Busan Vice Mayor Cho Don-young shares knowledge on inviting foreign investment

Cho Don-young, Busan vice mayor for investment policy / Korea Times photo by Shim Hyun-chul

By Kim Ji-soo

The seaside city of Busan is largely known for its port logistics, good people and international film festival. Lately, it has made news after being named the host for Microsoft’s new data center, which will be built to better service users of Office 365 and the cloud platform Azure.

Microsoft Korea said that it will build two data centers, in Seoul and Busan respectively, in the near future.

One of the key man behind the move is Cho Don-young, vice mayor of Busan who is also in charge of investment policy. He and the city government are working to turn the city of 3.6 million people into a viable Northeast Asian investment hub.

A long-time international salesman, Cho, 68, had served as vice president of Renault Samsung Motors for nine years from 2001 through 2010. In August 2010, he was appointed as Busan’s new investment chief. And before that, the graduate of Hankuk University of Foreign Studies and the University of Southern California graduate had served extensively in the Korea Trade-Investment Promotion Agency (KOTRA) including its Washington office. In the wake of the 1997-98 Asian financial crisis, he became the first chief of the Korea Investment Service Center, which is the predecessor of Invest Korea.

Officials from the Busan city government and Microsoft pose together in this file photo after agreeing to build a data center in the southeastern city. / Korea Times file

“It helped that the Ministry of Trade, Industry and Energy designated Busan as the clouding hub,” Cho said of the city, where 90 percent of submarine cables flows out from Busan.

“Busan is also the hub of Northeast Asia, being only two-and-a-half hours away from major cities. It is safe, and has excellent climate, with an annual average of temperature of 15 degrees Celsius,” he said.

In addition to these factors, the huge potential of the Northeast Asian market, which accounts for 20 percent of the world’s GDP and 25 percent of the world’s population, helps make Busan an ideal host city for IT firms. Koreans firms LG CNS and KT, for example, already have data centers there.

For Busan, Cho said that while the entry of global firms in Busan may not necessarily create jobs, it has other significant marketing.

Also, he pointed out the ripple effects particularly on the city’s upstream and downstream industries. The upstream industries refer to those that manufacture the machines needed in a data center, while the downstream industries refer to vendors and the big data industry, Cho said.

Based on his 30 years of experience, he believes that the most important factor when recruiting foreign investors is to convincing them there is a market to sell their products. He said the secondary factor is ensuring quality of life.

“Nowadays, all other countries all offer incentives or subsidiaries, so we need to show the investors that there is a market — this is of foremost importance. Then secondarily, we need to ensure that the city or place in which they will invest has a good quality of life,” Cho said.

The southeastern city beat out Malaysia and Japan in overall standing. He said the competition to attract global firms was more between nations rather than cities, as much is at stake and various factors are considered.

Cho said his know-how of winning the trust of any negotiating partner, communicating in their language, and understanding their cultures, are important in international negotiations.

“Basically, in any international business negotiations, once you make a promise, you have to keep it, in order to build trust. And then you also have to provide accurate information,” Cho said.

In talking with Microsoft, Cho said that the Busan Metropolitan City created a one-stop service team.

He said another difficult challenge in negotiating with the international businesses is ensuring confidentiality up to the minute when a deal is finalized. He said that the Korean media tend to be very fast in detecting that some new deals may be in the making that are not yet publicly known, and this tendency created difficulties in his negotiations with Microsoft.

“There are many such instances,” said Cho said. “I could write a book,” he said.

To promote Busan, — which he considers a well-kept secret of a jewel in Northeast Asia — he consistently networks with foreign business chambers in Korea such as the American Chamber of Commerce and the European Chamber of Commerce to anticipate which firms might be looking to make inroads into the country.

In fact, possessing information about who or which firm might be interested in investing in Korea is crucial, he said. Immediately after he came aboard the Busan city government in 2010, he had Busan city government sign memorandum of understandings (MOUs) with these chambers.

Cho also enjoys personal relationships with international business moguls such as Las Vegas Sands Group Chairman Sheldon Adelson and Dalian Wanda Group Chairman, Wang Jianlin, and has leveraged these relationships in helping the city attract businesses and investments, the former in particular for casinos, and the latter for film-related, fund investments.

However, he said, Busan still needs to build some infrastructure to accommodate the new businesses, such as an international airport that operates round-the-clock, Cho said.

He said one day, that Chairman Adelson requested for one of his private jets to land one day at 11 p.m., but this request couldn’t be fulfilled because the nearest airport, Gimhae, airport does not operate 24 hours to noise issues.

Cho believes that such requests should be accommodated in order to attract more international businesses. In late June, the central government is expected to decide on whether to open such an airport in Gadeok near Busan. Gadeok is competing with Milryang, South Gyeongsang Province.

“Busan is a logistics hub, but it is looking to become a finance hub, specifically in derivatives and ship financing. It has an active meeting, incentive, convention and exhibition (MICE) industry, and who does not know Busan International Film Festival?” said Cho said.

“In terms of tourism, it has mountain climbing and marine sports, and has a significant source of manpower with its array of 27 colleges,” he said, summing up the reasons the Northeast Asian hub city should be watched by international investors.