Korea Establishes Legal Grounds for the Commercialization of Autonomous Vehicles – A New Act for 2020

Proposed by the Chair of the Land, Infrastructure and Transport Committee on April 4, 2019, the Act on Promotion and Support of the Commercialization of Autonomous Vehicles (hereinafter as “Korean Act on Autonomous Vehicles”) aims to set forward legal grounds and a legal framework for projects of domestic and foreign companies, who focus on the development of autonomous or self-driving vehicles with the goal of the successful commercialization in Korea and abroad. The aforementioned Act shall become effective one year after promulgation. We shall update the reader when more is known. The Role of the Koran Motor Vehicle Management Act The Korean Motor Vehicle Management Act provides only general regulations about autonomous vehicles, thus, the Korean government believed a more robust regulatory framework was necessary. According to Art 2 (1-3) of the Korean Motor Vehicle Management Act an “autonomous driving motor vehicle” is “…a motor vehicle which can self operate

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Korea Focuses on Greater Control over Imported Food – Amendment to the Special Act on Imported Food Safety Control 2019

The Special Act on Imported Food Safety Control was recently amended and shall strengthen the on-site inspections of foreign establishments, which already export food to Korea, as well as those, which apply for registration of the importation of overseas food. The Amendment was proposed in early April 2019 and shall become effective upon promulgation. We expect substantially heightened risk for importers and an increase in the price of many imported goods. Major Provisions of the Korean Amendment to the Special Act on Imported Food Safety Control Food from facilities overseas, which is produced, manufactured, processed, treated, packaged and/or stored, before being imported to Korea, shall be subject to inspections initiated by the Ministry of Food and Drug Safety. In addition, overseas facilities, which intend to import livestock which are slaughtered, manufactured, processed, stored and/or milk is collected, shall also be required to be inspected upon request of the Ministry of

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Amendment to the Korean Foreign Investment Promotion Act 2019 – Investment Incentives in Korea

The Korean Foreign Investment Promotion Act (hereinafter as “FIPA”) is intended to support foreign investment in Korea by providing investment incentives to investors in the Korea market. The Korean National Assembly amended the FIPA this year. Key-facts about the Korean FIPA The Korean FIPA shall “…promote foreign investment in Korea by providing necessary support and benefit and to contribute to the sound development of the nation’s economy.” (FIPA Art. 1). FIPA may benefit foreign investors, including, individual investors, companies established in foreign jurisdictions, local companies owned by foreign companies and, also, international economic cooperative organizations. “Foreign investments” under FIPA Art. 2 “Where a foreigner holds stocks or shares […] of a Korean corporation (including a Korean corporation in the process of establishment; […]) or a company run by a national of the Republic of Korea, […], by any of the following methods in order to establish a continuous economic relationship

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Succeeding in Business in Korea

Since 1977, I have observed the rise and fall of many foreign companies in South Korea. I have witnessed the trials and tribulations as a bank employee, a high-tech salesman, a country manager and as a business consultant of foreign and Korean companies doing business in Korea . Bluntly speaking, while some foreign ventures have had some unlucky breaks, those companies that have succeeded in the Korean market have done so for good reasons.  And those who have failed have done so, largely, because of their own inadequacies and often the lack of understanding of the needs of businesses in the Korean market. Those companies who for a period “succeed” do so by largely having some kind of a monopoly in technology, a lock on a particular resource, or an overwhelming marketing advantage that makes Korean copycats look decidedly second class.  But many initially successful companies ultimately fail by not getting adequately

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Korean Act on Special Cases Concerning the Establishment and Operation of Internet Banks

In September 2018 the Korean National Assembly passed the Korean Act on Special Cases Concerning the Establishment and Operation of Internet Banks (hereinafter as “Act on Internet-Only Banks”), which is in force since January 2019. The major facial intent of the Act on Internet-Only Banks is to “…encourage innovative enterprises to enter the financial market while laying the legal framework for the convergence of information and communications technologies (ICT) with financial services, and the creation of new economic growth drivers.” One of the main impetus for the Moon Administration related to this Act was to allow individuals and companies that may have a more difficult opportunity to obtain credit to obtain credit. The foregoing is, only, intended as a brief teaser and not anything more than to provide a basic understanding of this Act. Korean Act on Special Cases Concerning the Establishment and Operation of Internet Banks 2018 “Internet Banks”

