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Korean Job Discussion Forums
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jdog2050
Joined: 17 Dec 2006
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 Posted: Sun Aug 25, 2013 7:34 pm Post subject: |
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| radcon wrote: |
| jdog2050 wrote: |
To answer the OP:
The reasons businesses change here are many-fold and have been answered in the thread.
One thing that hasn't been brought up yet though is the idea of "kwaligeum". We all know key money, rent, etc, but kwaligeum is something that only comes up when you are about to purchase or rent a retail location.
In a word, it is essentially "buy out" money--it's a certain amount paid to the original proprietor of a place that *at the least* recoups their renovation costs, but because it is also calculated using "foot traffic" it can get really high if your area of the city is booming.
So let's say you bought a place in Itaewon back in the early 2000s. Maybe you had no kwaligeum or very low kwaligeum (low kwaligeum could be something like 10-20 million Won). Fast forward 10 years...the average kwaligeum in Itaewon is now like 100 million Won.
So, you definitely have people who buy a business with no or low kwaligeum so that they can triple or quadruple it in a couple of years when that area blows up.
Oh, and to add insult to injury kwaligeum is technically illegal. No one cares. Everyone does it. |
I don't understand how kwaliguem is able to exist. Your lease is up, you are quitting your business, I'm signing a new lease with the landlord, you need to leave, you have no say in the matter, you want money?- get bent. |
Yeah, again, it's totally illegal. For what it's worth I think kwaligeum is the biggest disaster for the Korean economy: it encourages thoughtless people to start businesses while blocking entrepreneurship. Worst of both worlds. |
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expatjb
Joined: 23 Aug 2013
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| Posted: Thu Aug 29, 2013 10:43 pm Post subject: |
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| I agree that a lot of it is just jumping on the bandwagon of successful ideas others have had. While I do admire the entrepreneurial spirit in Korea and the high number of local businesses and family-run shops, etc., many Koreans do little to no market research before starting out. They have an idea, people encourage them and they go for it. Rather than analyze potential profits, research competitors, and talk to potential customers to find a gap in the market, a lot of the time they go in blind. Sets them up for failure, really. |
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radcon
Joined: 23 May 2011
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| Posted: Sun Sep 01, 2013 11:04 pm Post subject: |
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| jdog2050 wrote: |
| radcon wrote: |
| jdog2050 wrote: |
To answer the OP:
The reasons businesses change here are many-fold and have been answered in the thread.
One thing that hasn't been brought up yet though is the idea of "kwaligeum". We all know key money, rent, etc, but kwaligeum is something that only comes up when you are about to purchase or rent a retail location.
In a word, it is essentially "buy out" money--it's a certain amount paid to the original proprietor of a place that *at the least* recoups their renovation costs, but because it is also calculated using "foot traffic" it can get really high if your area of the city is booming.
So let's say you bought a place in Itaewon back in the early 2000s. Maybe you had no kwaligeum or very low kwaligeum (low kwaligeum could be something like 10-20 million Won). Fast forward 10 years...the average kwaligeum in Itaewon is now like 100 million Won.
So, you definitely have people who buy a business with no or low kwaligeum so that they can triple or quadruple it in a couple of years when that area blows up.
Oh, and to add insult to injury kwaligeum is technically illegal. No one cares. Everyone does it. |
I don't understand how kwaliguem is able to exist. Your lease is up, you are quitting your business, I'm signing a new lease with the landlord, you need to leave, you have no say in the matter, you want money?- get bent. |
Yeah, again, it's totally illegal. For what it's worth I think kwaligeum is the biggest disaster for the Korean economy: it encourages thoughtless people to start businesses while blocking entrepreneurship. Worst of both worlds. |
Yes it's illegal. Why do people pay it? I'd just refuse and tell the person to get their crap out of the building. The building owners can't like this system. |
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crescent
Joined: 15 Jan 2003
Location: yes.
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| Posted: Mon Sep 02, 2013 12:16 am Post subject: |
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^
There is enough competition for prime locations such that there is always someone next in line, willing to pay for it. |
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Nolos
Joined: 23 Oct 2011
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| Posted: Mon Sep 02, 2013 12:56 am Post subject: |
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| crescent wrote: |
^
There is enough competition for prime locations such that there is always someone next in line, willing to LOSE THEIR MONEY AND ALL THEY OWN INTO A STUPID BUSINESS WITH LITTLE TO NO PLANNING. |
fixed |
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radcon
Joined: 23 May 2011
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| Posted: Mon Sep 02, 2013 1:54 am Post subject: |
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| crescent wrote: |
^
There is enough competition for prime locations such that there is always someone next in line, willing to pay for it. |
I understand if you are paying someone to leave their lease early because you want that location now. But when the lease is up, the deal should be between the building owner and the new tenant. Why would a new tenant pay the old tenant anything? He has to leave, he doesn't own the building and he doesn't have a current lease. How can he stop you from moving in if you don't pay? |
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crescent
Joined: 15 Jan 2003
Location: yes.
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| Posted: Mon Sep 02, 2013 2:14 pm Post subject: |
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From what i understand, the only reason kwaligeum will go to an EX-tenant, is if that tenant had done renovations or improvements that the new tenant will take advantage of. In this case the building owner will facilitate it.
Kwaligeum is mostly demanded if the space is used in the same fashion it was before.
But like i said, many locations are in such high demand that someone in the crowd of interested renters will pay it. |
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