Oxygen supply system specialist ‘NF’ announced on the 12th that it signed a distribution contract with Dawels for the wellness oxygen supply system sector in India. Through this contract, the company plans to respond to the demand for air quality management in India, which is suffering from serious air pollution, and to take the lead in the wellness market.
Dawels is an affiliate of Birdtree Management Group (hereinafter Birdtree), a company specializing in international investment, legal, and tax consulting. Birdtree said, “We have various successful cases in consulting on investment and entry into India for Korean companies, and resolving international disputes,” and “We met through consulting on the operation of NF’s Indian corporation, and based on the trust between the two companies, we signed a distribution contract with an MOQ of 1 million dollars.”
NF has a history of emergency exporting and donating medical oxygen supply systems during the COVID-19 pandemic, and has expanded its business area to oxygen supply systems for wellness based on its manufacturing technology.
An NFC official explained, “O2REX supplies clean oxygen to spaces where users are, such as homes, offices, and vehicles, creating refreshing air quality like a forest and helping with health management.” A Birdtree official said, “India requires companies to carry out CSR activities,” and “Air pollution is an urgent social issue in India, so it is an area that companies are highly interested in.”
NFC CEO Lee Sang-gon said, “We will realize NFC’s mission of ‘We Save Lives’ in India and take the lead in the wellness market.”
Recently, major countries around the world are strengthening CSR through various methods, such as explicitly institutionalizing corporate social responsibility (CSR). In the case of India, CSR activities were legislated in 2014, and punishment provisions related to CSR obligations were included starting in July of this year. Accordingly, companies that have entered or are planning to enter the Indian market should find ways to understand this in advance and respond accordingly.
At the ‘India CSR Mandatory Law Revision Briefing’ held by KOTRA on the 27th, Attorney Ji-hye Yoo, CEO of Birdtree Management in India, said, “India is the first country in the world to implement a CSR mandatory law,” and urged, “As the country has recently introduced punishment provisions for companies that violate CSR expenditure obligations, our companies entering the market should be careful.”
CSR (Corporate Social Responsibility) of a company is a series of stakeholder-based management activities that direct and indirect stakeholders who are affected or affected by corporate activities pursue to fulfill the social obligations that the company demands from the company.
India, mandatory spending of 2% of net profits for CSR
India is emerging as the world's factory after China. It is Korea's 11th largest trading partner and 7th largest export destination, and the number of companies entering the country has been increasing steadily recently. As multinational companies are actively entering the market, the Indian government is strengthening CSR in the country.
In 2014, the Indian government added a provision for disclosure and mandatory spending of 2% of net profits for CSR in Article 135 of the Companies Act. It is mandatory for companies to spend 2% of their net profits on CSR. Companies subject to the CSR obligation are companies that have at least one of the following: ▲net assets of 5 billion rupees (approximately 80 billion won) or more ▲total sales of 10 billion rupees (approximately 160 billion won) or more ▲net profits of 50 million rupees (approximately 800 million won) or more.
The company establishes a CSR committee composed of directors, and the CSR committee establishes a CSR policy and recommends it to the board of directors. In accordance with the CSR policy, the board of directors must propose the necessary expenses for CSR activities and constantly supervise the CSR policy.
The board of directors must spend at least 2% of the average net profit of the last three fiscal years on CSR activities, prioritize spending in neighboring areas or business areas, and state the reason in the board of directors report when spending is not made.
Punishment of companies and executives for non-compliance with CSR obligations starting from July of this year
The revised Corporate Act in July of this year strengthened regulations by adding a penalty provision for non-compliance with CSR obligations. If a company has not spent CSR obligation expenses and has no ongoing CSR projects, it must make a contribution to a specific fund within six months from the end of the fiscal year.
If a company has not spent CSR obligation expenses and has an ongoing CSR project, it must deposit this amount into a designated bank account within 30 days from the end of the fiscal year, and must spend it within three years from the date of deposit according to the company’s CSR policy. If not implemented, the amount will be invested in a specific fund within 30 days from the end of the third fiscal year.
A penalty provision for non-compliance with CSR obligations has also been added. If the CSR policy is not detailed in the board report or the obligation to spend revenue for CSR activities is not fulfilled, the company will be fined 50,000 to 250 billion rupees (800 million to 400 billion won), and executives may be imprisoned for up to 3 years or fined 50,000 to 500,000 rupees (800 million to 8 million won). On the other hand, there are no tax benefits for CSR expenses.
