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Doing Business in Korea: IT Outsourcing and Digital Marketing

Web development, Mobile Development, Our approach

East Asia is a huge and well-developed market with business management characteristics that are very different from western ones. Countries like South Korea or Japan are full of contrasts. The Sannacode team has made a research product on how to market a business in Korea. Here are a few key points to keep in mind if you want to deploy a marketing strategy to attract customers there.

An Overview of the IT Market in Korea

Outsourcing developers or hiring dedicated teams abroad are not a common Korean practice. For years Korean entrepreneurs were looking for diligent and hard-working employees from their own country. At the end of the XX century, the country reached a high level of economic development, labor cost got more expensive compared to the previous years, so the stream of well-educated ex-pats has grown.

The Korean IT market is complex. Local realities are very different from what we are used to. In 2015, the cost of software development in Korea was over three times higher than the cost ten years ago. The legal system in Korea is generally transparent, fair, and judges with proactive guidance tend to be able to understand commercial disputes. Korean manufacturers need much less oversight than Chinese manufacturers and the cost of doing business in Korea is not substantially greater for high-quality products than that of China.

Promotion in the Internet

Although the overall market size is relatively small (20 times smaller than in the US), South Korea is the absolute leader in the proportion of advertising on mobile devices. The share of digital ad spending is 54.4%. At the same time, contextual advertising in search is more popular than display, and mobile application ads are used more actively than the search ads.

The marketers consider AdMob, Cash Slide, KakaoTalk Plus Friends, ADAM, AdPost to be the most popular platforms. In our experience, starting with KakaoTalk is best call. But we will get back to this later.

You Can Do Nothing Without a Native Speaker

Despite being involved in the global economy and the effects globalization, Koreans are very attached to their own culture and traditions. Children learn English in schools, but the language is still not widely used. The exception is those students who studied in the United States or in local prestigious universities.

Therefore, product promotion without Korean language is a way to failure. This is not only because locals will not understand you, even those who speak a foreign language will initially perceive you as an outsider.

This is why, If your company has far-reaching plans in Korea, it is necessary to hire a native speaker not only to communicate with customers but also to find contacts and negotiate. Even if such a person is not in your team yet, it is always best to master at least a few phrases in Korean.

Work With Opinion Leaders

Since a sense of community is very important for Koreans, personalized recommendations work well in this market. South Korea is a country where opinion leaders should not be disregarded. Adweek places the country in the TOP 5 of rapidly developing markets in the field of influencer marketing.

Influencers actively advertise clothing, cosmetics, travel, but you can also find other recommendations on blogs. The most popular sites are Instagram, Facebook, and YouTube.

It must be taken into account that in Asia it is not customary to work directly with reputable bloggers. Collaboration with opinion leaders is usually built through an agency. This is especially true in Japan. In Korea it is also generally true.

Familiar SEO Tools do not Work

In Korea, 74% of users use the Naver platform, which in this country plays the role of Google familiar to the US and EU users. Google itself accounts for 10% of users, another 16% prefer Daum.

The output page in Naver contains more than twenty different blocks of information. Organics starts from the 11th place, so the familiar search engine optimization does not work here. Initially, this site is perplexing for Europeans, but in general with Naver  it is quite possible to solve marketing problems: to send traffic to a site, receive applications, sell products. It is important to position yourself in Naver to reach a large part of the audience.

Messengers: Career vs Personal Life

The most popular messenger in Korea is KakaoTalk. More than 80% of the residents are using it. The popularity of this service among Koreans cannot be ignored when planning an advertising campaign. A significant part of its services are paid: for example, you need to pay a quarter of a dollar for every message sent.

Because most Koreans are fixated on work and career building, in their personal space they tend to relax and distance themselves from stress. That is why Kakao contains various bonuses, such as stickers or emoji sets that are received by subscribers from corporate pages.

So, What is the End?

In Korea, as well as in the neighboring Japan and China, traditions are very strong. To work in this market it is imperative to understand this culture, to understand how important reputation and communication in society are for Koreans. Be careful with jokes and try to check every post with a native speaker.

Marketing in Korea requires a well-thought-out strategy, the help of local partners, and financial investments. It is advised to enter this market only when your company has been making profit for 2–3 years because here you will have to spend money.

Over time, the investment will pay off: the Asia Pacific market is difficult but very promising - at Statista it was estimated that in 2015 the APAC region showed the highest e-commerce spending in the world, surpassing even North America.

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