South Korean Companies Should Be How To Expand Direct Investment In China

This thesis aims to seek for effective and efficient methodology for Korean FDI in China, which has been maintained since establishment of diplomatic relationship between two countries, in accordance with rapidly changing investment environment in China.China can be divided into major 8 regions such as Northeast, Northern Coastal, East Coastal, Southern Coastal, Middle Yangtze River, Middle Yellow River, Southwest and Northwest Region in accordance with economic development level and regional connection.It is true that investment environment varies in each region. The region which has the best investment environment was East Coastal Region and it was more advanced in overall position and conditions than any other region. Plus, South Coastal Region which has invited various FDI until now has superior open environment, and Northern Coastal Region where Korean enterprises have concentrated their investment has the market of large scale and superior consumption infrastructures. Middle Yangtze River Region can be considered to have potential market, productive environment and superior infrastructures. Moreover, investment environment of Southwest and Northwest Region where have lagged behind the other regions in spite of resource advantages are getting better thanks to the Large Development on Western Region in China. That’s why this region is expected to be an attractive investment target.Korean enterprises have kept on investing in China since establishment of diplomatic relationship. As for its characteristics and changes, investment on China is concentrated on manufacturing industry and small and medium enterprises. Also, their investment is concentrated on specific regions such as Tianjin, Shandong and Liaoning in regional aspect. Those characteristics showed some changes on them starting economic crisis of Korea in 90s. Investment volume of large enterprises got increased and cost-cutting investment trend using low labor and wage had changed into domestic market investment as time went by.With regard to these changes, graded analysis on determinants of investment position was carried out using investment data of Korean enterprises in each region so that how motives of investment on China has changed and transferred can be confirmed. As a result, the fact that low wage of China is no longer an important determinant of investment for Korean enterprises passing 2000s, can be confirmed. On the other hand, domestic market became more important investment factor as time went by. This indicates that investment on China is transferred into market-oriented investment from cost-cutting investment in early stage.Investment on China of Korean enterprises in the future shall be focused on exploring domestic market of China. Plus, strategy in which the difference of large enterprises and small and medium enterprises is considered should be established. Being concentrated on manufacturing industry should be fixed so that investment can be extended to various industries. Difference of investment environment in accordance with region should be considered and expected environmental change should be supported by government.