Tech Start-ups In South Korea Surge As Youths Snub Jobs At Big Companies

July 31, 2012South Koreaby EW News Desk Team

0

Thousands of South Korean students are rejecting the opportunity to secure lifetime jobs at the nation’s biggest companies in order to begin their very own technology start-ups, said a report by Bloomberg News on Tuesday, as more and more start-ups continue to spring up on the back of entrepreneur-friendly tax incentives and bank loans.

According to the Korea Venture Business Association, an agency that supports new enterprises, the number of tech start-ups in the country has increased by 83 percent over the last four years – with software start-ups experiencing a 61 percent increase, while the number of information and communications-service providers have more than tripled.

Conversely, the nation’s top 30 business groups – led by Samsung, Hyundai and SK – accounted for just 6.8 percent of South Korea’s workforce last year, according to a report by the Federation of Korean Industries, despite the companies’ historical and economic significance to the country.

“Everyone used to think if you go to a good college, that means you’ll get a job at a big conglomerate,” said Kim Dae Ho, a professor of service management at Mokwon University in Daejeon, South Korea, to Bloomberg.

“Now, people are thinking they can also start their own company and run it, rather than working for someone else. The whole environment has changed,” Kim said.

Related: South Korea Economy

Related: Korea (South Korea) Economic Statistics and Indicators

For decades, Koreans have often vied for employment at the so-called “Chaebols” (conglomerates) of the country – who wield significant political and economic influence after pulling the country out of poverty following the Korean War.

Today, Samsung for instance still accounts for nearly 20 percent of South Korea’s GDP, with the company’s average pay more than three times South Korea’s per capita income last year.

But students such as Sim Cheol Hwan, a 27-year-old engineering undergrad from Hanyang University, see more opportunities in starting up their own businesses rather than joining the large corporate enterprises.

“I don’t want to get a job at a top 10 Korean company…I don’t think I can maximize my full potential at these companies,” said Sim, who will be taking a break from school to set up his own business making apps for Samsung and Apple phones.

Lim Hyung Cheol, a 21-year-old college student who started Gameberry Inc – an app marketing firm that generates as much as 20 million won in revenue in a month – last year, added that tales of other successful start-ups had “enormously motivated” him to become an entrepreneur, with Facebook co-founder Mark Zuckerberg seen as a crucial role model.

“Zuckerberg’s success proves that there is a lot of money to be made” in start-ups,” he said.

Related: Internet Entrepreneurs Are Fundamentally Re-Wiring the Global Economy

Related: Facebook Co-Founder Eduardo Saverin Bets Big on Asian Internet

According to Lee Kap Soo, a researcher at Samsung Economic Research Institute, Korea’s history has been marked by numerous entrepreneurial successes, which may have inspired more students to strike it out on their own.

Nexon Corp, an online game maker for instance raised $1.2 billion in an IPO in Tokyo last year, after being founded by a graduate school student in 1994. And even Samsung began as a simple produce and fish exporting business.

“There are risks of failure, but there’s also a merit that you can personally grow your own business,” Lee said. “It’s hard to have a big success like Facebook, but people start their business with the hope of hitting a jackpot like that.”