Linked into Success: Invest Korea’s Kim Yong Kook Talks Business in Korea
For decades, the Korean government has courted foreign investment and has, for the most part, been rewarded with a thriving business culture on the peninsula. With the rise of China and other markets, however, staying competitive has been a challenge. Part of the problem of course is the smaller size and scope of the Korean market. Yet, it has been significant enough to have retained its relevance, due largely to the Korean government’s commitment to keep promoting foreign investment, a vital cog in the Korean economic wheel.
Kim Yong Kook, Invest Korea’s newly tapped head, is the person charged with overseeing the landscape of foreign investment in Korea. It only takes a few minutes with him to appreciate his deeply contemplative nature, especially when it comes to sketching out the aforementioned landscape. For Kim, Korea’s economy – and its consumers – is mature enough that the quality of an investment should be just as important a consideration as the sheer dollar amount. This seems to reflect his desire to take Korea’s already well-cultivated image up a notch. In the long term, this approach could pay off, especially because “sometimes, national image is everything.” But perhaps most important is his focus on job creation – after all, the livelihoods of countless Koreans depend on the foreign investments he brings into Korea. His desire to promote specific industries seems to stem also from a desire to create jobs not only for short-term economic gain but to foster valuable skills and create a long-term niche for those skills. Perhaps it’s due to his background in the securities industry, but this idea of focusing on targeted quality reflects his long-term vision for the country. The following is an excerpt of his conversation with Korea IT Times.
Q: Your agency is charged with promoting foreign investment in Korea. Will you give me a few examples of foreign businesses that have come into Korea and thrived as a result?
A: There is one that immediately comes to mind. Solvay is a chemical company and they’ve been here over 40 years. They’re involved in many projects in Korea but one standout project is the R & D center they established within Ehwa Womens University. It was the first of its kind. It’s in the university itself, for specialty chemical materials, and it’s a great opportunity for the school and the students who are studying that field. I think this is a great example of a more successful investment story. It’s a nice integration of business, academia, and even culture.
Q: What businesses and objectives are you focused on this year?
A: Obviously, meeting the investment target for the year is one objective. Last year was a record year [$20 billion FDI], so hopefully this year we can match it or do a little bit better. That’s the foremost target. After that, we need to look at which industries add value to Korea in terms of whether it’s technology or creating jobs.
Q: Could you elaborate on this? As the head of this agency, you have a lot of say in the landscape of foreign investment here in Korea. What are some of the specific qualities in a business that particularly appeals to you, and why?
A. I think there are two criteria, one is quantitative and the other is qualitative. Obviously, the quantitative is the amount of the investment; that is, how big the investment is and whether it will create jobs for people in Korea, whether the product can be successfully exported from Korea so that it’s “made in Korea” and then exported somewhere else, which is in a way using our FTA network –because Korea has a very strong FTA network globally. And the other thing we would look at is whether the technology that Korea is developing needs further advancement. Bio would be one area where we would look to increase investment because although there are a lot of Bio companies in Korea, we’re not global leaders in this area.
Q: You’ve supported Bitgaram Energy Valley’s efforts to promote investment. Are there any foreign businesses that have shown an interest in the new energy industry?
A: I have met a few times with a big European company that’s interested. They specialize in various fields of energy but they also do smart cities so that is something that can be pursued. And we had an investor forum called China Week a couple of months ago and one of the participants happened to be an energy company and they’ve shown interest in the Energy Valley. But obviously there needs to be further talk.
Q: Korea’s IT infrastructure is considered to be the best in the world – probably it is the best in the world. Will you provide examples of some success stories of businesses within the IT industry that have invested through your agency?
A: Cisco comes to mind. They signed an agreement with the Incheon Free Economic Zone – the Songdo area – to build a smart network system. When it’s completed – and this goes back to the idea of the Smart City – the Songdo-Incheon area will be well-connected.
Q: Do you think that’s the wave of the future – these economic free zones? Just over the past 20 years, they’ve been popping up everywhere, not just in Korea where we already have several, but all over Asia.
A: I think China is also doing something similar, so it seems to be a trend, not only within Korea but across the region.
Q: So in a way then, are we competing within Asia for foreign business?
A: In a way, yes, because a lot of times when a foreign investor is considering a site they consider Korea, China, sometimes Japan and other times Singapore. These are the potential sites for investment.
Q: In your new slogan “Global link to success,” the idea of Korea as a gateway market is encouraged.
A: I think the key word in the slogan is “link” because I associate the “link” to the FTA platform that we have. And we’re unique in the sense that we have FTA agreements with the US, EU, and China. As far as I know, globally there’s no other country that have all three. So we can use that link to attract foreign investment.
Q: This slogan seems brilliant to me because for years now some people have argued that Korea is too small to compete with, say, China, but the fact is that Korea’s market is not insignificant. So basically you’re leveraging that – the idea of a middle ground market as a market in and of itself?
