The Pros and Cons for working at Pangyo Techno Valley

The Korean government has spent a lot of money trying to make Pangyo Techno Valley into Seoul’s top tech cluster.  There is even an express subway line to Pangyo from Gangnam that takes around 20 minutes. The area was created in 2012 and is now home to major gaming companies like Nexon and NCsoft, biotech firms like Medisoft and SK chemical, and Korea’s top messaging app Kakao.  Foreign startups that are looking to work out of Pangyo Techno Valley should look at the pros and cons we laid out here.   Every company is different so it is important to weigh your options.  

The Pros

Pangyo saw their population increase by over 40% in 2018 and expects the same growth for 2019.  Pangyo has attracted a lot of Seoul residents to move out to Pangyo mainly to invest in real estate as well as get away from the busy city life that Seoul brings.  Currently, they have a population of just under 150,000. In addition, the area has become the epicenter for young foreign entrepreneurs.  This was due to the Ministry of SMEs and Startups hosting a program called the K-Startup Challenge that brought in 40 foreign startups last year.  They helped them set up their business in Pangyo which on average only took 5-7 days.  

As Pangyo grows they are attracting more foreign companies that wish to not only enter Korea but the Asian market as a whole.  The hottest sectors at the moment are startups dealing with AI, Fintech, and BioTech. The main factors for coming into Korea has been their speedy production, innovative environment, and cheap yet reliable manufacturing.  Korea has developed a strong reputation as having the world’s best internet connection and some of the most innovative hardware. Therefore another strong selling point for Korea is their customer base which is very tech-savvy and early adopters of the latest tech.  

Pangyo Techno ValleyThe Cons

Similar to Silicon Valley, one of the main issues of Pangyo Techno Valley is the high cost of the rent.  While there is a fast connection from Pangyo to Gangnam, Gangnam has the highest living cost in Korea.  Therefore finding workers that are willing to commute to Pangyo or live in Pangyo has been difficult. There has also been a sharp increase in coworking spaces in Seoul and in 2019 there have been many startups that have decided to work there rather than Pangyo.  Many that are moving out to Pangyo are rich Koreans that would don’t mind the high rent costs.  

Relocating to Gangnam seems to have more benefits than staying at Pangyo for foreign startups.  It is a lot easier to set up meetings in Gangnam and meet investors. Furthermore, some of the best talents are in the city.   That is the real issue.

The Future of Pangyo Techno Valley

NCSoft HeadquartersIf the Korean government wants to continue to support Pangyo they have two options. They need to give rental support to these foreign startups.  Or lower the office rental fees in Pangyo. Currently, there is no real difference in the price of office spaces in Gangnam and Pangyo. Therefore why would a startup move out to Pangyo?  If the Korean government does not do anything about the rent in Pangyo, Pangyo Techno Valley could end up a failure.  Another option might be to make Pangyo Techno Valley into the Gaming Hub of Korea.  Most of the top gaming companies are located in Pangyo and for gaming startups, it will be great to have a cluster of gaming companies in one location.  Esports tournaments can be held there and attract the top gamers and companies to Pangyo.  Currently, there is no real benefit for other tech startups to work out of Pangyo.  The Korean government should let the market dictate what Pangyo Techno Valley should be.  The market is showing that Gaming companies are striving, so their focus should go to that sector.