November 2011
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I. Wow Korea II. Diamond Korea III. Technology Korea 2
1945 Independence 1950 Civil War 1962 5-years plan for Economy Development
1988 Summer Olympics 2002 FIFA World cup 2010 G20 Summit 2011 IAAF World Championship 2018 Winter Olympics 3
Area: 100,000km2 (108th) < Kentucky St.
• 9,372,615 km2 (4th)
Population: 50 mil (24th)
• 307 mil (3rd)
GDP (nominal): $1.01 trillion (15th)
• 14,624 bil (1st)
GDP (ppp): $1.46 trillion (12th)
• 14,624 bil (1st)
- Per Capita: $29,836 (26th) GDP Growth Rate: 6.2% (2010)
- 47,123 (6th) ※ Source) IMF, World Bank
Trade (2010):▶ Export: $466 BN ▶ Import: $425 BN
Inflation (CPI): 2.9% (2010)
FX Reserves: $303.4 billion (Sept. 2011)
Unemployment: 3.7% (2010)
* Short-Term External Debt: $135 Bil (2010)
Fiscal Balance: 2.4% of GDP (2010)
* Gross External Debt: $360 Bil (2010)
National Debt: 33.5% of GDP (2010) 4
※ Source: The Bank of Korea, Ministry of Strategy & Finance
WOW indicators
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I. Wow Korea II. Diamond Korea III. Technology Korea 6
Single Diamond
Chance
Firm strategy, structure and rivalry
Demand condition s
Factor conditions
Related and supp orting industries
Government
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Source) Michal Porterâ&#x20AC;&#x2122;s Diamond model â&#x20AC;&#x201C; The competitive advantage of nations
Double Diamond Business Context
Factor conditions
Physical Factors
Politicians & Bureaucrats
Demand conditions
Related Industries MAIN FACTORS
SUB-FACTORS
Energy Resources Other Resources Demand Size Demand Conditions Demand Quality Transportation Communication Finance Education Related Industries Science & Technology Cluster Development Overall Living Environment Strategy & Structure Global Mindset Business Culture Business Context Foreign Investment Source) The Institute for Industrial Policy Studies Factor Conditions
Human Factors
Workers
Professionals
Entrepreneurs MAIN FACTORS Workers
SUB-FACTORS Quantity of Labor Force Quality of Labor Force
Politicians Politicians & Bureaucrats Bureaucrats Entrepreneurs
Professionals
Personal Competence Social Context Personal Competence Social Context
Chance Events
Chance Events
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Politicians & Bur eaucrats
Business Conte xt
Factor conditions
0.70 0.60 Cheapest Most stable 0.50 Safest from natural disasters
Physical Factors
Demand conditions
Related Industri es
0.64
0.61
0.59
Workers
Human Factors
Professionals
Entrepreneurs
Power failure case by year 0.50
0.50
0.49
0.47 0.48 0.42
0.40
0.40 0.30
Source) Korea Power Statistics Information System 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Infrastructure – Basic infrastructure
Electric costs for industrial clients Korea Indonesia New Zealand Thailand Taiwan Malaysia India Hong Kong Singapore Japan Philippines Australia China Mainland
0.06 0.06
(US$ per kwh, Year 2010) 0.07 0.08 0.08 0.09 0.11 0.12 0.15 0.15 0.18 (© IMD WORLD COMPETITIVENESS ONLINE 1995-2011)
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Distinguished Domestic Market (Demand quality / Demand conditions)
Politicians & Bur eaucrats
Business Conte xt
Factor conditions
A Large Market with Sophisticated Consumers
Physical Factors
Related Industri es
Demand conditions
Human Factors
Workers
Professionals
Entrepreneurs
• Population: 50 million (2010) • World's 15th in GDP (2010) • Test market of early adopters for new products • Rapidly growing buying power of brand-savvy consumers • More than half of Global top 500 firms (2010)
Many global companies as your partners
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FTAs with 2/3 of the world markets (Market size / Demand conditions)
Factor conditions
Physical Factors
Related Industri es
In Effect Chile, Singapore, EFTA, ASEAN, In dia, EU, Peru
Concluded
USA
Underway
Politicians & Bur eaucrats
Business Conte xt
Demand conditions
Workers
Human Factors
