Chinese Investment
China, which has become one of the three largest investors in the world, is increasing its investment in Korea at a rapid pace.
According to global investment market reports, China ranked third in the world in terms of investment amount last year. The amount increased from US$88 billion to US$101 billion between 2012 and 2013, whereas that of the United States, which topped the list last year, decreased from US$367 billion to US$338 billion during the same period. The United Nations Conference on Trade and Development (UNCTAD) recently predicted that China’s overseas direct investment (ODI) would exceed foreign direct investment (FDI) in China within two years.
At present, China’s investment in Korea is just 0.5 percent of its total investments. However, the investment guarantee pact between Korea, China, and Japan that went into effect in May this year and the Korea-China FTA to be signed in the near future are expected to cause the amount to soar. China’s investment in Korea during the first half of this year, in fact, reached US$780 million to already surpass the yearly total of US$480 million for 2013. The establishment of an RMB clearing bank and other policy changes are likely to bolster the trend as well.
Nowadays, China is decreasing its investment in Europe while increasing those in Asia, Africa and Latin America. Its investment in Europe dropped by 15.4 percent to US$5.95 billion between 2012 and 2013, but those in Latin America, Oceania, Africa, and Asia went up by 132.7 percent, 51.6 percent, 33.9 percent, and 16.7 percent, respectively. At the same time, private-sector companies rather than state-run enterprises are making inroads into more and more countries. For instance, TenCent invested US$500 million into CJ Games in March this year, and Alibaba is planning to enter the entertainment, game, and e-commerce sectors of Korea.
“China’s investment in Korea revolved around the real estate market until the recent past, but the focus is shifting toward the culture and fashion industries these days,” a KOTRA representative explained, adding, “Some Chinese financial companies expressed their desire to acquire Korean fashion companies and digital content providers, and co-produce movies during the IR sessions in Beijing and Shanghai in August.”