Category: start and run a business

eBriefing: “Answers to Top Questions about Business Visas in Korea”

————————————————–

Download the Following Weblog Article in PDF eBriefing Format.

————————————————–

3-8-2013 8-55-31 PMJared Muloongo–intern on KBC and job-seeker in Korea–and I are working to figure out some key information about the visa situation in Korea in order to share it with our members on KBC.

Based on the recommendation of my associate General-Secretary Yong-Moon Kim of the Gyeonggi Association of Foreign-Invested Companies, and through a couple people I worked with at InvestKorea last year to put together the KBC interview with Comissioner Hank Ahn, I was able to get in touch with the official from the Korea Immigration Service who is currently dispatched to InvestKorea to advise on visa matters for foreigners investing in Korea.

I visited his office today with a bundle of questions and the following are the answers I was able to get.

What are the visa options for foreigners who want to work in Korea in non-executive positions which are not teaching/ESL positions? (ex: E7, D8, E9, D9…)

To answer the specific visas mentioned in the question:

  • E-7: This is for foreign employees contracted with Korean companies to provide in-house services in Korea. It’s the visa best-matched to most entry-level foreigners looking for a white-collar job in Korea.
  • D-8: This visa requires a large investment by a foreigner in Korea.
  • E-9: This is the visa under which laborers from certain countries come to Korea to work in factories in Korea at low wages.
  • D-9: Foreigners who have a proven record of having achieved a certain degree of Korean exports in a trading business can be eligible for this visa.

Other visas which a foreigner might consider:

  • D-7: A foreigner who has worked for a foreign company or public agency overseas may be dispatched to Korea to work in the Korea branch or subsidiary of their employer and such person would be eligible for this visa.
  • E-1: Persons with an academic background may obtain a professorship and be sponsored by their university with the E-1 visa.
  • E-3: Foreign researchers at Korean research institutions (does not include professors) generally work under the E-3 visa.
  • E-5: Any number of foreign professionals, such as attorneys, doctors and accountants, would generally work in Korea under this visa.

What can you tell me about an E-7 visa? What are some of the requirements for this visa? 

The key point of this visa is that it’s for foreigners working in positions in Korean companies which the Korean companies have demonstrated to the satisfaction of the Korea Ministry of Justice cannot be filled suitably by Koreans. (This is the reason most former ESL teachers who have gone from the ESL visa (E-2) to a E-7 visa are still working in language-related tasks.)

What is a D-4 visa for? What kinds of interns get this visa? Is it only at investment companies?

The D-4 visa has a very specific purpose. It’s for the foreign local employees of the overseas branches and subsidiaries of Korean companies who wish to bring the foreign workers to Korea for on-the-job training. It is not a visa that can be easily issued under the sponsorship of a Korean company or otherwise to just any foreign intern.

Can you briefly explain what the E-9 visa is for? Who can apply for this visa and what are the requirements to qualify for this visa?

This visa is for foreign laborers (particularly those from Bangladesh, Pakistan, Vietnam, the Philippines, Indonesia and a few other countries) willing to work long hour in dangerous and dirty conditions for very low wages (currently about W900,000/month is average, or so I’ve heard). You don’t want this visa.

Are these visas country-dependent? For example, are they available only to citizens of certain countries and not to citizens of other countries? (Does this include African countries?) 

As I understand, the E-9 and H-2 visas are available only to persons from countries which have signed agreements with Korea for these visas. The other visas depend on finding a company or organization willing to sponsor, and which can also persuade the Department of Justice that they need the specific foreign employee and will properly take responsibility for that person. Also, as Korean companies now have to pay into four kinds of national insurance/workers compensation plans even for foreign workers, this can also be a significant burden, both in terms of costs and paperwork hassle.

How long does it take a candidate in Africa to have their visa procesed? What are some of the best places to have your visa processed quickly and efficiently?

I don’t know, but the official at InvestKorea did say that the visa issuance isn’t a country-based thing. No doubt, citizens of certain countries will have an easier time of it, but there aren’t specific regulations that would affect this.

If a company states that an individual they are hiring must get their own visa, what recommendations would you make to the individual? How can they get a visa without sponsorship?  What visas would you recommend for people coming to do business in Korea, especially if they want to invest but are below the $200,000 dollar mark?  

Certain visas are available without a company sponsorship, don’t require a ridiculously high investment or export record and allow the foreigner to work in Korea. They include the following.

