P. 1
Logistics in Korea

Logistics in Korea

|Views: 5,569|Likes:
Logistics in Korea - Emerging Investment Opportunities
Logistics in Korea - Emerging Investment Opportunities

More info:

Published by: Republic of Korea (Korea.net) on Feb 21, 2010
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

07/16/2013

pdf

text

original

Korea International Trade Association Korea International Logistics Council

Fl. 46, Trade Tower, Samseong-dong, Kangnam-gu, Seoul, Korea TEL: 82-2-6000-5114 FAX: 82-2-6000-5460 Website: www.kita.org

Logistics in Korea

Korea Trade-Investment Promotion Agency
13, Heolleungno, Seocho-gu, Seoul, Korea TEL: 82-2-3460-7114 FAX: 82-2-3460-7777 Website: english.kotra.or.kr

Logistics in Korea
Emerging Investment Opportunities

Emerging Investment Opportunities

ⓒ 2009. Ministry of Land, Transport and Maritime Affairs (MLTN).

Invitation to Korea
ortheast Asia (NEA) is emerging a hub of the global economy thanks to strong growth in its leading economies such as Korea, China, and Japan. The significance of its role is rising day after day. It is also the center of international trade as the largest manufacturing base, and one of the three largest economic blocs alongside Europe and North America. Korea stands at the heart of this massive market that boasts a population of 700 million and GDP worth 5.3 trillion dollars within 1,200 km. We are now the 13th largest economy in terms of trade volume thanks to our geographic advantage. One of our major export items is vessels that are mainly sold to EU members such as Germany, France, the UK, and Spain. Cell phones, wireless communication devices, electronics (manufactured by companies including Samsung and LG), automobile, and steel plates are also popular export items. Our main import items are oil, natural gas, electronics, and agricultural products from the EU, Middle East, and North America. Our goal is to create national wealth through the logistics industry utilizing the advantageous location right between China and Japan. To this end, we are developing a business-friendly environment and fostering logistics as an advanced service industry leading the creation of addedvalue. World-class logistics companies operating in our Incheon International Airport and the Port Hinterland Complex of Busan New Port include DHL, Schenker, Tesco, Steinweg, Mitsui&Co., LTD., Daiei Shipping. They are carrying out successful businesses in the areas of assembling, processing, packaging, and labeling. Currently, the global logistics market that had posted continuous growth in the past is suffering from the recession around the world. However, the economic crisis can be turned into an opportunity to identify new growth engines through drastic investment strategies. The Korean government is striving to minimize logistics cost and raise business efficiency of multinational companies that have invested in our market. To this end, we are supporting them in various ways such as building infrastructure including hinterland complexes, and offering incentives. ‘Logistics in Korea’ provides guidance to multinational companies on Korea’s logistics infrastructure and investment climate. It is an introduction of Korea’s logistics industry and investment procedure for companies and investors around the world. I hope the guidebook contributes to efficient investment decision-making and success of companies operating or interested in Korea. June 2009

N

Chung, Jong-hwan
Minister of Land, Transport and Maritime Affairs Republic of Korea

CONTENTS
Invitation to Korea I. Welcome to Korea
Korea at a Glance
General Information General Economic and Social Information

1

Free Trade Zones
What are Korea's FTZs? Industrial Complex Free Trade Zone Airport · Port Free Trade Zones

88 93 97 102 104

6 10

Advanced IT, HR Infrastructure for a Logistics Hub The Logistics Industry in Korea

II. Gateway to Northeast Asia
Korea, the Logistics Hub of Northeast Asia Sea Transport
The Port of Busan The Port of Gwangyang The Port of Incheon The Port of Pyeongtaek · Dangjin The Port of Ulsan The Port of Pohang Other Seaports

III. Business Opportunities in Korea
16

Competitive Business Models Success Stories
Case 1~4 (Sea port based) Case 5~8 (Airport based) Case 9~10 (FEZ, FTZ port based)

110 128

21 28 32 36 38 41 42

IV. Foreign Direct Investment in Korea
Overview of FDI in Korea
146 154 157 172

Air Transport
Incheon International Airport Gimpo International Airport Gimhae International Airport

47 54 55

Government Policy and Organization Foreign Investment Procedures and Incentives Living Environment in Korea

Rail Transport
Domestic Network Trans Siberian Railway, Trans China Railway, Trans Korean Railway

57 59

Land Transport
Expressway and Domestic Network ICDs and Distribution Centers Gyungin Waterways Coastal Transport

Appendix
64 67 70 72
Major Logistics Companies in Korea Foreign Organizations in Korea Logistics Related Organizations in Korea Korean Embassies

206 209 212 214 220 221

Free Economic Zones
What are Korea’s FEZs? Korea’s Free Economic Zones

74 80

KITA (Korea International Trade Association) KOTRA (Korea Trade-Investment Promotion Agency)

I. Welcome to Korea
Korea at a Glance

I. Welcome to Korea

Korea at a Glance

General Information
Korea is a democratic republic. The Constitution of the Republic of Korea states that “sovereignty lies with the people and all powers consequently come from the people.” The current constitution and political system were first promulgated in 1948 after the country was liberated from 36 years of Japanese colonial occupation beginning in 1910. The head of the nation is the President, who is directly elected by the Korean people every five years for a single term. The President represents Korea and is the head of the executive branch of the government. The Korean Peninsula is divided into two distinct political entities and governments. Like Germany, which was formerly divided into East and West Germany, Korea remains split in two as a result of the Korean War. When Japan surrendered at the end of World War II, the country became subject to two competing political ideologies, pro-democracy and pro-communism, each intent on establishing their own preferred form of government. The Korean War broke out on June 25, 1950 and quickly escalated into an international conflict when the Soviet Union and China intervened to back North Korea, while United Nations forces supported South Korea. The war lasted three years until an armistice was declared on July 27, 1953. From that time, Korea has remained divided, with the two Koreas are still technically at war. After the Cold War waned in the 1990’s however, the two countries were ready to commence some limited peaceful exchanges, including high-ranking diplomatic exchanges like the Six-Party Talks, as well as the establishment of the Kaesong Industrial Complex and the commencement of the Mount Geumgang (Diamond Mountain) tourism project. The Republic of Korea has a population of about 48 million people. Its population density is very high due to its small territory (roughly equivalent to the U.S. State of Indiana). Koreans are very eager to provide a strong education for their children, which has contributed to Korea’s success in overcoming its territorial and resource limitations. Today, a large and well educated workforce is one of Korea’s greatest assets. At the same time, however, Korea is becoming a rapidly aging society due to its very low birth rate. Some experts forecast that the birth rate will be only 0.21% by 2020. Foreigners account for nearly 2% of the population, exceeding more than one million people in 2007. Nearly half of all Koreans live near Seoul, which has nearly 11 million inhabitants and is by far the largest city. Seoul is characterized by its many high-rise office and residential buildings. In contrast to the preference in many other countries, most urban Koreans prefer high-rise apartments for their convenient amenities and ready liquidity upon sale. The strong demographic concentration in Seoul and its wider metropolitan area is a result of the rapid migration from the countryside that followed the industrialization and urbanization of the 1960s and 1970s. Industrial infrastructure was built around Seoul while cultural facilities, entertainment & retail, and education were concentrated in Seoul itself. Seoul is also the residence of the majority of foreigners living in Korea.

6

Korea at a Glance

7

I. Welcome to Korea

persevered even in the face of numerous invasions by foreign countries. Korea has largely been a culturally and linguistically homogeneous nation for most of its history. With the recent inflow of laborers from other parts of the world, however, a new more multicultural paradigm is emerging. Korea’s culture differs from that of its neighboring countries. Koreans traditionally considered the cultural heritage of China as fanciful and colorful, while Japan’s cultural heritage is considered delicate and feminine. In contrast to China and Japan, Korea’s cultural heritage is defined by its simplicity and closeness to nature. Korea’s cultural relics coexist with a forest of high-rise buildings, most notably in the capital. Seoul has been the capital city of Korea since its establishment in 1392, and has many palaces like Gyeongbokgung, Changgyeonggung, Changdeokgung, and Deoksugung, as well as royal tombs. Among these, Changdeokgung is a UNESCO-designated World Cultural Heritage Site. Other UNESCO World Cultural Heritage Sites in Korea include Jongmyo (the Royal Shrine), Bulguksa Temple and Seokguram Grotto in Gyeongju, Goryeodaejanggyeong at Haeinsa Temple, Suwon Hwasung, the dolmen sites in Gochang, Hwasun and Ganghwa, and the Jeju Volcanic Island and Lava Tubes. Today, Korea is an industrialized nation with a strong high-tech sector. After the devastation of the Korean War, Koreans leveraged their innate potential to become the 13th largest economy in the world. Possessing both ancient traditions and a strong modern work ethic, Korea continues to be a land of promising opportunities. Today the nation is on the verge of extending its accomplishments from economic development to contributing globally to the prosperity of the Asian continent and beyond.

Korea’s official language is Korean. “Hangul” is the unique alphabet of the Korean language. It was created by King Sejong of the Chosun Dynasty about 600 years ago. Until then, Korea used Chinese characters, which were not directly associated with Korean sounds. King Sejong, the alphabet’s inventor, sought to increase literacy among the populace and ordered scholars to create a simpler phonetic alphabet that would accurately represent the native Korean language, and could be used instead of literary Chinese, a wholly different language that requires mastery of a very large number of characters. “Taegukgi” is the national flag of the Republic of Korea. The white background of the national flag symbolizes brightness, purity and peace, while the “Taeguk” pattern in the center represents the harmony of Yin and Yang in the world. The four corners of the flag are “Geun,” “Gon,” “Gam,” and “Ri,” which symbolize heaven, earth, water, and fire respectively. The most widely known Korean cuisine is “kimchi,” which is a required dish at practically every Korean meal. Although rice is the main staple, as it is elsewhere in Asia, rice is almost invariably accompanied by kimchi. There are countless varieties of Kimchi for each region and household. In addition, there are many kinds of foods made with Kimchi as the primary ingredient. While Kimchi is hailed as the most representative food within Korean cuisine, Galbi (grilled marinated beef ribs) tends to be favored by foreigners. Seasoned Galbi, cooked over a tabletop grill, appeals to foreigners’ tastes, with Suwon being especially famous for this dish. Korea’s history traditionally dates back the founding of “Gojoseon,” the first Korean kingdom, by Dangun Wanggeom in 2333 BC. Since then, Korea’s ethnic identity has survived and

8

Korea at a Glance

9

I. Welcome to Korea

General Economic and Social Information
According to statistics released by the National Statistical Office (NSO), Korea had a population of 48,607,000 and a growth rate of 0.31% in 2008. People 14 and under accounted for 17.4% of the population, people aged 15 to 64 accounted for 72.3%, and people 65 and up accounted for 10.3%. Registered foreigner populations are also increasing. They totaled 850,000 in 2008, accounting for 1.8% of the overall population.
DEMOGRAPHIC TRENDS FROM 1990 TO 2008
Total population Men 1990 2000 2007 2008 42,869 47,008 48,456 48,607 21,568 23,667 24,344 24,416

As of 2007, Korea recorded USD 969.9 billion in GDP (nominal), ranking it 13th in the world. GNI per capita was USD 20,045, up 8.9% from the previous year (USD 18,401). Korea’s economic growth rate was 5%.
KOREA’S GDP, GNI PER CAPITA, ECONOMIC GROwTH RATE
Year 2001 Nominal GDP (KRW, Billion ) 622,122.6 684,263.5 724,675.0 779,380.5 810,515.9 847,876.4 901,188.7 GNI per capita (USD) 10,159 11,497 12,717 14,206 16,413 18,401 20,045 Economic growth rate (%) 3.8 7.0 3.1 4.7 4.2 5.1 5.0
* Source: Bank of Korea

Unit: thousand persons

2002 2003

Year

Gender Women 21,301 23,341 24,112 24,191 0~14 10,974 9,911 8,734 8,458

Age range 15~64 29,701 33,702 34,912 35,133 65 and more 2,195 3,395 4,810 5,016

Registered foreigners

2004 2005

210 766 854

2006 2007

* Source: www.kcc.go.kr

Koreans work an average of 43.5 hours a week, and 22.2 days a month. Total work time is on a declining trend. As of 2008, the economically active population was 24,347,000 and the employed population was 23,577,000. The unemployment rate was 3.2%. In 2008, 99.0% of children of the appropriate age attended elementary school; 93.2% were in middle school; and 90.0% were in high school. 99.9% of elementary school graduates advanced to middle school and 99.7% of middle school graduates went to high school. At the post-secondary level, 67.2% of students received higher education, including attendance at universities. More and more children have been advancing to higher levels of education. This indicates that Korean parents place a strong emphasis on quality education for their children. Koreans have enthusiastically embraced mobile telecommunications and high speed internet. Nine out of ten Koreans are mobile phone subscribers. As of 2008, the number of mobile phone subscribers was about 45,600,000 persons, up 4.8% year-on-year, while subscribers of wired telephone services numbered 22,000,000, down 4.3% from the previous year. Subscribers of high speed internet numbered 14,710,000 as of 2007. This translates into 30.5 % of Koreans subscribing to high speed internet services, the seventh highest after Denmark (35.1), the Netherlands (34.8), Iceland (32.3), Norway (31.2), Switzerland (31.0) and Finland (30.7). With an increasing number of internet subscribers, internet banking users have soared by 17.7%.

Korea was an agricultural country as recently as a few decades ago. The massive transformation in the country’s industrial infrastructure is a testament to Korea’s rapid economic development. Agriculture, forestry, and fisheries, which accounted for 26.6% of the national economy in 1974, shrank to 3% in 2007, while the manufacturing industry rose to 27.9% from 21.6% and the service industry to 57.6% from 45% over the same period.
TRANSFORMATION IN KOREA’S INDuSTRIAL STRuCTuRE
Agriculture, Forestry, and Fishery Industries 1974 1980 1990 2000 2007 26.6 16.2 8.9 4.9 3.0 Mining and Manufacturing 23.3 (21.6) 26.4 (24.4) 28. 1(27.3) 29.8 (29.4) 28.3 (27.9) Electricity, Gas and Utilities 0.7 2.2 2.1 2.6 2.3 Construction Industry 4.3 8.0 11.3 8.4 8.9

Unit: %

Service Industry 45.0 47.3 49.5 54.4 57.6

* Source: Bank of Korea

10

Korea at a Glance

11

I. Welcome to Korea

According to the National Statistical Office, the number of employees in agriculture, forestry, and fisheries continues to decline every year. As of 2008, the total number of employees in these industries was 1,686,000, representing 7.2% of the total number of employees, or 23,577,000. The number of workers in the mining and manufacturing industries was 3,985,000 persons, accounting for 16.9%. These were almost all in manufacturing, with the number of workers in mining accounting for only 0.1%. The number of workers in social infrastructure and other service industries accounted for 75.9%, or 17,906,000 persons. Korea is heavily dependent upon international trade. As of 2007, its dependence on international trade reached almost 75%, ranking 15th in the world. Korea exported more than USD 422 billion and imported nearly USD 435 billion in 2008, for a total trading volume of USD 857 billion. This made Korea the world’s 11th largest trading nation.
TRADING vOLuME OF KOREA AND OTHER MAjOR PARTNERS (2007)
Trading Volume 10 1 2 3 4 5 Korea America Germany China Japan France 728,335 3,179,960 2,388,690 2,174,044 1,320,367 1,161,844 11 1 2 3 4 5 Exports Korea Germany China America Japan France 371,489 1,329,050 1,217,790 1,162,980 700,538 546,353 12 1 2 3 4 5 Imports Korea America Germany China England Japan 356,846 2,016,980 1,059,640 956,254 620,741 619,829

MAjOR IMPORTS AND ExPORTS OF KOREA (BASED ON MTI 3 uNIT)
Exports 2007 Item Ships, Marine Structures and Parts Petrochemical Products Wireless Communications Devices Automobiles Semiconductors PDP and Sensors Iron & Steel Plastics Auto Parts Computers Total Amount 27,777 23,966 30,458 37,284 39,045 16,929 12,375 13,000 12,436 13,808 371,489 2008 Amount 43,157 37,573 35,713 35,032 32,793 18,732 15,948 14,909 13,950 10,697 422,007 Growth Rate 55.4 56.8 17.3 -6.0 -16.0 10.6 28.9 14.7 12.2 -22.5 13.6 Item Oil Semiconductors Natural Gas Petrochemical Products Iron & Steel Coal Computers Alloy Iron, Pig Iron, Scrap Iron Fine Chemical Materials Copper Products Total 2007 Amount 60,324 30,817 12,653 11,969 10,150 6,445 9,896 5,913 5,403 6,658 356,846 Imports

Unit: USD, million, %

2008 Amount 85,855 32,018 19,806 17,534 17,203 12,810 9,723 7,960 6,879 6,288 435,275 Growth Rate 42.3 3.9 56.5 46.5 69.5 98.8 -1.7 34.6 27.3 -5.6 22.0

Unit: USD, million

* Source: Korea in World, KITA

Among Korea’s exports, ships, marine structures, and parts have a majority share, followed by mobile communication devices like mobile phones, and automobiles, PDPs, and iron and steel products. Crude oil takes up the largest share of imports. Natural gas is one of Korea's largest imports, illustrating Korea's high dependence on foreign energy resources. In addition to oil and natural gas, Korea is also largely dependent upon imported raw materials like iron and copper.

As a peninsular country with an impassable northern border, Korea’s exports and imports are transported entirely by ship and airplane. At present, Korea has 28 trading ports, including the ports at Busan and Gwangyang, 8 international airports, and 7 domestic airports. The seaports process 11.4 million ton yearly on average while airports handle 1.2 million ton.

12

Korea at a Glance

13

II. Gateway to Northeast Asia
Korea, the Logistics Hub of Northeast Asia Sea Transport Air Transport Rail Transport Land Transport Free Economic Zones Free Trade Zones Advanced IT, HR Infrastructure for a Logistics Hub The Logistics Industry in Korea

II. Gateway to Northeast Asia

Korea, the Logistics Hub of Northeast Asia
Located in the heart of Northeast Asia, Korea is well-positioned to serve as the logistics hub for your business.
Trans-Manchuria Railway Trans-Siberian Railway
Haulbin

Overseas

Free Economic Zones
Foreign investment support facilities including commercial, business and residential buildings

Domestic

Airport · Seaport Tariff-free Zones
Northeast Asia
Raw materials and parts Carry-in • Assembly & Processing • Sale & Exhibition • Packing & Storage

Raw materials · Parts · Finished goods

The Americas

Finished goods

Carry-out

Europe

Transshipment

•Ship, Aircraft Repair •Oil, Ship Supplies

Nearby industrial complexes

Concentration of related industries including ship trafficking, insurance, finance, logistics education, and research institutes

Trans-Mongolia Railway
Beijing Tianjin Dalian

Vladivostok Shenyang Nakhodka

North American Route
Niigata

Trans-China Railway

Yantai Qingdao Lianyungang

Trans-Korea Railway

Kannazawa Kobe Nagoya Tokyo Yokohama Osaka Kitakyushu Hakata

A logistics hub acts as a stronghold where multinational companies may establish regional headquarters or centers in the hinterlands near well-established regional airports or seaports. Companies can provide value-added logistics services like manufacturing, assembly, processing, packing, and labeling using raw materials, components, and assembled goods throughout Northeast Asia. Amsterdam and Rotterdam in Europe, Singapore and Hong Kong in Southeast Asia, and Dubai in the Middle East have developed into logistics hubs for their economic zones. Northeast Asia, a major economic zone that includes China and Japan, where about 1.5 billion people reside, leads global economic growth. In 2000, the total production of Northeast Asia accounted for nearly 21% of world production, and is expected to increase to 30% by 2020. For China, now the “factory for the world,” demand for mid-to high-quality materials, components, semi-finished goods, and finished goods is rapidly rising. China has become heavily dependent upon foreign intermediate materials and finished goods commensurate with its increasing income and purchasing power. Companies in the Americas and Europe, which intend to supply intermediate materials and finished goods, are in dire need of international logistics strongholds to provide fast and cost-effective services in Northeast Asia. However, Northeast Asia differs from North America and Europe in that there has been no distinctive logistics center in the region until recently. Northeast Asia is neither a single market nor a unified one; it has diverse sub-regions. One logistics hub may not fully cover this entire region. There must be multiple hubs. The approach to the region must be segmented, and response to market demands must be made in a timely fashion.

Shanghai

European Route

Multinational companies and international logistics service providers are now building a global network of major airports and seaports on each continent as they expand their scope of business. Regions with superior logistics infrastructure that can provide efficient logistics services will emerge as logistics hubs. A logistics hub serves as a base that provides services to neighboring areas in a global logistics system that connects regional economic zones. In this respect, a logistics hub in Northeast Asia is a center (or headquarters) of global logistics and also serves as a gateway to the region.

16

Korea, the Logistics Hub of Northeast Asia

17

II. Gateway to Northeast Asia

Logistics centers in Hong Kong, Taiwan, and Shenzhen provide international logistics services in the southern part of China while Shanghai works as an international logistics hub in the central region. Concurrently, Korea is growing as an international logistics stronghold by providing frequent marine and air transportation services in the northeastern part of China, the western coast of Japan, and the Far East of Russia. The southern part of the Korean Peninsula is situated on the global “trunk route” and the expansion of the northeast transportation network through Incheon International airport and sea ports like Busan, Gwangyang, and Incheon raise the connectivity of airports and seaports in the region. Incheon International Airport has high competitiveness backed by its geographic advantages. It connects Asia with North America and Europe. The airport handled 2.3 million tons of freight in 2008, making this airport rank 2nd for three consecutive years from 2006. It is a genuine hub in terms of transshipment volumes to North America, China, and Northeast Asia. Incheon International Airport attracts more air cargo with other key advantages: a shorter distance from Northeast Asia to New York (11,000 km from Incheon compared to 13,000 km from Hong Kong and 15,000 km from Singapore), plus connectivity with 51 cities with more than one million people within 3.5 hours of flight time or less. As of October 2008, 61 airlines provide service to Incheon International Airport linking 157 cities in 49 countries. In particular, Incheon International Airport offers flight services to 33 cities in China and 26 cities in Japan, providing superior connectivity within the region. In addition, Asiana and Korean Air, which are based at the airport, operate a greater number of routes and flights than Chinese or Japanese airlines, thus providing a highly competitive network. Incheon International Airport, which went into service in 2001, opened its airport logistics complex, covering 470,000 m², in March 2006 to support value added activities for logistics companies. The second stage of the expansion project is currently underway. As of December 2008, a total of 15 companies (individual companies and consortiums) have decided to move into the first area of the Airport LogisPark in the Free Trade Zone at the airport, and 76% of leasing has been completed. A free trade zone is a special area within a country where normal trade barriers are eliminated to facilitate international trade and commerce. In this area, trade is exempt from tariffs and taxes, and bureaucratic requirements are reduced. Manufacturing, logistics, distribution, and

trade can be carried out without obstacles. In a free trade zone, companies can bring in cleaning, labeling, processing, assembling, and re-packaging services, without being subject to customs clearance proceedings. They can also exhibit or re-export them. Busan, which ranks fifth in terms of container traffic, and Busan New Port are located on the “trunk route” to the world, connecting major cities in Northeast Asia (including Japan and China) to provide the best logistics services. A “marine silkroad” is already open that links ports in Korea with the world via routes to Europe, America, Northeast Asia, China, and Japan. Korean ports are located between China and Japan, two economic powerhouses, while Busan and Gwangyang are interconnected with the Northeast region via finely segmented routes. The two ports link with 45 ports in China, 60 ports in Japan and 5 ports in Russia. Moreover, Korean ports have a geographic advantage in that they can serve as a gateway to China and Europe via the railroad system of North Korea. The hinterland of the logistics complexes for Busan Port and Gwangyang Port have attracted investment from around 40 companies in the logistics and manufacturing industries in a number of consortiums. The areas surrounding the Busan New Port, for example, have already completed selection of tenant companies for 2009. As for customs clearance, the major administrative service in international logistics, Korea has shortened the freight clearance time to world standard levels by implementing a RealTime Freight Management System and a round-the-clock clearance system. Clearance time was dramatically shortened to 4.4 days in 2006 from 9.6 days in 2003, while immigration time was also shortened to 21 minutes in 2006 from 40 minutes in 2003, almost half the International Civil Aviation Organization (ICAO)’s recommendation, 45 minutes. Against this backdrop, Korea can link the entire area of Northeast Asia with the world using airports, seaports, and the surrounding free trade zones in a swift and efficient manner while still ensuring top-notch service, including prompt immigration and clearance.

18

Korea, the Logistics Hub of Northeast Asia

19

II. Gateway to Northeast Asia

Sea Transport

The Port of Busan
The 1990’s have seen East Asia take the lead in the world economy. Three Northeast Asian countries in particular (China, Japan, and Korea) have accounted for much of the dynamism of the global economy for the past few decades.
Yellow Sea East Sea

Sokcho Port

Donghae Port Incheon Port PyeongtaekDangjin Port

Multinational corporations in the United States and Europe are Busan Port accordingly making strong efforts to expand their presence in East Asia. With strong and educated human resources, skilled manpower, and comparatively high levels of openness and transparency, Northeast Asia is an attractive market and investment destination for many multinational firms. With high productivity and continuously expanding consumption, backed by investment from the public and private sector, and constantly increasing disposable income, Asia is continuing to expand its role as a favored production and consumption base for the world’s companies. Global companies are rushing to Northeast Asia because the regional economy has maintained and sustained its vitality. The region supplies and processes vast quantities of semi-finished and finished products that are then distributed worldwide. As Supply Chain Management becomes more widely adopted by global companies, efficient cross-border logistics has grown more critical. In this context, Korea has become recognized as a nation that can satisfy the logistics needs of global companies.

Pohang Port Gunsan Port Ulsan Port Busan Port Gwangyang Port Masan Port

20

Sea Transports

21

II. Gateway to Northeast Asia

Centrally located between China and Japan, Korea is well situated as a gateway to East Asia. The Port of Busan is the logistics hub that facilitates such functions. The Port of Busan is one of the world’s largest container ports, handling 13.5 million TEU in 2008. It is also the largest port in Korea, with annual container traffic exceeding 240 million tons, and accounts for 66% of total exports and imports. The transshipment container traffic of Port of Busan is 6 million TEU, representing 45% of total traffic, greater than Shanghai, Shenzhen, Qingdao, Kobe and Yokohama. With its geographic advantages, the Port of Busan offers sea route linkages with most of Japan and China. It operates routes to all 57 ports in Japan and provides 57 shipping services a week, more than feeder services that connect large ports like Tokyo, Yokohama, Osaka, Kobe, Nagoya, and Kitakyushu with regional ports in Japan. It also boasts lower shipping charges. There is a trend for large importers in Japan to move their logistics centers from Japanese ports to the hinterland of the Port of Busan. The main reason behind this shift is Busan’s excellent connectivity and strong cost competitiveness. China is not an exception to this trend. China’s 17 manufacturing and logistics bases -including Shanghai, Shenzhen, Qingdao, Dalian, and Ningbo -- are connected to the Port of Busan. The port provides more than 46 shipping services a week. The Port of Busan’s value does not lie exclusively with its connectivity between large-scale ships and feeder ships, or with its cost competitiveness. Its excellent port facilities and high productivity have also attracted shipping companies to the port. North Port, which performs the major functions of the Port of Busan, operates 14 berths more than 14m deep and 9 berths more than 15m deep, which together accommodate 8,000 TEU container vessels. High efficiency standards have led to the handling of more than 700,000 TEU per berth. To make up for the lack of container yards in the terminal, there are off-dock container yards scattered around Busan to support port functions. The North Port had space limits due to constant arrivals and heavy container traffic. A new port development project was then pursued to facilitate smooth handling of the increased traffic load. The new port was built on Gadeok Island, 25 km away from the Port of Busan. This newly built port has been in service since 2007. The port was named the Busan New Port, though it was administratively located near the border between Busan and neighboring cities. The new port has an extensive hinterland away from downtown. Global terminal operators like PSA Corporation and DP World participated in the terminal development and are operating the

terminals in expectation that the new port will be a logistics hub in Northeast Asia (DPW has a 25% stake and PSA Corporation has 16.2% stake). In 2009, Hanjin Shipping Company and Hyundai Merchant Marine Co., two global carriers, opened a terminal 16 m deep which is expected to reinforce the role of the new port as a hub in Northeast Asia. Busan New Port operates 13 berths more than 16 m deep as of 2009. The port stretches 4,300 m without a curve or corner, making it the longest straight port in the world. With continued port development, the port will have thirty 16 m deep berths by 2016. Since the port is sufficiently distant from downtown, local traffic does not interfere with port traffic flow. With the hinterland complex covering 1.9 million m² right behind the port, the flow between the complex and terminal is very smooth. Moreover, transshipment is efficient as 30 berths are concentrated in a single site. The excellent port design makes the Busan New Port very attractive to shipping companies. The surrounding logistics complex at the Port of Busan is designated as a free trade zone. Global shipping companies operating in Northeast Asia have set up their international logistics bases in the hinterland of the Port of Busan. Japan’s Mitsui Trading, Holland’s C. Steinweg (the largest warehouse operator for the London Metal Exchange), Hong Kong’s Kerry Logistics, Japan’s Shimonoseki Sea Land Transportation, Date-Japan, and Fukuoka Transportation have already established warehouses and logistics operations in this area.

22

Sea Transports

23

II. Gateway to Northeast Asia

■ Container throughput of the world ports
(Unit: 1,000 TEU)
29,918
S 1. ing ap ore S 2. ha ng ha

■ Busan Port container throughput flow trend
(Unit: 1,000 TEU) 10.4% 11,492 3.1% 11,843 1.7% 12,039 11% 13,261 1.2% 13,426

2008 2007
24,248 21,400

Port World (DPW). Hanjin Shipping began operating four berths beginning in 2009, while Hyundai Merchant Co. opened four berths in the second half of 2009. At North Port, Korea Express, Sebang, Dongbu Express/Evergreen, and Shinsundae Container Terminal (PECT) run large berths while Unikai Container Terminal (UCT), Kukje Transportation, Hanjin Shipping, and Dongbang operate feeder terminals, respectively. Originally, the Port of Busan was developed, managed, and operated by the Korean government, but bureaucratic requirements hampered efficient management and operation. Against this backdrop, port management was revamped to improve operational efficiency, respond more quickly to user needs, and enhance international competitiveness. As a result, the Busan Port Authority (BPA) was established. The BPA is a public corporation established in January 2003 that manages the port on a self-sustained basis. The BPA’s major functions include development and management of port facilities and facilities in the surrounding area, and the recruitment of shipping companies, ship owners, and logistics firms. More than 10 years before the establishment of the Authority, the Port of Busan adopted a leasing system and developed into a landlord port as in advanced nations. This system was further reinforced by the BPA. The BPA as a landlord, leases terminals to shipping companies and stevedores. The BPA has taken the initiative in working as a bridge between the central government and local governments, building port infrastructure and facilities, and attracting investments from the private sector to increase profit for related companies and contribute to the local community. Shipping and port industries historically developed in the Port of Busan. Korea’s first shipbuilding yard and ship repair yard were established in the area. Though large-scale shipbuilders like Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering established their dockyards near the area, there are also many small to mid-sized yards like Hanjin Heavy Industries. Ships that require repair may procure parts and services from the Port of Busan at a reasonable price. Worldclass ship supply manufacturers provide parts and components for shipbuilding yards and ship repair yards, including Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering.

g u i n am on ho he tao gz bo an ai erd gK nz ing an us ub ing on ott he .Q Gu .B .D .N .R .S .H 3 5 6 7 8. 9 4 10

North Port and the New Port of Busan are located on the main “trunk route.” It takes only 60 minutes at North Port and 90 minutes at the New Port to enter the terminal after a pilot boards. This takes less time than at Shanghai, which requires more than three hours for processing after a ship has departed. The Port of Busan is much favored by large-sized ships that operate on tight schedules. The Port of Busan is linked with Seoul, which has the largest shipping demand, and its metropolitan area is served via several expressways. It takes less than five minutes from the port terminal to the expressway. All container terminals have access to railroad services. For inland transportation, both expressways or railroads are available. The farthest point in the metropolitan area from the Port of Busan is only 416 km away, taking five hours on weekdays and eight hours on weekends by truck. The Port of Busan is situated in the southeast of Korea, and has four seasons. The temperature falls below zero only for a few days in winter when it is exceptionally windy. The temperature goes beyond 30 degrees Celsius for only a few days in a row in the summertime. Korea's summer is not long and the temperature does not exceed that of Tokyo, Yokohama, Osaka, Kobe, and Nagoya, where it is also hot and humid. Qingdao and Tianjin have yellow dust problems in spring, Shanghai has much fog, and the temperature often falls below zero in Dalian. Productivity is frequently hampered in these regions, and shipping schedules are hard to readjust. The Port of Busan, however, operates 24 hours, seven days a week, and can conform to tight shipping schedules. Hutchison Korea Terminals, a wholly-owned subsidiary established in 2002 by Hutchison Ports Holding (HPH) a Hong Kong global terminal operator, runs two terminals and six berths. Port of Singapore Authority (PSA) Corporation runs one terminal and nine berths jointly with Dubai

27,980

13,426

12,000

11,226

11,001

10,830

10,320

2004 2005 2006 2007

2008

24

Sea Transports

25

II. Gateway to Northeast Asia

The Port of Busan has excellent bunker supplies. Ulsan and Yeosu, which are the bunker suppliers, are only 65 km and 205 km away, respectively. The bunker supply is stable because there are sufficient storage tanks. Premium bunkers produced by SK Energy, S-Oil, and GS Caltex produce quality oil. The prices of Korean bunkers are also the lowest in East Asia outside Singapore, so Korean bunkers are favored by shipping companies. As a result, sale of bunkers ranks second to Singapore in Asia. BPA is expanding its international network to offer world-class services to global shippers and logistics companies. BPA undertook efforts to join the Nakhodka container terminal development project in far eastern Russia. It also signed a Memorandum of Understanding for ICD development in Mudanjiang Shi and Suifenhe in Heilongjang Province, China. It also exchanged MOUs with Algeciras Port of Spain, Niigata Port of Japan, and Dalian Port and Dafeng Port in China.
CONTAINER ROuTE NETwORK FOR THE PORT OF BuSAN
Shipping companies - 78 shipping companies - 57 routes with Japan - 46 routes with China - 16 routes with Russia - 68 routes with Southeast Asia - 38 routes with North America - 31 routes with South America - 22 routes with Europe - 17 routes with Australia - 7 routes with the Middle East

CONTAINER TERMINAL FACILITIES OF BuSAN NEw PORT
Operator DPW/PSA Hanjin Shipping Hyundai Merchant Marine Korea Shipping/ZIM/Kukje Express Hanjin Shipping, K Line, YM BPA Berth length 2,000m 1,200m 1,100m 1,150m 1,400m 1,050m 1,500m Water depth -16m~16m -16m -17m -15m -15m -15m No of GC 25 10 9 9 9 9 Opening year 2006~2009 2009 2009 2011 2011 2016

COST COMPETITIvENESS OF THE PORT OF BuSAN
Port Cost Quotient Busan 100 Hong Kong 322 Singapore 186 Kobe 277 Yokohama 263 Kaohsiung 107 Shanghai 106

Route network

CONTAINER TERMINAL FACILITIES OF THE NORTH PORT AT BuSAN
Terminal Busan Gamman Container Terminal Busan International Container Terminal Shinshundae Terminal Hutchison Busan Container Terminal Dongbu Busan Container Terminal Kamchun Container Terminal UCT 3rd Terminal 4th Terminal 7th Terminal Operator Korea Express/ Hutchison Korea Terminals Hanjin Shipping/Sebang PECT Hutchison Korea Terminals Dongbu Express/Evergreen Hanjin Shipping KCTC/Kukbo Hanjin Trasportation/ Korea Express/Donjin Kukje Express/DongBang Dongkuk Transportation Berth length 700m 700m 1,500m 1,447m 848m 500m 500m 995m 1,311m 645m Water depth -15m -15m -14m~16m -15m -15m -13m -11m -7.5m~9.5m -7.5m~9.5m -6m~12.5m No of GC 8 7 14 14 7 5 5 8 8 3

26

Sea Transports

27

II. Gateway to Northeast Asia

The Port of Gwangyang
The Port of Gwangyang was developed by the Korean government to carry out hub functions in Northeast Asia in conjunction with the Port of Busan. While the Port of Busan East Sea has been used for centuries, the Port of Gwangyang is an Yellow Sea entirely new port planned by the Korean government in the 1980s. When Korea hosted the Seoul Olympic Games in Gwangyang Port 1988, the Port of Busan suffered from severe congestion. The Korean government accordingly selected a new site and developed a new port in response to the needs of shipping companies, shippers, and trading companies. Since Busan was already a large metropolitan city, making it difficult to build new roads and new port facilities, the Korean government opted to develop the Port of Gwangyang to provide an alternative to shippers and shipping companies. Gwangyang, situated in the southwestern part of the Korean peninsula, is only 35 km away from Yeocheon Petrochemical Industrial Complex, the second largest industrial complex in Korea. The complex houses crude oil tanks, oil refinery plants, and chemical manufacturing facilities, including GS Caltex, Korea Dow Chemical, Gumho Mitsui Chemical, and Korea BASF. The area has comparatively few manufacturing companies outside this complex.

