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Korea, Your avenue to opportunity
May 2015
Yongsoo Park
Head of Foreign Direct Investment Promotion Team
KOTRA Frankfurt
KOTRA
Profile of Korea
Economy & Industry
Korea-Germany Trade
Foreign Direct Investment in Korea
KOTRA
4
Status
Government agency for the trade and investment promotion of Korea
Vision
Global business platform for the future of Korea
Mission
Improve the customers’ competitiveness with global business activities
KOTRA
5
Supports for Exports
of Korean companies
• Identifying target
markets by region
• Supports for partnering
with global companies
• Guiding entry into
public procurement
market
• Supports for
participation in overseas
exhibitions
• Providing information
about Korean industries,
markets and business
sites
• Intermediary services
with governments
• Grievance resolutions
• Job fair for foreign
invested companies
• Providing market
information: global
markets and target
markets
• Supports for the
development of trade
policy of government
• Providing overseas
investment information
• Supports for the
employment of global
talents
Main Activities
Foreign Direction
Investment
Promotion
Supports for
Overseas Expansion
of Korean Companies
Trade & Investment
Information Services
6
CIS
(9)
North
America
(10) Middle
East
(15)
Europe
(21)
Africa
(10)
Southea
st Asia &
Oceania
(14)
Central &
South
America
(14)
China
(18) Japan
(4)
• 122 Overseas offices in 84 countries
Global Business Network
South
west
Asia
(7)
Profile of Korea
8
Korea ???
9
Korea ???
10
Korea ???
11
Statistics 2014
Population 51,378,174
Area 99,720 km2
GDP(Nominal) US$ 1.41 trillion
Real GDP Growth 3.3%
Per capita GNI(Nominal) US$ 28,180
Labor Force 26.5 million
Inflation rate 1.3%
Credit Rating, Outlook
• S&P: A+, Positive (‘14.9)
• Moody’s: Aa3, Stable (‘12.8)
• Fitch: AA-, Stable (‘12.9)
Export US$ 572.7 billion
Main Export Items Chemical products, Semiconductor,
Automotive, Machinery, Ship
Import US$ 525.5 billion
Main Import Items Crude Oil, Machinery, Chemical Products,
Electronic parts, Steel
Overview
12
Shanghai
Bejing
Ulaanbaatar
Sapporo
Tokyo
● Seoul
Taipei
Hong Kong
China Xian
2h 05m
3h 10m
3h 30m
1h 55m
2h 30m
2h 20m
2h 45m
(‘13) $9.47 trillion
(‘13) $4.89 trillion
(‘13) $1.30 trillion
(‘13) $11.5 billion
(‘13) $489.1 billion
Far East Russia (‘13) $117.4 billion
3h 45m
Gateway to the Northeast Asia • Population: >1.5b (22% of the world) • GDP: 16.3 trillion (22% of the world)
13
1st ASQ winner for 10
consecutive years
5th largest cargo handling world-wide in TEU
Busan Port
World’s 5th high-speed train
KTX
KTX
Gangwon-Do Gyeonggi-Do
Gyeongsangbuk-Do
Gyeongsang Nam-Do
Chungcheongbuk-Do
Jeollabuk-Do
Jeollanam-Do
Chungcheongnam-Do
Ground Transportation
Infrastructure
Incheon International Airport
Length of roads: 105,703km
(1.1km/km2)
* Germany: 1.8km/km2
2nd busiest international
cargo handler
2nd ICT Development Index
ICT
14
• A total of 22 chapters that would lift trade and investment barriers in various economic sectors ranging from goods and service, telecommunication, finance, investment, intellectual property, competition, transparency, environment, electronic commerce to economic cooperation
• To provide an occasion to drastically develop bilateral economic ties between Korea and China
Korea-China FTA
15
6,108
7,541
9,690
10,796 11,272
1,649
3,328
5,846
6,954 7,428
49.9
61.6
79.2
88.2
92.1
20.1
40.6
71.3
84.8 90.6
0
10
20
30
40
50
60
70
80
90
100
0
2,000
4,000
6,000
8,000
10,000
12,000
Instantly Over 5 years Over 10 years Over 15 years Over 20 years
Korea # of Items China # of Items Korea Percentage China Percentage
Tariff Concession Schedule of Korea-China FTA
• Korea to lift tariffs on 92.1% of traded goods over the next 20 years while China to lift tariffs on 90.6%
16
EU
EFTA
Turkey
GCC
Israel
Russia
China
Mongolia
Japan
SACU
India
Singapore Indonesia
ASEAN
Australia
New Zealand
Canada
USA
Mexico
MERCOSUR
Colombia
Peru
Chile
In effect
Concluded
Under negotiation
Under consideration
73%
