South Korea, the fourth largest economy in Asia, is famous in the world for its export of electronics, automobiles, machinery, and robotics. In the past two decades, South Korea has progressed to be among the top 20 economies of the world. It is highly developed in terms of infrastructure, housing facilities, technology and standard of living. For a larger part of the two decades, South Korea was a closed frontier as far as foreign investments are concerned. Recent changes in policies have seen South Korea opening up its economy to foreign investments. High-end gadgets, superior technology cars, and machines rank highest among the exports in Korean list.
A business opportunity in South Korea can be exciting as well as challenging at the same time. South Korea offers its business partners a plethora of options to explore. Being a leader in technology, you can partner with a South Korean company to provide with technological know-how required. The Korean business directory will provide a list of companies that you can strike a deal with. Businessmen are enamored with the business opportunities that are available in South Korea; however, you need to tread a bit carefully for a successful business setup. The Foreign Investment Promotion Act is aimed at getting more businessmen and companies to invest in South Korea. The Act provides benefits like subsidies, tax benefits and financial support as well.
How to Set up a Business in South Korea?
Any individual or company looking to set up business in South Korea has to procure either
1) D-8 Visa (Corporate Investment)
2) F-5 Visa (Permanent Residence )
3) F-6 Visa (Marriage Immigration)
You can either set up a Private business or Corporate business.
Legal Formalities: As per the Foreign Investment Promotion Act, there are a number of formalities that have to be completed. All information can be found on the government website. South Koreans are quite precise with their procedures and websites give all the information to potential businessmen.
Know your market: Before registering your business, you need to have a good research done about where exactly you want to invest. You can either partner with a firm in South Korea to import their products and services or start a business that will sell your products in their market. If you decide on partnering with a South Korean company to import their products, then searching for a list of companies in South Korea will help you. You can then shortlist the ones that you want to conduct business with and go ahead with your deal. It is better to deal with 3-4 suppliers so that you can increase your product range. Be rest assured that South Koreans are the masters of producing quality products. If you want to set up a business where you would be selling your products in South Korea, then carry off an extensive research. South Koreans are high spending individuals, obsessed with quality. Hence you need to make sure that whatever your product may be, it has to excel in quality. Do not try and influx products that the South Koreans are already a master at. For Eg, Mobiles and automobiles are manufactured in Korean which is at the top the of range. There is no point in introducing a second string of these products as there is no market for them.
Things to consider while doing business in South Korea-
- South Koreans take the development of the country quite seriously. Every elected president announces a five-year vision which the entire country whole-heartedly supports. The major companies in South Korea try and contribute to this vision. South Koreans will love and respect those companies/businessmen who also contribute to this vision in some way.
- Another major aspect of doing business in South Korea is to understand their business ethics. South Koreans invest a lot in personal relationships which forms the basis of business relationships as well. Hence start investing in your contacts. This does not mean monetary investment but getting to know them personally, inviting for dinners and get together etc. Also, South Koreans give a lot of importance to age and rank. Try to emulate the same ethics in your dealings as well.
- South Korea has one of the highest levels of education in the world. South Koreans lay a lot of emphasis on completing their education. Hence you should keep in mind that the concept of low wages is not there in South Korea. The main advantage of investing in South Korea is having a highly talented workforce at your disposal. South Koreans are highly efficient with a desire to succeed in all endeavors. This could mean that they will give their 100% towards work and try to achieve the goals and vision you have set for your company. In the same vein, South Koreans are extremely attached to their organizations with a majority of them working for long years in the same company. In case you are looking for experienced staff for your company you may face some difficulties in the hiring process.
- The level of competition in South Korea is extremely high. The local companies compete not only amongst themselves but also with the foreign entrants. Therefore you need to be fully prepared to counter them. If you seek the South Korean companies list you will know that a number of international brands have failed to make a mark in the South Korean market due to stiff competition.
- Lastly, you need to hire quality interpreter as soon as possible. English is widely spoken and understood by a majority of Koreans but the main language is Korean. You may find it tough to find clients for your company if you do not know the language. South Koreans though open to international companies still prefer to deal with homegrown companies a lot more. Majority of the deals are dependent on interpersonal relationships and hence right contacts and knowledge of Korean language are seen as requisites for foreign business entrants.