Professionals
Entrepreneurs
On the Agenda
Japan, China, Canada, Mexico, GCC, Korea-China-Japan, Australia, MERCOSUR, Russia, Israel, Vietnam, Mongolia, SACU, New Zealand, Columbia, Turkey Central America, Indonesia, Malaysia Source: www.fta.go.kr, Ministry of Foreign Affairs and Trade
61% of world GDP, 46.2% of world trade volume, 39.7% of world population
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FTA with Korea
Politicians & Bur eaucrats
Business Conte xt
(Trade & service openness / Demand conditions)
Factor conditions
Physical Factors
Demand conditions
Workers
Related Industri es
Human Factors
Professionals
Entrepreneurs
KORUS FTA
More job creation for American’s workers: tens of thousand - eliminating non-tariff barriers, export-related new jobs
More economic benefits for Americans: new U$ 1 Tri market - sharing annual economic growth of 5% in Korea
More American products sold to Korea: U$10 Bil to 11 Bil - exporting more agricultural, auto/truck/green cars, machinery/equipment
More American services sold to Korea: new 560 Bil market - financial, express delivery, legal, accounting, healthcare, education
A competitive marketplace: to market share 21% from 9% - regaining a strong hand to compete with EU, China, Japan Source) U.S. International Trade Commission
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Politicians & Bur eaucrats
Business Conte xt
Factor conditions
Physical Factors
Demand conditions
Related Industri es
Incheon Int’l Airport Gyeonggi Province
South Chungcheong Province
Voted the best airport in pas senger service by ACI for 6 years (s ince 2005) • World’s 2nd for cargo volume
Gangwon Province
Workers
Human Factors
Professionals
Entrepreneurs
Well-Organized Highway
North Chungcheong Province North Gyeongsang Province
Total extens ion: 4,77
4km
•
North Jeolla Province South Gyeongsang Province South Jeolla Province
Source: KOSIS
Busan Port Gwangyang Port KTX
World’s 5th high-speed train m anufacturer
World’s 17th 182M tons (2008)
5th largest for cargo handli ng 13
The Most Wired Country
Politicians & Bur eaucrats
Business Conte xt
(Communication / Related industries)
Factor conditions
Physical Factors
Demand conditions
Workers
Related Industri es
Professionals
Entrepreneurs
ITU, ICT development index world rank 2nd / 2009 → 3rd /2010 → 1st /2011 92.0%
Human Factors
103.0%
97.9%
95.0% 74.2%
2009
2010
55.1%
2011
93.3%
22.9% 8.0% 9.0% 8.6% GDP
9.7%
4.8% 7.3%
IPTV
102.0%
64.7% 1.6% 5.0%
17.2% S.TV
40.8%
Digi TV
BcN
S.phone
F.phone
Source) Annual report of Korea Communications Committee
By 2013, the speed of wired and wireless Internet in Korea will be 10 times faster than it currently is. Using t his Internet network, we can watch Ultra Definition TV (UDTV), which will be 4 to 16 times clearer than the e xisting High Definition TV (HDTV). In addition, we will also watch HD level video clips with mobile phones. We will make the world’s best converged infrastructure of wired, wireless and broadcasting systems with a g uaranteed speed of 1 Gbps for wired networks and 10 Mbps for wireless networks. - 11 Feb 2011, Minister of MKE
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Politicians & Bur eaucrats
Business Conte xt
Doing business world rankings Rank 1 2 4 8 10 13 17 18 19 20 25 89 91 98 105 126 129 132 136 183
Economy Singapore Hong Kong United States Korea Ireland Canada Thailand Malaysia Germany Japan Taiwan, China Sri Lanka China Vietnam Pakistan Brazil Indonesia India Philippines Chad
Source) World bank, Jun 2011
Korea is in 8th of 183 <9 categories> • Dealing with Construction Permits, • Getting Electricity, • Registering Property, • Getting Credit, • Protecting Investors, • Paying Taxes, • Trading Across Borders, • Enforcing Contracts, • Resolving Insolvency
Factor conditions
Physical Factors
Demand conditions
Related Industri es
Workers
Human Factors
Professionals
Entrepreneurs
World’s best countries Sort by: Rank Country 1 2 3 7 9 11 13 14 15 17 19 20 37 58 59 63 78 81
