternative (or better, complement) to local resources that help learners get better grades on their tests at school or meet career requirements at their place of employment. Considering how price inflexible Korean mothers can be when trying to get the best education for their kids, you won't be able to do this with a marketing appeal that focuses mainly on lower cost; you've got to offer quality differentiation on a variety of dimensions that your market will find important.

This will take both strategic marketing AND program development.

It will also take "boots on the ground", though I don't think it will require you to learn Korean or become an expert in the Korean culture, nor do I think you're going to find a stranger willing to recruit for you on a commission-basis. Everybody wants that; just today I received yet another request to help (wait for it…) an online ESL website get students in Korea.

One approach could be to connect to an offline service provider and complement their service without them feeling threatened by your role or being tempted to replace you. What I mean is that by offering lessons by a native-English speaker, you could plug into the teaching efforts of independent Korean teachers or small Korean institutes that are struggling just like you and would benefit from having a native English speaker on staff to supplement the grammar lessons they are giving their students. If kids at an institute are being taught English for three hours a week, you could offer to add on a 30-minute or 60-minute Skype call direct to the classroom with the kids gathered around the computer, to help them practice what they've learned. I suggest small institutes or independent teachers since large institutes and corporations are already making their own arrangements for this and won't be open to your value proposition.

At the same time, you have to figure out how to build relationships or share equity or something else that overcomes conflicts of interest, where your Korean counterparts worry you'll rip off their students after getting access or where you won't worry they'll just change Skype teachers at some point in time. Thus, you're not going to recruit these partners by email.

I suspect you're going to have to come to Korea and immerse yourself in the ESL industry (such as by teaching English) for awhile to make contacts and build relationships and experiment with approaches that work and that Koreans respond to. This knowledge of the market (and a little of the culture, which you can get up to speed on quickly and affordably with the KBC Professional Certification Program) and a lot of sweat equity on the ground is probably the only way to bootstrap your way to a successful online business.

** Visit the related discussion on Korea Business Central: "How Can I Market My Web-Based ESL Business Offline to Korean Language Learners?"

** Visit the related discussion on Korea Business Central: "How Can I Market My Business Online to Korean Consumers?"

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The Internet has opened up possibilities for new business models, and many new online businesses are sprouting up in the field of teaching English as a second language. It's not hard to understand why. Rather than fly native English speakers around the world to live in unfamiliar surroundings to teach English to locals, instructors can now connect to students over Skype and educate without travelling. It's a great way to reduce costs and avoid other cultural and logistical difficulties while delivering value to language learners the world over.

With falling barriers to entry, the field has gotten crowded though, with thousands of websites cropping up to offer these virtual/remote English lessons. Over the years, my team and I have had the privilege of translating a few of these sites to Korean so that our clients can connect to the market in Korea for ESL instruction. Unfortunately, a nice website that communicates well is only the first step, as the following message from a previous client makes clear. 

 I answered my client as follows.

It's nice to hear from you. I remember working on the Korean localization of your website and I'm glad to hear that our service met your expectations. I recall that your attitude to the localization process put quality above cost and I believe you when you say you're willing to spend the time and money to make the endeavor work. In fact, as someone who has spent a ridiculous amount of money and effort on online marketing efforts of various kinds, I have a great deal of sympathy for your situation.

You asked near the beginning of our business relationship about the value of having Korean text alongside English YouTube videos and about whether it would be effective in attracting Korean students. I just dug back into my archives and found my following reply: 

"It's a tough call, especially as you're jumping into a very competitive market. If you've got the marketing strategy in place to support the YouTube funnel, then of course, the Korean text can be an asset. If you're not sure what kind of traffic you can pull to these videos, you might put that cost off until later. I've seen more than one businessperson (myself included!) spend a lot of money to get all set up only to find that the marketing is lacking." 

In advising you, I'd like to first discuss some insights about online marketing in Korea. At this point, I should point out that I don't think this will ultimately be cost-effective for you in your business, but the following does describe a starting point for understanding how a successful campaign might be put together.

You mention that Google Adwords was a waste of money. It all depends on what niche you're in, but for ESL, I'm sure the bid prices on keywords are through the roof and too many non-converting visitors will drain your bank account quickly. The only way to make it work is to have a deep sales pipeline with an integrated range of goods and services that you're marketing effectively to those who click on your Adwords ads. Top advertisers on major keywords are prepared to lose money on the initial leads in order to harvest value over a longer period of time.

I'd be interested to know how you operated and targeted your Google advertising. Did you do it yourself? Regardless of what Google says, Adwords is not for the faint of heart, and not just because the tools are complicated (and getting more so everyday) and the underlying algorithms secret. I would even say that Google's representations of their system to novice advertisers are even misleading and incomplete. But as you may have found out, working with a competent (or even incompetent!) SEM professional is expensive, and even if your consultant does know what he/she is doing, you often won't get the level of focused and sustained attention you need to make it work. 

In fact, in your market, there are bound to be a lot of competitors, some with deep pockets (thanks to cash flow from offline, successful English institutes in Korea but without a sustainable strategy), just throwing money into the marketing effort. This makes Google rich, but leaves everyone else paying more than they should.

