Korean high-tech and service firms such as Naver and Kakao are electing to start new businesses abroad rather than in Korea citing the obstacles of excessive regulations. Evidenced by this example, we can see how Korea's high-tech firms are following the footsteps of the manufacturers who have invested heavily overseas to grow their business. As a consultant supporting direct, strategic foreign investment into Korea for more than 30 years, I have often bemoaned regulations which are one of the three main impediments to Korea's economic health (along with dominance of the chaebol and labor inflexibility). Potential foreign investors considering locations for their Asia (even global) operations have passed Korea by due to these structural impediments. As the Korean government develops (woefully meagre) incentives to attract foreign investors, they perpetuate an ecosystem that is decidedly anti-business. Koreans have the talent, experience, capital and character to become successful entrepreneurs and innovators but they are repeatedly stymied by unfriendly conditions. To give the economy new impetus, government policies must focus on creating an open, fair, transparent and competitive environment and then get out of the way and let clever businesspeople stimulate the economy, create wealth and create jobs for the population.
Written by Peter Underwood, IRC Consulting Managing Partner.