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Why Do Chinese Service Firms Come to Korea?

Song in hyeok 1 Wang Peng 2 Myounggu Kang 3

1서울시립대학교 도시공학과 석사과정
2강소대학교
3서울시립대학교

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ABSTRACT

Nowadays the Chinese FDI into Korea has been rapidly increasing since 2009 and the investment of 1.77 billion dollar in 2015 ranked second after United States. Existing literature identified the four main motives for FDI, efficiency-seeking,resource-seeking, knowledge-seeking and market-seeking. Yet, it is limited in explaining the Chinese FDI into Korea. Where wage is high, resource is limited and market is relatively small. This study examined why Chinese FDI comes to Korea with panel data. By the number of firms, almost 80% of Chinese FDI in Korea is non-business service industry, such as wholesale, retail, logistics, food, accommodation, etc. Chinese FDIs in Korea increased as Chinese people in Korea increased. The cross-sectional time-series FGLS regression analysis confirms that areas with many Chinese people in Korea induce Chinese FDIs. Chinese FDI firms are more competitive in language and culture in the business with Chinese people in Korea than Korean firms. Up until today, the Chinese FDI in Korea simply follows a new market of Chinese people in Korea and doesn’t show strong economic interactions with Korean economy.

Citation status

* References for papers published after 2023 are currently being built.