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Sean Hayes attended the Korea Business Forum

The Korean Business Forum is one of the leading private groups of senior executives in leading companies doing business in Korea. The group meets, at least, monthly to discuss major issues affecting businesses in Korea. I, highly, recommend applying for membership in the Korean Business Forum. This month’s meeting addressed issues facing the Korean economy, the new labor policy of the Moon Administration, and major reasons why Korea is still important for international businesses. Some interesting takeaways: Korea is the 11th largest economy by nominal GDP in the world. Korea is the 4th largest economy in Asia. Korea is the leading chip manufacturer and shipbuilder in the world. Korea is the 4th largest oil producer and 6th largest car maker in the world. Korea is the 6th largest exporter in the world. Korea’s household debt is one of the highest in the world. Korea ranks low in the World Competitive

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Building Systems Before JVs in Korea to Build Trust between Partners

A blog referred to me by the China Law Blog has a wonderful post on Developing Trust in China by Building Trustworthy Systems/Processes.  The same advice given in this blog post is relevant to work done in Korea, Southeast Asia, China and even the West.  We believe that the verification of the developing and implementation of these system is, often, necessary before building a joint venture relationship with a Korean company. The value of building systems is not to be underestimated in Korea.  Koreans, in most respects, are wonderful at performing tasks that are well dictated and explained. While in the West, we often appreciate more autonomy and, often, don’t strive when systems are too rigid. In the East, many strive on ordered guidance. My law firm often works with business consultants to assist client in implementing systems that reward following these systems/processes. These “systems” are, often, incorporated by reference

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Korean Feasibility Studies will Save You Money and Headaches in Korea

I have worked in projects in Korea for over a decade and I see too many investors and companies engaging in projects in Korea, without conducting an adequate or even any feasibility study. The feasibility study should be performed by an attorney in Korea with the active participation of a seasoned Korean business consultant. A business consultant, alone, is not enough. Attorneys deal in numerous projects simultaneously and sometimes have a better grasp of the market and pitfalls than business consultants, because of these experiences. Beware, however, some attorneys that only deal with transactional work are, too often, not adequately prepared to give the advice necessary to assist clients. I always work with business consultants, since they often do a great job of complementing my experience. My favorite to work with in good old Tom Coyner. Tom has been in Korea since the 1970s and this old hat has seen

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Can you Succeed in Korea without Resorting to Bribery?

Perhaps in a few warped ways, I have a bit of affection for the Foreign Corrupt Practices Act, which bars American companies from bribing officials overseas. From a nostalgic perspective, I recall when this act was made into law while I was at my first “real job” at The Chase Manhattan Bank in Seoul. The immediate reactions around me in the US business community were those of dread. We were certain that we would be put to disadvantage when competing with the locals as well as with other foreign nationalities. It turned out not to be the case. In fact, by and large we discovered the act gave us legitimate cover not to “go local” in conducting unethical and potentially sordid business practices. In time, other Western nations passed similar laws. While this clean business movement has hardly eradicated corruption, it has contributed to reducing unethical business behavior – most

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Is the Korean Market Open to Foreign Businesses by Tom Coyner

For many years, the Korean market has been synonymous with protectionism in many foreign marketers’ minds.  However, with the advent of a strong middle class and its successful struggle to gain a genuine democracy during the past two decades, many of the trade barriers have fallen. As more foreign products and services have become integrated into the Korean economy, a wider acceptance of foreign corporations has taken place. However, it would be a mistake to say this is a trend.  A number of counter factors remain — some of which are even strengthening.  Foreign companies, especially from the major countries, are regarded with mixed feelings. While high technology and advanced products are admired and coveted, they are at the same time somewhat feared by Korean businessmen who perceive the possibility of having to depend on them.  When using foreign IT products and services, Koreans sometimes feel they themselves are not

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USA Today cites The Korean Law Blog and IPG Attorney Sean Hayes on Casino Gambling Law

