{"id":9086,"date":"2020-11-10T08:00:35","date_gmt":"2020-11-10T16:00:35","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=9086"},"modified":"2020-11-09T17:28:05","modified_gmt":"2020-11-10T01:28:05","slug":"doing-business-in-south-korea","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2020\/11\/doing-business-in-south-korea","title":{"rendered":"Doing Business in South Korea"},"content":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;9087&#8243; img_size=&#8221;full&#8221;][vc_column_text]<span style=\"font-weight: 400;\">South Korea is in eastern Asia in the southern half of the Korean Peninsula. It is bordered by North Korea, the Sea of Japan and the Yellow Sea. At 99,720 sq km in size, the country is slightly smaller than the US state of Pennsylvania.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Although it has been an independent kingdom for much of its history, the 20<\/span><span style=\"font-weight: 400;\">th<\/span><span style=\"font-weight: 400;\"> and 21<\/span><span style=\"font-weight: 400;\">st<\/span><span style=\"font-weight: 400;\"> centuries were tumultuous for South Korea. It was occupied by Japan in 1905 and did not regain its independence until 1945. The Democratic Republic of Korea in the south and the communist People\u2019s Republic of Korea in the north split the peninsula after 1945. The US fought alongside South Korea from 1950 to 1953 to defend the country against the north\u2019s invasion. In a 1961 coup, a new leader took over and led South Korea through several years of prosperity. Its first free presidential election took place in 1987 under a revised constitution. Strife between North Korea and South Korea continues to this day.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Manufacturing in South Korea<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The South Korean government began encouraging investment in manufacturing technologies, especially for high-tech and automotive industries. Family-owned chaebol conglomerates like Hyundai, Samsung and Daewoo helped to fuel the growth. Typical manufacturing products made in South Korea include electronics, telecommunications, automobiles, chemicals, shipbuilding, mining and steel. South Korea also enjoys a reputation for excellence in cosmetics and high-end skin care products.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As of 2017, South Korea\u2019s industrial production growth rate was about 4.6%, putting it at number 63 in the world. Industry accounts for approximately 39% of the country\u2019s GDP.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Other Important Industries<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Services make up 58.3% of South Korea\u2019s GDP, and tourism is the largest service sector industry. More than 61,000 people visit South Korea in a single month, and even during the COVID-19 pandemic, tourism still generates $496,700 million per month. In less troubled times, tourism reached as high as $2,227,900 million and 1,703,495 people per month.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Agriculture is a mere 2.2% of South Korea\u2019s GDP, and its primary agricultural products are rice, root crops, barley, vegetables, fruit, cattle, pigs, chickens, milk, eggs and fish.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Supply Chain Infrastructure for Manufacturing<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Korea has a strong infrastructure to support its manufacturing supply chain. The country has just under 100,000 km of paved roads, and a very strong telecommunications backbone, with 129 cell and 50 landline subscriptions per 100 inhabitants, making it one of the easiest countries in the world to communicate with.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Shipping<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Korea has 71 airports with paved runways, more than half of which can support cargo jets. The country also has 466 heliports. This robust infrastructure makes it easy to move freight in or out of the country quickly and easily. The annual freight traffic on registered carriers was 11.297 billion mt-km in 2015.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With more than 3.978 km of railway and 1,600 km of waterways, South Korea has the ability to move products to customers or suppliers as needed. Even though the inland waterways are primarily used for smaller craft, South Korea has a strong merchant marine to take advantage of its direct ocean access. As of 2019, it has 1,880 vessels, of which 83 are bulk carriers, 86 are container ships, 368 are general cargo ships, and 187 are oil tankers.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Workforce<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">With a workforce of 27.75 million people and unemployment at a consistent 3.7%, South Korea\u2019s workforce is large. Workers enjoy a high standard of living because of South Korea\u2019s favorable economic policies and the strength of its economy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Only 4.8% of the workforce is in the agricultural sector, while 24.6% are in industry and slightly more than 70% in services.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The country\u2019s population has a median age of 43 years. Its overall literacy rate is 98%, and most people attend school for 16 to 17 years, so workers are typically well educated and capable of handling complex tasks.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Economy<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Korea\u2019s economy is the 14<\/span><span style=\"font-weight: 400;\">th<\/span><span style=\"font-weight: 400;\"> largest in the world, despite its small geographic footprint. The total GDP is $1.54 trillion as of 2017. Taxes make up 23.2% of the GDP.