South Korea Market Entry

South Korea Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

KR is a member of the WTO and the OECD and follows the relevant regulations, commitments and agreements of these organizations. The rating of the country is Aa2 according to the agency Mody

Imports of most items are liberalized. The customs burden is still high for some types of goods, but within the framework of the WTO, the Korean Customs Administration is gradually reducing the amount of customs duties. When importing, it is necessary to pay increased attention to the regulations and regulations governing the import of not only commodities, but also specific individual items. E.g. when importing cheese, it is necessary to apply for the import of a specific type of cheese, not cheese in general. In the case of foodstuffs in particular, approval processes for granting import permits are very time-consuming, in some cases (e.g. meat, meat products) the process consists of several steps and can take many months. Food products are subject to tests, which in the case of goods of lower value and one-time import, can be very financially demanding. Check smber for agriculture and fishing facts of South Korea.

Import documents and the customs system are similar to those in other developed countries of the world. Customs forms (e.g. import declarations), as well as all relevant import conditions, including information on the customs system and customs tariffs for individual types of goods, can be filled out directly on the Korea Customs Service website.

The basic documents required for importation to KR include:
• commercial invoice;
• waybill or air waybill;
• list of imported items;
• certificate of origin;
• the names of all components that are included in the product, including the percentage composition;
• a description of the production process in the production of the product;
• certificate of production date;
• description of packaging materials
• phytosanitary certificate (for meat, fruit, nuts, vegetables, plants, grain, etc.);
• other relevant certificates according to the type and specification of the product and its content (e.g. “non-biotech” certificate for corn and its products, for soybeans, potatoes, etc.).

Korea Customs Service Building 1, Government Complex-Daejeon, 189, Cheongsa-ro, Seo-gu, Daejeon, Korea Information Line (Customs Customer Service Center): Tel.: 1577 – 8577
An important role in the field of imports is played in KR by the KOIMA Importers Association, whose website contains a lot of important information and contacts in English: www.import.or.kr.

Export control applies mainly to military material and equipment and dual-use items, where the KR Republic strictly applies restrictions set by international control regimes. The high sensitivity of the export of military equipment in the case of KR is also due to the military-political situation on the Korean Peninsula and relations with North Korea. Items of cultural value and cultural heritage (antiques, etc.) are also subject to approval for export. The approving authority is the “Seoul Metropolitan Government, Art & Antique Assessment Office”. The seat of the office is in Seoul. The export conditions are described in detail at: www.customs.go.kr.

Czech companies do not yet have their own sales offices in KR. For our exporters, it is practically inevitable to use a local sales representative to enter the Korean market, even in the case of large-scale or one-off deliveries.

For exports to KR, you can also use the services of leasing companies financing imports of investment units, which they then transfer to end users through leasing contracts.

The business and legal environment for foreign-invested companies has not improved recently. According to a survey of 220 foreign businesses with 50 or more employees in Korea, more than half of the respondents said that doing business in Korea is difficult for them. Above all, it is the constant introduction of new regulations without a transparent legislative process, unpredictable and incoherent administrative regulations, wage inflexibility.

When employing local forces, it is necessary to take into account the high cost of labor as well as strong elements of the trade union movement, limited flexibility (especially in handling emergency situations), unwillingness to bear responsibility or perform tasks that the local forces consider inferior, etc. Koreans also often do not accept superiors from other countries. Local laws are more on the side of the employees and one must take into account, for example, the employer’s obligation to pay the 13th salary in the amount of 100% of the basic salary and, upon termination of employment, to pay severance pay, which amounts to approximately 1 month’s salary for each year worked.

Forms and conditions of operation on the market

The conditions for establishing a representative office in the Republic of Korea are similar to those in other OECD member countries. There are several ways to start a business in the Republic of Korea:

Corporations

A foreign entity can establish a joint stock company or a limited liability company in the Republic of Korea. The establishment of the company is subject to the Foreign Investment Promotion Act. If it is registered in accordance with procedures established by law, it is recognized as a Korean enterprise and subject to Korean laws. For this type of company, a minimum share capital of approximately USD 100,000 is required. In order to establish a company, it is necessary to submit a notice of foreign investment to the Ministry of Finance (Ministry of Strategy and Finance), open an account with a foreign exchange bank, transfer the share capital to this account and register the company in court and in the commercial register.

