1st Quarter - AdmiralCloud

How to captivate the 'digital first' generation KGCCI Economic Outlook 2021

COVID-19 vaccine impact on global logisticsWhat's new in 2021 Korean tax laws?

N. Korea's new generation - Change by youth?

Korea Unternehmen Märkte

1st Quarter2021, No.87

Comment

We are proud to celebrate the 40th

Anniversary of our chamber this year.

Established in 1981, the Korean-

German Chamber of Commerce and Industry

(KGCCI) has been accelerating Korean-German

economic relations for four exciting decades.

For German and Korean entrepreneurs and

trade promotion organizations, KGCCI has

also become the first point of contact for

establishing business contacts in both countries

and realizing tangible outcomes. The kind and

scope of activities and services KGCCI offers has

changed and increased over time, in step with

the development of relations between Germany

and Korea. A large array of professional market

entry and expansion services—market research,

business partner matching, HR services, trade

fair businesses, delegation trips, investment

promotion and also support of governmental

initiatives such as the Korean-German Energy

Partnership—are part of our daily business, also

during pandemic times.

At the occasion of our 40th Anniversary, we take

the opportunity to envision a better future, rather

than simply looking back to legacies of the past.

COVID-19 has a critical impact on the global

business environment, accelerating digitization

trends and establishing new businesses such as

AI, green mobility, green energy, biotechnology

and others which will lead growth in the post-

corona future. We will go this way together with

you and promise you an unwavering support to

your business for the time ahead.

This is also why we dedicated the first

quarter KORUM of this year to the topic “New

Generation.” Millennials and Generation Z are

no longer the generation unknown, but the

main drivers of the global economy. Especially,

Gen Zs, the first digital natives, are rapidly

changing everyday lives and businesses through

digital innovation and mindset. Without proper

understanding of the new generation, it will be

hard to steal the hearts of young consumers and

employees and make use of their potential.

For me personally, this is the last edition of

KORUM to comment on as President & CEO of

the KGCCI. It was a great honor and pleasure

serving KGCCI and you as members and

partners of the KGCCI for eight years. I will

follow developments fondly from my new home

and work place in Budapest, Hungary. I wish you

all the best, for your families and companies,

and my successor Dr. Martin Henkelmann a

good start. I will keep Korea and the KGCCI

forever in my heart and look forward to the

further deepening of Korean-German economic

relations in the next decades to come.

Barbara Zollmann

President & CEO Korean-German Chamber

of Commerce and Industry

Dear readers,

UNTIL MAY 31, 2021

A P P L Y N O W !

INNOVATION IN BUSINESSINNOVATION IN DIGITALIZATIONINNOVATION IN SUSTAINABILITYWOMEN IN INNOVATION

www.innovation-award.kr

Tax & Legal The year 2021 marks another change in Korea’s tax law. So far, Value Added

Tax Act, Individual Income Tax Act, Corporate Income Tax Act and the Liquor

Tax Act have been re-written. Shin & Kim provides the brief overview of tax

law changes and highlights what may be pertinent to foreign individuals

and companies doing business in Korea. Kim & Chang introduces the Serious

Accidents Punishment Act (SAPA), a key manifestation of the trend in Korea

towards more robust safety and health regulation.

Cover StoryMillennials and Generation Zs are all around us. They are young and

digitized generation with increasing purchasing power. In light of

business, understanding the new generation means proper targeting of

the biggest batch of consumers and better management of employees

at your workplace. Find out how to win hearts of the new generation in

the context of marketing and HR, along with the Kyobo Life Insurance

interview on “reverse mentoring.”

KGCCI Economic Outlook 2021KGCCI held the “KGCCI Economic Outlook 2021” which was livestreamed

from Seoul to viewers in Korea and Germany. Our distinguished speakers

provided insights regarding the economic development in both

countries, highlighting that Korean-German economic partnership has

been longstanding and ongoing despite COVID-19. With a rising hope of

overcoming the virus, Korean and German economy is foreseeing a room for

improvement.

Cover Story

Comparing trends among Generation Y and Z 06

How to captivate the 'digital first' generation 10

Working with Millennials and Gen Z in Korea 14

Dancing like BTS with my boss 16

Markets & Trends

Hi there, do you "Karrot"? 18

KGCCI Economic Outlook 2021 20

COVID-19 vaccine impact on global logistics 22

S. Korean Market for Pharmaceuticals 24

and Biopharmaceuticals

Tax & Legal

What's new in 2021 Korean tax laws? 28

Overview of the Serious Accidents Punishment Act 30

North Korea

N. Korea's new generation - Change by youth? 32

Trends in Germany

Persistence in a Pandemic 36

KGCCI Member's Spotlight

KGCCI CSR Report 40

Inspiring CSR: BASF Korea 40

Inspiring CSR: Porsche Korea 41

Inspiring CSR: ZEISS Korea 41

Member to Member Promotions 42

News & People 44

KGCCI New Members 46

Inside KGCCI

Events & Seminars 47

Fairs & Exhibitions 50

Trade & Business 51

Meet Our Team : Ji-Eun Kang 52

Korea Life

A Zoomer’s guide to Korea’s housing problem 53

20 28


1th Quarter2021, No.87

06

05 KORUM | 1st Quarter 2021 |04 | KORUM | 1st Quarter 2021

Contents

Digital, critical and remote

Comparing trends among Generation Y and Z in Korea and globally

Capturing the main characteristics of millennials

(also known as Generation Y) and Generation Z

is not only about ‘young customers’ or ‘future

leaders’ anymore. In a year or two, older millennials will

be well in their forties and even among Generation Z a

significant number would be finishing higher education

and entering the workforce soon. The aim of this article

is to summarize some of the key trends in behaviour and

attitudes of millennials and Generation Zs that matter to

the companies in Korea.

1) For a more narrow definition see for example: https://www.pewresearch.org/fact-tank/2019/01/17/where-millennials-end-and-generation-z-begins/

2) https://www.weforum.org/agenda/2018/08/generation-z-will-outnumber-millennials-by-2019/

3) https://population.un.org/wpp/

There are different approaches in identifying the right

chronological separator between Generation X (post-

boomers), millennials and Gen Z. This article references

studies with varying methodologies and will generally use

the broadest definition that puts millennials' birth years

in 1980-2000 range and Gen Z’s after 2000.1) According

to calculations, around 4.9 billion people in the world

belonged to Gen Y and Z in 2019 which corresponds to

64% of the global population.2)

In Korea the situation is

different due to the ageing population trend, but still the

number of people aged less than 40 comes up as 44% of

the total population.3)

The importance of being digital

Probably one of the most obvious characteristics of

Generations Y and Z is their savviness in everything digital

with Generation Z being the first one that is fully digitally

native.4) This has an impact on everything from the way

they work to how they choose products and consume

them. With East Asia showing one of the highest levels

in adoption of digital technologies compared with other

regions,5)

this trend here is only more pronounced.

For example, as The Economist Intelligence Unit

(EIU) confirmed in the study ‘Asian digital millennials:

Opportunities for business’ (see graph), having an option

to pay with digital wallets and apps is significantly more

important to younger generations in China and South

Korea than in Western Europe and the US (72% versus

57%). The same is true for their expectations to shop more

using e-commerce websites or online vendors based

in other countries (62% versus 47%). It does not mean,

however, that brick and mortar shops are completely

irrelevant to young people in East Asia—in fact, it is here

that potential shoppers are discouraged to buy a product

online if there is no option to interact with it in-person (52%

in East Asia versus 34% in the West).

Digital plays a bigger role in how millennials and

Generation Zs are choosing among brands and specific

products with social networks increasingly contributing

more. Particularly in Korea and Japan, younger

generations are also heavily influenced by video sources

in choosing the brand6)

. Together with the highlighted

importance of both physical and digital shops, this shows

that a sophisticated omnichannel approach is crucial for

influencing Generations Y and Z.

Millennial pessimismGlobally, millennials and Generation Z tend to be more

pessimistic than people from generation X (born in 1965-

1980) or ‘baby boomers’ (born in 1946-1964).7)

There are

multiple reasons for this, ranging from complex political

and ideological challenges to more obvious economic

circumstances. This still holds true to this day—for

example, more people among the younger generations

have a negative outlook on the pace of economic recovery

following the economic crisis induced by the COVID-19

pandemic.8)

It seems to be even more so with regards to Korea which

made headlines a few years ago as a country with the

most pessimistic youth globally.9) This is consistent with

more recent studies, for example Deloitte’s millennial and

Generation Z mood index shows that Korean youth were

the fourth most pessimistic in 2019 (among the studied

4) https://www.pewresearch.org/fact-tank/2019/09/09/us-generations-technology-use/

5) EIU. The Asian Digital Transformation Index 2018. http://connectedfuture.economist.com/article/asian-digital-transformation-index-2018/

6) https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/what-makes-asia-pacifics-generation-z-different

7) See here: https://www.economist.com/bartleby/2019/05/23/a-bleak-view-of-the-future https://www.ipsos.com/ipsos-mori/en-uk/people-western-countries-

pessimistic-about-future-young-people

8) https://eiuperspectives.economist.com/sites/default/files/eiu-sap-the-influtenial-shopper-executive.pdf

9) https://www.businessinsider.com/south-korean-millenials-may-be-the-saddest-millenials-of-them-all-2015-2

BABY BOOMER GEN X GEN Y GEN Z

Comparing trends among Generation Y and ZCover Story

06 07 KORUM | 1st Quarter 2021 || KORUM | 1st Quarter 2021

countries) with the sentiment score twice as low as that

of China or India. One of the biggest contributors to this

is the staggeringly high level of unemployment among

youth in Korea, but speaking more generally, a lot of

people among both millennials and Generation Z in Korea

seem to resent the stereotypical ‘Hell Joseon’ lifestyle—

a controversial concept criticising the workaholic and

paternalistic culture of post-war economic development

years for Korea.10)

This is reflected in how millennials in

Korea are sometimes called ‘give-up generation’ with the

increasing number of things they—voluntarily or not—give

up on, such as dating, marriage and home ownership that

were traditionally perceived as more desirable.

Working differentlyGiven the higher adoption rate of digital technologies

on one hand and a somewhat critical view of traditional

working culture on the other, it is not surprising to see

that both millennials and Generation Z are showing

strong preference for remote and flexible working. Up to

two thirds of them globally agree that having an option to

work from home improves work-life balance and reduces

stress, and 60% are saying they would like to have this

opportunity even when there are no more healthcare-

related reasons for lockdowns and social distancing.11)

In fact, global surveys are already showing a

counterintuitive decrease in the stress level following

the start of the COVID-19 pandemic and the subsequent

shift to remote working for most of the countries. This

is even more pronounced in Korea where the number of

Associate Director, Economist Corporate Network, North AsiaThe Economist Group

https://corporatenetwork.com

Dimitry Rakin

people saying they felt anxious and stressed dropped by

23% for millennials and by 24% for Gen Zs, which means

that practically one fourth of youth are feeling better

because of the changes in life and workstyle.12)

It has

long been noticed that together with long working hours

younger generations in Korea also tend to feel bothered

by common office practices such as ‘bonding’ drinking

parties with colleagues that are practically compulsory,13)

and it may be that their absence contributes to the

reduction of stress level as well.

ConclusionOf course, generalizations regarding people born in

a certain periods of time versus the others have their

limitations and there is always a significant variability

inside each particular group. However, some of the

common trends described above highlight an increased

importance for non-traditional and customized strategies

in working with millennials and Generation Z as customers

and employees. A heavier reliance on omnichannel

presence and flexibility of working arrangements are

especially noticeable here and also seem to be generally

true for both Korea and other countries.

10) https://www.abc.net.au/news/2020-01-30/south-korea-hell-joseon-sampo-generation/11844506?nw=0

11) https://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

12) https://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

13) https://rdiuk.com/blog/5-things-korean-millennials-hate-at-work/

Cover Story

08 | KORUM | 1st Quarter 2021

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How to captivate the ‘digital first’ generation Gen Y and Z?

With millennials (Generation Y) and Generation

Zs having experienced the rapid digital

transformation while growing up, they are

often referred to as the Digital Generation, or the MZ

Generation. However, taking a page out of the marketing

playbook called “Divide and Conquer,” it is an approach

that leads to a great deal of trial and error. They are

two separate generations of different characteristics

and inclinations because their experience in basis for

experiencing the digital world is somewhat different.

While “being digital” for millennials means the removal

of analog discomforts and having a world that is more

tailored to oneself, for Gen Z, digital has already been

tailored to their life from the get-go, providing them with a

variety of underlying pleasant experiences.

Personalization is important for millennials,

while play matters for Gen Z!

Personalization is an extremely important need for

millennials. This means that, from a marketing point

of view, personalized products or services using digital

technology are the appeal points for millennials.

The number of single-person households in Korea has

been on a gradual increase among millennials. This

means that for millennials, “an experience just for me”

has become important. They prefer companies which

provide products or services that consider personal

preference and disposition as well as specific events such

as birthday.

