Travel Reference
In-Depth Information
sonal relationships count for even more here than they do in the Western business world,
and since banks and many firms will shy away from dealing with a start-up, having a few
locals prepared to advocate on your behalf often proves crucial in getting a business off the
ground. Established businesspeople therefore recommend entrepreneurs put in some leg-
work to meet and develop ties with South Korean professionals and companies in their
chosen field. Chambers of commerce and industry associations serve as a good starting
point for this sort of socializing, as do churches, alumni associations, and sports clubs.
There are relatively few restrictions on starting a business in South Korea, and foreign na-
tionals are free to set up and fully own companies in all but a few restricted or semi-restric-
ted sectors such as defense technology, agriculture, and publishing—provided they've got
the cash.
After a couple of years of the government hiking minimums and closing loopholes, to
set up a foreign-owned company, or a local branch of a foreign firm, now requires a min-
imum initial investment of 100 million won. This investment allows you to fast-track the
company registration process through Invest Korea (
www.investkorea.org
), the government
support agency for foreign investors, and should enable you to receive a visa to live and
work in South Korea through your new corporation. The 100 million won doesn't have to
sit in a bank account for a designated amount of time; you're free to make use of it as soon
as the start-up process is complete, but you must provide documentation showing it was
brought into the country from elsewhere. Foreign-invested companies and foreign employ-
ees of those companies are often eligible for significant tax and other perks, particularly
if they're bringing in large amounts of capital, setting up in “disadvantaged” areas (i.e.,
outside of Seoul), or operating in industries the government is targeting for development,
such as clean technology. Newly established companies can take the form of private busi-
nesses—basically one-person operations—or full corporations. The latter carry more paper-
work and reporting requirements but have an easier time getting financing.
Foreign investment visas are reviewed on a regular basis and may be denied if the au-
thorities see the firm as nonviable—consistently declaring losses or failing to pay taxes are
among the things that will raise red flags. By contrast firms that are perceived to be contrib-
uting to the country, by for example employing large numbers of locals, can expect a very
easy time of it.
If you can't or won't make the 100 million won investment needed to start up a firm
the standard way, things get trickier and more ambiguous. Other possibilities include regis-