This, however, has enabled the Port of Gwangyang to capitalize on port terminals and the surrounding areas. Currently, fourteen berths are in service at a depth of 15m, with available terminal length of 600 m. Logistic warehouses have been continuously refurbished behind the terminal while a spacious hinterland has been built across the road. The port terminals and surrounding areas are also away from downtown, so transportation is not hampered by downtown traffic. The port of Gwangyang has highly competitive infrastructure due to the active efforts of the government, the local community, and the Korea Container Terminal Authority. Expressways to the port terminals link the Seoul metropolitan area with the rest of the nation. Transport takes five hours to Seoul, which is 360 km away, on weekdays and seven hours on weekends. Behind the terminal is a freight railroad station, with more than 20 trains in service each day. The biggest strength of the Port of Gwangyang lies in its usage costs. The port is located at the farthest point inside Gwangyang Bay. The entrance is close to the main trunk passage and requires 80 minutes to the container terminal after a pilot boards. A breakwater is not needed because the water is calm. The land surrounding the bay on the left and Namhae Island on the right breaks high waves, making it well suited for port construction. As a result, low costs and low terminal rents ensure the port has optimal price competitiveness. Capitalizing on its cost competitiveness, spacious terminal yard, and expansive hinterlands, Hutchison Ports Holdings (HPH), a global terminal operator, established a wholly-owned subsidiary, Hutchison Korea Terminals (HKT), and leased one berth in 2002. In addition, HPH secured four berths in 2004 via Korea International Terminals where it holds an 80% stake (Hyundai Merchant Marine, and Hanjin Shipping hold 10% stakes, respectively.). In 2008, ten years after its opening in 1998, the Port of Gwangyang handled 1.8 million TEU despite the global financial crisis that engulfed the world, putting it on a footing with Kobe and Osaka. This performance is especially remarkable when considering that the Japanese ports have operated for centuries. The Port of Gwangyang offers frequent ocean routes to North America, Europe, the Middle East, and Latin America. Currently, global shipping companies like Maersk, HMM, Hanjin Shipping CMA, APL, and IRISL offer route services to global regions in addition to feeder services linking with Japan and China. Gwangyang offers ten routes to ten different ports in China, including Shanghai, Ningbo, Dalian, Qingdao, and Xingang. The port is linked with nine ports in Japan including Tokyo, Yokohama and Nagoya. Depending on the port, various route

28

Sea Transports

29

II. Gateway to Northeast Asia

services are available in a typical week. Service is available at all times, without significant waits. Recently, more and more cargo exported to Japan from Southeast Asia and China passes through the hinterlands of Gwangyang. This is because large warehouses are located in these areas and it is more advantageous to provide logistics services at Gwangyang than at a Japanese port. Gwangyang’s hub port capabilities are evident in the London Metal Exchange (LME) warehouse situated at the Port of Gwangyang. Sebang Co., Ltd. attracted an LME warehouse in early 2000. The advantages of the Port of Gwangyang are not confined to ample port facilities and high levels of infrastructure. A site covering 3.7 million m² is being built near the port, with the entire area designated as a free trade zone. Low port usage charges, spacious hinterland and the designation of free trade zones make the port one of the most attractive in Northeast Asia. Gwangyang does not simply function as a container port. The port is one of the areas that surround Gwangyang Bay. From the left of the bay entrance are Yeosu, Yeocheon, Gwangyang, and Namhae. Among these, Yeosu serves as a fishing port and general cargo terminal, and is the venue where the Yeosu Expo will be held in 2012. It is warm and mild even in winter and the temperature does not fall below zero. It has attractive scenery and a clean environment, making it a popular tourist attraction. Yeocheon, 20 km to the north of Yeosu, houses the second largest petrochemical industry complex in Korea. It is possible to berth 300,000 DWT VLCC in Yeocheon, and it has long been regarded as an optimal port for transshipment of petroleum due to its excellent and stable water conditions. Gwangyang lies at the farthest point of Gwangyang Bay, and has container terminals where POSCO’s Gwangyang Steel Works, the largest integrated steelworks, operates. POSCO has an annual production capacity of 17.4 million tons and operates a large-scale, 2,063 m long berth for bringing in raw materials like iron ore, bituminous coal, and limestone, and a 1,980 m long berth for the export of steel products. Thus, Gwangyang Bay, consisting of Yeosu, Yeocheon, Gwangyang and POSCO terminal handled 217 million tons in 2008, following the Port of Busan in terms of cargo traffic in Korea.

CONTAINER TERMINAL FACILITIES AT THE PORT OF GwANGyANG
Classification Project period Operations started Operating company Berth length Front water depth Handling capacity (TEU) Berthing capacity (No. of ships) Site area - CY Area - Building area - CFS 5,100 m 16 m 5,480,000 50,000 DWT × 12 20,000 DWT × 4 2,746 km² 1,609 km² 89 km² 42 km² '98. 7~ Total Phase 1 '87.~'97 '98. 7. ICT(Sebang+Hanjin Shipping) Hutchison Korea, KIT 1,400 m -15 m~16 m 1,600,000 50,000 DWT × 4 840 km² 500 km² 36 km² 21.1 km² Phase 2 Terminal 1 Phase 3 Terminal 2 Phase 3 Terminal 1 '95.~'01 2002. 4. ~'03. 2004.10. KIT (Korea International Terminal) 1,150 m -16 m 1,140,000 50,000 DWT × 2 20,000 DWT × 2 533 km² 321 km² 13km² 5.3 km² '99.~'07 2007. 3. Korea Express Keonsosium (STXPanocean, Korea Express) 1,400 m -17 m 1,600,000 50,000 DWT × 4 840 km² 529 km² 19 km² 5.4 km²

Dongbu Express

1,150 m -16 m 1,140,000 50,000 DWT × 2 20,000 DWT × 2 533 m² 259 km² 21 km² 10.5 km²

HINTERLAND DEvELOPMENT PLAN FOR THE PORT OF GwANGyANG
Facility usage East (development completed) West (Under development) Total Logistics Complex Support facility Public facility Total Area (1,000 m²) 1,950 1,930 3,880 2,306 285 1,289 3,880 Construction time ~2008 ~2011 ~2011 2006~2015

30

Sea Transports

31

II. Gateway to Northeast Asia

Incheon, situated on the Yellow Sea, has more difficulty in securing adequate water depth than the Port of Busan or the Port of Gwangyang located to the south. This problem is shared, with Qingdao, Dalian, Tianjin, and Shanghai on the Yellow Sea. Large vessels face difficulty in berthing at the northeastern ports in China. To deal with this problem, the Port of Incheon has established lock gates that can overcome tidal gaps of up to 10 m. The lock gate is the biggest in the world, with 50,000 ton vessels (32.3m wide, 230m long, 18.5m deep) and 10,000 ton vessels (19.2 m wide, 150 m long, 18.5 m deep) able to pass through. A maximum of 45 vessels pass through the lock gate each day. Eight terminals operate inside of the lock gate. Terminals 1, 2, 3, 6, and 8 are for general cargo from the lock, terminal 4 for containers, terminal 5 for automobiles, and terminal 7 for grain. There is a South Port, a North Port, and a coal port in operation outside. Oil, liquid gas, coal, sand, and ferrous scrap, which are difficult to handle in the lock gate, are handled outside of it. The container terminal inside of the lock has five berths at present, but operates an additional six berths including two berths at the 14m deep container terminal outside the lock to facilitate the smooth incoming and outgoing of container carriers. Korea Express, Sun Kwang of Korea and PSA Corporation of Singapore are terminal operators. Recognizing the potential growth of the port, PSA developed a terminal via the BOT method in 2001 and has operated two berths since then. The water can stay 14 m deep even at ebb tide outside the lock.

The Port of Incheon
The Port of Incheon is a gateway to Seoul (population: 11 million) and its metropolitan area (25 million population), at only 35 km from Seoul. The Port of Incheon is situated in the central/western part of the Korean Peninsula and is the closest to China. The port is 250 miles by sea to Dalian, 313 miles to Qingdao, and 448 miles to Shanghai. It takes 15 hours from the Port of Incheon to Dalian, 18 hours to Qingdao, and 26 hours to Shanghai by a container carrier.
East Sea

Incheon Port
Yellow Sea

In response to the increasing container traffic at the Port of Incheon, the Korean government and the Port of Incheon Authority (IPA) acquired the site 15 km away from the dock and are building the New Port of Incheon on it. They undertook to develop six 14m deep large container terminals in 2008. When the new port is completed in 2011, the handling capacity of the Port of Incheon will increase up to four million TEU. As there are residential and commercial facilities around the lock of the Port of Incheon, the space for logistics facilities has become insufficient and traffic has become more congested. These conditions work to weaken the competitiveness of Incheon, and account for the stagnant growth of the Port of Incheon from the 1990’s to the early 2000’s, unlike other ports in Northeast Asia. However, the Korean government has strongly realized the need to cultivate growth potential in East Asia, particularly in the Yellow Sea area. To increase port competitiveness, the Korean government reformed the port management system in 2005 and established the Port of Incheon Authority. Like the BPA, the IPA was inaugurated as a public organization. It coordinates the opinions of the community and parties of interest, and manages the port using corporate management principles.
Sea Transports

The Port of Incheon offers routes linking all the ports in China. It has opened container route to 12 Chinese ports like Shanghai, Yantai, Ningbo, Qingdao, Dalian, Xiamen, and Dandong and six shipping services are available throughout the week, so the shippers do not need to wait at the port. Car ferry service is also available to Dalian, Rongcheng, Tianjin, Qingdao, Weihai, and Dandong. Incheon has such close ties with China that 70% of container traffic handled at the Port of Incheon is bound to or from China.

32

33

II. Gateway to Northeast Asia

Since its establishment as a public organization, the IPA has focused on expanding the surrounding logistics complex, which was the weakest point in the Port of Incheon. Currently, the surrounding area complex of more than 1.5 million m² is being built, and a site of 3.7 million m² will be completed as the hinterland of the New Port of Incheon by 2020. The IPA is soliciting logistics companies with phased completion of the surrounding area complex. Many companies are now competing to move into the complex and the port’s surrounding area site has been designated as a free trade zone. This underscores the high growth potential of the Port of Incheon in the future, as all surrounding areas are free trade zones. The Port of Incheon hopes to become the logistics hub of the Yellow Sea Zone. The Port of Incheon reformed the old labor system to improve labor productivity in 2007 when the port laborers were decasualized. The Port of Incheon has served as a base for importing foods (grain), raw materials (sand, oil, gas, etc.), and daily necessities that will be supplied to residents in the metropolitan areas of Korea. This includes grain from the United States, Brazil, and China, lumber from Indonesia, the Russian Far East, and Canada, scrap iron from the Americas and Africa, raw animal feed from Southeast Asia, LNG from Indonesia and Brunei, and anthracite coal from China and Russia. Steel products and 400,000 automobiles produced by GM Daewoo and Ssangyong Motors are bound for China, Japan, and Southeast Asia via the Port of Incheon. As Incheon handles more than 70 million tons of bulk cargo every year, the lock is very important. The Port of Incheon is now transferring its functions to the outer harbor from the inner harbor. The inner harbor already has highly concentrated residential buildings and traffic congestion. The outer harbor, however, has already shortened service time by a minimum of five hours when using terminals in the dock and can offer speedier and more effective services to container carriers and shippers who prioritize rapid delivery. The Port of Incheon serves as a passage for marine and air intermodal transport. Cargo that requires speedy transport from China to Europe and the Americas passes through the Port of Incheon (traveling from China to the Port of Incheon, then Incheon International Airport, and then Europe/the Americas).

Shandong and Changshu Provinces are the main places where the largest demand for freight transport occurs. The cargo passes through Qingdao, Weihai, Tianjin, Dalian, or Shanghai ports. These ports provide frequent car ferry and container shipping services to the Port of Incheon. When the cargo passes through the Port of Incheon and Incheon International Airport, it only takes 3 to 4 days from China to North America and 4 to 5 days to Europe. This route is very popular and its traffic is increasing every year, taking on 6,692 TEU in 2007 and 9,778 TEU in 2008. Marine and air intermodal transport via the Port of Incheon can be attributed to lack of transport capacity in Chinese airports, lack of land infrastructure in China, and excellent facilities and service from the Port of Incheon and Incheon International Airport. Accordingly, intermodal transport via the Port of Incheon and Incheon International Airport is expected to maintain its upward momentum.

CONTAINER TERMINAL FACILITIES AT THE PORT OF INCHEON
Terminal ICT SICT KESCT E1CT 4th Terminal Hanjin Transportation 625m -11m 3 Inner Port Operator PSA Coporation Sunkwang Korea Express E1 Korea Express Berth length 600m 407m 225m 259m 535m Water depth -14m -11m -7.5m -12m -11m No of GC 5 4 2 3 3 Location South Port South Port South Port South Port Inner Port

CONTAINER TRAFFIC TRENDS (1,000 TEu)
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 Import 274 308 359 392 451 558 695 834 857 Export 210 229 292 317 377 498 637 793 810 Transshipment 0 1 2 3 5 6 13 18 24 Coastal 128 125 117 108 102 86 33 18 12 Total 611 663 770 821 935 1,149 1,377 1,664 1,703

34

Sea Transports

35

II. Gateway to Northeast Asia

The Port of Pyeongtaek · Dangjin
The Port of Pyeongtaek·Dangjin, situated on the western coast, is only 75 km to the south of the Port of Incheon by land. It serves as a gateway to the metropolitan area due to its East Sea location southwest of Seoul. The Port of Pyeongtaek·Dangjin was developed to supplement the functions of the Port of Incheon as the port was expected to face difficulties in Pyeongtaek·Dangjin Port Yellow Sea expansion due to full use of port facilities within the lock at Incheon. With increasing trade and proximity to China, however, the Port of Pyeongtaek·Dangjin has emerged as a strong port in its own right. Though it takes two to three hours to the port after a pilot boards because it is situated at the farthest end of the Asan Bay, there are no waits because the port has no lock. In addition, it has a very expansive surrounding area where new companies can easily establish themselves. Unlike Seoul, Incheon in Gyeonggido, where traffic is congested all the time, the port has few traffic issues, making road transportation rapid and convenient. Currently, container terminals at the Port of Pyeongtaek·Dangjin are being continuously added. In 2000 when the container service was first provided, the traffic was only 988 TEU. Due to the increase in trade volume and proximity with China, however, container traffic dramatically rose, reaching 356,000 TEU in 2008. As container traffic has increased at the Port of Pyeongtaek·Dangjin, container routes are following suit. In its early stages, the port provided services to Dalian, Qingdao, Xingang, and Shanghai in China, but services have now expanded to include Haiphong in Vietnam, European ports, and the Atlantic coast of the Americas. The port also provides car ferry services to Rizhao and Rongcheong in China.

The Port of Pyeongtaek·Dangjin is emerging as a third steel port in Korea. Dangjin is located on the right when entering the Asan Bay entrance from the Yellow Sea. Steel makers like Hyundai Steel, a subsidiary of Hyundai Group, Dongkuk Steel Mill, and Dongbu Steel are closely located in Dangjin. The steelmakers import raw materials like iron ore, bituminous coal, and limestone, as well as semi-finished steel products and export the finished steel products to the overseas and domestic markets after processing them. New ports for raw materials and steel products have been continuously added.

CONTAINER TERMINAL FACILITIES AT THE PORT OF PyEONGTAEK·DANGjIN
Terminal Pyeongtaek Container Terminal Pyeongtaek I Port Operator Pyeongtaek Container Terminal Corporation (PCTC) Dongbang Berth length 480m 560m 720m Water depth -12m -14m -12m No of GC 4 3 Opening Date 2005~2008 2009. 9

CONTAINER ROuTE FROM THE PORT OF PyEONGTAEK·DANGjIN TO CHINA
Ship Ferry Twice a week Four times a week Three times a week Container Twice a week Lianyungang Qingdao Dalian, Shanghai Xingang, Xianmen, Hong Kong Hiphong, Weihai, Longkou, Guangzhou, Yantai, Shantou, Shidao, Dandong, Fuging, Ningbo, Malaysia, Turkey, Rumania, Ukraine, Egypt, New York, Willmington, Savannah Frequency Three times a week Ports of Call Rizhao, Rongcheong, Qingdao, Weihai

Once a week

CONTAINER TRAFFIC TRENDS (1,000 TEu)
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 import 1 11 34 77 94 111 127 160 173 Export 0.4 10 32 75 96 116 132 156 180 T/S 0 0 0 0 0 0 1 2 3 Total 1 21 66 152 190 228 260 319 356

36

Sea Transports

37

II. Gateway to Northeast Asia

The Port of Ulsan
The Port of Ulsan is the biggest industrial port in Korea situated in the southeastern part of the Korean Peninsula. It has 96 berths (16.4 km) including five berths that can East Sea accommodate a maximum of 350,000 DWT vessels. It is the biggest port for petroleum and chemical products in East Asia Yellow Sea as the largest petrochemical industrial complex is nearby and ulsan Port oil refineries like SK Energy and S-Oil are located in Ulsan. The Port of Ulsan handles 135 million tons of liquid cargo annually, which accounts for 79% of the total cargo (170 million tons) handled by the port or 39% of the total liquid cargo (345 million tons) in Korea. The Port of Ulsan is on the “trunk route” for transporting liquid cargo, and thus works as a strategic stronghold for international marine transportation. There are many tank terminals operated by global tank terminal companies like Vopak, Odfjell, and Stolt-Haven.
TANK TERMINALS
Company Korea Vopak Taeyoung Industry Jeongil Stolthaven Odfjell Korea Dongbuk Chemical Taeyoung Horizon Terminal Korea Total Tanks (No. of units) 140 107 137 64 37 41 526 Storage Capacity (1,000 ㎘) 261 250 529 171 199 230 1,640

FOREIGN INvESTMENTS IN THE CHEMICAL TERMINAL FACILITIES AT THE PORT OF uLSAN
Company Investment Share Odfjell Terminal (Korea) Joint investment with Odfjell (50:50) Jeongil Stolthaven Terminal Joint investment with StoltHaven and Jungil Tank (50:50) 40,000 DWT × 1 20,000 DWT × 2 3,000 DWT × 1 136 units, 526,000 m³ Vopak Terminals Korea Taeyoung Horizon Terminal Korea Joint form Horizon Terminal and Taeyoung Industry(50:50) 30,000 DWT × 1 8,000 DWT × 1 16 units, 99,100 m³

Vopak’s stake 51%

Port facility

40,000 DWT × 1 20,000 DWT × 1 64 units, 170,970 m³

30,000 DWT × 1 20,000 DWT × 1 140 units, 261,100 m³

Tank

Currently, chemical shipping lines like Odfjell and Stolt-Nielsen provide regular ocean services. On these lines services are available directly linking Houston, Los Angeles, Tokyo, Osaka, Ulsan, Ningbo, Yeosu, the Middle East, and Rotterdam. The following are the main routes. Significant amounts of cargo are transshipped at Ulsan and most ships for transshipment are 30,000 to 60,000 DWT. Transshipped cargo is transported by feeder ships to ports in Japan, Zhangjiagang, Nantong, Nanjing, Dalian and Qingdao in China, and Kaoshiung in Taiwan. A ship carrying liquid cargo of less than 50,000 DWT can arrive or leave port at any time at night. Loading and unloading are done throughout the year. Tokyo Bay and Osaka Bay in Japan do not permit nighttime handling of liquid cargo and Ningbo in China does not allow chemical carriers to handle cargo operation during the night. The Port of Ulsan benefits carriers by offering cargo loading/unloading at any time and transport anywhere and at any time. Although the Port of Ulsan is the biggest liquid bulk port in Northeast Asia, it also handles dry bulk cargo and containers. Dry bulk cargo includes woodchips, feed sub-materials, anthracite coal, and ore required by the hinterlands of the port. Container cargo mostly originates in

The following are foreign-invested companies in the chemical terminal facilities at the Port of Ulsan.

38

Sea Transports

39

II. Gateway to Northeast Asia

national industrial complexes. The cargo is bound to 38 ports in ten countries including Japan, China, Southeast Asia, and the Middle East. The port handles 400,000 TEU containers annually. The Port of Ulsan has many private terminals in Korea. Hyundai Motor Company, the fifth largest auto maker in the world, runs an 830m long automobile-exclusive terminal that loads one million cars annually. SK Energy and S-Oil run a marine berthing facility that can accommodate 350,000 DWT VLCC and a dolphin facility that can berth 3,000 to 50,000 DWT tankers. The biggest shipyard in the world, that of Hyundai Heavy Industries, is located in Ulsan. The Port of Ulsan is both a commercial port and an industrial port. There are many private terminals for oil refineries and petrochemical companies in Ulsan. In addition, as the port of Ulsan is a port for liquid cargo, many tank terminal operators are in service. As mentioned above, terminals have been historically operated by private companies at the port, so efficiency in the Port of Ulsan is much higher than other ports. The Port of Ulsan is adopting various strategies to reinforce the role of liquid cargo ports in East Asia by concentrating its resources on serving as a hub for liquid cargo. To this end, the New Port of Ulsan and the surrounding areas are under development and port facilities will be continuously expanded to respond to customer needs.

The Port of Pohang
The Port of Pohang is located on the eastern coast of Korea and in the southeast of the Korean peninsula. The port is the largest one for handling steel products, and handles East Sea raw materials and products for steel makers. POSCO, the world’s largest steel works, is situated near the port. The Yellow Sea steel works produces 13.7 million tons of steel annually. Iron Pohang Port ore and bituminous coal are imported from Australia, Brazil, and India. Large material carriers are up to 250,000 DWT. Piers for raw materials are 19.5 m deep. Steel makers in the industrial complex, including Dongkuk Steel Mill, Hyundai Steel, and SeAh Steel, import semifinished products. Ships of 2,000 DWT (at minimum) enter the Port of Pohang from Japan and China while ships of 50,000 DWT arrive at the port from the Mediterranean Sea, Russia and the Americas. Steel products like coils, steel billets, iron plates, and steel pipes produced by tenant companies in the steel industrial complex are exported to the world including Japan, China, the Middle East, and Europe. In addition to the steel industrial complex, Korea’s largest textile industrial complex and electronic industrial complex are located in Daegu and Gumi, which are 95 km and 125 km away, respectively. To leverage geographic proximity to these complexes, a container terminal is under construction. The container terminal, which will open in 2009, is 12 m deep and the quay is 1,000m. It is expected to provide services to China, Japan, and Northeast Asia.
▒ CONTAINER TERMINAL FACILITIES
Terminal Pohang Yeong il New Port Operator Pohang Yeong il New Port Berth length 1,000m Water depth -12m No of GC 2 Opening Date 2009. 8

CARGO HANDLING TRENDS
Liquid cargo Year Crude Oil and petroleum 62,389 62,316 59,583 59,077 63,211 63,652 66,549 64,482 63,644 Refined petroleum products 41,396 40,781 41,596 38,130 42,300 44,121 43,657 43,819 45,104 Chemical 15,629 14,730 14,400 14,860 16,745 16,731 16,274 18,412 16,545 Gases 4,258 4,155 4,047 4,474 4,824 4,667 4,201 3,531 3,268 Sub-total 123,672 121,982 119,626 116,541 127,080 129,171 130,681 130,244 128,561 Other

Unit: 1,000 ton

Total

2000 2001 2002 2003 2004 2005 2006 2007 2008

27,395 27,597 28,585 29,601 33,134 33,243 35,036 38,408 41,753

151,067 149,579 148,211 146,142 160,214 162,414 165,717 168,652 170,314

40

Sea Transports

41

II. Gateway to Northeast Asia

Other Seaports
The Port of Masan
The Port of Masan is located on the southern coast of the Korean Peninsula. It is between the Port of Busan and the Port of Gwangyang. The entrance routes to the Port of Masan are on the same line with that of the Busan New Port, and located 20 miles farther than the Busan New Port.

East Sea

Yellow Sea

The Port of Masan is near the city of Masan, Changwon, and Masan Port Jinhae. The first free trade zone in Korea is located behind the Port of Masan Terminal 3. Electric/electronic companies, machinery makers, non-metal producers, textile companies, metal companies and precision instrument manufacturers have settled in the complex. Multinational corporations such as Nokia, Sony, and Sanyo moved into the Masan Free Trade Zone to bolster the local economy. Machinery and metal equipment makers are mostly located in Changwon. Heavy equipment manufacturers like Doosan Heavy Industries and Posco export cranes, power generation equipment, and other heavy industry equipment. Jinhae houses shipyards which build and export ships to the global market. The Port of Masan mainly handles heavyweight and bulk cargo, as well as container cargo. Currently, the Port of Masan offers container routes mainly to Japan and China. Companies in Masan and Gumi of Gyeongbuk, Korea’s largest electric and electronic industrial complex, and Daegu, Korea’s biggest textile industrial complex also use the Port of Masan. Thus New Port is under development to facilitate the smooth handling of increased container cargo. Masan New Port is expected to run four 20,000 GT berths with 12 m deep water. The berth length will be 980 m. The new port is scheduled to be completed by late 2011.
CONTAINER TRAFFIC TRENDS
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 Imports 18,374 27,669 18,071 20,049 28,480 25,320 15,428 14,218 11,710 Exports 23,392 37,038 30,619 26,358 33,509 30,143 17,018 15,117 12,891 Total 41,766 65,016 49,020 47,352 61,994 55,559 32,634 29,468 25,055
Unit: TEU

The Port of Gunsan
The Port of Gunsan is situated on the western coast of Korea and across from Shandong Province in China. Gunjang Industrial Complex was built around the port and the Iksan Free Trade Zone is only 45 km away. The industrial complex and FTZ were recently expanded.
Yellow Sea

East Sea

Gunsan Port The Port of Gunsan mostly handles bulk cargo. Grains, feed sub-materials, lumber, scraps, and pulp and paper consumed in the hinterlands are imported via the Port of Gunsan from the Americas, China, Southeast Asia, and Indonesia. The main export via the port is automobiles manufactured by GM Daewoo.

Taking advantage of geographic proximity with China, liner shipping companies have opened regular services to China. Currently, the Port of Gunsan provides services with Shanghai and Lianyungang Ports in China. Car ferry service is also available to China.
CONTAINER ROuTE FROM THE PORT OF GuNSAN TO jAPAN
Country Japan China Frequency Once a week Once a week Ports Tokyo, Yokohama, Chiba Lianyungagn, Shanghai

* The total includes transshipment and coastal traffics

42

Sea Transports

43

II. Gateway to Northeast Asia

The Port of Donghae
The Port of Donghae is located in the middle of the East Coast. The eastern part of the Korean Peninsula is well known for its setting because it is mostly mountainous and the Korean government prohibits development of the region. Masses of anthracite coal, limestone, and ore are buried in the region and limestone is processed into cement for export to Japan, China, and the Middle East. Anthracite coal, ore, and limestone are transported by sea to domestic markets.

The Port of Sokcho
The Port of Sokcho is located 110 km to the north of Donghae Port. It offers regular car ferry services linking northern China and far eastern Russia. For three northeastern provinces East Sea in China, it is more cost effective and timely to export to Sokcho Port the Americas and Europe via the Port of Donghae, passing Yellow Sea through far eastern Russia than via ports in the Yellow Sea (including the Port of Dalian). Accordingly, traffic on the route is continuously rising. At present, the port offers services to Zarubino and Vladivostok in the Russian Far East three times a week. In mid-2009, the port plans to open new services linking Vladivostok to Niigata in Japan.
CONTAINER TRAFFIC TRENDS

East Sea

Yellow Sea

Donghae Port

Donghae Port offers regular container services to Far Eastern Russia. This service covers not only far eastern Russia but also North and East Europe, and Central Asia via the Siberia Land Bridge (SLB).
PORT FACILITIES
Terminal South Terminal North Terminal West Terminal Central Terminal Terminal for Coal Terminal for Oil products Berth length 1,282m 1,190m 400m 270m 270m Water depth -10m~13m -9m~12m -10m -12m~14m -13m -6.5m Cargo Cement, Other ore, General Cargo Cement, Other ore, General Cargo Container, General Cargo, Other ore General Cargo, Other ore Coal Oil products

Unit: TEU

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008

Imports 499 1,236 2,729 3,000 3,200 3,308 3,923 3,892 1,666

Exports 343 1,157 2,053 2,481 2,637 2,993 3,802 3,823 1,641

Total 842 2,829 4,782 5,481 5,837 6,301 7,727 7,715 3,307

44

Sea Transports

45

II. Gateway to Northeast Asia

Air Transport

Incheon International Airport
The Hub of Air Freight in the Northeast Asia
Incheon International Airport is located in the center of the Northeast Asian economic zone, where 30% of the world’s trade traffic and at least 40% of worldwide air cargo originates. About 167 cities worldwide currently connect through Incheon International Airport on more than 70 global airlines. More flights to China (35 routes) and Japan (26 routes) are available from Incheon International Airport than any other airport in Northeast Asia.
Yangyang Airport

CONNECTIvITy IN THE REGION
Number of Cities Served (Dec. 2007)

Gimpo Airport (Seoul) Incheon Airport Wonju Airport

168 124 121

China Japan Europe N. America Others

106

Cheongju Airport

Pohang Airport Gunsan Airport Daegu Airport Ulsan Airport

ICN

HKG

SIN

NRT

Incheon International Airport handles the second highest quantity of international air cargo (based on tonnage) in the world and has been maintaining an increasing trend towards high traffic with an annual average growth rate of 9% since its opening in 2001. The weight of transshipment cargo as a portion of total traffic is very high (approximately 50%), indicating that air freight hub functions within the region are developing on the basis of its excellent location and connectivity.

Gimhae Airport (Busan) Gwangju Airport Sacheon Airport Muan Airport

EUROPE 39 cities

CHINA 35 cities

N. AMERICA 24 cities

ICN
Yeosu Airport
JAPAN 26 cities

International Airport Domestic Airport
AFRICA 2 cities

MIDDLE EAST 8 cities

ASIA 32 cities

Jeju Airport

OCEANIA 5 cities

When the “Open Sky Agreement among Korea, China, and Japan” becomes effective in 2010, Incheon International Airport will develop further into a Northeast Asian air freight hub.

46

Air Transport

47

II. Gateway to Northeast Asia

TAx INCENTIvES
Type National Tax Applicable Taxes Corporate Tax Income Tax Value Added Tax Acquisition Tax Registration Tax Property Tax Reduction Period / Rate 100% for the first 3 years & 50% for the following 2 years 100% for 10~15 years Requirements Manufacturing : investing over USD 10 mln Logistics : investing over USD 5 mln

Local Tax

LAND LEASE INCENTIvES
Below are the current land lease incentives based upon investment :

Investment Amount (USD) USD 5,000,000 ~ USD 9,999,999 USD 10,000,000 ~ USD 14,999,999 USD 15,000,000 ~ USD 29,999,999 USD 30,000,000 ~ USD 49,999,999 USD 50,000,000 and above

Land Lease Incentive 50% reduction in land lease for 5 years 100% reduction in land lease for 5 years 100% reduction in land lease for 7 years 100% reduction in land lease for 10 years 100% reduction in land lease for 15 years

Free Trade Zone (FTZ)
Incheon International Airport has designated the cargo terminal and airport freight complex as a Free Trade Zone (FTZ) with an area of 2,093,000 m², and is planning to expand the FTZ to an area of 3,015,000 m² by 2011 through the addition of the second stage airport freight complex with an area of 921,720 m². The FTZ is a non-tariff region that is convenient for import, export, and value-added transshipment freight activities. It has performed as a Northeast Asian freight hub for many companies by providing incentives in an international business environment. The incentive for a company located in the FTZ differs based on the amount of investment. For example, a company that invests between USD 5 million and USD 10 million can receive a 50% discount on its initial land rental term of five years, while a company that invests USD 50 million or more can be exempt from land rent for a period of 15 years. Furthermore, a manufacturing company that invests USD 10 million or more, or a logistics company that invests USD 5 million or more is fully exempt from national taxes (corporate tax, income tax, and value-added tax) for the first three years and from local taxes (acquisition tax, registration tax, and property tax) for 10 to 15 years in addition to a 50% discount on taxes for the following two years.

OTHERS
• Goods can be utilized or consumed without paying customs duty • Supply of goods or services within the FTZ is exempted from imposition of value-added tax

Strong Air Cargo Infrastructure and Cargo Terminal Facilities
Incheon International Airport which has completed the second stage of its expansion, has three extra-large runways (4,000 m × 60 m) that can process 410,000 craft (80 planes an hour), as well as a total of 40 large cargo aprons for processing of cargo aircraft on an annual basis. The Cargo Terminal Area (CTA) at Incheon International Airport consists of two sites in the south and north with an area of 2.15 million m². Major airlines, international postal services,

48

Air Transport

49

II. Gateway to Northeast Asia

U.S. military postal services, are located in the south. DHL, Polar Airlines, air cargo warehouses, are located in the north. The eight companies located in the cargo terminal at Incheon International Airport are capable of handling 4.68 million tons of cargo annually in the area with 281,680 m² in total. It is expected that new air freight businesses will be created by improved connectivity to the airport freight complex in the future.
TERMINAL FACILITIES AT INCHEON AIRPORT
Companies Size (m²) Capacity (ton)

per m²) is charged for air cargo newly created by transshipment or value-added freight activities. The land-lease period for a company in the airport logistics complex is a maximum of 50 years. The basic lease period is an initial 30 years and can be extended twice for 10 year periods so that companies in the complex are guaranteed stable and continuing business activities. Sixty-five percent of the total land was sold in lots when the freight logistics was established. Global companies that specialize in logistics such as KWE and Schenker, as well as local air freight forwarders like Logitech for Samsung, and Pantos Logistics for LG are located on premises to perform various value-added freight activities.
LEASE CONDITIONS
Item Transshipment Manufacturing Other logistics uses Specification KRW 11,490 / m² / year USD 12 EUR 8.9 KRW 11,490 / m² / year USD 12 EUR 8.9

Land lease fee (Depending on purpose)

South Cargo Terminal

Korean Air Cargo Asian Cargo Foreign Airlines Int'l Express Mail Center U.S Military Mail Center

91,900 50,400 50,400 33,800 2,000 228,500

1,420,000 1,160,000 1,400,000 350,000 20,000 4,350,000 100,000 120,000 110,000 330,000
4,680,000

Land lease fee imposing date

After 3 years from the date of execution of the agreement or business commencement, whichever comes earlier. 30 years from the date of agreement (2 extension options of 10 years each)

Land use period

Subtotal North Cargo Terminal Subtotal Total

DHL Polar Air Cargo Air Cargo Warehouse

20,000 17,000 16,180 53,180
281,680

Sixty-five percent of the total land was sold in lots as soon as the freight complex at Incheon International Airport was established. Global companies that specialize in freight such as KWE, Schenker, etc. and the air freight agencies for export companies such as Samsung Electronics, Logitech, Bumhan Pantos, etc. are located on the premises to perform various value-added freight activities.

Efficient and Competitive Airport Logistics Complex
The airport freight complex, with approximately 1,044,000 m² in total, was established to serve various logistics businesses by maximizing the advantage of the FTZ in the east of the cargo terminal at Incheon International Airport. The air freight complex is located in an optimal site, directly connecting the air cargo terminal and the runways and aprons. An air freight complex with an area of 1,400,000 m² will be additionally built up by 2011. The land rent for the logistics complex at Incheon International Airport is relatively inexpensive: USD 12 annually per m² for general logistics activity. Only half the above rent (USD 6 annually

50

Air Transport

51

II. Gateway to Northeast Asia

World’s Beating Service and Cost-Competitiveness
Incheon International Airport was selected as ‘The Best Airport Worldwide” by the Airport Council International (ACI) for four years in a row from 2005 to 2008, and was selected as ‘The Best Cargo Airport Worldwide” in 2008 by Air Cargo World. The airport offers 24-hour customs clearance service all year round and boasts the fastest export/import customs clearance (including tariff charges and refunds) in the world. It provides the world’s best service quality in its air cargo land work. Charges for using Incheon International Airport (landing charges, parking charges, etc.) are lower than other competing airports. The airport provides more competitive air freight business opportunities by implementing new route openings, flight expansion, and various discounts for airline operating during off-peak season.
FAST AND EASy CuSTOMS CLEARANCE
Incheon Airport customs ranked first cut of 169 members of World Customs Organization in ACI Service Excellence Award.
• 24 hour clearance service • Express cargo: One-stop clearance on the spot • Pre-declaration available before entry
Export Clearance Import Clearance Within 2 mins Within 2 hrs (0.5hrs if the integrated system) Within 5.2 hrs Within 10 mins

SuPERIOR GROuND HANDLING SERvICE
In order to provide the fastest and most predictable cargo handling service, ICN introduced the continuous service improvement program, ensuring a better service quality than those of other leading airport.
Activity Landside Truck Waiting Time (in 30 min) Cargo Reception (in 15 min) Cargo Breakdown-ATA Standard Passenger Aircraft (in 3.5 hrs) Freighter Aircraft (medium, in 5 hrs) Freighter Aircraft (large, in 8 hrs) Express Cargo (in 2 hrs) Perishable Cargo Inbound Cargo Assortment (in 1 hr) Mishandling Rate 95% 97% 97% 97% 97% 95% 0.00015% 97% 100% 100% 100% 100% 96.5% 0%
* Source : IIAC

Goal

Result (2007)

97% 95%

98.7% 98%

ICN’S OPERATING COSTS COMPARED wITH MAjOR COMPETING AIRPORT
ICN's aeronautical charges are lower than that of major competing airports in the region.
Category System Paperless Automatic acceptance (export) Single Window Korea UNI-PASS 100% 99.6% Complete USA ACE 60~95% 90% Complete Canada ICS 95% Measuring Complete Australia ICS 99% Preparing

Landing Charge ICN KIX NRT PVG HKG Asia Average 100% 205% 187% 117% 89% 120%

Parking Charges 100% 165% 165% 162% 159% 142%

Operating Cost 100% 190% 165% 137% 117% 125%
* Source : IATA, 2007

Customs Drawbacks Tax Payment

* Source : IIAC

INCENTIvE PROGRAM
New Air Service Incentive Increased Frequency Incentive Night Flight Incentive (23:00~5:30) off-peak Flight Incentive 100% reduction on landing charge for a year 50% reduction on landing charge for a year 25% reduction on landing charge for a year 25% reduction on landing charge for a year

52

Air Transport

53

II. Gateway to Northeast Asia

The Other Airports
Seven international and seven domestic airports, in addition to Incheon International Airport, are evenly distributed nationwide in Korea that provide various air freight business opportunities. Six international airports (other than Yangyang Airport) specialize in air cargo handling facilities (terminals) and are capable of handling about 1.2 million tons of international and domestic air cargo.
INTERNATIONAL AIRPORT
Gimpo
D I D

planning to supply logistics facilities with an area of about 26,000 to 34,000 m² by 2012 on the basis of the high marketability and utility of the logistics complex at Gimpo Airport.

Gimhae International Airport
Gimhae Airport is the gateway to the Busan and Gyeongnam regions, the second largest economic zone in Korea. It possesses various international air routes (second to Incheon International Airport), and has flights to more than 20 cities in seven countries throughout Asia and Europe (Japan, China, Taiwan, Thailand, Vietnam, Hong Kong, Russia, and Germany). Gimhae Airport upgraded its facilities to accommodate large cargo aircraft by opening its modern international cargo terminal with a total area of 18,338 m² as of January 2009. It is expected that more active air logistics business opportunities will be created in addition to the growth of the regional economy in the future.

Gimhae
I D

Jeju
I

Cheongju
D I D

Muan
I D

Daegu
I

Sub total
D I

Area (m²)
30,914 115,040 9,685 18,338 15,562 31 1,667 590 2,050 1,062 844 60,722 135,061

Annual Handing Capacity (10,000 tons)
61.8 98.9 19.0 16.3 31.0 1.7 3.3 0.5 4.1 0.9 1.7 120.9 118.3

* D: Domestic I: International

Gimpo International Airport
Gimpo International Airport (cargo terminal and logistic complex) is located within 20 km of downtown Seoul. It provides access to the largest metropolitan area with significant demand for air cargo, and also has excellent connectivity to other major Korean cities. The cargo terminal and logistics complex at Gimpo Airport performs functions similar to those of Incheon International Airport and have been developed as core logistics facilities for the Seoul metropolitan area. Many global freight forwarders specializing in logistics, including DHL, Expeditors, and Schenker are located in the logistics complex at Gimpo Airport. Korea Airports Corporation is

Jeju International Airport
Jeju International Airport handles the most domestic air cargo in Korea (80% of total air cargo) and can handle 194,000 tons annually in an area of 15,694 m². Jeju Island handles a variety of air cargo traffic, from marine products to flowers and tangerines. The demand for import air cargo is very high due to the region’s specialized tourism industry, which also creates high growth opportunities in air freight in the future.