Since millennials are the generation that really began

utilizing the internet and digital devices, they purchase

products or services in various ways regardless of

the channel—either domestic or international, online

or offline. For a company with millennials as core

customers, designing both on- and offline channels which

allow millennials to get the most out of their purchasing

experience has become an essential challenge.

Using digital technology eliminates the inconvenience of

navigating and purchasing while maximizing the individual

experience. For example, millennials prefer shopping

histories to be delivered through mobile apps rather

than paper receipts, which makes 'personalized and

digitized expenditure management' a desirable value and

experience for them.

Meanwhile, an important feature for Gen Z is that

members of this generation were born as digital natives.

Thus, the designing and delivering of digital experiences

that maximize fun and satisfaction is what marketers

need to focus on when taking this generation as a key

customer. For generations prior to them, and including

millennials, the cost to performance ratio was important.

While it is important for companies to provide adequate

information to millennial customers to let them weigh

costs and benefits, in case of Gen Z customers, it

is about providing an experience that allows them

to rid themselves of stress and depression through

consumption. In other words, Gen Z care for the price to

satisfaction ratio.

A delightful experience is the most important factor for

Gen Z consumers when making a purchase decision. In

particular, Gen Zs enjoy online experiences which can

be done in a self-directed way regardless of time and

location. They dwell in social media platforms in which

they freely search for information and communicate with

people who share the same hobbies or thoughts. This is

why they trust information shared by those in intimate

online relationship, rather than an advertisement or

information provided one-way by individual companies.

Characteristics of Gen Y Marketing point

1. Single-person

consumption

“I live alone so I prefer ready-

to-cook food and small-sized

products”

➜Need to respond to "oneconomy"

(one person + economy) market

2. Individual

promotions

“It would be great to have a

small discount on my birthday”➜

Need for personalized promotions to

meet price to satisfaction ratio

3. Pursuit of profit

rather than

preference

“Unmanned stores are

preferred if they offer

promotions such as discounts

or bonus points”

➜Need for realistic profits whether via face-to-

face or non-face-to-face. Need to offer different

benefits through online and offline channels

4.Eliminating

annoyances“Don’t really want paper receipts” ➜ Need for digital technology to eliminate hassles

Characteristics of Gen Z Marketing point

1. Experiential

consumption

“I live alone so I prefer ready-

to-cook food and small-sized

products”

➜Take influencers into consideration and think

about what kind of experience a product/service

could offer

2. Preference

over profit

“Price is important, but I have

to like it” first➜

Promotions should be tailored to individual

preference and situation

3. Fansumer

consumption

“I'm willing to leave a good

review if I'm satisfied with the

product or service”

➜Induce “fansumers”(fan+consumer) to make

content viral

4. Conditional

contact-free

preference

“I’d often like to be greeted or

serviced by a person”➜

Provide different features and benefits for each

face-to-face and non-face-to-face service

How to captivate the 'digital first' generationCover Story


CX Strategy Teamwww.entrue.com

LG CNS Entrue Consulting

V-Commerce (Video Commerce), which often involves a

collaboration with well-known YouTubers and influencers

to promote a business with Gen Z as its core customer, is

an example of Gen Z marketing strategy.

Thus, for marketers, they need to quickly grasp the ever-

changing trend among Gen Zs in order to capture their

hearts. Gen Zs do not only purchase but support their

favorite products or services by becoming a “fansumer.”

Understanding what or whom Gen Zs love, and constantly

communicating with them in order to make them fans of

a product or service has become an important point for

marketers to give serious thought to.

Not just Y and Z, but also HENRY

Other than millennial and Gen Z, which are under age and

digital adaptability, there is another group of consumers

in regard of economic and purchasing power.

This is known as HENRY: not the name of a person, but an

acronym for “High Earner, Not Rich Yet.” In 2003, Fortune

magazine put together a new segment of people who

earned between $250,000 and $500,000, defining them

as They are high earners but after subtracting taxes,

mortgage and school expenses, not wealthy enough to

enjoy retirement without any worry.

This group, a main target of luxury marketing, is also

a trend-setting group which has a strong influence

on millennials and Gen Zs. They are not only heavy

consumers but also influencers among young generation.

This is why marketers believe that winning hearts of the

HENRYs will lead to a knock-on impact on the Digital First

generation.

Good ways for marketers to connect with the

Digital First generation

While traditional marketing method involved big surveys or

focus group interviews (FGIs) to understand consumers,

things are changing with the Digital First generation.

Think about a marketing or purchasing manager of your

company. Millennial employees are already establishing

their positions at the core of enterprises, using digital

channels to acquire information and make decisions. They

also tend to prefer digital based contact-free channels

over face-to-face channels.

Contact-free marketing using digital channels has become

the new normal in understanding and communicating

with the Digital First generation. The traditional marketing

process of sensing trends, selecting target customers,

planning marketing content strategy and discovering

marketing leads now has no choice but to be connected

with the digital channels preferred by the new generation.

Through digital channels, marketers need to provide

sufficient content and campaigns that are personalized

and offer “Fun & Play” experiences, as pursued by the

Digital First generation. Last but not least, one can say

that marketing in the digital age is done properly only

if the digital traces are collected and based on this,

marketing performances are constantly measured.

How to captivate the 'digital first' generationCover Story


Advertisement

Working with Millennials and Gen Z in Korea An opportunity to rethink and move forward

Take a look around at your workplace (for those of

you not working from home), then you might notice

some new faces. It is likely that your latest co-

worker is born in 2000, some even in 2001.

Yes, Gen Zs are in your workplace, with almost 50% of the

population in Korea being millennials and Gen Zs in 2020.

Some are feeling the stress of working in a generationally

diverse workplace.

A survey in 2019 conducted by JoongAng media group

found that 80% of Koreans say there is a generational

issue at their workplace, meanwhile, 65% cited as saying

it is a major source of stress for them at work.

Is it all doom and gloom for generational diversity in the

Principal ConsultantRDI Worldwide

www.rdiuk.com www.linkedin.com/company/rdiworldwide

Eric Wan

Korean workplace or do organisations see opportunities

for them to leverage generational diversity as a form of

competitive advantages in the market?

Saramin, one of the largest job-related online platforms

in Korea, conducted an employer survey in 2020 and

found that companies in Korea do see that Korean Gen

Zs bring a unique value to their organisation: capability

and knowledge in the latest technologies, quick decision

making, a wide range of personal experiences, and

readiness to work in a multicultural environment being

the top Gen Z qualities that companies appreciate the

most.

Understanding Gen Z from an experience-driven

perspective

SM Culture & Contents (branch of SM Entertainment)

describes Korean Gen Z as "Shilgamsaedae"(실감세대).

Here, the word “Shilgam” refers to realistic feeling and

“Saedae” to generation.

As consumers, Gen Zs value authentic experiences that

engage all five senses and it is through these experiences

their opinions are developed and purchasing decisions

are being made. Companies that are able to develop

consumer experiences appealing to Gen Zs are the ones

most successfully able to gain their trust.

As employees and co-workers, these still very much

hold true for Gen Zs, their experience as an employee

influencing their approach to work, the workplace and the

people within it.

For leaders and their companies to truly understand

how to work with Gen Zs, a conscientious effort must be

made to focus on the Gen Z employee experience, as well

as a change in mindset of how that experience is being

measured.

The employee experience is formed when an employee

interacts with any career-related element at their job

and company. These elements include supervisors, co-

workers, customers and the environment. To focus on

working effectively with Gen Zs, leaders should ask

themselves: “What was the experience like, for the Gen

Z who interacted with me?” Furthermore, the employee

experience needs to be measured constantly and if

possible, in real-time.

Most companies measure their employee’s engagement/

satisfaction once or twice a year, which are still important

metrics to retrospectively look at the employee experience

at a high company-wide level. However, leaders need to

seriously think about how they can measure employee

experiences in real-time.

Gen Zs are used to providing feedback and reactions

in real-time. Take YouTube as an example, (or any type

of social media Gen Zs use) the thumb up and down

interface in YouTube offers an instantaneous way for Gen

Zs to provide real-time feedback on their experiences and

thus the experiences provider can make an immediate

adjustment to content (experience).

Can you imagine the ineffectiveness of only being able to

gather the audience's reaction on a Youtube video once a

year only at a specific given time? By the time you made

the adjustment retrospectively, it would already be too

late.

To summarise, for leaders to work effectively with Gen Zs,

we need to start thinking about:

• What direct experience do Gen Zs have with me as a

leader?

• How can I gather real-time feedback from Gen Zs on the

experience?

Generational diversity requires all generations

to re-think what is good leadership in 2021

On a final note, as more Gen Zs join us in the workplace

in 2021, it is also worth mentioning that at the same time

more millennials will be stepping up into leadership roles

in their organisation.

Recent online communities have pointed out that

millennial managers are displaying authoritative types of

behaviours towards their Gen Z co-workers, often causing

them to be called under a disgraceful name “kkondae”(꼰

대, meaning “boomer” in Korean)

The biggest complaint directed toward millennial

managers is: Millennials like to give lectures and advice,

even when unsolicited.

With that, I will leave you with a study conducted by Kurt

Lewin, one of the pioneers of social psychology on giving

lectures and changing minds.

Lead and influence the next generation with a

collaborative approach

During World War II, Lewin was hired by the American

government to persuade families to use more offal–

insides of an animal–as a cooking ingredient due to meat

shortage and potential protein deficiency in the population,

yet many perceived these meats to be low-classed and

refused to add them to their own diets.

Lewin tested two different approaches on two groups

of participants. The first was given a fact-filled lecture

by a nutritionist about how the ingredient does not only

support the war effort but also improve their families’

health.

The second group was asked to discuss and come up with

their own ideas about why this policy might make sense

and how to implement it nationwide.

Just 3% of participants in the first group adopted the

promoted behaviour. In the second group, this number

stood at 52%. Food for thought.

1,548,200,774 views

844,177 7,314,092

Working with Millennials and Gen Z in KoreaCover Story


Dancing like BTS with My Boss Kyobo Life Insurance “Reverse Mentoring” Program

When talking of mentoring, a mentor is most likely

to be the one who’s older and more experienced.

However, Kyobo Life Insurance made a twist

on such stereotype by adopting a “reverse mentoring”

program. In this program, junior employees become the

“mentors” and senior executives become the humble

“mentees.”

Reverse mentoring is popularized by Jack Welch,

the former CEO of General Electric (GE) in the late

1990s, however, it is recently getting a spotlight due to

rapid digitization and emergence of new generation –

millennials and Generation Z.

How does reverse mentoring work and does it really

help closing the generation gap? On January 18, we met

Kumjoo Huh, Senior Executive Vice President of Kyobo

Life Insurance who is also the Chair of the WIR Mentoring

Program at KGCCI (here by nickname "Mars"), and her two

mentors Kyeongmin Cha, Associate of AI Application Team

(“Brian”) and Seungsub Kim, Assistant Manager of Open

Innovation Team (“Neo”) to take a page out of their playbook.

How did you come across and adopt “reverse mentoring?”

Mars: As a person who’s in charge of digital transformation

and organizational culture, I was deeply motivated by

Tony Saldanha, who is the author of the book “Why digital

transformations fail.” During the last year’s interview with

Maeil Business Newspaper, he highlighted that digitization

is not just about introducing the latest technology but also

enhancing the digital literacy of a leader and suggested

reverse mentoring as an action plan.

Please introduce the specifics of reverse mentoring.

Neo: Reverse mentoring lasted from September to

November 2020. 14 mentors were selected in total, who

are in their 20s or 30s – mostly millennials – and have a

good digital background. Brian and I are also in our third-

year as data scientists and each of our role is focused on

developing AI solutions and supporting overall digitization

respectively. Then mentors were matched to 7 mentees,

who are all senior executives.

Of course, all the activities are done within office hours.

During the program, we met at least

3 times a month. At the end of the

program, we were awarded as one

of the two best mentoring groups.

Why do you go by the nicknames?

Brian: I made a suggestion at the

very beginning of the program. I got

a hint from the employees of our

project partner company, who were

calling each other by nicknames

and freely voicing one’s opinions.

Mars took the idea without a minute

of hesitation. I thought it marked us

a good start because, to be honest,

the success and failure of the

reverse mentoring largely depends on the mentee.

Neo: Some might think it’s not a big deal, but it certainly is.

Compared to other industries such as IT, financial industry

tends to be more hierarchical. It’s hard to think of a junior

employee calling a senior executive by a nickname.

Mars: Actually, it made me think more about flexible and

horizontal communications. So, I took this program as a

chance to start calling my team members by nicknames

and remove designated seats in the office.

What was the content of the mentoring program?

Brian: A general concept of the program is to introduce

digital platforms and tools to a mentee and have some fun

together. So, Brian and I first planned to teach Mars how

to make an Instagram account and achieve 100 followers.

To our surprise, it turned out she already has had two

accounts with almost 1,000 followers. She was a better

influencer than us.

Mars: I was always curious of home-sharing, so we

decided to become a host by participating in “Naamezip”

(meaning “other’s house” in Korean) project. It is a Korean

home-sharing platform similar to Airbnb. I first set up a

host page with a witty introduction and fancy photos. My

two mentors became the first guests. The experience also

gave me a great insight in regard of business, because I

was able to market my home to young customers.