A: We need to leverage that. A lot of the foreign investment companies that are here also mention that Korea is not a big market but that it’s not small, either. It’s sizeable and the consumers are mature enough for them to use Korea as a test market. These companies – the US or EU companies – can come here, manufacture their goods and go to China because they don’t have agreements with China. They can use our market as a gateway or home base away from home. The slogan makes a connection with the FTA platform and that’s what we want to promote.
Q: And again, it goes back to these different Asian governments making these economic zones, and this slogan places Korea right in the center of that.
A: Right. Also, if you look at any successful corporation or any agency, they are somehow linked to a catchy slogan, and Invest Korea never had any specific identifiable slogan. So I think this could be the beginning of such a slogan.
Q: And the other arms of KOTRA are also free to add their own endings to that, right?
A: Sure. They could say “Global Link to Trade” or “Global Link” to whatever. It has the flexibility to be used in all sorts of ways.
Q: Are there any policy changes you’d like to see that would facilitate your work?
A: It’s not necessarily policy but as I mentioned earlier, last year we reached a milestone, going over $20 billion FDI, so, rather than exclusively focusing on the dollar amount we need to perhaps also look at the quality of the investments because Korea in general has always been merit or results-oriented. They like to outdo previous records. We reached a fairly decent number, and now we need to look at what goes in those numbers and perhaps go after the sectors that we really need to have in Korea.
Q: Which would be?
A: As I mentioned, Bio, for one. I o T for another. And maybe 3D printing. The auto industry is going through a technology revolution with their driverless vehicles. So I think those are areas we can focus on.
Q: So when you seek foreign investment in Korea, let’s say 10, 20 years down the line, because you talk about the quality of the investment, not just the sheer number, what do you see, or what would you like to see?
A: Well, I think we can see it even in the activities that we are doing now, in terms of promotion, of going abroad. In the past it was more about our country – where we’re trying to sell Korea, telling them why Korea’s the right place; now I think we’re doing more promotion activities that are industry focused, where the investors are smaller in number but they’re interested in one or two sectors, so it’s more of an audience specific promotion rather than country wide promotion. I mean, Korea is relatively well known on the global stage now, so we need to do less of country promotion and more of industry promotion.
Q: You’ve mentioned previously that one of the biggest factors in whether a business decides to open shop in Korea is the idea of profit – how much profit that can be made. But once they know profit can be made what are the secondary considerations?
A: Profit of course is in everyone’s minds when they’re doing business. For investors when they go abroad, though, the first thing they want to make sure is “does the place have enough qualified people that I can hire?” So labor is a key issue. They also ask “Is there a market?” “Can I sell my product there?” “Does the IT work properly?” “ How is their infrastructure?” And within the region, Korea stacks up well by these measures. Of these, probably the biggest consideration is labor, and we have a well-educated population with a very strong work ethic. If you give them a responsibility, they try their utmost to deliver.
Q: Do you think they’re creative?
A: In fact, Korea was recently recognized for being the most innovative country to do business in. The way of education is different between the US and Korea. Korea is more test and memorization driven whereas the US is more creativity, class participation and what not. It’s the way they’re educated, which makes some people suggest that maybe Koreans aren’t as creative as, say, Americans. But the ranking I just mentioned was made by Bloomberg. And innovativeness means creativity. Besides, if Korea wasn’t creative, I don’t think we would be this advanced in the IT field.
Q: Do the foreign business leaders bring this up at all in your discussions?
A: No, not really. They’re pretty happy with what Korea has to offer. And they think that whatever positions they’re looking to fill, Korea has ample qualified labor force here. One of the key criteria for why foreign investors are happy here is that they are able to find good labor.
Q: There is criticism even within Korea about the Korean education system but if you look at what Korea was like 50, 60 years ago and you look at it now, there’s obviously something about the education system that does work. What do you think it is?
A: I think it instills hard work. It instills the fact that if you work hard and the results show then you are rewarded for that. Foreign companies appreciate this work ethic because when they hire someone at home or in other countries, they can feel the difference, I’m sure.
Q: Would if be accurate to say that you are focused on China?
A: China is a recent focus. Our traditional markets have been US, EU and Japan. We are continuing to look at those three markets but since China has emerged globally as a big investor abroad, and with the recent FTA agreement with China, it puts us in a positive position in terms of trying to attract investment from that country.
Q: How important do you think national image is to foreign investment?
A: National image is in a way everything. It’s very important. How they perceive Korea – it could be a key factor in the early stages of whether they want to invest in Korea or not. But more important than this is when potential foreign investors talk to business leaders from their own countries who are already doing business in Korea. If they find us very business friendly and everything’s going well then that itself is a big plus for us in promoting Korea. So in a way it’s word of mouth that’s more important.
Q: Do you have a network system for businesses that are already established here?
A: We have various annual meetings with them as well as with my colleagues in the ombudsman team to listen to specific issues or grievances, and I frequently visit various Chambers of Commerce and meet with the heads of the Chambers. We do everything we can to smooth out their issues.