Furthermore, running a Google Adwords campaign in English isn't going to get you very close to your market since your potential students probably aren't doing most of their searching in English. That means your ads need to be localized, too. But since Google Adwords isn't a set-it-and-forget-it approach, you can't just get your ads translated once somewhere and then throw them up online. The ads must be constantly monitored and optimized, not just from a standard marketing perspective but also in terms of language and culture, which makes it a high-touch/high-specialization/high-cost adventure. (BTW, I've written about a surprising aspect of character limitations that applies to Korean ads on Google Adwords.)

Besides, even if you do get your online marketing program going effectively on Google in Korean for Korean consumers located in Korea, you'll then be reaching… just 10-15% of the search market. As you noted already, the movers and shakers in the Korean market are still Naver (with about 60-70% of the market) and Daum (with around 20-30%).

You said that you tried SEO for the Korean search engines, but these native Korean portals also run their own proprietary advertiser tools modeled on Google Adwords. The interfaces are in Korean and the complicated Korean government-mandated requirements make it next-to-impossible to register to advertise as a non-Korean. I tried it about a year ago on Naver just to see if I could, and I barely managed to sign up, but I still had to register as an overseas marketer since my websites are owned by my US corporation, which meant that the process had to be jury-rigged to get me through the ad approvals every time. I ultimately never did anything with it; just too much trouble. This means you would ultimately have to work with a Korean agency to get directly to Daum and Naver, and to do that, you're looking at talent of dubious competence and high cost and you won't be able to transparently monitor the process.

At any rate, if you do choose to move forward with online marketing to Korean search engine users, I would recommend the following approach which, done right, would minimize your costs and maximize your effectiveness.

Stage 1 - The online advertising interfaces of the Korean portals are primitive compared to the Google system and I don't recommend you start with them. Instead, work with an SEM provider who is qualified to advertise on Google in English and supplement this with a Korean language consultant who can localize and adjust ads as instructed by the SEM professional. Keep this up until you've got a strong campaign going that generates profitable leads and until you've exhausted the potential that Google is giving you in its 20% of the Korean search market. Be sure you have Google Analytics installed on your site and know how to use it; you'll need that both to optimize for Google, as well as for Stage 2 below.

Stage 2 – Once you've wrung out all the value from Stage 1, you're ready to attack the Korean portals. Do this by working through an SEM professional in Korea. You won't need the best expert here (good thing, because they're hard to find!); just someone who knows the nuts and bolts and has an account that is authorized to to resell advertising for foreign advertisers on the Korean portals. Make it clear that you'll be providing the optimized ads and keywords from your Google campaign and so only minor optimization within the Naver and Daum ecosystems will be required. Then feed the ads, keywords and other demographic information directly or through your Korean language consultant to the Naver/Daum seller and tell them to set it up.

Normally, advertising on the Korean portals would be a black box, since you won't have easy access to what's going on there. But because you'll have the results of your Google campaigns to benchmark against, you can simply watch carefully through Google Analytics to make sure your Korean campaigns are generating results on par with Google. As you continue to optimize your Google campaigns, you can have your Naver and Daum campaigns updated as well.

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Regarding marketing on SNS, don't bother unless you're prepared to engage in time-consuming conversation with your market. On the other hand, there are umpteen online "cafes" which you could join on Daum or Naver. These are online meeting places that bring together groups of people interested in the same topic. Some would be focused on learning English and if you were to make your presence known in these spots, such as by sharing value in the discussions, you might be able to get closer to your market. However, I haven't tried it and I don't know how practical it is because of the Korean-language interfaces. Done strategically, it could at least would get you into an under-served area away from the crowds at Facebook and Twitter. Even so, these are still vibrant online discussion forums in Korea today.

As for general search engine optimization, well, there's so much content out there now in the ESL field that I don't know how you'd ever get heard amidst everything else. Ultimately, I think you'll need to reach out to your market; not hope they find you through organic SEO. 

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** Visit the related discussion on Korea Business Central: "How Can I Market My Business Online to Korean Consumers?"

The D-8 visa has been a good visa for non-Korean investors and entrepreneurs wishing to live and work in Korea over the long-term. 

Basically, since opening a corporation in Korea had previously required W50 million in paid-in capital, non-Koreans setting up such a corporation in Korea who made the investment to set up a corporation had also been able to apply for and receive a visa to live and work in Korea over the long-term. There was a little paperwork involved, but by following the rules, the initial investment burden wasn't excessive. Furthermore, after jumping through the hoops to set things up, as long as the business remained in legal compliance, the visa continued to be renewed, even if the initial investment ended up getting spent on things like living expenses and/or the business did not actually make much money.

Unfortunately, this approach attracted "investments" from non-Koreans (primarily from other Asian countries, I'm told) who would bring in money to set up the corporation in order to get the visa to live in Korea, but without intention of actually running a profitable company. Furthermore, the W50 million bar was so low that not a lot of economic activity was generated by vibrant businesses set up with such small amounts of capital. Not just that, in 2010, the minimum capital amount in Korea for setting up a corporation (both Koreans and non-Koreans) was reduced to just W1 million, making it necessary to separate the visa and capital requirements.