Neo: The most memorable experience was dancing to BTS

“Dynamite.” We first set up a goal to make a video of it in

November. Then Brian and I met 6~7 times for practice

and Mars, despite her busy schedule, also participated

3 times. We even danced together when Mars invited us

to her house. After the hours of practice, we managed to

record a video and upload it on YouTube.

Brian: Above all these, we often ate lunch or had coffee

together and talked a lot about our company. So we had a

good chance to deliver what millennials and Generation Z

employees think.

How would you define MZ Generation?

Neo: In business sense, MZs are so much different from

older generation. For example, MZs even bother installing

an authentication program when using online banking.

On the other hand, there are still many people from old

generation who feel comfortable with an actual bankbook.

Brian: Millennials were born analog but at the same time,

they are familiar to the digital world. I think they can

bridge between the generations.

Mars: In my age, “suffering with patience” was considered

a virtue. Sometimes, people just closed their eyes, shut

their mouth when they shouldn’t. But MZs don’t give up

on their convictions and equity so they constantly speak

up for things. That’s why communication is essential in

understanding MZs and closing generation gaps.

(Interviewed by KGCCI.)

Dancing like BTS with My BossCover Story


Hi there, do you “Karrot”?Karrot - Korea’s most popular secondhand goods-trading app

It all started in Pangyo Techno Valley outside Seoul.

Karrot or Danggeun Market – an abbreviation of ‘the

marketplace in your neighborhood’ in Korean – was

founded by two former KakaoTalk staffs in 2015, Two years

later, the service went live nationwide and its transaction

volume achieved 1 trillion KRW in 2020. However,

secondhand trading market in Korea is not a novelty at

all. How could Karrot gain immense popularity only within

three years? What is behind Karrot’s success?

Before Karrot appeared, the most representative

online secondhand platform in Korea was the website

Joonggonara. But it did not have a mobile app and suffered

from scams including non-payment and non-delivery.

Fears of fraud and lack of trust were the most critical

barriers for users to enter the online secondhand market.

Karrot differentiated from Joonggonara and other

competitors by launching a convenient smartphone app

based on direct transaction. Founders of Karrot regarded

limited range of face-to-face transactions as an effective

solution against frauds. Thus, the app only shows a list

of user located within a four- to six-kilometer radius. For

transaction safety, all users are obligated to provide their

mobile numbers and location when signing up. Transaction

on Karrot is commission-free and can be easily arranged

between users via chat. To ensure trust among users,

Karrot came up with a ‘manner meter’ which rates product

quality and user behavior. Users, can leave reviews, praises

or disapproval after a deal. These reviews are then reflected

in the manner meter of each user. Furthermore, Karrot

utilizes machine learning to recommend personalized

products for customer convenience.

Karrot envisions to go beyond being a mere online

trading platform. Like NextDoor, it is transforming itself

into a commerce-based social platform that vitalizes

community life and local businesses. Karrot is slowly

replacing the so-called “mom cafes”—online communities

for mothers on Naver and Daum (Korea’s largest search

engines)—to exchange useful information with people

in their local communities. However, they are regarded

“closed societies” because only certified users—pregnant

women or mothers—can acquire full membership. Karrot

opened the door to wide range of participants with the

‘neighborhood life’ section. Karrot’s users can exchange

region-based information and recommendations such as

trusted doctors, gyms, hidden restaurants and delicious

side dish shops nearby. Some users check job postings

nearby or upload postings to find a missing dog or an

AirPod piece. This clearly differentiates Karrot from

Joonggonara and its other competitor Beongaejangteo.

the app while spending more time at home. Secondhand

trading market is currently valued at around 20 trillion

KRW. It has settled as a new consumption culture, with

more consumers viewing it as wise and practical way of

spending. Goods on Karrot are sold in average at 40-50%

of the original price.

Karrot is expected to become the 13th unicorn startup in

Korea. However, Karrot’s current revenue comes solely

from advertisement of regional micro enterprises such as

beauty salons, delivery services, cafes, etc. Karrot would

soon need to diversify revenue streams.

Secondhand trading has also positive impact on the

environment. Karrot announced that it achieved a

cumulative 191,782 tons of greenhouse gas reduction

effects with transactions by 10 million users in 6,577

regions countrywide last year. Moreover, Karrot recently

partnered with GS Retail, which operates 15,000 offline

stores all over Korea, to notify Karrot users on nearly-

expired food to be sold at discount. In this case, GS would

be able to cut down on food waste and boost profit while

Karrot secures a revenue source.

Local distribution giants, which are Karrot’s indirect

competitors, are also actively entering the secondhand

market. Last year, Lotte Mart installed a secondhand

vending machine “Parabara” for the first time. When a

seller places an item for sale in the vending machine, a

buyer can check and purchase it. IKEA Korea is providing

a “buyback” service, from which it buys used IKEA

furniture from the customers, repairs and resells them.

Last year, Karrot launched its service in 41 regions in the

UK, US, and Canada and has further expansion plans.

Could Karrot, as it aims for, become the next worldwide

local community service platform like Facebook?

Senior Trade OfficerSwiss Business Hub Korea

www.s-ge.com/en

Min-Seo Kang

Karrot users visit the app in average about 22 to 24

times per month. More than 10 million items are newly

registered daily on Karrot. Listed products range from

clothing, baby products, home appliances, to luxury goods

such as bags and shoes. Users spend roughly 3.16 hours

per month on the app, which is about twice the time users

spend on Joonggonara. Roughly six out of 10 users are

female, and those in their 30s or 40s take up 38% of all

users.

Along with the high population density in cities, the

economic downturn and social distancing rules due to

COVID-19 has helped the entire secondhand market in

Korea grow fast, with users more actively selling through

As a result, the number of Karrot’s monthly

active users exceeded 14 million in 2021.

Source: Karrot

2020 01

480

2020 03

660

2020 07

970

2020 08

1,086

2020 10

1,200

202101

1,400

Source: K

arrot

Hi there, do you ‘’Karrot”? Markets & Trends

18 19 KORUM | 1st Quater 2021 || KORUM | 1st Quater 2021

KGCCI Economic Outlook 2021

On January 26, the Korean-German Chamber

of Commerce and Industry (KGCCI) held its

‘Economic Outlook 2021’ in cooperation with Daegu

Metropolitan City. The event was livestreamed from Seoul

to viewers in Korea and Germany. Ms. Susanne Wöhrle,

Vice President of KGCCI, virtually welcomed around 80

guests to the biannual event which provided insights

regarding the economic development in Korea and

Germany.

In her welcome speech, Ms. Wöhrle stressed the heavy

long-term economic impact of the COVID-19 pandemic

with countries initiating finance support programs, which

will inevitably raise public debt levels globally. To support

an economic recovery, she highlighted the need to

facilitate an investment cycle aimed at sustainable growth

with less dependency on government debt. For this, Ms.

Wöhrle emphasized the need for broad international

cooperation to stabilize the global economy. Following,

Mr. Jin Hyuk Kim, Director of the Investment Promotion

Division of Daegu City, presented the merits of Daegu

as an investment location with already a number of

successful Korean-German joint ventures in the city. By

encouraging to “Never let a good crisis go to waste,” he

highlighted the opportunities arising from the COVID-19

induced challenges.

Longstanding Korean-German partnership in

times of COVID-19

The first part of the event with facts and figures on

the outlook on bilateral relations and the economic

development in Korea was led by two distinguished

speakers. Michael Reiffenstuel, German Ambassador

to Korea, emphasized the longstanding economic

relationship between Germany and Korea and the further

need to strengthen it. “The 40th anniversary of KGCCI in

2021 testifies close economic partnership between two

countries.” As export-driven economies, Mr. Reiffenstuel

stated that Korea and Germany share similar interests,

including the push towards sustainable, secure and

affordable energy with the Korean government’s recent

announcements of the Korean Green New Deal and

the goal of carbon neutrality by 2050. He encouraged

German businesses to leverage the many possibilities

for cooperation in Korea. He further underlined the

importance of improving outdated trade and investments

treaties, including the long overdue update of the Korea-

EU FTA. While 2020 was an overall challenging year, the

ambassador saw a strong silver lining in the continuous

cooperation projects in the field of science, research and

education as well as the extensive agreement between

the Korean and the German government on facilitating

essential travel between the two countries in times of

COVID-19.

Mr. Frank Robaschik, Representative Correspondent of

Germany Trade and Invest (GTAI), appreciated Korea’s

overall strong COVID-19 crisis management performance

and expects a relatively quick economic recovery despite

remaining internal and external risk factors. “Korea did

a very good job in fighting COVID-19 and the country’s

GDP is expected to surpass the pre-crisis level GDP

2021.” Due to the comparatively positive development

in Korea, he highlighted Korea overtaking Japan as the

second largest export market for Germany in the Asia-

Pacific region in 2020, which were especially driven by

increased car imports. By sector outlook, he expected

semiconductors, pharmaceuticals and batteries export

growth from Korea to reach above the levels of 2019 and

outbound shipments of cars and car parts to perform

comparatively better than 2019. Of note, he stated that

e-commerce revenue has grown nearly 20% on-year as

of November 2020 and now accounts for one third of retail

sales in Korea amid changing consumption patterns in

the “new normal.” For German suppliers to Korea, Mr.

Robaschik saw expectations especially positive for car

parts, automobiles, pharmaceuticals, foodstuff and the

chemical sector.

2021 Outlook for the Korean and German

economy

The second part of KGCCI’s Economic Outlook focused

on the post-corona economic projection for both

Germany and Korea. Dr. Volker Treier, Chief Executive

of Foreign Trade and Member of the Executive Board at

the Association of German Chambers of Commerce and

Industry (DIHK), gave a virtual presentation on the topic

of “Outlook 2021: Will it bring normality to the German

international Business?” based on survey results of more

than 30,000 companies in Germany.

“German business expectations in 2021 are much better

than in mid-2020,” said Dr. Treier. “A possible scenario

is a V-shaped economic recovery throughout the course

of the year. There can be a setback in the beginning of

the year but there will be an upcycle when the vaccine

is spread throughout the population and optimism

grows as a result.” While investment intentions as a

possible weak point of the German economy have been

further exacerbated by the pandemic, recent large-scale

investment announcements such as the EU Green Deal

as well as the continued push for Industry 4.0 and the

energy transition may service as future continued growth

facilitators. For this, both the government and companies

need to work hard to stimulate a recovery. Overall, he

forecasted a GDP loss of 99 billion EUR in Germany which

would constitute a significant decrease from the loss of

189 billion EUR in 2020.

Prof. Ku-Hyun Jung, Dean Professor of Yonsei University

and former President of Samsung Economic Research

Center and Seoul Forum for International Affairs,

provided the final input of the event by looking at longer-

term trends and both advantageous and disadvantageous

sides of the Korean economy. He stated that the Korean

economy appears to have bottomed out in the second

quarter of last year with the GDP growth rate of minus

1.0% for 2020, ranking best among 37 OECD members.

The positive growth trend is expected to continue with a

3.0% GDP growth for 2021, citing figures from the Bank of

Korea.

Prof. Jung expects a subdued impact from COVID-19,

with the country’s competitive manufacturing sector and

strength in advanced technology putting its economy

in a relatively positive position. To underline Korea’s

strong position in growth industries, he pointed out that

sectors that are considered new tech — semiconductors,

electric batteries, hydrogen fuel cells and more — now

account for 65% of the total valuation of the KOSPI, the

country’s representative stock market index. On the

other hand, he warned of economic policies pushing high

labor costs, increasing government spending and the

resulting growing public debt to GDP ratio, as well as the

lingering dangers of a sharply aging population. Prof.

Jung concluded by stating that although the long-term net

effect of the positive and negative aspects of the Korean

economy is hard to determine, expectations remain

positive for the next years, evidenced by the country’s

relatively positive foreign direct investment trend in

international comparison.

Project AssistantKGCCI DEinternational Ltd.

www.kgcci.com

Sven-Hendrik Arp

From left to right ▶ Peter Tiedemann (German Chairman of KGCCI and President & Representative Director, Carl Zeiss Co., Ltd.), Dr. Hyo Joon Kim (Korean Chairman of KGCCI and Chairman of BMW Group

Korea), Frank Robaschik (Representative Correspondent Germany Trade and Invest), Michael Reiffenstuel

(German Ambassador to Korea), Susanne Wöhrle (Vice President of KGCCI), Ku-Hyun Jung (Dean Professor

of Yonsei University), Jin Hyuk Kim (Director of Investment Promotion Division Daegu Metropolitan City)

KGCCI Economic Outlook 2021: Speakers & Panelists

KGCCI Economic Outlook 2021Markets & Trends


COVID-19 Vaccine Impact on Global Logistics DB Schenker, Lufthansa Cargo and va-Q-tec on COVID-19 vaccine distribution

The year 2021 kicked off with the hope of overcoming

COVID-19. Although, the development and

production of vaccines have been considered the

foremost task since then, their seamless distribution

is what needs to be accompanied. Since vaccines must

be kept in a freezing temperature throughout its entire

transportation process, they require a “mastery of

distribution.” German companies are putting their best

effort and already playing an important role in the field.

