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Small business in Korea are failing at a rapid rate, why is this?
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승인 2017.10.12  16:45:53
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Government data released on Thursday showed that 72.7 percent of small business set up in Korea don't last for five years.

In terms of restaurants and accommodation, a massive 40.8 percent of them closed within one year of their opening.

This was significantly lower than the survival rates of other countries including the Germany (60.9% survive five years), France (55.7%), U.K (38.9%), Spain (60%), Italy (43.3%).

One major worry is the effect that this has on the countries rising levels of debt.

A Bloomberg article from last year explained how many of these businesses are started by people who have been laid off as they look for a way to make enough money before retirement.

These people often lack experience and are unprepared for the challenge associated with running a new business.

This leads to many people choosing businesses not necessarily because they have a high chance of success, but rather because they have low start-up costs or don't require a particularly high level of skills.

This can go some way to explaining the incredibly high number of chicken shops and barbecue restaurants found in Korea.

This phenomenon of people being laid off early is incredibly common in Korea. Workers, who have often spent a lot of time working at the company, are often pressured into leaving their jobs before the official retirement age.

It can then be hard for these people to get new jobs due to a preference for younger workers, partly due to due to a perceived negative effect having an older new member of staff could have in the office.

In fact, even when the new "blind recruitment" laws, those that are designed to stop employers from hiring (or at least interviewing) due to age or looks, come into place, it is expected that age will be one of the hardest barriers for employers to overcome.

The jobs that people do get, such as taxi drivers, can often be far lower paid than the jobs these workers previously held at large Korean companies and as such, if a worker wants to continue earning a lot of money, their only real chance is through the risky process of starting a business despite the high rate of failure.

As the state pension age in Korea is 60, this means that people often have around years to fill before they can retire properly and starting a business is seen as a way to earn money.

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