Sunday, Oct 22, 2017
Industry & Trade | Asia-Pacific | South Korea

Invest Korea

Strong FTA network positions Korea as “global link to success”


1 year ago

Yong Kook Kim, Head of Invest Korea
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Yong Kook Kim

Head of Invest Korea

Following a record-breaking year for FDI inflows in 2015, the head of Invest Korea, Yong Kook Kim, explains how the country intends to leverage on its FTAs with 52 countries and its highly educated workforce to continue to attract quality investment from foreign partners.

 

How do you perceive the role of FDI in general, and Invest Korea in particular, in helping Korea develop into a “creative economy” at the forefront of the fourth industrial revolution?

The whole idea behind the “creative economy” is to capitalize on the creativity and ingenuity of the Korean people. If you look at a recent survey by Bloomberg, Korea was ranked as the most innovative country in the world. We are probably one of the leading countries in terms of ICT technology, a sector which demands creativity. To remain competitive, we require funding, and FDI plays a role in this. We want to establish more R&D centers and create new industries, so there’s a match between the creative economy and FDI.

 

How are you shaping your strategies to match the preferences of American investors?

We have seven offices in strategic American cities. Each city has a strong industry, and a lot of our promotion activities or projects are developed by our staff at those offices who understand what local investors are looking for.

Delegations from Korea visit at least 10 times per year for promotion activities. In July 2016, we went to New York and focused on industries such as medical, real estate, retail, and fashion.

In the past we used to try to sell Korea as a whole, but these days we need to be more industry focused. We will do presentations to specific industries and smaller, focused crowds.

 

The US was the number one source of FDI in Korea in 2015, injecting $5.46 billion, mainly into the IT and logistics sectors. In which sectors do you see the potential for increased American direct investment in Korea, besides the ones you mentioned already?

Probably biotech is another one. It makes sense to target any sector where the US is a leading country. We also get semiconductor component-makers or equipment-makers coming into Korea to supply our industries. We will target a mix of old and new industries.

 

Despite the USA being the main source of FDI inflows, according to the Ministry of Trade, Industry and Energy, American investment pledges decreased 56.2% year-on-year in the first quarter of 2016, whilst FDI pledges from China continued to soar. What are the reasons behind this decrease, and do you expect the US to remain the primary source of quality investment in the face of increasing interest from China?

I don’t think we’re purposely shifting our focus away from the US, it just happens that the FTA with China was recently signed and that has obviously impacted on inflows from China. There’s probably better political vibe with China and since they are one of our closest neighbors, it’s easier to sell the K-Wave or K-Culture related industries such as movies, dramas, food and fashion. It is easier for them to absorb Korea culture-related industries and a lot of investments have, in fact, been in those areas.

 

Does the K-Wave have no crossover appeal in the US? Is it worth promoting such industries in the American market?

There is potential in the US because there are huge populations of Koreans in LA and New York. There is an annual K-Pop event in LA called K-Con, which attracts thousands of fans and we can easily promote things related to the event. The USA will remain a key market for us.

 

We observe that US investment in other parts of Asia, including China and Asean countries such as Vietnam, is booming. How would you define Korea’s regional and international competitive advantages as an FDI destination in an increasingly competitive environment?

One is the FTA network. We’re probably one of the only nations that has an FTA network with US, EU and China. In fact, we have FTAs with 52 countries globally, covering some 73% of global GDP. That is one of the strongest FTA networks in the world, without doubt.

The other strength that a lot of investors always mention is that the Korean market is big enough as a test market. A lot of Korean consumers are very sophisticated so some cooperates like to use Korea as a test bed.

We also have a number of very strong industries and a highly educated, qualified workforce. Foreign corporates are usually very satisfied with the quality of the workforce here.

 

We can’t escape the fact that we are hearing a lot of anti-free-trade rhetoric in the American Presidential debate at the moment. The KORUS FTA has come under scrutiny and there is perception in the US that this agreement has benefitted Korea more than the US. Does this give you an extra incentive to redouble your promotion efforts in the US and showcase that there are actually very good investment provisions here for American investors?