54

Air Transport

55

II. Gateway to Northeast Asia

Rail Transport

Domestic Network
Status of the Railroad Network and Rail Cargo Transport in Korea
46.81 million tons of cargo are transported annually on Korea’s railroads with 24 routes spanning a length of 3,381 km. The railroads have not been actively extended in terms of facility expansion since 1950, but have grown 10% since 1990 due to the opening ofhigh speed railroads and the commencement of regular railroad construction projects. Doubletracking and electricification-railroad rate have steadily increased with extensions of 41.3% and 53.5%, respectively, as of 2007. The quantity of cargo transported has changed relatively little since 2000, and is smaller than the 57.92 million tons transported in 1990. Individual items tend to decrease, but by and large, containers have a tendency of steady rates of increase.

Seoul Gwangmyeong Suwon Jecheon DongHae

Chunan/Asan Chunan West Daejeon

ChungJu

Yeongju

Railroad Network Year Service Extension (km) 3,091 3,123 3,125 3,129 3,140 3,374 3,392 3,392 3,399

Cargo Transport Results (10,000 tons) Ore 466 261 239 222 226 234 197 176 200 Oil 528 258 259 265 264 255 240 220 210 Other 475 303 330 293 295 241 170 125 110 Total 5,792 4,524 4,512 4,573 4,711 4,451 4,167 4,334 4,453

Daejeon Kimchun

Double Smokeless General Electrification Tracking Cement Container Rate (%) Coal Merchandise Rate (%) 27.4 30.1 32.1 32.1 33.0 39.1 39.9 40.6 41.3 16.7 21.4 21.4 21.4 21.7 47.1 47.1 53.6 53.5 1,411 1,736 1,794 1,893 1,951 1,772 1,516 1,582 1,648 328 872 777 815 875 893 1,003 1,125 1,173 1,968 712 718 667 712 638 657 737 688 616 382 395 418 388 418 384 369 424

1990
Gyungju

Iksan Jeonju

East Daegu

2000 2001

Ulsan Masan Gwangju Sunchun Mokpo Busan Gyeonbu Line Honam Line Jeolla Line Janghang Line Jungang Line Taebaek Line

2002 2003

Busanjin

2004 2005 2006 2007

The high-speed railroad, exclusively for passenger trains, is 240.4 km long between Gwangmyeong and Dongdaegu out of a total 3,399 km of trackage. It is expected that the length of the high-speed railroad routes will reach 638.5 km in 2017 when the 2 nd stage Gyeongbu high-speed railroad and the Honam high-speed railroad projects will be completed. The Central Line (Seoul to Gyeongju), the Gyeongbu Line (Seoul to Busan), the Taebaek Line (Jecheon to Baeksan), and the Yeongdong Line (Yeongju to Gangreung) handle 9.393 million tons, 9.072 million tons, 8.308 million tons, and 7.313 million tons, of cargo respectively. They amount to 73% of the annual cargo transport quantity of 46.81 million tons sent by rail

56

Rail Transport

57

II. Gateway to Northeast Asia

in 2008. The Donghae Route, Gyeongjeon Route and Jeolla Route play important roles in rail cargo transport.

Status of Railroad Freight Centers
Freight centers to handle railroad traffic possess CYs (Container Yards) with an area of 843,000 m² in 26 stations, CFSs (Container Freight Stations) with an area of 34,064 m² in three stations, 95 cement stock facilities in 37 stations, branch centers with an area of 97,000 m², and a vehicle yard with an area of 20,690 m².
FREIGHT CENTER STATuS
Freight Center Station Category Area/Capacity Number of Stations Station Name
Ohbong, Dujeong, Sapgyo, Sojeongri, Jochiwon, Cheongju, Chungju, Bugang, Maepo, Okcheon, Ahpo, Yakmok, Busanjin, Gaya, Ulsan port, Onsan, Gangneung, Seokpo, Gunsan, Dongiksan, Dongsan, Imgok, Songjeongri, Heungguksa, Sinchangwon, Taegeum Ohbong (10,711 m²), Busanjin (3,832 m²), Sinchangwon (19,521 m²) Susaek, Ohryudong, Ohbong, Suwon, Seongbuk, Deokso, Paldang, Choseongri, Ohsong, Bugang, Maepo, Sintanjin, Heukseokri, Yeonmudae, Cheongju, Eumseong, Doan, Ganchi, Sinseong, Okma, Jupyeong, Yakmok, Sindong, Goedong, Nammunsan, Hanrimjeong, Geukrakgang, Jangseong, Yeosu, Buyong, Bukjeonju, Chuncheon, Mureung, Sinnyeong, Pyeongeun Yongsan, Seongbuk, Onsan, Ohbong, Susaek, Jinju, Changhang cargo, Bukjeonju Seongbuk (16,500 m²), Ulsan (4,190 m²) Iron Steel Center - Uiwang (6,765 m²), Ohbong (9,597 m²), Goedong (4,565 m²) Iron Steel Yard - Sinchangwon (6,460 m²), Incheon (1,280 m²) Ore Warehouse - Donghae (11,837 m²)

As for progress in ongoing regular railroad projects, as of 2009, there are 18 projects under construction with a total length of 1,109 km and a total project budget of KRW 21 trillion. There are 10 projects in the design stage with a project budget of KRW 12.2 trillion. The goal is to build a high speed railroad cargo transport system by expanding the railroad network to major industrial complexes and ports and by building major high speed arterial railways.

Trans Siberian Railway, Trans China Railway, Trans Korean Railway
South-North Railroad Connection Project
The south-north railroad connection project in Korea is between Munsan Station and Gyeseong Station (27.3 km) and between Jejin Station and Geumgangsan Station (25.5 km).

CY

843,000 m²

26

CFS

34,064 m²

3

Cement Stock 570,000 tons Facility

SOuTH-NORTH RAILROADS
Gyeong-ui Line
Munsan station to Kaesung Station (27.3 km, Single Track)

37

Branch Center Vehicle Yard

97,000 m² 20,690 m²

8 2

Munsan station

Imjingak Station

Dorasan Station

Military Demarcation Line (MDL)

Panmun Station

Sonha Station <15.3 km>

Kaesung Station

Other

6

<12.0 km>

Donghae Line
Jejin Station to Geumgangsan Station(25.5 km, Single Track)

Future Railroad Network Master Plan and Progress
The goal of the national railroad network master plan (March 2006), which sets the direction for the network’s construction through 2015, is to set up a railroad network in six south and north axes, and six east and west axes connected to the high speed railroad to connect all major cities in the nation in two to three hours time. The goal is to achieve railroad extensions of 3,816.5 km, double track rates of 64.1%, and electrified railroad rates of 73.1%.

Jejin Station <7.0 km>

Military Demarcation Line (MDL)

Gamho Station <18.5 km>

Samilpo Station

Geumgangsan Station

The south-north railroad was constructed in full by linking the Gyeongeui Route railroads (Seoul to Sineuiju) as a direct result of the historic South-North Korean Summit Talks in 2000. South and North Korea held a ground-breaking ceremony for construction to connect the

58

Rail Transport

59

II. Gateway to Northeast Asia

railroads of the Gyeongeui Route and the Donghae Route on September 18, 2002, following the terms of an agreement signed in August of that year. The construction of the south section of the Gyeongeui Route was completed in December 2002. Trains have been operating to Imjingak Station since September 2001 and to Dorasan Station since April 2002. The construction of the south section of the Donghae Route was completed in December 2005. South and North Korea tested the operation of the new connections with a train operating at a speed of 40 km/h in the 27.3 km section of the Gyeongeui Route and the 25.5km section of the Donghae Route in May 2007. Even though it was a test operation and one time event, it became the starting point to prepare for a future opening. The successful train test operation eliminated worries about safety and overcame technical obstacles to full-scale operations.

Khasan railroad and the Najin Port improvement project in April 2008. The ground-breaking ceremony of the project was held on October 4 of that year. TCR is currently saturated with domestic traffic demand by China. Thus, China has not been active in moving the continental railway connection project forward, except for its inland areas. As for the use of the TCR main route (Lianyungang – Beijing – Kazakhstan), this is seen as advantageous to connect the sea transport routes between Korea (Incheon Port – Busan Port) and Lianyungang at the moment, while the TCR main route with the inland areas of China provide service to Central Asia (Kazakhstan) after marine transport from Busan (Incheon) Port to Lianyungang. The northeast provinces of China are the major production bases for food and mineral resources. The economic growth and resident life improvement caused by the recent northeast development policy has rapidly increased demand for transport in the corresponding region. To meet these growing needs, China is constructing its ‘Eastside Railroad,’ about 1,380 km from The Amur River to Liaoning Province along the border between Russia and North Korea. The freight bottleneck of the three northeastern provinces is expected to be resolved through the construction of the Eastside Railroad in the future. In order to expand and facilitate smooth exchange with the three northeastern provinces (Jilin, Liaoning, and Heilong Jiang Provinces), it is necessary to connect them to the Gyeongeui Route. The condition of the railroad in the north section of the Gyeongeui Route among the routes passing through the Korean Peninsula is relatively good so there is high potential to succesfully utilize the Pyeongyang – Sineuiju route in the near future. Transport to the interior of China utilizing the TCR main route through Pyeonyang, Sineuiju, and Beijing is greatly needed to diversify the freight network connecting inland China and the wider Asian region.
STATuS OF TRANSCONTINENTAL CROSSING RAILROAD ROuTES
Classification Trans Siberian Railway (TSR) Trans China Railway (TCR) Trans Manchuria Railway (TMR) Trans Mongolian Railway (TMGR) Distance (km) 9,288 8,613 7,721 7,753 Double Track (km) 9,288 7,127 7,367 6,296 Building Electric Railroads (km) 8,917 5,001 6,067 5,777 Length (mm) 1,520 1,435 1,520 1,435 1,520

Progress of Trans-Continental Railway Connections
The continental railroads connected to the Trans Korean Railway (TKR) are the Trans Siberian Railway (TSR), Trans China Railway (TCR), Trans Mongolian Railway (TMGR), and Trans Manchuria Railway (TMR). The four routes of the TSR and TCR are comparable to international railroads in that they are routes with a high possibility of being utilized in connection with the South-North train. However, the TMGR and TMR lack sufficient routes in the international railroad network due to decaying facilities and inefficient border passage. Traffic on the TSR has increased recently, but returns on investment on are still relatively low. The recent positive attitude of Russia towards the connection of the TKR to TSR will be a major factor to propel the continental railway construction project in the future. Moreover, the railroad transport network to supplement sea transport to the European region has been secured for the future, and it is expected that the multi-purpose utilization of Siberia as a resource will increase. North Korea and Russia recently reached an agreement on propelling the Najin-

60

Rail Transport

61

II. Gateway to Northeast Asia

The Inter-Governmental Agreement on the Trans-Asian Railways
The basis for connecting the continental railroads was set up by concluding the intergovernment agreement on the Trans Asian Railway (TAR) at the UN ESCAP’s 3rd Conference of Ministers of Transportation held in Busan in November 2006. The 18 countries that signed it were Armenia, Azerbaijan, Cambodia, China, Indonesia, Iran, Kazakhstan, Laos, Mongolia, Nepal, Korea, Russia, Sri Lanka, Tajikistan, Thailand, Uzbekistan, and Vietnam, while the 10 countries that did not sign were Pakistan, North Korea, Bangladesh, India, Malaysia, Myanmar, Kyrgyzstan, Singapore, Turkmenistan, and Georgia.

Land Transport

Chuncheon

TRANS ASIAN RAILwAyS

Guri Gimpo Incheon Seoul Ansan
Pyeongtaek·Jecheon 57 km

Hanam
Youngdong Line 234 km

DongHae
DongHae Line 60 km

Wonju

Pyeongtaek Dangjin
Seohaean Line 341 km

Anseong Chunan Gongju Daejeon Kimchun Nonsan Jeonju Jangsu Hamyang
Iksan·Pohang Line 63 km

Punggi
Central Line 289 km

Seocheon Gunsan

Pohang

Daegu Ulsan Busan
Busan·Ulsan Line 47 km

Honam Line 194 km

Gochang
Gochang·Damyang Line 43 km

Daedong

Gwangju Muan Mokpo

Damyang Suncheon

Masan Jinju

Namhae 1 Line 17 km

Namhae Line 168 km

Muan·Gwangju Line 42 km

Gwangyang Routes are used Line under construction Private Line Private Line under construction

62

Land Transport

63

II. Gateway to Northeast Asia

Expressway and Domestic Network
Overview of expressways and national roads
Korea’s road networks consist mainly of expressways and national roads linking major cities and regions through the nation. As of late 2007, the expressways stretch 3,400 km, while national roads span 14,000 km, representing 17% of total road length. In addition to expressways and national roads, regional roads, county roads and trunk roads in downtown areas link the interior of provinces, and amount to total of 86,000 km. Total road length in Korea exceeds 100,000 km of which 78% is paved. Paved express roads of four lanes or fewer extend 2,600 km. 12,800 km of the nation’s roads are paved. 93% of them are four lanes or fewer.
KOREA'S ROAD SySTEM (AS OF LATE 2007)
Classification Expressway National Roads Regional Roads, etc. Total Length (km) 3,368 13,832 85,819 103,019 Pavement Rate (%) 100 97.4 74.2 77.6 Length of Lanes (km) Under four lanes 2,557 12,701 59,549 74,807 More than six lanes 810 766 4,258 5,834

Expansion and maintenance of expressways
The addition of 29.5km to the Gyeongin Expressway linking Seoul and Incheon in 1968 and the opening of the 426km long Gyeongbu Expressway linking Seoul and Busan in 1970 brought the entire country within a day’s travel. As of late 2007, a total of 3,368km in expressways on 26 lines had been constructed, playing a pivotal role in passenger and freight transportation by land.
STATuS OF ROADS IN OECD MEMBER STATES
Classification America Japan England France Italy Korea Road Length (km) 6,544,257 1,177,278 388,008 950,985 484,688 103,019 Road length per 1,000 persons (km) 21.40 9.20 6.38 15.43 8.23 2.13

In Korea, geographically, south-north roads have more traffic than east-west roads and are more developed. The road length per area is 1.03km/1km², hovering slightly below the level of advanced nations. The road length per 1,000 persons is 2.13km, only a tenth that of the US and slightly more than one fifth that of Japan. In France, the total road length is shorter than Japan, while the road length per 1,000 persons is 15.43km, 9.2km longer than Japan.

Gyeongbu Expressway, Honam Expressway, Namhae Expressway, Youngdong Expressway and Guma Expressway were opened in the 1970s. In the 1980s, the 182.9km 88 Olympic Expressway and the 117.8km Jungbu Expressway were built, and in the 1990s, the 92.9km road from Toegyeowon to Pankyo, Jangsu, and Ilsan, as well as the 14.3km road from Seoul to Ansan and the 15.8km Second Gyeongin Expressway were added. In addition, new roads and expressways were built including Seohaean Expressway, Jungang Expressway, DaejeonTongyoung Expressway, Pyeongtaek-Chungju Expressway, Cheonan-Nonsan Expressway and Incheon International Airport Expressway to provide more balanced development in the nation’s territory. New roads including Busan-Ulsan, Busan-Daegu, Iksan-Pohang, Mokpo-Gwangyang, Gochang-Damyang, Muan-Gwangju, and Daejeon-Dangjin were built and existing roads were extended to facilitate freight transportation between Korea and other countries. A total of 13 roads are under construction or have already been constructed. Korea is undergoing efforts to bring the entire nation to within a half-day trip. Notable achievements include the Jungang Expressway, Seohaean Expressway, Jungbu Naeryuk Expressway and the Daejeon-Tongyong Expressway.

64

Land Transport

65

II. Gateway to Northeast Asia

Jungang Expressway
The Jungang Expressway stretches from Chuncheon to Busan, spanning 362km. The road was designed to enhance accessibility to the central and inland Youngnam regions and promote tourism in these areas. The opening of the Jungang Expressway halved travel time from Busan and Chuncheon. The section between Daegu and Busan was privately funded and the sections from Daegu to Andong, from Jecheon to Wonju and from Hongcheon to Chuncheon were widened to four lanes.

ICDs and Distribution Centers
Logistics facilities in Korea include freight stations, freight terminals, collection & distribution centers, farm products distribution facilities, Integrated Freight Terminals (IFTs), and Inland Container Depots (ICDs). Among them, the logistics infrastructure refers to IFTs and ICDs. Utilizing the infrastructure, logistics activities such as transportation, storage, unloading, and shipping can proceed smoothly.

Seohaean Expressway
A 355.1km expressway was built in the western coastal region linking the Port of Incheon to the Port of Mokpo to respond to changing conditions in Northeast Asia, and to serve as a hub port. Construction commenced in 1990 and was completed in 2001. The opening of the expressway shortened travel time from Incheon to Mokpo by more than four hours.

Jungbu Naeryuk Expressway
The Jungbu Naeryuk Expressway is under construction to distribute future traffic load on the Gyeongbu and Jungbu Expressway and to balance development of the nation’s territory. It spans a total of 330.7km, of which 294.1km was opened in 2007 while the 36.6km between Yangpyeong and Yeoju is scheduled for completion in 2012.

Northern Metropolitan

Gangneung Bucheon
Metropolitan

Seoul/Dongnamgwon Gwangju Yeoju
Southern Metropolitan Eumseong

Daejeon-Tongyoung Expressway
The Daejeon-Tongyoung Expressway stretching 209.8km was opened in 2005 to meet the demand for transportation of cargo from the Port of Gwangyang to the Chungcheong region and to develop the relatively underdeveloped northeastern part of Jeollabukdo and the western part of Gyeongsangbukdo.

Pyeongtaek Chunan

Jecheon

Jungbu Area

South Daejeon Daejeon

Andong

Other Expressways
In addition to the aforementioned four expressways, Incheon International Airport Expressway (36.6km), Pyeongtaek-Chungju Expressway (59.4km), Iksan-Pohang Expressway (129.4 km), Mokpo-Gwangyang Expressway (101.1 km), Daejeon-Dangjin Expressway (94.3km), GongjuSeochoen Expressway (59.0km), Cheonan-Nonsan Expressway (80.9km), and Seoul-Yangyang Expressway (78.5km) were built (some sections are still under construction).
Honam Area

Jeonju

Youngnam Area

Ulsan

Gamcheonhang

Busan Area

Inland Logistics Bases Logistics complex In operation Construction completed Under construction Planning

66

Land Transport

67

II. Gateway to Northeast Asia

IFT and ICD
The Integrated Freight Terminals (IFTs) handle loading, unloading, classification, information processing and the packing of freight using more than two transport modes (i.e. freight trucks and railroads). Facilities include distribution centers, freight stations, container yards, and railway stations. The Inland Container Depots (ICDs) are logistics strongholds built in a strategic transportation location for roads and railways in order to reduce traffic problems between off-dock container yards and ports. The ICDs were established as a means of expanding SOC (Social Overhead Capital) and enhancing the rationalization of logistics process like shifts in transportation from land to rail. Intermodal transportation using ICD can be more effective than using single mode transportation. In 1987, the Korean government set up a distribution modernization policy for the freight terminals (IFTs and ICDs). It established IFTs in Gunpo in the capital area, Yangsan in the Busan area, Jangseong in the Honam area, and Cheongwon-Yeonji and Chilgok in the Youngnam area as five logistics bases in 1991 to reduce transport time and costs through massive freight transportation linkages via the main railway. The Euiwang ICD is a customs clearance center for containers bound for the capital area where they are temporarily stored and then transported. The depot went into service in July 1993. It covers 735,000 m² and performs customs clearance, freight collection, storage, classification, simplified bonded transportation, tariff refunds, railway transport stationing, issuance of B/Ls to shipping companies and plant quarantine. A customs house, banks, and shipping companies are housed in the ICD to handle railway transportation, tariff refunds, and B/L issues. The ICD is an extension of the pier at the port to the inland. This railway transport from the pier to the customs house in the ICD is simplified bonded transportation and carries out the same function as freight being handled at a terminal or a customs house. Tariffs are refunded early for export freight coming to the Euiwang ICD based on a certificate of Goods Carried-in issued by the ICD after the export declaration is received. Accordingly, the depot is well suited to midweight freight using railways, resulting in more freight coming to the Euiwang ICD. The Gunpo IFT will be built on a 347,000 m² site in the capital area after the then Ministry of Construction and Transportation of Korea agreed on the proposal by the Korea Integrated Freight Terminal to expand the IFT in October 2002 due to increasing demand for freight transport from the 1990s. The Yangsan IFT of the Busan area broke ground in December 1994 and went into service in

June 1999. It was built on a 317,000 m² site. With the Port of Busan and Kimhae Airport nearby, the IFT plays a role as a transport base for exports and imports. The Yangsan ICD, the inland container station for the Busan Area, is built on a 952,000 m² site and was opened in April 2000. The Jangseong ICD built in Jangseong-gun, Jeollanamdo, completed its first phase and went into service in June 2005. Currently the second phase is underway. It will be built on a 529,000 m² site and will act as a logistics hub in Jeollado. The IFT and ICD will be separately built and operated in the capital and Busan area, but the two facilities will be jointly built and operated in the Honam area as well as other areas. Accordingly, it is referred to as the Inland Logistics Bases (ILBs). The Inland Logistics Bases (ILBs), will serve as freight transport stronghold in the Chungcheong and Gyeongbuk areas, and are under construction via a private construction firm contracted in March 2005. For the ILB, freight stations, distribution centers, and container yards are being built on a 481,000 m² site in Yeongi-gun and Cheongwon-gun, Chungnam. The ILB of the Youngnam area will be built on a 456,000 m² site in Chilgok-gun, Gyeongsangbukdo. The ground was broken in February 2007.

Operation of the general freight terminal
Freight terminals other than ICDs and IFTs are called general freight terminals. There are about 30 terminals in operation throughout the nation as of January 2009. Among these, the largest terminals are the Korea Freight and Seobu Truck Terminals in Seoul, the Busan Freight Terminal, the Pohang Freight Terminal in Gyeongbuk, and the Seobu Freight Terminal in Daegu.

Role and future of logistics infrastructure
With the establishment of the ICDs and IFTs, transportation loads are distributed among small-sized trucks, large to mid-sized trucks, and railways. Small-sized trucks run between a terminal and neighboring consumer communities, while large to mid-sized trucks and railways run on a long distance platform. This led to a logistics system that realized environmentallyfriendly, cost-effective economies of scale by reducing logistics costs, including lead time and fuel costs. In addition, the construction of the ICD helped shippers save on logistics costs as they can obtain export containers from the shortest distances because empty containers can be stored in the ICD after the import goods in a container are delivered to their owners. When the aforementioned five logistics bases are completed and a new one in the northern capital area (Paju) is built, a global logistics network will be created linking regional airports and sea ports and serving as a logistics hub in Northeast Asia that carries out domestic transport and international freight transfers.

68

Land Transport

69

II. Gateway to Northeast Asia

Gyungin Waterways
The GI Waterway stretches 18km, with a 14.2km trench already completed. Digging an additional 3.8km trench toward the Han River will allow the waterway to join the Han and the West Sea.
Classification Extension Bottom Width Facilities Project Cost Gulpocheon Trench 14.2 km 80 m Trench and Embankment (Four Lanes, 13.4 km) KRW 584.9 billion Gyungin Waterway 18 km (Added Section 3.8 km) 80 m Channel, Terminal and Sluice KRW 2.2458 trillion

Expected Effects
The Ministry of Land, Transport and Maritime Affairs (MLTM) forecasts that KRW 2.25 trillion will be invested in the construction of the GI Waterway. The resultant economic effects will be 25,000 new jobs and KRW 3 trillion in production inducements. The GI Waterway will be completed in 2011 and with its completion, the waterway is expected to reduce logistics costs, control floods in the basin of Gulpocheon, relieve traffic congestion, and create demand for tourism. The Ministry of Land, Transport and Maritime Affairs anticipates that 970,000 TEU containers, 750,000 ton steel products, 76,000 vehicles, 913 m3 of sea sand and 1.05 million passengers will be on the waterway by 2030. When the Yongsan Terminal, which is part of Han River Renaissance Project underway by the Seoul Metropolitan Government, is completed, passenger ships will pass through the waterway from China to Yongsan, the center of Seoull.

The waterway can accommodate 4,000 G/T barges, larger than the original size (2,500 G/T). It will open in late 2011 but more trenches will need to be dug in order to secure the required 6.3 meter depth.

Overview of the GI Waterway project:
MAjOR FACILITIES PLAN - FOuR BASES AND FOuR SuB-BASES

Windmill Park Riverside Park Hyangyuwon Incheon Terminal Sacheongyo Waterfront Makyeongwon

Gimpo Terminal

Dumulmeori Eco Park
Four bases for logistics, culture, tourism, and leisure Four sub-bases using waterfront

70

Land Transport

71

II. Gateway to Northeast Asia

Coastal Transport
CARGO TRAFFIC ALLOTMENT PROPORTION By TRANSPORT MODE IN KOREA
80 70 60 50 40 30 20 10 0 1966 1971 1976 1981 1986 1991 1996 2001 2006
Public roads Railway Ships Airplane

Recently, however, with coastal transport’s increasing prominence as an environmentallyfriendly mode of transport, Hanjin Shipping has reopened the coastal container line service between Gunsan and Gwangyang on February 24, 2009 followed by the coastal transport service linking the Port of Incheon, the Port of Gwangyang, and the Port of Busan. This move is attributable to heightened expectations with respect to coastal transport induced by the reduction of port charges (including container line navigation charges, berthing charges, and anchorage charges) in 2009 and stricter responsibility for green house gas emissions worldwide. Hanjin Shipping plans to station two 4,000-ton container vessels (Hannamho & Hanpoho) (215 TEU) at the Port of Busan followed by the Port of Incheon and the Port of Gwangyang, and run them three times a week. The opening of the coastal container line service is expected to increase traffic from the nearby Yeosu Petrochemical Industrial Complex, the capital area, or Jeollado, to ensure stable transport methods and reduce logistics costs.

Re-examination of coastal transport as “Green Transportation”
Domestic freight traffic (based on tonnage) rose 9.7 times in the period from 1966 to 2006. Traffic increased 2.14 % by road, 5.13 % by coastal shipping, 0.85% by railway, and 315% by airplane from 1966 to 2007. Compared with the fuel consumption for one container, trucking requires 20 times more fuel than coast-sailing ships. Road transport requires eight times more energy (kcal) per tonkilometer than railway transport. The Ministry of Land, Transport and Maritime Affairs plans to complete the port-railway development plan for Busan New Port and Gwangyang Port by 2011. This plan includes the establishment of power supply facilities for large vessels and a high efficiency energy project by late 2009.

High dependence on road transport and problems
The reason behind high dependence on road transport is that recently, truckers become more competitive due to oversupply of trucks in the freight trucking market and that shippers favor road transport rather than other transport modes because of more flexible transport contracts.

Resumption of domestic coastal container liner service
The domestic coastal container liner service operated by Hanjin Shipping and Korea Express ceased in April 2006. This was triggered by competition in the coastal transport market when coastal routes between Busan and Incheon and Gwangyang were opened to foreign shipping companies in 2002. The coastal container liner service lost competitiveness due to port charge reduction exemptions (berthing charges, anchorage charges, freight immigration charges, etc.), exclusion from duty-free oil users and exemption from the overland container tax.

72

Land Transport

73

II. Gateway to Northeast Asia

A World within Korea
Free Economic Zones
What are Korea’s FEZs?
A Free Economic Zone (FEZ) is a special zone providing incentives to invite foreign companies. A special economic zone is a region that with eased regulations on economic activities occurring within the zone. Special economic zones include “trade-centered zones,” “production-centered zones,” and “complex zones.” Trade-centered zones are regions where import items within the special zone are free from various regulations like limitations on quantity, payment of tariffs, and item taxes, and foreign currency regulations. Examples include the Free Trade Zones (FTZs) in Korea, the Foreign Trade Zone in the US, and the Foreign Access Zone in Japan. The production-centered zone is a special zone for inviting foreign manufacturing companies. Examples are the Free Trade Zones in Korea, the Export Processing Zone in Taiwan, and the Special Economic Zone in China. Third, a complex zone is a zone with a trade-centered zone plus a productioncentered zone, and can guarantee a wider range of economic activities like trade, production, and financing.
TyPES OF SPECIAL ECONOMIC ZONES
Classification Trade-Centered Zone Details
Regions for Activating Trade Functions among Nations

East Sea
Incheon FEZ Hwang-Hae FEZ Saemangeum-Gunsan FEZ Daegu-Gyeongbuk FEZ

Yellow Sea

Busan-jinhae FEZ Gwangyang Bay Area FEZ

Cases
• Korea: Free Trade Zone • America: Foreign Trade Zone • Japan: Foreign Access Zone • Korea : Free Trade Zone, Foreign Investment Zone • Mexico: Maquiladora • Taiwan: Export Processing Zone • China : Special Economic Zone • Hong Kong, Singapore, China Pudong

Production-Centered Zone

Regions Maintaining a Production Base with the Provision of Tax Benefits

Complex Zone

Regions for Comprehensive Business with Trade, Production and Financing Combined

Among the special economic zones, Korea’s FEZ is a complex special economic zone that includes export activities, logistics, financial services, education, R&D, sightseeing, culture, and a foreign residents’ environment. Free Trade Zones (FTZ) and Foreign Investment Zones (FIZ) are roughly similar to Free Economic Zones, though they differ in some critical respects. An FTZ is a region that guarantees freedom of manufacturing, distribution, and trade activities through relaxed regulations to attract foreign investment, improve international trade, and promote regional development. In an FEZ, tariffs are not applied, and various taxes (corporate tax, acquisition tax, registration tax, and property tax) and rent are reduced for foreign companies. Moreover, the goal of an FEZ is to improve the management environment of foreign investment companies and the living conditions of foreigners in order to promote foreign investment. Various tax reduction benefits have been provided for foreign capital invested in the FEZ.

74

Free Economic Zones

75

II. Gateway to Northeast Asia

Eased regulations are applied to medical services and education in these areas to create an environment suitable for foreigners. Labor activities can be specifically regulated to create a better environment for corporations. In this respect, FEZs can be a more comprehensive special economic zone compared to FTZs and FIZs. The targets of FIZs are only corporations, while the targets of FTZs are exportoriented foreign companies. The targets of FEZs include not only the manufacturing industry but also all industries such as logistics, business, sightseeing, education and medical services.
Barcelona

Copenhagen London Amsterdam Southampton Rotterdam Le Havre Paris

Moscow Vancouver Ulan-Bator Dandong Tashkent Cairo Jidda Dubai Aden Colombo Singapore Zhengzhou Beijing Tianjin Seoul Vladivostok Tokyo Yokohama Osaka

Seattle Portland Oakland

Los Angeles

Long Bea

Shanghai Keelung Hongkong Kaohsiung Bangkok

SIx FEZS
Incheon Busan-Jinhae Gwangyang Bay Area Yellow Sea SaemangeumGunsan Daegu-Gyeongbuk
Cape Town Durban Port Elizabeth

Dampier Brisbane Sydney Melbourne Auckland Wellington

Area (km²) 209 105 89 Airports / Ports
Incheon Int'l Airport/ Incheon Port Busan Port/ Busan New Port Gwangyang Port Pyeongtaek Port · Dangjin Port Gunsan Port, Gunzang New Port Daegu Int'l Airport

55

67

40

Advantages of Korea's FEZs
Geographically, Korea has huge background markets with respect to China and Japan and plays a key role as a center for trade in Northeast Asia. Moreover, strong shipping networks, air networks, and ports have been developed to connect Korea's FEZs to every continent in the world. Linkage of the railroad network to the TSR (Trans-Siberian Railway), TCR (Trans-China Railway), and TMGR (Trans-Mongolian Railway) is being prepared so that a direct connection to Russia, China, and Europe will be possible. In the areas of policy, market, manpower, and infrastructure, Korea’s Foreign Economic Zones boast some of the highest investment attractiveness of any FEZ in the Northeast Asian region. It is important to note that the Korean government actively solicits foreign investment through the adoption of favorable policies. Korean can also provide strong human resources. The Korean public’s strong desire for educational achievement, strong IT technology and inherent diligence all maximize the productivity and cost-efficiency of tenant companies in Korea’s FEZs. In particular, Korea’s FEZs are equipped with strong infrastructure to provide an optimum business environment for foreign companies. Incheon International Airport, the Port of Busan, and the Port of Gwangyang are recognized as some of the world’s best facilities. Furthermore, a large logistics complex has been created to attract logistics companies in support of tenant companies in the regions behind major airports and ports. All Korea’s FEZs are directly connected to suitable airports and ports.

Development Period 2003-2020 2003-2020 2003-2020 2008-2025 2008-2030 2008-2020

Major Industries to be Attracted
- Land development - Int'l business - Logistics - Tourism, leisure - Cutting-edge industries - Manufacturing - Logistics - Cutting-edge parts and materials - Manufacturing (Automobiles, Shipbuilding) - Tourism, Leisure - Logistics - Fine chemicals - New materials - Tourism, Leisure - Manufacturing - Cutting-edge (Automobiles, manufacturing Shipbuilding, (Automobiles, It, Machinery, etc.) Biotechnology, etc.) - Logistics - Electronics information - Biotechnology - Int'l education - Medical complex - Textiles, Fashion

- New and renewable - Games, Software energy - Manufacturing (parts and materials, - Tourism, Leisure (catering to chinese IT) clients)

Website www. ifez.go.kr www. bjfez.go.kr www. gfez.go.kr www.yesfez.go.kr www. sgfez.go.kr www.dgfez.go.kr

76

Free Economic Zones

77

II. Gateway to Northeast Asia

Korea is actively trying to attract more investment from foreign companies outside Northeast Asia (i.e. China and Japan) and various incentives have been provided for tenant companies to this end. In order to provide the conditions preferred by foreign companies, tax reduction, financing, reduction of regulations, simplification of administrative procedures, and a better settlement environment are being made available, and there are no limitations on residence among other special zones in Korea. Thus, various facilities like manufacturing related facilities, international airports and ports, international logistics centers, international business complexes, education institutions and residential complexes can be set up inside the FEZs. Korea’s FEZs will be a strategic partner for the success of residing companies as an optimal location for foreign companies hoping to enter China, Japan in Northeast Asia and emerging countries in Asia.

▒ INCENTIvES AND SPECIAL LAwS TO ATTRACT FOREIGN INvESTMENT INTO FEZS STRONG POINTS OF KOREA’S FEZS
Classification Details
• Active Foreign Investment Support Systems and Favorable Policy Environment, including the Foreign Investment Promotion Act • Integrated Foreign Capital Invitation Support Agency, including the Free Economic Zone Authority and Invest Korea • Various Incentives, including Tax Reduction, Cash Support, and Financial Support • Access to the Chinese and Japanese Markets • The World’s 12th largest trading nation through trade with 220 Countries • Expansion of the Market by Actively Pursuing FTAs like the Korea-USA, Korea-China, and Korea-EU FTAs • Domestic Market with World’s 12th largest GDP Growing by 5% Annually • Sophisticated Consumers Ideal as for Test Marketing • Leading Companies like Samsung Electronics, Hyundai/Kia Motors, and POSCO • More than Half of the Global Fortune 500 Companies are Present in Korea • Educated and Motivated Workforce • High Labor Productivity • Outstanding Technical Capability in IT and Strong Technical Skills in Shipbuilding • Rapidly Emerging Female Workforce • Decreasing Labor disputes and Stable Industrial Relations • Incheon International Airport, the Hub of Northeast Asia • Geographically Optimal Ports • Competitive Freight Conditions through High Speed Railroads and Expressways, and Future Connection to the TSR and TCR • Strong IT Environment and R&D Centers • Urban Environment with Access to Nature • Cultural and Recreational Facilities • Numerous Foreign Schools and High-Level Medical Services • House Lease Agreement and Rental Houses • Simultaneous Interpretation Services with Cell Phones • Foreigner Life Support Centers, including the Free Economic Zone Authority and Invest Korea

Policy

Tax Cuts

• BENEFITS Companies operating in FEZs eligible for tax deductions based on the following formula: Deduction = taxable revenue × foreign investment rate × tax rate - The above deduction applies to corporate, acquisition, registration and property taxes (including land taxes) and to income taxes for business owners. - The above deduction applies for three years after the generation of operating income; companies and business owners save 50 percent of that amount for two years thereafter. - Also, companies are exempt from tariffs on imported capital goods for three years. • MINIMuM INvESTMENT - Land development: USD 30 million - Tourism: USD 10 million - Medical institutions: USD 5 million

Markets

- Manufacturing: USD 10 million - Logistics: USD 5 million

• Cash grants to establish a business and cover start-up costs

Financial Support

• Private (non-bid) contracts available for publicly-owned property at reduced cost: Rent as low as 1 percent of land-clearing costs • The National Treasury support for infrastructure construction

Manpower

Flexible Labor Regulations Tax Benefits for Foreign Workers

No obligation to fill a certain quota of workers with disabilities or offer paid leave.

Infrastructure

Foreign employees of companies operating in FEZs receive an income discount credit of 30 percent; a low income tax rate of 17 percent applies to earners in certain tax brackets

Living Area

78

Free Economic Zones

79

II. Gateway to Northeast Asia

of the nearby islands. The Cheongra District is being developed as a city for international finance and leisure. The Songdo District is being developed as a new city for international business on the basis of IT, BT, and R&D. Harmonious development for each region will provide foreigners residing in the FEZs with the best settlement environment for international business, education, medical services and sightseeing. The IFEZ has the potential to develop as a global international city as a result of its geographical location. China is a 1.5 hour flight from Incheon, and Japan can be reached in a similar amount of time. 51 cities with a population of at least one million or more are located within 3.5 hours flight from Incheon. Furthermore, the metropolitan area with a population of 22 million constitutes the largest consumer market in Korea. Incheon International Airport provides airliners to 133 cities in 41 countries, and is strategically located to connect this large market. The ratio of transshipment from Incheon International Airport is the highest in the Asia-Pacific region. The cargo volume is the third largest in the world. Passenger transport volume is the 10th in the world. Two runways are being expanded recently, and 1,058,000 m² is being added to the current area of 1,091,000 m² for the cargo terminal so that it can more effectively play a role as the largest hub airport in Northeast Asia. Moreover, the Port of Incheon, the gateway to the metropolitan area helps provide smooth exports and imports. Incheon is well connected to China, making it an optimal location for foreign companies doing international business with China.