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">South Korea\u2019s economic growth is expected to undergo a gradual slow down, but it is expected to stabilize in the range of 2-3%, which is common for countries with advanced economies such as that of South Korea.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In 2017, South Korea exported $577.4 billion of goods including semiconductors, petrochemicals, automobile parts, automobiles, ships, wireless communication equipment, flat screen displays, steel, electronics, plastics and computers. Its primary export trading partners were <\/span><a href=\"https:\/\/www.qad.com\/blog\/2019\/07\/doing-business-in-china\"><span style=\"font-weight: 400;\">China<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/www.qad.com\/blog\/2019\/03\/doing-business-in-the-united-states\"><span style=\"font-weight: 400;\">the US<\/span><\/a><span style=\"font-weight: 400;\">, Vietnam, Hong Kong and <\/span><a href=\"https:\/\/www.qad.com\/blog\/2019\/09\/doing-business-in-japan\"><span style=\"font-weight: 400;\">Japan<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Imports for the same period were $457.5 billion, and the primary commodities were crude oil, petroleum products, semiconductors, natural gas, coal, steel, computers, wireless communication equipment, automobiles, fine chemicals and textiles. Import trading partners were China, Japan, the US, <\/span><a href=\"https:\/\/www.qad.com\/blog\/2020\/02\/doing-business-in-germany\"><span style=\"font-weight: 400;\">Germany<\/span><\/a><span style=\"font-weight: 400;\"> and Saudi Arabia.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Political Landscape<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Korea\u2019s president is considered both the chief of state and the head of its government. A prime minister acts as the principal executive assistant to the president. President Moon Jae-in has been in office since May 2017, and since January 2020, the prime minister is Chung Sye-kyun.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Tax Rules<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Tax payments are required 12 times per year, and typically require 174 hours for preparation and reporting. The total tax and contribution rate add up to 33.2% of total profit.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In 2018, the South Korean government amended some of its tax rules. The withholding rate on certain foreign entity employers was increased to 19%, and the definition of businesses subject to this level of tax was expanded to include the ship building industry and the financial sector.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Even so, the country still enjoys a reputation for being an easy place to start or run a business.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Special Circumstances<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">North and South Korea continue to dispute the official borders, including the Demilitarized Zone and certain portions of the Yellow Sea and the Northern Limit Line.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Getting Down to Business<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Doing business in South Korea has many advantages along with a few challenges. Despite forecasts that the economy will slow, it is still one of the largest and most robust in the world, and it is extremely manufacturing-friendly. Its location and robust infrastructure make it an ideal spot for an Asian supply chain hub, and tools such as <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/financials-erp\/data-sheet\/qad-internationalization-data-sheet.pdf\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">QAD Internationalization<\/span><\/a><span style=\"font-weight: 400;\"> enable companies to easily manage the challenges of taxation. As in many countries, the manufacturing industry within South Korea is undergoing rapid change, making <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/cloud-erp\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">QAD Adaptive ERP<\/span><\/a><span style=\"font-weight: 400;\"> an essential part of many companies\u2019 IT footprint.\u00a0<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">How would you describe the state of Manufacturing in South Korea? Learn more about manufacturing and <\/span><\/i><a href=\"https:\/\/blog.qad.com\/?s=%22doing+business+in%22\"><i><span style=\"font-weight: 400;\">doing business<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> in other great countries around the world.<\/span><\/i>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;9087&#8243; img_size=&#8221;full&#8221;][vc_column_text]South Korea is in eastern Asia in the southern half of the Korean Peninsula. It is bordered by North Korea, the Sea of Japan and the Yellow Sea. At 99,720 sq km in size, the country is slightly smaller than the US state of Pennsylvania. Although it has been an independent kingdom for [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":9087,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,199],"tags":[505,507,493,508,24,510,1440,509],"class_list":["post-9086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-manufacturing-trends","tag-doing-business-in","tag-economy","tag-industry","tag-infrastructure","tag-manufacturing","tag-politics","tag-south-korea","tag-workforce"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Doing Business in South Korea | QAD Blog<\/title>\n<meta name=\"description\" content=\"Doing business in South Korea has many advantages and a few challenges. 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