Deciding on what form of business to choose and how to secure foreign direct investment incentives were among the topics discussed at a recent two-part seminar for foreigners planning to start a business in Korea.

Young Ham, managing partner and head of the Global Services Division at Hanmi Accounting Corp. in Seoul, presented “The Nuts and Bolts of Setting up and Running a Company” to a crowd of some 90 budding entrepreneurs at Seoul Global Business Support Center.

Over the course of an hour, Ham explained the differences between a liaison office, branch and subsidiary, the three types of business entity entrepreneurs with businesses outside Korea already can set up.

A liaison office performs preliminary or auxiliary activities for its head office such as advertising or market research and is not subject to corporate income tax. A branch of a foreign company is subject to tax only on its earnings in Korea, whereas a subsidiary is subject to tax on income generated within Korea and outside the country.

Ham said that one advantage of a subsidiary is that it demonstrates a greater commitment to the Korean market to customers in the country. A foreign branch of a business, however, has the advantage of having no minimum capitalization requirements.

Ham also spoke about the two forms of business open to entrepreneurs who don’t already have a business outside of Korea, a sole proprietor and a corporation.

Ham recommended that a corporation is the preferable option for a business likely to turn over more than $50,000 profit in a year as it appears more solid to potential customers.

“If you present a card saying I’m the CEO of a company it’s different from just being a salesman,” he said.

For smaller operations, he said, being the sole proprietor is preferable because it is easier to set up.

Ham also devoted part of the seminar to tax matters, noting, in an echo of Benjamin Franklin’s famous phrase, “tax is something you cannot avoid in your life, like death.”

Making reference to Korea’s 8 percent corporation tax on income up to 200 million won, Ham said that Korea’s business taxes are very competitive when compared internationally.

For some of the budding entrepreneurs at the seminar, there were plenty of obstacles to overcome before tax rates even became an issue. Daouda Sakho, a Ph.D. student in administration from Senegal who attended the seminar, agreed that Korea offered a favorable climate for doing business, but said that start-up money was a significant hurdle for him to clear.

“You need a lot of money,” he said, “I want to find a partner. Maybe a Korean partner.” After finishing his Ph.D, Sakho hopes to start a business selling cars.

Vernon Philips, a Canadian who was keeping his plans close to his chest, found the seminar helpful. But for him, the Korean government’s recent decision to double the investment requirement for foreigners wanting to set up a business in the country has been a source of frustration.

“There’s a little bit of pressure right now because the government just changed the rules. It is quite frustrating,” he said.

Philips said that while the government had tried to encourage foreign entrepreneurs, it could do more.

“A lot of effort has been made and that’s good, but it needs to go a little bit further,” he said.

After Young Ham’s sober delivery, the second part of the seminar, delivered by business coach Sharon Noh, could hardly have been more different.

Titled “Connect to true Success in Korea,” Noh’s one-hour talk detailed her journey of self-discovery through Buddhism after leaving a steady job, before covering practical steps entrepreneurs can take to succeed in business in Korea.

“My mission is to bloom to my fullest potential and to help others bloom to their full potential,” she told the crowd.

Personal branding, in other words, showing customers why you and no one else are ideal for their needs, is key to success, she said.

“In business, identity matters a lot,” she said, adding that Korean customers tend to be very loyal to businesses they build relationships with. She noted that there were many challenges for foreign businesspeople in Korea, though many of them could be minimized by learning Korean language and etiquette.

“Koreans love it when you speak Korean,” she said.

“Korea has a high entry barrier but once you break the code you win their hearts,” she added.

Noh closed the event by offering free weekly consultations to five entrepreneurs who planned on starting a business sometime this year.

By John Francis Power (remrgrt@gmail.com)