FTA Network “Toray Advanced Materials is going to put carbon fiber from its Gumi plant on the markets of Europe and the United States, where aircraft are produced. Toray Advanced Materials has a 20-percent price competitiveness now with the U.S. and EU FTAs in effect” (Lee Young-kwan, President, Toray Advanced Materials Korea)
• FTAs with the world’s three biggest economic blocs, the US, EU and China
Vietnam
17
20 40 60 80
Singapore(1)
Korea(2)
Taiwan(3)
Japan(4)
Canada(5)
* Source: IMD World competitiveness year book(2013)
* Higher education achievement : Percentage of
population that has attained at lease tertiary education
for persons 25-34
Employment by Industry(2014. 12)
Human Resources
“Korean people are extremely curious but also they are technologically savvy people” (Xavier Veyry, President of AXA General Insurance in Korea)
(Unit: 1,000)
Industry # of
people %
Manufacturing 4,406 17.4%
Wholesale and retail 3,865 15.2%
Accommodation and food service 2,168 8.5%
Construction 1,838 7.2%
Education service 1,820 7.2%
Healthcare and welfare service 1,713 6.7%
Transportation 1,410 5.6%
Associations, repair and other personal services 1,260 5.0%
Facilities management and support services 1,200 4.7%
Agri., forestry & hunting 1,072 4.2%
Professional, scientific and technical activities 1,027 4.0%
Public administration and defence 869 3.4%
Financial institutions & insurance 807 3.2%
Others 1,927 7.6%
Total 25,384 100%
Higher Education Achievement
4.5 5.0 5.2 4.0 4.4
0.0
5.0
10.0
2010 2011 2012 2013 2014
Labor Turnover
18
• 1st most innovative country among 110 countries
• 2nd in Patent activity and Manufacturing capability
• 3rd in High-tech density and Tertiary efficiency
Innovation
“Korea is the first place where a lot of companies can test new technologies and new ways of doing business.” (Joseph Kern, CFO, IBM Korea)
1
51
101
R&D intensity
Productivity
High-tech
density
Researcher
concentration
Manufacturing
capability
Tertiary
efficiency
Patent activity
Korea
Japan
Bloomberg Global Innovation Index
• R&D intensity : Research and development as a percentage of gross domestic product
• Productivity : GDP per employed person, per hour worked
• High-tech density : High-tech public companies as a percentage of publicly listed companies
• Researcher concentration : R&D researchers per one million people
• Manufacturing capability : Manufacturing value-added as a percentage of GDP; products with high R&D intensity as a percentage of total manufactured exports
• Tertiary efficiency : Enrollment ratio in all subjects for post-secondary students; tertiary graduation ration of students who majored in science, engineering,
manufacturing and construction; annual new graduates and total tertiary-degree holders as percentages of labor force
• Patent activity : Resident patent filings per million population and per $1 million R&D spent
Rank Country Total score
1 South Korea 92.1
2 Sweden 90.8
3 United States 90.7
4 Japan 90.4
5 Germany 88.2
6 Denmark 87.0
7 Singapore 86.1
8 Switzerland 86.0
9 Finland 85.9
10 Taiwan 83.5
19
453,544
199,066
163,148
101,993
59,809 54,164 42,607
30,752 28,280 25,484 10,115
2.79
3.35
1.98
2.98
2.29
4.15
1.73 1.69
2.19
1.27
3.93
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Total R&D Expenditure % of GDP
* Source: OECD, Main Science and Technology Indicators 2014-1
R&D Expenditure “Korea’s emphasis on R&D is the main driver that has been bolstering its global competitiveness.” (Sharon Lam and Jason Liu, Morgan Stanley)
Economy & Industry
8
375
902
1,410
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012
21
GDP
• One of the world’ fastest-growing developed countries
• GDP growth with CAGR = 12.5%
• 13th by nominal GDP and 13th by purchasing power parity (2014)
(unit: US$ billion)
Asian Financial Crisis
Global Financial Crisis
Government initiatives
Export-oriented strategy
22
Working Hours
(‘14, OECD)
• Korea 2,163hrs
• Japan 1,745hrs
• Germany 1,393hrs
• Netherlands 1,383hrs
• Moor’s Law: “The
computing chips
doubles every 18
months.”
