IT companies fleeing Seoul, heading for the provinces

Seoul may be the center of the South Korean universe, but many IT companies based in or near the city are planning to go provincial, citing high costs and other onerous conditions in the capital. P.M.K., a liquid crystal display manufacturer based in Gimpo, near Seoul, is planning to move its headquarters to Chungcheong provinces. “We want to expand our Gimpo factory,” said Chun Woo-nam, head of planning and management at P.M.K., “but the real estate prices in the metropolitan area are too high, and heavy taxes added to the real property acquisition tax make it difficult for us to build our factory in the capital region.” Character Korea Enterprises, which offers mobile content to cellular phone companies and Internet portal companies, is debating moving its headquarters from Bundang, Gyeonggi province, to Chuncheon in Gangwon province. “We want a place near Seoul with an adequate environment that can positively affect the research development that we do”, said Han Dae-hee, head of planning and management at Character Korea Enterprises. Korea’s largest portal site, Daum, is one of the many other IT companies planning to move its main headquarters ― in Daum’s case, to Jeju island. Incruit, the nation’s leading human resources portal site, in cooperation with the Korea Internet Corporations Association, questioned 73 IT companies about possible plans to transfer headquarters to another region; 46.6 percent answered that they were discussing moving. “IT companies that emphasize technology prefer smaller-sized headquarters that can receive various benefits from local autonomous regions,” said Kim Sung-ho, the planning chief of the association. Lee Kwang-suk, an associate at Incruit, added that “79.4 percent of companies that are considering moves expressed positive answers regarding the recruitment of regional school graduates and local residents, which can help resolve unemployment and promote a more active economy.” Daejon, Chungcheong provinces and Gangwon province are among the most popular regional candidates for headquarters transfer chosen by survey respondents. The main reasons behind planned relocations were “cheaper rent and maintenance fees” (40 percent), “a relatively pleasant environment” (35 percent) and “tax benefits” (15 percent). “We are considering moving to Chungcheong and we expect that with the government plans to transfer to a new capital, the infrastructure, such as roads and wireless communication services within that area, will be well ensured,” said an associate at H Enterprises, a software developer. However, some companies surveyed worry about a smooth supply of manpower. “We are concerned that skilled workers who don’t wish to move out of the capital might desert their jobs,” said an employee at Internet Contents, which is planning a transfer to North Chungcheong. “Many companies hesitant about moving their headquarters might become more willing if the government and local entities help out in securing skilled local employees, providing connections between companies and local colleges and supporting information collection and marketing,” said Mr. Han of Character Korea Enterprises. by Chang Chung-hun