In the past few years, South Korea has emerged as a lucrative Asian destination for a lot of foreign investors and companies. As per the World Bank’s Ease of Doing Business Index, Korea was number five in 2019. Furthermore, by nominal GDP, the country has the fourth-largest economy in Asia and the tenth-largest in the world.
However, scaling a growing business entails making a lot of big and small decisions, out of which, where to expand next is probably the first and biggest one.
As such, in the third episode of the Market Access Series in partnership with Globalization Partners, we explore why and how you should expand your business to South Korea. Featuring Bonhi Gu, Director of Invest SEOUL; Jung-hee Ryu, Partner and CEO of FuturePlay; and Charles Ferguson, General Manager – Asia Pacific of Globalization Partners; the panel is moderated by Dennis Poh, Founder and CEO of Legatcy.
Home to Samsung and Hyundai, to BTS and YG, Korea is a globalised business haven
Bonhi from SEOUL opened the discussion by making a case for Korea, stating that the country is an innovation leader. And, he is not wrong. Did you know that according to the Bloomberg Innovation Index, South Korea held the title of the most innovative country for six years until 2020 when Germany claimed the top spot only to jump back to number one in 2021?
Home to 50 million people and resting between two Asian giants, China and Japan, South Korea is often overshadowed as a business destination but it is important to remember that the country has a sophisticated and affluent populace, world-leading infrastructure, and a plethora of business opportunities.
Also read: Looking to expand your business? Head down to the Philippines!
Bonhi explained that Korea has an extremely modern infrastructure and an internet-savvy population. As per Statista, around 92.7 per cent of South Koreans owned a smartphone in 2021, up from around 21.9 per cent in 2011.
Jung-hee from Future Play believes that Korea has a very unique position among Asian countries being home to the likes of Samsung and Hyundai. He further stated that Korea also has a unique cultural aspect with global phenomenons like BTS and YG as well as a rich heritage that has infiltrated virtually every aspect of global pop culture. This ensures a very globalised ecosystem for any business setting up offices in the country. South Korea also benefits from its strategic location, acting as a bridge between Southeast Asian markets and giants like China and Japan.
Ferguson from Globalization Partners shared that Korea is at an inflexion point today and that over 70 per cent of global corporations come to Korea for some sort of collaboration, be it for marketing, hardware, or software.
Challenges and opportunities for startups expanding to Korea
Obviously, there are certain challenges for which any business expanding to Korea or any new country for that matter, needs to be ready. There can be language and cultural barriers that might slow down or even obstruct business growth. Advising startups on overcoming these challenges, Ferguson shared a lesson he learnt in business school: “Proper preparation prevents poor performance”. He emphasised the significance and value of localisation.
The panel also encouraged business owners to start networking before they actually plan to roll out the expansion. Reaching out to local players and key stakeholders and leveraging virtual networking platforms to gain a better understanding of the local scene can help eliminate a lot of these challenges.
Korea can be an excellent destination to test products and launch new solutions. With 23 million people living in Seoul and its neighbouring province (Seoul Capital Area), the region’s population density hits 8,940 per square mile. This means people live in close communities and are thus more engaged with each other. By comparison, in global cities like New York, 1,127 people live per square mile; Shanghai records 1,406 per square mile.
Also read: Challenges and opportunities for startups expanding to Thailand
With all of these factors, it’s certainly a ready market. Korea ranks second in the World ICT Development Index (ITU). Furthermore, Korea has a highly educated talent pool with Seoul alone housing 32 universities, which take 20% of the total students in the country.
Bonhi shared that more than 70 per cent of Korean people ranging between 25-35 years have a tertiary degree, which means that most of the talent pool can leverage their specific skills and knowledge and contribute to business growth. He also added that over 35 per cent of the population have a Master’s degree or PhD.
If you are looking to leverage the burgeoning business ecosystem in Korea as well as the highly competitive talent pool, get some boots on the ground, be open to collaborations, and get ready to launch!
To learn more, view the webinar here.
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This article is produced by the e27 team, sponsored by Globalization Partners
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