On February 3, the Korean-German Chamber of Commerce

and Industry (KGCCI · AHK Korea) and the German

Chamber of Commerce and Industry in Japan (AHK Japan)

jointly held a webinar on "Distribution of COVID-19 Vaccine,"

hosted by Marcus Schürmann, CEO of AHK Japan and

Barbara Zollmann, President & CEO of KGCCI.

With three speakers from German companies—DB Schenker,

Lufthansa Cargo Korea and va-Q-tec—the seminar shared

insights and prospects on COVID-19 vaccine distribution and

discussed its biggest challenges and solutions.

COVID-19 vaccine logistics outlook and its unique

challenges

Delivering a presentation on the "COVID-19 Vaccine

Logistics Outlook," Veronique Dameme, the Global Head

of Healthcare of DB Schenker provided an overview of

the developmental phase of COVID-19 vaccines and the

impact on the global airfreight market.

As one of the world’s top freight forwarding providers,

DB Schenker set up a global vaccine taskforce in order

to response promptly to the any need, along with is 24/7

control tower. The company has also introduced, “DB

SCHENKERlife+,” logistics solutions for the healthcare

industry designed and customized for exact requirements.

However, COVID-19 vaccine impact on the global airfreight

market remains to be seen due to supply shortage at this

point. There are simply not enough vaccines to vaccinate

the whole world. Nevertheless, as more pharmaceutical

companies are getting approvals and leaping into

temperature solution involves active heating or cooling by

using specialized containers, whereas a passive solution

emphasizes on processes by minimizing exposure to

elements that might affect the temperature.

Lufthansa Cargo, a leading transporter of air freight

focusing on the airport-to-airport business, offers the

widest range of active heating and cooling containers in

the market. Vaccines fly to around 30 Lufthansa Cargo

stations that are certified by IATA's CEIV Pharma.

“Overall, the airline industry seems well prepared for the

transportation of different vaccines. Once the production

is up and running and all the necessary certifications

of different countries are finalized, we feel confident to

play our part and provide the required product and cargo

capacity to ensure the vaccine distribution.”

The innovative packaging solution

In 2015, Va-Q-tec, a pioneer of high-tech thermal

containers and boxes for temperature-controlled logistics,

won the KGCCI Innovation Awards for its innovative Vacuum

Insulation Panel (VIP) technology. Five years later, the

solution took on a new significance in times of COVID-19.

Song Kibeom, Country Manager Korea of va-Q-tec, said,

“VIP and Phase Change Material (PCM) are our main

technologies. This is how we keep frozen temperature

for 5 to 6 days.” The first batch of Moderna vaccines

was packed with the company’s product, va-Q-pal, and

transported from Belgium to Italy.

Va-Q-tec’s VIP is a flat panel for optimized temperature

insulation, offering 10 times higher thermal insulation

than traditional insulation materials such as fiber or foam.

PCM absorbs heat while melting and releases it during

crystallization or freezing process. These technologies are

applied to provide passive thermal packaging solutions.

While vaccine distribution presents an unprecedented

challenge in the field of logistics, it is a global task which

cannot be avoided. Also, we may be able to take this effort as

an opportunity to take the current logistics to another level

and open up new business opportunities in times of COVID-19.

PR & Communications ManagerKGCCI

www.kgcci.com

Yuna Ku

Vaccines flying under the right temperature

For the airline industry, COVID-19 has completely altered

its business landscape. Thomas Dettmer, Director of

Lufthansa Cargo Korea, said, “In normal times, the split

of cargo and passengers on our aircraft is 50-50, but

now it is about 70-30. In addition to this, an estimated 7

billion doses of vaccines which need to be transported via

airfreight do pose great logistical challenges.”

Above all, vaccine airfreights—along with other

pharmaceutical products, dangerous goods and

semiconductors—require adequate temperature sensitive

solutions. The solutions put emphasis on securing a cold

chain throughout the entire distribution process. An active

COVID-19 Vaccine Impact on the Global Airfreight Market

Short-term (up to Mar’21)

- Initial impact with trial shipments and first COVID-19 vaccine shipments are expected to focus on major

economies and routes

- Primary usage and distribution is expected to supply vaccine to governmental and security personnel

Medium-term (2021)

- Many large economies have placed orders with the largest pharmaceutical vaccine manufacturers

- Initial phase 1 distribution will supply vaccine to modern and most developed economies in the world

- Containerized supply will not only demand additional capacity from major vaccine production sites in US

and Europe, but also require a container repositioning cycle and reverse logistics

Long-term (2022)

- A global vaccine approach requires a herd immunization of approx. 60-70% of the population across countries

- Therefore many countries will need to be supplied in a second phase especially in less developed regions

and continents

- Expected distribution for a global vaccine is estimated to take at least 24-36 months

- Potential seasonal COVID-19 vaccine distribution to become part of the revolving supply chains globally

production, medium- and long- term impacts are worth

the wait. Ms. Dameme projected global vaccine distribution

to take at least 24 to 36 months to reach its full scale.

“The medium-term impact is going to be bigger. Vaccines

will definitely be given a priority for all air cargo flows.

There might be a few bottlenecks, but they are probably

nothing compared to the bottlenecks of Personal

Protective Equipment last year.”

Ms. Dameme also pointed out some unique challenges

specific to the distribution of COVID-19 vaccines, especially

highlighting the unprecedented scope of vaccination since

the entire world population must be vaccinated at the

same time. She also warned that there is “a diplomacy of

medicine,” meaning that medical supplies are becoming

political strategic weapons for some governments and NGOs.

Manufacturer

Health center

National storage facility

Regional hospital

Vaccination outreach

*Source: DB Schenker

*Reproduced from the PATH website at www.path.org, 3/4/2021

COVID-19 Vaccine Impact on Global LogisticsMarkets & Trends


South Korean Market for Pharmaceuticals and Biopharmaceuticals

Growth potential in an aging market

South Korea is the fourth largest market for

pharmaceuticals in Asia. The country was ranked the

twelfth largest pharmaceutical market worldwide in 2019

according to the healthcare analytics company IQVIA.

Demand and domestic production are likely to continue to

grow in the years to come.

The South Korean pharmaceutical market is growing

steadily. The main reasons for this growth are the rapid

aging of the population, an increase in prosperity and

the increase in chronic diseases. Pharmaceuticals made

up 20% of total health care expenditures in 2019, well

above the average for the Organization for Economic

Co-operation and Development (OECD). This compares,

however, with 25% in 2009. While drug prices are low, the

quantity used is often high. An example is the very high

usage of antibiotics in South Korea, which according to

OECD data were used 2.5 times as frequently in 2018 as in

Germany.

Imports of pharmaceuticals increase

Data on imports varies depending on the definition. Trade

statistics show that South Koreas imports of medical

and pharmaceutical products (SITC position 54) rose by

11.8% in 2020 to USD 8.6 billion. With this, South Korea

was the third largest importer of pharmaceuticals in Asia.

Its imports from Germany increased by 6.9 % to USD 1.2

billion. According to data from the Ministry of Food and

Drug Safety (MFDS), the largest German importers in

2019 were Boehringer Ingelheim Korea with USD 215.7

million and Bayer Korea with USD 212.2 million.

According to the MFDS, the import quota rose from 31%

in 2018 to 33.1% in 2019. According to the latest data as of

2018, 24.4% was comprised of finished medicinal products

and 73.6% of active pharmaceutical ingredients. The

proportion of foreign suppliers was significantly higher

for innovative and high-quality original drugs than for

generics.

Slower growth expected

Overall, growth rates are likely to level off in the medium

term, given that the market is already highly developed. In

addition, the state's cost containment policy is increasing

the consumption of generic drugs while many patents

for original drugs are nearing expiration. Added to this is

that the South Korean population will probably shrink in

the future. Despite cost containment measures, a rapidly

aging society and a rise in chronic diseases mean that

prescription drugs will continue to dominate and should

even increase their share in the market. This increases

sales opportunities for providers of such pharmaceuticals.

Generics on the rise

The government's pricing policy for pharmaceuticals gives

preference to generic drug providers and biosimilars in

particular. This benefits South Korean producers who

have focused their production on the field. As a result,

domestic manufacturers are continuing to get stronger in

these areas and increasingly competing with international

producers of original products with patents nearing

expiration

OTC pharmaceuticals losing importance

The share of non-prescription drugs (over the counter,

OTC) in total sales is—given the high level of private co-

payments and overall low drug prices—more than three

times as high as in Germany. Sales of these products

are expected to grow in absolute terms. However, their

importance may decrease in relative terms as the

National Health Insurance Service (NHIS) increases the

coverage of the cost of prescription drugs.

Large investments in biopharmaceuticals

Particular impetus for South Korean pharmaceutical

production comes from biosimilars and

biopharmaceuticals, where the country is developing

into an increasingly important producer. The company

Celltrion, founded in 2002, made an announcement in

May 2019 of USD 34.3 billion in investments extending to

2030 that include USD 21.4 billion in biopharmaceuticals

and USD 4.3 billion in chemical medicines. The company

intends to have at least 20 own biosimilars on the market

by 2030 and to expand biopharmaceutical production

capacity to 1 million liters. Celltrion began building a third

plant in Songdo in the city of Incheon in November 2020

which will increase production capacity from the current

190,000 liters to 250,000 liters.

Samsung Biologics has even greater ambitions. The

company, founded in 2011, began construction of a

fourth plant for the production of biopharmaceuticals

in November 2020, at the same time as Celltrion. With

S. Korean Market for Pharmaceuticals and Biopharmaceuticals Markets & Trends


Representative CorrespondentGermany Trade and Invest

www.gtai.de/korea

Frank Robaschik

South Korean pharmaceuticals

1) Estimate; 2) ForecastSource: FitchSolutions Q4/2020

2016 2018 2020 1) 2024 2)

Pharmaceutical sales (billion USD) 16.2 19.2 19.0 23.4

Pharmaceutical sales per capita (USD) 317.9 374.8 371.3 455.4

Percentage as prescription drugs 80.3 80.7 81.2 82.2

Percentage patented 33.3 33.2 32.9 32.4

Generics (share of total pharmaceutical sales in %) 47.0 47.4 48.3 49.8

Over the counter medication (share of total pharmaceutical sales in %)

19.7 19.3 18.8 17.8

Imports (billion USD) n/a 6.0 6.2 8.4

Imports as share of total pharmaceutical sales (in %) n/a 31.4 32.5 35.7

The article is an excerpt

from the publication

"Gesundheitsmarkt

Südkorea - Arzneimittel

und Biopharmazeutika"

written for the export

initiative for the German

healthcare industry

(www.exportinitiative-

gesundheitswirtschaft.de)

STUDIE

Gesundheitsmarkt Südkorea Arzneimittel und Biopharmazeutika

an investment of USD 1.5 billion, its capacity in Songdo

is expected to increase from 364,000 liters to 620,000

liters by 2023. This company mainly acts as a contract

manufacturer for other companies and has been in

cooperation with the German provider Merck for quite

some time. Merck opened a Life Science Operation Center

in Songdo in 2019, which produces cell culture media

for biomedicines. Imports of biopharmaceuticals are

increasing, reaching more than USD 1.3 billion in 2019

according to the MFDS. Samsung Biologics founded the

biogenerics manufacturer Samsung Bioepis in 2012 in a

joint venture with the US biotechnology company Biogen.

Major South Korean pharmaceutical companies also

include GC Pharma (formerly Green Cross), Hanmi

Pharmaceutical, Chong Kun Dang Pharmaceutical,

Daewoong Pharmaceutical, LG Chem, Dong-A ST, HK

inno.N (formerly CJ Healthcare), Ildong Pharmaceutical

and JW Pharmaceutical.

S. Korean Market for Pharmaceuticals and Biopharmaceuticals Markets & Trends


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necessary as a result of the court decision.

Last, but not least, there are a few amendments

worth noting for foreign individuals residing in

Korea.

• Foreign individuals who work in Korea are eligible for

a flat income tax rate 19% for the first 5 years working

in Korea. This flat rate tax provision is to expire as of

December 31, 2021 and many foreign individuals will be

subject to gradual tax rates with the marginal rate of 45%,

which is introduced this year to apply to income bracket

exceeding KRW 1 billion.

• Gain from sale of virtual assets will be categorized

as ‘other income’ and taxed at a rate of 20% with the

exception of those that fall below the minimum threshold

of KRW 2.5 million per year. The reporting and payments

of such gains must be made annually in May. The payor

of payments from the sale of virtual assets to foreign

companies or non-resident individuals are required to

withhold tax at 20% or a reduced rate under the relevant

tax treaties. This change will become effective from

January 1, 2022.

5 years from 3 years. As a result, considering the cover

period for an APA is 5 years, the total number of years

that an APA is effective can be as long as 12 years for bi-

lateral APAs and 10 years for unilateral APAs.