Korea’s Free Economic Zones
Incheon FEZ
The Incheon Free Economic Zone (IFEZ) is the first FEZ designated by the Korean government in August 2003 as an international business base. With a vision of “Building the East Sea Best Business-Centered City in Northeast Asia by Actively Incheon FEZ Enabling International Business, Logistics, and KnowledgeYellow Sea Based Industries with Human Resources, Companies, and Nature”, the base’s creation will be complete by 2009. In order to realize this vision, Incheon is being developed as an international city with the goal of building industrial innovation clusters, logistics networks, and a financial hub that comprise an optimal spatial organization. The IFEZ is classified into 3 regions in total including the Yeongjong District, Cheongra District, and Songdo District, and is being developed in a linked fashion to attain functional efficiency. The Yeongjong District is being developed as a facility for freight and distribution for the Incheon International Airport, a hub airport in Northeast Asia, and for sightseeing and leisure

80

Free Economic Zones

81

II. Gateway to Northeast Asia

Busan·Jinhae FEZ
The Busan-Jinhae FEZ (BJFEZ) was declared in October 2003 to make it advantageous for foreigners to invest in and reside in Gangseo-gu, Busan and part of Jinhae, Gyeongnam. Envisioned as “The Global Logistics and Business Center”, it is being developed as an optimal base for investment by foreign companies.

Wungdong District is being developed as a base for logistics, distribution, leisure and recreation. A large port background complex has been built up in the district to ensure it can play a role as a logistics base in Northeast Asia, and a sightseeing and leisure complex is being developed by links with the south coast sightseeing industry belt. The Busan New port, with current development projects of 30 berths in the BJFEZ, is creating a global network connecting Europe, Southeast Asia, Northeast Asia, and America. As a large hinterland is being developed in the north, the south, and the west, nine domestic and overseas companies are operating as of 2009, and 13 companies are applying for residence. It is also linked with railroad infrastructure, including the TSR, TCR, TMGR, etc., while Gimhae International Airport is within 20 minutes, all providing direct routes to major cities in Asian countries like Beijing, Tokyo, Manila, and Bangkok. The combination of ports, airports, and railroads provides optimum logistics conditions.

East Sea

Yellow Sea

Busan·jinhae FEZ

BJFEZ consists of five districts in Sinhang, Myeongji, Jisa, Dudong, and Wungdong, and these districts are being developed in a radial shape with close linkages. Sinhang District is being developed as a base for logistics, distribution, international business, and marine affairs by building a container terminal with 30 berths and a logistics complex behind it. Myeongji District is being developed as a base supplying air freight, hightech parts and materials, as well as comfortable and attractive residences for foreigners. Myeongji District is being used as a production base in Northeast Asia by a French company, Renault Motors, proving the competitiveness of its location. Jisa District is being developed as a high-tech industry and R&D center exclusively for foreigners. Competitive infrastructure facilities for manufacturing including automobile parts, machinery, shipbuilding machinery, and materials, this is a district where significant foreign investment is being made with a focus on the Busan Scientific Local Industrial Complex. Dudong District is being developed as comfortable residential complex and industrial and electronics education and R&D center.

Gwangyang Bay Area FEZ
The Gwangyang Bay Area Free Economic Zone (GFEZ) was designated on October 30, 2003 to create a production base for international logistics and to develop the area as a sea freight depot for Northeast Asia. The GFEZ is being developed by dividing it into five districts like Gwangyang, Yulchon, Sindeok, Hwayang, and Hadong to make the best environment for foreign investment.
Yellow Sea

East Sea

GFEZ

Gwangyang District is being developed as the Gwangyang container terminal and a large port in the hinterland. Fourteen foreign companies reside in the Gwangyang hinterland as of 2009. Gwangyang Port is an optimal base for managing 16 modern container terminals that can be linked to the world. New materials, precision industries, iron steel, shipbuilding, petroleum and chemicals, energy, and assembled metal industries are producing in the Yulchon District. In particular, a 4.1km² area (out of 4.7km²) was sold in lots in the first Yulchon Industrial Complex so that 38 companies could begin operation. Sindeok District is being developed as a center of residence, education, medical services and R&D. Hwayang District is being developed as an ocean leisure and sightseeing complex where a country club and a marina will be located. Production functions like shipbuilding, ship machinery, and assembly will be located in Hadong District.

82

Free Economic Zones

83

II. Gateway to Northeast Asia

The Gwangyang Port is a major transshipment base in the Northeast region functioning in the GFEZ and has been evaluated as an optimal location to perform international business. Gwangyang also boasts high quality of life due to the development of its sightseeing resources and cultural arts.

Yellow Sea FEZ
The Yellow Sea FEZ (YSFEZ) was designated with an area of 55,050,000 m² with a vision of establishing an “International Cooperation Base around the Yellow Sea”. The FEZ is located in Gyeonggi-do and Chungcheongnam-do and was created in May 2008 with a mission of “cultivating districts for specialized knowledge creation and development and as a depot for export to and import from China.

expectation of an increased presence from foreign companies. The FEZ has been evaluated as a particularly suitable location for valueadded freight activities for foreign companies targeting the China market.

East Sea

yellow Sea FEZ

Yellow Sea

Daegu-Gyeongbuk FEZ
The goal of the Daegu-Gyeongbuk Free Economic Zone (DGFEZ) is to invite foreign capital, technology, and advanced think tanks to the knowledge-based local manufacturing and service industries to create a knowledge innovation cluster. The DGFEZ is equipped with strong transporta tion infrastructure, including international airports, high speed railroads, and seven expressways that put the whole country within 2 hours. It is home to global companies like Samsung, LG, ExxonMobil, and Siemens.
Yellow Sea

The YSFEZ consists of 5 districts in Songak, Inju, Jigok, Poseung, and Hyangnam, and is to be developed as a center of high-tech industry. Songak District has been created as a high-tech industry cluster for automobile parts, electronic information businesses and R&D. Moreover, it was developed as a self-sufficient city enabling international business, logistics, commercial activities, residences, and ecological parks. In the Inju District, a cluster of deep knowledge-based industries like displays and semiconductors has been created, including an international business complex with convention centers and exhibition halls. Jigok District has been built up as a high tech automobile parts cluster linked with the nearby special automobile complex. Poseung District supports hightech industries like automobile parts, electronic information, and R&D, and global logistics with Pyeongtaek and Dangjin Port as the center, while also providing international business facilities and and leisure facilities like hotels and casinos. Hyangnam District is being developed as a high-tech BT industry cluster for bio-pharmaceuticals, medical devices, and biological electronics linking existing nearby industrial complexes with the pharmaceutical and IT industries. The Location of YSFEZ is competitive in many respects, and is within one hour from the Port of Pyeongtaek and Dangjin, Incheon International Airport, and a large background market. Samsung Electronics, LG Display, Hyundai Kia Motors, and Hyundai Steel have further confirmed its competitiveness. Pyeongtaek and Dangjin are constructing a large hinterland in

East Sea

Daegu-Gyeongbuk FEZ

Moreover, the Daegu-Gyeongbuk region possesses a strong economic base in manufacturing, including electricity, electronics, machinery, steel, and fabric as well as new growth industries like energy, IT integration & convergence, and medical services. Regional universities and colleges supply 70,000 or more workers annually so that abundant human resources and a sound industrial relations culture is being created. There are also 600 or more various public institutes and technology research centers like the Daegu Gyeongbuk Institute of Science and Technology, the ETRI Daegu Center, the Pohang Accelerator Laboratory, and the Pohang Institute of Intelligent Robotics which provide support for R&D for various companies. The region also possesses five university hospitals, six general hospitals, 61 regular hospitals, and 25,000 or more medical personnel. Medical services are abundant and medical device manufacturing is thriving, while an environmentally-friendly green city is also being created so that there is no inconvenience to foreigners’ daily lives.

84

Free Economic Zones

85

II. Gateway to Northeast Asia

In the DGFEZ, a knowledge corridor consisting of the IT Valley, Knowledge Service Valley, Parts Materials Valley, and Convergent Technology Industr y Valley, is being created and developed in five cities, including Daegu, Gumi, Gyeongsan, Yeongcheon, and Pohang, as well as 11 project districts. The IT Valley is to be created as a global free technology district by activating knowledge-based industries such as IT, mobile communications, robotics, and solar energy. The Knowledge Service Valley is being developed as a base for the international culture industry by intensively recruiting the culture creation industry, including education, medical services, culture, and fashion on the basis of competitive education conditions and human resources. The Parts Materials Valley is a district specializing in the knowledge-based manufacturing industry, including high-tech mechatronics and intelligent vehicles to upgrade the vehicle parts and machinery industry. The Convergent Technology Industry Valley is being established to invite future growth industries like NT, BT, RT, and ET and R&D on the basis of abundant potential in science and technology including think tanks and the capital of POSTECH and POSCO.

Saemangeum-Gunsan FEZ
The Saemangeum-Gunsan FEZ (SGFEZ) has been developed to intensively cultivate new industries as well as marine sightseeing and leisure. It is to be set up in the 401 km²-wide Saemangeum area with the world’s longest sea wall at 33km, and the Gogunsan peninsula, which is near some 60 islands. The SGFEZ is being developed in four districts, including the Saemangeum Industrial Complex, Saemangeum Sightseeing Complex, Gogunsan International Marine Sightseeing Complex, and the Gunsan Residence surrounding areas.

East Sea

Saemangeum-Gunsan FEZ

Yellow Sea

The large scale cluster for high-tech industries and new energy has been built in the Saemangeum Industrial Complex. The international sightseeing complex includes a park, golf complex, and sightseeing and leisure facilities all constructed in the Saemangeum Sightseeing Complex. The international marine sightseeing complex includes a luxury hotel, villa zone condominium, marina, casino, and water park and has been created mainly in the coast of Gogunsan in the Gogunsan International Sea Sightseeing Complex. A comfortable residential area for foreigners includes public areas, with residential and commercial facilities all harmonized with the natural environment, parks, and green spaces of the Gunsan Residence surrounding areas.

86

Free Economic Zones

87

II. Gateway to Northeast Asia

Free Trade Zones
What are Korea's FTZs?
Liberalized trade in goods and services, and the development of new integrated transport networks and information and communication technology have brought about seismic changes to international commerce and the logistics industry. Fierce competition triggered by such changes has led the public and private sector to realize the need to expand business strategy beyond national and regional boundaries and toward the world. Market strategies are required to respond to customer needs stemming from changes in the global market, cost savings, and quality improvement. In particular, global companies strengthen corporate competitiveness in the world market by mapping out global market strategies, thus manufacturers advancing into overseas markets must pay close attention to supply chains as part of their global strategy. They also must make efforts to enhance competitiveness by reducing inventory and financing costs and providing customer-oriented services and additional logistics services. Accordingly, companies need to set up logistics centers in ports, airports, or industrial complexes to perform integrated logistics management. In addition, the trend to introduce logistics supply chains led by specialized logistics companies has accelerated with the introduction of rationalized and simplified tariff and nontariff barriers. With this trend, most Asian countries rushed to establish Free Trade Zones for the logistics industry (centered on logistics companies) centered on airports and seaports to maximize economic benefits. Northeast Asia has built a supply chain for global production and consumption since the 1990’s centered on China, the “factory of the world.” Northeast Asian countries established Free Trade Zones based on ports and airports and provided assistance for the global logistics supply chain in response to the needs of multinational companies. Korea, capitalizing on its geopolitically advantageous location in Northeast Asia, shifted the center of its Free Trade Zone to the logistics industry in the 2000s from the manufacturing industry in the 1970s. With Free Trade Zones, Korea has improved its national competitiveness as a logistics hub in Northeast Asia, meeting the needs of multinational companies and conforming to global business standards. Korea’s Free Trade Zones have developed as competitive regions in manufacturing and logistics in Northeast Asia. The Korean government offers a variety of incentives to Free

Trade Zones to promote foreign investment and export/import logistics. In particular, Korea's Free Trade Zones are located in a hub of railway, land, and marine transportation, including an international hub airport and ports to enhance global logistics competitiveness. Like Singapore, Korea has designated airports and seaports which provide one-stop service in the global supply chain. The centers are the Port of Busan, the Port of Gwangyang, and the Port of Incheon.
▒ CONCEPTS OF KOREAN FREE TRADE ZONES
DOMESTIC AREA
(Tariff Region) Levying of tariffs Customs (Gate) Import Customs Clearance Carrying-in of goods Regarded as Exports (Refund/Exemption)

FENCE

Foreign Countries

Free Trade Zone
(Non-Tariff Region)

Exemption of tariffs Customs Omitted Carrying-in of goods

Logistics and Production
Carrying-out of goods
Unloading, Transport, Storage and Exhibition, Manufacturing, Wholesale, etc.

Re-export and Transshipment

These Free Trade Zones house 43 global companies from Europe, China and Japan due to their strategic location, where tenant companies can address markets in Korea, Japan and

88

Free Trade Zones

89

II. Gateway to Northeast Asia

China simultaneously. In addition, many domestic and multinational companies are willing to move in the logistics-centered Free Trade Zones to be developed from 2009. The Korean government is ready to offer eight industrial complex type Free Trade Zones (Masan, Donghae, Yulcheon, Ulsan, Gimje, Iksan, Gunsan, Daebul) and five logistics-based Free Trade Zones to companies at home and abroad in response to strong interest and request for tenancy in the port Free Trade Zones. In particular, logistics-centered Free Trade Zones include five port Free Trade Zones (the Port of Busan, the Port of Gwangyang, the Port of Incheon, the Port of Pyeongtaek·Dangjin, and the Port of Pohang), and one airport Free Trade Zone (Incheon International Airport). The Port of Busan and the Port of Gwangyang Free Trade Zones already house 43 global companies in the form of a consortium, and companies are expected to move into the Port of Incheon and the Port of Pyeongtaek·Dangjin Free Trade Zones.

Advantages of Korea’s Free Trade Zones
The strong response of multinational companies for Korea’s Free Trade Zones is largely due to better accessibility to China, Japan and Far eastern Russia than neighboring countries, allowing them to engage in various businesses. Another attraction is the incentives provided by the Korean government. Korea’s Free Trade Zones offer the best incentives and administrative assistance to tenant companies, including deregulation in manufacturing, distribution, and trade, optimal infrastructure, low rents for land and buildings, tax reduction, and one-stop administrative services so that tenant companies can do business friction-free. The Korean government simplifies customs clearance on value-added logistics activities such as the movement of goods and transfer among registered companies and the use/consumption/maintenance of foreign goods, and applies zero value added taxes. In particular, the Korean government removed most financial regulations such as foreign remittance that neighboring countries still regulate. The following are major incentives offered to tenant companies in the Free Trade Zone in Korea.

▒ INDuSTRIAL COMPLEx FREE TRADE ZONES (AS OF LATE 2008)
Classification Designation Year Area (km²) Tenants (foreign invested companies) Employment Masan '70.01 954 98(52) 7,510 Iksan '73.10 310 31(6) 1,294 5.3 million 1.5 billion Gunsan '00.10 1,254 27(6) 1,901 (scheduled) 20 million 0.14 billion Daebul '02.11 1,156 30(21) 2,326 63 million 2.8 billion Donghae '05.12 248 Yulchon '05.12 343 1(1) 20 50 thousand Ulsan '08.12 1,297 Gimje (Planned) '08.12 992 -

MAjOR INCENTIvES OFFERED IN FTZS
Duties withheld
• Goods required for production and manufacture such as facility materials and raw materials • Goods held by logistics companies or traders for some period (goods for intermediate trade, etc.)

Tax incentives
• Manufacturing companies that can invest more than ten million dollars, logistics companies that invest more than five million dollars
 Corporate income tax, income tax, 100% reduction for three years, 50% reduction for two years  Property Tax, Acquisition tax, Registration tax, Composite land tax: 100 to 50% reduction for fifteen years at maximum.

Foreign Investment 128 million (USD) Exports (USD) 3.3 billion

• Application of zero value-added tax

▒ LOGISTICS-CENTERED FREE TRADE ZONES (AS OF LATE 2008)
Classification Designation Year Area (million m²) Tenants (Foreign Invested Companies) Freight Volume Investment Attraction (Foreign Investment) Busan Port 2002.01 5,451 25(22) 19.97 million ton Gwangyang Port 2002.01 6,755 26(25) 9.82 million ton Incheon Port 2003.01 2,294 15(0) *Ten companies moved in. Stevedores Korea tenant companies Pohang Port 2008.12 709 Incheon Int'l Airport 2005.04/2007.12 3,015 550 (12) USD 108,900,000

 Domestic goods supplied for export to Free Trade Zones  Goods and services provided by one tenant company to another

Other
• Provide one-stop service, including construction permits, factory establishment, tax reduction, reporting of foreign investment

USD 455,900,000 USD 343,900,000 (USD 80,794,000) (USD 108,155,000)

* Pyeongtaek Port is scheduled to develop 1.428 million m²

90

Free Trade Zones

91

II. Gateway to Northeast Asia

Rents in the Port Free Trade Zones
Rents in Korea's Free Trade Zones are extremely competitive, at less than half the rent in China’s coastal free trade zones. Most tenants in the Port Free Trade Zones receive preferential rents because they meet the requirement of a minimum 10% foreign stake. The applicable rents are different for each port, but are all very attractive. According to a survey of tenants in late 2008, rents in the Free Trade Zones were recognized as the lowest in the world, while the geopolitical location and logistics infrastructure of Korea were rated as excellent. External factors such as the appreciation of the Korean Won have brought about positive effects like lower labor costs and export prices.
Applicable Period

Port FTZ Basic rent Port of Busan Preferential rent Rent based on publically announced land prices Basic rent Port of Busan/ Busan New Port Preferential rent Rent based on publically announced land price Basic rent Port of Gwangyang Preferential rent Rent based on publically announced land price

Conditions General Tenants Logistics companies among foreign invested companies Tenants not suitable for the purpose of designation of free trade zone General Tenants Logistics companies among foreign invested companies Tenants not suitable for the purpose of designation of free trade zone General Tenants Logistics companies among foreign invested companies Tenants not suitable for the purpose of designation of a free trade zone

Rents KRW 300 per month per m² KRW 150 per month per m² Publically Announced Land Price×50/1,000 (annual) KRW 260 per month per m² KRW 40 per month per m² Publically Announced Land Price×50/1,000 (annual) KRW 200 per month per m² KRW 30 per month per m² Publically Announced Land Price×50/1,000 (annual)

Industrial Complex Free Trade Zone
3 years

Masan Free Trade Zone
The Masan FTZ is the first industrial complex only for foreigners. It was designated as a Free Export Zone in 1970. However, it was designed as a Free Trade Zone in 2007 and plays a central role in Korean exports by attracting foreign investment companies. It is recognized as successful model of Free Trade Zones among 1,000 FTZs in 120 countries. It added 160,000 m² in December 2006, thus the entire area was 953,000 m².

East Sea

Yellow Sea

Masan FTZ

Rents in the Port Free Trade Zone in Korea are uniform despite the presence of foreign stakes and are more favorable than those in Japan and China. In addition, the buildings are equipped with an EDI system based on the latest technology, enabling tenant companies to do business in an optimum environment.
▒ RENT OF BuILDING (COMPOSITE LOGISTICS wAREHOuSE) IN THE PORT FREE TRADE ZONE
Classification Port of Busan Port of Gwangyang Rent KRW 641 per month per m² 3 years KRW 510 per month per m² Applicable period

Masan and Changwon, the hinterlands of the Masan FTZ, are representative industrial clusters that have experienced research manpower, educated labor, and high levels of technology. The two cities are favorable for value-added high-tech companies. Masan FTZ has continued to expand through renovation and modernization because it continues to accommodate foreign invested companies. A project to modernize facilities has been underway from 2009 to 2014. When the project is completed, tenant companies will increase to 130 companies from the current 94, and annual exports will rise to USD 10 Billion from USD 5 Billion. Employment will increase to around 20,000 jobs from 7,000.

92

Free Trade Zones

93

II. Gateway to Northeast Asia

Iksan Free Trade Zone
The Iksan FTZ is the second Free Export Zone designated as such in October 1973. After the related law was revised, it was designated as a Free Trade Zone. Iksan FTZ will be renovated into a national industrial complex where both foreign and domestic companies can easily enter beginning in 2011, after it is successfully sold in 2010.

shipbuilding-related companies and one machinery manufacturer, giving the shipbuilding industry the lion’s share of the zone. Foreign companies that want to do business in the shipbuilding industry in Korea will be benefit the most.
East Sea

Yellow Sea

Iksan·Gunsan FTZ

The Daebul FTZ has provided standard factories with KRW 70 Billion in investment since May 2008. Standard leased factories consist of 4 buildings for light industry, 2 buildings for heavy industry and warehouses. The greatest advantage of the standard leased factory is the additional rent incentive of KRW 700-800 per month per m².

Gunsan Free Trade Zone
The Gunsan FTZ is situated in the Gunjang National Industrial Complex. The 1.254 million m² area was designated as a Free Trade Zone in October 2000. The FTZ is divided into three districts, Production, Logistics, and Support. The Production District provides two types of factories; Self-owned factories (a tenant company leases the site from the Korean government to set up a factory) and standard factories (a tenant company leases a government-owned factory). A standard factory is a useful system where the Korean government is responsible for construction and maintenance while a tenant company can be immersed in business activities only. In the Logistics District, the Korean government sets up a joint logistics center and offers it to tenant companies at a highly competitive price. The Support District provides conveniences for tenant companies such as production support facilities, public facilities, employee welfare facilities, and sports and fitness facilities. The Gunsan FTZ spans a 29.091 million m²site on industrial land, including Gunjang National Industrial Complex. New sites are also available in the FTZ because of the Saemangeum Reclamation Project. It has very favorable conditions as a growth base for the automobile industry, including GM Daewoo, TATA Daewoo Commercial Vehicle, and the Automobile Parts Complex. It is only two hours away from the capital city, Seoul, and within one hour from Daejeon and Gwangju. It is expected to play a gateway to the Administration Complex.

Donghae Free Trade Zone
The Donghae FTZ was designated on a 248,000 m² site in December 2005 for development as a base for trade in Korea's East Sea Area and northward trade. Advanced manufacturing and logistics industries related to IT, BT and new materials will be intensively developed in the FTZ. The Donghae FTZ has favorable conditions to securing raw materials from Northeast Asia (including Russia) and excellent import/export conditions. It has the Donghae Port and Yangyang International Airport in its vicinity, which will help facilitate import/export activities.

East Sea

Yellow Sea

Donghae·yulchon FTZ

Yulcheon Free Trade Zone
The Yulcheon FTZ was designated in December 2005 to set up a place where companies can freely do business and international trade without barriers, and to attract foreign investment. Yulcheon 1 Industrial Complex placed in the Port of Gwangyang Free Trade Zone will be built on a 9.157 million m² site by 2011. The Yulcheon FTZ has the Gwangyang Container terminal nearby, so it is easy to carry in and carry out goods and raw materials. The average annual temperature is 13.8C and the average annual rainfall is 13.93 mm. Relative humidity is 68% and the average wind speed is 4m/ sec. It has optimal weather conditions. With its favorable location and conditions, Yulcheon 1 Industrial Complex has already received LOIs (Letter of Intent) from 17 companies who want to move in. Major industries include shipbuilding, heavy industry, and the petrochemical industry for tenant companies POSCO and Hyundai HYSCO.

Daebul Free Trade Zone
The Daebul FTZ was built on a 1.156 million m² site in November 2002. Occupancy rates exceeded 70% via linking with the shipbuilding industry cluster project. Currently, a total of 16 companies are operating there, including eight Korean companies (including Hyundai Mipo Dockyard) and eight foreign companies (including K.S. Yanase Industry). There are 15
East Sea

Yellow Sea

Daebul FTZ

94

Free Trade Zones

95

II. Gateway to Northeast Asia

Ulsan Free Trade Zone
The Ulsan FTZ was designated in December 2008 to create a site that combined advantages in logistics, international trade and production and grew into a cluster in connection with East Sea the Northeastern industrial belt. To do this, the FTZ plans to create a sophisticated industrial structure based on advanced Yellow Sea industries like mechatronics and bioscience and invest a ulsan FTZ total of KRW 260.7 Billion to build production, logistics and support facilities on a 1,297,482 m² site from 2009 to 2012. The Production facilities will house Japanese manufacturing companies (assembly/metal, electronics/electric) and advanced knowledge-based manufacturing companies (mechatronics and bioscience). The logistics facilities will house storage & warehouse companies, transport companies and trading companies. In addition, the support facilities will accommodate production support facilities, public facilities and welfare facilities. The FTZ will make efforts to remove inconveniences for tenant companies. The Ulsan FTZ will hasten development by 2012 so as to offer low-cost land to foreign companies that want to move into the FTZ. In addition, the conditions for tenant companies have been dramatically improved as it is being developed in connection with Ulsan New Port, KTX Ulsan Station neighborhood development and Ulsan New City. It is also working with the automobile, shipbuilding and petrochemical industries which are the core industries of Ulsan.

Airport · Port Free Trade Zones
Incheon International Airport Free Trade Zone
The Incheon International Airport Free Trade Zone (IIA FTZ) was designated on a 3.015 million m² site in April 2005 as part of a strategy to develop IIA as a hub airport in Northeast East Sea Asia. It is divided into two districts, the freight terminal area IIA FTZ and the airport logistics complex. It is located east of the Yellow Sea airport. The Four Freight Terminals link aircraft with overland transport to help tenants attain smooth transport, storage, and handling. It operates 24 hours a day, 7 days a week. It also has room for staged expansion in response to increasing demand. It has installed information processing systems that can handle information on freight movement and storage in real time. The Airport Logistics Complex provides easy investment procedures and an appropriate business environment for multinational and global logistics companies through rapid freight handling, incentives, and simplified customs clearance. The IIA FTZ is located next to Incheon International Airport (IIA) which ranks second in freight traffic in the world. IIA has optimal conditions for transshipment to major cities in Northeast Asia including Seoul, Korea, Tokyo, Japan, and Shanghai, Qingdao, and Dalian in China. Compared with China which developed facilities for passengers, IIA was designed to simultaneously handle freight and passengers, thus providing the most optimal airport network and infrastructure. For this reason, more and more Chinese air freight is coming to IIA via boat for transshipment at IIA. The IIA FTZ has already housed 22 multinational companies. In particular, 14 logistics companies moved in to the Airport Logistics Complex, which will reinforce the advantages of the IIA FTZ.

Gimje Free Trade Zone
The Gimje FTZ performs supplementary functions to the Seamangeum/Gunsan Free Trade Zone and is expected to create synergy effects by accelerating inland development in East Sea Jeollabukdo and attracting foreign investment. The FTZ will be set up on a 991,740 m² site with KRW 70.5 Billion investment Yellow Sea by 2011. It plans to attract auto parts, machinery and Gimje FTZ renewable energy industries. It expects to house 30 tenant companies, send out USD 850 Million in annual exports, and create around 4,500 jobs by 2011. The Gimje FTZ will lay out Production, Logistics, Support and Public Facility districts, and tenant companies will be given various tax incentives, including deregulation, low land rent, and tariff exemptions.

96

Free Trade Zones

97

II. Gateway to Northeast Asia

The Port of Busan Free Trade Zone
The Port of Busan FTZ was designated on a 5.415 million m² site in January 2002 to add value to the Port of Busan, which ranks fifth in container traffic in the world, and to East Sea facilitate foreign investment. In 2007, the FTZ was expanded to 5.505 million m² site to establish an international shipping Yellow Sea supplies distribution center, and to establish the site around Busan Port FTZ the LME warehouse within the port. With this expansion, transaction and logistics costs will be reduced due to logistics clustering, while the financial industry will develop further. When the logistics complex in the hinterland is completed, the creation of added value will be accelerated due to facilitated foreign investment. The Port of Busan FTZ has completed its second stage and companies have moved in. The first stage commenced successful operations in 2006. The Busan New Port hinterland (FTZ, 419,000 m²) in the first and second stages housed nine companies. The Dongbang Logistics Center (37,000 m²) is now into full operation. The Ministry of Land, Transport and Maritime Affairs plans to offer the 1.421 million m² South Container hinterland and the 3.579 million m² Ungdong District at very competitive prices by 2015. When this is completed, value-added industrial activities will be enhanced and Busan New Port will truly be a global logistics hub.

The Jungma reclamation site at the the Port of Gwangyang FTZ was sold to Steinweg, a warehouse company on the LME (London Metal Exchange). Since its move to the the Port of Gwangyang FTZ, Steinweg has grown rapidly and handles the largest container traffic in China, Japan and Northeast Asia. The Port of Gwangyang FTZ is a duty-free area and hailed as the best place for transshipment and assembling and processing of carried-in goods from overseas.

The Port of Incheon Free Trade Zone
The Port of Incheon FTZ was designated on a 2.294 million m² site in the Inner harbor and hinterland of the Port of Incheon in January 2003. An additional 111,000 m² site at the South Port container terminal was designated in September 2008 to be used as a berthing facility and offdock container yard. The expansion of the FTZ will strengthen the competitiveness of the logistics industry as it can create a port cluster in connection with the Incheon FTZ.

East Sea

Yellow Sea

Incheon Port FTZ

The Port of Gwangyang Free Trade Zone
The Port of Gwangyang FTZ covers a 6.755 million m² site and was designated in January 2002. Subsequent expansions were made to create container traffic and carry out valueadded logistics activities in conjunction with the second container port in Korea, the Port of Gwangyang.
Yellow Sea

The Port of Incheon is located in the major metropolitan area of Korea which has enormous growth potential, and across from China, a vast market. It is also close to the Incheon International Airport, allowing for the creation of an international transport network. It is recognized as a logistics-centered port in the vicinity of the metropolitan area. With the increased awareness of the Port of Incheon in the wake of the expansion of the FTZ, the port plans to increase line services to China, Japan and Northeast Asia..

East Sea

Gwangyang Port FTZ

With the expansion of the Port of Gwangyang FTZ, new investments are expected to continue. For the logistics complex in the hinterland completed east of the Port of Gwangyang FTZ, there are 23 foreign invested companies with around KRW 300 Billion in investments. Forecasts are for 8.74 million tons of freight and 1,105 jobs. Economic benefits such as KRW 323.6 Billion of investment will be induced.

98

Free Trade Zone

Free Trade Zones

99

II. Gateway to Northeast Asia

As of 2008, there were ten resident companies, and they were mostly bonded warehouse operators. However, foreign logistics companies will increase their investments with the expansion of the FTZ.

of KRW 1,391.8 Billion and 10,803 jobs. Indirect benefits include the revitalization of the distribution industry in the hinterlands, enhanced export competitiveness, and procurement of raw materials at low cost due to the concentration of industries. When the Pyeongtaek·Dangjin FTZ is completed and its tenant companies start operation, the Port of Pyeongtaek·Dangjin will grow into a gateway to the metropolitan area and a central port of Korea's East Sea Area. Along with the Port of Incheon, the Port of Pyeongtaek·Dangjin has a role as a central port in increasing trade volume with China. Trading volumes are constantly increasing and the port scores the highest traffic growth among Korean ports. Foreign invested companies that moved in to the Port of Pyeongtaek·Dangjin FTZ will accordingly set up the port as a base for trade with China. As the neighboring area is designated as the Yellow Sea Free Economic Zone, the Pyeongtaek·Dangjin FTZ will be able to offer a competitive living environment including residences, medical services, education, tourism and leisure.

The Port of Pohang Free Trade Zone
The Port of Pohang FTZ was designated in December 2008 with an aim of balanced development of the eastern coast of Gyeongbuk. The FTZ diversifies production and logistics bases in the region and offers new opportunities to foreign companies by distributing national industrial facilities and port traffic.

East Sea

Yellow Sea

Pohang Port FTZ

Pohang, which is a steel city with excellent R&D capabilities, is expected to serve as the hub of regional development and will have the opportunity to reinvent itself as a logistics center for Korea's East Sea Area, encompassing Northeastern China and Far Eastern Russia, by capitalizing on geographical advantages. With this potential, the the Port of Pohang FTZ will offer new business opportunities to foreign invested companies in Northeast Asia and Korea.

The Port of Pyeongtaek · Dangjin Trade Zone
The Port of Pyeongtaek·Dangjin Free Trade Zone was designated in March 2009 to attract domestic and foreign logistics companies to create new traffic. In this area, the logistics industry will be developed and the FTZ will present itself as the region’s most favorable area for foreign invested companies. In the first stage of the project designated in 2009, the construction of infrastructure will be completed by March 2010.
East Sea

Pyeongtaek·Dangjin Port FTZ
Yellow Sea

The cargo volume of the Port of Pyeongtaek·Dangjin FTZ is expected to increase 637,000 TEU and create added value

100

Free Trade Zones 101

II. Gateway to Northeast Asia

Advanced IT, HR Infrastructure for a Logistics Hub
The Korean government has spared no effort in fostering specialized, talented manpower to enhance national and private sector competitiveness. The results of such efforts are visible in government-led education projects like: (1) “Brain Korea 21,” a specialized university project aimed at fostering professional manpower and industry-academic cooperation; (2) university specialization support projects, where universities in the metropolitan area become specialized through enhanced university competitiveness and the fostering of professional manpower by enhancing specific areas for comparative advantage; and (3) the New University for Regional Innovation (NURI), a support project for the Graduate School of Logistics aimed at developing professional logistics personnel at an international standard that will lead innovation in corporate logistics and the supply chain. These projects are funded by the Ministry of Education, Science & Technology while the project to support the Graduate School of Logistics is funded by the Ministry of Land, Transport, & Maritime Affairs. The educational programs of the Graduate School of Logistics will be provided in English only in conjunction with the international cooperation programs of various universities around the world. The projects also focus on fostering global level talent through joint research projects with prominent faculty. In addition, under the industry-academic collaborative programs, internships will be available to develop hands-on knowledge and skills. The graduate school is developing online education programs jointly with the Chartered Institute of Logistics & Transport (CILTS) and encourages the acquisition of international certification. Moreover, it is also offering scholarships to develop better logistics professionals. The Graduate School of Logistics offers comprehensive logistics curricula including a Masters of Global Logistics Management (MGLM), Masters of Logistics Management (MLM), Master of Science in Logistics (MSLog), Ph.D. in Logistics, and the Global Logistics Management Program for CEOs (GLMP). The MGLM (Master of Global Logistics Management) is an MBA-level, specialized master’s degree program that targets mid working-level managers who have built a career path. The Master of Science in Logistics (MSLog) and Ph.D. in Logistics (Ph.D) are programs built in a comprehensive education and research system in connection with the Asia Pacific Logistics College, Jungseok Research Institute of International Logistics and Trade, overseas universities

and other research institutes at home and abroad. Its goal is to develop professionals with knowledge and hands-on experience. The GLMP (Global Logistics Management Program for CEOs) introduces management strategies with the latest trends in the logistics industry, and provides opportunities for top management of logistics companies to build businesses and relationships and pursue logistics systems’ innovation through benchmarking successful cases. Logistics professionals fostered through these education programs can work successfully in the logistics industry in Northeast Asia and develop themselves as global professionals in the industry.

102

Advanced IT, HR Infrastructure for a Logistics Hub 103

II. Gateway to Northeast Asia

The Logistics Industry in Korea
Status of the logistics industry in the national economy
The overall perception of Korea’s logistics industry has dramatically improved in recent years. Nevertheless, to some degree the industry is still regarded in Korea as less important than areas like sales, production, or marketing. Recently, the logistics industry has begun to be recognized as a new growth engine of the national economy, as it is seen as an independent industrial form by the Korean government.
▒ wEIGHT OF THE LOGISTICS INDuSTRy IN KOREA’S ECONOMy (2007)
Classification Number of Companies Number of Employees Sales Revenue (a billion KRW) All Industries (A) 3,189,181 15,728,028 1,864,067 Logistics Industry (B) 171,587 566,835 82,342 Weight(%, B/A) 4.5% 3.6% 4.4%

Major logistics companies in Korea
Shipping companies account for seven of the top ten logistics companies and eleven of the top 20 logistics companies in terms of sales revenues. This indicates that logistics services are still concentrated in international transport like shipping rather than specialized logistics service providers that offer full service to shippers in Korea. This clearly shows a structural trend towards shipping companies, which take up 74.8% of the total sales among the top 20 companies. There are nine representative specialized logistics companies (including Globis, Korea Express, Samsung Electronics Logitech, Pantos Logistics and Hanjin with sales of KRW 8.51 trillion in total). Specialized logistics companies accordingly have strengthened their presence in Korea. The Korean government introduced a certification policy for full-service logistics companies aiming to globalize the Korean logistics industry in January 2006.

