Policies

[Economy] Youth’s Business 1000

Date 2014-06-11 Category Others Updater scaadmin
Affiliation
BUSINESS INCUBATION DIVISION
Date
2014-06-11
Last Update
2016-11-01

HISTORY

The majority of the previous business incubating policies of Seoul City focused on older generations, and related programs for young people, if any, were temporary in their nature, such as supporting a business-incubating club or the good business item developing project in 2008. 

Introduction and operation of Youth Business Incubator Center (in 2009)

For the first time within local governments, Seoul City provided a groundbreaking plan which covers the entire set of procedures for founding a business for young people in their 20s and 30s, and invested a huge budget over 19 billion (KRW), each year in related programs. The city has introduced the ‘Youth Business Curator Center,’ for areas both north and south of the Han River, one for each, which can accommodate up to 1,000 people, as well as a task force responsible for supporting start-up companies in the Seoul Business Agency (SBA), under Seoul City, in specific management and system operating tasks. 

Introduction and operation of off-line Dreaming Youth Shop (in April, 2011)

After two years of operation, the city found that most Youth Business Incubator Center graduates manage to establish their own businesses after completing the one-year customized program, but later on, began showing a sluggish pace in growing their businesses for a couple of reasons including difficulties opening up markets. To assist with this issue, Seoul City opened the ‘Dreaming Youth Shop’ in downtown Seoul, a store for displaying and selling the products of the Center graduate enterprises to help the start-ups find reliable sales routes. 

With the trustful brand, “Seoul,” products that couldn’t attract the attention of consumers before being displayed in the shop have reincarnated themselves as bestsellers, and many of these start-ups have enjoyed a large increase in sales. As of October 2011, the shop registered sales of ₩2,360 million for 200 items from 64 different companies. 

Youth’s Business Plus Center (in July 2011)

In July 2011, the city opened the ‘Youth’s Business Plus Center’ to commemorate the graduates of the Youth Business Incubator Center. This center provides a drastically larger space and various utilities for 200 start-up businesses selected among graduates for their higher growth potential. As a result, as of October 2011, the center recorded sales of ₩2.8 billion only three months after its opening, as well as the employment of 89 people. 

Opening of On-line Dreaming Youth Shop (in October 2011)

Driven by the success of off-line ‘Dreaming Youth Shop,’ Seoul City introduced the shop’s On-line version to allow the customers to conveniently buy the products of the youth business group, without visiting the offline store. With this on-line store, the city could also offer young enterprises’ products that couldn’t make their way to the off-line shop, providing a reliable sales channel for young CEOs who were suffering sales difficulties of their products due to poor marketing. 

INTRODUCTION

“Youth’s Business 1000” project in 2009 to provide new channels for young generation Koreans to find jobs. In this program, the city selected 1,000 young people with brilliant ideas for new business opportunities and provided them with funds and spaces for founding a business, as well as a series of other supports including training, consulting and marketing services, under the flag of creating a groundbreaking number of quality jobs for youth. 

BACKGROUND AND GOAL

Young people with great difficulties finding jobs in the global economic crisis

In 2008, the unemployment rate of Korea stood at 3.2%; 7.0% for youth in their 20s to 30s, which is the lowest among all generations except teenagers. Since 2009 when a global economic crisis hit the world and the unemployment rate began sharply rising, young people’s unemployment issues have become further aggravated, with their unemployment rate standing at 7.9%. 

Youth unemployment becoming permanent and weakening labor morale

In particular, the highly-educated background has structurally increased idle manpower, and enterprises increasingly prefer temporary positions to permanent positions and choose to hire people with experiences via occasional recruitments. 

These changes around the job market posed the risk of youth unemployment becoming permanent, which discouraged young people from seeking jobs and from willingly participating in productive activities. The not-precluctive active population of youth is also ever growing, which includes those who gave up finding jobs. The youth unemployment issue can undermine the nation’s growth potential beyond the individual level, sparking different kinds of social insecurities. It’s emerging as one of Korean society’s most serious problems. 

Implementation

Trial Strategy

The ‘Youth’s Business 1000’ program started in June 2009, under the flag of providing full-fledged supports for young, future business founders so that they could display their potential and become leaders in the Korean economy by means of continuous R&D activities. 

1. To provide all types of supports for the young business professionals to build an independent foundation for business.