CSR activities recognized under the Companies Act are limited… Need to discover CSR
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CSR activities recognized under the Companies Act are limited. CSR activities recognized by the Corporate Law include ▲poverty eradication and public health promotion ▲education and livelihood improvement projects ▲promotion of women and the underprivileged’s rights ▲ensuring environmental sustainability and ecological balance ▲promotion of artistic activities such as restoration of cultural heritage ▲support for the welfare of veterans and their families ▲support for sports training ▲contribution to the National Relief Fund ▲participation in the Technology Business Incubator Fund ▲rural development projects and development of slum areas, disaster relief, etc.
CSR activities that companies and employees contribute in kind or participate voluntarily, such as volunteer work, are not recognized as CSR activities.
There are three ways to use CSR funds: direct use by the company, use through central government contributions, or use through NGOs. In the case of small and medium-sized businesses, several companies can come together to create a joint fund and operate CSR.
Attorney Yoo said that when using CSR funds through the government, there are many restrictions on using them through state governments, so they should be used through the central government. He went on to advise that since CSR activities are limited, companies need a program to systematically establish and operate CSR plans, and that they need to focus on discovering creative CSRs. Reporter Chae Min-seon of SME Economy
Jihye Yoo, Advisor to the Korea Small and Medium Enterprises Association (KOSMA) and Managing Partner of Birdtree Management, gave a detailed PPT presentation for the participating Korean companies.
"India has very specific regulations in terms of CSR implementation. And it is not only mandatory, but also very unique and the first of its kind in the world. Today, I introduced the recent amendments to the CSR laws in the Companies Act, especially Section 135. Korean companies have great concerns about how to implement the new changes and what to do," Jeehye You told the Asian Community News (ACN) network.
Asked what type of questions the participants asked, Jihye Yoo said the biggest challenge was 'how' to implement it, whether it would end as a one-time event and whether to make it a sustainable program in the long term.
Other participants asked whether they would carry out CSR projects themselves or through NGOs. Hong Sung-chang, CEO of NHyup Bank, said, "It was a good opportunity to understand how different the meaning of CSR is in India."
Bertrey Management CEO Jihye Yoo / American Attorney | 2022 Management Strategy Seminar for Korean SMEs Entering India The Korea Small and Medium Business Association (KOSMA) held the '2022 Management Strategy Seminar for Korean SMEs Entering India' on October 7, 2022 at the Leela Hotel in Gurgaon, near New Delhi, India, in collaboration with the Korean Embassy in India and KOTRA. This seminar was held with presentations by experts in each field on topics such as: Strategies for securing competitiveness of Korean SMEs entering India in the With Corona era, understanding Indian culture, and mitigating business risks.
Global cultural content production planning company ‘Rockin Korea Co., Ltd.’ announced on the 8th that it signed a business agreement with ‘Coindo Trading’ and ‘Birdtree Management’ to launch the K-webtoon platform ‘RKToon’ in India and promote cultural content exchange between Korea and India.
‘Coindo Trading’ is a company specializing in international trade in East and Southwest Asia, including B2B and B2C event planning, e-commerce, and TV home shopping, while ‘Birdtree Management’ is a global advisory group specializing in investment, international transactions, M&A, legal, tax risk management in Korea, India, and the Middle East.
An official from Rockin Korea Co., Ltd. said, “We promoted Korean cultural content in the European market through the ‘EXPOSITION K-WEBTOON’ Korean webtoon exhibition held in France last September and the ‘Jeongheum Band’s solo concert in Paris, France’, signing MOUs with many local French art content production companies, and cooperating with the Korean Cultural Center in France.” He continued, “Following this, we plan to promote Korean webtoons and cultural content in the Indian market with a population of 1.4 billion by signing MOUs with local Indian professional companies for the production and launch of the K-webtoon platform ‘RK Toon’ and to serve as a cultural bridgehead between the two countries.” Meanwhile, the K-webtoon platform ‘RK Toon’ launched on November 1 was produced with the support of the Korea Creative Content Agency and KOTRA, and is servicing the works of legendary domestic writers such as Won Soo-yeon, Kang Kyung-ok, and Na Ye-ri in Korean, English, and Hindi. Recently, the company has expanded its business to drama film adaptations of webtoon IPs, raising high expectations that it will present secondary business possibilities for IPs in India, where the film industry is developed, according to an official.