  • D-10: Foreign graduates of Korean universities may be awarded this visa for 6-12 months, which allows them to stay in the country to look for work. In fact, it’s called a “Get a Job” visa. This visa does not allow the individual to work though.
  • F-2: Those who are able to jump through lots of hoops and pass the points system may be awarded an F-2 residents visa. F-2 visa-holders may work in Korea.
  • F-6: Foreigners married to a Korean get this visa and they can work too.
  • F-5: This is the visa for permanent residents who have fulfilled various long-term residence and other conditions, and these persons can work, also.
  • G-1: This catch-all visa only requires the foreigner to convince the Ministry of Justice to give it to them. It appears to be intended for special situations.
  • H-2: This visa covers a very wide range of work roles and based on this document which I downloaded from the Ministry of Government Legislation‘s website, it appears to be similar to the E-9 visa in that it helps Korean manufactures get low cost manpower. Online articles indicate that these visa-holders are only from a few countries which have signed certain agreements with Korea.

What are the process and minimum requirements for a Korean company to sponsor a foreign employee?  What conditions must the foreign employee meet in order to get a work visa? Can an individual ever sponsor the visa of another foreigner without being family? Is there a way to work legally as an intern in Korea without having one’s visa sponsored by the interning company? Are there any loopholes that would legally allow someone to work in Korea without having a business visa?

There don’t appear to be formal minimum requirements for a sponsor, but the company has to find a way to persuade the Ministry of Justice that the visa is warranted and that the company will take full responsibility for the employee. Apparently the representative of the company must take personal liability for the foreign employee.

I asked if I, as a foreigner with a non-corporation company in Korea, would be able to sponsor a foreign employee. The official said that, in theory, it’s permitted, but that it would be very hard to persuade the Ministry of Justice to award one in this case. So basically, the visa sponsorship process is just a matter of persuading the government that it’s necessary but there aren’t formal conditions; in some cases it’s easier than in others.

The only way to work legally in Korea without a sponsored work visa is to get one of the non-company-sponsored visas mentioned above.

Can you explain about the visa points system?

I found this PDF online which explains it.

What can a business visa applicant do to speed up the visa process? What professonal support services are available/helpful for getting through the visa process?

The fastest way to get through is to prepare the paperwork and submit it properly. The official told me that Korea doesn’t have attorneys specializing in immigration work; I guess there’s just not that much work to warrant it and the Korean system appears to be a little more approachable than the US immigration, which is a black box. Most visa information is available at Hi Korea. Foreigners should also be able to get free help from offices like the Seoul Global Center (which I believe has a free hotline for questions).

I asked if there was a document which explains all this in one place (including a comprehensive list) and in English and the official said there isn’t. He did give me a Korean-language print-out listing all the visas and their summaries which he said don’t exist in English, and much of the information provided in this article is based on that document, in addition to my discussions with the official.

If your visa application is rejected, can you apply for another visa type? If your visa is rejected for not having the correct documentation, can you reapply or is there a specific waiting period? 

I didn’t specifically ask these questions, but based on what I learned, I would say that the Korean system is quite flexible, with discretion for the government officials, and doesn’t automatically lock people out for set periods of time. However, if one is rejected once and then applies again without improving the application, the officials will notice the previous record and are unlikely to award the visa the second time, either.

———

Thus, in terms of recommendations for a foreign entry-level job-seeker in Korea who doesn’t have the option of ESL teaching, or other short-cuts (such as marrying a Korean), here are what I’ve come up with as options.

  • D-2 (Foreign Student) – I’ve learned that Korean universities help their students (including foreign students) get internships and jobs, and that a D-10 visa (which would be awarded after graduation) would give the graduate up to a year to find a position.
  • D-7 (Korea Dispatched Employee) – Persons working for a company or organization with operations in Korea could get transferred to Korea after a time.
  • B-2 (Tourist) – Come to Korea and look for a job through intense networking and research… and hope for the best.
Other than these, there’s the E-7 visa which can, in theory, be obtained from abroad. But without coming to Korea first, it’ll be hard to find a job and compete in the application process with others who are already in-country. In addition, the company still has to persuade the Korean Ministry of Justice that the prospective candidate brings skills/expertise that they can’t find from the tens of thousands of Korean graduates who also can’t currently find a job, and it’s really not reasonable to ask a Korean company to make this case to the Department of Justice for an entry-level job applicant whom they haven’t met before.

