BLOG: Reflections on South Korea’s social enterprise sector

Article by Neil Young
Mon 16th December 2019

Neil Young, P4P Coordinator, was recently invited to visit Daegu, South Korea to attend the 1st Daegu x Glasgow Social Economy International Forum. In the final P4P blog of 2019 he discusses some of the features of the South Korean social enterprise sector and provides details of both the forum itself and the study visit.

Background

Last month, representing both Senscot and P4P I was honoured to be invited to take part in a study visit from Scotland to Daegu, South Korea alongside colleagues Duncan Thorp from Social Enterprise Scotland, and Gary Meek, Chief Executive of Glasgow Council on Alcohol who attended on behalf of the Elevate-Glasgow Public Social Partnership.

The study visit was organised and funded by Daegu Metropolitan City, the Daegu Social Economy Center, and the Social Enterprise Research Center at Yeungnam University in Gyeongsan. It followed an earlier visit to Scotland in July 2019 by South Korean social economy representatives.

The main purpose of the visit was to attend the 1st Daegu x Glasgow Social Economy International Forum to share knowledge and learning between the two cities with regard to social enterprise.

The visit also involved meeting with a range of different social enterprise leaders in the Daegu area, and with better understanding other aspects of Korean culture including Korean food and history.

About Daegu

Daegu (meaning ‘large hill’ in Korean) is South Korea’s fourth largest city, after Seoul, Busan, and Incheon, with over 2,500,000 residents.

The city is located in south-eastern Korea approx. 50 miles from the coast, near the Geumho and Nakong rivers.

Nicknames of the city include ‘Apple City’ and ‘Textile City’ due to Daegu’s reputation for producing high-quality apples, and textiles. Apart from textiles, the city’s other major industries include machinery and metals, and cars

Future strategic industries for the city include water; self-driving or electric cars; medical; Internet of Things technology; and energy.

The city has a warm climate which receives little rain apart from during the Summer months, with an average temperature of 26 degrees in August. The city’s reputation for warm weather has led to a new nickname for the city, ‘Dae-prika’ (a portmanteau of ‘Daegu’ and ‘Africa’).

Culturally the city is regarded as more conservative than South Korea’s capital city, Seoul. Traditionally Buddhism is the most commonly practiced religion in the city, but many Christian churches can also be found, with Christians representing around 17% of the population.

Many Buddhist temples can be found on the outskirts of the city near mountains, including the Donghwasa temple which we visited on our final day in Daegu. Nearby mountains include Mt. Palgong, Mt. Biseul, and Mt. Apsan.

Daegu city centre, or ‘downtown’, however, has a wide range of shops, large department stores, and restaurants. Streets are usually themed – for example, a whole street will be devoted to older people, to shoes, or traditional medicines.

Social Enterprise in South Korea

Social enterprise development started in South Korea in the early 1990s when the production community movement and labour protection associations were established in low-income regions.

It wasn’t until 2007 however as a result of the Social Enterprise Promotion Act that the South Korean Government founded an array of agencies and intermediary organisations, including the Korea Social Enterprise Promotion Agency (KoSEA).

The Social Enterprise Promotion Act defines a social enterprise as “an enterprise for pursuing the social purpose of providing working opportunities or social services for people who belong to socially and economically vulnerable classes as well as performing business activities such as the production and sale of goods and services”.

There are five types of social enterprise in South Korea: Job-creation Type; Social Service Provision Type; Mixed Type (Job-creation and Social Service Provision); Other Types; and Local Community Contribution Type (a new type added in 2011).

One distinctive feature of the South Korean social enterprise sector is that the Social Enterprise Support Committee within the South Korean government certifies social enterprises, unlike in Scotland where we do not have a legal definition of social enterprise and the Scottish Government does not have a role in social enterprise certification. As in Scotland, however, there are various legal forms that social enterprises can take.

The South Korean government provides social enterprises with tax incentives, which has been a strong facilitator for the increase and expansion of social enterprises in the country.

There are now over 1,700 social enterprises across South Korea (2017). Daegu itself contains 884 social enterprises hiring 7,683 people.

International Forum

The 1st Daegu x Glasgow Social International Forum, Social Economy at the Crossroads, was held on Friday 22nd November 2019 at Innopolis, Daegu.

The forum began with an opening ceremony with music and dance performances from local social enterprises, as well as introductions to the speakers and an official welcome from the forum organisers to the three Scottish delegates.

The forum itself was divided into three sessions. The first focussed on an overview of the Scottish and South Korean social economy and support infrastructure, followed by a session on issues relating to procurement, and lastly a session on partnerships between social enterprises and the public or private sector.

P4P’s presentation concentrated on procurement reform; challenges faced by social enterprises in accessing income from public procurement; and how P4P tackles this by supporting the development of new social enterprise partnerships or consortia.

The presentation from P4P was followed by a presentation from Yeong Rak-Im, Chief Executive of the Moohan Social Co-op. Moohan Social Co-op bids for funding or contract opportunities from the public sector on behalf of its 53 social enterprise members. This is supported by a system of discretionary ‘preferential’ purchasing of social enterprise services or goods, similar to the ability of public buyers in Scotland to reserve contracts for supported businesses.

The forum finished with an open discussion chaired by Kim Youngcheol, professor at Keimyung University in Daegu. The questions asked mainly related to the Public Social Partnership model, the definition in Scotland of ‘charity’ versus ‘social enterprise’, as well as social enterprises competing with the private sector.

Running alongside the main forum was a series of pitches from young social entrepreneurs attending high school or university.

Study Visit Activities

In addition to attending the international forum, representatives from the Daegu Social Economy Center gave us a tour of the city as well as hosting a number of visits to local social enterprises where we heard from social enterprise leaders about their business model, their social aims as well as the challenges they experience.

Social enterprises visited in Daegu included:

Grace Silver Cinema, a social enterprise cinema which shows films targeting Daegu’s older population.

Daegu Haru, a social enterprise café which promotes friendship and cooperation between South Korean and Japan.

Elly Rollhouse, a social enterprise bakery whose social aim is to provide training and employment opportunities for young people excluded from school.

Vege Bakery Café, a social enterprise bakery and café serving vegetarian and vegan food and drink whose social aim is to provide training and employment opportunities for local people.

Empathy Guesthouse, a social enterprise guesthouse and travel company which uses 20% of its profits to support North Korean defectors.

In addition to visiting South Korean social enterprises, whilst in Daegu we had time to sample a lot of different types of Korean food, visited a UNESCO recognised Buddhist temple (the Donghwasa temple), as well as shopping at local markets and shops.

Conclusions

The South Korean social enterprise sector appears to be growing at a fast pace, having only been formally established in 2007 as a result of the 2007 Social Enterprise Promotion Act.

Key features of the social enterprise sector in South Korea include a formal social enterprise certification scheme, a focus on job creation to support disadvantaged or low income groups, tax incentives, as well as preferential purchasing of social enterprise goods and services by South Korea’s public sector. I was also struck by the number of social enterprise technology start-ups, although this may be due to the success of the technology and electronics industries in the country as a whole.

South Korean social enterprises, however, seem to experience many of the same challenges as social enterprises in Scotland, including issues with sustainability, funding, procurement, as well as a lack of awareness amongst the general public of the social enterprise business model.

I would like to take this opportunity to thank our South Korean hosts for providing us with the opportunity to share our knowledge and experience of the social economy together and look forward to the next Daegu x Glasgow social economy conference to further develop relations and friendship between Scotland and South Korea.

neil@p4p.org.uk