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Source: Daily Economy (http://www.kdpress.co.kr)
The Consulate General of the Republic of Korea in Chennai invited representatives from about 20 companies, including Hyundai Motor Company, Samsung Electronics, Lotte Confectionery, Doosan Bobcat, Shinhan Bank, Hana Bank, and Woori Bank, to hold a ‘Seminar for Companies Entering India’ on November 11.
According to the Consulate General, on that day, EY Consulting Manager Jeong Won-yeong gave a presentation on ‘Recently Strengthening Proof of Origin and Response Measures for the Introduction of Non-face-to-face Tax Investigations in India’, and Buddtree Managing Attorney Yoo Ji-hye gave a presentation on ‘Trends in CSR Regulations in India and Response Measures.’
The Consulate General held a non-face-to-face seminar for companies entering India in October, but this seminar was held in person. The presentation materials for this seminar are also included in the ‘Guide to Entering South India’ recently published by the Consulate General.
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As exports of Korean quarantine-related products have increased significantly due to COVID-19, the possibility of trademark disputes in the local market has also increased, and companies are expected to be especially careful.
On the 23rd, BUDDTREE Management CEO and attorney Yoo Ji-hye, attorneys Param Tripathi and Rohit Adlakha announced through KOTRA India's New Delhi Trade Center that Korean companies need to be cautious as trademark applications related to COVID-19 are rapidly increasing.
According to BUDDTREE, trademark applications including expressions related to 'coronavirus' are currently on the rise at trademark offices across the United States, China, and India.
Due to the spread of COVID-19, the number of patents and trademark applications for various products, from pharmaceuticals, pharmaceutical products, and hand sanitizers to vaccine software, is rapidly increasing worldwide. It is pointed out that domestic companies should also be aware of the fact that the pharmaceutical industry is actively pursuing trademark applications.
In the case of the Indian Patent Office, there are pharmaceutical companies that have applied for two trademarks for their vaccines, 'Covidac' and 'CoroFlu', and there are many applications using the term 'Corona', such as 'Corona safe', 'Corona Sanitizer', and 'COVID RELIEF', to the extent that a hand sanitizer trademark called 'COVID Fighter' has been applied for.
In the US, there have been applications for trademarks such as 'Love in the time of Coronavirus', 'The Coronavirus Blues', and 'Bye, Bye Corona', and in the UK, trademarks such as 'Corona-CHEX' and 'COVID Wars' have been applied for.
According to Birdtree's analysis, since trademark applications related to the COVID-19 virus, including brand and business marketing strategies, can lead to the acquisition of rights, this situation has become one that requires attention.
Korea has already experienced a surge in related trademark applications during SARS, the new flu, and MERS.
According to the Korean Intellectual Property Office data confirmed by Birdtree, trademark applications increased by 105% in 2003 when SARS was prevalent, 12% in 2010 when the new flu was prevalent, and 9.1% in 2015 when MERS was prevalent.
The recent COVID-19 pandemic is no exception.
Trademark applications for masks, a major personal hygiene product, as designated products increased by about 2.6 times year-on-year to 789 cases in the two months of February and March 2020.
If the scope of personal hygiene products such as hand sanitizers and detergents is expanded, the number of applications in February this year more than doubled from 473 cases in the same month last year to 950 cases, and 1,418 cases were applied in March, an increase of 792 cases compared to March of the previous year.
The Korean Intellectual Property Office predicts that this trend will continue for the time being.
Attorney Yoo Ji-hye said, "The series of trademark applications related to COVID-19 and the surge in trademark applications related to personal hygiene products may be a good opportunity for companies to utilize the value of the term 'Corona'," but advised, "We need to refer to the precedents of other countries, such as China, which are reported to have denied all trademark applications that were judged to have a negative impact on society."
She continued, "Companies considering such applications in India need to carefully apply for trademarks based on a thorough review of the Indian government's policies and related laws," and "Since inappropriate trademark applications using the term are rampant in India, there is a risk that our companies' valuable trademark applications will not be recognized for their value."
Attorney Yoo emphasized, "In order to properly utilize the opportunity, communication between companies and consumers regarding COVID-19-related products is important. In particular, careful attention is required in conveying COVID-19-related messages contained in trademarks." He added, "It seems that special care should be taken to ensure that the act of including COVID-19 in trademarks does not negatively form the product image or mislead consumers." <© 2024 Medi Pana News, Unauthorized reproduction and distribution prohibited>
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At the ‘India Market Marketing Strategy Seminar’ held by the Korea International Trade Association at the Trade Tower in Samseong-dong on the 19th, Kim Hyun-chul, head of the Global Marketing Headquarters of the Trade Association, is giving a welcoming speech. The seminar was filled with the audience, reflecting their interest in the Indian market. [Photo=provided by the Korea International Trade Association]
India is the trend. The Korea International Trade Association and KOTRA held seminars and briefing sessions for entering the Indian market in Korea and India, respectively.
