Increases, Decreases
Over the past five years since 2018, Samsung has reduced the number of its overseas subsidiaries by approximately 100, whereas Hanwha has increased its number by more than 400, leading the group with the most overseas entities. Particularly, Samsung has actively reduced 22 of its subsidiaries in China during this period, indicating a decisive move away from the Chinese market.
According to an analysis by the Korea CXO Research Institute on the “Status of Overseas Subsidiaries of 82 Domestic Groups in 2023,” there are 5,686 overseas subsidiaries spread across 129 countries that are effectively controlled by 82 domestic groups through substantial ownership. This number is 399 more than the 5,287 overseas corporations operated by large enterprise groups designated by the Fair Trade Commission last year.
Particularly, the number of domestic subsidiaries of the 82 groups is 3,076 this year, whereas the number of overseas subsidiaries is 2,610 more.
Of the groups surveyed this year, Hanwha has the most overseas subsidiaries with 739. This is an increase of 102 from the previous year’s 637.
In particular, Hanwha has increased the number of overseas corporations established in the United States from 198 to 241, a rise of 45, compared to last year, according to the public announcement. It was also found that the number of overseas subsidiaries established in Spain has increased from 83 to 105, an addition of 22.
Next to Hanwha, SK Group has the most overseas subsidiaries, with 598 this year. This is 57 more than last year’s 541, and considering the 367 in 2021, it reflects that 231 new companies have been established abroad in two years.
Samsung is third with 566 subsidiaries, trailing Hanwha and SK. Although Samsung had the most overseas subsidiaries among domestic groups until 2021, it has relinquished that title since last year.
Specifically, Samsung had as many as 663 overseas subsidiaries in 2018 but has consistently decreased this number year by year: 626 in 2019, 608 in 2020, 594 in 2021, 575 in 2022, and continued reduction until last year. A total of 99 overseas subsidiaries have closed over the past five years since 2018.
Among foreign countries, Samsung has reduced the number of its subsidiaries in China from 87 in 2018 to 65 this year, a decrease of 22 in five years. In the United Kingdom, which has been in the spotlight due to the Brexit issue, the number of corporations has decreased from 47 in 2018 to 32 this year, a withdrawal of 15 in five years.
Following Hanwha, SK, and Samsung, the groups with the most overseas subsidiaries this year were found to be CJ (393), Lotte (204), GS (156), POSCO (142), and Naver (105).
Looking at the overseas subsidiaries by country, the United States recorded the most with 1,321 this year, an increase of 152 from last year’s 1,169. The proportion of U.S. corporations among all overseas subsidiaries also increased from 18.8% in 2021 to 22.1% last year and 23.2% this year, up 1.1 percentage points, confirming the importance of the U.S. market for domestic conglomerates.
Next to the U.S., there are as many as 845 overseas subsidiaries operating in China. However, unlike the U.S., there was a subtle difference. Although the number of overseas subsidiaries in major corporate groups increased by about 400 this year, the number of corporations in China only increased by 5. The proportion of overseas subsidiaries established in China among all overseas subsidiaries also decreased by about 1 percentage point from 15.9% last year to 14.9% this year.
In 2021, there were 1,037 total subsidiaries in China (including Hong Kong) 152 more than in the U.S. However, last year, U.S. corporations (1,169) overtook China (including Hong Kong) (994) by 175, and this year, the gap widened with 322 more in the U.S. than in China (including Hong Kong). China remains an essential market for our major companies, but its popularity seems to have waned recently.
Specifically, the number of corporations established in Hong Kong decreased from 170 in 2020 to 163 in 2021 and 154 last year. It remained the same at 154 this year, indicating that no new companies were established in Hong Kong.
Contrary to Hong Kong, the number of companies controlled by major domestic groups in Singapore is steadily increasing. The number of foreign subsidiaries established in Singapore was 167 in 2021, but increased to 186 last year, and this year grew to 206, with 20 new companies added within a year. This trend can be interpreted as a sign that major South Korean companies prefer Singapore over Hong Kong as an Asian financial hub.
According to this year’s survey, after the U.S. and China, Vietnam had the third-largest number of foreign subsidiaries established. In the past year, the number of overseas subsidiaries of domestic groups in Vietnam increased from 268 last year to 299 this year, adding 31 new company signs. This underscores the significance of Vietnam as both a production base and a strategic location for our companies to target the Southeast Asian market.
The survey found that the countries with the most foreign subsidiaries this year were Japan with 210 (up from 208 last year), France with 190 (181), Indonesia with 187 (166), India with 154 (142), and Spain with 140 (116). In Ukraine, where the conflict continues, there were 12 subsidiaries both last year and this year, while in Russia the number remained consistent at 63.
In this year’s survey, the number of foreign subsidiaries established in tax haven regions mentioned by the OECD and IMF, such as the Virgin Islands, Cayman Islands, and Marshall Islands, was 107, similar to last year’s 106. In countries classified as tax avoidance jurisdictions such as Luxembourg and Labuan, the number increased to 666 this year, up from 645 last year. Out of more than the 5,600 subsidiaries that domestic major companies have established overseas, 773 (13.6%) are operating in countries that are favorable for reducing or avoiding tax burdens.
Oh Il-sun, director of Korea CXO Research Institute, stated, “The fact that domestic major companies are establishing many foreign subsidiaries in various countries can be very positively evaluated in terms of actively targeting the global market.” However, he also pointed out a regrettable aspect, stating, “Establishing factories and companies in other countries may somewhat reduce the opportunities to create jobs in our country.”