SEOUL, April 20 (Yonhap) -- When Benjamin Hughes, an American arbitrator and mediator, and a 10-year resident of Korea, decided to open up an office space in Seoul recently, he was already on familiar ground.
"I was previously working as a senior foreign legal consultant at a major Korean law firm so I had some idea as to how business was done in Korea," Hughes says. That is when he turned to The Executive Center (TEC) inside the Seoul Finance Center to rent a serviced office so he could use the space full time to focus on his practice. Thus far, the move has proven lucrative, and his work flow is running smoothly.
"The facilities are excellent and the staff at TEC is very helpful, as well as bilingual in English and Korean."
Given his understanding of the language and customs, Hughes didn't experience much inconvenience. Yet, for others, the transition may not prove so easy.
Venturing out into new territory has its challenges, the language barriers being just the tip of the iceberg. Given the hardships and overhead that go with setting up a business in a new city, it can be an experience many choose to avoid.
Yet, with economic interest growing in Asia, the interest for expansion in Korea is on the rise. Northern Asia is home to 25 percent of the world's population and generates 21 percent of its GDP. This figure is forecast to increase to 30 percent by 2020.
To shoulder some of this demand and alleviate the burden of starting a business in a foreign country, TEC has set up two serviced office space stations in Seoul, the Seoul Financial Center in the northern part of the capital and the Gangnam Finance Center in the southern section.
"One of the advantages with The Executive Center is that our clients don't have any overhead expenses," says Min Kim, assistant business development manager with the TEC. "Utilities are all included and our clients have full access to extensive facilities without the need for investing in additional space -- conference facilities, a lounge area."
Yet, despite such options, the Korean government has recently made changes to the Foreign Investment Promotion Act. As of June this year, foreign nationals wishing to run a small- to medium-sized enterprises (SMEs) here in Korea and acquire a work visa will be required to put up 300 million won, up from the previous 100 million won, an amount higher than many other countries.
The Executive Center offers in-depth support to those interested in starting up their own business.
Reasons for this stem from the fact that the government doesn't feel the SMEs largely engaged in small trade make considerable contributions to the Korean economy by creating jobs or introducing sophisticated technologies.
"When the old laws for foreign investment were introduced, government officials felt that foreigners were abusing this law so they saw the need for amending it," says Choi Hong-seok, a business consultant at Seoul Global Center.
"The newer, stringent measures were implemented as a way of safeguarding the marketplace," Choi admits.
Other options that curtail the need for investing money include applying for certain visas.
"The new F5 visa is a permanent residency visa for foreigners," Choi says. "Those living in Korea for at least five years can apply. The F2 is available to those that have lived in Korea for at least two years, but is valid for only two years."
Such approaches may not work for those wishing for something more immediate. As such, there are ways to leapfrog administrative roadblocks.
For newcomers to the Korean market interested in expanding their brand but uneasy with the prospect of fronting significant investment, a viable option is renting virtual office space. For example, IT or infant start-up companies wanting to operate outside their respective central business districts but require a city identity will find this a lucrative choice.
"Setting up a virtual office in Seoul circumvents a lot of the risks involved in investing significant amounts of capital," Kim assures. "Those wishing to test the waters in the Korean market can do so in a very cost effective manner before deciding to expand their operations in the future, should the market work in their favor."
For Mark Kang, who recently set up the real estate investment and asset management advisory firm Trinity Advisors with a special focus on industrial and logistics properties in Seoul, it was his third time setting up a business at TEC within the last 10 years.
Kang admits that there's been quite a lot of improvement over the years in terms of convenience and accessibility. He has learned a lot more about how Koreans operate their businesses than he would have beforehand.
"The previous two occasions were with global companies entering Korea and now this time is for my own business," Kang says.
He experienced little difficulty in the transition in terms of physical relocation, and legal and accounting infrastructure were supported by various special partners, including TEC. In fact, the entire legal procedure took a week to finalize. He also hired a local accounting firm at a fairly cheap cost to outsource accounting work, which includes bookkeeping and tax filings.
"The highly functional and flexible service offices in Seoul's central business district like TEC offering professional secretary service and flexible lease conditions made it easy to set up and kick start the business in a stable working environment," he says.