Seoul City has provided a ‘Youth Business Curator Center,’ for areas both north and south of the Han River, one for each, and with a 10㎡ size office and equipment for each young, future CEO for one year. The city also provided business launching funds of ₩700,000 – ₩1,000,000 (KRW) depending on the rating of each business plan and low-interest loans for business founders incapable of putting up enough collateral, to help them get on their feet. 

2. To minimize the risk of failure through business training and consulting services. 

The Youth Business Incubator Center made use of external specialists in each business type and area in their mandatory basic training courses on starting a business, while providing specific consulting services dealing with each business matter via professional consultants in legal, accounting, tax, and other service areas. 

3. To expand the infrastructure for founding business  by connecting the supports of government agencies with relevant communities in the private sector. 

This year is its third space anniversary,and there is a movement in the ‘Youth’s Business 1000’ program to establish cooperative networks between the program graduate enterprises. Korea Co-work Association, established in 2010, has been planning joint projects and has provided business start-up networking opportunities between the Youth Business Incubator Center graduate companies. Dream Biz Forum, despite being a private community, has continuously contributed to the spread of business founding spirit, via efforts such as a briefing session for investment attraction, as part of their efforts to support junior business founders. These youth business groups are voluntarily organizing associations to participate in research activities on co-survival and to return their gains to society, which is creating the mood for expanding the bases for by the youth. 

Obstacles And Overcome Method

1. Young generations’ groundless distrust of government agencies – Eliminate this through continuous and systematic supports and constant achievements

The Korean government has made their own efforts to boost the employment of young people, including with the 2008 extension of the temporary law, ‘Special Act on Promotion of Youth Employment,’ for defining a lower limit of the number of young people hired in the public sector, but such an effort has failed to relieve the problem, instead increasing distrust among the youth of government policies. As such, the Seoul citizens couldn’t help but doubt whether the ‘Youth Business 1000’ project could be run sound or as planned, in the initial stage of the program. 

Despite the doubt, the program produced about 600 successful graduates, annually, for the last 3 years and helped create a plethora of new jobs, which has turned many people’s suspicions into confidence in the project. In addition, the successful stories of these young enterprises are serving as good role models for future business founders. 

2. Possible moral laxity among the youth – Resolve this via thorough management and supervision

To prevent the young business dreamers from becoming morally lax due to the full supports given by the city, such as funds for starting a business, Seoul City evaluated the performance of these young enterprises with the help of external agencies. The city adjusted the rating of each start-up business based on the results of the evaluation, and sometimes decided not to provide the funds or gave an order of dismissal for those with poor ratings. 

Used Resources

1. Financial support – Secure independent budgets for youth business group

Seoul City has secured funds for the ‘Youth’s Business 1000’ program by tying together the existing programs for young generations including business incubation support, job creation for vulnerable members of the society, and more.

In addition, the city has utilized city-owned idle spaces as offices for the young entrepreneurs to start their businesses. For example, the Gangbuk Youth Business Incubator Center has been prepared by remodeling the former Mapo-gu Office building, and the Gangnam Youth Business Incubator Center, by renting unsold stores in the logistics complex in the southeast of Songpa-gu which was built by SH Corporation, both of which minimize the cost of providing space for business start-ups. The city also enjoyed a secondary effect that revitalized the commercial zones around these centers, each of which accommodated 500 young business start-ups. 

2. Technological and human resources – Make use of the help of affiliated organizations with much experience in supporting small and medium enterprises

The Seoul Business Agency has run business incubation and education programs for over 10 years. By making use of the knowledge held by these affiliated organizations, the city could develop youth business foundation monitoring programs, effectively responding to the diverse needs of each business type and the level of each young, future CEO. 

Such monitoring programs are not temporary or fragmentary but phased education courses organically combining business start-up mentoring, customized teaching, business start-up coaching, and business consulting.

In addition, the city introduced a Youth Business Incubation Support Team within the headquarter building of the Seoul Business Agency to provide a more methodic environment for supporting young,future CEOs. 

RESULT AND EVALUATION

Create 1,406 companies led by youth and expand jobs for young people including 11,221 positions

The ‘Youth’s Business 1000,’ which selects 1,000 young people out of many wannabe business founders with brilliant ideas and passions for new business opportunities and supports them to grow into young CEOs, has paved the way for young people, who wish to launch a new business but can’t afford to. The selected youth can use offices and the equipment in the Business Incubator Center free of charge and receive a range of supports, including business funds, trainings, and consulting services. 

