As the headquarters for some of the world’s largest corporations, Seoul has become a major business and financial hub. Exec looks at this hi-tech Asian economy
Written by Rebecca Waters
Once one of the poorest economies in Asia, South Korea has transformed into one of the most technologically advanced cities in the world; transforming from a farming and fishing based economy.
Home to more than 10 million people in the world, South Korea’s capital, Seoul, is the world’s third largest metropolitan area, located on the basin of the Han River in the country's northwest.
After the 1988 Summer Olympics and 2002 FIFA World Cup, Seoul became a global city and is now viewed as the ‘heart of Korean entrepreneurship, invention and discovery’. It is also one of Asia’s most vibrant economies; a blend of old and new with modern high rises and trendy shops mixed in with ancient temples and palaces.
PROS
Seoul is one of the fastest rising centres in the hi-tech global marketplace, making it very appealing for foreign investors. The construction of the International Finance Center (IFC) in Seoul will only encourage this, and will see the city join a circle of global landmark destinations including New York’s Rockefeller Center and London’s Canary Wharf.
According to the Seoul Metropolitan Government, “the digital cluster of Seoul will become the centre of the global digital based software industries.” The majority of head and branch officers of banks, stock and insurance companies are all concentrated in Seoul. The city is also home to some of the world’s largest corporations including Samsung, LG Group, Hyundai, Kia Motors and Daewoo Corporation.
Although Seoul accounts for only 0.6 percent of South Korea's land area, it generates around 21 percent of the country's entire GDP. Seoul has a thriving service sector which benefits the national economy and development. Foreign Direct Investment is also mostly concentrated to this industry, accounting for around 85 percent of total investment, and it’s getting stronger.
The finance, real estate, telecommunications, wholesale and retail industries in Seoul are also higher compared to average.
Located between Japan and China, Korea’s geographical position has enabled Korea to act as a bridge for cultural exchange and trade between its neighbours. The country’s major exports include electronics, automobiles and machinery. Korea is the world’s sixth largest automobile producer and number one in DRAM semiconductor manufacturing, shipbuilding and LCD production.
The South Korean shipbuilding industry is also one of the most highly developed, headed by chaebols such as the Hyundai Heavy Industries, Samsung Heavy Industry and POSCO.
With a low crime rate, the city is a safe place to travel and considered one of the safest in Asia. Public transportation is also excellent, with an extensive network of train, taxi, bus and subway services, all of which provide cheap travel around the city and South Korea. In particular, the urban rail system is often considered as more user-friendly and environmentally-sound than buses, although it is costly.
CONS
Indeed, the urban transport system is Seoul is changing continuously however, the heavy concentration of people causes various urban problems and traffic congestion and other transportation problems have become a part of everyday life in Seoul, as urbanisation and suburbanisation have proceeded.
As income increases, private transport has become more popular than public transport which has caused various transport problems with the roads and facilities unable to cope with the rapid growth in traffic volume. As a result, the Seoul Metropolitan Government has made greater efforts to improve this facilities, for example, paved road increased 1.4 times from 1980 to 1996 but despite huge effort and expense, the 10-fold increase in cars has overwhelmed the progress and transportation is still an issue.
While the economic development has pulled more people – and investment - into the city, Seoul is still a very expensive city to live in when compared to many other international cities. In a 2007 survey by London human resources consulting firm ECA International, it was listed as the third most expensive city in the world, following closely on London’s heels, and the most expensive in Asia - it is now 10 percent more expensive than Tokyo - when it comes to cost-of-living levels for foreign executives. Both rental payments and housing costs are very high considering the quality and size of housing that is available, and for many, those properties are well out of reach.
"Five years ago, the average expatriate was paying about 35 percent more for goods and services in Tokyo than in Seoul," says Lee Quane, Hong Kong-based general manager for ECA International. "Now, with the huge appreciation of the won over the past three years, Seoul is."
CONCLUSION
While the currency appreciation is likely to continue, Seoul is one of the most dynamic and vibrant business centres in Asia and a hub for foreign investment. The construction of the International Finance Center will only further encourage this and enhance Seoul’s global status, bringing more people into the Seoul. While this will mean growth further transport demand within Seoul’s urban areas, there is a strong emphasis to improve the transportation system to counteract the congestion and urban problems.
After all, Seoul is still in its youth and it will be exciting to see how this hi-tech Asian city develops.
Important Tips
• Office hours in Seoul are 09:00 to 18:00, Monday to Friday, and Saturday morning, 09:00 to 13:00.
• Koreans attach great importance to first impressions. Always wear smart clothing in business situations.
• Business cards should be exchanged each time you meet somebody new; give and recieve cards using both hands, as this is considered respectful.
• Most of management in larger Korean companies speak English but expect some difficulty communicating in English with smaller and/or more traditional companies.
• When you take the lift in an office building, particularly in the morning, it is customary to queue up and wait your turn.