The Korean government is making efforts to improve social awareness of the logistics industry in consideration of its weight in the national economy. Based on sales revenues by industry in 2007, the logistics industry of Korea ranked eighth following distribution (retailing and wholesaling), construction, electronics, automobiles, chemicals, primary metals, and coke/refined petrochemical products and nuclear fuel. It represented 4.4% of the national economy. In terms of added value to sales, it scored 35.83%, far higher than the 22.7% recorded for of the manufacturing industry, though falling behind retail and wholesaling, at 38.39%. It is regarded as an industry that can create high added value for the economy in terms of employment. The logistics industry was still in its infancy until the 1990s in Korea. In the early 1990s, large companies began to recognize the logistics industry as the last stage in ensuring market competitiveness through cost savings and improved customer service based on efficient logistics. Since the late 1990s, the Korean government has driven various policies to develop the industry as one of the core national industries of the 21st century. As of 2006, the national logistics cost, an indicator of total cost consumed for logistics activities in Korea, was KRW 106 trillion. In real terms, it grew 4.44% annually. Given the potential and current market for logistics, total sales hovered around KRW 82 trillion in 2007, so the logistics industry still has potential to double its current size in light of ripple effects in related industries. 104
The Logistics Industry in Korea 105

II. Gateway to Northeast Asia

▒ RANKING OF MAjOR LOGISTICS COMPANIES IN KOREA
Ranking of Sales 2007 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2006 1 3 2 4 8 5 6 7 10 12 9 11 20 13 15 14 17 16 18 Hanjin Shipping STXPANOCEAN Hyundai Merchant Marine Glovis Korea Line Corporation SK Shipping EUKOR Car Carriers Inc. Korea Express Samsung Electronics Logitech Samsun Logix Pantos Logistics Hanjin Daeyang Shipping Hyundai Logistics CJ-GLS Heunga-A Shipping Sebang KMTC Sinokor Merchant Marine Hi Logistics Total Shipping Shipping Shipping Logistics Shipping Shipping Shipping Logistics Logistics Shipping Logistics Logistics Shipping Logistics Logistics Shipping Logistics Shipping Shipping Logistics Companies Business 2007 69,360 48,734 48,456 25,102 19,713 18,712 15,823 12,669 11,399 10,907 10,203 7,598 7,244 5,640 5,194 4,833 4,612 4,519 4,172 2,705 337,595 Sales (a year, KRW 100 million) 2006 60,514 27,844 47,342 18,851 11,502 17,755 15,410 11,703 8,283 7,148 9,401 8,025 3,007 5,114 4,780 4,993 4,102 4,520 3,489 2,106 275,889 2005 59,801 27,924 48,456 15,408 11,093 15,832 15,560 11,717 8,256 9,447 10,009 7,427 7,933 4,664 4,407 5,420 3,817 4,787 3,447 1,559 276,964 2004 62,021 25,863 51,186 9,028 11,501 16,726 14,837 11,190 7,000 8,441 9,415 6,618 9,711 4,292 3,786 5,292 3,679 4,916 3,471 1,499 270,472

▒ PRESENT LOGISTICS SuBSIDIARIES OF LARGE-SIZED COMPANIES
Company
Sales (as of 2007) Recent Trends

Glovis
KRW 2.510 trillion · Overall management of volumes for related subsidiaries like Hyundai Mobis and Hyundai Steel and partner companies · Connection with globalization of Hyundai Motor Co., expansion of overseas networks and rising overseas sales

Korea Express
KRW 1.267 trillion · Specialized logistics company of the former Dong-A Business Group · Inclusion of Geumho Asiana Group, incorporation of Korea Express International Logistics

Samsung Electronics Logitech
KRW 1.140 trillion · Samsung Electronics’ logistics sales · Handling of Samsung Electronics only after changing the company name to Samsung Electronics Logitech

Pantos Logistics
KRW 1.020 trillion · Handling export / import volumes from LG Electronics

Hanjin
KRW 759.8 billion · Specialized logistics company of the Hanjin Business Group

Hyundai Logistics
· Door-to-door service provider of the Hyundai Business Group · Started as Asia Merchant Marine, changed company name to Hyundai Logistics Corp. in 1993 · Revamped into a specialized door-to-door delivery and freight forwarding company since 1997 · Changed company name to Hyundai Logistics in 1999

KRW 564.0 billion

CJ-GLS
KRW 519.4 billion · Started business with cargo from CJ Group · Aaccomplished 50% of third-party volume through active marketing · Acquired Singaporean Accord and set up CJ-GLS Asia

Dongwon Industries (Past) Reseuko
KRW 351.0 billion · Started as a Korea-Japan joint venture company in 1997, logistics company for food and beverages · Incorporation in Dongwon Industries in December 2005 · Including merchant sales (logistics sales of 69.9 billion KRW in 2006, representing 21% of total sales)

KIFT
KRW 302.8 billion · Started a private operator of Gunpo Integrated Freight Terminal · Handling exports of Geumho Tire

Present logistics subsidiaries of large-sized companies
Most specialized logistics companies are subsidiaries of large conglomerates (or business groups) in Korea. They laid the foundation for growth based on sales from other subsidiaries within the same business group and have tended to develop into third-party logistics companies. These business groups are actively pursuing the expansion of businesses to overseas markets through the globalization of subsidiaries based on their logistics subsidiaries.
KRW 270.5 billion

Hi Logistics
· Started business with domestic sale logistics for LG Electronics in 1999 · In 2004, changed company name to Hilogistics and ran business for subsidiaries of LG Group

Hansol CSN
KRW 251.5 billion · Started business with goods from Hansol Paper · Transformed to a specialized logistics company from an online door-to-door delivery company including cyber logistics

Lotte Logistics
KRW 28.4 billion · Stated business with goods from Lotte Group, including Lotte Department Store and Lotte Mart

106

The Logistics Industry in Korea 107

III. Business Opportunities in Korea
Competitive Business Models Success Stories

III. Business Opportunities in Korea

Competitive Business Models
The Korean government is putting a lot of efforts into establishing a business-friendly environment in Free Economic Zones. As part of these initiatives, it is developing marketoriented business models, on a national-level, designed to promote and support the business activities of corporations moving into the region. In particular, the Ministry of Land, Transport and Maritime Affairs and the Ministry of Knowledge Economy have presented a variety of business models as described below to enable more efficient utilization of Free Economic Zones and Free Trade Zones in connection with the international division of labor in Northeast Asia, with FEZs focusing on logistics and FTZs focusing on manufacturing process..

Production district logistics intensive management model
This business model is designed to promote services through intensive logistics management in production district areas.

FEASIBILITY
Korea is one of China’s closest neighbors, and is well placed for intensive management of import/ export through highly-trained logistics personnel, and a state-of-the-art logistics system. With this logistics stronghold utilized as a strategic base to provide logistics services through integration and joint management of industrial production, corporations are expected to enhance customer services by accelerating delivery of goods directly to customers. More specifically, multiple products in small quantities from all over China can be brought together into ports in Korea’s Free Trade Zones to be sorted through reliable logistics services before they are delivered directly to major customers in the US, Europe, and elsewhere. Businesses are able to benefit from more cost reductions with the recent depreciation of the Korean won vis-à-vis the Chinese Yuan.
Case Study: China-based company L had few problems with supply & demand for individual products for its affiliates but, due to separate logistics system, distribution costs for the entire group were increasing. It is now actively engaged in feasibility studies of models to rectify this problem.

UTILIZATION EFFECTS
The Company can integrate logistics system of affiliates across the entire group as described below and then enhance the quality of service and the image of the group as a whole.

Services through intensive logistics management in production district areas
• Comprehensive logistics service in the row materials districts • Direct delivery to customers
Tianjin Dalian Qingdao Shanghai

LG in China (Tianjin, Shenyang, Shanghai, etc.)
Investment amount: Undecided Ports concerned: Port Hinterland Complex of Korea Major business: Intensive management and distribution of electronic appliances
- Logistics services in individual factories - Group-level comprehensive logistics service

Free Trade Zones of Korea (Logistics centers) : Provides Various incentives, Competitive rent, Quality services

110

Competitive Business Models 111

III. Business Opportunities in Korea

Quality logistics service model
Service promotion type
This business model is designed to promote services through flexible responses to customer requirements.

Raw materials supply & demand management model
This business model enables a stable supply of raw materials and creation of value added.

FEASIBILITY
The import of price-competitive consumer goods manufactured in China to Japan is on the rise, but due to problems in meeting Japan’s rigorous quality management criteria, customer complaints have been frequent. Chinese agricultural and fishery products whose safety status has not been confirmed go through a state-of-the-art quarantine system within the Port Free Trade Zone in Korea, designed to quarantine products that require rigorous quality management and the shortest possible lead time. Export to Japan as well as distribution for domestic consumption in Korea can be significantly enhanced through a well-organized feeder network.
Case Study: Korea-based company “H” is equipped with a frozen warehouse facility and engages in the processed export of frozen foods between China and Japan by utilizing Korea's rigorous animal and plant quarantine system, as well as a variety of feeder lines, including the Port of Busan.

FEASIBILITY
Competition to acquire raw materials has heated up recently due to fluctuating prices and an unstable supply of raw materials, and corporations are increasingly interested in securing a stable supply of resources. This business model is designed for Chinese and Japanese corporations experiencing difficulty in procuring high-priced raw materials subject to market fluctuation. Large corporations or logistics companies that need to trawl the whole of China for raw materials will be able to do so in a stable manner by utilizing the Port Free Trade Zone of Korea while enjoying economic benefits due to protection from excessive price fluctuations.

Case Study: Company L currently residing in the Gwangyang Port Free Trade Zone has enjoyed high profits by engaging in storage, delivery, and quality management of non-ferrous metals targeting Northeast Asia and Far eastern Russia, while China-based company L in Tianjin is considering using the Gwangyang Port Free Trade Zone to source raw materials throughout China (including copper, grain, aluminum and etc.).

UTILIZATION EFFECTS
An additional amount of value can be created through service promotion and superior product management through increased product reliability.

UTILIZATION EFFECTS
The company is able to both promote product competitiveness and obtain arbitrage profits at the same time through a stable supply of raw materials.

Promotion of logistics services through flexible response to customer requirements
• Advanced refrigeration warehouse • Efficient logistics management
Industrial products Tianjin Agricultural & marine products Dalian

Enhanced logistics service through stable use and supply of raw materials

Korea H group (Busan, Seoul etc.)
Various feeder networks

Additional Exports

China-based L group (Tianjin)
Investment amount: Undecided Ports concerned: Gwangyang Port Logistics Complex Major business: Intensive management of distribution of raw materials
- Supplying all China with raw materials - Supplying materials within China through the Gwangyang port

Qingdao

Investment amount: Undecided Ports concerned: Busan Port Logistics Complex Major business: Intensive management for distribution of frozen fishery products
- Intermediary processing trade for frozen fisheries - Expanded Japanese market thru enhancement of service quality

Timely Supplies Qingdao

Efficient Inventory Management

Shanghai

Shanghai

Rigorous management + Economies of scale (cost savings)

Creating additional values through price controls

112

Competitive Business Models 113

III. Business Opportunities in Korea

Brand image utilization model
Market expansion type
The business model is designed to avoid the effect of the so-called ‘China Discount’ and ‘China Blocking’ in the US and European markets (major export targets of Chinese products) and to create more added value.

Overseas market entry model
The business model is designed for Chinese manufacturers that seek entry into US, Japanese and European markets with the Korean market utilized as a test bed.

FEASIBILITY
A newly-established Chinese electronic company A in Qingdao delivers its products through the local central logistics center but is considering transferring delivery to the Port Free Trade Zone of Korea. The company is preparing to conduct a market test on their new products by utilizing the demandoriented tendencies of Korean customers to verify market feasibility for their products before exporting to the global market.
Case Study: The China-based H group is seeking entry into the Korean market with the third largest market share and into the US electronic appliance market with the 10th largest market share through the utilization of this business model.

FEASIBILITY
This business model aims to create added value by utilizing relatively high awareness of the Korean brand. Many Chinese manufacturers need new survival strategies due to lower brand image, rising labor costs, and appreciation of the Yuan. Chinese manufacturers are making various attempts to shift production portfolios from low-priced products with cheap labor cost to higher end products. This business model is designed to transfer products without strict production district regulations and with significant tax break effects due to multilateral FTAs from the current Chinese production base or assembly factory to the Port Free Trade Zone where they are processed, assembled and then exported with the Korea brand.
Case Study: The China-based K group imports semi-assembled products from China and processes them in Korea before exporting them (it accomplished 10 Million Dollars in exports and profits within one year since establishment in February 2005).

UTILIZATION EFFECTS
The same company endeavors to expand its market share in Korea, an enthusiastic market for electronic appliances, seeking to be ranked third by 2010.

UTILIZATION EFFECTS
The group is guaranteed to get a delivery price 20% higher than the previous one.

Revenue increase by 10~20% for exports via Korea

Enhanced product awareness through rigorous verification in the Korean market

10% revenue increase

China Kingking Group (Shandong)
Investment amount: KRW 50 billion + KRW 200 billion Ports concerned: Busan Port + Gwangyang Port Logistics Complex Major business: Candle manufacturing, delivery to Wal-Mart
- Semi-manufacturing in China <–> Export with Korean brand (10% revenue increase) - Logistics service with added value

Market expansion through reductions in lead time
CDC in Korea

China Haier Group (Shandong)
Investment amount: Undecided Ports concerned: Busan Port + Gwangyang Port Logistics Complex Major business: Electronic appliance industry
- Expanded market share in Korea and Japan - Expanded overseas market through verification in the Korean market

114

Competitive Business Models 115

III. Business Opportunities in Korea

Marine & air logistics management model
Cost reduction type
The business model is designed to ensure a stable supply of cargo within a short period of time along with cost reductions.

Integrated delivery management model
This business model is ideal for Chinese and Japanese logistics companies that source products from multiple regions and that distribute to multiple regions as well.

FEASIBILITY FEASIBILITY
Companies that deal with high-priced or seasonal products (fiber, electronics, etc.) are able to accomplish timely delivery of products that used to require mid-term product delivery periods (approx. one week) by conventional air carrier transportation along with additional distribution cost savings by utilizing this business model. This business model is designed to reduce logistics cost and delivery time by delivering multiple products in small quantities directly to each destination in Japan through a feeder network wellestablished around Korean ports connecting Korea, China and Japan. Land transportation (trucking) through distribution centers in major ports in Japan involves a number of problems, including an increase in distribution costs when delivering products around Japan, environmental pollution, and traffic congestion. Therefore, this model will not only bring about a reduction in distribution costs but also establish an environmentally-friendly import distribution system within Japan through environmentally-friendly marine transportation.
Case Study: The Japanese company M began its business from December 2005 and an increasing number of Japan-based logistics companies have established corporations in the Port Free Trade Zone of Korea to conduct business.

Case Study: Company E based in Tianjin, China (a multinational logistics company) has expanded business through cost savings and the introduction of various services since it adopted this business model in 2005

UTILIZATION EFFECTS
Although it takes two or three days more than a direct freight flight from China to US, this can save some USD 2,000 or more for 40ft cargo.

UTILIZATION EFFECTS
These companies are able to save on transportation costs, indirect tax and administrative costs, etc. by as much as KRW 200,000 to KRW 300,000 per TEU on average through the Free Trade Zones in Korea in addition to land distribution costs within Japan (approx. 15~20%).

Cost savings and timely delivery of mid- and short-term cargo
Total transit time 4~6 Days

2~3 Days
China-ICN

2~3 Days
ICN-the US & Europe

japan’s land transportation cost savings model through a developped feeder network in Korean ports
Activities at Gamchon Distripark
Storage, Processing, Consolidation, etc. Busan
FCL FCL FCL FCL

Ex-Factory

Ocean

Breakbulk

Air

Company E in Tianjin
(a multinational logistics company)

FCL
Europe
Italy, France China, Taiwan

Investment amount: Undecided Ports concerned: Inchon Port Logistics Complex Major business: Sea & Air Service
- Cost reduction through a feeder line between Korea and China - Timely delivery through an air carrier between Central American and the US

NE Asia

America SE Asia
Thailand, Indonesia Malaysia, Vietnam the US, Canada, Chile

FCL

japan Mitsui Products
- Invested in Gamcheon port FTZ(100 billion KRW) - Operated from December 2005

Competitive & Reliable Service

116

Competitive Business Models 117

III. Business Opportunities in Korea

Model utilizing the Generalized System of Preferences(GSP) in Japan
This business model is designed to reduce some of the barriers of the Generalized System of Preferences (GSP) in Japan.

This model, presented as a solution to this problem, is intended to find the product segment whose basic tariff and special tariff from Japan’s Generalized System of Preferences is almost identical, and to provide value-added logistics service.

▒ APPLICABLE MODEL FOR ExPORT TO jAPAN
Tarrif Rate
There is a six to eight percent difference between general preference tariff rate and general tariff rate
Classification Furniture Construction Materials Tarrif Rate HS code (2 units) General Tariff Preference Tariff 34 69 44 38 84 44 31 78~81 52 53 54 55 85 Free 2.2% 2.6% 3% 8% 2.6% Free Free Free Free Free Free 5.28% Free Free Free

BUSINESS STATUS
The Generalized System of Preferences is a program designed to promote profits from export and industrial development in developing countries by applying a tax rate lower than the general tariff to specific import items from developing countries (implemented since August 1971). The number of countries subject to the Generalized System of Preferences in Japan is 155 in total, concentrated mostly in Africa and South America. However, if items imported from those countries that enjoy the benefit of the program, such as China and southeast Asian countries, go through intermediary processing such as consoling, labeling and packaging in the Port Free Trade Zone of Korea before being delivered to Japan, they no longer get the benefit of the Generalized System of Preferences (5~10% of tax break), which means the intermediary trade via the Port Free Trade Zone of Korea offsets the distribution cost reduction effect.

BM applicable items
The product items subject to basic tariffs in Japan and special tariffs from Japan’s Generalized System of Preferences include furniture, construction materials, tools, metal products, motors, wood products, fertilizers, fiber, and electronic appliances, etc. and are able to obtain the same tariffs stipulated in the Generalized System of Preferences if value added logistics services (console, labeling, processing, packaging and etc.) are provided in the surrounding area distribution complex for ports in Korea.

Tools Metal Products Motor Wood Products Fertilizers Non-Ferrous

Fiber

Free~11.2% Free~3.36% Free~12.8% Free~2% 4.8%~10% 0.8%~6.5% Free~10% Free~7.04% Free Free

Definition of GSP
• It is a program that applies a tariff rate lower than that of general tariff on specific items imported from developing countries or regions in an attempt to help them achieve enhanced export profits and promote economic development as well as industrialization. • Japan’s Preference Tariff policy has remained effective since August 1971
Central Asia Africa Latin America Eastern Europe Middle East South-East Asia Oceania Central America

Applicable Nations
A total of 155 countries are beneficiaries of Preference Tariff Program. Most of those courtiers are located in Africa and South America.

Electronic Appliances

Source: www.customs.go.jp

Azerbaijan, Afghanistan, Ahru meniah, Tadzhikistan, Turkmenistan etc. Algeria, Guyana, Ghana, Gabowerude, Cameroon, GAMBIA , Guinea, Guinea-Bissau, Republic of the Congo, Zambia, Djibouti, Gibraltar, Zimbabwe, Sudan, Equatorial Guinea, Senegal etc. Argentina, Antigua and Barbuda, Uruguay, Solomon, Dominican Republic, Trinidad and Tobago etc. Albania, Mordova, Montenegro, Bosnia and Herzegovina etc. Yemen, Iraq, Iran, Lebanon etc. Indonesia, Thailand, Sri Lanka, Papua New Guinea, Vietnam, Philippines, Myanmar, Laos etc. British Anguilla, British Virgin Islands, Samoa etc. Guatemala, Honduras, Mexico etc.

118

Competitive Business Models 119

III. Business Opportunities in Korea

Investment attraction model for market acquisition Utilization of Korea-US FTA
This business model is for foreign companies planning to expand their business in the Northeast Asian Market utilizing the Korea-US FTA.

• If the unit production cost in Japan is assumed to be 100, the unit production cost in Korea is 80~85 and this difference is expected to grow as the local procurement of parts and intermediate products within Korea increases and the amount of production expands. • However, due to the gap in technology levels, some core parts and intermediate products will need to be procured from Japan although investment into the Korean market is expected to expand technology transfer. With the business type and cost structure of company S taken into account, the market expansion type investment attraction model is highly applicable, along with cost reductions and creation of additional profits. Considering the effect of the Korea-US FTA alone, the production of Korean LCD manufacturers is expected to increase by as much as 5% or more, which necessitates the expansion of production capacity by 50%. In this case, planned manufacturing branches in Taiwan and China may be established in Korea’s Free Economic Zone instead. NEw BuSINESS MODEL
Manufacturing and sales branch in Korea Manufacturing branch in China (planned)
-  Expanded production capacity (1.5 times or more), decrease in unit production cost (85%->75%), cost savings through economies of scale 60~70% of products are sold to Korean companies, including Samsung and LG

BUSINESS STATUS
The Japan-based LCD manufacturer S used to manufacture LCDs in Japan and deliver them to Korean companies in the initial stage. However, it established a manufacturing branch in Korea in accordance with a request from these companies as the production of LCDs in Korea significantly increased. The company has a manufacturing & sales branch in Incheon with 90% of its production sold in the Korean market and the remaining 10% sold in Taiwanese and Chinese markets. The headquarters in Japan manufactures products for the Japanese market as well as parts and intermediate products required by the Korean branch. CuRRENT BuSINESS MODEL
Manufacturing and sales branch in Korean Manufacturing branch in China (planned)
-  Establishment of a global production base (future investment to be expanded)
Domestic Consumption re-exports exports re-exports

-  Unit production costs are 80%~85% of those in Japan -  Market segmentation: Domestic consumption 90%, Export 10%
Domestic Consumption

90% of products are sold to Korean companies, including Samsung and LG

-  Establishment of a production bases targeting the Chinese market (investment to be determined depending on the circumstances of the Chinese market)
Domestic Consumption

The Korean market is expected to expand by 5% due to the Korea-US FTA

Domestic Consumption

Japanese Headquarters
-  Core parts, intermediate products, mass production of complete products -  Production Cost =100 80%~90% of complete products are sold to domestic (Japanese) companies

Export to the Chinese market

Providing complete products and core parts

Domestic Consumption

Japanese Headquarters
-  Core parts, intermediate products, mass production of complete products -  Production Cost =100
Export to the European market

Providing complete products and core parts

Non-tariff exports Non-tariff exports

Export to the US market

exports

80%~90% of complete products are sold to Japanese companies

Establishment of a Manufacturing branch in Taiwan (planned)
-  Establishment of a global production base (future investment to be expanded)

re-exports

exports

EFFECTS
• Cost perspective: It is anticipated that the current unit production cost, which is 85% of that of Japan has decreased to 75% due to economies of scale triggered by expansion of production within Korea. • Profit perspective: It was found that the current profit level of 20% can increase to 29.4% through cost saving activities. • Sales perspective: Sales currently dominated by Korea (90%) are expected to expand to the US, China, and Europe through expansion of production bases due mainly to the Korea-US FTA policy, resulting in an increase of profits.

FEASIBILITY
A Japanese company S that established a manufacturing and sales branch in Korea’s Free Economic Zone obtained positive effects in delivery limits, after sales services, etc. In addition, as demand in China and Taiwan increases, the company is scheduled to establish another manufacturing branch in China and Taiwan in response to the potential growth of the Chinese market in the future.

120

Competitive Business Models 121

III. Business Opportunities in Korea

Brand awareness promotion model
This business model utilizes both the global brand value of Korea and ratification of the Korea-US FTA.

CuRRENT BuSINESS MODEL

Korean contractors
-  Provision of 15~20% of core

Chinese HQ

parts and intermediate products
Providing intermediate products

Foreign contractors
-  Provision of 15~20% of core

BUSINESS STATUS
• Electronic company S manufactures industrial fans (tariff rate: Korea=8%, US=4.7%) in Qingdao, China and considers the US its most sought-after market. Industrial fans are commodity products that do not require high-end technology and S electronics is in charge of developing its own independent technology. • The company procures intermediate products and core parts (motors, propellers, etc.) mostly from Korean and foreign contractors while procuring miscellaneous parts and raw materials from contractors within China. • The high procurement rate of intermediate products and parts as well as additional logistics costs and delivery limits requires a large amount of inventory and subsequently gives rise to monetary problems as well. • Company S assembles parts and raw materials outsourced from external sources in a semiautomatic manufacturing process and labor costs take up about 10% of unit production cost.

-  Planning, design, R&D, semi-

automatic manufacturing process Low price, Low quality, Delivery limit.

parts and intermediate products

Order

Chinese contractors
-  60%~70% of raw materials and

intermediate products

Complete products (delivery of industrial fans)

Buyers in the uS
-  90% of sales production

Import Tariff : 4.7% Other buyers
-  10% of sales production

EFFECT
Company S is expected to improve the profit structure as it overcomes the gap in labor costs between Korea and China if it establishes a production system that interconnects Korea and China by building a factory in Korea’s Free Trade Zone.

FEASIBILITY
• The real wage of Chinese workers increased by at least 30% due to the enforcement of a New Labor Act in 2008. • Meanwhile, US buyers lowered unit production costs of Chinese products as opposed to Korean or Mexican counterparts only because they are Chinese products, imposing a burden in terms of profit structure. • The portion of profit out of unit production cost was only 5~10% but is now 2~7%, and has become lower after the enforcement of the New Labor Act. • Additionally, there are restraints in the import of intermediate products and raw materials, and in particular a ban on introducing cheap second-hand equipment from Korea creates additional cost increase factors. • The new Chinese VAT sets the tax refund rate to 8% as opposed to the previous 13% with 17% of payment. • Therefore, companies engage in indirect procurement from Hong Kong or other countries to avoid Chinese VAT imposed on intermediate products and parts. These problems have made Company S consider moving back to Korea’s Free Economic Zone or Free Trade Zone, a movement which is expected to accelerate due to recent appreciation of the Chinese Yuan against the Korean Won.

Cost perspective
• Production in Korea will cause an increase in labor costs, but such costs will be mostly offset by the automation rate for manufacturing in Korea, modularization of parts procured from the Chinese branch and enhanced labor productivity. • In addition, a decrease in costs of parts and raw materials and expansion of outsourcing within Korea is expected to further reduce production costs and eliminate the uncertainty of supply time frames. • Additional costs will be eliminated and securing capital will be easier by escaping the administrative and miscellaneous costs imposed when manufacturing in China for export as well as the non-refunded part of the Chinese VAT

Profit perspective
Since the major target market of Company S is the US, it can expect to increase profit in exports by as much as the tariff rate (4.7%) due to the Korea-US FTA, and enhance its profit structure by relief in the China discount and the effect of the Korea premium.

122

Competitive Business Models 123

III. Business Opportunities in Korea

Biz model for differentiation of brand and place of origin
This business model is designed to promote profits from the increase in the value of the Korean brand and expected ratification of the Korea-US and Korea-EU FTAs.

BUSINESS STATUS
NEw BuSINESS MODEL Company S is a mid-sized company that manufactures luxury leather handbags and purses for females based on high quality and advanced technologies and that delivers its products to multiple ordering parties (luxury brands).
Korean contractors
-  Provision of 30~40% of core

• The company has a business division and R&D function in Korea while manufacturing all products in China.
Foreign contractors
-  Provision of 15~20% of core

Chinese branch
-  Semi-automatic manufacturing

parts and intermediate products
Providing intermediate products

• Major production items include luxury leather handbags and purses for women, mostly high value-added products with tariff rates of 8~10% for Korea and 8~10% for the US & Europe.

process for intermediate products

parts and intermediate products

Chinese contractors
-  40~55% of raw materials and

Product development is made in Korea while manufacturing is based on ODM through collaboration with ordering parties as well as approved technology and quality.
• The core parts and raw materials are procured from Korean contractors (procurement rate of 60~70%) while general parts and miscellaneous raw materials are procured from Chinese contractors (procurement rate of 30~40%).

intermediate products

Korean HQ (Gwangyang)
-  Planning, design,

Order

R&D, semi-automatic manufacturing process

Import Tariff: 0%
from the Korea-US FTA Complete products (delivery of industrial fans)

Buyers in the uS
-  90% of sales production

• This spikes up the distribution cost, which significantly reduces export competitiveness all the more due to the recent appreciation of the Chinese Yuan.

Other buyers
-  10% of sales production

Timely procurement is extremely important as the company is required to obtain parts and materials within 50 days after subcontractors place an order due to the predetermined product manufacturing schedule. The Chinese branch manufactures complete products by manually processing procured parts and intermediate products.
• The portion of labor costs out of the unit production cost is currently at the level of 20~25% but a 20% increase in wages has been made, compared to 2007, since the enforcement of the New Labor Act in 2008. This has put a heavy burden on profit structures, all the more because of the recent appreciation of the Chinese Yuan.

Profitability is not favorable as ordering parties (luxury brands) set the delivery price to 20~30% of the consumer price along with 10~30% of the ‘China Discount’, further aggravating export competitiveness.
• Additionally, the company used to pay 15~17% in Chinese VAT and got a refund of 11~13% but this refund rate has been dramatically reduced since 2008.

124

Competitive Business Models 125

III. Business Opportunities in Korea

CuRRENT BuSINESS MODEL
Korean HQ (uiwang)
-  Manufacture of R&D test products

Korean contractors
-  Manufacture of intermediate

• In addition, the current tariff of major manufacturing items from Company S, including luxury leather handbags and purses, is 8~10%, but extra profit can be realized through the elimination of tariffs due to the Korea-US and Korea-EU FTAs respectively.

Chinese branch
-  Manufacture of complete products

products (leather, synthesized fiber, original fabric, ornaments etc.) (60~70%)
Providing intermediate products(60~70%) (Procurement: within 60 days, distribution within one week) Order, design, ODM

Sales perspective
Company S needs to develop its own brand as it retains capabilities in design and quality as the basis for competitiveness of items on the same line. • In particular, the internal brand can contribute to enhanced profitability as the delivery price of its own internal brand is 50~60% of the consumer price. • However, as it requires a huge amount of investment and risks to develop a new luxury brand, government subsidies as well as phased planning will be required.

through manual assembly

Chinese contractors
-  Manufacture of intermediate products

HQ of luxury manufacturers
-  Investigation on trends, markets,

(synthesized fiber, original fabric, simple parts) Providing 30~40% of parts & raw materials

Tariff 8~10%
(paid by sales division) Delivery of complete products (within 90 days after ordering)

consumer preferences (5 seasons)

North American sales division
-  70% of sales production

Other sales division
-  30% of sales production in

NEw BuSINESS MODEL
Chinese branch
-  Modularization with outsourced

Europe, Asia and other regions

Korean HQ (uiwang)
-  Market survey, Establish ment

Korean contractors
-  Manufacture of intermediate

EFFECT
With the items and technologies of Company S taken into account, it is anticipated that the company will generate substantial profit as well as accomplish corporate development through a short-term strategy of differentiating place of origin and a mid- and long-term strategies of developing an independent brand.

parts and raw materials, Production of intermediate products (mostly manual processing)

of development planning , Manufacture of R&D test products

products (leather, synthesized fiber, original fabric, ornaments etc.) Provide 60~70%

Providing intermediate
products

Luxury HQ
Order, design, ODM -  Investigation on trends, markets,

Chinese contractors
-  Provision of 20~30% of low value

Providing intermediate
products (module)

consumer preferences (5 seasons)
Delivery

added parts and raw materials

Korean HQ (Gwangyang)
-  Partial transfer of core functions

Profit perspective
• The company develops its own design and provides a number of luxury brands with its products so it is expected to improve profitability by targeting the high-end market with differentiated products including place of origin through consultation with ordering parties. • In particular, this strategy can secure a high delivery price if it deploys manufacturing of high-end products with materials procured from Korea. • The current delivery price is only 20~30% of the consumer price while the delivery price of luxury brands with materials procured from Europe, Korea and Japan is 30~40% of the consumer price.
Other sales division
-  30% of sales production in

North America sales division
-  70% of sales production

such as R&D. Luxury handbags, Luxury brands, High-end handbags. Assembling & processing for complete products

European branch
-  Brand sales

Tariff : 0%
with Korea-US, Korea-EU FTA

Europe, Asia and other regions

Cost perspective
• Since there is a large amount of procurement of parts and raw materials from Korean contractors, it can shorten delivery times and reduce distribution costs if the products are manufactured in Korea. • If the company engages in manufacturing products within Korea’s Free Economic Zones, the labor costs may go up but this will be offset by modularization of intermediate products procured from Chinese branches, automation of Korean factories, and improved labor productivity.

126

Competitive Business Models 127

III. Business Opportunities in Korea

Success Stories
A. Sea port based
CASE 1.

Distribution cost reductions through packaging in large quantities
The model is designed to reduce distribution costs by transporting high-end special cleaners, perfumes, and wines etc. manufactured in Europe in large quantities to Korea’s Port Free Trade Zones and conducting mixed loading, consoling, sophisticated packaging, and labeling before delivering them to consumers.
This business model is designed to create value added through customized sales strategies via packaging that conforms to customer requirements, as well as sophisticated and prompt services that reduce distribution costs by 10~20% through transport in bulk packaging (drums, oak barrels, etc.), Items include high-end cleaners, perfumes, and wines etc. currently manufactured in several European countries (including Germany, France and Italy) transported to Korea’s Port Free Trade Zones. In particular, companies exporting to Japan are able to reduce transportation time through the utilization of a well developed feeder network in the Busan port. A number of companies are considering using this model in the liquor market as well.

This business model is intended to target the Northeast Asian market with liquid cargo, including high-end cleaners, oils, and wines manufactured in Europe and the US while achieving cost reduction, promotion of services, and product sophistication.

Case Study: France-based company B transports products (including hair removal products for women and high-end cleaners) in large quantities that require supply on the same day to the Busan Port Free Trade Zones, and then repackages them in small quantities before exporting them to Japan and Korea. The company enjoys tax breaks of as much as USD 200~300 per TEU.

Distribution cost reduction effects : uSD 200~300/TEu
The business model where specific cleaners or daily supplies manufactured in European countries including Germany and France are repackaged in Busan before being delivered to multiple destinations in Japan

128

Success Stories 129

III. Business Opportunities in Korea

CASE 2.

Model utilizing Korea’s assembly technology
This business model is intended to utilize advanced technology regarding machinery parts, geopolitical location and relatively cheap labor cost
This business model brings high-priced office chairs and equipment manufactured in the US and Europe into the distribution center in Korea’s Port Free Trade Zones where they are finished before being exported to the Northeast Asian market. In particular, with the increase in demand for highend office equipment in Korea and Japan coupled with economic growth in China, markets are set to grow rapidly, along with high value-added distribution services that utilize superior assembly materials in Korea. This business model features transportation in small units and high-capacity loading from the investment corporation’s perspective, along with reduction in distribution and labor costs. Defect rates are low as products are assembled in the vicinity of consumer locations.

CASE 3.

Model involving reassembly of Japanese second-hand cars
This business model aims to create added value through proper product management and customization, including changing the position of the steering wheel for regions with high demand for second-hand cars like the Middle East, South America and Russia.
The global automobile market faced an unprecedented crisis during the global recession in 2008 giving the global secondhand car market significant opportunity to grow. In particular, due to a ban on driving right-hand drive cars in Russia, the demand for Korean secondhand cars as well as Japanese cars is expected to rise. Currently, secondhand cars exported to the Middle East utilize containers with a variety of service routes rather than the Roll-on/Roll-off routes dedicated to automobiles in specific ports only, due to restraints in production year and a reduction in supply. Despite the uncertainty of market demand, there is a high chance of success considering the sustained economic growth of BRICs and of the third world countries. With the enhanced brand image of Korean cars, companies involved in this business are enjoying increased prices for secondhand cars from Korea and demand for exports of Japanese cars via Korea due to relatively low remodeling costs compared to Japan. The global secondhand car market is expected to sustain expansion from 900,000 cars currently to up to two million cars due to green growth and environment-friendly policies being adopted worldwide. The demand for secondhand cars is expected to soar due to changing global economic circumstances making it possible to accomplish environmental renovation and a variety of distribution businesses.
Case Study: Japan-based secondhand automobile exporter B, which is currently stationed in the Gwangyang Prot Free Trade Zone exported 4,000 secondhand cars in Japan and is now preparing to begin export in the Port of Gwangyang.

Case Study: US-based company T has an assembly factory in Korea where materials from France and Korea are assembled to target the Northeast Asian market. The company can reduce distribution costs by 15~30% on average and is scheduled to expand production capacity in the near future.

utilization of Korea’s assembly technology
• Import of parts for high-end chairs to assemble and sell in Korea, China and Japan • Reduction of production costs by 30% and distribution costs by 15%

Sheets from US

Korean Shaft

French frames

130

Success Stories 131

III. Business Opportunities in Korea

The renovation model for secondhand cars is intended to create value added by increasing the value of secondhand cars through the commodification process as described below. Secondhand cars within Korea typically go through various renovation processes including initial inspection, maintenance, sheet metal processing, painting, cleaning and final inspection to overcome inconsistency in quality and to create value added. Renovated cars go through a “vanning process” as a final maintenance stage before being placed in a container for export (up to six cars) along with parts or modules for after sales service.

equipment from Japan while localizing some parts to encroach on the Japanese market. Chinese manufactures complete products by importing parts and modules from Korea and Taiwan while securing technology in down streaming markets such as LCD TVs. This model, which leverages specialization in East Asia enables procurement and sales within Korea as well as overseas procurement, sales and distribution services by introducing a distribution center for storage, distribution, processing and management of LCD products in Korea’s Port Free Trade Zones.

The LCD clustering distribution business model aims to create additional value from a distribution perspective by transporting a variety of high value-added products and is expected to produce a large quantity of goods transported with frequent transfer of products.

CASE 4.

LCD clustering model
This business model utilizes the LCD cluster that interconnects assembly factories in China and Taiwan as well as sophisticated LCD technologies from Korea and Japan.
The production base of the global display industry is concentrated in Northeast Asia; Korea, Japan, Taiwan and China are the major manufacturing countries. The tripartite competition system among Korea, Japan and Taiwan remained established until the mid 2000s with a reinforced international specialization system. The establishment of global production networks in the display industry is expected to accelerate with the expansion of local production by large conglomerates. The display industry including LCDs favored rapid transportation via air carriers due to high prices and the need for timely delivery. However, due to plunging prices and expansion of the consumer market along with severe competition, this industry is shifting back to conventional transportation. In particular, marine transportation is gaining popularity as the product breakage rate is lower than in air transportation. When examining the structure of the industry in East Asia, Japan generally oversees the entire process of manufacturing, while Korea and Taiwan usually manufacture modular products with parts imported from Japan. Japan dominates the market with market leading technology in parts and manufacturing equipment, and manufactures polarizing plates, glass boards, and color filters etc. through joint research among the relevant parts and materials contractors. Korea and Taiwan manufacture modular intermediate products by importing parts, materials and

132

Success Stories 133

III. Business Opportunities in Korea

B. Airport based
Sufficient demand in the surrounding area is required along with well-established airlines and the shortest possible lead time from frequent transportation services to be qualified as an international distribution base The Incheon International Airport is a strategic location as it is located close to Korea's major metropolitan area and retains Asia’s largest airline network, which enables reduction in transportation time. In addition, the airport has made numerous efforts to be a qualified international distribution center, including minimization of time required for customs clearance by streamlining procedures, and introduction of government policies and tax conditions favorable to businesses. As a result, the Incheon International Airport has emerged as the world’s second largest Asian air hub base with 700 companies conducting business within the Incheon International Airport Free Trade Zone. Recently, the Incheon International Airport Corporation has taken supplementary measures to attract foreign investment, including establishment of physical infrastructure as well as simplification of cargo classification, repackaging, and overseas transference procedures, allowance of post-facto reports when exporting strategic materials to foreign companies, and settlement of corporate taxes for simpler storage, transfer, and repackaging by foreign companies. In addition, the IIAC has engaged in PR activities to ensure that the competitiveness of the Incheon International Airport is better known to companies stationed in the Free Trade Zones, the Korea Trade-Investment Promotion Agency (KOTRA), and the Korea International Trade Association (KITA). As a result, a number of foreign and domestic companies including Schenker Korea, Kuehne & Nagel Inc, Samsung Electronics Giheung Factory, ASML, and SONY are utilizing the Incheon International Airport as a distribution center.

CASE 5.

ASML
ASML, a Dutch firm that is the world’s largest semiconductor exposure equipment manufacturer selected Incheon International Airport Free Trade Zone in 2008 as its international logistics center to warehouse products to be distributed worldwide. ASML is also the world’s third largest semiconductor equipment manufacturer in general, with the world’s largest revenue in exposure equipment. It formerly had a number of warehouses for parts scattered around Asia but integrated them into a centralized warehouse to cover the Asia Pacific region, and is now scheduled to expand its functions on a global basis to create a global hub warehouse from which parts and equipments can be exported worldwide. The government has changed its policy from requiring permission for export of strategic materials, which used to take up to ten days, post facto reporting after exporting the bulk of strategic materials. This move is to attract more investment in warehousing from multinational companies. The “Comprehensive Export Permission Policy”, which used to apply only to Korean corporations, has extended to the distribution centers of foreign companies which do not have a domestic branch. Thanks to this policy, ASML Korea and the headquarters of ASML agreed on “commissioned management of export of strategic materials”, enabling ASML Korea to fully control the export of strategic materials. In addition, the Korea Customs Service and the customs service at the Incheon International Airport allowed the declaration of cargo to be divided and merged by multiple distributors. This enables each cargo item to be self-managed on an individual basis. If the same item is taken out for re-export, companies can reduce the lead time from four hours down to 30 minutes by applying a general export procedure instead of using existing return procedures and using electronic export customs procedures, without resorting to complex paperwork.

