The Study On Strategy Of Korean Feed Companies' Fdi In China

Recently Korean feed manufacturing companies has made or been considering FDI outward actively in an effort to overcome the limit of Korean domestic market which only has had 0.62% of annual average growth rate in terms of production since year 2000 due to the trade liberalization of Korean livestock products market, frequent outbreak of animal disease and decrease of livestock numbers.Since year 1991 Korean feed companies began investing overseas and most of the investment has been made in China which is near to Korea and has high growth potential. Not many companies investing in China, however, have been successful due to high competition and lack of understanding local market situation.Thus, this paper intends to find out successful investment strategies by means of analyzing China's feed industry and foreign direct investment environment and doing case study.Firstly, this thesis hereby reviews the FDI theory, motives and types and finds out the relationship between FDI theory and Korean feed manufacturing industry by using Dunning's Eclectic theory.Secondly, by analyzing Chinese feed industry does this paper introduce current status, some problems and potential of Chinese feed industry. Thirdly, this paper covers the main changes of Chinese Corporate Tax Law and Labor Contract Law that have a large influence on FDI in China and mentions that the recent policy changes bringing repealed tax incentives, increase of labor cost and labor market inflexibility could be a burden on Korean feed companies in investing in China.Fourthly, this thesis handles a case study about Rainbow Feed Co. of TS Group which is one of the earliest companies in investing in China and is regarded as the most successful Korean feed company in China and finds out initial problems and major success factors as well as its entry and marketing strategy.Lastly, this paper suggests some successful strategy for Korean feed companies planning to invest in China based on problems and success factors of Rainbow Feed Co. as follows.①Concentrate on market segment with differentiation;②Focus on quality and safety;③Utilize sales channel through local distributors effectively;④Establish Investment strategy from the long-term perspective;⑤Consider the counterplans about changing Chinese foreign investment policies and labor law;I hope that Korean feed companies'FDI in Chinese feed industry can be a win-win game which provides a good opportunity for Korea to expand market using its technology and management skill and for China to upgrade its feed industry.