Reasons for Falling Behind
It was pointed out that Korea's strict regulation is preventing the birth of 'Unicorn Enterprises.' A unicorn company means an unlisted start-up which is valued at over US$1 billion and 10 years old or younger.
The Korea Economic Research Institute (KERI) announced on March 28 that only three Korean companies made the list of 236 unicorn companies by US market researcher CB Insight. The three were Coupang, Yellow Mobile, and L&P Cosmetics.
It is the US that gave birth to the largest number of unicorn companies. US companies accounting for 49.6% or 116 of the 236 unicorn companies. China came in second with 64 companies, accounting for 27.1%, followed by Britain with 13 and India with 10.
The Unicorn company with the highest corporate value was Grab Taxi called Singapore's Uber. Its value reached US$6 billion. By country, Singapore stood first in the average value of unicorn companies as Singapore has only one unicorn company, Grab Taxi. Singapore was followed by Sweden with two unicorns whose average corporate value ran to US$5.5 billion. The US which has the largest number of unicorns recorded the average corporate value of US$3.5 billion, China, US$4.4 billion, India, US$3.6 billion and Korea, US$3.6 billion.
Based on the survey results, the KERI said that new companies such as Naver, Nexen, NCsoft, and Kakao were born in the late 1990s when a dot.com fever gripped Korea. The KERI claimed that recently, there were a small number of successful cases of innovative companies in Korea and tough regulations were to blame.
The KERI pointed fingers at laws to prevent the realization of business ideas such as regulations on the shared economy business and allowing venture companies to order its employees to work 52 hours a week, an environment where founders’ management rights such as a ban on unequal voting rights and policies to preclude big companies from making investment in venture start-ups such as the prohibition of internal trading between affiliates.