Korea Business Advisor (Seoul Magazine) – Supplement to the Article “Three Ways Contracts in Korea Are Different”

P1060515In my latest column for Seoul Magazine's March 2012 issue, I discuss the different perspective from which contracts in Korea are written. For more insights on Korean business practices, including contracts and other legal agreements, check out the links below.

I Was Quoted in the Korea JungAng Daily About Entrepreneurs in Korea

Here’s what I said in an article in the JungAng Daily on July 21, 2011 about foreign entrepreneurs in Korea:

“Most foreign entrepreneurs are setting up businesses that support the international community. There aren’t many who are doing business in Korean society and serving Korean consumers,” said Steven Bammel, founder and head administrator of Korea Business Central, an online community supporting expats doing business in Korea.

“Even companies investing in Korea through FDI are generally setting up operations to support the chaebol, so aside from the foreign community and chaebol, there don’t seem to be many foreign companies doing business directly with the majority of Korean consumers.”

Link to original article.

Download Expats blaze new trails in business in PDF format

This article is also featured on Korea Business Central with accompanying member discussion.

A Recap of Tom Coyner’s Exclusive Interview on Korea Business Central – “Marketing to the Korean Consumer and Advertising/PR in the Korean Market”

Author_book_03 Tom Coyner is the president of Soft Landing Consulting. He has twenty-five years of experience in Japan and Korean working for American firms, as well as seven years working for Japanese companies in the US, and he is co-chair of the American Chamber of Commerce in Korea’s SME Committee and Senior Commerical Advisor for Joowon Attorneys at Law in Seoul. Author of Doing Business in Korea, Tom is recognized as a leader in assisting foreign companies wishing to do business in Korea and his book is available online from Seoul Selection.

To listen to the interview, download the .mp3, subscribe on iTunes, read the transcript and/or discuss this interview and this topic with other members of Korea Business Central, visit the following discussion link:

https://www.koreabusinesscentral.com/forum/topics/korea-business-central-9

The full list of interviews in the Korea Business Interview Series is maintained here: https://www.koreabusinesscentral.com/page/interviews-2

 

Main Points of the Interview

Topic #1 – Understanding the Korean Consumer

  • Korean consumers can be surprisingly demanding. One reason this came about is that Korean providers used to make up for inferior service by offering exceptional follow-up service. Today, Korean quality has improved, but immediate after-sales support is still provided. Foreign companies often fail in the area of customer service.
  • To succeed in the Korean market, foreign companies need to be competitively different than local companies, and do so in a way that local companies cannot easily emulate, such as by reputation or advanced functionality or engineering.
  • Koreans in their late 20s and early 30s often havve the highest disposable income in Korea, particularly since many are getting married relatively late and still living with parents until marriage. These people are very Internet-connected and fads and fashions change very rapidly, with word-of-mouth over the Internet driving consumer trends.
  • The iPhone is a good example of a foreign product that has succeeded in Korea by being different and better. The mainstream media, headily dependent on advertising from Korean producers, predicted that the iPhone wouldn’t meet the needs of consumers in Korea. But the young, affluent demographic didn’t get its news from the mass media, but through the Internet and was ready for the iPhone
  • Korean women – often, housewives – control the family budget and their influence on family buying decisions cannot be ignored.
  • Koreans today are relatively free spenders and make buying decisions based on getting ahead – or at least, not falling behind – socially. Koreans will spend based on social pressures, at least as much as based on functionality.
  •  A key advertising theme for the Korean market is:  “This is the good life, this is what modern Korea is all about. You should participate in it like everyone else, so don’t be left behind because everyone else is moving forward.”

Topic #2 – Experiences of Foreign Companies in the Korean Market

  • A key question that determines whether a foreign companies is successful in Korea: “Does home office give the expatriates working in Korea the authority and means to adapt their products and services to the Korean market?”
  • One company that failed to answer the above question adequately was Carrefour; one that has been very successful is Tesco and their Homeplus brands, which they’ve done, in part, by posting very few expatriates in their Korea operation and relying on top local talent. This has allowed them to adapt thoroughly to the Korean market.
  •   The Korean market has, over the last 10-15 years, become very consumer driven, what Coyner refers to as “The tail wags the dog”. The days of limited consumer choice are long gone.