Branch
A foreign company can establish a branch in the Republic of Korea, which will conduct its business there. This type of business is also covered by the Foreign Investment Promotion Act. This type of business is also considered a local business. To establish it, you need to open an account with a foreign exchange bank, rent an office, shop, etc. (company headquarters) and register the company with the court and the tax office.

Liaison office
A foreign company can create a support office, the so-called “Liasion Office”. This can only carry out non-commercial activities, such as market research, R&D, quality control, advertising, promotion, information gathering, etc. The method of registration is similar to that of a branch, however, there is no need to register with a court. Detailed establishment conditions for setting up an office, representative office or joint venture can be found on the following website: www.investkorea.org.
Source: Invest in Korea

Marketing and communication

Recommended advertising and PR and HR agencies in the country (if any)

What advertising channels do successful companies mostly use (FB, TW, Instagram, TV, Radio, Web, printed materials, billboards and other advertising areas)

What to never use in marketing under any circumstances.

Issues of intellectual property protection

Korea would like to take a proactive role in driving WTO reform and become the main drafter of new trade rules on digitalization and climate change at the multilateral and bilateral levels.

On WTO matters, Korea’s positions are generally not too far from those of the EU. Korea plays an active role in the Ottawa Group and, like the EU, supports the “Trade and Health” initiative.

Violation of intellectual property rights is a big problem in KR. The unprecedented scale and diversity of counterfeiting and piracy multiply business losses in dealings with KR and become a serious obstacle for companies that plan to enter the Korean market or already have established business activities here, or intend to invest in this territory.

KR was placed on the Priority 301 Watch List by the Office of the US Trade Representative (USTR) in January 2004, which includes countries that admit to infringing US intellectual property rights. The laws issued are some of the strictest laws within OECD member countries. Unfortunately, however, the implementation of these laws in practice is insufficient, and the result is an ever-increasing number of counterfeits and pirated copies openly sold on Korean markets. One of the actions to support the protection of intellectual property rights was the organization of an exhibition of counterfeits in August 2005, which was open to the general public, and where citizens could view the original products together with their counterfeits and learn how to recognize them. The event was widely publicized in the Korean media.

The following laws relating to intellectual property law apply in KR:
Trade Marks Act 1949 Patents Act 1961
Industrial Designs Act 1961

Korean organizations dealing with the field of intellectual property:
The KIPO (Korean Industrial Property Office) is one of the external offices of the Ministry of Knowledge Economy (MKE) dealing with intellectual property. Part of this office is the International Training Institute for the Protection of Intellectual Property Rights (IIPT), which, in cooperation with the WIPO (World Intellectual Property Office), trains both Korean workers and workers from developing countries throughout Asia and the Pacific in the field of intellectual property rights.

Public procurement market

On January 1, 1997, the Republic of Korea acceded to the WTO GPA (Government Procurement Agreement). Since then, it has been possible for all foreign suppliers who are also signatories to the GPA to participate in tenders for government contracts announced in KR. The Korean government has established a government agency, the Public Procurement Service (PPS), in which all activities related to public contracts are centralized, and which in this sense is in charge of all stages from issuing tenders, collecting bids and evaluating them, to announcing the winner. In exceptional cases (if the value of the contract is less than USD 0.1 million or in the case of construction works USD 0.3 million), the only entity that can issue tenders for public contracts are regional administrations. However, they also use the system used by PPS for announcements.

PPS is operated as a “single window electronic system”. In practice, this means that all information can be found under one internet address, from the announcement of the tender, instructions on how to apply for the tender to information on payment conditions. All information is available on the following websites: www.pps.go.kr, www.g2b.go.kr The

disadvantage is that a foreign company can only participate in tenders for government contracts through a local representative. All tender documentation is available in Korean only. Without a representative, foreign companies can only participate in tenders announced for foreign companies (the 2% mentioned), but again the documentation is only in Korean.
Source: MOTIE, KOIMA

Payment terms, payment ethics and resolution of commercial disputes

Koreans generally have good payment morals, and payment terms are consistent with most internationally recognized standards, including letters of credit.

