The following section provides some basic guidelines on how to set up an office in Korea. In addition, a list of real estate consultancy, taxation and human resources search services in Korea is provided in this section.

Step 1: Assess Your Company's Ability to Conduct Business in Korea

Depending on your company's particular industry sector, each investment will be different in terms of its size and complexity. Investment also depends on relevant Korean laws and regulations. Because the Ministry of Finance and Economy (MOFE) continually revises its negative list of commodities that are either prohibited or restricted from importation into Korea, the best way to verify that you may establish your business in Korea is to contact Invest KOREA.

Invest KOREA was established as Korea's official investment promotion agency and is an arm of the Korea Trade-Investment Promotion Agency (KOTRA), a government-sponsored non-profit organization. The operation is staffed by KOTRA personnel and complimented by officials from relevant government ministries and specialists from the private sector in areas such as law and accounting in order to provide the foreign investor with prompt and comprehensive service.

Invest KOREA provides assistance in the following areas:

• Support on all necessary administrative procedures.
• Consultation on all forms of investment, including M&A, joint ventures and real estate acquisition.
• Advice on legal and taxation matters.

Additionally as part of its "One-Stop Service", Invest KOREA provides investment planning consultation, ongoing support and follow-up support.

There is also an Investment Ombudsman Office that will address any of the foreign investor's grievances once s/he establishes his/her company in Korea.

Step 2: Receive Authorization to Proceed with an Investment

Once approved to conduct business in Korea, the next step is to complete and submit the necessary notification documents. Approved foreign investment projects are subject to notification from the Ministry of Commerce, Industry, & Energy (MOCIE), which delegates its authority to the head office of a major commercial bank in Korea or to Invest Korea. (A list of major banks in Korea can be found at www.buyusa.gov/korea/en/bankcontacts.html.)

The head office of any major commercial bank has the ability to accept notification from companies proposing to engage in business in a liberalized sector. In practice, a commercial bank's head office will also generally accept notification of partially liberalized sectors provided that the foreign investment meets the criteria for the specific business. However, the bank will reject notifications in sectors that prohibit foreign entry.

Your company's designated representative should visit a commercial bank's head office or Invest Korea and consult with staff that deal with foreign clients and foreign investment. Invest Korea or the bank can provide application documents that are to be completed and then submitted for authorization. Once all the documents have been submitted, along with Korean translations, the authorization process should be completed within a day.

Step 3: Search for an Office Site

Companies are required to submit notification documents to the head office of a Korean commercial bank or to Invest Korea for approval prior to setting up an office. However, as finding and negotiating an office site may take more time than completing the necessary documents, companies should consider completing steps 2 and 3 simultaneously. To a company unfamiliar with Korean real estate, it is vital that the company locate a reputable real estate agent or real estate consulting firm with experience in foreign investment in order to locate a suitable office site. A list of select real estate agents and real estate consulting firms can be found at: http://www.buyusa.gov/korea/en/realestatecontacts.html#_section1.

Recent reports have highlighted a mild increase in office vacancy rates in Seoul's Central Business District (CBD), nevertheless, due to the scarcity of and high demand for land, property in Seoul is expensive even by U.S. and Asian standards. The rental rates for office space in Seoul are not as high as other East Asian capitals such as Tokyo, Shanghai or Hong Kong. A recent survey indicated that the average monthly in the CBD was USD 75 per pyong (equal to 3.3 square meters) but rents in the popular Gangnam District can be higher. Experts expect rents to rise 4% over the next 12 months. These rates are inclusive of maintenance fees and are based on gross floor area, which include common areas.

In addition to monthly rent, another major expense is a substantial deposit payment (or "key money"), which is a one-time charge that is refundable upon termination of the lease. Nearly all Korean landlords require key money, which ranges from USD 3,000 to USD 6,000 per pyong. There are various combinations of monthly rental fees and key money deposits, and the price per pyong varies based on the negotiated terms. Office parking, another scarce commodity in Seoul, is usually available for a monthly fee.

Most foreign companies in Seoul are located in the following four well-known districts: 1) Kangnam -- the expensive, bustling, new city center south of the Han River where one can find the World Trade Center complex and the American Chamber of Commerce in Korea; 2) City Hall -- the historic CBD area where the U.S. Embassy and a few Korean ministries are located; 3) Yoido -- or "Manhattan Island," which is adjacent to the Han River, where many financial firms and the National Assembly can be found; and 4) Mapo District – which is halfway between Yoido and City Hall. While heavy urban traffic is an ongoing source of frustration and delay, Seoul has an excellent public transportation system that allows foreign investors to consider various locales for their Korean offices.

Under the Foreign Land Acquisition Law the Korean government allows foreigners to purchase land regardless of the size and purpose for which it will be used. Local zoning laws restrict certain types of activity, and should be taken into consideration by the investor before making the final purchase.

Step 4: Register with the Nearest Tax Office

After locating the site for the branch office and providing notification to the Bank, the investor should register with the nearest tax office within the jurisdiction of the site area for tax reporting purposes. Local Korean tax authorities, in addition to performing tax audits, provide new tax information and counseling at the request of the company. However, the complexity of Korean tax laws and the language barrier make it difficult for foreign companies to file taxes with Korean authorities. Therefore, foreign companies should consider hiring a local accounting firm to file taxes. A list of local accounting firms can be found at: http://www.buyusa.gov/korea/en/realestatecontacts.html#_section2.

Step 5: Seek Qualified Employees

One of the final steps in setting up an office in Korea is to locate and hire qualified employees, whether local or foreign, to staff the office. Frequently, a U.S. company's headquarters designates one or two American staff to head the company's Korean office, while the remainder of the staff in the office typically are local nationals or Koreans educated in the U.S. Local Koreans are very much attracted to working at the Korean branch office of a U.S. firm due to relatively higher salaries than at local Korean firms, prestige, opportunities for travel, the ability to use and learn English and the possibility to transfer to the company's home office or another foreign branch office.

Korea has a large pool of conscientious, highly educated, enthusiastic, and underutilized female workers who are usually unable to find equivalent employment in Korean companies due to traditional cultural attitudes toward women in the workforce and the prevalence of the "old boy network" in Korea's corporate culture. Due to the paucity of opportunities for professional advancement for women in many Korean companies, frustrated professionally qualified Korean women often welcome employment offers from foreign firms.

Korean employees' once renowned dedication and company loyalty is slowly declining. Company loyalty still exists, but along with high productivity, it should not be taken for granted. It is essential that the employer first earn the respect of his/her Korean employees. Many foreign managers have successfully used recognition and increased pay to reward increased productivity.

Whether seeking to hire local or foreign staff or to obtain information on local labor laws, a foreign investor should consult an employment agency in Korea. Click "here" to view a list of employment agencies.

To view the list of real estate consultants, accounting firms and human resource agencies, click "here".