Multinational firms flocking to Korea

BASF, GE and Simens chose Seoul as main Asian bases

By Cho Mu-hyun

Korea is emerging as a global hub for multinational companies expanding into Asia, recent moves by high profile company show.

Foreign money has traditionally chosen Southeast Asia because of its favorable exchange rates and regulations, and especially as a bridgehead into China, the world’s second largest economy.

But as a base for well-performing global conglomerates, and with its increasingly recognized intelligent workforce, Korea has become the top choice for global giants as a base of operations for the region.

This year, three major players have set up their Asian headquarters in Korea.

Most recently, German-based BASF, the world’s largest chemical firm, said it would establish a regional head office here to take charge of its electric material business, which it has chosen as its next growth engine. It will also launch a research center for the business here.

BASF Korea CEO Shin Woo-sung told reporters late last month that setting up the research center showed the company’s commitment to Korea and said the country was important for its plans in the Asia Pacific.

BASF has numerously partners based-here, not the least Samsung and LG Group affiliates involved in electric material and chemicals.

U.S.-based General Electric (GE) also announced last month that it will headquarter its planned offshore and marine business in Korea.

“We also considered other competing countries but finally chose Korea for GE’s offshore and marine businesses as the country offers competitive advantages from a global perspective,” GE Korea CEO Christopher S.W. Kang told reporters.

This is the second time that the company has chosen another country to host a business division headquarters. In 2011, it headquartered its mining business in Australia.

The nation has some of the largest and most sophisticated shipyards in the world owned by conglomerates Samsung, Daewoo and Hyundai. Though shipbuilding is having trouble maintaining growth due to lowered demand abroad, these companies, like GE, are considering offshore plants as their next cash-generator in the coming years.

GE already has partnership with theses conglomerates, but has up to now only provided engines, power generators and other parts for ships. It is planning to build shipyards, facilities and a research center here.

Kang said the company was prepared to hire local talent.

Siemens, the German company with global leadership in electric engineering, is planning to announce that it will use Korea as its base of operations in the Asia Pacific region.

Though not a big announcement, French car maker Renault also announced last month that it has upgraded the status of the Samsung Renault design center here as its head office to supervise all others in Asia.

All the businesses the multinational companies are showing interest in have been the central backbone of the export driven Korean economy ― electronics, shipbuilding and power generators. Korea now has globally recognized brands in these sectors with trust built over time with its clients.

The companies headquartering here are most likely looking for close partnerships to increase their competitiveness in the area.

A GE Korea official said that companies here have a long track record of on-time delivery and good quality control, and that is enough to draw foreign investment, despite the comparatively small size of the market here.

Korea’s technological advancement was also a huge plus over competing countries in the region. Kang said that in shipbuilding, Korea’s technology was enough to win over China’s large market and plentiful resources in being chosen as GE’s headquarter business.

Shin also said, “The Korean market is small and there are no resources, but it has the people.”