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Starting A Business In Korea

Korea Business Informational By Ahn Sehoon

Ahn Sehoon is the manager at Seoul Global Center in Korea.   The Seoul Business Agency was established to promote and develop industries in Korea.  In addition, it provides comprehensive and systematic support to SMEs(Small and Medium-sized Enterprises) located in Seoul.”   The Seoul Global Center business team is operated by the SBA, on behalf of the Seoul City Government.

Recently, Mr. Ahn spoke at one of their business meetups about starting a business in Korea.  He spoke very candidly to the audience about what it takes to successfully open a business in Korea.

I asked if he would be willing to share the insights he provided on that day for foreign startups who couldn’t attend.  The following is what he shared with the audience.

Seoul Global Center Meetup Discussion

I’m going to tell you some of the things that you know so well, but you’re overlooking. It may not be lovely to hear, but I hope you’ll think it over.

In recent years, many foreigners look for opportunities in Korea.  But the reality is it’s not as easy as you may think. There’re many regulatory requirements and cultural differences.  In addition, there are language barriers which you will face and must overcome. These things will remain the same in any country you go, correct?

Focusing on these obstacles will change nothing.  Can I share with you something that may comfort you?  Do Koreans feel comfortable in every situation when they run or start a business?  I guarantee you, almost every Korean, just like you, doesn’t know where to start, what to do, where to go and asks for help in the beginning.

Are you relieved now?  My goal is to be with you and support you with all my heart for your business in Korea.

I meet with a lot of foreigners, and the impression that I get during their business consultation is that they don’t know what they want to do, but they ask me how to start a business and want to know about the procedures.

They may think if they learn the proper procedures, this is the key to business.  Do you think your business will be successful right after you set up your business?  Can you succeed in business with only learning the procedures? I don’t think so.

People in Korea are often said to be very diligent and smart.  If you look back in history at the Korean people, you’ll see some of them were diligent and smart, and some of them weren’t.

It’s a well-known fact that the Korean economy has grown dramatically.  Since the Korean War in 1953, Korea’s GDP (Gross Domestic Product) existed at the bottom of the market.

However, in just 65 years, Korea’s GDP has risen to 12-13th in the world.  I’m a Korean citizen, and I can’t believe this country has grown so fast. When I was young, I wished for Korea to be as advanced and prosperous like the U.S. and other European countries.  Now, I think Korea has achieved this goal to some degree.

You have chosen Korea as the land of opportunity, so grab the opportunity and work diligently and smart.

Seoul Global Center Startup Business School Class
Ceremony of the 2nd Start-up Business School in 2018.

Here are three tips to assist foreign startups in Korea.

First, learn the language!

If you become fluent in Korean, I think it’s equivalent to earning at least tens of millions of won a year in a potential income perspective.  The better you communicate in Korean, the more chances you will have. If you are good at speaking, you can find information on the Internet quickly, correct?

There will be fewer worries to be defrauded and fewer mistakes or miscommunication. But more than that, it’s easier to find Korean partners in business relationships and build trust. You will understand the culture and people better by learning Korean.

As you may have noticed, there is a concept called ‘we, 우리’ in Korea. It’s hard to get into an organization or a group, but once accepted into the group, you’ll gain unlimited trust and support.  I hope you learn Korean and respect Korean culture. To be honest, I know there are some people who can speak Korean better than me. I have to learn Korean harder.

Oh, and I admit there will be others who ignore you, or who are rude or want to use you while staying in Korea.  Try to avoid these types of people who I believe are originally bad people. I hope you don’t think that some of these people represent Korea, but look for opportunities to interact with good people.

Second, do your research!

It doesn’t matter if a big company wants to expand its business in Korea.  Because they hire a Korean employee for the research. But it does matter to a small business startup like yourself.

Your main interest can’t only be about business procedures such as ‘How to start a company, how to open a restaurant, how to import and export.’  I’m sure some of you are thinking about doing business just as I mentioned. But have you decided which items to sell? And did you do the market research?

Eight out of ten people come to us without thinking their business idea through, and people with this kind of inquiry never do business.  Even if a business is able to open, it becomes dishonest and closes. This is the worst case. You make money by reducing unnecessary expenses, yet you’re not in compliance with Korea’s business requirements.

This is not to discourage you.

Everyone seems to have an illusion that they will be successful when he or she starts a business.  Even Korean people are forced to close their business! So, you should prepare to face difficulties in your business rather than the possibility of success.

Survey your products/services, do market research and thorough analysis are mandatory for building a successful business.  It won’t be too late to check the procedure later. Some of you may not be familiar with chopsticks, 젓가락. But would you go hungry because you don’t know how to use chopsticks?  Or would you learn how to use them to eat the delicious food in front of you? The same goes for business.

Also, many of you want to meet foreigners who are successful in Korea.  You might be doubtful if they exist in Korea. But there are foreigners in Korea who are successful.  Of course, there is. But the rich don’t reveal that they are rich. They don’t want to let you know their strategy.  That’s their weapon! That’s why you can hardly find any information about them.

Third, investment, funding, etc.

Many foreigners ask us questions like: How can I get financial help or support from the Korean government?

Yes, you can get support if you have a very special and unique business which will produce lots of employment or contribute greatly to Korea.  But to be honest, it’s not easy even in this situation.

10 out of 10 people ask if there is support from the government level.  They don’t ask about loans, but for funding. I’d like to ask people why do you think this way?  Why should the Korean government support you financially? Because you are a foreigner? I’m telling you, it’s not going to happen, and you should never expect it.  The Korean government is not a treasure chest.

Another question I get asked: then, does the Korean government give special benefits to Koreans?  Of course, there are benefits Korea provides to Koreans. Is it because they are Korean? Nope.

The reason is that Koreans are doing business in Korea and paying taxes to the Korean government.  The government expects Korean small businessmen to make more money and pay taxes in the future. Also, because Koreans build credit by bank transactions in Korea and provide collateral property for the loan.  Can a Korean who has a low credit rating and no collateral borrow money from the bank? No.

If you were a bank, are you going to invest in a business which products are not very good?  It’s not because you’re a foreigner, but because you don’t have credit or collateral. Investors look for high return investment opportunities.  It’s like good food if your food smells good people will come. If your ideas and products are good, people will invest in your idea.

I hope this information has been meaningful and useful.

Good luck in your business endeavors and daily living.

About the Author:

Ahn, Sehoon is the Manager at Seoul Global Center, Seoul Business Agency in South Korea.  He majored in Business Management and has worked for SBA since 2002.  With ten years of experience in Marketing in the Fashion Industry and Game/Character in the Animation Industry, etc.  He has over five years of experience in supporting and providing consulting on the Business Environment in Korea, Start-up business School, and Idea Audition for the Start-up Visa.

Visit the Seoul Business Agency website for more information on their organization and programs.

Seoul Global Center
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Written by: Ahn Sehoon

Edited by: Erica Dozier

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