It’s probably not my area to comment but I think the Minister of Trade mentioned that he’ll be talking to his US counterparts to work out the differences and misunderstanding about the KORUS FTA.

 

Recently Invest Korea launched a new branding campaign: “Global Link to Success”. What does this slogan signify?

We went through a very thorough process in coming up with that slogan. We had employees participate in the process and we had various advertising agencies work with us and that slogan was the number one choice. The key word there is “link”, which for me represents the global free trade platform that we’re trying to push for.

The slogan can be used with many other words, such as “link to entertainment”, “link to movies”, or whatever we’re selling. A lot of the other government related agencies can use that slogan. Any successful corporation is identified with a very catchy slogan but I don’t think Invest Korea ever had one, so hopefully “Global Link to Success” will stick in people’s mind.

It also shows that we can be a bridge to other countries. For example, you can set up a manufacturing plant in Korea and then export to China because we have the FTA agreement with China.

 

How do you intend to use this slogan in the US and internationally?

I don’t think we have any specific plan of how to use it but whenever we go on the road, whenever we do any presentations, all our materials will carry that logo. In the future, we’re also planning to put it in our business cards.

 

Korea has made tremendous efforts to develop its economy, but hasn’t managed to successfully market its “brand”. I was reading there’s a lack of a national identity that companies can align their brand with. You are traveling all the time, do you agree with this?

To be honest, we may not be at the forefront of marketing but I sort of disagree you. I was in the US way back in the 1980s and since then we hosted the 1988 Olympics and the 2002 World Cup. Back in the 1980s, some people would ask if I was from North or South Korea. Nowadays nobody asks me that. They know that if I was from North Korea I would not be able to travel to the US. So awareness has gone up a lot and certainly those two global events helped.

Also, the fact that we’re selling Hyundai cars and Samsung mobile phones all over the world has helped people realize that we produce quality goods, whilst North Korea produces nuclear weapons.

 

Korea is striving to be seen as a dynamic country, and certainly it is succeeding in this goal in countries such as China where the populations are mass consumers of K-Pop and K-Drama? How do you think Americans really see Korea today?

I think even President Obama mentioned that he envies the Korean education system, and the way that people are striving to get ahead through education. If you look at a lot of the Korean students that are studying in the US, they are all very driven and hardworking. A lot of the American teachers or fellow students wonder why Koreans are so hardworking but I think it’s the way they are brought up. We really value education here in Korea as a means to self-improvement and self-empowerment.

 

You were appointed earlier this year as the Commissioner of Invest Korea after a long career working for investment firms. How has your career in the private sector helped to shape your vision for Invest Korea?

A lot of people ask me that. I used to be a stockbroker selling Korean equities to foreign institutions. Now I’m trying to sell Korea to foreign investors. I have lots more responsibilities now. I’m not trying to sell equities and worrying about missing commissions; I’m trying to sell Korea and worrying about the consequences of missing out on big investments.

Nevertheless, I think a lot of things are the same in the sense that I have to meet people and convince them. We probably need to improve at targeting clients. I’m thinking of, perhaps, tiering some clients, like I used to do as a broker. Tier 1 get priority service and tier 3 less of a priority.

Also, since I have a finance background, lots of former colleagues try to set up meetings with financial people when I travel abroad. For example, I went to Japan last month and I was able to meet the CEO of the national pension fund to see whether he has any plans to invest in Korea, how much alternative investment there is, and whether we can cooperate with other financial institutions within Korea and Japan. So, hopefully, if we continue knocking on the doors of foreign financial institutions, we can find a common ground or area of investment that was not there before.

 

What is your final message to our American readers about the potential of Korea as a destination for FDI?

I would reiterate that it’s a great place for investment, not only because of the various incentives and cash grants, but because the market is big enough to sell your product. There is a host of qualified, hardworking people here. Koreans have a very strong work ethic, so there’s a sense of pride and loyalty when you give them some assignment or work to do and they try to finish it and do their best at whatever assignments they’re given.

Also, Korea has one of the highest college graduation rates in the world. There are a lot of US-educated or internationally educated people like myself that are at least bilingual, and bi-cultural, so it’s easy to communicate and do business in Korea. 



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