• Also, the deadline for the APA annual report previously

was within 6 months after the due date of corporate

income tax returns, but now has been extended by 3

months, thus within 12 months after the fiscal year.

• Additionally, the Summary of International

Transactions and Condensed Profit and Loss Statements

or Related Parties and the Information on Overseas

Real Estate and Investment have all been extended by 3

months, thus within 6 months after the fiscal year.

• If the taxpayer files master and local file, then the

taxpayer is automatically exempted from submitting the

Summary of International Transactions and the Transfer

Pricing Determination Methodology.

• In the past, if there had been a final decision rendered

by a domestic or foreign court, Mutual Agreement

Procedure (MAP) could not be commenced. Under the

new tax amendment, the final court decision does not

necessitate closing of a MAP proceeding any longer, but

a MAP may commence in order to enforce corresponding

adjustments, if such corresponding adjustment is

The Ministry of Strategy and Finance has been

working on re-writing of tax laws so that they are

easier to read and understand for taxpayers. So far,

Value Added Tax Act, Individual Income Tax Act and the

Corporate Income Tax Act have been re-written. This year,

the International Tax Coordination Act and Collection of

National Tax Act have been re-written. Also, the Liquor

Tax Act, which included not only liquor tax rules but also

liquor license related rules, was divided so that now there

is the Liquor Tax Act which prescribes relevant tax rules

regarding liquor and Liquor License Act, which governs

regulatory licensing rules and regulations. In terms of

the substantive changes, we wanted to highlight what

we thought may be pertinent to foreign individuals and

companies doing business in Korea as follows.

First, we wanted to point out some of the new tax

laws that protect your rights as a taxpayer in Korea.

• Tax audit notice and result notifications have become

more expansive to include additional information to

taxpayers under audit. Specifically, in the audit notice, the

tax authorities now need to disclose the tax year subject to

audit. After the audit is completed, the tax authorities are

now required to include specific information to explain the

outcome, such as the relevant tax laws, specific facts and

circumstances for the determination of tax base and tax

amount and also the types and amounts of penalties to be

imposed and the basis for such penalties.

• The base date from which interest accrues on refund

requests has been changed so that the interest accrues

from the date on which the tax was paid, instead of the

date on which the taxpayer files refund request. This

change aligns with the law that allows the interest to

accrue on tax payable to the tax authorities from the date

the tax was due.

• Arbitration under domestic tax law has been introduced

within the realm of Mutual Agreement Procedure (MAP).

This introduction will eventually be an additional tool

to resolve international tax dispute when arbitration

provision is also implemented into the tax treaties, and

will actually speed up the re-negotiation of tax treaties to

adopt this new way of resolving tax disputes.

• Carryforward periods for tax credits have been

extended to 10 years from 5 to 7 years.

• Carryforward periods for net operating losses have

also been extended to 15 years from 10 years.

Second, we wanted to highlight some of the other

amendments that provide more flexibility for

you in terms of filing deadlines for cross-border

transactions.

• A roll-back period for bi-lateral APAs has been

extended to 7 years from 5 years, and for unilateral APAs

What’s new in 2021 Korean tax laws?For the first quarter issue of KORUM magazine for 2021, we want to brief you on the new tax laws for 2021 that have been approved by the National Assembly of Korea last December.

Senior Foreign AttorneySHIN & KIM LLC

www.shinkim.com

Sun Young (Sunny) Kim

What’s new in 2021 Korean tax laws?Tax & Legal

28 29KORUM | 1st Quater 2021 || KORUM | 1st Quater 2021

6. Joint Penal Liability for Companies

A company may be subject to a criminal fine of up to KRW

5 billion in case of a fatality (or up to KRW 1 billion in case

of injury or illness); however, if the company was diligent in

exercising substantial care or supervision to prevent a violation

of the SAPA, then the company may not face such liability.

7. Punitive Damages

A business owner or a business may be liable for punitive

damages of up to 5 times the actual damages in case of

willful misconduct or gross negligence in performing

obligation to secure safety and health, unless the business

owner (or the business) was diligent in the exercise of

substantial care or supervision to prevent a serious accident.

Concluding Remarks

The SAPA represents an important trend towards

heightened safety and health standards in Korea. Other

examples of such trend include the new OSHA obligation

– effective from 2021 – for the representative director

of a joint stock company with 500 or more employees

to prepare and submit a safety and health plan for the

company to the company’s board of directors for approval.

Also, on February 9, 2021, the Ministry of Employment

and Labor announced its 2021 overall plan for the audit

of occupational safety and health matters, with focus on

safety and health in workplace.

4. Serious Public Accidents

In addition to improving occupational safety and health,

the SAPA seeks to promote public safety and health.

Specifically, the SAPA imposes liability on the business

owner or responsible management personnel in case

of a violation of obligation regarding public safety and

health which causes serious accident affecting members

of the general public. The potential liability exposure of

a business under the SAPA for serious public accidents

will depend on the types of products or raw materials

which are produced, manufactured, sold, or distributed

at the place of work under de facto control, operation,

or management of business concerned, or the public

facilities or the instrumentalities of public transportation

under de facto control, operation or management of the

business concerned.

5. Penalties

• Serious Industrial Accidents

On January 26, 2021, the Serious Accidents

Punishment Act (the “SAPA”) was promulgated,

introducing a new regime in Korea for safety

and health management. The SAPA will take effect

from January 27, 2022 for businesses with 50 or more

employees. The SAPA is a key manifestation of the trend in

Korea towards more robust safety and health regulation,

and presents a significant compliance challenge for

companies doing business in Korea.

Relationship with the Existing Regime for

Occupational Safety and Health Regulation

The SAPA places the duty to secure safety and health

squarely on the top decision-maker of the business

concerned. In doing so, the goal is to encourage

fundamental changes at the “top” in terms of attitudes

towards safety and health and incentives for concrete

action to prevent serious accidents. Below are some key

differences between the existing regulatory regime under

the Occupational Safety and Health Act (the “OSHA”) and

the SAPA.

SAPA at a Glance

The following is a summary of the key provisions of the SAPA.

1. Obligation to Secure Safety and Health

(i) Establish and implement safety and health

management system*

(ii) Establish plan to prevent recurrence of serious

accident and implement

(iii) Perform improvement or corrective order issued by

the government, as applicable

(iv) Take managerial measures to perform obligations set

forth in the relevant safety and health laws*

Note*: Details to be announced via the Enforcement

Decree to be promulgated during 2021.

2. Obligation of a Service Recipient Company

If a company (“Company A”) receives services from

another company (“Company B”), then Company A has the

obligation to secure the safety and health of the workers

employed by Company B where: (i) Company B’s workers

provide labor services to Company A, (ii) at the place of

work which is subject to de facto control, operation and

management by Company A (as determined by reference

to the facilities, equipment and location concerned).

3. Responsible Management Personnel

An individual business owner or the responsible

management personnel of a business (i.e., a person

who represents the business and has the authority and

responsibility to manage the business, or a person having

comparable authorities in relation to safety and health

matters) must fulfill the obligation relating to safety and

health under the SAPA (and will face penalties under the

SAPA in case of a failure to fulfill such obligation which

results in a serious accident).

Overview of the Serious Accidents Punishment Act:

Assessing the Latest Trends for Safety and Health Regulation in Korea

Foreign AttorneyKim & Chang

www.kimchang.com

Heon-Yup LEE

OSHA SAPA

Person(s)

held

accountable

Manager and EHS

personnel on site

Top decision-maker

of the business

Scope of

obligationWork place Entire business

FocusGround-level

compliance

Building systems,

processes, protocols

to ensure effective

compliance

Type Penalty

Fatalities (1 or more persons)

Imprisonment: 1 year or more

AND / OR

Criminal fine:

up to KRW 1 billion

Injuries (2 or more persons

receiving medical treatment

of 6 months or longer, due

to same accident)

Imprisonment: up to 7 years

OR

Criminal fine:

up to KRW 100 million

Occupational illness (3 or more persons within 1

year, due to same hazard)


OR

Criminal fine:


Type Penalty

Fatalities (1 or more persons)

Imprisonment: 1 year or more

AND / OR

Criminal fine: up to KRW 1 billion

Injuries (10 or more persons



to same accident)


OR

Criminal fine:


Illness

(10 or more persons



to same cause)


OR

Criminal fine:


NOTE (*) Punishment enhanced by 50% if violation is

repeated within 5 years

• Serious Public Accidents

Overview of the Serious Accidents Punishment ActTax & Legal


goods to paying

customers all

over the country.

And the richest

people could even

afford to bring

their children out

to study abroad,

mostly in China.

Cell phones, and

even tablets,

by now became

widespread

among the elite

and are used

by members

of the younger

generation like

a duck takes

to water. Overall,

life for youth in

particular in Pyongyang, but also in other cities around

the country, became easier and more variegated:

amusement parks and water parks were restored or

newly opened, new “traffic parks” allowed children to

learn about much increased traffic, the new Science and

Technology Center, the new Natural History Museum and

other attractions particularly entertaining for children.

The biggest change, however, was not material but

ideological, and it posed a great challenge to the

government: with the opening of the country since 1995,

and marketization and the growth of a hybrid economy,

before unknown quantities of foreign music, movies,

lifestyles and ideas entered the country. Though the

government tried to stamp out all signs of dissent, it

could not prevent in particular South Korean movies and

music to enter the country. Jeans, trousers, clothes with

roman characters on it, long or even colored hair of men,

were signs of internal dissent. At least three times in the

last 15 years, most lately in this winter, campaigns to

eradicate these lifestyles were led with arrests and even

executions in the case of gross violations such as import

of foreign movies. Nevertheless, there is a constant

inflow of new ideas from thousands of workers North

Korea sent abroad, thousands of traders who had been in

China as well as their connections, 30,000 refugees who

managed to leave the North and arrive in South Korea

through middlemen, with their families still at home. The

COVID-19 pandemic stopped this flow to a trickle for the

moment, but this situation soon will be unsustainable.

North Korea s new generation – Change by youth?

When thinking of the North Korean state, and when

looking at the pictures of their leadership they

release, often the images of a lot of old men,

covered from head to legs in medals, veterans of guerilla

times, come into mind, led by equally or similarly old leaders,

Kim Il-Sung and Kim Jong-Il. However, this was not always

so. Actually in particular compared to South Korea’s Rhee

Syngman, 70 years old in 1945, North Korea started with a

very youthful leader, Kim Il-Sung, who was just 35 years old

when arriving on board of a Russian ship in Wonsan in 1946.

He was then surrounded by young and middle-aged guerilla

fighters and he managed swiftly to get rid of any older

potential rival during factional purges in the next twenty

years. And from then on, the idea of a gerontocratic regime

was not far from truth. Clearly, upon his succession in 2011,

Kim Jong-Un wanted to change that. Already in the three

preceding years, after a stroke of his father Kim Jong-Il,

his succession was prepared and a new song for him called

“footsteps” appeared to praise the “young captain”. His outfit

in the first years of leadership often closely resembled that

of the young Kim Il-Sung. And, by and by, he got rid of the old

guard of his father’s trustees in his leadership, including the

execution of his uncle Jang Song-Thaek.

What does this mean for the young generation of North

Korea? First of all, it is important to see the huge change

in society happening in the dark years of famine and

hardship from 1990 to 2005. Before, North Korea closely

resembled other “orthodox” socialist states, though with

an extreme personality cult. In 1946 Kim Il-Sung founded

the “Democratic Youth League of North Korea”, renamed

later “Kim Il Sung Socialist Youth League” in 1996 and

“Kim Il-Sungist-Kim Jong-Ilist Youth League” in 2016.

It includes all young Koreans aged 15 to 30, with the

exemption of party members and housewives. The Korean

Children Union and its uniformed branch, the Young

Pioneer Corps, include children from 6 to 15. Young people

until today often are deployed in “shock brigades” to build

hydropower plants, houses or roads. Until the 1990s,

the life of these young people resembled that of their

contemporaries—the Komsomol in the Soviet Union or

the Freie Deutsche Jugend (Free german Youth) and Ernst

Thälmann pioneers in the (East) German Democratic

Republic—albeit under much harsher conditions. Among

the duties of “social order brigades” in the youth league

are controls of appropriate clothing, wearing of the

leaders’ badges and hairstyles and much more.

The breakdown of the socialist system brought, among

others, the end of cheap energy imports from the Soviet

Union, and subsequent crash of the North Korean

economy; estimates of deaths from famine are between

200,000 and 2,000,000. In particular, children suffered.

Bands of beggar children called “kotjebi”, meaning

flowering swallows, roamed around the countryside and

cities for food and shelter. These street children were

especially harshly affected by the famine and many died.

When North Korea asked for humanitarian aid in 1995,

help for children in “orphanages” was one of the most

urgent tasks. These children mostly did not literally lose

their parents, but parents were unable to care for them

any longer due to a lack of food.

When by 2005 the worst of the famine was over and the

social life began to stabilize, a completely new youth grew

up. In the cities, a new middle class of “donju”, meaning

moneyed people, as well as old elites afforded their

children a wealthier life, including the use of new status

symbols of wealth, e.g., expensive watches or glasses

by international brands. Previously, these had only been

distributed as presents by the leader to loyal followers,

but now they could be bought in shops. Markets brought

before unknown quantities and quality of consumer

School children in the Natural Science museum in Pyongyang. The last decade saw the creation of a number of new entertainment and edutainment possibilities for young people in Pyongyang.

