Chinese Nationals Dominate Foreign-Owned Small Businesses in South Korea, Study Finds

Incheon Chinatown was formed after Incheon Port opened in 1883 and the Jemulpo area was designated as an extraterritorial zone of the Qing Dynasty in 1884. With a history spanning more than 120 years, the district has preserved the unique culture and customs of the Chinese community, and its red-decorated alleys evoke the feeling of traveling through China at every turn. (Yonhap)

SEOUL, Dec. 24 (Korea Bizwire) — More than seven in 10 foreign nationals running small businesses in South Korea are Chinese, highlighting the growing role of Chinese entrepreneurs in the country’s local service economy, according to a new report released Tuesday.

An analysis by the Korea Immigration Policy Institute found that Chinese nationals accounted for 72.5 percent of foreign self-employed business owners operating restaurants, beauty salons and other service establishments. The study examined 10,323 businesses registered as individual merchants with Shinhan Card as of June this year.

The findings show a sharp imbalance by nationality. Americans made up 6.2 percent of foreign business owners, followed by Canadians at 3.7 percent, Taiwanese at 3.1 percent and Europeans at 2.8 percent.

Most foreign-owned businesses were small-scale operations. Nearly 74 percent reported annual sales of less than 300 million won ($220,000). Still, a small number of high-earning establishments were identified, particularly in affluent areas such as Seoul’s Gangnam district and the city of Seongnam in Gyeonggi Province, where some foreign-owned businesses generated more than 1 billion won annually.

Visitors watch a lion dance performance in Chinatown, Jung-gu, Incheon. (Image courtesy of Yonhap)

Industry concentration varied by nationality. Overall, food service and hospitality accounted for 61.5 percent of foreign-run businesses, followed by beauty services, food retail, education and medical services.

Entrepreneurs from China, Taiwan and Uzbekistan were heavily concentrated in restaurants and nightlife-related businesses, while those from the United States and Canada were more likely to operate in education, tutoring and healthcare.

The study also found differences in business longevity. Taiwanese entrepreneurs had the longest average operating period, at more than eight years, while businesses run by Chinese nationals averaged just under four years, slightly below the overall average.

Researchers attributed the shift in foreign self-employment patterns to changes in South Korea’s immigration framework, including revisions to the Overseas Koreans Act that have led to an increase in arrivals from China and former Soviet states.

The institute said most foreign entrepreneurs are likely ethnic Koreans from abroad, marriage migrants, or holders of long-term residence or permanent residency visas. It added that more detailed conclusions would require access to broader immigration registration data.

The findings offer a rare snapshot of how immigration and small-business activity intersect in South Korea, as the Democratic Party–led government weighs policies aimed at balancing labor shortages, social integration and local economic vitality.

Lina Jang (linajang@koreabizwire.com)