Driven by these full-fledged government supports, the program has obtained remarkable achievements in creating jobs for youth for the last 3 years since its launching. As of October, 2011, the program has developed and trained a total of 2,651 young business professionals and introduced 1,406 new youth enterprises, which have recorded overall sales of ₩147.9 billion. In particular, it is noteworthy that the youth enterprises introduced by the ‘Youth Business 1000’ program have employed 11,221 people during the last 3-year period.   

Promote the reliability of administrative tasks via thorough post-measures including PR and marketing supports 

In July 2011, Seoul City introduced a temporary office space for students who completed business courses provided by the program, and named it the ‘Youth’s Business Plus Center.’ The space is designed to provide an office environment for future youth business professionals who can’t afford one after graduating from the Business Incubator Center. The space will also serve as a bridge for cooperation and development of sales routes between graduates who are already running businesses at the moment. 

On top of this, Seoul City has introduced an offline store connected to its online shopping mall called, the ‘Dreaming Youth Shop,’ to offer products from the youth’s enterprises which do not sell well because of poor awareness of their brands, despite the good ideas. Seoul City has also been helping youth enterprises to participate in on- and off-shore exhibitions and make PR materials. 

As a result of Seoul City’s continuous three-year support for founding businesses and preparing reliable foundations, the ‘Youth’s Business 1000’ program has earned the trust of citizens as a gateway to starting a business for young generations; currently there are many appilcants waiting to join the programs. 

A social environment to ensure self-realization for the youth

One of the most significant effects of the ‘Youth’s Business 1000’ program is a social atmosphere that respects and supports the ideas of young people. The program has highly appreciated the youth’s ingenious ideas and helped the young people commercialize their ideas, which has helped them relieve their senses of helplessness and encouraged the growth of courage and self-confidence among young generations. This is one of the greatest virtues of the program.

 

Transferability

Financial aspect – Need to secure a reliable source of revenue

To successfully lead a program for supporting the youth establishing businesses, the government must invest a significant budget amount in a continuous fashion, by approaching the youth unemployment issue as a social problem. Specifically, the government needs a strategy to secure a reliable source of revenue, such as an active budget plan for creating jobs for the youth. 

Seoul City has successfully reduced the investment volume by aggressively making use of idle spaces around the city and expert pools from its affiliated organizations, and is planning to further curtail the budget by means of donations by retirees who wish to help talented people. 

Economic aspect – Boost the economy by creating more jobs

The ‘Youth’s Business 1000’ project is designed to support the founding a businesses. More fiscal payments will boost the local economy and increase the production and sales thanks to the establishment of new companies and growth of industries, and this will lead to more recruitment, which may, in turn, rev up the national economy. 

Social aspect – Attracting more attention as an alternative solution for youth unemployment

The program requires a large volume of financial support, and consequently, will bring together members of Korean society in recognizing the issue of youth unemployment. We should note that Seoul City was able to successfully promote the ‘Youth’s Business 1000’ program mainly because the central and local governments, NGOs, and citizens all were brought to a consensus that the youth unemployment issue is a critical social problem thatto be addressed. 

Benchmarking – Benchmarking and business founding activities boosted by the central and local governments

In March 2010, the ‘Youth’s Business 1000’ program was selected as a ‘Good Local Government Policy Initiative’ for creating jobs at the National Employment Strategy Meeting held in Cheongwadae.  

As of now, the SMB Administration has benchmarked the project to provide business start-up space, funds, education and coaching service for future CEOs under 39 years of age around the country.Particulary, the  Busan and Ulsan governments are using exactly the same models for almost all areas except the volume of financial support. 

In March 2010, Yim Taehee, the then Minister of Employment and Labor (MEL), who had listened to difficulties suffered by young generation Koreans at the Youth Business Incubator Center, introduced an intern program where any young person who wished to start a business could learn about business from experts in each area, as an apprentice. During the 6-month internship period, MEL launched a business start-up supporting program in April, with the Ministry paying part of the employment subsidies and internship wage to the educating enterprises. 

Futhermore, representatives of Tongkwan City in China visited the Youth Business Incubator Center in November 2010, to learn more about the program.  

Contact

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Department / Contact

  • Business Incubation Division / Jea-Young Jeon
  • Global Urban Partnership Division  /  82-2-2133-5264  /  policyshare@seoul.go.kr
  • Global Future Research Center  /  82-2-2149-1418  /  ssunha@si.re.kr