134

Success Stories 135

III. Business Opportunities in Korea

Since ASML, a global logistics company, is using the Incheon International Airport Free Trade Zone as its global distribution hub, domestic airlines and logistics companies expect a significant rise in sales due to an increase in air freight, along with a decrease in delivery lead time for semiconductor equipment parts, which is expected to fall from 30 hours or more to less than three hours. In addition to ASML, around ten global semiconductor equipment companies are reviewing decisions to transfer Asian and global hubs to the Incheon International Airport Free Trade Zone.

CASE 7.

AACT (Atlas Air Cargo Terminal)
The AACT freight terminal, the Asian hub of Polar Air Cargo Inc., the air freight company run by Atlas Air Worldwide Holdings, Inc. (AAWH) that retains the B747, the world’s largest air freighter, moved to the Incheon International Airport in May 2008 and has been operating successfully ever since. The AACT will be used as a hub terminal for Polar Air Cargo for the Asia – US route. This plays an important role as a distribution hub that covers all of Asia including China and India with a significant increase in demand for air freight. Polar Air Cargo, an air carrier with the single largest amount of cargo among foreign air carriers at Incheon, reinforced its strategic investment in Incheon by leveraging the strategic location of Incheon International Airport for the Russian Far East, Northeastern China, and Northeast Asia. It handled cargo weighing nine tons through 29 air freight operations a week in 2007. Atlas Air Cargo Terminal (AACT) is expected to have its volume of goods transported increase by 5.9% annually, as it uses Incheon International Airport as a transit hub that connects China, India, America and Europe. Atlas Air Cargo Terminal (AACT) entered with an investment of KRW 17.3 billion. It occupies a total floor area of approximately 16,000 m², located close to the Incheon hub of DHL, to create synergy effects for both companies and dramatically increase Incheon's status. In addition, Incheon International Airport is expected to increase to 150,000 tons of transit cargo over the next 25 years with the commencement of the AACT, and is also expected to gain KRW 370 billion of profits from oil use and surface work charges while creating 240 new jobs annually.

CASE 6.

SONY
Sony established and operated a global distribution center in the Incheon International Airport Free Trade Zone in August 2008 through Sony Supply Chain Solutions (Korea) Co., Ltd. Sony Inc. has operated a distribution center in Hongkong for products manufactured in Shanghai and Yantai in China. It decided to move the distribution center for laptop computers for the US market from Hong Kong to Incheon International Airport, which will handle 14,000 units, and is scheduled to send 420,000 laptop computers weighing about 6,000 tons to the US market annually. If it is successful, Sony plans to move the entire distribution center from Hong Kong to the Incheon International Airport Free Trade Zone. The utilization of the current complex transportation and distribution system has been presented to Sony as a significant strategy in determining the transfer of Sony’s distribution hub. Sony has adopted a distribution system that utilizes marine and air transportation and a distribution system where product items are transferred to the Incheon seaport using car ferries between China and Korea, and are then distributed worldwide through air carriers at the Incheon International Airport. Sony’s decision is regarded as symbolic of the geographic advantages of Incheon International Airport, which has strong growth potential as a central hub for distribution to the Yellow Sea region.

136

Success Stories 137

III. Business Opportunities in Korea

CASE 8.

DHL
In an attempt to prepare for surging demand for logistics in the Northeast Asian region, DHL, the world’s largest delivery and transportation company, established a continental hub terminal with a land size of 20,000m² within the freight terminal of the Incheon International Airport in 2007 and has operated it ever since. The DHL hub terminal was established with a total investment of USD 50 million and is five times larger than existing DHL distribution facilities. It plays a role as a stronghold of intercontinental distribution lines that connect America, Europe, and Northeast Asia with major demand for logistics from Northeast China and Far Eastern Russia. DHL is seeking enhanced productivity and customer services through the establishment of an Express Incheon hub equipped with state-of-the-art systems. For this, it has prepared a fully automatic distribution system to process all cargo with a variety of cutting-edge equipment and tools including weight gauge equipment and X-ray equipment with a new gateway capable of processing 13,500 cargo loads an hour, a dramatic improvement from the traditional 2,500 cargo loads an hour. In addition, the company has set up sophisticated systems, including a six-plane camera tunnel system with the ability to recognize air freight invoices, to measure weight and dimensions automatically, and to deliver corresponding information to the server so that cargo items can be precisely classified. DHL’s investment demonstrates Incheon International Airport’s world class infrastructure and its advantages as a strategic hub in the Asia Pacific region.

C. FEZ, FTZ port based
CASE 9.

Global Stronghold business model that utilizes high-end technology
CURRENT STATUS
Company K established by a joint investment between Korea and a US firm manufactures precision chemical products (dyes, IT equipment, processors, etc.) and provides them for the Asian market, including Korea and China. It procures complete products as well as core raw materials from the US, manufactures products for sale, and provides them to the Korean and Asian markets through distribution branches. Due to limited production at Korea’s production branch and significant cost, the unit production cost is 90~95% of that of its US headquarters. The necessity of localization and consideration of the Chinese market has made the company enter the Korean market for expansion of production facilities but has suspended implementation on concerns of technology leaks.

Korean R&D Center (Suwon)
-  R&D for products

Korean distribution center (Pyeongtaek)
-  Processing of domestic and foreign cargoes

Korean manufacturing corporation (Hwaseong, Naju)
-  Unit production cost is 90~95% of that of US -  Leadership of the Korean and Asian markets

Domestic Consumption

Chinese market

90% of products sold in the Korean market
Providing complete products and core parts

Partial transfer of technology Exports (10% of overall production)

uS HQ
-  Mass production of core parts and complete products -  Unit production cost =100 -  Sales in US market : 90%

Southeast Asian market

East Asian market

NEW BUSINESS MODEL
The same company has established a global stronghold that utilizes high-end technology within Korea’s Free Economic Zones and is expected to obtain a variety of effects. If the Korean market is expanded due to the Korea-US FTA and entry into the European market becomes easier due to the

138

139

III. Business Opportunities in Korea

Korea-EU FTA, expansion of production facilities may be required. In particular, the ratification of the Korea-US FTA is expected to settle intellectual property protection issues that have stood in the way of investment. The company has expressed a willingness to expand technology transfer in the future and to shift production from its US headquarters to the Korean branch to reduce unit production costs by about 10.5~11.1% by doubling the production facility as well as obtaining additional cost savings through enhanced productivity.

CASE 10.

"Open Innovation" type Korea-US joint investment business model
CURRENT STATUS
Company D stationed in Korea’s Free Economic Zone manufactures customized semiconductor products used in IT, and electronic products etc. by obtaining technical licenses from a US company that retains the original technology and provides them for the global market including Korea. Company D has a number of competitors in Taiwan and China, and obtains royalties from Taiwanese and Chinese companies after providing original technology. Developments in global IT technology now require massive product development costs to meet increasingly rigorous customer requirements. There is high profit from mass production through expanded investment and production facilities but it is difficult to procure costs and the uncertainty of investment is significant. The US company that retains the original technology takes an extremely serious approach towards joint investment with the Korean corporation due to intellectual property protection issues. Taking the speed of technical development and heavy competition in the semiconductor industry into account, Company D retains processing technology for commercialization, while the US company that retains the original technology has seriously considered setting up a joint R&D corporation. However, if the intellectual property protection issues are resolved through ratification of the KoreaUS FTA, both companies are expected to secure competitive advances in the global market.

Korean R&D Center (Suwon)
- R&D for products

Korean distribution center (Pyeongtaek)
- Processing of domestic and foreign cargoes

Korean manufacturing corporation (Hwaseong, Naju)
- Doubled production capacities - Hub functionning for some items - Unit production cost = 80~85 - Economies of scale

Chinese market

Domestic Consumption

60~70% of products are sold in the Korean market

0% Tariff
Korea-EU FTA

Providing some core parts

Significant increase of technology transfer
Exports (30~40% of overall production)
Non-tariff exports

uS HQ
-  Mass production of core parts and complete products -  Unit production cost = 100 -  Sales in US market : 90%

European market

Southeast Asian market

East Asian market

0% Tariff
Korea-US FTA

uS market

Korean Companies (Global Suppliers)
- Advanced technology for processing - Mass production capacities

A small portion of production for domestic consumption
A large portion of production mostly towards the global market

Chinese market

Technology Introduction

Providing original technology under strong intellectual property protection law

European market

uS HQ
- Holding technical licenses

A mutual need for collaboration with heavy competition in the global market

uS market Asian market

140

Success Stories 141

III. Business Opportunities in Korea

This firm is expected to enjoy various benefits with respect to import/export activities as it is able to access a variety of government incentives and superior infrastructure as they are stationed in Korea’s Free Economic Zones.

NEW BUSINESS MODEL
As the protection of intellectual property rights is reinforced and protection of investment is ensured in accordance with the Korea-US FTA, companies from both countries will be able to collaborate based on mutual trust and create substantial synergy effects by combining original technology and processing and manufacturing technologies in developing new products. In addition, both companies will be able to maximize their profits by expanding market share within the framework of mutual collaboration and subsequently exploit opportunities to develop their own internal technologies to meet global standards.

Korean Companies (Global Suppliers)
- Advanced technology for processing - Mass production capacities Ensured Intellectual property rights through Korea-US FTA  Business trust enhancement through KoreaUS collaboration, so-called "Open Innovation"

Chinese market
Combining processing and manufacturing technology
Mutual sharing results and performance Sharing sophisticated technology and R&D costs Mutual sharing results and performance

uS HQ
- Holding technical licenses

European market

Korea-uS joint investment in R&D sector
- Technology sharing to increase the global market shares - Enhanced profitability focusing on new product co-development

uS market

Asian market

142

Success Stories 143

IV. Foreign Direct Investment in Korea
Overview of FDI in Korea Government Policy and Organization Foreign Investment Procedures and Incentives Living Environment in Korea

IV. Foreign Direct Investment in Korea

Overview of FDI in Korea
Korea adopted a more liberalized economic policy after the Asian Financial Crisis in 1998, and opened its capital and real estate markets to foreign investors. The Foreign Investment Promotion Act, passed in 1998, enabled the government to launch more aggressive campaigns to attract FDI. After the initial success with liberalization in 1998, slowing inbound capital flows made it apparent that a new paradigm for investment was needed. The government decided that this new paradigm would employ a more proactive approach to recruit foreign investors, targeting potential investors with closer reference to the strengths of Korea's industrial base, and developing one-stop services to accurately address foreign investors' needs and difficulties. The government in place as of February 2008 has been preparing a more powerful and concrete system for FDI promotion. Given the current significance of not only maintaining but expanding foreign investment inflow into Korea, the government's preparations consist of three pillars: systemic reform, overhauling regulations, and tax cuts, all three of which are underway and being executed in phases.

Considering the overall trend in FDI in 2008, the increase of investment from the EU and Japan has offset the decrease in investment due to the outbreak of the financial crisis in the US. In particular, investment from Japan showed an increasing tread in the fourth quarter due to factors like the stronger Yen, and this trend has continued to the first quarter of 2009 (The amount of FDI notification from Japan was ranked as the largest in the first quarter of 2009). Considering major factors according to business sector, investment in the finance and insurance industry largely increased (by USD 4.6 Billion, 101% increase) due to increased investment to expand liquidity for financial institutions in preparation for the enforcement of the Capital Market Consolidation Act (in February 2009). The manufacturing industry also showed an 11.5% increase as expectations on the potential for Korean industrial growth remained. In light of investment patterns, the decrease in new investment was offset by a large increase in M&A activity (by 78.2%), increased investment (by 27.1%) and long-term loans (which grew 89.8%). Amid the current global financial crisis, the government has more strongly committed to FDI promotion, perceiving it as key to Korea's economic recovery. On the other hand, new business opportunity factors might be triggered by the weaker KRW currency, the active M&A market due to restructuring of domestic companies, and enforcement of the Capital Market Consolidation Act. In addition, FDI inducement will be promoted as strategies for developing new investments and diversified recruitment overcome disadvantageous investment conditions in the long term. For example, investment recruitment activities might focus on investors that are less influenced by the financial crisis, including investors from the Middle East and China, while continuously carrying out recruiting in the USA and EU. Moreover, the Korean government will provide front-line support for existing FDI companies to induce additional investment. For the revitalization of the regional economy, the Korean government will also try to attract more diverse investment, including investment from new growth industries and regional development projects.
STATuS OF INwARD FDI By INDuSTRy
9,000 8,000 7,000

Trend of Inbound FDI in Korea
17.5 15.0 12.5 10.0 7.5 5.0 2.5 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Notification A total of USD 124 Billion from 1998 to 2008

USD million
Services

6,000 5,000 4,000 3,000 2,000 1,000 900 100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Unit: USD Billion, notification basis

Manufacturing

1998 8.9

1999 15.5

2000 15.2

2001 11.3

2002 9.1

2003 6.5

2004 12.8

2005 11.6

2006 11.2

2007 10.5

2008 11.7

Others

• The total FDI for the decade since the Asian Financial Crisis (1998~2008) is as 5 times as that of 1962-1997. • Inbound FDI averaged USD11 billion for ten consecutive years from 1999.

2008

146

Overview of FDI in Korea 147

IV. Foreign Direct Investment in Korea

Unit: USD Million, %

2005 Manufacturing Amount Percentage Amount Percentage Amount Percentage 3,084 26.7 8,334 72.1 145 1.3

2006 4,246 37.8 6,626 59 368 3.3

2007 2,692 25.6 7,612 72.4 210 2

2008 3,002 25.6 8,387 71.7 317 2.7

Service

Other

Investment from Japan in the first quarter of 2009 reached USD 661 Million, an 162% increase year-on-year. Japan’s share (39.4%) also increased compared to the same period in the previous year (9.3%) as investment for materials and parts showed a sharp increase in manufacturing. Investment from Japan - one of Korea’s primary sources of FDI - fell by 53% in 2007, but rebounded significantly by 44% in 2008. Investment from the financial industry in Japan is expected to be highlighted as one of the most important FDI sources amid the continuous stream of investments from the financial industry in Japan due to declining real estate prices in Korea along with a stronger yen. FDI from the US continued on a downward trend since 2005, totaling USD 1.7 Billion in 2006, a 37% year-to-year decrease. In 2007, FDI from the US jumped by 37% to USD 2.3 Billion. The financial crisis hit the US hardest however, which influenced its outbound FDI. As investment from the US showed a sharp decrease since the third quarter in 2008, FDI reached USD1.3 Billion in the end (the investment to the service industry decreased by 52.3 %).

In 2008, investment in the manufacturing sector accounted for 25.6% of overall inbound FDI into Korea, while service sector investment totaled 71.9% (other business categories accounted for the remaining 2.7%]. Although the weights of FDI were distributed over industries with no major change from 2007, investment central to the service industry around the finance and insurance sectors was introduced in the second half in 2008, recording USD 8.39 Billion, an increase of 10.2% year-on-year. Although investment in the service industry decreased in 2006, it showed an increasing trend from 2007. Meanwhile, investment in food, non-metallic mining, and chemicals in the manufacturing industry increased in 2008 with an investment of USD 2.54 Billion in the materials and parts sector which accounted for 84.5% of the total manufacturing industry.

STATuS OF INwARD FDI By TyPE
10,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 900 100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

USD million
Greenfield

STATuS OF INwARD FDI By REGION
U.S.A. Japan Netherlands Germany UK France Others 32.6 Total

M&A

1962-2008 (%)

27.0 14.7 11.3 5.6 5.0 3.8 67.4

Unit: USD Million, %

M&A Amount 2005 2006 5,268 4,309 2,483 4,426 % 45.6 38.3 23.6 37.8 Amount 6,297 6,933 8,031 7,280

Greenfield % 54.4 61.7 76.4 62.2

Investment from the EU, US and Japan accounted for 77.6% of the total as of 2008, of which investment from the EU reached 54.1% with a record USD 6.36 Billion. The US stood collectively as the largest direct investor in Korea accounting for 46.5% in 2006 and 43.9% in 2007. Other major investors in the EU include the UK, the Netherlands, Germany, and France.

2007 2008

By type, greenfield FDI for construction of new plants and business facilities grew significantly between 2004 and 2006, while M&A investment waned. FDI for green-field investments,

148

Overview of FDI in Korea 149

IV. Foreign Direct Investment in Korea

which had increased continuously until 2007, decreased by 9.4% in 2008. M&A investment with a decreasing trend since 2004 recorded USD 4.43 Billion, an increase of 78.2% year-on-year in 2009.

Overview of Inbound FDI in Korea’s Logistics Industry
Most countries are well aware of the importance of FDI promotion in the development of their national economy while competing with other countries across the world. FDI has been induced for various reasons including resource exploration (natural/artificial resources), market exploration, efficiency, and strategic resources exploration, etc. The Asia-Pacific Region is facing an important change in economic growth along the coastal areas as well as international cooperation in transportation for the Asian Highway and TransAsian Railway. Regional and international cooperation for trade and transportation facilities is increasing in the European and Asian continents, which has helped diminish barriers between countries. Such trends will generate increased demand for a logistics cluster platform that covers many countries. Korea has been making substantive efforts to secure infrastructure for logistics including road, railway, airport and port facilities in order to increase national competitiveness. Major infrastructure for logistics, including airports and seaports, has been greatly expanded. Foreign companies are participating in SOC private investment projects driven by Korea in the form of an equity investment or long-term loan (over five years). AMEC in the UK is investing in the construction (to be completed in October 2009) of the Incheon Bridge (at 18.5km, the sixth largest in the world) which will connect Incheon International Airport to Incheon Songdo International City in a BTO (Build-TransferOperate) system. Systra (France) is investing in the construction of a light railway between Busan and Gimhae in a type of equity investment and Mizuho Corporate Bank (Japan) is providing a long-term loan to the highway project between Daegu and Busan. DP World (Dubai) and Bouygues (France) among others are carrying out operation and development of port terminals and logistics. They are also participating in the construction of Busan New Port (30 docks for container terminals). Prologis (USA) and others are investing in real estate development for logistics including general warehousing business around the inland areas. Incheon Airport, as the second largest international cargo airport and one of the top 10

NEw AND ADDITIONAL FDI
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 900 100
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

USD million
New Additional

Long-term Loans

Unit: %

Year 2005 2006 2007 2008

New 32.5 38.6 48.1 37.8

Additional 66.7 57.9 46.8 53.4

Long-term Loans 0.8 3.5 5.1 8.8

150

Overview of FDI in Korea 151

IV. Foreign Direct Investment in Korea

international passenger airports as of March 2009, accommodates 56 airliners flying to and from 165 major cities across the world. It is becoming a hub airport in East Asia with facilities that can handle 4.5 million tons of cargo a year along with three large runways (two 3,750m runways and one in 4,000m runway). In addition, Incheon Airport was awarded “ B e s t A i r p o r t Wo r l d w i d e ” f o r f o u r consecutive years for the first time in the history of the Airport Service Quality (ASQ) survey carried out by Airports Council International (ACI), an organization of over 1,700 airports across the world. Incheon Airport has developed and is operating the First Phase of its Airport LogisPark project along with its cargo terminal areas to maximize cargo and generate value added in response to changes in the international logistics environment. Areas around Incheon Airport accommodating foreign logistics companies include DHL, Fedex, UPS, Polar Air, Schenker, KWE, and AMB Property. Incheon Airport also accomodates the Asia hub of ASML, the third largest semiconductor equipment company headquartered in the Netherlands. Additionally, Incheon Airport is planning to develop a logistics complex (920,000 m²) in the second phase and to provide sites beginning in 2012. The Busan new port next to the current port of Busan is the fifth largest port (13,452,000 TEU) based on the quantity of goods transported by ports across the world in 2008. It has completed development for the phase 1-3 Northern Container Logistics Support Complex, where many foreign companies have established themselves, including C. Steinweg Warehousing PTE., COSTCO Logistics Co., and Sanyo Maritime, etc. The development project at the Northern Container Logistics Support Complex (Phase 4 scheduled for 2011) is in progress (0.22 million m²), and the Southern Container Logistics Support Complex (1.42 million m²) and the Woongdong District Logistics Support Complex (3.58 million m²) are planned for development as well. Port of Gwangyang is exclusive for containers, and completed development of its Eastern Logistics Support Complex (1.95 million m²) in 2008. Foreign companies like TESCO Holdings,

and Mevius, established themselves, and are planning to develop a Western Logistics Support Complex (1.93 million m²) by 2012. Port of Pyeongtaek located around the capital region is developing 1.43 million m² for a logistics support complex by 2010 and has planned to develop 1.2 million m² additionally by 2015. Port of Ulsan, characterized by a high presence of liquid cargo, is accommodating foreign investment companies including Stolt Haven, Vopak, and Odfjell, etc. It is in the progress of executing designs to secure a port logistics support complex of 440,000 m² by 2011. Port of Incheon, Pohang, Masan, and Mokpo are planning to actively attract more foreign logistics companies while developing their port logistics support complexes as welll.
INBOuND FDI IN KOREA'S LOGISTICS INDuSTRy
Year Logistics (Transportation, Warehousing) Transportation Warehousing 2004 371.7 112.1 259.6 2005 363.5 144.7 218.8 2006 567.6 89.3 478.3

Unit: USD million, notification basis

2007 563.8 311.3 252.5

2008 703.8 19.7 684.1

Thanks to the efforts of the Korean government, FDI records in the logistics sector have shown an increase since 2004. However, the weight of third party logistics (3PL) utilization for shipping companies in Korea has remained at 42.2% in 2007 and 46.3% in 2008, much lower than the 70-80% in advanced countries. Accordingly, the Korean government is planning to expand third party logistics for cost savings and specialization through logistics rationalization to foster logistics companies and to address the advancement of cargo transportation markets in a systematic manner. It also plans to newly develop northern and southern inland logistics bases around the capital region to revitalize collection and distribution systems. In addition, it plans to continuously expand ITF (Integrated Freight Terminals), ICD (Inland Container Depots), inland logistics bases and complexes while extending logistics complexes under operations in three places to 39 places by 2012. The Korean government is also planning to build a national logistics general information center by 2012 to link and integrate the logistics information network while constructing an RFID based information system for the logistics bases including airports and ports.

152

Overview of FDI in Korea 153

IV. Foreign Direct Investment in Korea

Government Policy and Organization
Government Policy
Since the onset of the financial crisis in 1997, the Korean government has been active in its efforts to attract foreign direct investment to Korea and the Foreign Investment Promotion Act. passed in 1998 has greatly facilitated these efforts. In 2007, on the occasion of the 10th anniversary of Korea’s pro-FDI policy, the government has initiated a new goal of increasing high value-added investment and established an action plan to support the national effort to attract foreign companies and expand FDI-related infrastructure. These initiatives are aimed at improving the efficiency and scope of the current FDI promotion system by selecting high-priority industrial sectors and creating cooperation mechanisms between relevant government agencies. To this end, the extent of the government’s drive includes stepping up investment incentives as well as upgrading the current one-stop service system and foreign investor support system. Overall, plans are in place to organize the implementation of an array of measures designed to create an optimal investment environment, promote a social atmosphere that is more foreign investment-friendly, enhance the living environment for international residents and continue strives to reduce language barriers. The government will be leveraging these efforts by sharpening the competitiveness of Korea’s Free Economic Zones and incorporating them into its vision to develop a regional financial hub in Northeast Asia. Moreover, under the business-friendly policy framework, the new Korean government elected last year (Feb 2008) is carrying out the 3-year plan for improvement of foreign investment environment including phased reduction of corporate tax. Especially, President Lee Myung-bak has been achieving substantial results in FDI attraction through the brisk sales diplomacy at the unilateral and multilateral summit talks. As it is expected that the global economy would post a negative growth rate after the US-driven financial crisis, investment environment becomes more challenging. In order to overcome such challenges effectively, the Ministry of Land, Transport and Maritime Affairs, which is in charge of establishing national logistics policy and expanding logistics facilities, is taking an active role in

implementing the foreign investment policy to secure the financial resources and technologies necessary for the expansion and operation of the logistics infrastructure, such as SOC facilities (roads, railroads, high-speed railroads, airports, harbors, etc.), airport/port-hinterland complexes and inland logistics depots.

FDI Promotion System
Currently, Korea's FDI promotion system is comprised of several organizations. These organizations, such as local governments(including Free Economic Zone authorities), public corporations and industrial complexes, IK (Invest Korea) and KBCs (Korea Business Center) of KOTRA(Korea Trade-Investment Promotion Agency), are cooperating with one another systematically centering around the central ministries including the Ministry of Land, Transport and Maritime Affairs(MLTM) and the Ministry of Knowledge Economy(MKE). The central government, local governments, public corporations and industrial complexes, etc., can attract FDI unilaterally and ask for cooperation from other organizations when it is necessary.
Foreign Investment Committee Central Govemment (MLTM, MKE etc.) Local gov. / FEZ Overseas KBC (Korea Business Center) Invest Korea Public corporations / Industrial complexe corp. KOTRA Headquarters
Targeting

Identifying Investors

Marketing for Investment attraction

Support service

Aftercare service

Foreign Investment Committee is the supreme decision-making body in matters of foreign investment policy, etc. Its chairperson is the Minister of Knowledge Economy and committee members are ministers of relevant ministries such as the Minister of Land, Transport and Maritime Affairs and the head of local government or Mayor/provincial governor related to the case presented to the committee.

154

Government Policy and Organization 155

IV. Foreign Direct Investment in Korea

Foreign Investment Committee deliberates matters related to basic policy and system regarding foreign investment; integration and adjustment of the concerned ministries' measures regarding the improvement of foreign investment environment; criteria for tax reduction/exemption granted to the foreign-investment companies; and cooperation and opinion adjustment between the central administrative body and municipality/metropolitan city/province or special self-governing province regarding foreign investment. The central ministries including the Ministry of Land, Transport and Maritime Affairs are engaged in continuous search for new projects and investment attraction activities, and settlement of the difficulties and policy improvement regarding foreign investment. IK (Invest Korea), the National IPA (Investment Promotion Agency) specialized in investment attraction, was established within the KOTRA for the purpose of providing FDI-related consulting, guide, promotion and research services; handling investment-related civil affairs and assisting with the filing process; providing business incubation service and other support services to foreign investors and foreign-invested companies. IK is also engaged in various activities including reporting investment projects identified by KOTRA's KBCs, etc., to the concerned ministry; addressing difficulties of foreign investors on the spot in cooperation with IK's PM(Project Manager) and the concerned ministry's PM; providing investment-related information; and arranging a meeting with investors through KBCs. Moreover, the office of Foreign Investment Ombudsman is operated to support addressing the difficulties of foreign-invested companies. The Ombudsman is appointed by the President among the persons with knowledge and experience in FDI-related works. In connection with concerned ministry, local governments (including Free Economic Zones), public corporations, industrial complexes and IK are promoting foreign investment attraction and submitting proposals to the government to address difficulties that foreign investors might face. In logistics sector, the central ministry, the Ministry of Land, Transport and Maritime Affairs and its subsidiary organizations including Korea Expressway Corporation, Korea Airports Corporation, Korea Port Authority, Korea Container Terminal Authority, etc., are closely cooperating with one another to attract foreign investment more efficiently.

Foreign Investment Procedures and Incentives
Laws Applied to FDI in Korea
Foreign Direct Investment (FDI) refers to an investment made by a foreigner for the purpose of establishing a continued economic relationship with a corporation of the Republic of Korea or a business owned by a citizen of the Republic of Korea and is based on the Foreign Investment Promotion Act (FIPA) and other related laws. FDI, as prescribed in the FIPA, includes acquisition of shares or equity of a domestic corporation or business, provision of longterm loans to invested domestic corporations, a contribution to a non-profit organization, etc. The FIPA is the basic law for foreign investment. Unless stated otherwise in the FIPA, the Foreign Exchange Trade Act will apply to matters related to foreign exchange and external dealings related to foreign investments. The Tax Exemptions and Exceptions Act and its Enforcement Promotion Act and Enforcement Regulation and regulations on tax reductions on foreign investments, etc. will apply to tax reductions for foreign investments. However, since foreign-invested companies are local corporations established under domestic law, the same laws that apply to purely domestic corporations will apply even if the foreigninvested company has gone through the processes as prescribed in the FIPA. Therefore, if approval and permission under each law are required, the relevant business may be conducted only after the required processes are completed.
FOREIGN INvESTMENT-RELATED LAwS
BASIC LAwS
• Foreign Investment Promotion Act (FIPA) ∙ Enforcement Promotion Act (EPA)s ∙ Enforcement Regulations • Regulations on foreign investment and technology import (MKE: The Ministry of Knowledge Economy) • Comprehensive announcement of foreign investment (MKE) • Regulations on tax reduction and exemption for foreign investment (MOSF: The Ministry of Strategy and Finance) • Tax Exemptions and Exceptions Act (Chapter 5. Tax Exemptions for Foreign Investments, etc.) ∙ Enforcement Ordinances · Enforcement Regulations

OTHER RELATED LAwS
• Foreign Exchange Trade Act: Matters regarding foreign exchange and external trading related to foreign investments • Law on designation and operation of Free Trade Zones • Law on designation and operation of Free Economic Zones • Financial Investment Services, Capital Markets Act, Capital Markets Consolidation Act etc.
For more details, please visit www.investkorea.org and refer to the link 'investment guide'.

156

Foreign Investment Procedures and Incentives 157

IV. Foreign Direct Investment in Korea

Foreign Investment Procedures
The procedures to establish a foreign investment consist of foreign investment notification, remittance of the investment capital, registration of incorporation and business registration and FDI company registration. The procedures applied to foreigners are basically the same as for Koreans except for the two additional steps which are foreign investment notification and FDI company registration. However, in the case of registration as a private business, registration of incorporation is not required. Foreign investors or their agents can notify their investment at Invest Korea (KOTRA) or Korea Business Centers of KOTRA, headquarters and branches of domestic foreign exchange banks, or domestic branches of designated foreign banks.
* Notification processing period: Immediately (the issue of notification certificates

Investment Fund Remittance
In principle, investment funds shall be remitted through a foreign currency bank under the very foreign investor's name. Funds from domestic sources are not recognized as foreign investments. In the process of paying for stock subscription, the bank issues a stock deposit certificate for subscription payment (required for corporation establishment registration) and a foreign exchange purchase certificate (required for registering a foreign-invested company).

Corporate Establishment Registration & Business Registration
Various required documents shall be taken to the district court and tax office to conclude registration of incorporation and business registration.

Paid-In Capital Transfer to Corporate Account
When registration of incorporation and business registration procedures are completed, the new company becomes a legally valid corporation. Hence the bank requests the necessary documents and transfers the paid-in capital in custody to the account of the newly established corporation.

Since November 1998, the principle of simplified notification has been applied to foreign investments. The investment notification types are divided into pre-notification prior to the acquisition of shares, equity, etc. and post-notification following the acquisition of shares or the conclusion of a contract. The details are as follows:
Notified Items Pre-Notification Foreign investment through acquisition of new shares, etc. or subscription and changes in investment details Foreign investment through acquisition of existing shares, etc. or changes in investment details Foreign investment through long-term loan or changes in investment details Post-Notification Acquisition of shares, etc. through mergers, etc. • Acquisition via the issue of new shares such as reserves, revaluation reserves, etc. of foreign-invested companies. • Acquisition through mergers, spin-off and comprehensive interchange and transfer of shares, etc. • Investment with profits (dividends) from acquired shares • Acquisition through purchase ∙ inheritance ∙ testation ∙ donation • Acquisition through conversion, interchange and acquisition of CBs, EBs and DRs Transfer of shares, etc. Decrease in shares, etc. Application for registration, change of registration, or cancellation of a foreign-invested company Exceptionally, for acquisition of a listed company’s shares, within 30 days from the date of acquisition Remarks

Foreign-Invested Company Registration
For the following cases, a foreign investor (or their agent) or a foreign-invested company must register the foreign-invested company at the entrustment institution within 30 days of the occurrence of the causes as follows: • Completion of payment for the investment object (new share acquisition); • Acquisition of existing shares (existing share acquisition); • Acquisition of shares through mergers, etc. (new acquisition of CB conversion, spin-off, etc.); and • Completion of a contribution to an NPO (new acquisition through contribution)

Local Corporation Establishment
The establishment of a local corporation exactly follows the foreign investment procedures. The following includes the details of company establishment and business registration procedures which are significant in establishing a local corporation. As most companies take the form of “incorporated company,” the focus will be on the procedures to establish incorporated company.
Within 30 days of the date of acquisition

Foreign Investment Notification
(INVEST KOREA (KOTRA), foreign exchange bank)

Investment Fund Remittance
(foreign exchange bank, carried in through customs)

Corporation Establishment Registration
(Court Registry)

Within 30 days from the date of contract Pursuant to Article 439 of the Commercial Law: Within 30 days from the date of termination of the creditor's notification period Within 30 days from of occurrence of the case

Foreign-Invested Company Registration (Initially notified
organization)

Paid-In Capital Transfer to Corporate Account (Foreign
exchange bank)

Corporation Establishment Notification & Business Registration (Headquarters
district tax office)

158

Foreign Investment Procedures and Incentives 159

IV. Foreign Direct Investment in Korea

FOREIGN INvESTMENT NOTIFICATION AND FOREIGN-INvESTED COMPANy REGISTRATION
Acquisition of new shares (including contribution) Acquisition of existing shares Share acquisition through merger, etc.

FDI Incentives
The purpose of FDI incentives is to compensate foreign companies investing in Korea for their economic contributions and to assist them with costs related to establishing new business operations in the country. The government currently offers tax relief to foreign companies with the potential to make major contributions to the Korean economy, provides them with industrial sites or assists them with site location and acquisition and provides cash grants and other types of financial support.

New share acquisition or contribution Foreign investment notification(pre): Article 5 of the law
Capital goods in kind investment

Existing share acquisition Foreign investment notification(pre/post): Article 6 of the law
Cash investment

Share acquisition notification through mergers, etc. (within 30 days): Article 7 of the law

Capital goods import itemized account check application

Remittance of investment funds (bank, hand-carried through customs)

Capital goods import customs clearance

Capital payment storage/private business fund exchange

Settlement

In kind investment completion confirmation application

Corporate establishment (capital increase) registration & business registration (*private business registration)

- Free issue of new shares (capitalization of reserves, revaluation reserve, etc.) - Business merger ∙ division, comprehensive share exchange/ transfer - Foreigner purchase/inheritance/ testation/contribution - Investment of cash, stock dividends - CB, EB, DR stock conversion

TAX RELIEF
According to the Tax Exemptions and Exceptions Act, corporate and income taxes on business income, dividends income, technology introduction considerations, earned income, etc. have been reduced. Acquisition tax, registration tax and property tax have been reduced for properties that have been acquired or held.

Foreign-invested company registration (new application): Article 21 of the law, article 27 of the enforcement Decree

Long-term loan investment notification (pre): Article 8 of the law
Initial application for loans after registration is feasible. Notification of change

Corporate Tax Reduction
Reduction in corporate tax for foreign-invested companies applies to income from businesses qualifying for reductions under the Tax Exemptions and Exceptions Act. The initial day of reckoning tax reductions is, whichever is sooner between, the tax year in which the first income is created, or the tax year in which the 5th year anniversary of the date of business commencement falls.

Visa issue application

Post management: Transfer/reduction, amount increase investment, registration/change registration, etc.

- Pre acquired share transfer notification (within 30 days from the transfer contract date) : Article 23 of the law - Pre acquired share reduction notification (within 30 days from the deadline of the creditor notification date)
- Notification of share acquisition through mergers, etc. - New share acquisition notification (amount increase investment) - Existing share acquisition notification (amount increase investment) - Other investment change notification (when applicable)

- Change of loan provider - Change of loan amount - Change of loan conditions (repayment conditions, interest rates, premature repayment, repayment funds capitalization) Cause for change of registration due to changes in details of foreign-invested company - Capital change (native capital increase/ CB capitalization, etc.) - Foreign investor merged, changing of company names - Company name, address change of foreign-invested companies, etc.

Date of Business Commencement
• In manufacturing, the first day of manufacturing goods at each manufacturing facility • In mining, the first day of commencing collection/mining of minerals at each place of business • In other businesses, the first day of supplying goods and/or services

Foreign-invested company: change of registration (application) : Article 21 of the law, article 27 of the enforcement Decree

Foreign invested company registration cancellation (application) : Article 21 of the law, article 28 of the enforcement Decree

Cause for foreign-invested company registration cancellation - Closure (individual-closure certificate, court-certified copy of liquidation registration, business establishment association) - Resolution to liquidate (resolution of liquidation dissolution) at the general assembly of association members) - Transfer of all foreign-held shares/ Capital reduction of all foreign held shares - Liquidation (corporation-certified copy of liquidation registration), etc.

In capital increases, the date marking the registration of capital increase shall be considered the date of commencing business in applying this regulation. For foreign acquisition of shares through capitalization of reserves, revaluation reserve, etc. the period and rate of reduction shall be determined by cases of reductions for shares, etc. that are the basis of such occurrence. If an application for tax reduction is made after increasing the capital less than 5 years after the decrease in paid-in capital, the reduction shall be determined only for the foreign investment ratio of the portion that is purely increased from before the capital decrease. However, in the case that a purely domestic company receives an investment from a foreigner through a capital increase and becomes a foreign-invested company shall be considered as a new foreign investment and not as a case of capital increase as described above.

160

Foreign Investment Procedures and Incentives 161

IV. Foreign Direct Investment in Korea

The amount of foreign investment ratio (for tax amount subject to reduction) multiplied by the calculated tax amount shall be deducted 100% from acquisition, registration and property taxes for 3-5 years following the commencement of business and 50% for 2 years afterwards on properties that have been acquired following the commencement of business operations. However, acquisition, registration and property taxes that have been already paid on properties that have been acquired following the commencement of business operations, but prior to becoming the subject of tax reduction, may not be refunded. However, acquisition, registration and property taxes on properties that have been acquired prior to the starting date of business shall be subject to 100% reduction on the tax reduction amount for properties that have been acquired following the date of the tax reduction decision. Property tax shall be subject to 100% reduction of the tax reduction amount for 3-5 years following the acquisition of the property and 50% of the tax reduction amount for the next 2 years. According to the regulations, the local tax reduction period may be extended up to 15 years, or the reduction or deduction rate could be increased.

For mergers, if a foreign-invested company merges with a domestic company (excluding foreigninvested companies under the reduction period) during its reduction period, resulting in a decreased ratio of foreign investment in the merged corporation, the foreign investment ratio in the foreigninvested company prior to the merger shall apply. For equally apportioned capitalization of revaluation reserves, that is, reserves which are not subject to new reductions, there shall be no changes to the reduction rate for the business year of capital increase, nor the next business year.

