BUSAN < invest Korea

According to Yonhap News,

Korean manufacturers, who moved abroad for cheap labor, are making a move to return to Korea.

Busan-si (City) reported on February 24 that Korean manufacturers, who moved to China, are asking for information about appropriate business locations in the Busan area, due to rising management costs caused by increasing labor costs.

Two Korean companies, including a shoe manufacturer so-called “G Company” currently located in Qingdao, China, are currently discussing their relocation plans with Busan-si (City) and are searching for suitable business sites in the Keumsa Industrial Complex and the Noxsan Industrial Complex.

A company, which transferred its headquarters from Busan-si (City) to Qingdao in 2005, is presently looking for a 16,000㎡ factory site. It will begin construction as soon as the factory site is secured and will even move its headquarters back to Korea.

Besides that, the Korea Trade-Investment Promotion Agency (KOTRA) is getting inquiries on newly building or relocating factories in the Busan area.

An official from the Busan Metropolitan City Government said, “Due to an increase in business management costs, Korea manufacturers in China are taking into account two options: transferring to another Southeast Asian country, such as Myanmar or Vietnam, where labor costs are lower; or completely turning back to Korea. Especially, shoe manufacturers are trying to return to Korea, where relevant infrastructures are well-equipped.”

Busan-si (City) has decided to sign MOUs with companies wishing to return and strengthen its activities to recommend appropriate industrial sites in the Busan region.

Once Korean companies abroad come back, they will have many benefits, such as corporate income tax reduction and local investment encouragement subsidies.

When it comes to local investment encouragement subsidies, companies that will return to Korea can receive up to 40 percent of land price and 10 percent of their investment in equipment.

As for corporate income tax, companies that will completely move their overseas operations to Korea will be given a 100 percent tax exemption for the first five years and a 50 percent tax exemption for the following two years.

“Korean companies in China are seriously considering their comeback to the homeland since the Chinese government intends to increase workers’ wages by 11 percent and improve working conditions significantly by 2015. We are seeking various supporting measures to attract Korean companies abroad to this region,” said a Busan-si (City) official.

Source: Yonhap News (Feb. 24, 2013)

** This is the translation of a Korean article.