An article in USA Today on Casino Gambling in Korea cites The Korean Law Blog and the main author of this blog on Casino Gambling in Korea.  The article may be found at:  South Korea wants to build casino industry where all are welcome but Koreans. The article notes, in part, that: “According to the Korea Center on Gambling Problems, which was established by the government in 2012, the prevalence of gambling addiction is two-to-three times higher in Korea than in other major countries. While it’s unclear how those statistics are compiled, the notion that Koreans are uniquely susceptible to gambling addiction is a widespread social theory that informs the laws surrounding the issue.” [ABTM id=1137] (c) Sean Hayes – SJ IPG. All Rights reserved.  Do not duplicate any content on this blog without the express written permission of the author. [email protected]

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Barriers to Trade in the Korean Franchising Industry

The Office of the United States Trade Representative issues an annual report that details issues that concern the ability of United States companies to do business abroad.  One interesting component of the this report, that may concern some international franchise systems in Korea, is addressed in the report.  The 2018 National Trade Estimate Report on Foreign Trade Barriers notes under Korean Franchising that: “U.S. stakeholders have raised concerns for several years about the activities of the National Commission on Corporate Partnership, now renamed the Korea Commission on Corporate Partnership (KCCP), which imposed restrictions on the expansion of some U.S.-owned restaurant franchises and opened proceedings looking into numerous other sectors as well. The KCCP is a partially government-funded organization, created by Korea’s National Assembly with a mandate to mediate complaints of unfair or unequal competition between large and small businesses. The KCCP’s mission, according to its government appointed chairperson, is to level the

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Tax Liability of Controlling Shareholders in a Korean Company: Tax Law Updates

Under Article 39 of Korea’s Framework Act on National Taxes, unpaid taxes owed to the Korean government are enforceable against certain “ologopolistic” shareholders of respective debtor company’s shareholder.  This secondary liability of shareholders is codified within the Framework Act on National Taxation.  Article 39 of the Framework Act on National Taxes, specifically, notes that: “Where the property of a corporation is not enough to pay national taxes, additional dues and disposition fees for arrears imposed upon or to be paid by the corporation, any person who falls under any of the following as of the date on which the national tax liability is established shall have the secondary tax liability for the amount of such money shortage: Provided, That in case of an oligopolistic stockholder under subparagraph 2, his/her secondary tax liability shall be limited to the amount calculated by multiplying the amount obtained by dividing the amount of such

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Tender Offers in Korea: Conditional Offers under Korea Capital Markets Act

The Korean Capital Market Act and related regulations dictate the basics for tender offers in Korea.  The rules in Korea are, simple: 1.  If the total number of tendered shares is less than the intended number of shares to be purchased by the tender offeror, the offeror may not purchase any of the shares; and 2.  If the total number of tendered shares is more than the number that is intended to be purchased by the tender offeror, the tender offeror shall purchase the shares pro rata. The tender offeror is required to validate that it has the resources to purchase the shares. Other articles on The Korean Law Blog that may be of interest to the reader: Minority Squeeze-outs in Korea Korean M & A Basics Korean Due Diligence Check List Selling to Korea via Distributors, Agents & other Non-Direct Sales Channels Joint Venture/Partnerships in South Korea Test the

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Starting a Company in Korea: Establishing a Foreign Capital-Invested Korean Company, Branch or Liaison Office

Korea, for many business, is an excellent market to enter.  We assist numerous franchisers, tech companies, chemical companies, oil & gas companies, automotive suppliers, defense companies and basic manufacturing companies on compliance and contentious issues related to their business in Korea.  We, also, assist entrepreneurial individuals in establishing and doing business in Korea. To establish a company in Korea, there are, in short, three legal manners for a foreign company or individual to do business in the Korean Market.  A business may enter as a Foreign Capital-Invested Company (Foreign Direct Investment Company)a Branch or Liaison Office.  In most situations, the most suitable manner to enter the Korean market is via the FDI Company route in order to avail of certain favorable tax treatments, not expose the foreign entity to liability, easier remittance of profits and easier processing of visas. However, many exceptions to this general rule do exist.  The basics

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English-speaking Korean lawyers and International Lawyers at International Law Firm in Korea discussing issues of Korean Law