The due date of invoices varies from one to two months. It happens that even if the invoice was issued earlier, it does not reach the payer until the due date itself.

The Korean Commercial Arbitration Board (KCAB) is the main official arbitration body in the KR. KCAB seeks to resolve disputes through negotiation; if the negotiation is not successful, it accepts decisions in the form of arbitration awards, which are final and there is no appeal against them. The KCAB makes decisions based on the Korean Arbitration Act and in accordance with the Commercial Arbitration Rules. KCAB recommends that all traders, when concluding contracts, include a standard arbitration clause in them, enshrining its jurisdiction to resolve disputes. For Czech traders, it is prudent to include such a clause in contracts, as the KCAB judges on the basis of Korean law, which is unknown to them.
The contact for KCAB can be found at: www.kcab.or.kr/jsp/kcab_eng, or you can use the contact below directly:
KCAB Customer Center
Tel: 82-2-551-2070
Fax: 82-2-551-2113
E-mail: [email protected] (Ms. Hyleim CHO)
To help foreign investors in solving their problems connected with investing in KR, he was within the organization KOTRA (Korea Trade – Investment Promotion Agency) created the Office of the Investment Ombudsman, where 30 experts from the fields of taxation, finance, law, construction, labor relations and customs work. KR is a party to the UN Convention on the Recognition and Enforcement of Arbitral Awards.
Source: KCAB

Visas, fees, specific conditions for traveling to the territory

There is a visa-free agreement between the Czech Republic and the Czech Republic for all types of passports, on the basis of which citizens of both countries can stay in the other country without a visa for a period of up to 90 days (except for trips for the purpose of gainful activity.

Upon arrival in the Czech Republic, a valid passport must be presented for the duration of the expected stay and a pre-filled arrival card (received by passengers on the plane). The same procedure applies when traveling to KR by sea. A person over the age of 20 can import the following commodities duty-free into KR: 200 cigarettes, 50 cigars, 250 g of pipe tobacco, 1 liter of alcoholic beverages, 2 oz (ounce) of perfume, gift items up to a value of $600.

Prohibited import items: narcotics, food of animal origin, fruit, plant seeds and plants and printed materials, films, recordings, etc., which may be considered subversive (especially of North Korean origin), obscene or harmful to national security and public interests. It is also prohibited to import fresh meat and meat products. Firearms are subject to an import license. Currency exchange is not mandatory. When changing, a travel document and a telephone connection in KR may be required. Excess local currency can be exchanged back to currency (USD, EUR) at the airport upon departure. Imported or exported currency over USD 10,000 must be declared.
Note: From the point of view of incoming tourists to the Czech Republic, Korea is one of the strategic markets with a large year-on-year increase of 15-25%. Korean tourists can use eight direct flights from Seoul to Prague and back (Korean Air) during the summer tourist season, but unfortunately, for the duration of COVID-19, all flights to KR are temporarily suspended.

The Korean market is relatively centralized, with the five most important tour operators (Hana Tour, Mode Tour, Hanjin Travel, Lotte Tour and Interpark Tour) operating on it. In addition, there are several thousand smaller travel agencies and agencies on the market.

Due to the complex traffic situation, complications with renting vehicles for foreigners and parking, it is advisable to use a taxi or public transport for traveling around the cities. In Seoul and in the vast majority of larger agglomerations, there is a very well-functioning public transport infrastructure (it is advantageous to purchase a top-up public transport “Tmoney” card here). Traveling between major cities is made easy by affordable KTX high-speed trains.

You can pay by credit card at the vast majority of sellers, problems with the operation of foreign cards can usually only be encountered when paying on the website.

Korea is generally a safe destination for foreigners with very low violent crime rates.
Source: Customs Administration of the Republic of Korea, CzechTourism Korea

Employment of citizens from the Czech Republic

The Korean visa policy is complex and the position of the Republic of Korea in this area is individual depending on the nationality of the visa applicant.

