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The Success and Risk Factors of Korean Firm's Foreign Direct Investments in China

JEONGTAEBEOM 1

1숙명여자대학교

Candidate

ABSTRACT

China has long influenced Korea both politically and economically all through its history, partially due to their geographical proximity. In spite of its later adoption of market capitalism, China has almost caught up Korea in business and economic growth. Now just facing the 30th anniversary of the economic amity between Korea and China, China has become the biggest importer of Korean products, and Korea ranks as the second biggest importer of chinese products at the same time. The recent trend of their economic cooperation show a vivid change, that is the remarkable growth of Korean firms’ direct investments in china, escaping from simple trade of each products. China could provide abundant low-waged labors as well as world largest markets to Korean investors, who have long suffered from tough labors requiring high wages and more welfares. Despite all the merits of China as a host country, China still have many political risks, and renders important uncertainties to Korean firms, caused mainly from their very unique cultural and social characteristics. This paper suggests the results of strategic analyses on the success and risk factors for Korean firms who are about to launch businesses in China as the foreign direct investors. The results include the major features on the business location, operation and marketing strategies of three successful Korean firms and two failures. The paper also provides eleven practical instructions which could guide Korean firms to beat the Chinese market. All eleven instructions commonly stress the importance of localization strategies. Korean firms must earn the trust of Chinese people to win the Chinese market.

Citation status

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