1. Trip notes – Seoul

    By Ewan Markson-Brown
    Central Seoul, 2005.
    Illustrations by Andrew Lyons.
  2. A new generation of entrepreneurs is changing the way South Korea does business. Ewan Markson-Brown, manager of Pacific Horizon Investment Trust, travelled to the country’s capital to meet them


    The value of shares in Pacific Horizon Investment Trust, and any income from them, can fall as well as rise and investors may not get back the amount invested.

    This article originally featured in Baillie Gifford’s Spring 2020 issue of Trust magazine.

  3. Fifteen years ago, there was limited enthusiasm from our team to go to Seoul. It was a polluted city full of dull glass towers, brick-built shacks with smoking chimneys and streets crammed with black Hyundai saloons.

    South Korea was admirable, not enjoyable. A poor agrarian economy after the 1950–53 Korean War, it became a wealthy industrial exporter under a military dictatorship. From there it made a peaceful transition to democracy, bouncing back from the 1997 Asian financial crisis, helped by a citizens’ campaign to repay the International Monetary Fund by donating gold jewellery and other heirlooms. 

    Back then, most visits to the companies of interest to us were to family-owned chaebol conglomerates whose dominance was bolstered by ties with banks and politicians. Meetings in their dark-panelled offices followed a pattern. The top people tended not to speak to us and those who did often radiated irritation at our inability to speak Korean. On the occasions we did meet the boss he sat at a big desk backed by a regiment of sombre-suited men (always men). Investor relations people stuck to a usually lengthy script about their global ambitions and their growing market share. Our questions sent them leafing through a file of approved answers. 

    Visiting last autumn it struck me that the Korean metropolis, home to 25 million people, is a more relaxed place than it was, though still a confusing one. On a pleasant cycle along the Cheonggyecheon, a subterranean stream recently transformed into a three-mile green strip through the city’s heart, I reflected that some things had changed dramatically in 15 years, others not so much. 



    The global cachet of K-pop has given Seoul a bit of glamour and confidence. Korea’s leadership in technology is impressive, with wifi-enabled cars, strong 4G and 5G networks and some of the world’s fastest broadband speeds. Business dress is more relaxed and there are more women in the workplace, though female participation in the workforce is still one of the lowest in the G20. Some offices are brighter and airier. 

    The investment landscape has changed too. Korea’s KOSDAQ stock market, established in 1996, features a new generation of exciting Korean companies. Often they are in the tech and biotech sectors, launched by former chaebol workers seeking an outlet for their entrepreneurialism.


    the Korean metropolis… is a more relaxed place than it was, though still a confusing one.


    Meetings with these owner-managers are dramatically different. Today’s growth companies are more western-looking and more flexible. A 40-something generation of leaders is pioneering promising businesses in biotech, IT and fintech, relying on venture capital rather than banks. They have large stakes in their own businesses, speak good English and are more open to foreigners and their questions. 

    Take, for example, Flitto an online translation company whose app and services are used by over 10 million people worldwide. It started as a crowdsourced translation service and now supplies language data to large US technology companies. 

    Flitto’s chief executive officer Simon Lee met me in their open-plan office in Seoul’s trendy Gangnam district, made famous by the international hit ‘Gangnam Style’. Its singer Psy uses Flitto’s app to talk to fans worldwide. Its speciality, Lee explained, is in translating between Asian languages, where the western giants struggle. Its main global rival is Australia’s Appen, but the difference is that Appen relies on professional translators to compile its data, and Flitto claims it can undercut them, saving costs by crowdsourcing it for free from its large user base.



    I spent an equally interesting morning with Douzone Bizon, a software company with more than an 80 per cent share of the market for small and mid-sized Korean firms. The female investor relations chief told me about plans for Wehago, a new product aimed at making business processes easier for sole traders. Through this product the firm intends to gather enough data to morph into a fintech company, a better route to greater profits. Douzone looks to the west for inspiration, but as with several other Korean companies we own in the portfolio, its main advantage is its ‘Koreanness’. Being native to the world’s 12th largest economy counts for something, given the linguistic and cultural barriers to entry.

    In Douzone’s case it means faster response times for changes in regulation and accounting standards. Making the most of this advantage in a market often seen as too complicated to enter by foreign multinationals allows Korean companies to build enough scale to venture into carefully targeted foreign markets, often in Asia. 

    Exciting companies are not limited to glamorous tech industries. Another I visited was Cowell Fashion, which sells branded clothing but mainly peripheral items such as underwear, an $8 billion market in Korea. It’s a low-growth sector but Cowell claims to have captured most of the outsourced branded undergarment market thanks to licensing deals, mainly with sports brands including Puma and Adidas. Growth is based on good inventory management, economies of scale and strong branding. International labels are signing up in droves with a company which has proven results. The owner, Jong-min Lim, lives and breathes his fashion: a real entrepreneur, happily sparing the time to explain his business fantastically well. Times have changed. 

    The new Korea is strong in biotech and its progressive regulator, the Ministry of Food and Drug Safety, wants it to be a global leader. Biotech is now a large cluster, attracting top graduate talent. Companies pioneering new drugs get research and development subsidies, easy insurance protection and other incentives. Many companies have drugs at the Phase III stage, the promising stage that precedes licensing. Those we visited included Enzychem, which produces a cancer drug now being approved for supply to the U.S. Department of Defense, gene research company Bioneer and HanAll Biopharma, a research and development leader in the treatment of dry eye conditions.

    One company playing to a particular Korean biotech strength is L&C BIO. It has pioneered the medical use of donated human tissue for use in procedures including cosmetic reconstruction after mastectomies. L&C BIO chief executive officer Lee Hwan-cheol is another young and passionate boss leading a company capable of undercutting western rivals and getting a technology to market more quickly: a proven Korean route to market share and exporting success.

    If I’ve given the impression that business culture in Seoul these days is all open-neck shirts and ping-pong tables, I should mention one throwback meeting. The investor relations man assumed he knew my questions as well as the answers, embarking on a whiteboard lecture on how we didn’t understand his business. Old Korea dies hard, but its displacement by a new generation of meritocrats seems all but inevitable. 


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  5. Ewan Markson-Brown

    Investment Manager

    Ewan is an Investment Manager in the Emerging Markets Equity Team. He has co-managed the Pacific Fund since May 2014 and has managed Pacific Horizon Investment Trust PLC since March 2014. Ewan is a CFA Charter holder. Prior to joining Baillie Gifford in 2013, Ewan was a Senior Vice President in Emerging Markets at PIMCO. He previously worked at Newton for five years, most recently as Lead Portfolio Manager on an Asia Pacific Equity Strategy, as well as segregated Asian income and Japanese Equities Strategies. Ewan also previously worked for Merrill Lynch Investment Managers as a Portfolio Manager in the Asia-Pacific region for six years. He graduated MA in Politics, Philosophy and Economics from the University of Oxford in 2000.