Korea losing lucrative venture enterprises due to heavy regulations, rigid conditions

Red tapes and new business-unfriendly environment in Korea are scaring away venture enterprises.

Woowa Brothers Corp., the operator of the nation’s top food delivery platform Baedal Minjok (Baemin), became latest to sell 87 percent stake to German food delivery company Delivery Hero (DH) who already had under its arm Korea’s second and third delivery apps Yogiyo and Baedaltong at $4 billion, the biggest foreign buyout of a Korean IT venture.

The company’s founder and CEO Kim Bong-jin reportedly explained that the company made the bold decision from the lesson that an IT company should seek growth beyond a local market to survive amid a fast changing IT business trend, according to sources. Kim will stay out of the domestic business but reach out to the Asian market by leading Woowa DH Asia, a 50 to 50 joint venture with DH to be established in Singapore.

Early this year, Korea’s top game company Nexon sought to sell a 98.64 percent stake owned by its founder and CEO Kim Jung-ju and his family members. The sale fell through due to differences over the sale price.

Lee Jae-kyo, managing director of NXC, holding entity of Nexon, regretted the fallout as it could have been given a global push for the gaming company.

Last month, Naver and Japanese tech conglomerate SoftBank announced a 50:50 joint venture to place Naver’s Japan-focused messenger service Line and Yahoo Japan under one roof. Naver founder and Line chairman Lee Hae-jin has been focusing on the global business as a global investment officer (GIO) since he cut down his stake in the company to 3.72 percent and stepped down from Naver’s board in 2017.

Higher barriers to novel business concepts such as sharing economy and big data have turned Korean IT companies to take their businesses abroad.

Local mobility startup Tada is at risk of folding its van-hailing business due to the fierce opposition from taxi drivers and the National Assembly’s move to outlaw its business. Lee Jae-woong, CEO of Socar that operates Tada is now under trial on charges of running an unlicensed transportation business.

Woowa Brothers’ Kim has been summoned for questioning by the National Assembly every year since he was grilled at the parliamentary inspection in 2017 over charges related to advertisement. Naver’s Lee was charged in 2017 and 2018 of alleged content manipulation and Nexon’s Kim was implicated in a bribery scandal involving former prosecutor and his friend Jin Kyung-joon.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]