An electronic reading room in Kim Il Sung University. The current young generation, though still living in an isolated state, has wider information possibilities than before.

Students in Pyongyang – they may wear uniforms like in the 1940s, but they still know how to handle

a cellphone!

Change by youth?North Korea


minimum height is reportedly only 148 cm. Also, previous

exemptions for only sons and some sons of farmers

and miners deemed important for the continuance of

production in farming and mining were revoked, and they,

as well as some college graduates, were drafted.

While being exempt from military service, the life of

students in Pyongyang and elsewhere is far from being

easy. On bigger holidays like the birthdays of the leaders

or the party foundation day on October 10, students take

part in mass events like torch marches. For this, they

practice often for many months, sitting for many hours

often late in the night, at Kim-Il-Sung square. The reasons

behind are not so much related to perfecting a show–

though this is also true. Rather, the exercise is one form

In the countryside, the pace of change is much slower,

or not visible at all. In the cooperative farms, which

usually comprise whole villages, children have to help

with farm work from their early age. Schooling, generally

comprehensive and recently extended to twelve years, is

often interrupted by need for tree planting, rice planting

and harvesting or weeding. Some schools require

children to bring buckets full of human feces as fertilizer

before allowing them to participate in classes. The biggest

difference between children of the elite, which is almost

entirely concentrated in Pyongyang, and the countryside,

is the military service. Basically, every North Korean boy

has to serve ten years in the army (a reduction from 13

years in the past), and girls since 2015 have to do seven

years of service, though not all women are really drafted.

Service starts at age 17, and takes most of the golden

youth age away, often under incredibly harsh conditions.

Sometimes, army units unable to feed their soldiers

enough have even to send undernourished soldiers home.

Children of the elite, however, can be taught by specialists

(like musicians, artists, technicians) and sometimes

get only short military training as reserve officers.

While most people think of the North Korean military

in terms of their missiles, their special forces and shiny

uniforms in parades, the life of most soldiers is anything

but glamourous: the overwhelming part of soldiers are

farmers-in-uniform or builders-in-uniform. Indeed, there

are no private construction companies in North Korea,

since all buildings are built by builder-soldiers.

How difficult the life in the countryside is can be seen

in the order to reduce the minimum height requirement

of soldiers in 2016, the time when children who grew

up through the famine came into service. Now, the

RepresentativeHanns Seidel Stiftung - Seoul Office

www.hss.or.kr

Dr. Bernhard Seliger

of social control. Students, as members of the elite,

are among the best informed and therefore, potentially

rebellious groups. Practicing starts at an early age, for

small schoolchildren taking part in the (in)famous “Arirang

mass games” often in primary school age, and it can last

for many months.

What will the youth of North Korea do, once it comes into

power? Certainly, the current young generation grew up

less isolated, with more ready information, than before.

This includes some illegally achieved information, but one

School children in Kangwondo (2019). Though life in the countryside is harsh, even here consumption possibilities got better before the COVID-19 pandemic. Clothes and some other consumer goods often are imported from China.

Soldiers during harvest. Being soldiers takes most of the golden youth time away – starting for men at age 17 and ending at age 30…

Arirang mass games in North Korea: The pictures are made by primary school children, and every small dot is the head of a child. Here, they present the names of their district in Pyongyang, they come from.

should not neglect the positive effect of greater availability

of cell-phone apps with important information. It is not

clear, however, how this affects their stance towards

opening and a freer society. Even the most well-connected

young people still grow up largely in a pariah state, with

few or no outside contact or chance to talk to foreigners.

Still, the idea impressed on many of them is that they are

surrounded by enemies. One of the important tasks of

policy from abroad is to make them a specific offer for

peaceful relations. If not, entrenchment with privileges for

the few and suffering for the many will likely be going on.

Change by youth?North Korea


Advertisement

Persistence in a Pandemic

No one said it was going to be

easy. After a summer when

Germany largely succeeded

in limiting the coronavirus pandemic,

rising numbers of COVID-19 infections

across the globe led German health

experts and political leaders to

decide that measures were needed to

prevent a full-blown second wave.

In early November, restaurants,

bars and cafes had to limit their

service to takeout and delivery,

while culture, recreation and sports

venues were shut down, and tourist

accommodation banned. These

measures were stepped up in mid-

December to include most retail

businesses and in-person education.

But there were also glimmers of

hope on the health front. Unlike

many countries, Germany did not

face a shortage of intensive care unit

beds in hospitals. In late December,

the European Union gave regular

approval to the coronavirus vaccine

codeveloped by German company

BioNTech and Pfizer. The first

inoculations commenced before the

end of the year.

German governments at both the

national and regional state levels

were keen to make sure those

businesses most affected would

be able to bridge the economic gap

created by the renewed COVID-19

restrictions. An additional EUR

10 billion was immediately set

aside to help them – on top of

the unparalleled EUR 600 billion

stabilization fund created in March.

That fund was bolstered and

extended as the lockdown continued.

These preventative measures were

applauded by the Organization

for Economic Cooperation and

Development (OECD).

“It’s certainly true that the quick work

of the governments was a factor,”

says Nicola Brandt, director of the

OECD Berlin Centre. “But so were

the credit guarantees for companies

and the direct financial support.

All that certainly helped. Taken

together, these made up one of the

biggest fiscal packages to bridge the

pandemic in the whole OECD area.”

Proactivity and restraint

“In this serious situation, we are not

leaving our companies and workers

in the lurch,” said Minister for

Economic Affairs and Energy Peter

Altmaier, as the new measures were

announced.

Under the relief program, firms

could apply for up to 75 percent of

their 2019 November turnover in

government aid, small companies

were in line for one-off payments

of up to EUR 10,000, and the self-

employed were able to claim a

one-off grant of EUR 5,000. Loans

from the state-owned development

bank KfW were extended and made

available to companies with fewer

than ten employees. Previously,

value-added tax had been reduced

from 19 to 16 percent through 2020

to encourage consumer spending.

And the government also decided

that its popular Kurzarbeit furlough

program would be continued until

the end of 2021. Under Kurzarbeit,

the state temporarily covers the

salaries of employees so that firms

can retain their workforces.

Germany did not grind to a standstill.

Most people continued to work, many

in home offices, a solution born of

necessity that worked better than

anyone expected and even turned

out to have considerable advantages.

Initial predictions forecast less

economic damage from the second

lockdown than from the first.

As a result, while the economy did dip

in late 2020, industrial production –

upon which 15 million jobs directly or

indirectly depend – remained steady.

So too did the truck toll mileage

index, which reflects the numbers

of trucks on German highways and

is considered a good measure of

economic activity.

Reasons for optimismThere are reasons for cautious

economic optimism in 2021 and

beyond – for example, the progress

Germany made between the first

and the second shutdown. In the

third quarter of 2020, before the

second lockdown, growth increased

by 8.5 percent, leaving the economy

operating at 96 percent of its pre-

pandemic level.

“In general, the German economy is

still going well, even though several

individual sectors are suffering a

lot,” concluded Christian Rusche

from the Cologne-based German

Economic Institute (IW Köln) in the

fall. “Automobile construction, for

instance, is slowly picking up again.”

Persistence in a Pandemic

37KORUM | 1st Quater 2021 |36 | KORUM | 1st Quater 2021

Trends in Germany

Germany Trade & Invest (GTAI)Markets Germany

www.marketsgermany.com

Further reasons for confidence in

Germany’s resilience include its

structural advantages and its ability

to draw on solutions that worked

during the last period of economic

turmoil, namely the financial crisis

of 2007–2008. Compared to other

European countries, Germany is less

reliant upon service sectors with lots

of face-to-face human interaction.

When the pandemic began, Germany

had far lower infection rates than,

for example, Italy or Spain, and its

decentralized healthcare system

gave local hospitals the flexibility they

needed to quickly adapt.

Healthy structures

Meanwhile, tools that proved

successful back in 2008 were

redeployed. In addition to the furlough

program, they included suspensions

of mandatory bankruptcy

declarations and the rollout of fast,

unbureaucratic loans from public

banks.

Last but not least, in reaction

to the financial crisis, German

national and regional governments

and the business community had

the foresight to create insurance

funds for more difficult times. The

experience of the global financial

crisis encouraged many German

companies, especially small to

medium-sized enterprises (SMEs),

to exercise financial prudence.

According to the German Savings

Banks Association (DSGV), the

country’s mid-sized firms enjoy an

equity ratio of 39 percent, which has

kept bankruptcies to a minimum.

In other words, many of Germany’s

SMEs, often called the engine room

of the economy, were in a position to

compensate for temporary losses in

income.

Individual creativity

Stories abound throughout Germany

of SMEs getting through the

pandemic by taking advantage of

the tools the state has put at their

disposal and also by thinking outside

of the box.

Take SchuF, a 100-year-old precision

engineering firm that specializes

in making valves. SchuF had to

tell some employees to stay home

for the first time in over ten years.

Twenty percent of its workforce was

furloughed, but “only in the office,” as

CEO Martin Frank stressed in the fall.

Despite a moderate decline in orders,

the workshop stayed open and

production carried on. By keeping his

workforce together, Frank expects

that his company will be able to pick

up where it left off when the economy

recovers.

Other entrepreneurs are changing

their approach and product range

to match new social realities.

The British-German backpack

manufacturer RiutBags, for instance,

found demand plummeting amidst

all manner of travel restrictions.

So founder Sarah Giblin adapted

and created an easy-to-disinfect

rucksack especially for the COVID-19

world.

“There are some businesses

out there who are going to start

rebuilding the world around us to

respond to how we’re feeling at the

moment,” she predicts. “The world

has changed, I accept that it has

changed – so is there something

I should be doing as a designer to

help humans adapt to the new world

through the objects that I make?”.

Digital innovation and

acceleration

Necessity is not only the mother

of invention but also a great

accelerator. The COVID-19 pandemic

has bolstered everything digital

in Germany, particularly as more

and more people work from home

and avoid face-to-face meetings.

The German digital industries

association Bitkom reports that

75 percent of Germany’s biggest

companies expanded their

investment in digitalization in 2020.

The German government has also

sped up its plans to develop digital

infrastructure.

German industry is now well on the

way toward creating more flexible,

efficient and customized manufacturing

processes, which in turn are

yielding new business models and

opportunities. Figures from the Ministry

for Economic Affairs and Energy show

the government plans to invest EUR

40 billion in the digital networking of

industry. Some 20 percent of German

automotive companies already have

automatized plants, while 83 percent

of companies predict a “high level of

digitalization” in their supply chains. To

maintain that advantage, the German

government is also continuing to

fund the EUR 50 million technology

program PAiCE, which promotes

the development of digital industry

platforms as well as collaboration

between firms using those platforms.

Long-term trends

Moreover, the pandemic has

highlighted the fragility of global

supply chains, and growing numbers

of companies are expected to start

manufacturing locally. In turn, that

could mean more and more German

firms trying to exploit the advantages

of sectors like robotics.

According to figures released in June

2020 by the International Federation

of Robotics (IFR), Germany has one

of the highest numbers of industrial

robots per worker in the world, with

388 robots for every 10,000 manual

laborers. This ratio is much higher

than the international average of 99

and only exceeded by Singapore and

South Korea.

Green energy shows resilience

Some sectors are by their very

nature more pandemic-resilient

than others. Germany’s transition

to renewable energy, for instance,

is significantly less impacted by the

coronavirus – and the government

has invested heavily in it. That’s one

reason why Enapter, the Italian-

Thai manufacturer of hydrogen

generators, or electrolyzers, has

decided to go through with building

a EUR 100 million construction

facility in the western German town

of Saerbeck despite the pandemic

disruption.

For Enapter, the biggest problem

in 2020 was how the coronavirus

impeded the search for a location.

“The coronavirus did slow us

down a little bit, particularly at the

beginning of the year, but we never

had to close down production,”

says Enapter’s head of strategy

Thomas Chrometzka. “That was very

important to us because our motto is:

‘We’re offering a solution to climate

change, so we really can’t be slowed

down – we need to speed up.’”

Chrometzka explains Enapter needs

“a structurally strong environment

with highly qualified HR capacities,

with good connections to the research

and development community and

to suppliers. All of this we found in

Germany.”

The first year of the coronavirus

pandemic has been full of ups and

downs, with the situation remaining

fluid and subject to rapid changes

and reversals of fortune. Despite all

the legitimate causes for concern,

however, the outlook for Europe’s

largest economy is on the whole

optimistic – Germany is carrying on.

Persistence in a PandemicTrends in Germany


Porsche Do-Dream / Since 2017

Porsche Korea has

consistently engaged

with corporate social

responsibility since 2017

after its first launch of the

“Porsche Do Dream” CSR

campaign. With “Porsche

Dream Up,” the company

offers scholarships to

gifted students in various

fields within the arts and

sports. Also, the company

builds indoor gym through “Porsche Dream Playground,” providing opportunities

for students to play as well as to develop one’s creative thinking and interpersonal

skills.