The government increased the FDI required for D-8 visa eligibility to W100 million a few years ago in order to sift out investors that the government perceived were not providing adequate economic value to the nation. Along with that, by meeting the W100 million FDI threshold for the D-8 visa, a businessperson was not required to invest in a corporation; sole-proprietorships and partnerships were permitted, too.

However, things are still changing. At the end of 2012, new rules went into effect requiring all D-8 visa holders to convert their sole-proprietorships into corporations, and any new D-8 visa applications would require the corporate form of business. Perhaps an added benefit of this approach (from the government's view) was that it would be easier to monitor the viability of a business run along corporate lines, than a sole proprietorship or partnership where business and personal fund mixing makes it difficult to analyze objectively. 

Now the government is raising the minimum initial investment amount to W300 million in order to qualify for the D-8 visa, a considerably higher amount than before. As far as I know, this hasn't been announced formally, but based on my discussions with the foreigner ombudsman's office at KOTRA, it's not a rumor. I understand that the new FDI requirements will go into effect in mid-2013. Furthermore, just bringing in the W300 million won't be enough; to maintain visa eligibility, the business will be expected to achieve certain minimum business results, such as in terms of sales.

For sure, the Korean economy is one where small companies struggle and large conglomerates run the show. Some are considering that these new rules reflect a lack of interest by the government in supporting foreign small businesses. However, it seems likely to me that the government is more concerned about closing loopholes that some foreigners have been using to live in Korea under visas that don't reflect the purpose of those visas. The government's decisions are probably helped by a belief that many of these small foreign businesses are not much of a contributor to the Korean economy.

The following was extracted from a recent interview with me about how to build a business in a Korean company. 

"What resources are available on Korea Business Central to help me build a business in Korea and do business with Korean companies?"

"I’ve already mentioned the expert interviews we’ve done on Korea Business Central that discuss these key aspects; each of them is a goldmine of valuable and practical information for doing business in Korea. We have a group of experts on KBC ready to answer questions in the community, sometimes at no charge. In addition, many community discussions reference challenges and opportunities of doing business in Korea, and following and participating in these is a great way to raise one’s understanding.

In fact, there’s so much information in the community about doing business in Korea, that we’ve even made things easy by organizing it for you. There’s a page that focuses on Starting and Running a Business in Korea. Another focuses on Korean Business Savvy, and another on Korean Business Networking. Each of these pages brings together the best resources in the community, along with a lot of links to elsewhere on the web, so they should be a frequent point of reference for you in your business endeavors in Korea.

Finally, we offer high-quality professional services, including translation, business interpreting, online marketing and other one-on-one consulting services, as well as formal Korean business culture training in the form of our KBC Professional Certification Program."

Visit Korea Business Central for more information on doing business in Korea, including the full video of this interview. 

Learn more about the KBC Professional Certification Program to be more successful in your career in Korea.

The following was extracted from a recent interview with me about how to build a business in a Korean company.

"How would I go about forming a corporation and starting a business in Korea?"

"We’ve actually got an interview on Korea Business Central with Korean accountant Young Ham that explains the nuts and bolts of this very topic. Basically, fees come to around US$1,000 or so if you do it yourself, or a bit more if done through an accounting provider. Setup is just a few days and with a lot of free consulting available to foreign investors from the Korean government, it’s not all that hard.

This is just a quick overview; we’ve got full details on all of this on Korea Business Central, including links to the free resources I’ve mentioned and the interview with Mr. Ham."

 Visit Korea Business Central for more information on doing business in Korea, including the full video of this interview.

Learn more about the KBC Professional Certification Program to be more successful in your career in Korea.

The following was extracted from a recent interview with me about how to build a business in a Korean company.

"Let's say I wanted to start a company in Korea. First of all, what's in demand? What industries offer the greatest chance of success?"

"There are a few approaches you can take. A good number of non-Koreans enter the English instruction market. Others set up companies that cater to the needs of the expat community or internationally-minded Koreans.

Focusing on larger businesses, some of the best opportunities come from providing services to Korean firms, and for that, the key is usually to have globally competitive technology. I’ve worked as a consultant to the Province of Gyeonggi, which is the area that surrounds the Seoul metropolitan area, and there are nearly 1,000 foreign-invested companies in this province alone. On closer observation, it turns out that most are involved in supplying technology-related products and services to the large Korean business groups.

Finally, thanks to the rapidly increasing number of free trade agreements that Korea has signed with the US, the EU and other countries and regions, tariffs are falling in a wide range of industries. Koreans import a lot of food from overseas, as well as raw materials and these also represent opportunities for foreign companies wanting to sell in the Korean market.

We did a case study with Tom Brown, former executive at Homeplus, one of the largest retailers in Korea, and completely foreign owned, and it was fascinating to find out what had worked for them and his suggestions to other companies that are breaking into the Korean market."

Visit Korea Business Central for more information on doing business in Korea, including the full video of this interview.

Learn more about the KBC Professional Certification Program to be more successful in your career in Korea.