Before giving business guides in South Korea, you should know that South Korea has a flourishing economy, with its GDP representing 2.47 percent of the world’s economy. Are you aware of business in South Korea? South Korea has managed to be the seventh-largest importer and tenth largest exporter with almost no resources. They are one of the leading exporters in the automotive and electronics industry.
South Korea has actively taken initiatives to promote foreign businesses in the country. It provides ample opportunities for new businesses. With the booming economy, investors are also keen to set up a business in South Korea. But it is also important to have a feasible plan ready before launching a business. Due diligence is important and you should conduct it.
A Korean Law Blog states:
“The few great due diligence professionals in Korea are, typically, not found easily at the ubiquitous Korean Law Firms, because of issues of the over-delegation of tasks to subordinates and, sometimes, issues related to conflicts.”
And that’s why Korea formed the Korean Free Economic Zones.
Can a Foreigner Open a Business in South Korea?
Foreigners can start business in Korea (including the establishment of corporations). by acquiring new or existing stocks as prescribed by the Foreign Investment Promotion Act, or by establishing a domestic branch or liaison office in Korea as prescribed by the Foreign Exchange Transaction Act.
A foreign-invested company is a domestic corporation established under the Commercial Act. It is classified as either an unlimited partnership company, a limited partnership company, a limited liability company, a limited company, or a stock company. The most common types of corporations established by foreign investors are limited companies and stock companies.
What is KFEZ?
Korea has specially designed Korea Free Economic Zones or KFEZ in order to upgrade business and living environments for companies willing to invest in South Korea. It ensures the investors get maximum help and relaxation to launch their businesses smoothly.
There are eight KFEZ, and each aims to focus on specific industries. The industries are broadly classified into aviation, R&D, tourism, steel, biologics, and IT development. Some goals of the KFEZ may be common as well.
What Do You Need to Invest in KfEZ?
Three methods given by the Foreign Investment Promotion Act(FIPA) need to be followed to invest in any business in South Korea. These methods are:
- Shares in a Local Company
- A loan of 5 years or more
- Association with Non-profit Corporation
Advantages of Korea Free Economic Zones
The Korean government has spent millions of dollars on the infrastructure for the new business. Through KFEZ, investors get exemption on taxes, property taxes, and acquisition.
KFEZ makes the process of doing business in Korea easier by providing a few relaxations. Financial and site support is also provided for rents and infrastructure.
Exemption from some zoning regulations and affordable foreign exchange transfers are provided to help the investors. Each KFEZ also appoints a project manager to look after the procedure involved in the initial stages. The manager also consults investors about beneficial investment opportunities and potential investment partners.
South Korea has a rapidly growing and stable economy, which makes it ideal for investors to start a business. However, it is located in a highly militarized region and deals with a dangerous neighbor, North Korea. South Korea depends very heavily on exports and hence, might suffer when the global economy comes down.
Steps to Start a New Business in South Korea
An outsider will need a business visa to register and start a business that is physically located in South Korea. One does not need to be physically present during the registration process. A list of required documents should be provided. The embassy gives the residence permit for South Korea after all the formalities are over. International investors need to invest a minimum of 75000 Euros as an initial capital investment.
To start an investment in KFEZ, a registration process needs to be followed. If someone is investing for the first time, they need to report their foreign investment to the Korea Trade-Investment Promotion Agency (KOTRA) and revoke funds with any foreign exchange bank. The entire registration process involves numerous procedures, and an expert is needed for better guidance.
Sean Hayes is a foreign attorney and an important member of the Korean Law Faculty. Sean is the first non-Korean to have achieved this position. He is famous for his calculative solutions and honest opinions. He is a preferred choice in the advocacy sector in South Korea.
The investors need to file a registry at the court and the tax office in the same region. Business registration is also looked after by the tax office. Once these steps are over, investors need to transfer their equity funds to their company. This is done through the same foreign exchange bank and registers the company under a foreign-invested firm.
Why South Korea is a Good Place to Run Your Business?
Running your business in South Korea or the Republic of Korea has several advantages;
It is a developed country and it gives you ample opportunities for growing your business.
From the Human development index point of view, South Korea ranks 7th among the Asian countries. This is an advantage for you to start your own business in this part of the world, South Korea.
The economy of South Korea stands in the 10th position in the world by nominal GDP index. Therefore it will be much easier for you to run and grow your business in this country.
The transport and communication network of the country is extremely developed, thus you will have great benefits in developing your business here.
Which business is best in korea?
Regarding the above mentioned tips about South Korea’s situation, some of the ideas for running and starting a business in South Korea are:
- Online Shops
- App Development
- Online English Teaching
- Real Estate Agency
- Old Age Care
- Knowledge Process Outsourcing(KPO)
- Accounting Service
To Sum Up
All the factors should be taken into consideration for a business. Investors should take their time to study the market extensively before deciding. Expert guidance is essential and very helpful for new businesses in South Korea.