KR mainly employs highly specialized and qualified workers. KR accepts low-skilled labor mainly from neighboring poorer states, while the visa is only valid for the given job. The type of visa required for a Czech citizen depends on the type of residence or employment. The most common types of visas for long-term employment:
· Visa for highly qualified workers
· Visa for professors and teachers at universities
· Visa for special occupations

Another possibility is the so-called working holiday for citizens of the Czech Republic between 18 and 30 years of age. This work permit is limited in time to a maximum of 1 year. If a Czech citizen receives a job offer in KR, the employer must first apply for and receive a permit in order to employ the new worker. This procedure takes about 2 weeks. The job applicant must subsequently visit the Czech Embassy in Prague with this permit and, after filling in the relevant forms, can apply for the relevant visa. This procedure does not apply to so-called working holidays. All you have to do here is apply for a visa at the KR embassy in Prague. Working holidays are not linked to a specific job. Upon arrival in KR, a Czech citizen who intends to stay in the country for more than 90 days must apply for a so-called “Alien registration card”, which is a type of citizen identification card. This card is issued by the immigration department. Each area in KR has its own immigration department, there are two such departments in Seoul itself. The issuance of the pass (card) is preceded by filling out an application and paying a fee of 30,000 KRW. Any additional documents and fees depend on the type of visa.

The minimum hourly wage for 2022 has been set at KRW 9,160 ($8), which at 209 hours/month is $1,672 (an increase of 5.1% from 2021).

Medical care in big cities is at a good level. However, the foreigner pays all the costs of the treatment himself, the fees are relatively high. We therefore recommend taking out travel insurance before traveling to Korea. A number of local doctors studied in the US and speak English. However, communication with medical staff in smaller health facilities is difficult. In Seoul, the following clinics in particular have a high professional and adequate language level:
– Yonsei Severance Hospital, tel.: 02-22285800, 010-9948-0983 (emergency room)
– Asan Medical Center, tel.: 02-30105001 – Samsung Medical Center, tel.: 02-3410-0200, emergency 02-3410-2060
– Seoul National University Hospital, phone: 02-2072-2890, 011-950-2890, 24/7 emergency phone: 02-20722473-7
– Samsung Cheil Hospital, phone: 02-20007208, 02-20007143
– Seoul Global Center operates a telephone counseling service for foreigners – Medical Referral Service.
Medically trained staff provide advice in English about medical facilities and services in KR (8:00am – 8:00pm, outside of this time only urgent cases). Tel.: 010-4769-8212, 010-8750-8212, e-mail: [email protected] Source: Customs Administration of the Republic of Korea, MFA of the Republic of Korea, Embassy of the Republic of Korea in Prague

Fairs and events

Korean trade fair organizations are united in the Korea Exhibition Organizers Association. List of all members, or organisers, fairgrounds with contact internet address can be obtained on the website http://www.keoa.org/english/. A complete overview of all trade fair and exhibition events is also available at the mentioned internet address. Another overview of trade fair events held in the Republic of Korea is on the website http://10times.com/korea.

The most important trade fair complex in the Republic of Korea is COEX, which is located in the capital city of Seoul. An overview of all trade fairs held here can be found on the website http://www.coex.co.kr/eng.

Another important exhibition center in Seoul is KINTEX – http://www.kintex.com/client/_eng/.

The most important exhibition center outside the capital is BEXCO – http://www.bexco.co.kr/kor/Main.do in the city of Busan, which is located in the south of the Republic of Korea.
Fair events held in other cities can be compared in terms of size to regional fairs in the Czech Republic.

The most important trade fairs include:
– AI EXPO Korea – International Computer Technology and Artificial Intelligence Fair (Seoul, March)
– SEMICON – International Electronics and Semiconductor Fair (Seoul, March)
– International Electric Vehicle Expo – International Electromobility Fair (Jeju, May)
– Seoul Food – International Food and Food Equipment Fair (Seoul, July)
– H2 Mobility +Energy Show – International Hydrogen Mobility Fair (Seoul, July)
– Import Goods Fair (IGF) – Imported Goods Fair (Seoul, July)
– Seoul Motor Show – International Automotive Fair (Seoul, July)
– ADEX and DX Korea – International fair of military technology and defense industry. They alternate after a year with each other (Seoul, October)
– G Star – International Games Industry (Busan, November)

South Korea Market Entry