The growth of entrepreneurship in South Korea has made the country an economic powerhouse.
Korean companies became world-class conglomerates such as Samsung, Hyundai, and LG. These three major companies compose more than 30% of the nation’s GDP.
But there are many barriers for people who want to become entrepreneurs. For example, there is a setup cost of at least $1,000 for administration fees (i.e. fees to form a corporation). A prevailing negative attitude towards entrepreneurs, attitude towards risk and failure, and bureaucracy are major issues concerning entrepreneurship in Korea.
But unemployement rate is very high. Many students with their bacchelor’s degree can’t find work and are forced to find low paying jobs such as working in a gaz station.
Network Marketing is a great alternative that can provide greater income and reduces the barriers of a start-up and nurture the entrepreneurial spirit.
It’s illegal for an MLM in Korea to pay over 35% commissions!
Since 2009, MLM companies in Korea are required by the Korean Fair Trade Commission (FTC) to only pay 35% of wholesale price to distributors.
The FTC is using the standard of 35% payoff to decide if a Korean MLM company is a pyramid. There seems to be no consideration of products quality or percentage of purchases made by customers.
Their Fair Trade Commission in Korea, the prosecutor for the economy, has declared war on illegal mlm companies in korea that are causing harm by taking advantage of the economic crisis to target people who are unemployed, retired and students from universities who are having difficulties finding jobs.
Chart 1: Consumer Sales for MLM companies in South Korea by Product Category – 2012
Sales for 2013 for MLM companies in Korea has been growing steadily since 2007 approaching USD 3.9 billion, which is a 27% increase from 2012 (USD 3.1 billion). In 2007 there were 62 registered MLM companies in Korea and that number has increased to 106 in 2013 from 67 in 2010. It is reported that these 100-plus network marketing companies have some 4 million distributors.
Chart 2: Consumer Sales for MLM Korea – 2013 (in billions of USD)
Before investing in launching your Network Marketing business in South Korea, you may want to consider the amount of support you are willing to provide your team. Ideally, find a local leader who already has leadership experience and work closely with them to make sure your team is not left trying to figure everything out.
Other MLM Korea articles.
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