Exemption of Customs Tariffs, etc.
According to the Tax Exemptions and Exceptions Act, customs tariffs, etc. shall be exempted for the following capital goods used directly in businesses subject to reduction in corporate tax or income tax and are imported through foreign investment notification on acquisition of newly issued shares, etc. • Capital goods imported as external or internal payment vehicles invested by foreign investors to foreign-invested companies • Capital goods imported as investment objects by foreign investors Exemptions of tariffs, etc. shall only apply to capital goods that have completed the import notification under the Customs Act within 3 years after the day of the foreign investment notification. However, in the case that the import notification can not be completed in the said period due to unavoidable reasons such as delays in factory establishment approval, etc. the exemption shall apply for up to 3 additional years with the approval of the Ministry of Strategy and Finance. All customs tariffs, individual excise and value-added tax shall be exempted for industry support services vital to strengthening the international competitiveness of domestic industries, businesses that involve a high level of technology, or businesses operated by foreign-invested companies in standalone foreign investment areas under the Foreign Investment Promotion Act. Customs tariffs shall be exempted for foreign-invested companies in complex foreign investment areas, specific companies in Free Trade Zones, foreign-invested companies in Free Economic Zones, businesses operated by foreign-invested companies as a development operator of the Jeju investment promotion district or Free Economic Zones, etc.

TAx REDuCTION CALCuLATION
Category Reduced Tax Calculation Method Reduced tax = (assessed tax × tax reduction business assessment standards/total standard of assessment) × reduction rate* • General cases (with only the original investment) - (foreign investor capital subject to reduction/total capital) × reduction rate of the business year (100, 50%) • Reduction rate calculation in cases of capital increase through cash · dividends Business Year {(foreign-invested capital prior to capital increase × reduction rate of the business year) + (foreign capital increased × number of days from the capital increase registration day until the end of the business year/number of days of the business year × reduction rate)}/total capital prior to capital increase + (increased capital × number of days from the capital increase registration day until the end of the business year/number of days of the business year)} Business year after capital increase {(foreign-invested capital prior to capital increase × fiscal year reduction rate) + (foreign investor capital out of increase capital × reduction rate)} / total capital

* Reduction Rate

Local Tax Reduction (acquisition/registration/property tax)
Property acquired or held by a foreign-invested company to do business subject to reduction shall receive either a 100% or 50% reduction in acquisition, registration and property taxes, or the items will be deducted from the standard of assessment.

Tax Support for Dividends
Dividends received by foreign investors from foreign-invested corporations operating tax reduction businesses are subject to tax reductions in the same rate as the portion of the amount of income of the tax reduction business, based on the dividend income during the reduction period.

162

Foreign Investment Procedures and Incentives 163

IV. Foreign Direct Investment in Korea

The initial day of reckoning for dividends from capital increase from new investments and cash, articles, or dividends is the same as the initial day of reckoning for corporate tax. During the period of 100% exemption of corporate tax, the dividend income tax is 100% exempted and during the period of 50% reduction for corporate tax, the dividend income tax is reduced by 50%. However, dividends that are capital from a capital increase through capitalization of revenue reserves or revaluation reserves shall be applied with the period and rate of reduction that are applied to the original shares that are the source of the dividends. That is to say, 100% for 5 years and 50% for 2 years shall not be renewed. Shares acquired by foreign investors from Korean national shareholders of foreign-invested companies or shares of domestic corporations shall not be subject to tax reduction since it is recognized as acquisition of existing shares. However, when foreigners or foreign corporations acquire shares held by a foreigner or foreign corporation, the initial period and rate of reductions shall be maintained.

CASH GRANT
For foreign investments that meet certain requirements, the government and the local government shall provide cash grant for funds required to build new factories. In doing so, various aspects shall be considered regarding the foreign investment, such as whether or not they come with high technologies, effects of investment's technology transfer, the number of jobs created, redundancy with internal investments, adequacy of location, etc.

Eligibility
To become eligible for cash grant, the foreign investment ratio shall be over 30% and meet the following requirements:
• Industrial support service businesses with foreign investments of no less than USD 10 Million, businesses involving a high degree of technology, parts or materials manufacturing businesses, or new and/or increased investments to factory facilities to generate new employment on a large scale. • Newly built/expanded R&D facilities in fields related to industry support services or high-tech businesses, or research facilities of non-profit corporations invested by foreigners (10 or more fulltime hired research personnel); • For cases when the investment amount, etc. do not meet the requirements, but has a profound impact on the domestic economy, the Foreign Investment Committee shall deliberate on the matter and determine whether the case is eligible for cash grant - Establishing regional headquarters of multi-national companies (multi-national companies with business presence in 3 or more countries and controlling regions of 2 or more countries); - Contributing to regional economic development as a regional strategic industry - Providing items or services not produced domestically, or which can improve domestic industry's competitiveness through introduction of advanced technologies

Other Tax Support: Tax Exemption for Technology Introduction Compensation
When introducing a high technology which is the key to strengthening the international competitiveness of domestic industries, the corporate tax and income tax on the compensations that the foreigner will receive for providing the technology shall be exempted for 5 years from the first agreed date of the payment for compensation. This applies not only to foreign-invested companies, but also to purely domestic companies, as well. The Ministry of Strategy and Finance and the Foreign Investment Deliberation Council shall go under deliberation and notify the range of technologies (high degree technology products and their technologies) eligible for tax reduction. The standards for such technologies are as follows: • Technology that has a profound economic or technological impact on the national economy and is essential to improving the industrial structure and strengthening industrial competitiveness • Technology that has been introduced to the country (date of technology introduction contract notification) less than 3 years ago, or technologies that have been introduced over 3 years ago, but are economically and technologically superior to already introduced technologies • Technology with most of its processes carried out domestically. In order to receive tax exemption for compensation for technology introduction, the application for exemption shall be made to the Minister of the relevant ministry before the sooner of the two: 1 year after the contract date of the technology introduction contract date, or the first payment date of compensations for technology introduction. If exemption applications are made and accepted for tax exemption after the tax exemption application deadline has passed, exemptions shall be granted to the taxation year of the exemption application date and the remaining exemption period afterwards. However, tax already paid shall not be refunded.

Grant Rate
Through negotiations, the cash grant ratio shall be determined at 5% and higher of the FDI, with the upper limit determined by a closed formula. As for an R&D center, FDI and R&D funds from overseas that are used for stipulated purposes shall be included in the funds to be calculated (except for funds raised domestically).

Legal Usage
Foreign-invested companies may use cash grant only for the following purposes: • Funds to support employment and training • Land purchase ∙ lease • Construction costs • Foundation facilities installation cost • Capital goods/research equipment purchasing costs

164

Foreign Investment Procedures and Incentives 165

IV. Foreign Direct Investment in Korea

In such cases, the purchasing amount of leased land for foreign investment companies shall be included in the cash grant limit. The cash grant can be provided simultaneously with financial support (except for cases where support items overlap) only if it is below the level of financial supportt.

 TAx REDuCTION
Category High Technology Business & Industry Support Service Eligible Industries • Manufacturing: USD 30 million • Tourism: USD 20 million • Logistics: USD 10 million • R&D: USD 2 million • Manufacturing: USD 10 million • Tourism: USD 10 million • Logistics: USD 5 million USD Reduced for 7 years (100% 5 years, 50% 2 years) Details

SUPPLY OF INDUSTRIAL SITES
Foreign Investment Zones
Foreign investment zones are designated to attract foreign investments. Businesses that locate into the area shall be provided with incentives. The zones are largely divided into two types: complex and stand-alone. The complex-type foreign investment areas refer to sections of national or general local industrial complexes that have been pre-designated for lease or sales, for the purpose of attracting small- and medium-sized foreign-invested companies. In practice, these sites are for lease. However, the stand-alone type foreign investment zones are designated in units of individual place of business of foreign-invested companies that have been comprehensively established as the investor requests in region, timing, incentives, etc. for the purpose of attracting large-size investments.

Stand-alone Type Foreign Investment Area

Complex Type Foreign Investment Zone Free Economic Zone Free Trade Zone

Reduced for 5 years (100% 3 years, 50% 2 years)

* National tax (corporation tax, income tax) and local tax (acquisition tax, registration tax, property tax) reduction

 LOCATION SuPPORT
Category Lease Site Support (site purchase) Details • Provide lease site through designation and purchase of foreign-invested area • Share of purchase costs - Capital region: Central government 40%, local government 60% - Non-capital region: Country 75%, local government 25% • Stand alone foreign invested area 100% • Over USD 1 million in high technology business: Complex type foreign-invested area 100%, industrial complex 50% • Over USD 5 million in general manufacturing business: Complex type foreign-invested area 75%, industrial complex 50% * Rent reduction of shared property shall be determined through regional laws Subsidies to be provided for the difference when selling industrial complexes to foreign-invested companies for less than the development costs (share is the same as lease site support)

 INvESTMENT REGION DESIGNATION REQuIREMENT
Complex Type Designation Standards Manufacturing Tourism Logistics USD 30 million and over in foreign investment New USD 20 million and over in foreign investment USD 10 million and over in foreign investment Expand R&D USD 2 million and over in foreign investments Site completed and ready for companies' establishment Stand-alone Type

Rent reduction (national property)

• Contracts concluded for tenants to move into 3/4 of the pre-designated space • Site prepared for companies' establishment • An express move-in demand by foreign invested companies are proposed

Subsidy for Difference in Sales Price

* Provide support within 50% of the FDI for cases of businesses with more than 30% of foreign investment ratio investing to install new factory facilities, etc.

Designator City mayors and provincial governors will designate after deliberation by the Foreign Investment Committee City mayors and provincial governors to designate after deliberation by the Foreign Investment Committee at regions desired by foreign investors Manager • Principle: City mayors and provincial governors will manage. • Exception: The Management body of the existing industrial complex will manage when establishing in a pre-developed national industrial complex. • Principle: City mayors and provincial governors will manage • Exception: The Management body will manage existing industrial complex when establishing in a pre-developed national industrial complex.

 FINANCIAL SuPPORT
Category Cash Support Details Provide cash support to investors of high degree technology etc. with more than USD 10 million to utilize part of the investments into factory construction, facility purchase etc. When newly employing 20 or more individuals, provide support equal to the support provided by the local government for up to 6 months at KRW 100,000-500,000 per person, per month When newly employing 20 or more individuals, from the 21st new employee, provide support equal to the support provided by the local government for up to 6 months at KRW 100,000-500,000 per person, per month

Training Subsidy

Employment Subsidy Applicable Law Foreign Investment Promotion Act Foreign Investment Promotion Act

* Provide support within 50% of the FDI for cases of businesses with more than 30% of foreign investment ratio investing to install new factory facilities, etc.

166

Foreign Investment Procedures and Incentives 167

IV. Foreign Direct Investment in Korea

Free Trade Zones
Industrial complexes, airports, seaports, distribution complexes, freight terminals, etc. are designated as Free Trade Zones, which are specially designated zones for manufacturing and logistics businesses to move in and create mutual connections to generate synergies. In a Free Trade Zone, reductions on national and local taxes are provided according to the type and scale of invested businesses. Also, customs is eliminated to reserve tariffs and apply 0% in value added tax on foreign goods and specific domestic goods that are brought into the Free Trade Zone. This creates an advantage of not having to go through the complicated procedures of refunds, etc. when exporting products manufactured from imported raw materials. Also, lands or factories, etc. can be leased for a long time at a low price. Such conditions create favorable business conditions for foreign-invested companies in export-oriented manufacturing businesses, logistics businesses such as warehousing, logistics, loading, packing, etc. as well as in wholesale for import and export trades. In particular, Free Trade Zones are the best location for large scale foreign investment companies that operate both the manufacturing and logistics businesses. The Free Trade Zone Management Office, the managing body of the Free Trade Zones, provide a onestop administration service by directly handling investment notification, permission to move in, factory construction permission and import and export approval, etc.

Free Economic Zones
Free Economic Zones are special areas where the application of domestic laws is alleviated through the enactment of laws on designation and operation of Free Economic Zones in order to make it possible to provide various support towards equipping infrastructures, etc. such as high-tech industrial complexes and hinterlands to make it possible to conduct manufacturing, logistics and tourism and by furnishing pleasant living conditions that will attract high quality human resources from home and abroad. In the Free Economic Zone, various regulations are alleviated to provide various benefits such as establishment and operation of foreign education institutions, hospitals, foreign language service, permission on foreign currency, broadcasting, tax reductions and fund support.

 INCENTIvES
Category Reduction Eligibility • Manufacturing: Over USD 10 million • Tourism: Over USD 10 million • Logistics: Over USD 5 million Imported capital goods used directly for businesses eligible for income tax/corporate tax reductions Reduction Details • National tax (corporate tax, income tax) reduction for 5 years (100% 3 years, 50% 2 years) • 100% exemption on local taxes (acquisition, registration, general excise tax) for 3 years

Tax Reduction

Customs Tariff Reduction

100% reduction for 3 years

 INCENTIvES
Category Reduction Eligibility
• High technology business&industry support services • Manufacturing: USD 10 million • Logistics: USD 5 million

Reduction Details
• National tax (corporate tax, income tax) reduction for 5 years (100% 3 years, 50% 2 years) • 100% exemption of acquisition, registration, general excise tax for 15 years

Financial Support

• Reduce shares such as farmland creation fees etc. for developers • Provide support from the National Treasury for infrastructure facilities • Reduce rent for foreign-invested companies (up to 100%) • Exclude from capital region restrictions on factory quota etc. • Exclude from mandatory employment of men of national merit ∙ the challenged • Unpaid weekly holidays, expand business types and periods for worker dispatches • Permit establishment of foreign educational institutions (primary, middle, high school, university) • Permit establishment of foreign hospitals (which also treat Korean nationals) • Foreign language services at government and public offices • Re-transmission of foreign broadcasts • Approval of the execution plan caused 36 agendas for approvals and permits to be discusses collectively • Free Economic Zone Office installed as a one-stop service provider

Tax Reduction

Improve Management Environment

Customs Tariff Exemption 0% Value Added Tax

• Free Trade Zones are outside the customs area, hence customs tariff is exempted for overseas goods • Exempt or refund customs tariff for domestic goods notified to have been carried into Free Trade Zones • Domestic goods notified to have been carried into Free Trade Zones • Overseas goods and services supplied or provided between tenant businesses of the Free Trade Zone • Free Trade Zone 100% - Foreign-invested companies with over USD 10 million in new foreign investments - With over 30% of the foreign-invested ratio and over USD 1 million in new foreign investments - Over USD 500,000 in new foreign investments into high-tech businesses, high technology business & industry support services

Improve Living Conditions

Rent Reduction

Simplify Administrative Procedures

 AIRPORT/SEAPORT DESIGNATION STATuS
Category Designation Date Size (10,000 pyeong*) Tenant Businesses Number Busan Seaport 2002.1.1 161 6 Gwangyang Seaport 2002.1.1 204 63 Incheon Seaport 2003.1.1 65.4 (69.3) 21 Incheon International Airport 2005.4.6 63.3 Logistics Complex 14
*1 pyeong = 3.3 square meters

 FREE ECONOMIC ZONES DESIGNATED IN 2003
Category Location Size (km²) Designation Day Incheon Three areas in Songdo, Yeongjong, Cheongna 209 Aug. 6, 2003 Busan·Jinhae Five areas in the Busan/Jinhae Region 104.8 Oct. 27, 2003 Gwangyang Bay Five areas of Yulchon, Shindeok, Gwangyang City, Hwayang, Hadong 88.98 Oct. 27, 2003

168

Foreign Investment Procedures and Incentives 169

IV. Foreign Direct Investment in Korea

 FREE ECONOMIC ZONES NEwLy DESIGNATED IN APRIL 2008
Category Location Size (km²) Yellow Sea South Chungcheong and Gyeonggi Provinces 55.05 Saemangeum·Gunsan Gunsan and Buan of North Jeolla Province 66.99 Daegu·Gyeongbuk North Gyungbuk and Daegu City 39.55

FDI Incentives in Korea's Logistics Industry
The Korean government held its 30th Free Economic Zone Committee and passed a ”Resolution to Establish 7-Year Tax exemptions on Operation Regulations in the Free Economic Zones”s applied to the tax exemption incentives for 7 years for large-scale foreign investment companies incorporated in the free economic zone in Korea. According to the resolution, any foreign investment company investing USD 10 Million or more into a logistics business might be eligible for a 100% tax exemption from income tax for five years and 50% for the following two years. Such tax exemption benefits are available as most of the airport or port support complexes are located in the free trade zones around the free economic zones. Foreign companies currently incorporated in the logistics complexes at Incheon Airport are subject to different levels of incentives according to the amount of investments. such as 50% exemption for five years for those with USD 5~10 Million or less, and 100% exemption for five years for those with USD 10~15 Million respectively for the land lease amount. The Ministry of Land, Transport and Maritime Affairs as the responsible ministry for logistics decided to introduce incentives according to the investment size of foreign companies newly incorporated in the support complexes around Busan New Port, Port of Gwangyang, Pyeongtaek·Dangjin which belong to the free trade zone. Incentives will be applied differently according to the size of investments, exempting 50% of the lease fee for five years with an investment of USD 5 Million, exempting the lease fee for five years with USD 10 Million, for seven years with USD 15 Million, and for 15 years with USD 50 Million. The effects of investment attraction seemed inefficient as the free trade zones have applied a flat rate of preferred lease fees such as KRW 40 per m² for Busan New Port and 30 Won per   for Port of Gwangyang regardless of the size of investment up to now. Once the investment invitation expansion system is announced, it is expected to apply to companies with public applications in May for Port of Pyeongtaek·Dangjin, and in July for Busan New Port. Apart from such measures, incentives for cargo business developments would also be given by the related local government in some places for the purpose of increasing the competitiveness of logistics, as well as solving the difficulties of the logistics industry while overcoming the managerial crises of companies from the recent economic recession.

OTHER SUPPORT
National/Public Property Lease & Rent Reduction
Land, factories and other national or public properties owned by the country or local governments may be used, leased or sold to foreign-invested companies through a private contract. The lease period may be up to 50 years. Upon maturity of the lease period, the contract may be renewed up to 50 years, or factories and other permanent facilities may be constructed on leased land on the condition that they will be donated to the country, local governments, or returned to the original state. When leasing national property, rents may be reduced up to 50-100% through certain procedures for foreign invested areas, or for lands that are in the national · local · urban high-tech industrial complex and agriculture & industry complexes, according to the law on industrial location and development. In leasing public property, the rent may be reduced according to local government regulations.

 ELIGIBILITy & RATE OF RENT REDuCTION FOR NATIONAL PROPERTy
Reduction Rate 100% Reduction Eligibility • Foreign-invested companies in stand-alone type FIZs • High degree technology businesses of 1 million USD or over in complex type FIZs • Manufacturing businesses of USD 5 million and over in FIZs • Businesses contributing to SOC expansion, industry structure adjustment and local government financial independence • Land within national industrial complex, local industrial complex, urban high-tech industrial complex and agricultural complex

75%

50%

Project Manager (PM) Designation and Operation
In order to efficiently support foreign investors or investments by foreign-invested companies, the government designates and oversees PMs. PMs may be designated for an individual foreign investor or a foreign-invested company (designated by the President of KOTRA). The designated PM is notified to the foreign investor or foreign-invested company. Key tasks include collection and provision of data or information, interview setup upon the request of foreign investors or foreign-invested companies, foreign investment related support and coordination of administrative matters as proxy, provision of help with housing lease and school entrance to help executives and staffs of foreign-invested companies and their families settle and all other foreign investment related tasks.

170

Foreign Investment Procedures and Incentives 171

IV. Foreign Direct Investment in Korea

Living Environment in Korea

Information on buying and renting a house
Real estate agencies for foreigners provide lease and trade services in English in areas with large foreign communities. Information on real estate agencies can be found easily through the Internet. The Seoul Metropolitan Government plans to expand the supply of houses or lease apartments for foreigners while directly providing more information on real estate for foreigners. In particular, it is initiating supply plans for town houses (a style of residence common in Britain, where a number of houses are incorporated into a single building) for foreign residents. It is more common to request real estate agencies to find a house for rent rather than to rely on advertisements in newspapers in Korea.
 HOuSING RENTAL
- Renter is required to pay a large deposit after contracting for one or two years. - Deposit should be refunded at termination of the contract. - Renter should pay 10 % of the deposit upon signing the contract. - Renter should pay the remainder of the deposit. - The deposit will be refunded upon termination of the contract. Renter is required to make monthly payments after providing a deposit (one- or two-year contract). Deposit is ordinarily 10 to 20 times the monthly payment. Wolse 1 (Monthly Payment + Key Deposit) Renter should pay 10 percent of the deposit upon signing the contract. Renter should pay the remainder of the deposit and provide the first monthly payment upon occupancy. The deposit will be refunded upon termination of the contract. Renter should pay all monthly payments in advance upon signing a one-or two-year contract. Wolse 2 (Advanced Payment of Total Monthly Rent) Renter should pay 10 percent of the total monthly payment upon contract signing. Renter should pay the remaining amount upon occupancy.

‘Jeonse' (Key Money Deposit)

Residence
Accomodations
Korea has serviced residence hotels available for residents looking for both short and longterm stays. These serviced residences are similar to condominiums in North America, and are equipped with amenities like swimming pools, fitness centers, restaurants, and internet cafés. Furthermore, since these residences are geared towards foreigners, they are usually located near tourist attractions or key business areas in the city.

Major residential areas for foreigners (Seoul)
Major residential areas for foreigners include Youngdeungpo District, Guro District, Yongsan District, and Geumcheon District, with high concentrations in Youngdeungpo, where foreign companies are numerous, and in Guro, where an industrial complex employs many foreign workers.

172

Living Environment in Korea 173

IV. Foreign Direct Investment in Korea

 SEOuL FOREIGNER RESIDENCE STATISTICS (BASED ON FOREIGN RESIDENT REGISTRATION ID HOLDERS)

Education
Overview of Korean Government Policies
The Ministry of Education, Science and Technology has made a pre-announcement of its “Regulation on the Establishment and Operation of Foreigners’ Schools” that stipulates the legal entities in question, admission qualifications, student ratios, and acknowledgement of academic attainments for foreign schools. Once this regulation is established, better foreigner schools will be built and the quality of the existing foreigners’ schools will be improved as such schools will be subject to domestic laws in a systematic manner.

Seongbuk 4.2% Seodaemun 9.2% Mapo 4.5% Yeongdeungpo 4.7% Jung 4.9% Jongno 4.1% Yongsan 14.1% Gangnam 8.3% Songpa 4.0%

Seocho 6.4%

Region

Yongsan 8,707 14.1%

SeodaeGangnam Seocho mun 5,725 9.2% 5,150 8.3% 3,989 6.4%

Yeongdeungpo 2,889 4.7%

Jung 3,064 4.9%

Mapo 2,793 4.5%

Seongbuk Songpa 2,626 4.2% 2,467 4.0%

Jongno 2,568 4.1%

Other 21,942 35.4%

Total

According to statistics from the Seoul Metropolitan Office of Education, the official number of foreign students in foreign schools (excluding universities) in Seoul stands at about 6,100 as of 2007, of which about 2,600 attend middle or high schools, 2,300 attend elementary school, and 800 attend kindergarten. Although foreign schools typically have a six month waiting list for admission, most schools accept admission at anytime. The Korean government has recently considered subsidies for the establishment of foreigners’ schools to improve foreign education in Korea. For example, Seoul Yongsan International School was established with subsidies from the government in August 2006, and Seoul Metropolitan Government also announced its plan to establish two new foreigners’ schools by 2012.

Number Ratio

61,920 100%

Residential areas with a dense population of foreigners exist in Hannam-dong, Yeonhee-dong and Yeonnam-dong with various foreign embassies. A “French village,” “Japanese village,” and “Chinatown” exist with businesses and restaurants catering to foreign customers. Hospitals, department stores and large retailers are distributed evenly all over Seoul. Most foreigners prefer renting their house but both resident and non-resident foreigners can purchase or sell any real estate using the same procedures applicable to Korean nationals.

School Overview and Cost
44 foreigners’ schools are operating in Korea that provide educational services for communities from the US, the UK, Japan, France, Germany, China, Mongolia, Norway and Taiwan. Twenty-three schools are located around the capital region, including Seoul. Their general admission regulations require all students to hold a passport and at least one of their parents must go through the basic interview processes.

174

Living Environment in Korea 175

IV. Foreign Direct Investment in Korea

 CuRRICuLuM & TuITION OF FOREIGNER SCHOOLS
School Name Gyeongnam International Foreign School (2004) Kwangju Foreign School (1999) International Christian School (Uijeongbu, 1983) Gunsan Chinese Elementary School (1941) Gyeonggi Suwon International School (2006) Global Christian School(GCSD) (2001) Taejon Christian International School (1958) Busan International School (1983) Busan Foreign School (1996) Busan Japanese School (1975) Busan Chinese Elementary School (1951) Busan Chinese Secondary School (1951) Seoul International School (1973) Seoul German school (1976) Seoul Academy International School (1983) Seoul Foreign School (1912) Yongsan International School of Seoul (1990) Seoul Japanese School (1972) Seoul French school (1974) 15,000,000 31,197,207 1,480,000 2,200,000 Courses Tuition (Unit: KRW) As of Nov 8, 2007 Middle School High School No. of Students 65 86 240 Lycee International Xavier (2002) Christians Celebrate the 100 Anniversary of Korea Foreign Schools Korea Foreign School (Gyeonggi, 2006) Korea Youngdeungpo Chinese Elementary School (1999) Korea Kent Foreign School 13,189,000 + USD5,330 13,189,000 12,719,000 - 17,988,300 Middle School: 19,000,000 16,115,000 16,000,000 2,500,000 16,050,000 + USD5,330 16,050,000 13 Oversease Chinese Primary School (2001) Oversease Chinese Secondary School (1999) Korea Daegu Chinese Secondary School (1958) 1,500,000 9,500,000 11,810,500 11,920,000 + USD5,830 1,200,000 11,500,000 12,719,000 13,740,000 + USD6,200 10,902,000 - 14,836,000 Middle School: 15,500,000 2,964,000 2,240,000 3,164,000 2,480,000 33,000,000 12,780,000 + USD600 16,460,000 + USD7,420 120 118 804 71 300 415 628 45

E. M. H. Elementary School 12,000,000 8,694,000

18,600,000 9,439,200 6,632,050 - 11,356,250 10,184,400

Chinese dues Replacement (Free education) 10,694,000 + USD5,270 11,679,750

128 36 576 152 131 28 156 139 1,071 146 155 1,458

There are many universities and graduate schools with curriculum in English in Korea. In addition, the Netherlands Shipping and Transport College Korea, as the first branch school of a foreign university, was established at the Gwangyang Bay Area Free Economic Zone in Port Gwangyang (in 2007). The Netherlands Shipping and Transport College Korea, incorporated in the World Marine Center in Port Gwangyang, is providing students with an internationalized curriculum, including lectures entirely in English with visiting professors from the Netherlands after admitting students for the full time Master’s Degree Shipping and Transport Program from March 2008. They have admitted 18 students (10 Koreans and 8 foreigners), 29 students (10 Koreans and 19 foreigners) under various master’s programs. Tuition for the 18 month master’s degree course is 10,000 Euros as of 2009. Many foreign schools, including colleges and graduate schools are planned for the future.

16,353,000 - 19,987,000 Middle School: 16,300,000 + USD2,000 13,200,000 18,000,000 14,250,000 + USD5,000 11,928,000 14,500,000 + USD5,400 18,200,000 + USD5,700

13,543,000 + USD1,600

582 422 319

19,200,000

6,668,000 French 9,064,000 French 9,804,000French and and and 8,360,000 Others 11,730,000 Others 12,310,000 Others 13,000,000 + USD3,000 10,560,000 14,000,000 1,603,380 1,800,000 1,440,000 10,630,000 14,000,000 + USD3,000 11,880,000 14,500,000 2,189,200 11,520,000 15,088,250 15,000,000 2,290,800 -

Asia Pacific International School (2007) Okpo International School (2002) Indianhead International School (1996) Incheon Chinese Jungsan Secondary School (2003) Uijeongbu Chinese Elementary School (1953) Wonju Chinese Elementary School (1956) Jeonbuk Foreign School (2001) Jaehan Mongol School (1958) Graduates Global Christian School (1997)

113 113 168 512 83 68 23 91 63

7,500,000 14,179,750

176

Living Environment in Korea 177

IV. Foreign Direct Investment in Korea

Medical Services
Medical Facilities
Medical facilities for foreigners (in Seoul) include general hospitals with medical centers for foreigners. Some individual hospitals provide treatment in foreign languages. Thirty hospitals in total provide diagnosis and treatment for foreigners including medical centers and clinics in Seoul. Eleven hospitals in total including Seoul National University Hospital and Samsung Seoul Hospital provide services around the clock. Eight hospitals operate medical hotlines (emergency telephone system) in English, including Seoul National University Hospital, Severance Hospital, Youngdong Severance Hospital, Seoul Samsung Hospital, Hyundai Asan Hospital, Soonchunhyang University Hospital, Gangnam Cha Hospital, and Hanyang University International Hospital.
Health Insurance
Korean regulation requires a prescription from a doctor for non over-the-counter drugs. Non-prescription medication such as cold and indigestion medicine as well as vitamins and health aids such as pregnancy-testing kits can be purchased at most pharmacies. When you visit a pharmacy to purchase prescription medicine for the first time, you should present your medical insurance card.

Transport
SUBWAY
Seoul has 11 subway lines in total including Lines 1 through 8, which operate in central areas of city, and the Bundang Line, the Incheon Line and the Central Line, which operate between Seoul and adjoining regions. They provide Korean and English announcements. Four more subway lines with a total length of 88.2km are expected around the capital, including the New Bundang Line, and the New Ansan Line.

BUS
Bus systems in Korea have systematic structures including transportation card fare, and transfer discounts etc. Information on bus lines can be secured through the Internet or urban traffic maps. Bus line information for each bus is also displayed at every bus stop and some buses have broadcasting systems in English as well. Seoul operates 7,792 buses on 402 lines as of 2007 and overall bus operations in Seoul can be confirmed on a real-time basis over the Internet or via mobile phones.

 SOME OF GENERAL HOSPITALS FOR FOREIGNERS
Hospital Name Samsung Medical Center Kangbuk Samsung Hospital Yonsei Severance Hospital ASAN Medical Center Cheil General Hospital St.Mary's Hospital Kangnam St.Mary's Hospital Seoul National University Hospital Soon Chun Hyang University Hospital Kangnam CHA General Hospital Ajou University hospital Shihwa General Hospital Busan National University Hospital Kangnam Severance Hospital Website (Area) http://www.samsunghospital.com (Seoul) http://www.kbsmc.co.kr (Seoul) http://www.iseverance.com (Seoul) http://www.amc.seoul.kr (Seoul) http://www.cgh.co.kr (Seoul) http://www.cmcsungmo.or.kr (Seoul) http://www.cmckangnam.or.kr (Seoul) http://www.snuh.org (Seoul) http://www.schuh.ac.kr (Seoul) http://kangnam.chamc.co.kr (Seoul) http://www.ajoumc.or.kr (Gyeonggi) http://www.swhosp.co.kr (Gyeonggi) http://www.pnuh.co.kr (Busan) http://yd.iseverance.com (Seoul) Phone 02-3410-2114 02-2001-2001 1599-1004 02-3010-3114 02-2000-7000 02-3779-1114 02-590-1114 02-2072-2114 02-709-9114 02-3468-3000 031-219-5114 031-432-2600 051-254-0171 02-2019-2114

TAXI
Taxi fare is well arranged in a systematic manner, and regular, deluxe and call taxis are available 24 hours a day. In addition, a taxi fare system is under operation to make payments using transportation cards or credit cards.

KOREA TRAIN EXPRESS (KTX)
Korea has recently joined the ranks of countries with high speed trains. The KTX, which started operations in April 2004, reaches speeds of 300 km per hour. High-speed service will have impact in various areas, by connecting every part of the country within 2 hours. It is fast, safe, comfortable, and environmentally-friendly, and comes with video and audio systems and other facilities.

178

Living Environment in Korea 179

IV. Foreign Direct Investment in Korea

DRIVING ENVIRONMENT
Anyone who has an international license may drive cars in Korea for a year. An overseas license can be exchanged for a domestic license only for those who stay 90 days or longer after registration. Those who do not have any driver’s license may acquire a driver’s license after applying for and passing a test in Korea (available in English, German, French, Japanese, Chinese and Vietnamese).

DOMESTIC AIRLINES
Domestic flights
Korean Air and Asiana Airlines provide a domestic flight network linking Seoul to Korea's 16 major cities. Flying time to any of these destinations is approximately one hour's duration. Reservations and ticketing can be done by calling a travel agent or the airline office (WHEN).

For reservations
Asiana Air (Tel: 82-1588-8000, Domestic) / Website: http://flyasiana.com/english Korean Air (Tel: 82-1588-2001, Domestic) / Website: www.koreanair.com Jeju Air (Tel: 82-1599-1500, Domestic) / Website: www.jejuair.net

When you plan to use domestic flights in Seoul, there’s an airport in Gimpo. Gimpo International Airport is located in western area of Seoul, which is within 30-60 minites distance depends on transportations. Not only by public transportations such as subways, local buses and taxis, but also you can get there by Airport express buses, KAL limousine buses and Airport limousine buses. To be assured of a seat, tickets must be purchased before the reservation expiration date.

