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President Roh Moo-hyun, right, invited Korea‘s tycoons to the Blue House on Jan. 19, 2004. Among the participants are Samsung chairman Lee Kun-hee, second from right, and Hyundai Motor chairman Chung Mong-koo, third from right. Chongwadae Press Corps
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More Korean companies look abroad, but not due to fighting at home
Local companies are moving their plants overseas and expanding investment in foreign countries, but the moves are not due to worsening domestic relations between management and labor, a survey showed. This is in stark contrast to the long-held claims by management that companies try to go overseas due to the militancy of Korean labor unions. According to a survey of 300 labor representatives and 500 business leaders between September 11 and 26, 40.6 percent said their increased overseas investment was to find new markets, with 29.2 percent citing high labor costs in local markets. Only 2.6 percent said that worsening management-labor relations here had pushed them to look into overseas markets. The survey was conducted by Korea Research at the request of the Korea Tripartite Commission."It is a kind of ideology conceived by certain business leaders and economists that abrasive labor relations are the main reason behind companies going overseas," a commission official said. "The survey showed a huge gap between this conception and reality." Of note is that overseas investment by local companies has not resulted in a hollowing-out effect in the domestic market. Among those surveyed, 39 percent said that they would continue investment here, even if they also eye foreign countries for investment, while 37 percent said they would expand their domestic investment. Only 17 percent said they plan to cut spending in the domestic market. The official noted that the hollowing-out effect in the domestic market was not significant because companies still use domestically produced parts due to their technological advancement. But he warned that things could get worse down the road. Meanwhile, the survey showed that heavy industry and chemical firms are more aggressive in investing in overseas markets than are light firms. The survey also showed that large companies hold more plans to invest overseas than do small and mid-sized firms.
