Back in the 60s and 70s of the last century, the Republic of Korea was a backward and impoverished Asian outskirt with a predominantly agricultural economy. Today, this country is among the twenty most developed economies in the world and is the fourth economy in Asia with a high-tech industrial component.
According to Bloomberg’s Global Innovation Index, the Republic of Korea (today the country is unofficially called South Korea) ranks first in the world in categories such as Research and Development, Education, and Patents. It’s hard to imagine, but South Korea is the world’s largest shipping company with 45% of the global market share.
The country’s macroeconomic growth is large because for many decades the government has been focusing on the priority development of national business, commodity, and technological exports, as well as on attracting investment to the country. What sets this country apart is its incredible work capacity: even though the officially standardized work week of the average South Korean is 40 hours a week, in practice, they work up to 10-12 hours a day.
South Korea is a small country with limited reserves of minerals and natural resources. That is why the priority and vital for it is the expansion of the economic space at the expense of foreign markets. The main foreign economic consumers of goods from South Korea are the United States, the EU, and China.
Taxes and conditions for company registration
The conditions for registering companies are the same for everyone, a set of documents translated into Korean, registration terms of 7-10 days are also the same for everyone. Bureaucracy, according to our South Korean partners, is practically absent in the country.
The minimum authorized capital for companies of all types of ownership is 9,000 – 10,000 US dollars. However, there is a ban on the participation of foreign capital in companies from such industries as air transportation, banking, television and radio broadcasting, telecommunications, energy, press, fisheries, livestock, and meat trade.
Applicable taxes:
- profit – from 13 to 25%;
- VAT – 10%,
- income tax – depends on many factors and averages 38%.
Business Etiquette
As our experience shows, direct appeals to a South Korean company with an offer of cooperation rarely bring results: Koreans prefer to be introduced to a partner, told about his offer, and the status of a negotiator in the company. As a rule, the first acquaintance requires rather detailed information about the company: the number of employees, the size of the annual turnover, and other similar information. Telephone conversations can last for quite a long time, but without a personal meeting, it is unlikely that it will be possible to advance in business with a South Korean company.
South Korean businessmen are highly respected people in their country who have a high social status and require appropriate treatment. Negotiations are doomed if the Russian participants in the meeting behave frivolously, arrogantly, or if their status is lower than the negotiator from the South Korean side. It is important at the meeting to have business cards in English indicating the status of the negotiator in the company.
Koreans are very polite people and expect the same from their interlocutors. But don’t be surprised by personal questions – about age, family, and children, this is also a manifestation of courtesy in Korean. If you are preparing for a meeting with a South Korean businessman, wear a formal business suit with a white shirt, but a woman is better off not wearing pants. A small souvenir will also increase your chances of negotiating success.
The agreement signed with the South Korean partners is not yet the ultimate truth. However, the conditions stipulated in the conversation are also binding. The price of a word for Korean partners is very high.