Topic #3 – Marketing Strategy and Market Entry in Korea

  • Korea is less risky than a number of other truly Asian markets. “Truly Asian” means those markets without a legacy of being British or American colonies.
  • Korea is a country ruled by law and the court system is reasonably consistent and fair. The probems lie with the laws themselves, which are often contradictory, but it’s not like China where contracts may be unenforceable.
  • It is relatively easy to invest in Korea, and to repatriate profits.
  • There are a lot of English-speaking business professionals and most market opportunities and resources are centralized around Seoul.
  • Korea is a good place to learn how to do business in Asia, before going into China or Japan. If you cannot succeed in Korea, you’re probably not going to succeed in China or Japan, either.
  • One challenge of business in Korea is the mindset, “Well, we don’t do this in Korea” as a catch-all for opposing a foreign approach. This retort needs to be taken with a grain of salt and not as a blanket reason not to do something different, which may in fact be an opportunity. You’ve got to do your homework in the Korean market and it takes maturity to know when to take risks in the Korean market.

Topic #4 – Advertising and PR in the Korean Market

  • The selection of advertising media depends a great deal in Korea, as elsewhere, on the product and demographic. Don’t overlook the power of Internet advertising though for many products and demographics since even Koreans in their 40s, 50s and 60s really do make purchasing decisions based on what they see on their PC screens or cell phones.
  • When selecting a local Korean advertising company, make sure your account manager isn’t just the best English-speaker person on-staff; insist on someone who’s more mature and has credentials with publishers and editors.

Closing Thoughts

  • Two reactions when people first come into the Korean market for the first time: 1) “I had no idea that Korea is so developed” and 2) “Compared to other markets, consumers are much more acctive and consuming a lot more.”

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 KoreaBusinessCentral.com.

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: 

 https://www.koreabusinesscentral.com/forum/topics/korea-business-central-8

(The full list of interviews in the Korea Business Interview Series he kept here: https://www.koreabusinesscentral.com/page/interviews-2

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 InvestKorea.org.
  • 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.

 

About the Gyeonggi Association of Foreign-Invested Companies and My Role As Advisor

Following my designation in February as a Gyeonggi Province FDI Advisor (For more information: Post #1, Post #2, Post #3), I was invited to become an advisor to the Gyeonggi Association of Foreign-Invested Companies, too. This organization, based out of Pyeongtaek in south Gyeonggi, is funded by the Gyeonggi Province government, member company dues and fee-based services. Its purpose is to provide support to the foreign-invested companies of Gyeonggi Province and it is an honor for me to serve as an advisor to the Association. 

Here is a copy of the Letter of Commission which I was awarded at the directors' meeting:

6a011279704a5b28a401348012a31d970c

The directors' meeting was held at the Ramada Plaza Hotel in Suweon but I had travelled down to Pyeongtaek a couple weeks before on March 24 in order to meet Secretary General Jake Kim at the GAFIC office to find out directly from him about the work of the Association. Here are some of the notable facts I learned in my meeting with him.

  • There are something like 800 foreign-invested companies with a presence in GyeongGi Province. Of these, roughly 1/3 are Japanese, 1/3 American and 1/3 European-invested.
  • When I asked why the GAFIC website has not been translated to English, Secretary General Kim explained to me that even though the member companies are foreign-owned, most are run by Korean management teams. 
  • Even though most member companies are managed by Koreans, there are still a number of Korean production sites which have foreign heads and the Association offers Korean lessons, Korean culture field trips and other services from time-to-time to these non-Koreans staff.
  • The Association provides services to GyeongGi Province-based foreign-invested companies regardless of their membership status with the Association. Many of these services are free and often involve interfacing with the Provincial Government bureaucracy to resolve issues unique to foreign-invested companies.
  • There are a half-dozen or so industrial complexes designated for foreign-invested companies in Gyeonggi Province and they are mostly concentrated in the southern region near Pyeongtaek, which explains why the GAFIC office is located there, too.
  • The federal and provincial governments offer a number of incentives to foreign-invested companies that set up a manufacturing presence in these designated industrial complexes. To qualify as a foreign-invested company requires foreign ownership of 10% or more (which was a lot less than I would have expected).
  • The vast majority of the foreign-invested companies in Gyeonggi Province are suppliers to the Korean chaebol, such the automobile factories of Hyundai/Kia, the LCD display production of LG and the semiconductor operations of Samsung. Very few (if any!) of these companies are selling directly to Korean consumers or non-chaebol companies.
  • I found it interesting to learn that once the US-Korea Free Trade Agreement (KORUS) is passed, Gyeonggi Province is expecting an influx of Chinese-owned companies. This is in order for them to take advantage of tariff loopholes in KORUS. Currently, there are very few, if any, Chinese companies of note in Gyeonggi Province.

