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ABCDAVE
Joined: 14 Jan 2006
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 Posted: Fri Jun 22, 2007 9:59 pm Post subject: Opening a business in Korea |
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Might any of you have some experience opening a small business in Korea? Specifically, creating a branch of an American born company?
Any and all relative info would be helpful. |
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ttompatz
Joined: 05 Sep 2005
Location: Kwangju, South Korea
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| Posted: Fri Jun 22, 2007 11:23 pm Post subject: Re: Opening a business in Korea |
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| ABCDAVE wrote: |
Might any of you have some experience opening a small business in Korea? Specifically, creating a branch of an American born company?
Any and all relative info would be helpful. |
You need a minimum investment of 50 million won to get a visa.
If you are on an F-2/5 visa then a list of resources can be found here:
http://forums.eslcafe.com/korea/viewtopic.php?t=88509&highlight=business
You are aware that many American franshise operations do NOT function well here. There are a few success stories but not many and the road is littered with the rest.
A solid business plan is necessary or you can probably expect, unless you are very lucky, to kiss your investment goodbye.
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ABCDAVE
Joined: 14 Jan 2006
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| Posted: Sun Jun 24, 2007 9:18 pm Post subject: |
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Would the buying of a building/land/property go towards the 50 million won investment you are speaking of?
Also, what would you say the primary reason is for the poor functionality of other American franchises? Is it their choice of products, timing, or just plain blindness to the desires of Korean buyers?
If you know of any ventures specifically that failed, could you fill me in?
Thanks a lot for the site, as well as your advice. |
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ttompatz
Joined: 05 Sep 2005
Location: Kwangju, South Korea
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| Posted: Mon Jun 25, 2007 1:32 am Post subject: |
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| ABCDAVE wrote: |
Would the buying of a building/land/property go towards the 50 million won investment you are speaking of?
Also, what would you say the primary reason is for the poor functionality of other American franchises? Is it their choice of products, timing, or just plain blindness to the desires of Korean buyers?
If you know of any ventures specifically that failed, could you fill me in?
Thanks a lot for the site, as well as your advice. |
re: land and property - I don't know specifically but I suspect that it would qualify.
Why did they fail: yes, yes, and yes.
Some of the franchise ones that come quickly to mind are Dairy queen and A & W. There were others that I remember being here and are gone now.
Wallmart was one of the globally large players that didn't/couldn't adapt (bought out by E-mart) and Carrefour (now homever) is also on the list.
Those (franchise and global players) that made significant changes and survived include McD's (bulgogi burger anyone?), KFC, IGA, 7-11, Costco, and some that partnered up include shopping giant Tesco (with samsung to form home-plus). |
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pkang0202
Joined: 09 Mar 2007
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| Posted: Mon Jun 25, 2007 1:55 am Post subject: |
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One of the keys to success in Korea is doing your market research into the buyer behavior of the Koreans. Walmart is a perfect example of a company that didn't do its research when coming here.
Aesthetics and looks are extremely important. Also, look at your competitors. Koreans are nationalistic and are loyal to domestic brands. If the franchise you are trying to open is already dominated by a Korean competitor you should scratch that idea.
A LOT of foreign franchises fail here. Mainly its do to the barriers to entry than anything else. A ton of domestic businesses never make it either. Look on a typical street in Korea. Chances are, there is at least one location that is having a grand opening because the people before them had to shut down.
I don't want to discourage you. I just to emphasize the research you have to do. Do an extremely detailed SWOT analysis. Study your market. Go to similiar businesses and spend hours there observing the customers. What do they do? What do they look at? How do the make their decision to buy? etc... |
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Drew345
Joined: 24 May 2005
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| Posted: Mon Jun 25, 2007 3:00 am Post subject: |
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I asked at imigration if the purchasing of an apartment counts toward the 50 million won "investment" for an investment visa. My question was clearly understood and the very clear answer was "No". A not so clear explanation went on about how buying an aparrtment is fine for a foreigner to do, but that is not an investment. An investment is opening a business.
