Korea

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26 Country starter pack Getting started in Korea Common areas of risk When doing business in overseas markets, Australians must consider multiple areas of risk and associated potential difficulties. Not all will be directly applicable to Korea but should be considered, particularly if working with regional partners. Political risk: How stable is the market politically, economically and socially? • Government and international enforced trade embargoes may affect the flow of goods and services and could affect your delivery of goods and getting paid • Another potential consideration is whether the country complies with international law requirements, such as on human rights, trade sanctions and recognition of personal property rights. Legal and regulatory risk: Challenges may arise due to differing legal and regulatory systems. For example: • Common law systems verses civil law systems, IP issues, taxation and auditing requirements • Differences in contract law: get tailored advice on contract terms due to differences with contract laws • Access to courts and dispute resolution mechanisms: some countries may not permit local litigation or place restrictions on the types of claims that can be made. Bribery, graft and corruption risk: • Bribery, graft and corruption are illegal in most countries around the world. Under Australian law (Division 70 of the Criminal Code Act 1995) ) you can face criminal prosecution in Australia for bribing a public official in another country. Exchange rate risk: How will adverse movements in exchange rates impact on your profits? Non-payment risk: What is the likelihood of your suppliers or customers defaulting or becoming insolvent? Korea is considered a relatively low-risk destination for doing business in Asia. Korea’s sovereign risk is low, with an A+ credit rating from Standard & Poor’s. The country also ranks fifth out of 189 in the World Bank’s Doing Business Report 2015 (the same ranking as 2014). In 2014, Korea was ranked 43rd out of 175 countries on Transparency International’s Corruption Perception Index (CPI). This is a fall from 2009 and 2010’s high point of 39th. While you might reasonably expect a higher ranking for an OECD member, Korea still ranks above most Asian countries on this measure, with China at 100th and Malaysia at 50th. The World Bank’s Governance Indicators demonstrate Korea is overall in the top 50 per cent in all areas of governance. Nevertheless, compared to other advanced economies, there are several areas requiring improvement. Political stability and absence of violence scores are particularly low by developed world standards but the instability with neighbouring North Korea does pose as a considerable security threat. According to Efic (2015), Australian businesses establishing in Korea should be aware of the considerable market power the long-standing chaebols which can present issues for competing foreign and domestic firms. The chaebols – a conglomerate of family-controlled firms – participate in most areas of business from manufacturing to banking – and are one of the key contributors to Korea’s impressive economic development over the past 50 years.
Country starter pack Getting started in Korea 27 THE MOST PROBLEMATIC FACTORS FOR DOING BUSINESS* Crime and theft Poor public health Government instability/coups Inadequately educated workforce Inflation Foreign currency regulations Inadequate supply of infrastructure Tax rates Corruption Poor work ethic in national labour force Insufficient capacity to innovate Tax regulations Restrictive labour regulations Access to financing Inefficient government bureaucracy Policy instability Source: The 2014 World Economic Forum Global Competitiveness Report *Ranked by number of respondents per the perceived top five problematic factors in doing business in Korea 5 10 15 20 25 Per cent 2013 BUSINESS CLIMATE INDICATORS* GOVERNANCE INDICATORS Control of corruption Government effectiveness Rule of law Political stability and absence of violence Regulatory quality Voice and accountability 0 25 50 75 100 0 25 50 75 100 Korea High Income OECD Source: World Bank & Efic *Country percentile rank
Page 1 and 2: REPUBLIC OF Korea COUNTRY STARTER P
Page 3 and 4: SURFACE AREA 99,400 square kmS GDP
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Page 39 and 40: Country starter pack Sales & market
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Country starter pack Business pract
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Country starter pack Visiting Korea
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Country starter pack Engage with us
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Country starter pack Engage with us
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© August 2015, Asialink Business.
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Korea

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