The Directors' meeting which I attended on April 7 was actually three meetings in a row. I had not realized this in advance, but I learned a lot of helpful information about business in Gyeonggi Province by sitting through the entire four-hour event.

  1. The first meeting was held to sign an MOU between GAFIC and the Ramada Plaza Hotel agreeing to special rates and conditions for GAFIC members. The Ramada Plaza Hotel is the only five-star hotel in Gyeonggi Province and I got the feeling even non-members, if introduced through GAFIC (or me!), could get those discounts on a case-by-case basis.
  2. We then met with representatives of Invest KOREA, which is the agency under KOTRA charged with promoting foreign investment into Korea as a whole. Several GAFIC members were in attendance, asking for help from the Invest KOREA representatives in solving issues unique to foreign-invested companies. One of the main issues what what a foreign-invested company should do with its facilities when it wished to withdraw from Korea; if those facilities were not easily movable off of the zones designated only for foreign-invested companies, then they could not often find a buyer.
  3. Next, over a catered dinner by the hotel, the directors and advisors of GAFIC discussed ways to assist the foreign-invested companies in Korea. 
  4. Finally, we got a tour of the Ramada Plaza Hotel. (Click here for photos of the suite where Former US Vice-President Al Gore stayed last year when he attended a conference on the environment in Gyeonggi Province.)

Secretary General Kim and the GAFIC team are ready to help. If you want information about GAFIC, you can reach the team through the GAFIC website. Or if you wish to do things in a bit more Korean way, contact me and I would be glad to introduce you directly.

How I Ordered 200 English/Korean Double-Sided, Full-Color Business Cards in Korea for About $12, Including Two-Day Shipping

The following instructions are prepared so that almost anyone can order, even without being able to read or type in Korean. However, a small amount of Korean typing ability is necessary for entering the mailing address.

1. I had my designer Catalin Soreanu prepare a two-page PDF of my business card (dimensions: 92mm x 52mm) with one page in English and one in Korean.

2. I opened Internet Explorer because other browsers don't work in Korea for e-commerce.

3. I went to ecard21.co.kr.  

4. I select the following graphic that says “파일주문명함” (actual graphic may be changed later).

4-9-2010 4-07-17 AM
5. I selected these options.

4-9-2010 4-12-06 AM
6.  I then clicked this button.

4-9-2010 4-23-28 AM
7.  I filled in the next screen as follows (though when I got to the address section, I had to follow the sub-process shown below this graphic).

4-9-2010 4-31-36 AM

 7a. In the address lookup above, the following pop-up window appeared.

4-9-2010 4-30-07 AM

7b. I entered the "dong (동)" in which I live and clicked "찾기".

4-9-2010 4-30-55 AM

7c.  I got a list of choices.

4-9-2010 4-31-11 AM

I clicked the one that corresponds to where I want the cards delivered and then returned to the main form to enter the rest of my address.

8. After finishing the large form above and clicking "확인", the following screen was shown to me:

4-9-2010 4-32-16 AM
9.  I then sent the amount shown in the blue box above to the bank account shown in the red box. I was sure to send from the bank account owned by the person I indicated in the form previously (which was me). I did it online but I could have sent payment by visiting the bank.

10. At any time I can check the status of my order by clicking "배송조회" on the home page:

4-9-2010 4-50-54 AM

On the next screen, I need to click the "파일주문명함" tab to find my name in the list, along with the order status:

4-9-2010 4-51-50 AM
 

 

A Summary of Peter Underwood’s Interview on Korea Business Central

Peter Underwood, long-time business consultant in Seoul and partner at IRC, was the fifth interviewee in our Korea Business Interview Series hosted at KoreaBusinessCentral.com.

Visit https://www.koreabusinesscentral.com/forum/topics/korea-business-central-4 to listen to the interview online, download the .mp3, read the transcript AND/OR participate in the lively discussion at KoreaBusinessCentral.com.