If you somehow opened a business whose function was to buy property, perhaps there is something there. But just buying property personally doesn't count for an investment visa. |
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ABCDAVE
Joined: 14 Jan 2006
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| Posted: Mon Jun 25, 2007 3:52 pm Post subject: |
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| Drew345 wrote: |
I asked at imigration if the purchasing of an apartment counts toward the 50 million won "investment" for an investment visa. My question was clearly understood and the very clear answer was "No". A not so clear explanation went on about how buying an aparrtment is fine for a foreigner to do, but that is not an investment. An investment is opening a business.
If you somehow opened a business whose function was to buy property, perhaps there is something there. But just buying property personally doesn't count for an investment visa. |
Thanks Drew. However, what I meant by property was the actual location for the store. Or was that what you were implying also? |
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ABCDAVE
Joined: 14 Jan 2006
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| Posted: Mon Jun 25, 2007 4:09 pm Post subject: |
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| pkang0202 wrote: |
One of the keys to success in Korea is doing your market research into the buyer behavior of the Koreans. Walmart is a perfect example of a company that didn't do its research when coming here.
Aesthetics and looks are extremely important. Also, look at your competitors. Koreans are nationalistic and are loyal to domestic brands. If the franchise you are trying to open is already dominated by a Korean competitor you should scratch that idea.
A LOT of foreign franchises fail here. Mainly its do to the barriers to entry than anything else. A ton of domestic businesses never make it either. Look on a typical street in Korea. Chances are, there is at least one location that is having a grand opening because the people before them had to shut down.
I don't want to discourage you. I just to emphasize the research you have to do. Do an extremely detailed SWOT analysis. Study your market. Go to similiar businesses and spend hours there observing the customers. What do they do? What do they look at? How do the make their decision to buy? etc... |
Point well taken. There truly is no other way around it. |
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jeffkim1972
Joined: 10 Jan 2007
Location: Mokpo
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| Posted: Mon Jun 25, 2007 4:50 pm Post subject: |
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I can fill you in on the details.
Only if you are opening a 주식 company, you need the 50,000,0000won. If you are starting a 유한 company, it is not needed. Then there are two other private forms of companies that foreigners are not allowed to form.
the 주식 company, everyone has complete liability protection. However, the 유한, only the president is exposed in terms of liability but the other directors are protected. Also with a 유한 company, you are limited to 50 shareholders.
You need to go to a 법무사 which is just a small law office. Filing fees are as follows. 주식 about 1,100,000 and 유한 about 800,000 and they will set up everything you need to get a company up and running.
PM me if you need any other more specific details.
There are risks to opening any business, so i would ignore all the pessimists here and make your own analysis. |
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ABCDAVE
Joined: 14 Jan 2006
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| Posted: Mon Jun 25, 2007 5:18 pm Post subject: |
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| ttompatz wrote: |
| ABCDAVE wrote: |
Would the buying of a building/land/property go towards the 50 million won investment you are speaking of?
Also, what would you say the primary reason is for the poor functionality of other American franchises? Is it their choice of products, timing, or just plain blindness to the desires of Korean buyers?
If you know of any ventures specifically that failed, could you fill me in?
Thanks a lot for the site, as well as your advice. |
re: land and property - I don't know specifically but I suspect that it would qualify.
Why did they fail: yes, yes, and yes.
Some of the franchise ones that come quickly to mind are Dairy queen and A & W. There were others that I remember being here and are gone now.
Wallmart was one of the globally large players that didn't/couldn't adapt (bought out by E-mart) and Carrefour (now homever) is also on the list.
Those (franchise and global players) that made significant changes and survived include McD's (bulgogi burger anyone?), KFC, IGA, 7-11, Costco, and some that partnered up include shopping giant Tesco (with samsung to form home-plus). |
It seems to me, that the thing about all of these companies is that they are catering to the masses instead of focusing in on a specific target market and/or social class. It's like they all want to have a little something for everybody. I'm not saying that is the reason for success or failure, but it is one intention that I do not have.