Finland Switzerland Sweden Canada Japan United States New Zealand United Kingdom Korea Ireland Belgium Singapore Malaysia Thailand China Philippine India Vietnam
Source) Newsweek, Aug 2010
Korea is in 15th of 100 <5 categories> • Education • Health • Quality of life • Economic dynamism • Political environment
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Politicians & Bur eaucrats
Business Conte xt
Factor conditions
Physical Factors
Demand conditions
Workers
Related Industri es
st 1
150
High school graduation 98% (age 25 to 34) Tertiary school entrance 81.5% R&D productivity Average hours actually worked
138
Human Factors
Professionals
Entrepreneurs
Labor disputes 115
108
121 86
100 Domestic 50
Invested 15
15
19
22
2006
2007
2008
2009
12
0 2010
Source) Ministry of Employment and Labor
Hours per year person in employment
2,256
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Politicians & Bur eaucrats
Business Conte xt
Factor conditions
Physical Factors
Related Industri es
Demand conditions
Workers
Human Factors
Professionals
Entrepreneurs
EIU Democracy Index 20th globally 1st in Asia
• Fair Trade Commission • The Anti-Corruption & Civil Rights Commission • Regulatory Reform Committee 17
Politicians & Bur eaucrats
Business Conte xt
Factor conditions
Dec. 1, 2011
Physical Factors
Related Industri es
Demand conditions
Workers
Human Factors
Professionals
Entrepreneurs
Grand Ballroom, The Ritz Carton Hotel in Seoul
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Politicians & Bur eaucrats
Business Conte xt
Factor conditions
Physical Factors
Demand conditions
Workers
Related Industri es
Business Efficiency - Labor Market Attracting and retaining talents is a priority in companies 1 Korea 8.15
Human Factors
Professionals
Entrepreneurs
R&D manpower doubled in 5 years World 9th researchers ratio to population Asia 4th in training employees
2 Taiwan
7.96
3 Australia
7.78
18
4 Malaysia
7.74
16
5 Singapore
7.67
14
6 China Mainland
7.47
12
7 India
7.45
10
8 Thailand
7.30
9 Hong Kong
7.29
10 Japan
7.01
11 New Zealand
6.89
4
12 Philippines
6.81
2
13 Indonesia
6.19
0
Researchers / Per thousand employed, full-time equivalent 2008 or latest available year
1999 or first available year
9.5%
8
6
19
http://stats.oecd.org/Index.aspx?DataSetCode=CSP2010
Politicians & Bur eaucrats
Business Conte xt
Factor conditions
Physical Factors
Related Industri es
Demand conditions
Workers
Human Factors
Professionals
Entrepreneurs
Key attractiveness indicator for KOREA From a list of 15 indicators, respondents of the Executive Opinion Survey were asked to select 5 that they perceived as the key attractiveness factors of their economy. The bars in the figures show the percentag e of responses per indicator from the highest number of responses to the lowest. Dynamism of the economy High educational level Skilled workforce Reliable infrastructure Competent managers Productivity of workforce Strong R&D network Policy stability & predictability Access to financing Competitive tax regime Lack of corruption Harmonious labor relations Effective legal environment Low operating costs Low regulatory burden
97.00 94.00 67.00 62.00 48.00 25.00 19.00 11.00 8.00 7.00 7.00 7.00 6.00 3.00 1.00 © IMD WORLD COMPETITIVENESS ONLINE 1995-2011
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I. Wow Korea II. Diamond Korea III. Technology Korea 21
To the ITC Service Ecosystem Hardware
Communication
Software
Service
Hardware Communication
Software
Service
To lead to least energy and least materials usage.
• Cloud computing • Data center
• Smart grid • Smart city
• e-government • U-healthcare
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New Growth Engine Development Plan (Science and Technology / Related industries) • Reinforce R&D activities : IT, BT, GT • Invest U$ 24.5 billion for 5 years starting 2009 • Create new market of U$ 700 billion Short-term plan (3~5 yr’s)
New Growth Engine (17 ind.)
