Countries all over the world were asking the same question after Brexit and that is how it will affect their country. After more than a year, it is clear that South Korea should not be worried. The relationship with Britain has not changed after Britain’s exit from the European Union. However, a full Brexit won’t occur until many years later. Their exit might not be the last, as it is very possible more nations will end up leaving the EU which currently has 28 members. As far as Korea Britain relations are concerned, the impact has been limited due to the fact that Korea has limited levels of trade with the United Kingdom. The United Kingdom was even the largest trading partner of South Korea when they were in the EU.
In 2018, the bilateral trade between South Korea and the United Kingdom was a little over $13 billion and only made up a little over 1% of Korea’s total exports.
Korea Britain Relations Post Brexit
2019 saw the conclusion of the Korea-United Kingdom Free Trade Agreement (FTA) and it is now in the parliamentary ratification process. Therefore, once Brexit fully happens, there will be minimal change to the trade relations between South Korea and Britain. In the agreement, the two countries agreed to not add new tariffs on major products including auto parts and automobiles. In addition, the two agreed to treat products transported via the EU the same as those shipped directly to Britain for 3 years after the end of the transition period.
The Korean government has already completed the ratification procedures such as the National Assembly’s approval to make the Korea-United Kingdom FTA go into effect as soon as possible. Therefore exports in South Korea have very little to worry about. The main exports from South Korea to Britain are ships, automobiles, and marine facilities. The key imports from Britain into South Korea include pharmaceutical goods and crude oil.
Startups in the UK Could Enter the South Korean Market in 2021
Many investors, startups, entrepreneurs are wondering what a post-Brexit look like for the British startup ecosystem? It is estimated that 20% of workers for London-based startups are from the EU. This means that in the coming years, Britain’s startup/tech sector could lose many highly skilled workers. Due to the uncertainty of immigration laws due to Brexit, many might leave Britain on their own accord and look for work in EU countries. This short supply of talent could cause startups in the UK to expand outside of the EU to find talent. Most experts feel that importing and exporting costs will increase which means many startups will need to expand out of the UK market and into new markets to find other means of growth. South Korea could potentially be the right country to expand for many London-based startups.
Support Programs for Foreign Startups in Korea
One thing is clear, there will be less of a demand to start a startup in London due to these uncertain conditions. Entrepreneurs with great ideas in the UK will start to look towards other countries to launch their business. The Korean government offers many startup support programs for global entrepreneurs looking to start a business in South Korea. These programs include the K-Startup Grand Challenge and the Seoul Global Startup Center. These programs are for non-Korean founders looking to bring their product/service into the Korean market. South Korea is the perfect country for any tech startup because South Korea is not only a tech-friendly country but also has a strong IT infrastructure.
For startups in the UK to survive, they will need to expand into new markets, Asia in particular. Investment funding in the UK is seeing a decline due to the referendum. Since 2017, there has been a 15% fall in seed-stage funding which is devastating for startups. This will significantly affect the UK innovation scene for years to come since seed funding is the lifeline for many innovative startups. With the potential loss of investors in the EU, Britain needs to start looking towards the Asian market, and entering South Korea is one of the best ways for this transition.
South Kore Britain Relations Will Remain Strong
South Korea is one of Britain’s key allies when it comes to the Asia-Pacific region. Currently, South Korea is one of the few countries in the region with a population of more than 51 million. In addition, it has a high standard of living and a strong economy. Another factor of the Brexit outcome will be Britain’s views on North Korea. The U.K. has always been for tough sanctions against North Korea and against their provocative nuclear rhetoric. Just because Britain has left the EU, it does not mean that will leave the U.N. Security Council and will continue to have a strong voice in regards to human rights and security issues.
Should startups in Korea expand into the UK?
Digital technology is a crucial contributor to the UK’s economy and employment. Brexit has left a lot of people in Britain worried about the loss of jobs and innovation. The digital tech sector alone contributes over $100 billion dollars a year. As mentioned above, many startups in the UK will look to expand into new markets. This could be an opportunity for startups in Korea that were looking to expand into the UK market. Particularly, fintech startups in Korea because even after Brexit, Longdon will remain one of the leading financial centers in the world. It is home to some of the largest financial institutions. These include the Bank of England, Barclays, HSBC, and the London Stock Exchange. HSBC and Barclays are the two largest banks in the world.
Increase in demand for foreign talent
While seed funding is on the decline, tech startups in Britain get around $7 billion in VC funding per year. This is more than all the EU countries combined. The two hottest sectors are in fintech and AI. There are many innovative fintech and AI startups in Korea that should enter the UK market. The demand to bring in foreign startups and talent will increase as more and more British tech startups leave London. In addition, London is one of the most attractive destinations in the world for fintech experts, data scientists, and machine learning engineers. The only issue could be the language barrier. English is the universal language in the UK which could be an issue for some startups in Korea.
The uncertainty of Brexit will surely impact the UK startup ecosystem. However, entrepreneurs and startups in Korea should not let this stop them from entering the UK market. From a strong financial hub to a large amount of VC funding, there are many advantages for startups in Korea planning to enter Britain.
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