Since China and South Korea formally signed the Free Trade Agreement (FTA), the trade exchanges between China and South Korea have become closer. Recently, the Ministry of Industry, Trade and Energy of South Korea and the Korea Trade-Investment Promotion Agency jointly launched the 11th “2015 Foreign Investment (Foreign Investment Week)” event, the reporter learned from the interview that the Korean government is increasing its efforts to attract foreign investment, so what is the investment environment in South Korea? What kind of business opportunities and investment policies are there? This reporter conducted an interview.
South Korea signed free trade agreements with 52 countries
At the “2015 Foreign Investment Week” event held in Seoul, South Korea, Lee In-ho, director of the Trade and Investment Office of the Ministry of Industry of South Korea, said: “The signing of the Korea-China Free Trade Agreement will provide the best opportunity for investment in South Korea and become a Korea is an opportunity for overseas investment to enter the world market.”
Officials from South Korea’s Ministry of Trade, Industry and Energy elaborated on several major advantages of investing in South Korea: convenient geographical location, excellent business environment, strong FTA network, and the government’s strong support for foreign investment. From a geographical point of view, starting from South Korea, the flight distance is within 4 hours, and there are 147 cities with a population of more than 1 million. It can carry out business with the world’s 3.9 billion people, especially with China’s first-tier cities such as Beijing and Shanghai. Adjacent to it, it occupies the best geographical location for exploring the Chinese market. In addition, South Korea invests heavily in research and development of high-tech industries, has very specialized and high-level talents in cutting-edge industries, and has a good business environment.
Over the past decade or so, South Korea has risen from a “peripheral country” in FTAs to a “key country”. So far, South Korea has signed free trade agreements with 52 countries, and the total GDP of FTA signatories accounts for the world’s largest GDP. It is also the only Asian country that has signed FTAs with the three major economies of the United States, the European Union, and China. This is also South Korea’s biggest advantage in attracting foreign investment. The signing of the China-South Korea Free Trade Agreement means that for multinational companies coveting the huge Chinese market, by investing in South Korea, the products will be labeled “Made in Korea” and then exported to China. The products will eliminate trade barriers and will undoubtedly be more competitive. Advantage.
An official in charge of international trade and investment at the Ministry of Industry, Trade and Energy of South Korea said that in the past, foreign investors in South Korea mainly focused on the local market of South Korea. Now, the South Korean government is working hard to make South Korea a hub to the global market, which will become an important factor in attracting foreign investors.
Chinese companies are targeting new business opportunities in advance
With the formal signing of the China-South Korea Free Trade Agreement, China’s investment in South Korea has experienced relatively large growth. According to relevant sources from South Korea’s Ministry of Trade, Industry and Energy, by the end of 2014, China’s non-financial direct investment in South Korea had reached a cumulative US$2.45 billion. China has become South Korea’s third largest source of foreign investment after the United States and Japan. Last year alone, the amount of declared investment reached US$1.2 billion, which can be described as rapid growth. In addition, it is worth noting that China’s investment in South Korea has also undergone structural changes. In the past, it was mainly the real estate industry. Now, emerging industries including film and television, mobile games, agriculture, renewable resources, finance, etc. have become new money-attracting points.
“Chinese companies can invest in South Korea and then return to the Chinese market, or use South Korea as a springboard to enter the global market.” An official from South Korea’s Ministry of Trade, Industry and Energy said that Chinese companies can flexibly use “Made in Korea” and “Made in Korea” by entering the South Korean market. Favorable factors such as FTA tariff preferential policies have once again entered the Chinese market. In addition, South Korea has signed FTAs with 52 countries including the United States and Europe. Chinese companies can use South Korea’s advantage to better enter the global market.
Some Chinese companies have already taken the lead. Ge Fangfang, who started her business in Qingdao, seized this opportunity. Together with several friends, she founded a company selling Korean grapefruit tea. “Our manufacturer is in South Korea. If the preferential tariff policy is officially implemented, our profits will increase. It may be higher, and by passing on part of the profits to consumers, consumers in Qingdao can also drink high-quality and cheaper grapefruit tea.”
Li Hongwei is the person in charge of Anhui Dongbao Food Co., Ltd. The company has signed a letter of intent to invest and set up a factory in the Incheon Free Economic Zone, South Korea. “At present, some of our high-end foods are selling well in South Korea. We hope to re-export these high-end products to China by setting up food processing plants in South Korea and enjoy the trade convenience and benefits brought by the FTA.” Li Hongwei said.
8 free economic zones have discounts
In addition to having a huge network of free trade agreements, South Korea is also making every effort to build free economic zones, making free economic zones the forefront of attracting foreign investment.