Long-term plan (Within 10 yr’s)
• Renewable energy (tidal, recycled resources)
• Renewable energy (solar, fuel cell)
• Renewable energy (marine bio fuel)
• Advanced green city
• Reducing carbon energy (nuclear power plant)
• Reducing carbon energy ( CO2 recycle)
• Advanced water treatment
• Green transportation system
• IT fusion system
• LED applications
• Convergence of broadcast & communications
• Value-added food industry
• New materials, Nano
• Global healthcare
• Global education services
• Robot application
• Green finance
• Bio-pharmaceuticals, medical devices
• MICE* · Tourism
Development Strategy
Mid-term plan (5~8 yr’s)
• Contents, software
• Application development
• Preoccupy core technology
• Develop fundamental technology
• System infrastructure improvement
• Create new market
• Train human resources
* MICE : Meeting, Incentive Tour, Convention, Exhibition
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Chungcheongbuk-do Seoul
GT – Solar valley
IT – IT Convergence
Incheon IT – Smart city
Jeollabuk-do GT - Photovoltaic
ChungNam IT – Display, Semiconductor
Busan GT – Wind power
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• Chosen by many global companies • Strong government supports • Diverse FDI incentives 25
Chosen by many US companies (2,095/14,410) More than 2,000 companies from USA have their business in Korea
Foreign-owned firms paid out large dividends last year, nearly more than double the average of all companies listed on the country's main stock market, a local fund market research instit ution said Sunday. - The Korea times, Oct 7, 2011 -
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Scientific Infrastructure
Defining the Competitiveness of Koreaâ&#x20AC;&#x2122;s IT/BT/GT
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One-Stop Service
Overseas Network of 42 KBCs (Korea Business Centers) Central Governments
Provide information on FDI
incentives, markets and industries Arrange meetings w/govt. officials
Local Governments
Resolve investors’ grievances
Assist in business-site selection
Help seek business partners
Provide administrative support
Improve business and living environment
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FDI Incentives
Corporate income tax
Acquisition tax
Property tax
Tariff, VAT, ICT for capital goods
Cash support for a FDI To finance the construction of facilities or the purchase of equipment related to the investment
Reduction or exemption of rent
Support for building of infrastructure
Subsidies for employment and education
Support in settling into Korea
Facilitate R&D activities
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Incentives Tracks for FDI Incentives
Qualification
Procedure
Confirm whether tax reduction is available fro m MOSF.** Positively influence and importance o n domestic economy and technology Register foreign investment notification to KOT Status of RA Less than 3 years from the date laun on income, corporate tax: 10 High-tech ind ched or more effective than the existing Apply with copies of Application for of tax redu ustry 0% for 5yrs, 50 technology ction & copies of Description of business % for after 2yrs Manufacturing in domestic area Evaluated by relevant organization within 2 wk on local tax*: 100% for 5yrs, s 50% for after 2yrs TAX Exem on customs : 100% for 5yrs <Individual type> Documentation with Local Government ption Manufacturing biz : FDI $30M or mor Application to MKE** e FIZ (Foreign R&D center : FDI $2M. or more & 10 Evaluation by Foreign Investment Committee Investment Z Researchers one) <Complex type> 15 FIZ complex; Cheonan, Pyungdong, Daebul, S on income, corporate tax : 1 acheon, Ochang, Gumi, Inju, Jan Manufacturing biz : FDI $10M or mor 00% for 3 yrs, 50 gan1&2, Dandong, Jinsa, … e. % for after 2yrs on local tax* : 100% for 3yrs, 50% for after 2yrs
LAND Su
on customs : 100% for 5yrs
pport Reduction of rent fee Support for infrastructure
CASH G RANT
6 FEZ; Incheon, Busan&Jinhae, Gwangyanman, Daegu, Hwanghae, Saemangum
More than 30% of foreign investors' stock rate with introducing high-degree technology / Creating new jobs / contributing to local economy
Discussion with KOTRA /Invest Korea
The Cash can be used for ; • Land Acquisition & Rent Cost More than 30% of foreign investors' stock rate • Construction Cost
Other
Manufacturing biz : FDI $10M or mor FEZ (Free Ec e. onomic Zone) R&D center : FDI $1M or more & 10 Researchers
Manufacturing biz : Parts & Material Specialty or high-tech status
Designation of Investment plan Preliminary Negotiation with KOTRA
Application to KOTRA • Set-up Cost for Basic Infrastr R&D center : new R&D Facilities and over 5 Researc Evaluation by Foreign Investment Committee ucture hers Final Decision within 60 days after official appl • Purchase of Capital Goods, R ication &D equipment & Materials 30
Support for the improvement of living and management environment * Local Tax: acquisition, registration, property tax, ** MOSF: Ministry of Strategy and Finance, *** MKE : Ministry of Knowledge Economy, Financial Support for Employment & Training
"On coming to Korea, we found that the attitude to doing business, capital markets, regulations and transparency were ideal for new business to grow.” - John Walker AM, Chairman, Macquarie Group of Companies, Korea
“A world-famous work ethic by highly educated workers, strong business infrastructure, proximity to the rising N ortheast Asian market and an ambitious FTA strategy are some of the attractions of this dynamic market” - Amy Jackson, President, Amcham Korea
For further information Please send an email to Jaewon Lyu at Jaewon@kotra.or.kr www.investkorea.org
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