Ebook: If you are expanding into Korea in 2017, here’s what you need to know.

This is extracted from our Market Expansion ebook, which gives tips on expanding into many Asian countries. Scroll to the bottom to download it.

The N Seoul Tower and the city skyline at night. Image credit: sepavo / 123RF Stock Photo.

Korea has been in the news for the wrong reasons. President Park Geun-hye’s impeachment trial has started. The country’s top business leaders were summoned for questioning on corruption.

Still, Korea can be a land of opportunity. Korea has a homogenous population, and about 50 percent of the population lives in Seoul. Trends can spread rapidly.

It’s also easy for tech startups to monetize in South Korea. According to the Pew Research Center, 94 percent of South Korean adults use the internet or own a smartphone. Disposable income is growing. Koreans are used to spending money in mobile apps.

Accelerators, funding, and government initiatives

The South Korean startup ecosystem is well-financed. South Korean President Park Geun-hye’s administration recognized the need to rely less on conglomerates such as Samsung and LG for economic growth. Touted as the “creative economy” initiative, it’s investing in innovative alternatives to the conglomerates so as to improve employment rates. In 2014, a plan was underway to nurture startups.

The government injects US$2 billion every year into the South Korean startup ecosystem. A further US$65.9 billion in spending was planned for 2016, and much was on developing Pangyo, an area south of Seoul hosting Korean tech firms such as Kakao. 17 innovation centers were also built around Korea as part of the government’s initiative. Each center has its own theme and specialty, with a corporation in charge.

The plan has seen early success. According to Tech in Asia’s data, the total funding amount grew by 6 percent from 2014 to 2016. Top funded startups over the past year include MelOn, Podotree, Yello Mobile, Baedal Minjok, and Viva Republica. They span vastly different industries.

Nathan Millard, founder and CEO of PR firm G3 Partners, shared with Tech in Asia that “there are incubators and coworking spaces across Seoul, over 20 accelerators at last count, an established VC ecosystem, active angel investment community, and very extensive government support.”

Despite active criticism of creative economy initiatives due to murky links to corruption, the Centers for Creative Economy and Innovation are likely to continue operations, having secured new funding from central and municipal governments. In fact, the Korean government announced new policies to boost growth focusing on artificial intelligence, information technology, and virtual reality in 2017.

Picture credit: Startup Alliance by Naver.

A developed ecosystem for foreign startups

On top of financial assistance, the government started an accelerator called the K-Startup Grand Challenge (KGC) in 2016 targeted at foreign startups, with focus on areas like gaming, information security, smart devices, and big data.

The accelerator is a big plus for foreign firms who wish to get a headstart in Korea, especially if they’re unsure of how to localize their product or marketing. Entrepreneurs also get funding and support accessing the market. Kenneth Lee, founder of travel chatbot developer and KGC participant TravelFlan, says that they received visa help and also networked with industry leaders. Other centers include the Seoul Global Startup Center, which provides space to work, funding, and operational assistance.

1. Chaebols are still talents’ top choice

2. Put effort into building good relationships with chaebols or the government

3. It’s important to be in the country.

4. Don’t rush head-first into the market.