First-generation Korean e-commerce enterprises are currently working to integrate recently acquired businesses and create new business prospects in the fiercely competitive E-commerce market of Korea. Last month, Korea Center, the owner of Enuri.com, the nation’s oldest online shopping mall and Danawa, another local e-commerce business, merged. In order to increase their ability to compete in the market, the two businesses intend to operate their e-commerce platforms independently while eventually building an integrated system forthe analysis of online shopping data. The
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Opportunities in the K-Beauty Export/Import Business
The Success of K- Beauty Exports and The Impact on Economy One of the top 10 beauty markets in the world, South Korea is renowned for its inventiveness, gentle ingredients, and attractive packaging. Due to the effects of COVID-19, the market size was projected to be $6.8 billion in 2020, a considerable decrease from the $9.4 billion it was the previous year. The total export of K-beauty products and the balance of trade have improved by about 16% and 14%
Continue readingThe Ten Commandments of Labor Relations in South Korea: Korean Human Resources Basics
Korea has one of the most capricious and least efficient labor forces in the world (which the exception of a few industries) and China is catching up with Korea very fast. Vietnam, Cambodia, Laos, Malaysia, Indonesia and the Philippines will soon follow. The fault is not only on the employees, but on the employers. Korean companies have departed for greener fields in China to discover that the fields are not as green as originally imagined. Many of these same companies,
Continue readingStarting 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,
Continue readingDistribution Agreement in Korea: Factors to Always Keep in Mind
Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor. We see too many distribution agreements that are mere spun U.S. distribution or agent agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced
Continue readingHow to Invest in Korean Free Economic Zones (KFEZs): Korean Market Entry
Korean Free Economic Zones (KFEZs) are specially designated areas designed to improve the business and living environments for foreign firms looking to invest in Korea. In 2003, Korea’s very first KFEZ was launched in Incheon following the passing of the adoption of the “Act on Designation and Management of the Free Economic Zones.” Since then an additional seven have begun operation, bringing the grand total of KFEZs in Korea to eight. Companies with business in KFEZs are eligible for tax
Continue readingKorean Smart City Opportunities for Foreign and Domestic Companies Doing Business in Korea
The Korean government’s “2020 Smart Challenge” is officially rolling out with the Act on the Promotion of Smart City Development and Industry of Korea. The Act is coming into effect on Feb. 27, 2020. The Korean government is, specifically, launching three separate projects called: Korean City Challenge Open to large, SMEs and startup companies. Intended to encourage creative and technological solutions to problems in cities. Smart-mobility may be a large focus of the governments initiative. Korean Town Challenge Open to
Continue readingExclusion of Japan from Export/Import White List
South Korea is on track toward barring Japan from its export control white list this month, in a blow for blow reaction to Tokyo’s prior choice to expel Seoul from its favored nation trading regime. On July 1, 2019 the Japanese government restricted the export to Korea of three classes of materials: fluorinated polyimide, photoresist and hydrogen fluoride. These chemicals are utilized in important export-driven manufacturing operations in Korea. Seemingly, the restriction is in reaction to a Korean Supreme Court
Continue readingKorea 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
Continue readingKorea 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
Continue readingAmendment 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
Continue readingSucceeding 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
Continue readingKorean 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.”
Continue readingSean 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
Continue readingBuilding 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
Continue readingKorean 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
Continue readingCan 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
Continue readingIs 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.
Continue readingUSA 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
Continue readingBarriers 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
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