Targeting China Money
KB Kookmin Bank opens a foreign direct investment (FDI) center in Gangnam-gu, Seoul early next month in order to provide foreign enterprises with forex services, legal and accounting consulting, investment services, etc. The bank organized a team serving the same purpose last year and the team has tripled the bank’s FDI attraction in a year.
Hana Bank set up its International Private Banking Center (IPC) in the same region last year and is planning to establish additional IPCs in Busan and Jeju in the first half of next year. The IPC of Hana Bank targets super-rich Chinese customers in particular. Shinhan Bank, which opened an FDI center early this year, is mulling over setting up more of it and Woori Bank is going to open a similar center targeting Chinese customers in early September this year in Jeju.
These South Korean banks’ efforts are because Chinese enterprise customers ensure sizeable profits. In general, foreign enterprises’ direct investment in South Korea is carried out in the form of stock purchase, participation in paid-in capital increase and the like. During the course, currency exchange is required along with legal and accounting services and these services can result in brokerage and currency exchange fees.
Nowadays, China’s investment in South Korea is on the increase mainly in the cosmetics, entertainment and IT industries as well as real estate. Some banks are concerned, though, about a potential downturn with the South Korean government having decided to accept the THAAD system and the Chinese government opposed to the decision.