The reporter saw in the Incheon Free Economic Zone, the most representative area in South Korea, that it has spacious roads and numerous high-rise buildings, and nearly 50 multinational companies have invested and settled there. According to officials from the Incheon Free Economic Zone Agency, the Incheon Free Economic Zone is the earliest free economic zone established in South Korea in August 2003 and is currently the most mature one. This area includes Incheon International Airport and Incheon Port, which ranks second in the world in terms of international cargo transportation volume, as well as three areas: Songdo, Yeongjong, and Cheongna. Each area has different aspects��Development direction. Among them, Songdo’s development direction is international business, information technology, and biotechnology; Yeongjong’s development direction is aviation, logistics, and tourism; Cheongna’s development direction is finance, leisure, and cutting-edge automobile manufacturing. By 2020, the Incheon Free Economic Zone will be built into a mature international free economic zone integrating domestic and foreign enterprises, research institutes, education, medical care, culture, leisure, and residence. In Yeongjong Island, Incheon, a huge integrated resort park, Meidang New City, is under construction. Lippo, Indonesia’s largest real estate group, and Caesars Entertainment, the world’s largest casino entertainment company (which owns a premium hotel in Las Vegas, USA) Caesars Palace) is expected to invest 2 trillion won to build a large-scale resort and entertainment complex modeled on Las Vegas. In addition, the Saemangeum Free Economic Zone has previously been selected by China and South Korea as a trial “China-South Korea Economic Cooperation Zone” before 2020, introducing industries that are complementary to China-South Korea cooperation and building it into a successful example of China-South Korea economic cooperation.
Since 2003, the Korean government has vigorously built free economic zones through incentive policies such as tax reductions and exemptions, providing financial support, relaxing regulations, and one-stop services to attract foreign investment and provide a good investment platform for foreign companies. For example, for tourism companies with an investment of more than US$20 million, the corporate income tax reduction period is 7 years (full exemption for 5 years and half reduction for 2 years). Currently, South Korea has eight free economic zones, including Incheon, Busan-Jinhae, and Gwangyang Bay Circle established in 2003, Hwanghae, Daegu-Gyeongbuk, Saemangeum-Gunsan established in 2008, and the Free Economic Zone established in 2013. East Coast, Chungbuk Free Economic Zone.
One-stop service in Gyeongsangbuk-do
In Gyeongsangbuk-do in the southeast of South Korea, Gumi Information Technology Industry and Pohang Steel Industry are the centers, leading the Korean economy. It is the largest administrative region in South Korea, 31 times the area of Seoul, and has the famous Pohang Xiang Iron and Steel Plant, Gumi National High-tech Development Zone, the world-famous capital of Silicon Valley. Familiar brands such as “Samsung” and “LG” are all produced in Gyeongsangbuk-do.
There is also an auto parts industry here, with about 1,000 parts suppliers. The green energy industry is also relatively developed. There are 24 green energy companies in the country, 12 of which are in Gyeongsangbuk-do. The new materials industry and aviation industry have also formed specialized industrial parks, and the biotechnology industry has become the core of world biotechnology. Companies outside South Korea that invest here can enjoy one-stop services, including factory construction, water and electricity, etc., and even help with children’s schooling. And you can also enjoy tax policies. For example, after the investment reaches a certain amount, you can be exempted from corporate tax for 7 years and local tax for 15 years. Moreover, a relatively complete industrial chain has been formed here. For example, some companies invest here to provide support for large companies such as Samsung, and this is the best shortcut.
It is understood that Gyeongsangbuk-do has beautiful natural scenery and splendid cultural heritage, and is known as a tourism treasure house. As the birthplace of Silla Buddhist culture, the mysterious Gaya culture, and Korean Confucian culture, Gyeongsangbuk-do is a place with a long history and many cultural relics. Gyeongsangbuk-do is the home of talents, Confucian scholars, and loyalty, and plays a role in guiding the development of the country. Gyeongsangbuk-do strives to give top priority to educating sound, creative, and moral talents, and there are 53 universities here.
Qingdao invests in Korean clothing industry
So what is the economic and trade situation between Qingdao and South Korea? The reporter learned from the Municipal Commerce Bureau that South Korea is the second largest source of foreign investment in Qingdao. From January to July this year, South Korea invested in 221 projects in Qinghai, a year-on-year increase of 59%; contracted foreign investment was US$1.15 billion, a year-on-year increase of 54.8%; actual foreign investment was US$850 million, a year-on-year increase of 108.6%. As of the end of July 2015, South Korea had accumulated 11,862 investment projects in Qinghai, with contractual foreign investment of US$25.94 billion and actual foreign investment of US$16.1 billion, accounting for 46.8%, 28.3% and 27.2% of the city’s cumulative foreign investment over the years respectively.
South Korea is Qingdao’s second largest trading partner. In 2014, the total import and export trade between Qingdao and South Korea was US$9.01 billion, a year-on-year increase of 6%, accounting for 11.3% of the city’s import and export volume. Among them, exports were US$4.77 billion, a year-on-year increase of 17.7%, accounting for 10.4% of the city’s exports; imports were 42.4%. billion, accounting for 12.6% of the city’s imports.
From January to July 2015, the total import and export trade between Qingdao and South Korea was US$4.58 billion, accounting for 11.4% of the city’s import and export volume. Among them, exports were US$2.35 billion, accounting for 9.5% of the city’s exports; imports were US$2.23 billion, Accounting for 14.8% of the city’s imports. The main commodities exported from Qingdao to South Korea are: electrical and electronic products, mechanical equipment, clothing, metal products, steel, etc. The main commodities imported by Qingdao from South Korea are: electrical appliances and electronic products, textiles, mechanical equipment, integrated circuits, plastic raw materials, etc.
As for Qingdao’s investment in South Korea, as of July 2015, Qingdao City has approved 129 investment projects in South Korea, with Chinese investment amounting to US$244 million, mainly involving knitted clothing, handicrafts, mechanical processing, electronic equipment, food processing, etc. industry sector.