Along with great CSR achievements so far, Porsche Korea has recently implemented

a new pioneering sustainability initiative called the “Porsche Dream Circle” under

the overarching “Porsche Do Dream” campaign. The new project focuses on planting

trees and providing solar panels to schools to better facilitate student learning

and leisure activities in environmentally friendly spaces. The initiative is driven by

the innovative technology “Smart Forest System,” which automatically irrigates

and maintains the surrounding forest environment by tracking meteorological

measurements all on its own.

Line of BusinessAn official importer and distributor of Porsche in Korea

Number of Employees in Korea72

Start of Business in Korea2014

Company Profile

Established in Germany1948

Websitewww.porsche.com/korea/ko

Line of BusinessMedical Technology, Industrial Research & Quality, Vision Care, Semiconductor Manufacturing Technology

Number of Employees in Korea290


Company Profile


Websitewww.zeiss.co.kr

Line of BusinessChemical

Number of Employees in Korea1,370


Company Profile


Websitewww.basf.com/kr

Overcome the Crisis and Invest in the Future / Since 2015

ZEISS Korea, along with

other German companies

in Korea, made a donation

via KGCCI for Korean

citizens suffering from

COVID-19 last year. The

donation was used to

support hospitals, disaster

response facilities as well

as self-isolated people and

vulnerable low-income

families. The MED (Medical

Technology) division also donated ZEISS breath shields to 640 hospitals. This breath

shield is attached to slit lamps of ophthalmic equipment and prevents saliva from

splashing between doctors and patients, and hence enables them to have a medical

consultation with fewer concerns about any possible infection.

Meanwhile, ZEISS Korea has held the ‘ZEISS Open Door Day for Children’ since 2015

to encourage children’s interest in science. During the event, ZEISS invites children

to explore the company. ZEISS explains the business to children in an accessible way

and offers chance to experience ZEISS’ electronic microscope and 3D scanner in

person.

BASF Kids’ Lab / Since 2003

BASF’s social engagement

contributes to solving

current and future

social challenges. With

the corporate’s social

engagement strategy,

BASF wants to open up

learning opportunities.

BASF supports the

achievement of these goals

with donations and its own

not-for-profit activities

(Corporate Citizenship) as well as with business-oriented projects.

BASF’s social engagement activities in Korea are designed to contribute to “Quality

Education”, one of the UN’s Sustainable Development Goals. Since 2003, BASF has

held annual science classes for elementary school students in Suwon, Yeosu, and

Ulsan, where BASF sites are located, to foster their interest in chemistry through

safe and interesting experiments. So far, over 15,000 children have experienced

hands-on experiments at various BASF Kids’ Lab activities in Korea. Also, BASF

released an online experience called Virtual Kids’ Lab to inspire hopes and dreams,

and cultivate talents of children anytime, anywhere.

Inspiring CSR

Every year, KGCCI is publishing the CSR report of German

companies in Korea. Through this report, KGCCI presents activities

of German companies in the field of Corporate Social Responsibility

(CSR), showing examples of how German companies engage with

the Korean society - despite the challenging circumstances due to

the COVID-19. Key projects will be presented in the “Inspiring CSR”

section of the KORUM magazine.

The latest edition of the KGCCI’s CSR Report features examples of

CSR activities of 14 German companies in Korea of 2019 and 2020.

The participating companies are: Audi Volkswagen Korea, BASF

Korea, Bayer Korea, Boehringer Ingelheim Korea, Henkel Korea,

Mercedes-Benz Korea, Merck Korea, Porsche Korea, SAP Korea,

Siemens Korea, TÜV SÜD Korea, Wilo Pumps Korea, ZEISS Korea

and KGCCI.

Inspiring CSRKGCCI Member's Spotlight

40 41KORUM | 1st Quarter 2021 || KORUM | 1st Quarter 2021

Member to Member PromotionsPromote your business, display your brand and highlight your products & services! This newly launched section presents various promotions that KGCCI corporate members provide exclusively to companies within the KGCCI membership network. Contact us for more advertisement options at [email protected].

Not a member yet? Join us now or upgrade your membership to corporate level. Contact: [email protected]

Special 20% off Only for KGCCI members!Come and enjoy 20% off on our Authentic German

Sausages at Cilantro Deli.

[Period] until 31 June 2021

[Contact] For reservations, T. 02-317-3290

* Please provide a screenshot of the coupon and a

business card.

Millennium Hilton Seoul

Plan Your Hybrid Meeting Up to 25% OFF on Guestroom• PRICE: KRW 2,500,000 (10% VAT inclusive)

• PACKAGE INCLUSION:

* Room rental for 20 persons for 6 hrs (Inc. set up & Rehearsal)

* Individual Coffee Break, Wired Internet, Plastic partition, Media Technology

[Period] Now till August 31. 2021

[Contact] For Inquiry and RSVN :

T. + 82 2 799 8156 or 8483 E. [email protected]

Grand Hyatt Seoul

Miele Experience Center Grand Opening 300,000 KRW discount only for KGCCI members!

Applies only for Major Domestic Appliances purchase.

[Period] March 29, 2021 – June 20, 2021

[Contact] T. 02-3451-9451

Miele Korea

Free Mobility ConsultationTogether we can develop innovative solutions for

sustainable added value. So benefit from it now!

[Period] Until the end of 2021

[Contact] T. +82 31 8067 6960

E. [email protected]

www.tente.com

TENTE

CHAUL 25% Off only for KGCCI members! Discount code “CHAULKGCCI25” for chaulskincare.kr /

25% DC per order (1 person & 1 code & 1 use)

[Period] Mar 22 – May 17, 2021

[Contact] Lucy Choi,

T. 010-3909-4841 E. [email protected]

Beiersdorf Korea

10% discount on your origin charge Discount promotion exclusively for KGCCI members who

want to move abroad

[Stay from/to] 2021. 01. 01 ~ 2022. 01. 01

[Contact] Andrew Lee

T. +82 2 3278 2668 E. [email protected]

GLS Korea

Free seminar and consulting service for digital transformation in process industriesSiemens digital industries provides a tailored seminar for digital transformation

and practical solutions.

[Period] until end of June 2021

[Contact] T. 02-3450-7608 E. [email protected]

www.industry.siemens.co.kr

Siemens

43


42 KORUM | 1st Quarter 2021 || KORUM | 1st Quarter 2021

Member to Member Promotions

News & People

KGCCI DEinternational Ltd.

Mr. Thomas Klein has been appointed

as President and CEO of Mercedes-

Benz Korea from January 1, 2021.

Since beginning his career with

Daimler AG in 1999, Mr. Klein built

his career as a member of Daimler

AG’s Management Trainee program,

various functions in the German organization on both

wholesale and retail level, Managing Director of Mercedes-

Benz Passenger Cars at Sandown Motors Holding Pty,

South Africa, and the President and CEO of Mercedes-Benz

Cars Middle East in Dubai.

He has successfully led the sales and services performance

in the region based on his diverse experience in sales and

marketing. He has significantly contributed to the overall

success of the brand and built excellent relationships with

partners as well.

Mercedes-Benz Korea

Ms. Ye-Chan Kim joined KGCCI

DEinternational Ltd. as Ausbildung

Manager as of January 2021. She

takes part in coordinating dual

vocational training programs in the

Ausbildung department. Before

joining KGCCI, she has worked

for three years in the automotive industry as a Training

Administrative Manager. From past work experiences, she

gained a deep insight into the automotive business and

acquired administrative work skills related to vocational

training. She also has brought a valuable network of

relevant parties including ministries, dealerships and

other participating brands. Now Ms. Kim is looking

forward to discovering new talents and nurturing

competent employees.

Contact information : [email protected] / +82 2 3780 4691

Preh Car Connect

Liaison Office Korea

becomes JOYNEXT

Liaison Office Korea.

The Joyson Eletronics Group, Ningbo/China, bundles its

activities in the field of car infotainment / connectivity and

thus adapts its structure to changing market developments.

In the new company, named JOYNEXT, Joyson Eletronics is

bringing together Joyson Preh Car Connect, Ningbo, China,

previously a subsidiary of Joyson Electronics, Preh Car

Connect GmbH (PCC), Dresden, previously a subsidiary of

Preh GmbH, Bad Neustadt, including the production site in

Oborniki/Poland, as well as additional teams of specialists

in China, Japan and Korea.

JOYNEXT Liaison Office Korea

Ms. Gia Kim has been appointed as

Digital Communications Manager

at the KGCCI since January 2021.

As a social media administrator and

digital content editor, she will be in

charge of the KGCCI’s PR-related

work focused on social media.

With three years of work experience in Public Relations

and profound knowledge of it, Ms. Kim will enhance the

KGCCI’s brand awareness, keep its member companies

up to date, and convey its messages to the public as the

voice of the Korean-German business community.


In the first

quarter of 2021,

the start of a new

HPF production

will take place

in Dangjin. The

plant has the

latest technology and highest safety and sustainability

requirements. The wholly owned subsidiary HPF Minerals

Tech Ltd. was founded for this purpose. The investment

underlines the growth course of the innovative Quarzwerke

division in Asia.

Germany-based Quarzwerke Group has more than 135

years of tradition. The HPF division has been developing

and selling high-performance fillers for years. HPF has its

own sales offices in Seoul.

HPF Minerals Ltd.

Ms. Soobin Heo joined KGCCI

DEinternational Ltd. as Senior

Manager / Consultant of Market

Entry department as of January 2021.

She has more than nine years of

experience in promoting international

business exchanges, especially

in the areas of ICT, robotics and energy. At KGCCI, she

engages in communication between German and Korean

companies, market research for German companies and

consulting services for their localization and market entry.

Ms. Heo is expecting to create new market opportunities

in Korea and support many competent businesses.


Mr. Kyoungwoo Rhee has been

appointed as new managing director

of Fissler Korea from December 1st,

2020. He graduated from Sogang

University's Department of Business

and holds an MBA from University

of Iowa (USA). He has a solid

international marketing and leadership experience, having

worked for companies like CJ, Johnson & Johnson, Reckitt

Benckiser, Shoemarker, Converse, Homeplus and latest

Diageo. He has a strong passion for consumer brands. He

says, “I am very happy to start a new journey at Fissler,

which leads the premium cookware market. Fissler

Korea will provide the best cooking experience for Korean

consumers' kitchens.”

Fissler Korea

Dr. David (Yoon-soon) Im has been

appointed as the new Representative

Director of BASF Korea from

March 1, 2021. With over 30 years of

experience in the IT and electronics

industry, Dr. Im has played a vital role

in major global companies, including

Samsung Electronics, Hyundai Electronics (currently

SK Hynix) and Hyundai Information Technologies. His

accumulated expertise led him to take up the role as Joint

Representative Direct of Robert Bosch Korea until most

recently.

BASF Korea

* Please contact [email protected] for any important changes in personnel or business.

News & PeopleKGCCI Member's Spotlight


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New Members

Airbus Korea

Mr. Fabrice Espinosa

President

[email protected]

Aerospace, defense

www.airbus.com

BayWa r.e. Korea

Mr. Chan-Soo Kim

Head of Project Development

[email protected]

Energy, Renewable Energy

www.baywa-re.com

WITH Accounting

Corporation

Mr. Brian Morikuni

General Manager

[email protected]

Accounting, Auditing, Tax

https://bluestonesbpo.com

ContiTech Fluid Korea

Mr. Torsten Laufer

General Manager

[email protected]

Automotive Supply

www.contitech-korea.com

Corporate Members

Associate Members

D’LIGHT Law Group

Ms. Hee-Young Lim

Foreign Attorney

[email protected]

Legal

www.dlightlaw.com

Gyeongsangnamdo

Mr. In-Su Kim

Director

[email protected]

Government, Non-profit Organization, Foundations

www.gyeongnam.go.kr

The 2nd Gender & Power Talks was jointly

organized by KGCCI, BNP Paribas and SHIN & KIM

on February 17 in order to celebrate the upcoming

International Women's Day and support #HeforShe

initiative by UN. The event consisted of two interview

sessions moderated by Barbara Zollmann, President

and CEO of KGCCI, and Peter Kimm, Senior Foreign

Attorney at SHIN & KIM. Philippe Noirot, Territory Head

of BNP Paribas South Korea, and Jean DeSombre,

Executive Vice President of Fresenius Medical Care,

participated as main speakers and discussed about

several topics including nurturing female leadership

within the organisations, ESG goals and gender equality,

and the role of men to achieve gender equality.

Gender & Power Talks series aims to promote

dialogue on gender equality and foster an equal work

environment. The first talk was successfully held in

November 2019.

KGCCI contact for Gender & Power Talks:

Ms. Yoon-Hee Choi [email protected]

Gender & Power Talks #2

Inside KGCCI

47KORUM | 1st Quarter 2021 || KORUM | 1st Quarter 2021



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On January 19th, KGCCI kicked

off this year’s first online HR

Circle for HR professionals

of German companies. A total of

14 participants attended to this

gathering and actively discussed

about current HR issues. A

representative of ElringKlinger

Korea shared their experiences

related to the “Employment

Stabilization Incentive” supported

by the Korean government.

