(News) "US Startups Look To South Korea Amid Country’s COVID Success"
2020. 8. 12.
The U.S. media are generally giving positive comments to how Korea has been dealing with COVID-19. Many people around me also said that it seemed to have saved many lives in Korea because Korea has dealt with COVID-19 well in the beginning. In fact, every time I felt proud, I also thought, 'Wouldn't you think that Korean government had infringed on people’s freedom too much if you know how Korea has dealt with COVID-19?’ But I just smiled and said, "So many people are going back to Korea from the United States."
It is not just international students who enter Korea from the U.S. There are U.S. startups have already entered or are considering entering Korea. Korea's response to COVID19 has given rise to the image of a country with the stability of its crisis management system, which has made Korea an attractive place of business in the current global pandemics especially for startups that need to take the stability of the business market seriously.
Korea's economy size and the stability of its crisis management system are certainly attractive to startups. Also, there are support system for startups and benefits for foreign investment in Korea. However, I want to emphasize one thing that startups who are especially willing to run innovative business or have creative technologies should consider before moving to Korea. The government regulatory system.
I think the government regulatory system is very important for startups. Unlike the U.S. has adopted a negative regulatory system, Korea government has adopted a positive regulatory system. To put it simply, in a positive regulatory system you can only do what is stipulated that it can. In other words, anything cannot be done before the government and the law specifically allow. On the contrary, in a negative regulatory system you can do anything other than what is stipulated that it cannot.
Therefore, basically under a positive regulatory system, it is not easy to run innovative businesses. If innovative business is not regulated by existing laws, it will have to wait until regulations specifically allow the business. Also, a positive regulatory system is more likely cause conflict and collusion of various interests.
The Tada case is a good example. The CEO, who was recognized of the innovative business (ride-hailing service business) and accompanied the President Moon’s visit to North Korea, is currently undergoing a criminal trial for violating related regulations (he was acquitted in the first trial, but the prosecution has appealed), and the National Assembly passed a controversial bill that dealt a severe blow to ride-hailing service Tada because of the strong opposition of people in the existing business (taxi business). Apparently, the Tada ended its main service business and the investors in Tada stopped investments due to “distrust of South Korea government and parliament”. (http://www.koreaherald.com/view.php?ud=20200312000679&ACE_SEARCH=1)
Thus, if U.S. startups want to move to Korea, the startups have to check whether it can be covered by regulations that are already allowed. Sometimes, a complicated and difficult process is required, such as legal reviewing on related Korean laws and practice for the business in advance and having to go through a consultation and persuasion process with relevant government agencies if necessary.
Nevertheless, Korea is still an attractive country for U.S. startups in many aspects. For U.S. startups to avoid a setback when moving to Korea, they should meet a lawyer who have extensive experience in Korean law, regulatory practice and dealing with government agencies from the planning stage to make detailed plans for the success of the business in Korea.