IPG Legal is a leading client-focused international law firm with offices in Korea that is, often, selected over the ubiquitous Korean Law Firms when success is essential and success depends on nuanced street-smart advice, proactive  and unconflicted representation. Our attorneys are, intentionally. different from the crowd.  From our retired judge partners to our junior associates, we are all trained with an intense focus on client success, lawyer proactivity, and to understand the nexus between your commercial and legal needs. Our attorneys shall never push to you useless memos, non-nuanced legal advice or get you into litigation without an honest assessment of the merits and shortcomings of the matter. We are  – intentionally different from the crowd.  Globally Experienced – Locally Connected.  We are IPG.  Korean Legal Practices Korean Antitrust, Competition & FTC Arbitration, Int’l & Domestic Korean Civil Litigation Korean Criminal Defense Korean Corporate Law & Compliance Korean Employment, Labor &

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Korea to Rule if Pokémon GO Can Be Released Nationally in Korea

Korea awaits a decision from the government that will effect the national release of the wildly-popular Pokémon GO app. We recently discussed the legal ramification in America that come with use of augmented reality games like Pokémon GO on our sister blog, The New York Law Blog.  Augmented reality games involve live direct or indirect views of a physical, real-world environment whose elements are augmented (or supplemented) by computer-generated sensory input such as sound, video, graphics or GPS data.  In the case of Pokémon GO, fictional creatures are projected onto a mobile device’s camera through the game’s app and relies on Google Maps, as part of the game’s presentation, to locate various elements of the game. Pokémon GO has yet to be released across Korea, the 4th largest gaming market in the world, because of alleged concerns for cyber security. The Ministry of Land, Infrastructure and Transport (MOLIT) is scheduled

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Starting a Business in South Korea: Top Posts from the Korean Law Blog

We write many posts on the Korean Law Blog on entering the Korean market.  However, the list is getting so large that many people have requested that we make a list of the posts that we feel are the most useful for those entering the Korean Market.  Thus, here we go.  More posts will be added to this list as they are written: Selling to Korea via Distributors, Agents & other Non-Direct Sales Channels Joint Venture/Partnerships in South Korea Test the Korean Waters and Then Hit China Protecting your Intellectual Property in Korea Korean Outsourcing: Legal Basics Tax Qualified Mergers in Korea Due Diligence in Korea New Corporate Forms in Korea Korean Labor Law Checklist for Employers The Ten Commandments of Labor Relations in Asia Please, also, take a look at the labels to the right, please search via the search box to the left and, also, click through to

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Starting a Manufacturing Business in South Korea: Top 14 Things to Know Before you Start a Business in Korea

Korea, in most cases, is a much better choice for the manufacturing of chemical, petroleum, construction equipment, complex crafted metals, specialty steel, automotive parts, semi-conductor, medical and pharmaceutical equipment and goods than China and most nations in Asia, because of Korea’s skilled work force, government incentives and increasingly transparent business practices. In many cases, manufacturing in Korea will not, in the end, be more costly than manufacturing in China, because of the increased efficiency of Korean workers and the, often, lower cost of doing business.  China is no longer cheap and China will never be easy. However, before going into any manufacturing arrangement in Korea here are the Top 14 things you need to know before investing money in Korea in a manufacturing venture or like Korean venture. The list assumes that you will have a local company as your JV partner in this manufacturing venture in Korea (you don’t

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So you Want to Start a Partnership/Joint Venture in Korea?

Business, in Korea, can be profitable and enjoyable.  However, business in Korea can, also, lead you to a jail cell and premature balding.  One key to success, in Korea, is to get the Korean joint venture structured by a professional from the start of the relationship with your joint venture partner(s).  Don’t just download a joint venture agreement or partnership agreement from the internet.  Vet your partner and, also, learn the expectations of your partner. We know you have “limited funds” (we all have limited funds -even multinationals and Donald Trump have limited funds) choosing to forgo having the deal structured by a professional and just downloading an agreement off the internet will, likely, lead to you having even less funds, less time and less hair. Do not be what my father likes to call young kids these days – knuckleheads.  I saw cases that ended up in the Prosecutor’s

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