4-8-2010 6-12-43 AM  (The full list of interviews in the Korea Business Interview Series can be found here: https://www.koreabusinesscentral.com/page/interviews-2)


Main points of the interview:

Topic #1 – Dramatic Development of the Modern Korean Economy

  • Over the last 50 years, Korea has progressed from dire poverty to become the 13th largest economy in the world.
  • Koreans used to view themselves as inferior to most of the world and lived frugally. Today they are confident in themselves and enjoy affluence. Koreans today are open and global minded.

Topic #2 – Factors of Success in the Korean Market

  • The Korean market is certainly unique and Koreans communicate with each other in a kind of “code” due to their homogeneity. Foreign companies must do their homework and learn to communicate to Koreans appropriately.
  • A key component of Korean business success is investing in relationships by mixing business with pleasure.
  • In spite of the reputation of Korea, there are more foreign companies which are successful in Korea than those that fail. These include: McDonald’s, Starbucks, Tesco, Citibank, Kimberly-Clark, Bosch, Siemens, Prudential, MetLife, ING and many others.
  • One client of IRC, Ehrlich and Balzers of Lichtenstein, launched into the Korean market at the peak of the Asian financial crisis of 1997-1998 but have still grown successfully every quarter since then and the Korean market is one of their most profitable in the world.
  • Another IRC client bought up a Korean competitor and used the Korean production base to then penetrate the Chinese market.
  • To be successful in the Korean market, one must have a long-term vision, a credible Korean partner and a compelling product or service offering.
  • Many companies that fail in the Korean market blame cultural factors when the real problem was in the execution of basic business fundamentals.

Topic #3- IRC’s Work with the US State of Georgia

  • IRC has worked with Georgia to attract Korean investment to the US and this culminated in the Kia automotive plan in Westport, Georgia, which opened last month.

Topic #4 – Challenges that Must Be Addressed in Korean Business

  • Koreans do not view contracts in the same legalistic way that Westerners do. The legal framework is often secondary to the social framework.
  • Accounting and taxation are a challenge because the Korean accounting practices different in many ways from Western ones.
  • Market barriers in Korea come in various forms. Oftentimes, this is to give Korean companies a chance to develop their own capabilities before foreign companies can enter the Korean market. As another example, data processing requirements or testing regulations may add extra costs to the products and services of foreign companies.
  • Overcoming these hurdles can often be achieved by making one’s organization look and act Korean. Sometimes getting to know and persuading the regulators can help.
  • Corruption in Korea has dropped dramatically, but has not been eliminated. Still, many foreign companies have been successful by doing business honestly (and wisely, through relationship building).

Topic #5 – Case Studies in Korean Business

  • Tesco and Carrefour both entered the Korean discount store market. Tesco teamed up with a strong Korean partner and localized their senior management; they were successful. Carrefour stuck with a French-centric team and failed.
  • The anti-US beef demonstrations in 2008 in Korea were primarily caused by a failure to manage the perception by the Korean public that they were being fed dangerous beef. The lesson here is that it is important to act and address concerns like this quickly before they get out of control. Another example is the US military’s late response to an accident which ended up in mass demonstrations in 2002; another one later was dealt with appropriately and the uproar went away quickly. We even see that Toyota made this same mistake in the US market recently.
  • US automakers have had difficulty entering the Korean market, in part because of a lack of suitable luxury brands. These are the brands wealthy Koreans (i.e. the ones willing to buy foreign cars) want to buy. Korean cars tend to have more bells and whistles than US cars and are better matched to city driving.
  • The following markets are considered sensitive and difficult for foreign companies to enter. However, it would be premature to say that in a country like Korea, which changes fast, these will remain as such indefinitely: rice, education, childcare

Topic #6 – Foreign Direct Investment into Korea

  • There was very little foreign direct investment into Korea until the Asian financial crisis of 1997-1998.
  • But the Korean government needs to change its approach to FDI to recognize benefits beyond attracting capital, such as skills, technology and employment.
  • Incentives to attract foreign investment should be offered to any company, even Korean ones, that invest.
  • Korean government funds for new strategic sectors can be a unique opportunity for non-Korean companies to crack the Korean market. However, the Korean government needs to make the market more accessible and avoid market distortions, such as channeling funds into inefficient areas.

Topic #7 – Final Advice to Foreign Companies Looking to Do Business in Korea

  • Make use of resources available, such as IRC, Korea Business Central, chambers of commerce, embassies, Korean organizations such as Invest Korea and KOTRA.
  • Foreign companies must take responsibility to fully understand the Korean market and get involved.