The KABC Online Second Chance Korea Business Forum
Where are we here? The state of foreign companies in Korea in 2023
8.00am – 9.30am Monday 3 April 2023 at the Online Seminar Room (Zoom) ONLY
On March 16, KBF held its annual consideration of the status of foreign companies in Korea, a regular topic that we started in 2014 when some companies wondered why they were still in Korea. Times change and companies already in Korea and the new ones that joined us in 2022 seem certain that they know why. In the March meeting we examined the place of foreign companies in Korea combining the rise in new investment in 2022 and the economic activities that new investors are pursuing alongside the assessment of foreign companies from the ECCK and AMCHAM surveys and our own members’ comments.
All KBF sessions start with a look at the current evolution of the economy, and we paid special attention to the fluctuations in the value of the won, the prospects for exports, the recovery of the Chinese economy and the prospects for regulatory reform.
Then we turned to the status of foreign companies. European companies report that Korea has risen in importance to their companies’ strategies in past years, although the ratio slipped down from 72% to 69% in 2022 – still a high level compared with the mid-teens of the 21st century. European companies also felt that doing business was a bit harder in 2022 than previous years at 54%, while American companies wanted a better tax deal for companies and for expatriate executives. Companies expected some regulatory improvements in 2023, and 14% had already felt some improvement in 2022.
Slightly more investment was pledged in 2022 than 2021 at US$30.45 bn, with 13% more new or existing investors totalling 3,400. Actual arrival of funds was slightly lower than in 2021 at US$18 bn. Compared with previous years, more investment in Korea came mainly from US and Japanese companies. In past years European investment has dramatically outpaced US investment. But in 2022 US companies showed a new willingness to invest in Korea, partly perhaps because it was not China, and alongside the rise in exports to the US. Investment promised from the US was up 65% at over US$8.69 bn and which investment from Europe fell 36% to US$8.68 bn. Investment was up from Japan and down from the rest of Asia. Manufacturing investment was up 149% and services down, with others including renewable electricity up 47%.
KABC’s opinion is that the Republic of Korea has come of age in the last three years and has a higher global standing in nearly every field of activity and this should help raise interest in the Korean market and consequently more investment which will assist in the recovery of 2023-4. This does not negate the fact that Korea is still considered a hard market to do business in successfully, and slightly fewer companies (at 68% for Europeans) were satisfied with their performance in 2022 than before. 54% of European companies saw their profits increase compared with 2021.
Whether you find Korea a hard market or a satisfying market, join us online for the second chance of this popular session to witness the KBF advantage in developing an understanding in the Korean market and its future direction. We will add a couple of slides about incentives and other aspects of promotion of FDI and a slide comparing Korea today with five or six years ago.
Tony Michell Ph.D
Managing Director, KABC Ltd.