On the 19th, the Trade Association held the ‘India Market Marketing Strategy Seminar’ at the Trade Tower in Samseong-dong. At the seminar, essential information for companies wishing to enter India, such as the characteristics of the Indian consumer market, marketing strategies, major tax laws and recent trends, logistics environment, and customs clearance strategies, was shared.
Dr. Yong-sik Kim of the POSCO Research Institute emphasized, “India has maintained high growth rates of 7% since 2014 under the strong leadership of Prime Minister Modi, and is an attractive market with a rich labor force of 1.3 billion people and a huge domestic market,” but added, “There are still management difficulties such as poor infrastructure, unstable exchange rates, and an opaque market structure, so our companies need a strategy to nurture experts in India in the long term.”
Kim Hyun-chul, head of the Global Marketing Headquarters of the Korea International Trade Association, said, “India is an important market that our companies cannot afford to miss as the need for export diversification is increasing due to the recent uncertain global trade environment,” and added, “In line with the government’s New Southern Policy, the association will also promote various projects to support entry into India.”
Ahead of this, KOTRA held a ‘India CSR Mandatory Law Revision Briefing Session’ in New Delhi, India, with the Korean Embassy in India on the 17th. The briefing session, which was held to listen to the voices of our companies that have advanced into India and find solutions, was attended by about 20 large companies such as Samsung Electronics and LG Electronics and mid-sized companies that have advanced into India.
India is the first country in the world to implement a law that mandates ‘Corporate Social Responsibility (CSR)’. As it recently introduced a penalty clause for companies that violate CSR spending obligations, our companies that have advanced into India need to be careful. In July, India revised its Companies Act to allow financial and physical sanctions for companies that violate CSR obligations.
CSR, which was usually promoted voluntarily by companies, was made mandatory by law in India in 2014, but until now, voluntary participation has been encouraged. In July of this year, Article 135 of the Companies Act was revised, requiring companies to spend 2% of their average net profit over the past three years on CSR activities. Otherwise, they will be forced to accumulate funds in a specific fund requested by the government.
In addition, if the funds in the fund are not used within three years, they will automatically be transferred to the Indian treasury. Companies that violate the obligations will be subject to a fine of up to 2.5 million rupees (equivalent to 40 million won), and company executives will be imprisoned for up to three years or fined up to 500,000 rupees (equivalent to 8.3 million won). This CSR law is applicable if only one of the criteria of sales (over 100 million dollars), net assets (over 70 million dollars), and net profit (over 700,000 dollars) is met.
Multinational companies operating in India are busy formulating countermeasures to the changing circumstances while asserting that the mandatory CSR measures are a kind of quasi-tax. Company A, who attended the briefing session, said, “It was not mandatory until now, but with the recent revision of the law, a clear understanding of CSR is urgently needed.” Company B expressed the opinion, “I hope the government will support communities that can operate funds together rather than companies individually conducting CSR activities.”
KOTRA plans to publish the report ‘Trends in Strengthening CSR Norms in India and Response Measures’ in September and distribute it at the ‘Indian CSR Mandatory Law Revision Briefing Session’ to be held in Korea on the 27th.
The briefing session in Korea will be held jointly with the New Southern Policy Promotion Committee and is mainly targeted at Korean companies wishing to invest in India. Applications for participation can be made through the KOTRA website. Information on Indian entry strategies and mandatory CSR laws, as well as other important points to consider when investing in India, will be provided.
For this purpose, experts in Indian investment and CSR will speak. Former KOTRA Southwest Asia Regional Headquarters Director Park Han-soo will present the Indian entry strategy, while the mandatory CSR law will be handled by U.S. Attorney Yu Ji-hye, CEO of Birdtree Management, a local Indian law firm. Ernst & Young India Managing Director Jang Jae-won will be in charge of important points to consider when investing in India.
Kim Sang-mook, head of KOTRA’s Economic and Trade Cooperation Headquarters, said, “CSR activities tailored to the needs of local society and businesses are also in line with the New Southern Policy that seeks mutual prosperity,” and added, “We will further activate support for entering the local market through proper understanding of CSR regulations.”
Reporter Kim Young-chae
Korea Trade Newspaper wtrade07@gmail.com