What I am also curious about is non-"chain" related ventures, and sole proprietorships. Since I have only been in Korea for about 10 months, I have yet to network with people (foreign to Korea) who have tried opening smaller sized, less commercial businesses like this.
Thanks again. |
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Wangja
Joined: 17 May 2004
Location: Seoul, Yongsan
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| Posted: Mon Jun 25, 2007 5:20 pm Post subject: |
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| Drew345 wrote: |
I asked at imigration if the purchasing of an apartment counts toward the 50 million won "investment" for an investment visa. My question was clearly understood and the very clear answer was "No". A not so clear explanation went on about how buying an aparrtment is fine for a foreigner to do, but that is not an investment. An investment is opening a business.
If you somehow opened a business whose function was to buy property, perhaps there is something there. But just buying property personally doesn't count for an investment visa. |
This is not quite true: if you make the 50 million investment as "Foreign Direct Investment" properly recorded as such, you can obtain a D8 (investor) visa. The cash remains yours and if you wish you are free to buy property.
If you had already bought the property, clearly the cash inport it was not made as a FDI and would thus not qualify as such. |
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ABCDAVE
Joined: 14 Jan 2006
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| Posted: Mon Jun 25, 2007 5:51 pm Post subject: |
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| jeffkim1972 wrote: |
I can fill you in on the details.
Only if you are opening a 주식 company, you need the 50,000,0000won. If you are starting a 유한 company, it is not needed. Then there are two other private forms of companies that foreigners are not allowed to form.
the 주식 company, everyone has complete liability protection. However, the 유한, only the president is exposed in terms of liability but the other directors are protected. Also with a 유한 company, you are limited to 50 shareholders.
You need to go to a 법무사 which is just a small law office. Filing fees are as follows. 주식 about 1,100,000 and 유한 about 800,000 and they will set up everything you need to get a company up and running.
PM me if you need any other more specific details.
There are risks to opening any business, so i would ignore all the pessimists here and make your own analysis. |
Perhaps a silly question, but does it matter what my visa status is when going through the filing process (F4 vs E2 vs D8...)? |
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Wangja
Joined: 17 May 2004
Location: Seoul, Yongsan
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| Posted: Mon Jun 25, 2007 6:03 pm Post subject: |
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Yes, I think it does. I am not even sure you can have a business as an E1/2, or indeed anything other than a D8 or F-series.
If you have the 50 million, a D8 is worth it. Otherwise, if you are maried to a Korean, you can (?) go the F-series route. |
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ABCDAVE
Joined: 14 Jan 2006
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| Posted: Tue Jun 26, 2007 4:28 pm Post subject: |
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| Wangja wrote: |
Yes, I think it does. I am not even sure you can have a business as an E1/2, or indeed anything other than a D8 or F-series.
If you have the 50 million, a D8 is worth it. Otherwise, if you are maried to a Korean, you can (?) go the F-series route. |
Indeed I think you are right. I just thought since I'm here already, I could get the official filing of the company over with so that I wouldn't have to deal with it later.
That is to say, only if Korea would allow you to file a company that might not have any activity for the first year or so. Though this is not a problem back home, I'm not sure what the case is for Korea. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Tue Jun 26, 2007 4:58 pm Post subject: |
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| Drew345 wrote: |
I asked at imigration if the purchasing of an apartment counts toward the 50 million won "investment" for an investment visa. My question was clearly understood and the very clear answer was "No". A not so clear explanation went on about how buying an aparrtment is fine for a foreigner to do, but that is not an investment. An investment is opening a business.
If you somehow opened a business whose function was to buy property, perhaps there is something there. But just buying property personally doesn't count for an investment visa. |
If it is an office-tell than it can be part of your investment (and officially part of your business).
I made a company while on an E2 and it was legal according to all ministries - except for immigration.
Can't do it until you have the right visa (officially)
Last edited by Captain Corea on Tue Jun 26, 2007 5:01 pm; edited 1 time in total |
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