He presented the details of

governmental support measures

and explained how his organization

adapted the measure in successful ways.

Following the presentation, KGCCI discussed the

hiring trends for 2021 based on the insights obtained

from the HR Salary Survey Report 2020/2021. KGCCI

published this annual HR report in cooperation with

PERSOLKELLY.

The report contains useful information such as hiring

trends, salary range, benefit package and COVID-19 HR

measures.

KGCCI contact for HR Circle:

Ms. Hee-Seon Lim [email protected]

The Korean New

Deal is the Korean

government’s recovery

strategy to strengthen the

economy. 160 trillion KRW

(121.2 billion EUR) will be

invested in key areas of green

technology and digitization by

2025. The Deal is comprised

of three pillars: Digital

New Deal, Green New Deal

and the strengthening of

employment and social safety

nets.

KGCCI and Swiss Business

Hub Korea have analyzed the Digital and Green New

Deal in depth to find out what business opportunities

might arise from it for German and Swiss companies. On

February 18, the webinar on the Korean New Deal was

held to present the key findings and discuss with Peter

Röthlisberger, COO of Solaxess and Thomas Schmid,

Head of Digital Industries of Siemens Korea, about their

assessment of the Korean New Deal.

KGCCI contact for the New Deal including

the Research Report:

Mr. Felix Kalkowsky [email protected]

HR Circle

Webinar: The Korean New Deal

Webinar: Mobility Trends in Bavaria, Germany

On December 12, KGCCI and Invest in Bavaria

hosted an online seminar on the latest trends of

the mobility industry in Bavaria, Germany. About

40 Korean companies and institutions from the industry

and the public sector participated in the event. During

the webinar, participants paid close attention to the

hydrogen strategy of Bavaria and how it will shape the

future of the mobility industry.

The webinar started off with a presentation by Invest

in Bavaria on the state’s business landscape as an

economic powerhouse of Germany and home to the

European high-tech industry (BMW, AUDI, MAN,

SIEMENS, INFINEON, ADIDAS etc.) H2.B Wasserstoff

Zentrum Bayern (“Center Hydrogen.Bavaria –

H2.B”) then introduced Hydrogen Alliance Bavaria—

a networking and interest platform for companies,

research institutions and associations—and talked in

detail about the future of the hydrogen industry. Lastly,

Hyundai Robotics talked about how it successfully made

inroads into Germany as a Korean robot manufacturer.

KGCCI contact for details:

Ms. Sun-Hwa Park [email protected]

Inside KGCCIInside KGCCI


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IFA Berlin 2021 @ KES

The 2020 Korea Electronic

Show (KES), the biggest

IT trade show in Korea,

was held in a hybrid format from

December 9 to 12, 2020 in Seoul.

About 200 companies in the fields

of semiconductors, consumer

electronics, smart-home devices,

and future mobility participated

as exhibitors. KGCCI, the official

representative of Messe Berlin in

Korea, also joined to present IFA

Berlin 2021, one of the biggest

electronics trade show globally, to

Korean companies.

On December 10, the Korea

Electronics Association celebrated the 15th Electronics

and IT Day and awarded Ms. Ji-Eun Kang, Senior

Manager at KGCCI, with a commendation from the South

Korean Minister of Trade, Industry and Energy. Ms. Kang

has worked for 16 years as an official representative

of IFA Berlin in Korea, providing Korean electronics

and IT companies with full support for their successful

overseas market entry and thus strengthening bilateral

ties between Germany and Korea in terms of trade and

investment.

KGCCI contact for Messe Berlin:

Ms. Ji-Eun Kang [email protected]

For Korean and German renewable

companies, an online business

matching program was organized

by KGCCI from November 2020 to

January 2021. A total of 18 renewables

companies from Germany, Austria and

Korea participated in the program to

discuss potential cooperation and the

possibility of the Korean companies’

entry into the German and Austrian

markets.

If you are interested in similar programs

as economic development corporation or

individual company, please contact us.

Check out the detailed recommendations

from our participants on KGCCI SNS

channels (LinkedIn, Facebook).

Online business matching for Korean & German Renewables Company

KOR-DE Open Innovation Series Meetup

KGCCI and Korea International Trade Association

(KITA) jointly organized the “DE-KOR Open

Innovation Series Meetup” to strengthen Korean-

German business cooperation and discover new market

opportunities.

From the German side, four global companies from

different industry sectors participated: Bayer AG (Life

Science), Volkswagen Group (Automobile), Continental

(Mobility Technology) and DB Schenker (Logistics

Solution). They conducted meetings with 30 competent

Korean startups in total, which continued until the end

of the year 2020.

The first meetups were held on November 6, 2020,

between Bayer and 8 Korean startups in the field of

biotech such as nanotechnology, regenerative medicine

and healthcare.

The second meetups with Continental co-pace GmbH

were held on November 23. It selected 7 Korean startups

with future mobility technologies such as autonomous

systems, AI, human machine interface, 5G automotive

applications, etc.

The meetups between Volkswagen Group and 6 startups

were held from November 23 to December 11. Each

meeting was held on a 1:1 basis.

On December 2, DB Schenker Korea and the German

headquarter met the 9 selected startups which specialize

in distribution center technology such as automation,

labor management and route optimization.

As a result of the meetups, some companies have

succeeded or are planning to organize follow-up

meetings to further discuss business cooperation. KGCCI

plans to continuously organize meetups between German

and Korean companies.

KGCCI contact for meetup participation and details:

Ms. Su-jin Lee [email protected] contact for energy projects: Ms. Ji-Hee Jeong [email protected]

Inside KGCCIInside KGCCI


Interview

Ms. Kang, you’ve been with us for a long time! Tell us about what brought you to

the KGCCI.

Since I studied German language and literature in Seoul, Germany naturally opened

a new world to me both personally and professionally. During my studies, I had a

part-time job in the German Department of KBS World Radio, which broadcasted

German language programs to Germany. I supported this department, collecting

feedback from German listeners and sending them souvenirs. I had always looked

forward to further working in this kind of German environment. After my studies, I

had the chance to start my career at the Chamber.

What are your main responsibilities at the KGCCI?

I’m the foreign representative for Messe Berlin in Korea. My responsibilities are

to provide comprehensive support to exhibitors, visitors and media so that they

have a positive and valuable participation experience that meets their expectations.

Through my work in the trade fair business, I connect Korean clients with German

partners and assist with the entire process from event preparation to on-site

support, until everything is wrapped up. It is an exciting work and I enjoy working

between two worlds.

Many trade fairs have been canceled or postponed due to COVID-19. How are

exhibitions evolving to survive the era?

The restrictions to contain the global COVID–19 pandemic had a huge impact on

trade fair businesses. Without question, the health and safety of our partners and

clients is our highest priority. Messe Berlin is strengthening options for digital

and decentralized exhibitions and is building on that continuously. The restrictions

on physical offline meetings make us all the more aware of the basic desire for

physical face-to-face meetings. Customers will select useful and helpful events,

when we are ready for physical events under disinfection management. At the

same time, digital platforms are providing extended services, which might also

stay after the pandemic. Strengthening digital promotion is essential for customers

to go with the times.

Please share your personal message to the KGCCI members and colleagues.

In terms of trade fair business, I work with German partners and Korean

companies. When both sides are satisfied with their participation in trade fairs

through my support, it makes it all worthwhile. My colleagues are also providing

different services to German and Korean clients and I believe our work actively

contributes to German-Korean relations and the industries of the two countries. I’m

very proud of my colleagues and want to thank them for their good cooperation. On

the occasion of a new era during COVID-19 pandemic, I want to find out new needs

of our members and clients and provide them with suitable services.

Profile

Name : Kang, Ji-Eun

Position : Senior Manager /

Trade Services

Start of work at KGCCI : 2001

Contact : [email protected]

Top 5 Trade Fairs of the Messe Berlin List of strongest service portfolio.

1. IFA

2. InnoTrans

3. ITB Berlin/ ITB Asia

4. Fruit Logistica / Asia Fruit

Logistica

5. International Green Week

A Zoomer’s guide to Korea’s housing problem

Meet Our Team Ji-Eun Kang

On the February 11, President Moon Jae-in apologized

to the South Korean public for the skyrocketing

housing prices.1) Ever since President Moon took

office in May 2017, the Korean government has made

tremendous efforts to cool off the real estate market

with 25 sets of real estate measures up to now. However,

despite the all-out effort by the government to bring down

housing prices in Korea, it seems like the Korean real

estate market never wants to slow down. The housing

shortage escalated to the extent where Zoomers like

myself can almost never dream of moving out.

The struggle for the younger generations to find a single

room to dwell in is a harsh reality.

According to data from the Korea Real Estate Board, the

housing prices in Korea last year increased by 5.36%,

rising at the fastest pace in the past nine years.2) The

younger generations who obviously cannot afford to buy

houses, rather look for adequately priced monthly lease

offers or “Jeonse”. Jeonse, a lump-sum housing lease,

is a housing system unique to Korea. A tenant with a

jeonse contract pays a large deposit at the beginning of

the contract instead of any monthly rent. The fact that

one does not have to suffer from housing expenses every

month makes jeonse a very attractive option for the

younger generation. However, jeonse rates also increased

steeply by 4.61% last year.3) Moreover, as three new

housing laws that aim to protect tenants from landlords

took effect from late July of 2020, jeonse offers are very

rare to find in the current real estate market. According

to statistics from the Seoul city real estate information

center, the number of jeonse contracts that were signed

in January 2021 was 5,806, which is about half of the

jeonse contracts signed in January 2020.4)

To support the young adults who are suffering from the

housing shortage, the government offers few types of

financial aid. One of them is a governmental housing loan

with an exceptionally low interest rate of 1.2%, which is

offered to young Koreans under the age of 34 who are

working at a small or medium-sized firm. Their annual

income should also be lower than 35 million KRW. The loan

Junior EconomistKGCCI DEinternational Ltd.

www.kgcci.com

Na Hee Lee

1) https://koreajoongangdaily.joins.com/2021/01/11/national/politics/Moon-Jaein-apology-New-Year-address/20210111183700625.html

2) http://www.koreaherald.com/view.php?ud=20210105000882

3) http://www.koreaherald.com/view.php?ud=20210105000882

4) https://www.chosun.com/economy/real_estate/2021/01/13/P2IKXXDSF5EDDO2RRWQUEI4LJM/

5) https://koreajoongangdaily.joins.com/2020/09/26/business/economy/real-estate-apartment-neroom/20200926060108455.html

6) https://www.joongboo.com/news/articleView.html?idxno=363468082

is limited to 100 million KRW and the total jeonse deposit

to 200 million KRW. This could be a great help for young

and financially unstable Koreans. However, realistically

speaking, it is very difficult to actually close a jeonse

contract with this type of loan. According to real estate

information and brokerage platform Dabang, the average

jeonse price of one-room studios in Seoul that are smaller

than 30m² was about 162.5 million KRW as of August

2020.5)

Not to mention the fact that leaseholders are not

so much favorable towards this kind of governmental loan

program due to complicated paperwork.6)

Another hardship that younger generations face during the

search for their dream home is the fact that there are scam

offers all over the internet. As digitally savvy generations,

millennials and Gen Zs in Korea tend to search for their

homes through mobile applications which specialize in

real estate brokerage like Dabang. However, all too often

a real estate offering that seemed to be a perfect match,

turns out to be an out-of-sale bait to lure customers. The

Ministry of Land, Infrastructure and Transport announced

that there were 8,830 false advertisement cases found on

the internet during the three-month of intensive monitoring

since August 2020.

At the moment, adequate housing for the younger

generations in Korea seems to be considered a luxury. It

seems like there is plenty of room left for improvements

regarding the housing policies for young Koreans. After all,

the younger generations are not asking for a three-story

mansion with six bathrooms, but rather a single room for

them to pursue their dreams in.

Messe Berlin Messe Berlin has been organizing international trade fairs and congresses since 1822 and organizes more than 100 regional, national and international in-house and guest events each year. It has established itself as one of the ten strongest trade fair companies in the world in terms of turnover and growth.

53KORUM | 1st Quarter 2021 || KORUM | 1st Quarter 2021

Inside KGCCI


Korea Life

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ahk.de/mitglieder/

Publisher

Korean-German Chamber

of Commerce and Industry

8th Fl., Shinwon Plaza, 85,

Dokseodang-ro,

Yongsan-gu, Seoul 04419,

Republic of Korea

www.kgcci.com

Editorial

PR Department

Tel. +82-2-3780-4652

Fax +82-2-3780-4655

[email protected]

Editor-in-Chief

Yuna Ku

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[email protected]

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© Korean-German Chamber of

Commerce and Industry

All rights reserved.

No part of the KORUM magazine may be

reproduced in whole or in part without

permission of the KGCCI.

The opinions of contributors to the

magazine do not necessarily reflect the

opinion of the KGCCI.


No. 87 | March 2021

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