The Most Challenging Aspect for Korean Service Companies Entering Overseas Markets is "Finding Buyers"

[Asia Economy Reporter Hwang Yoon-joo] The biggest challenge faced by our service companies when expanding overseas is 'finding local buyers,' and they most need government support for 'overseas market development.'

The Korea International Trade Association's International Trade and Commerce Research Institute conducted a survey on overseas expansion targeting 593 domestic service companies that have already entered or are preparing to enter export and overseas investment markets, and on the 13th, released a report titled 'Status and Challenges of Overseas Expansion in the Service Industry.'

According to the report, companies cited 'discovering local buyers and demand' (22.5%) as the most difficult aspect when pursuing overseas expansion. This was followed by 'the COVID-19 pandemic' (19.6%) and 'financing for overseas expansion' (18.5%).

Regarding necessary government support, there was a consensus on 'support for overseas market development' (25.9%), 'expansion of tax and financial support' (22.0%), 'investment support such as establishing overseas investment funds' (19.2%), and 'improving conditions for overseas expansion such as Free Trade Agreements (FTA) and intellectual property protection' (11.0%).

For detailed support in overseas market development, the most desired was 'non-face-to-face and online marketing support' (31.6%). Company A, which exports immersive content to China, said, "Since COVID-19, it has become difficult to meet local buyers in person," adding, "Although we meet buyers through online consultation meetings, we are struggling with marketing because we are not accustomed to meetings via screens." Other frequently mentioned supports included 'building and providing overseas buyer databases (DB)' (28.7%) and 'resuming offline consultation meetings and exhibitions' (25.4%).

As detailed measures for tax and financial support, companies requested 'wage support' (29.5%), 'research and development (R&D) and technology development' (26.5%), and 'export vouchers' (24.2%).

Meanwhile, more than half (53.2%) of companies reported 'delays in business commencement' as a type of damage caused by COVID-19, and in response, companies requested 'temporary tax reductions or financial repayment deferrals' (34.1%) and 'easing of entry and exit restrictions' (26.1%).

Based on this survey and analysis, the Trade Association proposed policy tasks to the government, including legal revisions for tax support for service companies, expansion of support for service startups, and improvement of the purchase confirmation issuance system. The Ministry of Trade, Industry and Energy also reflected these and announced the 'K-Service Overseas Expansion Activation Plan' on the 13th.

Senior Researcher Shim Hye-jung said, "We highly welcome the government's export support measures, which were prepared by actively listening to the voices from the service trade field and reflecting them," adding, "The Association also plans to further expand related support such as strengthening information provision in the FTA service sector, training specialized personnel in service trade, and supporting service startups."