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Foreign-invested Firms See Gains

Foreign-invested Firms See Gains

Foreign-invested companies operating in the country posted solid sales gains in 2008 and enjoyed higher productivity than their Korean counterparts, a government report showed yesterday.

The Ministry of Knowledge Economy report, which focused on 2,300 companies with investments exceeding $500,000, showed combined sales reaching 233 trillion won ($205.7 billion) in the cited year, or 13.1 percent of the national total. This marks a 23 percent on-year gain from 189 trillion won worth of sales calculated for 2007.

Under Korea’s corporate guidelines, a foreign-invested firm refers to a company in which overseas investors own more than 10 percent of the business. In 2008 there were about 16,000 foreign-invested companies in the country.

Labor productivity - measured by per capita value-added output - reached 113.2 million won for foreign companies, contrasted with just 66 million won for local firms, according to the report.
The findings also showed that foreign-invested companies had 318,000 workers two years ago, compared to 282,000 in the previous year and 253,000 in 2006, indicating that these firms have steadily increased the number of employees. The total number of employees of these companies accounted for 5.9 percent of the country’s workforce.

The latest report, however, said the global economic crisis brought on by the collapse of Lehman Brothers in late 2008 caused total exports by foreign-invested companies to fall to $52.3 billion from the previous year, when numbers topped $54.3 billion.

The report also showed that foreign-invested companies gave out more dividend earnings to shareholders than their Korean counterparts, and had lower research and development intensity. The R&D intensity of foreign companies stood at 0.84 of sales earnings spent on research vis-a-vis 1.71 for local firms.

The survey said 59.1 percent of the firms’ investments were aimed at the local market and consumers, with 87.8 percent of companies saying local ventures on average performed better than similar investments made in other Asian countries.

Meanwhile, foreign-invested companies brought in the bulk of the raw materials and components from abroad for manufacturing and reprocessing in the country.



Source: The JoongAng Daily (March 22, 2010)