Domestic Venture Companies Participating in CES "Desperately Need Legal Assistance"

Legal Differences Are the Biggest Barrier When Expanding Overseas
Legal Costs Are High, Making It Difficult for Small Companies to Afford

Many domestic venture companies participated in CES 2024. A considerable number of them said, “We are preparing to enter overseas markets because technological development and market expansion are freer under foreign legal systems than in Korea.” Conversely, this implies that there are limitations to developing new innovative technologies domestically. However, they expressed concerns that it is difficult to understand the detailed legal systems of each country, which could lead to bigger legal issues. Venture company employees unanimously stated, “While domestic regulatory reform is necessary, expert help and support are urgently needed to respond to legal issues that may arise in overseas markets.”

[Photo by Beopryul Newspaper]

“Legal costs are the biggest concern”

Company A, which developed a youth bio program using artificial intelligence (AI), is currently preparing to enter markets in the UK, Japan, and Southeast Asia. They decided early on to expand overseas, judging that the legal systems in foreign markets are more favorable to business activities than those in Korea for utilizing their technology. However, it is impossible to know the laws of each country in detail.

A representative of Company A said, “Of course, differences in laws between countries are one of the biggest barriers when entering overseas markets,” adding, “It’s not so much that the laws are unreasonable, but rather that the lack of knowledge about them causes anxiety.”

A representative of Company B, which developed multiple medical devices using AI, stated, “The framework of contracts used in the domestic market and certain overseas markets may be the same, but there are differences depending on detailed laws,” and added, “If major problems arise from contracts, the entry itself could be canceled or further technology development may become difficult.”

Another representative from Company C, a venture company, explained, “From the stage of creating the item, we kept overseas market entry in mind first,” and said, “Regulations are certainly fewer than domestically, but the content of regulations changes constantly, so it is difficult to check every time.” They continued, “Besides regulations, there are differences in social awareness and civic consciousness, and it is important to timely grasp the atmosphere of the respective country, so we spent time and effort selecting overseas partners to get help with this.”

The problem is that the costs required for legal review of overseas markets are larger than those related to the domestic market. This is difficult for small companies to bear.

A representative of Company A said, “Legal costs are the biggest concern,” adding, “Foreign lawyers are expensive, and it is difficult to verify their competence and reliability, so it is burdensome to spend on legal costs readily.” They continued, “If we try to cross-verify through lawyers or law firms in Korea, that also incurs costs, so the burden of legal costs is considerable.”

A representative of Company C said, “Companies that have already received investments or gained recognition through media can respond to legal issues faster with the help of investors or may not find the costs burdensome,” but added, “However, smaller companies lack personnel to pay attention to legal issues and are greatly worried about costs.”

Due to complex domestic systems... some turn their eyes overseas

Cases of turning to overseas markets due to complex domestic systems continue to emerge.

Kim Kang, CEO of Gangsters, which developed home training equipment for people with disabilities, said, “Knowing that market expansion is difficult domestically, I decided to re-export from the US,” adding, “I judged that this would accelerate the company’s development.” Gangsters, launched in January 2020, started exporting overseas within nine months and won an innovation award at CES. Currently, they export equipment to 11 countries. Gangsters exports most of its products to the US.

He said, “The government supports assistive devices for people with disabilities, and most disabled people rely on that support, but if a product is not included in the 84 supported assistive device items, companies cannot register as sellers, and the registration process is very complicated.” He pointed out, “We are exporting to the US under government support programs, but there is no such system domestically, or the relevant ministries are so unaware that the system and regulations are complicated, making it difficult to expand sales.”

Kim also said, “The development of various assistive devices for people with disabilities needs to be activated to grow together, and for this, it is urgent to organize various support projects and related processes, and to introduce fast-track measures and regulatory sandboxes.”

Han Suhyun, Legal Times Reporter

※This article is based on content supplied by Law Times.

This content was produced with the assistance of AI translation services.