• Hwang’s Law: “The
memory capacity of
chips could be
doubled every 12
months.”
• Frankfurt Declaration
1993 by Lee Kun-hee
“Change everything
but your wife and
children.”
• Chung Ju-yung,
the founder of
Hyundai Group,
“Even though I
suffer, I never fail.”
Growth Drivers
Hardworking Speed
Ever-changing Can-do Spirit
23
Smart Phone • Samsung 24.7%
• Apple 15.4%
• LG 4.6%
Large-size LCD • LG Display 21.1%
• Samsung Display 19.8%
Semiconductor • Intel 15.0%
• Samsung 10.4%
• SK Hynix 4.7%
DRAM • Samsung 41.4%
• SK Hynix 27.7%
Ship Building • 29.7% of world orders
IT Secondary Battery • Samsung SDI 20.5%
• LG Chem 15.9%
EV Secondary Battery • AESC 27.8%
• LG Chem 27.7%%
• Samsung SDI 17.9%
Automobile • Hyundai Motor Group 8.8%
Main Industries
“Korea is a very inviting environment for foreign direct investment. I see Korean companies in every corner of the world and they are competing globally. That is a big aspect when you invest here. You will get very good global reach at the same time” (Jeffrey Immelt, Chairman & CEO of GE, 25.10.2013)
24
2013 2014
Country Unit % Country Unit %
1 China 22,117 25 China 23,723 26.3
2 USA 11,066 12.5 USA 11,650 12.9
3 Japan 9,630 11 Japan 9,775 10.2
4 Germany 5,877 6.7 Germany 5,928 6.6
5 Korea 4,521 5.1 Korea 4,525 5.0
6 India 3,896 4.4 India 3,840 4.3
7 Brazil 3,740 4.2 Mexico 3,220 3.6
8 Mexico 3,052 3.5 Brasil 3,146 3.5
9 Thailand 2,457 2.8 Spain 2,403 2.7
10 Canada 2,380 2.7 Canada 2,394 2.7
World Total 88,311 100 90,105 100
Automotive Industry
(unit: 1,000) Automotive Production
25
Manufacturing Innovation 3.0
• Korean government and companies
plan to jointly invest US$ 1billion to
transform 10,000 companies into
smart factories by 2020
• Korean government and companies
plan to jointly invest US$ 1billion to
develop 8 key technologies for
smart manufacturing; Big Data,
Cloud Computing, Hologram, Cyber
Physical System, Energy Saving,
Smart Sensor, IoT, and 3D Printing
Korea-Germany Trade
27
7,571
21,299
0
5,000
10,000
15,000
20,000
25,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Export Import
Korea-Germany Trade
(unit: US$ million)
28,870
-13,728
-20,000
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Trade Balance
• Germany is the Korea’s largest trading partner in the EU
• Germany is the 19th country for export of Korea while the 6th country for import
28
Korea-Germany Trade by Product
• Korea surplus: Wireless communication apparatus, Vessel, ocean structure and parts, Battery
• Germany surplus: Automobile, Automobile parts, Mechanical elements, Fine chemical material,
Prime mover and pump, Meter, controller, analysis instrument
0 1,000 2,000 3,000 4,000 5,000 6,000
Automobile
Semiconductor
Wireless communication apparatus
Vessel, ocean structure and parts
Automobile parts
Synthetic resin
Dry battery and storage battery
Mechanical elements
Articles of plastic
Articles of rubber
Machine tools
Fine chemical material
Electron application apparatus
Prime mover and pump
Aircraft and parts
Tools
Other petrochemicals
Meter, controller, analysis instrument
Computer
Man-made staple fiber
Export
Import
(unit: US$ million)
29
Korea-Germany Automobile Trade
547
1,900
1,410 1,398
3,517
5,146
0
1,000
2,000
3,000
4,000
5,000
6,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Export Import (unit: US$ million)
• The Korea’s automobile import from Germany has increased to $5.1billion,
up 268.1% over the last 5 years while Korea’s export to Germany has
increased to $1.4billion, up 157.8%
Up 268.1%
Up 157.8%
30
