South Korean Companies to Increase Foreign Direct Investment in China
South Korean firms are speeding up their investments in China up to a third this year, by improving diplomatic ties that will include a pending free trade deal. The South Korean expansion in China is a sharp contrast to Japanese companies that have been rapidly drawing back their investment after a territorial dispute that happened two years ago that is accompanied with political misunderstandings.
Japan foreign direct investment into china is down by 43 percent this year, while South Korean foreign direct investment has jumped 33 percent in the first nine months of the year. The investment coming from South Korea cams after Beijing and Seoul strengthen its diplomatic ties in efforts to wrap up free trade talks before the year ends. South Korean President Park Geun-hye and Chinese President Xi Jinping met five times since they took office last year and is planning to meet again during the bilateral summit next month.
Samsung Electronics and Kia Motors are powering the investment drive by expanding production facilities in China as manufacturing is around 90 percent of the total foreign direct investment of South Korea to China. although investment in the less capital intensive retail and wholesale sector increased by 55 percent last year as consumers cash in on the Korean fashion wave which shows a big demand among younger Chinese crows who yearns for South Korean cultural products ranging from cosmetics, music and clothing. And since the South Korean market is relatively small, Korean companies are looking into overseas market to survive.