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

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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

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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

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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

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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

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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

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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

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Five Businesses to Avoid in Korea

We get a number of hare-brained foreigners that have requested advice on the opening of some peculiar businesses.  Here are a few businesses that we do not advise opening in Korea.  Farming. Prohibited for foreigners and foreign companies.  For example, the growing of rice and barley is prohibited for foreigners.  The farmers don’t even want to be in this business.  Stay away. Publishing & Broadcasting.  Prohibited for foreigners to own 50% or more of a publishing company and totally prohibited in the case of radio & TV.  The industry is, also, saturated and the few foreigners operating as a minority

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Credit Rating Agencies in Korea: Due Diligence of Your Supplier, Franchisee, Joint Venture Partner & Distributors

Korea has established four credit rating agencies.  The four agencies are: National Information & Credit Evaluation (NICE); Korea Investor Services (KIS); Korea Ratings (KR); and Seoul Credit Rating & Information (SCRI). Some reports provided by these rating agencies are provided in English.  However, many of the English reports are not complete.  Thus, it is advisable to make sure if you have an English version of a report that it is same as the Korean version of the report. Additionally, it is best to have someone with knowledge of the Korean business climate review the reports, since some clues to issues

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Establishing a Manufacturing Business in South Korea: Top 14 Things to Know Before you Go

Korea, in most cases, is a much better choice for the manufacturing of chemical, petroleum, construction equipment, complex crafted metals, specialty steel, automotive, 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

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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

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Starting a Business in South Korea

We wrote many posts on this 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. 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

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Korean Immigration Law’s 20% Rule Challenged

Increased direct foreign investment to Korea is, facially, Park Gun Hye’s Administration’s top priority. However, according to the Korea Herald, it seems like the Korean bureaucracy is not following the Park Administration. The Korea Herald reported that foreign companies have increased complainants about the current Korean immigration law as exemplified in at a government-organized forum in Seoul last week.   The complaints have come, in part, because “[u]nder Korean immigration regulations, companies are allowed to employ a workforce with up to 20 percent of their employees being foreign semi-professionals or skilled laborers on an E-7 visa.” Some participants argued that

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Business Opportunities in Korea for Entertainment Companies

I just read a blog post by my friends over at the China Law Blog that motivated me to write the following post.  Korea is an excellent testing ground to determine the feasibility of your business for other Asian markets such as China or Japan.  The country has, also, proven more profitable, for many businesses, than the often too hard to catch “Chinese Middle Class.” The following is a list of some industries that are successful in Korea: 1.  Franchises.  The franchise market in Korea is booming.  All major players are in Korea and most are doing very well.  Many

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Negotiating a Joint Venture Agreement in Korea: Shareholder Agreements in Korea

We recently had a client with a myriad of joint venture issues.  The issues were caused, primarily, because of the joint venture agreement being drafted, only, in English without a review my client or a competent lawyer and most of the negotiations occuring through a translator.   For example, the American company believed that the joint venture agreement mandated that all disputes were to be handled via arbitration in Hong Kong.  The American company SEVP noted this to the interpreter as non-negotiable.  The agreement was drafted in Korean and the American SEVP never reviewed the joint venture agreement in anything but

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Distribution 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. agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea. We see too many issues that could have been easily resolved by a carefully

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12 New Items Prohibited from Export from Korea by Overflow of Core National Technology Law of Korea

The following is the list of the 12 new items that have been newly prohibited from export from Korea without an export license/acceptance of report of export from the Ministry of Knowledge Technology of Korea.  The export prohibition was implemented by the Overflow of Core National Technology Law of Korea.   The prohibition takes affect from the beginning of 2011. Electric /ElectronicProducts Foundry process & device technologies of less than 31 nms. Design/process/manufacturing technologies of AMOLED panels (except for module assembly process technology). Design technologies of lithium secondary batteries with high-energy density (200Wh/Kg or more)  & high-temperature safety for electric cars.

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Nine Musts for a Succesful License Agreement in Korea

License Agreements in Korea are too often, simply, a spinning of license agreements used in the West.  Your foreign license agreement, in most cases, is not adequate for your needs in Korea.  Our 9 Musts before Engaging in a License Arrangement in Korea 1.  Due Diligence Say it three times and read my posts:  Doing Business in Korea:  Due Diligence, Agreements, Attorneys and Street Smarts 2.  Royalty Clause  Include in your license agreement a royalty clause.  The clause should detail, at a minimum:  Currency conversion rate or payment in the currency of your home nation  Payment terms  Accounting and audit

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Finding a Korean Distributor: Top 10 Things to Know Before you Jump into Bed with an Agent in Korea

Too often we deal with clients looking to collect on unpaid invoices to distributors/customers in Korea and resolve IP and other disputes between these distributors/customers because of clients rushing into relationships without vetting out the anticipated distributor or having a very poorly drafted distribution agreement.  Many distributors in Korea are fantastic, while, others are nothing more than order processors -they, simply can’t or don’t want to sell.   Additionally, in these tough economic times, too many companies, in Korea, are struggling to stay afloat.  If your distributor doesn’t know the market, you will find yourself with unpaid invoices from customers and

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Is K-Pop Sustainable? Tom Coyner by IPG’s Senior Adviser

For the past five years I have monitored with detached interest how Hallyu, or the Korean Wave has grown from a local pop phenomenon into an international trend. There is no denying it. The Korean Wave is huge. But by living in Korea, one could easily get the impression that the Korean Wave has taken the entire planet by storm and there is no telling where Korean culture will make its next global impact. But is this really the case? I know as a fact there is creative team in a major Korean tourism bureaucracy that is divided into two

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