Imported Cars in Korea by Brand
40,174 , 20%
35,213 , 18%
30,719 , 16%
27,647 , 14%
8,718 , 4%
6,840 , 3%
6,572 , 3%
6,464 , 3%
5,244 , 3%
4,675 , 2%
4,411 , 2%
3,601 , 2% 3,118 , 2%
2,976 , 2%
2,777 , 1%
2,568 , 1%
1,989 , 1%
1,163 , 1% 620 , 0% 503 , 0% 322 , 0%
45 , 0%
BMW
Mercedes-Benz
Volkswagen
Audi
Ford
Toyota
MINI
Lexus
Chrysler
Land Rover
Nissan
Honda
Peugeot
Volvo
Infiniti
Porsche
Jaguar
Fiat
Citroen
Cadillac
Bentley
Rolls-Royce
2014 (units, percentage)
68.1%
3.3%
71.4%
Foreign Direct Investment in Korea
32
• 5th easiest country for doing business among 189countries
Business Environment
“I believe there were no difficulties doing or expanding business in Korea. The business environment of Korea is good for foreign investors. I'm sure that speed is the key to gaining opportunities over your competitors, and Korea can be the best answer for speed.” (Frank Appel, CEO, Deutsche Post DHL)
0
50
100
150
Starting a business(17)
Dealing with
construction permits(12)
Getting electricity(1)
Registering property(79)
Getting credit(36)
Protecting minority
investors(21)
Paying taxes(25)
Trading across
borders(3)
Enforcing contracts(4)
Resolving insolvency(5)
* DTF: Distance to frontier
(Source: World Bank)
Rank Country DTF Score
1 Singapore 88.27
2 New Zealand 86.91
3 Hong Kong 84.97
4 Denmark 84.20
5 Korea 83.30
6 Norway 82.40
7 United States 81.98
8 United Kingdom 80.96
9 Finland 80.83
10 Australia 80.66
33
To finance the construction
of new plants or the purchase
of equipment related to the
investment
Reduction of rent
Support for infrastructure
Land Support Cash Grant
Corporate tax
Acquisition tax, Registration tax, Property tax
Custom duties
Tax Benefit
FDI Incentives
34
• Resolution of
investor grievances
• Improvement of
business & living
environment
Provide information
on the industries,
markets, legal &
taxation systems,
and infrastructure in
Korea
• Guidance on site
selection
• Support for seeking
business partners
• Coordinate FDI
incentive negotiations
Pre-Investment Consultation
Execution
Governments
After-care
One Stop Services for Foreign Investors
Local governments
42 KOTRA overseas offices
Ministry of Trade, Industry and Energy
Ministry of Strategy and Finance
Ministry of Land, Infrastructure and Transport
Ministry of Environment
Ministry of Employment and Labor
Ministry of Justice
Ministry of Government Legislation
National Tax Office
Korea Customs Office
35
2,167 2,681 3,749 4,410 4,552 5,017
3,704
6,898 4,398
8,848
5,008
6,788 5,364
3,290 5,393
2,957
4,884
6,690
11,483
13,071 13,673
16,286
14,548
19,003
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2009 2019 2011 2012 2013 2014
North America Asia Pacific Europe
Others Total AP Headquarter of Energy Solutions (‘13)
AP Electronics Materials R&D Center (‘14)
OLED Laboratory (‘14)
Production Facility for Gasoline Injector (‘13-’14)
FDI Trends • FDI to Korea hit record high in 2014 • Investment from China soared nearly 150% to 1.2 billion dollars and investment from the U.S.
also edged up while the amount from Japan shrunk due to the weakening Japanese yen • An easing of regulations, coupled with a boost in investment attractions from the FTAs of
Korea, encouraged foreign investors to increase investment in Korea
(unit: us$ million)
36
Foreign Invested Companies in Korea
> 14,000
37
歲寒圖 Wintry Days
“When winter comes, it will be noticed that the leaves of pine tree are not wilted”
38
Danke Schö n!
Yongsoo(Brian) Park Executive Director KOTRA Frankfurt
+49 69 242992 21 [email protected]