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• In the 2015 Policy Address, the Chief Executive unveiled a plan to set up a HK$300 million Youth Development Fund to support innovative youth activities, including providing subsidy in the form of matching funds for non-governmental organizations to assist young people in starting their own business. Starting a business has always been a challenge to many people in Hong Kong, especially the youth. South Korea is no exception.
• In South Korea, there has been a declining trend of entrepreneurship among young people since the dot-com bubble burst in the early 2000s. In 2000, nearly 55% of owners of start-ups were in their 20s and 30s. Yet the proportion fell to 20% in 2011. The younger generations are perceived to have a stronger preference for stability over risk for fear of failure. Besides, youth unemployment in South Korea has been pronounced. It reached almost 8% in 2012, compared to the national average of about 3%. To address the issues, the South Korean government has introduced various initiatives to promote youth entrepreneurship.
• This issue of Essentials gives a brief account of the initiatives implemented by the South Korean government to promote youth entrepreneurship.

What has been done to support youth entrepreneurship?

• The South Korean government has implemented a variety of programmes targeting at the youth population. These programmes offer different forms of direct support, covering financial assistance, entrepreneurship and leadership training, mentoring, internship opportunities, etc. As of 2014, the amount used on all related programmes by the various government institutions totalled 1.5 trillion Won (HK$11.1 billion). Some programmes are organized nationally and some at the local level. At the national level, one of the major initiatives is the "Young Entrepreneurs Start-up Academy" programme. At the local level, a case in point is the "Youth Business 1000" programme in Seoul.

"Young Entrepreneurs Start-up Academy"

• The "Young Entrepreneurs Start-up Academy" was established in 2011 by the Small & medium Business Corporation, a government-funded non-profit organization. The programme specifically promotes youth technology-based start-ups in the manufacturing or knowledge-based sectors with the objective of cultivating high value-added businesses. Annually, it selects a group of young entrepreneurs under the age of 39 with little or no start-up experience, and provides them with various types of support throughout the start-up process, including financial assistance at 70% of project cost up to 100 million Won (HK$710,000), office space, one-on-one coaching, as well as technical and marketing support.
• In 2013, the total budget for the programme amounted to 25.4 billion Won (HK$180 million). The initiative is seen as a one-stop shop for young entrepreneurs. In its first two years, the programme has facilitated the establishment of 425 start-ups with the creation of about 1 440 jobs. According to the Small & medium Business Corporation, over 2 100 intellectual property rights were granted under the programme.

"Youth Business 1000"

• Introduced in Seoul in 2009, the "Youth Business 1000" programme aims to support young entrepreneurs aged 20-39 with ground-breaking ideas but have no capital to start the business. Under the project, 1 000 young entrepreneurs are selected every year, who are given a monthly funding of up to 1 million Won (HK$7,100) and access to business incubation centre for one year. During the period, young entrepreneurs receive mentorship from successful entrepreneurs. The project also gains support from some business groups, who hold briefings to share their business founding experience on a voluntarily basis.
• Every year, a budget of 19 billion Won (HK$135 million) is allocated to the "Youth Business 1000" programme by the local government. To ensure proper utilization of resources, the progress of participants is evaluated periodically and those with poor performance may face possible dismissal. For the three years since its launch, the project has successfully assisted over 2 600 young entrepreneurs with the establishment of 1 400 enterprises.

Any follow-up support?

• It is a common phenomenon that most entrepreneurs are able to manage their own business quite well at the early stage but begin to show slow pace in moving on. In this regard, the South Korean government has made available follow-up support, for instance, providing entrepreneurs with access to loans and marketing opportunities to further open up the market. Under the "Youth Business 1000" programme, there are online and offline stores, known as "Dreaming Youth Shop" for promoting the products of the youth enterprises. For those who cannot afford an office but demonstrate high-growth potential, the government offers them facilities at a youth business centre to continue their business.

Any activities to foster an entrepreneurial environment?

• According to a global survey on entrepreneurs, most entrepreneurs in South Korea considered necessary for students to receive specific education on entrepreneurship in order to become entrepreneurs. The South Korean government has indeed made available the relevant education for teenagers. For instance, it has organized a programme known as "Biz-Cool for Teenagers", under which 80 middle and high schools across the nation offer courses on business start-up, business administration, finance, etc. Start-up business camps are one of the key features of the programme, among other activities.
• To cultivate and promote an entrepreneurial environment, the South Korean government hosts annually a festival event for entrepreneurs. The festival brings together college students, young entrepreneurs and successful entrepreneurs to share views, and provides an opportunity for start-ups and venture companies to showcase their innovative ideas and technological strengths. The festival is seen to be the largest start-up event in South Korea.

Observations

• The losing enthusiasm of young people to venture, coupled with the issue of youth unemployment, have led South Korea to introduce measures to nurture entrepreneurship. The two youth start-up programmes mentioned above are seen as one-stop schemes which provide not only financing but also infrastructural, advisory and coaching support that are necessary for young entrepreneurs without business founding experience to start a business.
• Seeing that there are always challenges in moving on the business after a period of time, the South Korean government has made available continued assistance to the businesses by means of loans and marketing exposure to address the financial constraints faced by young entrepreneurs and attract business opportunities. The South Korean government also sees the importance of fostering an entrepreneurial environment and thereby offering the related education and activities for teenagers.

Prepared by Tiffany NG
Research Office
Information Services Division
Legislative Council Secretariat
18 March 2015