South Korea has long been a leader in innovation, technology, and culture. Korean companies are increasingly looking outward, specialy in fields such as global tech and world famous entertainment. With this expansion comes the challenge of how to hire and operate globally—and the traditional route of setting up foreign subsidiaries is no longer the only (or best) option.
More South Korean businesses are turning to a solution that’s faster, leaner, and more flexible: the Employer of Record (EOR) model. According to Google Trends, interest in “Employer of Record” in South Korea has seen a noticeable uptick in the last year—a reflection of the country’s growing global footprint and demand for agile, compliant expansion.
In this article, we’ll explore why Korean companies are leaning into EOR over subsidiaries, what makes it the right choice in many cases, and when building a local entity might still make sense.
Understanding the Difference: EOR vs. Subsidiary
Before diving into why EOR is trending in South Korea, let’s break down the difference between the two models.
What is an Employer of Record (EOR)?
An Employer of Record is a third-party organization that legally employs your international workers on your behalf. While you manage the day-to-day work and performance of your team, the EOR takes care of:
Employment contracts
Payroll and tax compliance
Statutory benefits and contributions
Local labor law adherence
Key Benefits
An EOR enables fast market entry, eliminates the need to establish a local legal entity, and ensures full legal compliance—without requiring in-house expertise.
What is a Subsidiary?
A subsidiary is a separate legal entity that your company establishes in a foreign country. It allows for direct control over local operations, employees, and branding—but comes with high complexity and cost.
What it Envolves
Company registration and legal setup
Local office and staffing
Ongoing tax, HR, and compliance obligations
Legal liability in-country
Why South Korean Companies Are Choosing EOR
1. Speed and Agility
Korean businesses are known for rapid innovation and scaling. However, setting up a legal entity can take months, involve multiple layers of bureaucracy, and significantly delay strategic execution.
In contrast, an EOR enables companies to test new markets like Vietnam, Germany, or the U.S. within weeks, bypass long waiting periods for incorporation or regulatory approvals, and get local talent up and running almost immediately. As Korean startups and scale-ups race into Southeast Asia and Europe, speed isn’t just a competitive edge—it’s a strategic necessity.
2. Lower Risk and Cost Management
Establishing a subsidiary is expensive. There are registration fees, legal consultations, ongoing tax liabilities, and operational overhead.
Using an EOR helps:
Avoid large upfront costs for local setup
Minimize ongoing administrative expenses
Reduce the financial risk of pulling out if the market doesn’t perform
Especially for project-based or pilot expansions, EOR gives Korean companies the financial flexibility they need.
3. Simplified Compliance
International labor laws are notoriously complex—and they vary not only by country but often by region or industry.
An EOR ensures:
Employee classification is correct (avoiding contractor misclassification)
Local benefits are administered accurately
All tax and payroll regulations are met
Instead of investing in legal counsel and building an in-house compliance team, Korean businesses can lean on EOR partners with local expertise.
When a Subsidiary Makes Sense
While EOR offers unmatched speed and flexibility, there are times when setting up a subsidiary may be the better route:
Long-Term Market Commitment: If the company plans to build a long-standing presence in a country.
Brand Presence: A local entity may enhance brand credibility and operational independence.
Direct Control: Greater autonomy in legal, hiring, and financial decisions.
Revenue Operations: Some markets require a local entity to invoice clients or operate certain business functions.
This isn’t about either-or—it’s about the right tool for the right stage of expansion.
Real World Examples
K-Food Giants
As reported by The Chosun Daily, South Korea’s leading catering companies—Samsung Welstory, Ourhome, and Hyundai Green Food—have been aggressively expanding abroad in response to the global rise of K-food. With the help of government-backed food regulation guidance and local partnerships, these companies are establishing global teams to support operations across Southeast Asia, the Middle East, and beyond.
For many of these expansions, using EOR services allows them to onboard chefs, nutritionists, and operational staff without setting up costly local subsidiaries.
Defense & Aerospace Expansion
As reported by the Financial Times, Hanwha Aerospace—South Korea’s largest defense company—is planning a $2.5 billion share sale to fund its overseas expansion. The company aims to secure strategic production bases across Europe, the Middle East, Australia, and the U.S.
Rather than waiting on the lengthy process of setting up local subsidiaries in each market, firms like Hanwha can leverage EOR models to rapidly onboard specialized talent, manage local operations, and stay compliant—without sacrificing speed or flexibility. As South Korea rises among the world’s top defense exporters, EOR offers a practical solution for scaling internationally while focusing capital on innovation and infrastructure.
How to Decide What’s Right for Your Business
Here’s a quick checklist to help determine whether an EOR or subsidiary fits your international hiring needs:
✅ Are you entering this market short-term or long-term?
✅ Do you need full legal control over your operations?
✅ How quickly do you need to hire and operate?
✅ Can you commit to the cost and time of setting up a local entity?
✅ Is your primary goal market testing or full expansion?
✅ Do you need to invoice clients or process payments locally?
If your answers lean toward speed, flexibility, and cost-efficiency—Employer of Record might be your best option.
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