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By Lee Kyung-min
More than four out of five Korean firms in China find the local investment conditions worse than 10 years ago and believe that they are being discriminated against by their Chinese business counterparts, a survey showed Wednesday.
According to a survey released by the Federation of Korean Industries (FKI) of 131 companies with over 10 years of business presence in China excluding financial services firms, 85.5 percent said their investment conditions have deteriorated compared with a decade ago, with only 6.9 percent indicating otherwise.
About 63.4 percent said they agreed with the statement that conditions have worsened, while 22.1 percent said they have deteriorated significantly.
The combined 85.5 percent is 12.4 times more than the 6.9 percent that said conditions have improved.
Over a third said the deterioration is attributable to Chinese government risk (38.1 percent). This was followed by discrimination between Chinese firms and foreign firms (20.5 percent), the deepening U.S.-China trade feud (18.2 percent), tightening environmental regulations (15.2 percent) and production cost increases (8 percent).
Seven out of 10 Chinese firms, or 70.2 percent, said they have an unfavorable view on the impact of the Chinese government's recent tightening of regulations to realize "joint wealth," a state-led mandate seeking to curb the wealth of large firms, thereby advancing what the ruling party considers a fair distribution of wealth.
The Chinese government has introduced a variety of regulations recently to control the big tech, cryptocurrency, private education and gaming industries.
Some 80.9 percent of the respondents said they expect the "joint wealth" policies will be strengthened over the next five years. About 52.7 percent said they will be strengthened slightly, while 28.2 percent said they will be strengthened greatly.
A total of 81.7 percent of the respondents said they are subject to discrimination compared to the preferential treatment shown to their Chinese counterparts, with nearly half, or 49.6 percent, saying they are subject to stricter licensing rules. This was followed by business regulations including fire and overall safety inspections (21.5 percent) and environmental regulations (14 percent).
When asked where they would like to relocate their China-related businesses, over two-thirds, or 67.2 percent, said Southeast Asia would be ideal. Only 13 percent of respondents said they would consider reshoring to Korea.
One in three saw their annual sales decline from 10 years ago, mostly due to severe competition in the Chinese market.
Some 41.2 percent said a state visit of Chinese leaders to Korea would greatly enhance bilateral relations and thus help Korean firms in China.
This was followed by prompt settlement of the Korea-China free trade agreement concerning service and investment (24.4 percent) gradual promotion of green policies with market condition developments factored in (21.4 percent) and promotion of regional trade agreements advanced by prompt enforcement of the Regional Comprehensive Economic Partnership and joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (13 percent).
"We hope the leaders of Korea and China promptly organize a state visit to resolve difficulties experienced by local companies on the occasion of the 30th anniversary of the establishment of Korea-China diplomatic relations next year," an FKI official said.
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