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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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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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 shareholder in the publishing industry have faced difficulties in recent years, because of fierce competition for advertisers.  Raising Dogs for Consumption.  I, actually, had a man call me about this one.  Ignoring that this may be a prohibited business for foreigners, you will, likely, have a few protestors that will

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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 are unique to Korea. Some companies are required to have a credit rating performed by a Korean rating agency.  If a company wishes to issue asset-based securities and unsecured bonds the company, in Korea, will need to apply for a credit rating via one of the Korean credit rating agencies.

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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 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 in Korea New Corporate Forms in Korea Please, also, take a look at the labels to the right and, also, click through to the other articles noted within the articles above.  We are, presently, attempting to compile are blog posts into a more usable format, however, with over 700 posts

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Establishing a Company in Korea: New Korean Corporate Forms Available under Revised Korean Code

According to the Ministry of Justice, over 95% of corporations in Korea are formed as a Chushik Hoesa, while the Korean Commercial Code (KCC), at this time, defines four different types of Korean potential business entities.  In order to allow a little more flexibility, two new business forms have been created.  The recent amendment to the Korea Commercial Code, that will be promulgated from April of 2012, introduces two new forms of Korean business entities: Hapja Johap (LLP) Yuhan Chaekim Hoesa  (LLC) We expect that more foreign investors will choose the Hapja Johap and Yuhan Chaekim Hoesa forms and few new market entrants will utilize the Yuhan Hoesa form, because of the added flexibility of the Hapja Johap. Chushik Haesa (Joint Stock Company – Co. Ltd./Corp./Ltd.) Chushik Hoesa is the only corporate entity that is allowed, at the present, to publicly issue shares.  The revision will not change this.  The vast majority of incorporators in Korea chose the

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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 under the current regulations, foreign companies have to employee more local workers in order to increase their foreign workforce, which “adds to the financial pressure to many small and medium-sized foreign companies.” We see this and other issues with Immigration that we have seen, first hand, is causing many foreign

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Do you Sell Buggy Whips? Succeeding in a Competitive Korean Market

In many ways, the 19th century continued until the outbreak of World War I. The 20th century ended with the fall of Lehman Brothers.  In confusing times such as these, it is natural for people to draw parallels as a way to understand current events surrounding us. They hope to gain some insight on an uncertain future. Here are some examples: A recent issue of BusinessWeek suggested that America of 2009 may learn from Japan of the 1990s. In Korea, journalists, businesspeople and even some economists refer to the 1997-98 Asian financial crisis as a case study from which they may forecast a future. But America is not Japan. In so many cultural and political ways, such comparisons defy making accurate projections. And the “IMF Crisis” was a regional event. It was relatively isolated from the global economy, compared to the worldwide crisis we face today. Today, several public figures

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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 of the lesser-known franchises have also succeeded.  2.  Education.  Koreans have a thirst for education that seems insatiable.  Much of the market, however, is closed to foreign competition.  3. Military Technology.  Korea is one of world’s largest purchasers of military technology.  All major players have a solid footing in Korea

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