Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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An Study on FDI Determinants by Foreign-Invested Companies in the Manufacturing Sector Based on Their Sales Path

제조업 외국인투자기업의 매출 경로에 근거한 한국 투자 결정 요인 분석

  • 이영선 (서울과학종합대학원, KOTRA ) ;
  • 신호상 (서울과학종합대학원 )
  • Received : 2020.03.19
  • Accepted : 2020.04.25
  • Published : 2020.04.30
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Abstract

According to an analysis of 560 foreign-invested companies investing in South Korea's manufacturing industry, the following three facts were found. First, the proportion of sales by manufacturing foreign-invested companies is divided into 68.5 percent of domestic sales and 31.5 percent of exports. From 68.5 percent of domestic sales, sales to Korean companies are 60.5 percent, including 37.1 percent for large companies and 23.4 percent for small and medium-sized companies, while only 8.0 percent for domestic consumers. Second, the investment sectors of manufacturing foreign-invested enterprises are 'machine and equipment manufacturing', 'chemical and chemical-chemical material manufacturing-excluding pharmaceuticals', 'electronic components, computers, video, sound and communication equipment manufacturing' and 'vehicle and trailer manufacturing'. It overlaps with electric·electronics, petro-chemicals and automobiles, which are Korea's main industries and areas of Korean global companies. Third, 31.5 percent of the sales of foreign-invested companies in the manufacturing sector are exported. Foreign-invested companies export their products to use them for their parents or affiliates or to the third countries. The analysis shows that foreign-invested companies invested in Korea for B2B transactions with Korean companies. The implications are that Korea can attract foreign investments by utilizing Korean companies' demand for intermediate goods. Foreign-invested companies can invest in Korea in order to use Korea, which has signed free trade agreements with the US, the EU and ASEAN, as an export platform.

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