180

Living Environment in Korea 181

IV. Foreign Direct Investment in Korea

Hotel & Residence
Hotels in Korea

Sheraton Grande walkerhill Class: ★★★★★
Room:635 Rooms Tel: 82-2-455-5000 Adddress: 21 Gwangjang-dong, Gwangjin-gu, Seoul, South Korea www.sheratonwalkerhill.co.kr

Mayfield Hotel Class: ★★★★★

Room: 202 Rooms Tel: 82-2-6090-5522 Adddress: 426 Balsan-dong, Gangseo-gu, Seoul, South Korea www.mayfield.co.kr

w Seoul-walkerhill Class: ★★★★★

Room: 253 Rooms Tel: 82-2-465-2222 Adddress: 21 Gwangjang-dong, Gwangjin-gu, Seoul, South Korea www.wseoul.com

Samjung Hotel Class: ★★★★

Room: 162 Rooms Tel: 82-2-557-1221 Adddress: 604-11, Yeoksam-dong, Gangnam-gu, Seoul, South Korea www.samjunghotel.co.kr

Hotel Prima Seoul Class: ★★★★

Room: 120 Rooms Tel: 82-2-6006-9114 Adddress: 52-3, Cheongdam-dong, Gangnam-gu, Seoul, South Korea www.prima.co.kr

Riviera Hotel Seoul Class: ★★★★

Room: 316 Rooms Tel: 82-2-541-3111 Adddress: 53-7 Cheongdam-dong, Gangnam-gu, Seoul, South Korea www.hotelriviera.co.kr

Best western Premier Gangnam Hotel Class: ★★★★
Room: 128 Rooms Tel: 82-2-6474-2000 Adddress: 205-9 Nonhyun-dong, Gangnam-gu, Seoul, South Korea www.bestwesterngangnam.com

Ramada Hotel & Suites Class: ★★★★

Room: 331 Rooms Tel: 82-2-2119-8000 Adddress: 191-1 Shunwha-dong, Jung-gu, Seoul, South Korea www.ramadasuite-seoul.com

SEOuL
Grand Hilton Seoul Hotel Class: ★★★★★
Room: 501 Rooms Tel: 82-2-3216-5656 Adddress: 201-1 Hongeun-dong, Seodaemun-gu, Seoul, South Korea www.grandhiltonseoul.com

Renaissance Seoul Hotel Class: ★★★★★

Room: 494 Rooms Tel: 82-2-555 0501 Adddress: 676 Yeoksam-dong Gangnam-gu, Seoul, South Korea www.renaissance-seoul.com

Hotel La Mir Class: ★★★★

Room: 150 Rooms Tel: 82-2-2018-0000 Adddress: 662-7 Yeoksam-dong Gangnam-gu, Seoul, South Korea www.hotellamir.co.kr

Koreana Hotel Class: ★★★★

Room: 345 Rooms Tel: 82-2-2171-7000 Adddress: 61-1, Taepyeongno 1-ga, Jung-gu, Seoul, South Korea www.koreanahotel.com

Imperial Palace Hotel Class: ★★★★★

Room: 430 Rooms Tel: 82-2-3440-8000 Adddress: 248-7 Nonhyun-dong, Gangnam-gu, Seoul, South Korea www.imperialpalace.co.kr

Hotel Lotteworld Class: ★★★★★

Room: 533 Rooms Tel: 82-2-411-7310 Adddress: 40-1 Jamsil-dong, Songpa-gu, Seoul, South Korea www.lottehotel.co.kr

Hotel President Class: ★★★★

Room: 303 Rooms Tel: 82-2-753-3131 Adddress: 188-3, Euljiro 1-ga, Jung-gu, Seoul, South Korea www.hotelpresident.co.kr

Sejong Hotel Class: ★★★★

Room: 275 Rooms Tel: 82-2-773-6000 Adddress: 61-3, Choongmuro 2-ga, Jung-gu, Seoul, South Korea www.sejong.co.kr

Seoul Plaza Hotel Class: ★★★★★

Room: 455 Rooms Tel: 82-2-771-2200 Adddress: 23, Taepyeongno 2-ga, Jung-gu, Seoul, South Korea www.seoulplaza.co.kr

Lotte Hotel Seoul Class: ★★★★★

Seoul Royal Hotel Class: ★★★★

Room: 1479 Rooms Tel: 82-2-771-1000 Adddress: 1 Sogong-dong, Jung-gu, Seoul, South Korea www.lottehotel.co.kr

Room: 307 Rooms Tel: 82-2-756-1112 Adddress: 6 Myeong-dong 1-ga, Jung-gu, Seoul, South Korea www.seoulroyal.co.kr

Pacific Hotel Class: ★★★★

Room: 135 Rooms Tel: 82-2-777-7811~9 Adddress: Namsan-dong 2-ga, Jung-gu, Seoul, South Korea www.thepacifichotel.co.kr

182

Living Environment in Korea 183

IV. Foreign Direct Investment in Korea

Best western Premier Seoul Garden Hotel Class: ★★★★
Room: 362 Rooms Tel: 82-2-717-9441 Adddress: 169-1 Dohwa-dong, Mapo-gu, Seoul, South Korea www.bestwesterngangnam.com

Holiday Inn Seongbuk Seoul Class: ★★★★
Room: 128 Rooms Tel: 82-2-3216-5656 Adddress: 3-1343 Jongam-dong, Seongbuk-gu, Seoul, South Korea www.holiday.co.kr

Room: 96 Rooms Tel: 82-33-610-7751 Adddress: 274-1 Gangmun-dong, Gangneung-si, Gangwon-do, South Korea www.hyundaihotel.com/gyeongpodae

Hotel Hyundai Gyeongpodae Class: ★★★★

Room: 65 Rooms Tel: 82-33-252-1191 Adddress: 15-3 Bongui-dong, Chuncheon-si, Gangwon-do, South Korea www.chunchonsejong.co.kr

Chunchon Sejong Hotel Class: ★★★

Ramada Seoul Class: ★★★★

Room: 244 Rooms Tel: 82-2-6202-2000 Adddress: 112-5 Samsung-dong, Gangnam-gu, Seoul, South Korea www.ramadaseoul.co.kr

Hotel Capital Class: ★★★★

Room: 287 Rooms Tel: 82-2-792-1122 Adddress: 22-76 Itaewon-dong, Yongsan-gu, Seoul, South Korea www.hotelcapital.co.kr

Room: 45 Rooms Tel: 82-33-661-1950 Adddress: San 84-2 Jumunjin-eup , Gangneung-si, Gangwon-do, South Korea www.hotelagni.com

Hotel Agni(ex. Sun Castle Hotel) Class: ★★★

Hotel Sorak Kyoyuk Munhwa Hoekwan Class: ★★★
Room: 77 Rooms Tel: 82-33-639-8100 Adddress: 155 Domun-dong, Sokcho-si, Gangwon-do, South Korea www.temf.co.kr

Hotel Ellui Class: ★★★★

Room: 139 Rooms Tel: 82-2-514-3535 Adddress: 129 Cheongdam-dong, Gangnam-gu, Seoul, South Korea www.ellui.com

Lexington Hotel Class: ★★★★

Room: 235 Rooms Tel: 82-2-6670-7000 Adddress: 13-3 Yoido-dong, Youngdeungpo-gu, Seoul, South Korea www.thelexington.co.kr

GyEONGGI-DO
Hotel Miranda Ichon Class: ★★★★ Hotel Castle Class: ★★★★

Seoul Palace Hotel Class: ★★★★

Room: 283 Rooms Tel: 82-2-532-5000 Adddress: 63-1 Banpo-dong Seocho-gu, Seoul, South Korea www.seoulpalace.co.kr

Novotel Ambassador Doksan Class: ★★★★
Room: 230 Rooms Tel: 82-2-3282-6160 Adddress: 1030-1 Doksan 4-dong Gumchon-gu, Seoul, South Korea www.ambatel.com/doksan

Room: 209 Rooms Tel: 82-31-639-5000 Adddress: 408-1 Anhung-dong, Ichon-si, Gyeonggi-do, South Korea www.mirandahotel.com

Room: 81 Rooms Tel: 82-31-211-6666 Adddress: 144-4 Wooman-dong paldalgu, Suwon-si, Gyeonggi-do, South Korea www.hcastle.co.kr

INCHEON
Goldensky Resort Incheon Class: ★★★★★
Room: 201 Rooms Tel: 82-32-745-5074 Adddress: 773 Eulwang-dong, Jung-gu, Incheon, South Korea www.goldensky.co.kr

Paradise Incheon Hotel Class: ★★★★★

Hotel Pj Class: ★★★★

Room: 247 Rooms Tel: 82-2-2266-2151 Adddress: 73-1 Inhyeon-dong 2-ga, Jung-gu, Seoul, South Korea www.hotelpj.co.kr

Seoul Olympic Pakrtel Class: ★★★★

Room: 125 Rooms Tel: 82-2-410-2114 Adddress: 88 Bangi-dong, Songpa-gu, Seoul, South Korea www.parktel.co.kr

Room: 176 Rooms Tel: 82-32-452-8236 Adddress: 3-2 Hang-dong 1-ga, Joong-gu, Incheon, South Korea www.paradiseIncheon.co.kr

Best western Premier Incheon Airport Hotel Class: ★★★★
Room: 301 Rooms Tel: 82-32-743-1000 Adddress: 2850 International Business Center, Unseo-dong, Jung-gu, Incheon, South Korea / www.airporthotel.co.kr

Ramada Songdo Hotel Class: ★★★★

GANGwON-DO
Kensington Stars Hotel Class: ★★★★★ kensington Flora Hotel Class: ★★★★
Room: 306 Rooms Tel: 82-33-330-5000 Adddress: 221-1 Ganpyeong-ri, Jinbumyeon, Pyeongchang-gun, Gangwondo, South Korea www.hotelodaesan.co.kr

Room: 120 Rooms Tel: 82-33-635-4001 Adddress: 106-1 Seorak-dong, Sokcho-si, Gangwon-do, South Korea www.kensington.co.kr

Room: 204 Rooms Tel: 82-32-832-2000 Adddress: 812 Dongchun 1-dong, Yeonsu-gu, Incheon, South Korea www.ramada-songdo.co.kr

Incheon Airport Oceanside Hotel Class: ★★★
Room: 53 Rooms Tel: 82-32-746-0072 Adddress: 128-17, Deokgyo-dong, Jung-gu, Incheon, South Korea http://www.oceanside.co.kr

Incheon Airpark Hotel Class: ★★★★★

Hotel Sorak Park Class: ★★★★

Room: 121 Rooms Tel: 82-33-636-7711 Adddress: 74-3 Seorak-dong, Sokcho-si, Gangwon-do, South Korea www.hotelsorakpark.co.kr

Naksanbeach Hotel Class: ★★★★

Room: 127 Rooms Tel: 82-33-672-4000 Adddress: 3-2 Jeonjin-ri, Ganghyeonmyeon, Yangyang-gun, Gangwon-do, South Korea / www.naksanbeach.co.kr

Room: 40 Rooms Tel: 82-32-752-2266~8 Adddress: 2798-2 Unseo-dong, Jung-gu, Incheon, South Korea www.hotelairpark.com/kr

184

Living Environment in Korea 185

IV. Foreign Direct Investment in Korea

BuSAN
Haeundae Grand Hotel Class: ★★★★★ Busan Lotte Hotel Class: ★★★★★ Hotel-js Class: ★★★★ Hotel Crystal Class: ★★★

Room: 321 Rooms Tel: 82-51-7400-114 Adddress: 651-2 Woo-dong, Haeundae-gu, Busan, South Korea www.grandhotel.co.kr

Room: 804 Rooms Tel: 82-51-810-1000 Adddress: 503-15 Bujeon-dong, Pusanjin-gu, Busan, South Korea www.lottehotelbusan.com

Room: 70 Rooms Tel: 82-53-756-6601 Adddress: 326-1, Shincheon 4-dong, Dong-gu, Daegu, South Korea www.hotel-js.com

Room: 69 Rooms Tel: 82-53-655-7799 Adddress: 1196-1 Duryu 1-dong, Dalseo-gu, Daegu, South Korea www.crystalhotel.co.kr

westin Chosun Hotel, Busan Class: ★★★★★
Room: 305 Rooms Tel: 82-51-749-7000 Adddress: 737 Woo 1-dong, Haeundae-gu, Busan, South Korea www.chosunbeach.co.kr

Paradise Hotel Busan Class: ★★★★★

Room: 521 Rooms Tel: 82-51-742-2121 Adddress: 1408-5 Jung-dong, Haeundae-gu, Busan, South Korea http://busan.paradisehotel.co.kr

Hotel Inter-Burgo Exco Class: ★★★★

Room: 303 Rooms Tel: 82-53-3800-114 Adddress: Sangyeok 2-dong, Buk-gu, Daegu, South Korea www.ibexco.co.kr

Hotel Airport Class: ★★★

Room: 51 Rooms Tel: 82-53-260-0001 Adddress: 400-1, Jijeo-dong, Dong-gu, Daegu, South Korea www.htlair.com

Hotel Commodore Busan Class: ★★★★

Room: 313 Rooms Tel: 82-51-466-9101 Adddress: 743-80 Youngju-dong, Jung-gu, Busan, South Korea www.grandhotel.co.kr

The Hotel Nongshim, Busan Class: ★★★★
Room: 242 Rooms Tel: 82-51-550-2100 Adddress: 137-7 Onchun-dong, Dongnae-gu, Busan, South Korea www.hotelnongshim.com

DAEjEON
Hotel Riviera yuseong Class: ★★★★★ yousung Hotel Class: ★★★★

Hotel Paragon Class: ★★★★

Room: 142 Rooms Tel: 82-51-328-2001 Adddress: 564-25 Gxeabeop-dong, Sasang-gu, Busan, South Korea www.grandhotel.co.kr

Busan Phoenix Hotel Class: ★★★

Room: 107 Rooms Tel: 82-51-245-8061 Adddress: 8-1 street 5 Nampo-dong Jung-gu, Busan, South Korea www.hotelphoenix.net

Room: 174 Rooms Tel: 82-42-823-2111 Adddress: 444-5 Bongmyung-dong, Yuseong-gu, Daejeon, South Korea www.hotelriviera.co.kr

Room: 190 Rooms Tel: 82-42-822-0811 Adddress: 480 Bongmyoung-dong, yousung-gu, Daejeon, South Korea www.yousunghotel.com

Hotel Spapia Class: ★★★★

Sunset Business Hotel Class: ★★★

Room: 72 Rooms Tel: 82-51-730-9900 Adddress: 1391-66 Joong-dong, Haeundae-gu, Busan, South Korea www.sunsethotel.co.kr

Busan Homers Hotel Class: ★★★★

Room: 103 Rooms Tel: 82-51-750-8000 Adddress: 193-1 Gwangan 2-dong, Suyung-gu, Busan, South Korea www.homers.co.kr

Room: 220 Rooms Tel: 82-42-600-6000 Adddress: 545-5 Bongmyung-dong, Yusong-gu, Daejeon, South Korea www.hotelspapia.co.kr

Adria Hotel Class: ★★★

Room: 80 Rooms Tel: 82-42-828-3636 Adddress: 442-5 Bongmyoung-dong, Yousung-gu, Daejon, South Korea www.hoteladria.co.kr

Hongin Hotel Class: ★★★

DAEGu
Hotel Novotel Daegu City Centre Class: ★★★★★
Room: 203 Rooms Tel: 82-53-664-1184 Adddress: 11-1 Munhwa-dong, Jung-gu, Daegu, South Korea www.novotel.com/7038

Hotel Inter-Burgo Class: ★★★★★

Room: 49 Rooms Tel: 82-42-822-2000 Adddress: 536-8 Bongmyoung-dong, Yousung-gu, Daejon, South Korea www.honginhotel.co.

Best western Legend Hotel Class: ★★★

Room: 75 Rooms Tel: 82-42-822-4000 Adddress: 547-5 Bongmyoung-dong, Yousung-gu, Daejon, South Korea www.legendhotel.co.kr

Room: 207 Rooms Tel: 82-53-602-7114 Adddress: 300 Manchon-dong, Soosung-gu, Daegu, South Korea http://hotel.inter-burgo.com

GwANGju
Hotel Prado Class: ★★★★★ Hotel Prado Class: ★★★★

Daegu Prince Hotel Class: ★★★★

Room: 117 Rooms Tel: 82-53-650-5217 Adddress: 1824-2 Daemyong 2-dong, Nam-gu, Daegu, South Korea www.princehotel.co.kr

Eldis Regent Hotel Class: ★★★★

Room: 80 Rooms Tel: 82-53-253-7711 Adddress: 360 Dongsan-dong, Chunggu, Daegu, South Korea www.eldishotel.com

Room: 120 Rooms Tel: 82-62-717-7000 Adddress: 1238-3 Chipyeong-dong, Seo-gu, Gwangju, South Korea www.ramadagwangju.com

Room: 111 Rooms Tel: 82-62-654-9999 Adddress: 638-1 Beak woon-dong, Nam-gu, Gwangju, South Korea www.pradohotel.co.kr

186

Living Environment in Korea 187

IV. Foreign Direct Investment in Korea

Shinyang Park Hotel Class: ★★★★

Room: 87 Rooms Tel: 82-62-228-8000 Adddress: 20-8, Jisan-dong, Dong-gu, Gwang-ju, South Korea www.shinyangparkhotel.com

Hotel Mudeungpark Class: ★★★★

Room: 127 Rooms Tel: 82-62-226-0011 Adddress: San 63-1, Jisan-dong, Dong-gu, Gwang-ju, South Korea www.hotelmudeungpark.co.kr

City 7 Pullman Ambassador Hotel Class: ★★★★★

Room: 321 Rooms Tel: 82-55-600-0700 Adddress: 333 Dudae-dong, Changwon-si, Gyeongnam, South Korea www.thecity7pullman.com

Room: 95 Rooms Tel: 82-55-862-8811 Adddress: 1182-9 Seosang-ri, Seo-myeon, Namhae-gun, Gyeongnam, South Korea www.namhaehotel.co.kr

Namhae SportsPark Hotel Class: ★★★★

uLSAN
ulsan Lotte Hotel Class: ★★★★★ Hotel Hyundai ulsan Class: ★★★★★

Changwon Hotel Class: ★★★★
Room: 211 Rooms Tel: 82-52-960-1000 Adddress: 1480-1 Samsan-dong, Nam-gu, Ulsan, South Korea www.lottehotelulsan.com Room: 283 Rooms Tel: 82-52-251-2233 Adddress: 283 Jeonha-dong, Dong-gu, Ulsan, South Korea www.shinyangparkhotel.com

Room: 173 Rooms Tel: 82-55-283-5551 Adddress: 99-4 Jungang-dong, Changwon-si, Gyeongnam, South Korea www.changwonhotel.co.kr

Namiltte Hotel Ellie Nurse Class: ★★★★

Room: 59 Rooms Tel: 82-55-832-9800 Adddress: 707 Hyangchon-dong, Sacheon-si, Gyeongnam, South Korea www.namiltte.com

GyEONGSANGBuK-DO CHuNGCHEONGNAM-DO
Onyang Tourist Hotel Class: ★★★★ On yang Grand Hotel Class: ★★★★ Gyeongju Comodore Hotel Class: ★★★★★
Room: 151 Rooms Tel: 82-41-543-9711 Adddress: 300-28 Oncheon-dong, Ahsan-si, Chungnam, South Korea www.grand-hotel.co.kr

Room: 113 Rooms Tel: 82-41-545-2141 Adddress: 242-10 Onyang 1-dong, Asan-si, Chungnam, South Korea www.onyanghotel.co.kr

Room: 260 Rooms Tel: 82-54-745-7701 Adddress: 410-2, Sinpyeong-dong, Gyeongju-si, Gyeongbuk, South Korea www.chosunhotel.net

Gyeongju Kolon Hotel Class: ★★★★★

Room: 318 Rooms Tel: 82-54-746-9001 Adddress: 111-1 Ma-dong, Gyeongju-si, Gyeongbuk, South Korea www.kolonhotel.co.kr

Hyundai Hotel Gyeongju Class: ★★★★★

CHuNGCHEONGBuK-DO
Ramada Korea Class: ★★★★★ Cheongpung Resort Class: ★★★★

Room: 331 Rooms Tel: 82-43-290-1000 Adddress: 500-3 yulryang-dong, Sangdonggu, Cheongiu-si, Chungbuk, South Korea www.ramadakorea.co.kr

Room: 276 Rooms Tel: 82-43-640-7000 Adddress: 33 Kyo-ri, Cheongpung-myeon, Jecheon-si, Chungbuk, South Korea www.cheongpungresort.co.kr

Room: 449 Rooms Tel: 82-54-748-2233 Adddress: 477-2 Shinpyeong-dong, Gyeongju-si, Gyeongbuk, South Korea www.hyundaihotel.com

Concorde Hotel Class: ★★★★★

Room: 307 Rooms Tel: 82-54-745-7000 Adddress: 410 Shinpyong-dong, Gyeongju-si, Gyeongbuk, South Korea www.concorde.co.kr

Gyeongju Hillton hotel Class: ★★★★★

Room: 132 Rooms Tel: 82-43-542-5281 Adddress: 198 Sanae-ri, Songnisanmyeon, Boeun-gun, Chungbuk, South Korea www.lakehills.co.kr

Lake Hills Hotel(songnisan) Class: ★★★

Room: 101 Rooms Tel: 82-43-845-3500 Adddress: 292 Onsen-ri, Suanbo-myeon, chungju-si, Chungbuk, South Korea www.sangnokhotel.co.kr

Suanbo Sangnok Hotel Class: ★★★

Room: 324 Rooms Tel: 82-54-745-7788 Adddress: 370 Shinpyung-dong, Gyeongju-si, Gyeongbuk, South Korea www.gyeongjuhilton.co.kr

Gyeongju Temf Hotel Class: ★★★★

Room: 270 Rooms Tel: 82-54-745-8100 Adddress: 150-2 Shinpyong-dong, Gyeongju-si, Gyeongbuk, South Korea www.temf.co.kr/gyongju

jEOLLANAM-DO
Hotel Hyundai Mokpo Class: ★★★★★ Eldorado Resort Class: ★★★★

GyEONGSANGNAM-DO
Samsung Geoje Hotel Class: ★★★★★ Hilton (Namhae Golf and Spa Resort) Class: ★★★★★

Room: 80 Rooms Tel: 82-55-631-2114 Adddress: San 2-10, Jangpyeong-dong, Geoje-si, Gyeongnam, South Korea www.sghotel.co.kr

Room: 170 Rooms Tel: 82-55-860-0100 Adddress: San 35-5, Doekwol-ri, Nam-myeon, Namhae-gun, Gyeongnam, South Korea / www.hiltonnamhae.com

Room: 208 Rooms Tel: 82-61-463-2233 Adddress: 1237-6 Sanpo-ri, Sanho-eup, Youngnam-gun, Jeonnam, South Korea www.hyundaihotel.com

Room: 103 Rooms Tel: 82-61-260-3300 Adddress: 233-42 Woojeon-ri, Jeungdomyeon, Sinan-gun, Jeonnam, South Korea www.eldoradoresort.co.kr

188

Living Environment in Korea 189

IV. Foreign Direct Investment in Korea

jEOLLABuK-DO
Daemyung Byunsan Cloud Nine Class: ★★★★★ Core Hotel Class: ★★★★

Residences in Korea
Room: 111 Rooms Tel: 82-63-285-1100 Adddress: 627-3 Nosong-dong, Wansangu, Jeonju-si, Jeonbuk, South Korea www.corehotel.co.kr

Room: 131 Rooms Tel: 82-63-580-8800 Adddress: 257 Gyeoppo-ri, Byeonsanmeon, Buan-gun, Jeonbuk, South Korea www.daemyungresort.com

SEOuL AND BuSAN
M Chereville
Class: REGIDENCE Room: 124 Rooms Tel: 82-2-533-9600 Adddress: 1316-31 Seocho 4-dong, Seocho-gu, Seoul, South Korea www.mchereville.com

Dormy Inn Seoul
Class: REGIDENCE Room: 195 Rooms Tel: 82-2-6474-1515 Adddress: 205-8 Nonhyeon-dong, Gangnam-gu, Seoul, South Korea www.dormy.co.kr

Room: 166 Rooms Tel: 82-63-232-7000 Adddress: 26-5 Poongnam-dong, Wansangu, Jeonju-si, Jeonbuk, South Korea www.core-riviera.co.kr

Chonju Core Riviera Hotel Class: ★★★★

Room: 373 Rooms Tel: 82-63-580-8800 Adddress: 257 Gyeoppo-ri, Byeonsanmeon, Buan-gun, Jeonbuk, South Korea www.daemyungresort.com

Daemyung Resort Class: ★★★★

ulji-Ro Co-op Residence
Class: REGIDENCE Room: 252 Rooms Tel: 82-2-2269-4600 Adddress: 32 Uljiro 6-ga, Jung-gu, Seoul, South Korea http://residences.co-op.co.kr

Coatel Chereville
Class: REGIDENCE Room: 365 Rooms Tel: 82-2-6288-3333 Adddress: 1330 Seocho-dong, Seocho-gu, Seoul, South Korea www.coatel.co.kr

jEju
Hyatt Regency jeju Class: ★★★★★ Shilla Hotel jeju Class: ★★★★★

Hotel Provista
Class: REGIDENCE Room: 153 Rooms Tel: 82-2-597-1140,1141 Adddress: 1677-8 Seocho 1-dong, Seocho-gu, Seoul, South Korea www.provista.co.kr

Somerset Palace Seoul
Class: REGIDENCE Room: 431 Rooms Tel: 82-2-6730-8888 Adddress: No 85 Susong-dong, Jongno-gu, Seoul, South Korea www.somersetpalaceseoul.com

Room: 224 Rooms Tel: 82-64-733-1234 Adddress: 3039-1 Saekdal-dong, Seogwipo-si, Jeju-do, South Korea www.hyattcheju.com

Room: 330 Rooms Tel: 82-64-735-5114 Adddress: 3039-3 Saekdal-dong, Seoguipo-si, Jeju-do, South Korea www.chejushilla.com

vabien Suites II Suites Hotel jeju Class: ★★★★★ jeju Grand Hotel Class: ★★★★★
Class: REGIDENCE Room: 286 Rooms Tel: 82-2-6399-0113 Adddress: 25-10 Uijuro 1-ga, Jung-gu, Seoul, South Korea www.vabienseoul.com

Stay 7 Mapo
Class: REGIDENCE Room: 56 Rooms Tel: 82-2-365-9010 Adddress: SK HUB Bldg, 425-5 Ahyondong, Mapo-gu, Seoul, South Korea www.stay7mapo.com

Room: 90 Rooms Tel: 82-64-738-3800 Adddress: 2812-10 Saekdal-dong, Seogwipo-si, Jeju-do, South Korea www.suites.co.kr

Room: 512 Rooms Tel: 82-64-747-5000 Adddress: 101 Yeon-dong, Jeju-si, Jeju-do, South Korea www.grand.co.kr

Fraser Place Central Seoul
Class: REGIDENCE Room: 235 Rooms Tel: 82-2-2220-8888 Adddress: 1 Soonhwa-dong, Jung-gu, Seoul, South Korea www.fraserplace.co.kr

Casaville Shinchon Residence
Class: REGIDENCE Room: 183 Rooms Tel: 82-2-6220-4000 Adddress: 57-26 Nogosan-dong, Mapo-gu, Seoul, South Korea www.shinchonco-op.com

Seogwipo KAL Hotel Class: ★★★★★

Room: 225 Rooms Tel: 82-64-733-2001 Adddress: 486-3 Topyeong-dong, Seogwipo-si, Jeju-do, South Korea www.kalhotel.co.kr

jeju KAL Hotel Class: ★★★★★

Room: 282 Rooms Tel: 82-64-724-2001 Adddress: 1691-9 Yido 1-dong, Jeju-si, Jeju-do, South Korea www.kalhotel.co.kr

Artnouveau City
Class: REGIDENCE Room: 226 Rooms Tel: 82-2-560-9000 Adddress: 701-1 Yeoksam-dong, Gangnam-gu, Seoul, South Korea www.ancsr.com

Casaville Samsung Station Residence
Class: REGIDENCE Room: 200 Rooms Tel: 82-2-539-9080 Adddress: 945-29 Daechi 3-dong, Gangnam-gu, Seoul, South Korea www.casaville.co.kr

Lotte Hotel jeju Class: ★★★★★

Room: 500 Rooms Tel: 82-64-731-1000 Adddress: 2812-4 Saekdal-dong, Seoguipo-si, Jeju-do, South Korea www.lottehotel.co.kr

Room: 313 Rooms Tel: 82-64-752-8222 Adddress: 1197 Samdo 2-dong, Jeju-si, Jeju-do, South Korea www.oriental.co.kr

jeju Oriental Hotel Class: ★★★★★

Haeundae Centum Hotel
Class: REGIDENCE Room: 543 Rooms Tel: 82-51-720-9000 Adddress: 1505 Woo 2-dong, Haeundae-gu, Busan, South Korea www.centumhotel.co.kr

Seacloud Hotel
Class: REGIDENCE Room: 416 Rooms Tel: 82-51-933-1000 Adddress: 1392-100 Jung-dong, Haeundae-gu, Busan, South Korea www.seacloudhotel.com

190

Living Environment in Korea 191

IV. Foreign Direct Investment in Korea

Sightseeing In Korea
Seoul & surrounding areas
Gyeongbokgung (Palace)
www.royalpalace.go.kr
This palace was built by King Taejo, the founder of the Joseon Dynasty in 1395. It was burned down in 1592 by Japanese invaders, and rebuilt by King Gojong in the 1800s. Some buildings such as Geunjeongjeon, Hyangwonjeong and the Chimney of Amisan have been well preserved and reflect the beauty of Korean traditional cultural heritage. will allow you to experience the atmosphere of everyday life and culture of Korean ancestors through Korean traditional performing arts, food and crafts.

Suwon Hwaseong
http://ehs.suwon.ne.kr
Built of only plaster and soil, this is one of the best fortresses from the Joseon Dynasty. The fortress is a product of King Jeongjo’s regret and filial piety, also registered on UNESCO’s World Heritage List in 1997. The fortress has 4 entrances along with many builtin defensive features.

Mt. Gwanak

Jogyesa (Temple)
http://eng.jogyesa.org
Jogyesa, located in the middle of downtown, is the head temple of Korean Buddhism built in 1939.

Mt. Nam
parks.seoul.go.kr/namsan
Many people exercise in Namsan in the early morning. You can see the sea in Incheon, although fa r f rom Seo ul, on a clear day. In the park, you will find Palgakjeong, a playground, botany garden, and cable car. It is a good place to study the environment, take a walk or exercise.

Gwanaksan is situated at the southern tip of Seoul, and the shape of the mountain looks like a fire. There are dozens of mountain tops covered with rocks and old trees. It is also called Sogeumgang or Seogeumgang, which means west of Mt. Geumgangsan, the most beautiful mountain on the Korean Peninsula.

Deoksugung (Palace)
www.deoksugung.go.kr
Originally called Jeongneung dong Haenggung but later renamed Gyeongungung by King Gwanghaegun in 1611, the king moved to Changdeokgung in 1615, and this palace remained empty for 280 years. When King Gojong started to live here after returning from the Russian Legation in 1897, it was then used as the main palace. However, the name Deoksugung was used in 1907 after King Gojong was dethroned. The palace houses many beautiful Westernstyle buildings, such as Seokjojeon.

Itaewon
yongsan.go.kr/eng
Itaewon is situated in the main area of Seoul and became famous for foreigners as a shopping town after the Asian Games in 1986 and Seoul Olympic Games in 1988. Most shops sell high quality goods at low prices, making Itaewon the most popular shopping destination for tourists.

You will find Daeungjeon, Buddhist Hall, Buddhist Jeonghwa Memorial Hall, Yongmunsan Sangwonsa Bronze Bell (National Treasure No. 32), pagodas and stone towers in this temple.

Mt. Bukhan
http://bukhan.knps.or.kr
Mt. Bukhan is a unique natural park in the city and became the 15th National Park in Korea. It is famous for natural beauty and cultural heritage like temples. Many people visit for climbing and relaxing. It is also easy to access by car, subway, or bus from the metropolitan areas. More than 5 million people visit every year, setting the record as the most crowded national park in the world.

Ganghwa Island
www.kanghwado.net
Ganghwado is a historical region bordering the Yellow Sea, where traces of war against the Mongol tribe during the Goryeo Dynasty still remain. Located about 50 kilometers from Seoul, this tourist site offers relaxation and activity with an enchanting sunset, lapping blue waves, and beautiful coastal scenery.

Korean Folk Village
www.koreanfolk.co.kr
This famous tourist site has recreated the Korean folk lifestyle, including shamanist religions and the annual customs of the late Joseon Dynasty. Tourists can experience the traditional life and culture of Korea.

Korea House
www.koreahouse.or.kr
Having been modeled after Jagyeongjeon in Gyeongbokgung Palace, Korea House is elegant and beautiful, with a tastefully designed garden in the hanok (traditional house). Korea House

192

Living Environment in Korea 193

IV. Foreign Direct Investment in Korea

Hangang (River) Yeouido Park
H a n g a n g Ye o u i d o Park is well-preserved naturally. A group of migratory birds visit here in the winter. Yunjungno, the road to the National Assembly running along the Hangang River, is crowded with people during the flower festival in the middle of April. People come out with their families to enjoy spring blossoms.

Lotte World
www.lotteworld.com
Lotte World, a joyful and enchanting world also known as ”a city within a city,” has museums, hotels, and the world’s biggest indoor theme park consisting of Adventureland, Magic Island and Folk Museum-all in one place. The roof is covered with glass, so there is no worry about outside weather. Magic Island, the first island park in Korea, is connected to Adventureland by monorail and an arched bridge, modeled after villages in fairy tales.

and the IMAX Theater all within its 3 basement levels and 60 above ground levels. The panoramic city view from the Observation Platform is an enchanting experience.

Iron Triangle Battlefield
T h e I r o n Tr i a n g l e Battlefield is the area that connects Gimhwa, Pyeonggang and Cheorwon. This area had the heaviest casualties during the Korean War with the Baekmagoji Battle and the Oseongsan Battle. The Iron Triangle Battlefield was the headquarters and frontline of the North Korean Army.

Golden Gate Casino
www.goldengateparadise.com
Golden Gate Casino offers state-of-theart facilities with courteous dealers in its dynamic and fun atmosphere. In addition to the games, K1 and racing girls will be ready to welcome guests. Golden Gate Casino offers non-stop-action throughout the year with its Las Vegas-Style premier gaming establishment for foreigners only. It operates 24 hours a day and 7 days a week. Only minutes away from Incheon International Airport, Golden Gate Casino at Hyatt Regency Incheon will be a new landmark casino of Northeast Asia.

Olympic Park
www.sosfo.or.kr/olpark
Ol ympic Park was built to commemorate the 1986 Asian Games and the 1988 Seoul Olympics. It has 6 gymnasiums for cycling, weight lifting, fencing, gymnastics, and swimming, along with the 88 Nori Madang, music fountain, etc. You can also appreciate world-famous sculptures while walking about the outdoor sculpture park. Many famous singers such as John Denver, Eric Clapton, and the heavy metal band Metalica, have held concerts here.

Samcheok Hwanseongul
http://tour.samcheok.go.kr
The beauty of stalagmites and stalactites forming rows inside Asia’s largest cave is a marvelous sight.

Everland
www.everland.com

Seoraksan National Park
http://seorak.knps.or.kr

Other Information Resources
• Seoul: www.seoul.go.kr • Incheon: www.incheon.go.kr • Gyeonggi-do: www.gg.go.kr

Seoul Land
www.seoulland.co.kr
Seoul Land consists of 5 different themes such as the World Plaza, Samcheolli Land, Future Land, Fantasy Land and Adventure Land. Its size makes it difficult to see in its entirety in one day. Here you can enjoy the comfort of fresh air coming from Mt. Cheonggyesan, see many types of buildings from all over the world in the world plaza, and experience Korean traditional foods, antiques, old markets, swings and other treasures.

Everland, opened in 1976, consists of Caribbean Bay and Festival World. There are safaris and various spots for recreation in Festival World, and flower festivals are held seasonally. Caribbean Bay is an indoor/outdoor waterpark open all four seasons.

Gangwon province
Naksansa Temple
www.naksansa.or.kr
Naksansa Temple is located 4 km north of Naksan Beach, and has a history of 1,300 years. It is a temple that was built by UiSang, an ambassador of the 30th king of the Silla Period (57 BC~AD 935). Inside, there is the Seven Floor Stone Tower, Dongjong, Hongyaemun, and other cultural assets. Also known as “Seolsan” and “Seolbongsan,” the mountain was named Seorak because the snow would not melt for a long time and its rocks stayed white as snow. In November 1965, the Seorak Mountain district was designated as a Natural Monument preservation area. Afterwards, in December 1973, it was designated as a park preservation area, and in August 1982, as a Biosphere Preservation District by UNESCO.

63 Building
www.63city.co.kr
63 Building, standing high on the bank of Seoul’s jewel Han River, contains an enormous aquarium that has recreated a portion of the ocean, Cineworld 63

194

Living Environment in Korea 195

IV. Foreign Direct Investment in Korea

Odaesan National Park
http://odae.knps.or.kr/eng
Odaesan National Park was designated as a national park in 1975. Odaesan was named after the following 5 plateaus: Manwoldae, Jangryeondae, Girindae, Sangsamdae and Jigongdae. Featuring its 1563 meter-high Birobong Peak, Odaesan spreads southwest with Mt. Sodaesan, Horyeong Peak and Mt. Sogyebangsan.

Balwangsan, is the first domestic ski resort which opened in 1975. With an average of 250 cm of snow each year, you can enjoy skiing from November to April. It is 215km from Seoul, and with the construction of a four-lane highway, the travel time has been shortened to two hours. When the ski season ends, you can enjoy golf from April to November as well.

with a wall 3 kilometers in length and cultural assets such as Jinnamnu, Ssangsujeong, Gongbungnu, Yeongeunsa and more. It is invigorating to walk on natural trails where the beautiful scenery gradually transforms year round according to the season.

in the central area, residing within the beautiful Soknisan Nat’l Park. The sound of wind chimes and the mountain breeze break the desolation. A chanted sutra from a Buddhist temple combine for a state of spiritual perfection. In Beopjusa, there are mountain cherry blossoms in the spring, pine groves in the summer and maple trees with red foliage in the autumn.

Gungnamji Gapsa (Temple)

Gyeongpodae Beach
www.gntour.go.kr/eng
A large pavilion with a handlebar-shaped roof overlooks the crystal clear waters of Gyeongpoho Lake. You can enjoy a grand sunrise over the East Sea, sunset over Daegwallyeong and the beauty of a moonlit night.

Central Korea (Chungcheong Province)
Seosan Maae Samjon Bulsang
www.seosantour.net
Smiling mysteriously with a perpetually peaceful expression, it is a stone image of Buddha engraved on a rock. Maae Samjon Bulsang is characterized by various expressions from the changing angles of sunlight. It is a well-known fact that Gungnamji is the oldest man-made pond in Korea. A pavilion is in the middle of the pond, and an elevated bridge was built over the water. Tourists can enjoy a romantic view of willows surrounding the pond.

www.gapsa.org
Gapsa temple is located in Gyeryongsan Mountain National Park, about 19km from Gongju-si. It was established by the monk Adohwasang in 420, during the Baekje period (234-678), and is famous for having numerous cultural treasures. Once you pass the parking lot, you come to a market area, the ticketing booth, and then pass through Iljumun, the main gate. From the parking lot to the Gapsa temple is less than 2km, but the road passes a famous area known as Ori forest.

Kangwon Land Casino
www.kangwonland.com
With 30 game tables and 500 slot machines, the casino delivers lucky ambience. It is scheduled to expand to 80 game tables and 1,600 slot machines, and will be reborn as Asia’s best Las Vegas-style casino with hotels, cultural events, theme parks, recreation areas and resting facilities.

Independence Hall of Korea
www.independence.or.kr
Independence Hall has an outdoor pavilion and seven standing exhibitions incorporated into the 4.7 millionsquare-yard complex, with displays of historical achievements of Koreans who have fought off centuries of aggressions.

Sudeoksa (Temple)
www.sudeoksa.com
Sudeoksa is a Buddhist temple with picturesque scenery in harmony with the mountains and the sea with clean and invigorating water running through the valleys.

Songsan-ri Tumuli (Burial Mounds and Tomb of King Muryeong)
The Songsan-ri Burial Mounds and Tomb of King Muryeong (reign 462-523) contains representative relics of the Baekje period (234~678). The

Yongpyong Resort
www.yongpyong.co.kr
Yongpyong Resort, located on the ridge of Mt.

Gongju Gongsanseong
www.gongju.go.kr
This is an ancient palace of the Baekje Kingdom,

Beopjusa (Temple)
www.beopjusa.or.kr
This is the most important and magnificent temple

196

Living Environment in Korea 197

IV. Foreign Direct Investment in Korea

Songsan-ri Burial Mounds have graves of kings from the period when Baekje's capital was Gongju, and it is believed to contain 10 such graves. Only seven graves have been discovered so far. The biggest attraction of Songsan-ri Burial Mounds is the wall painting drawn on the number 6 tomb -- it is the only art of its kind in the world, drawn from the way the bricks were laid to create the wall.

depart to follow the waterways of Chungjuho Lake. The ferry travels to Oksunbong, Gudambong, and Manhakcheonbong Peaks, Choga Rock, Whale Rock, Hyeonhakbong, Onodong, Sinseonbong, Gangseondae, Beodeulbong, Oseongam, Seolmabong, Jebibong, and Dumusan to reach its final destination at Sindanyang Dock.

head. There are 15 summits on this mountain, of which Cheonhwangbong (845.1m) is the main, and others are Sambulbong, Sinseongbong, and Gwanembong peaks to name a few.

Daejeon EXPO Science Park
www.expopark.co.kr
This is a science park displaying exhibitions with themes on new scientific developments, including the universe, life, Internet communications and energy. You will feel as if you are in a city of illusion while viewing the fun parks with themes on youth, romance and love. It is a relaxing park which offers a variety of facilities for all kinds of performances.

Nakhwaam
Nakhwaam is the site of a tragic legend where some 3,000 Baekje court women leaped to their death so as not to be dishonored at the hands of their enemies at the fall of the Baekje Kingdom. The hexagonal Baekhwajeong is situated on top of the precipitous cliff, where visitors can enjoy a view of the Baengmagang river below.

Danyang Eight Sights
There are eight areas designated as the most beautiful scenic areas in Danyang, and they are: Haseonam, Jungseonam, Sangseonam, Sainam, Gudambong, Oksunbong, Dodamsambong, and Seokmun. These areas were visited many times by numerous scholars in the Joseon Period (1392-1910), and they have many historically and culturally important relics.

Soknisan National Park
http://songni.knps.or.kr
Mt. Soknisan National Park is composed of Mt. Soknisan and Hwayang, Seonyu, and Ssanggok Valleys. Situated in the middle of the Sobaeksanmaek Mountains, which is the southwest branch of the Taebaeksanmaek Mountains, Mt. Soknisan is one of Korea’s most beautiful sites.The sharp granite peaks of Mt. Songnisan and the deep valleys of sedimentary rocks make magnificent scenic areas. Therefore, Mt. Songnisan is also called Mt. Sogeumgangsan (which means ‘small version of Mt. Geumgangsan’).

Southwestern Korea
Hwaeomsa (Temple)
www.hwaeomsa.org
Situated at the southwest corner of Mt. Jirisan, Hwaeomsa Temple is one of the ten most famous temples in Korea. It was constructed during the Silla Era in 544 A.D. in the fifth year of King Jinheung’s reign, but was burnt down during a Japanese Invasion, Jeongyujaeran, in 1592. It was rebuilt during the Joseon Period, including the restoration of the temple’s central shrine, Daeungjeon. The path to Hwaeomsa lies along a beautiful valley named after the temple.

Gosu Cave
http://kosu.or.kr
This is a limestone cave in Danyanggun, and is designated as a natural monument. The cave is 1,300 meters deep, large, and the inside is famous for its beauty. The name Gosu comes from the fact that in the past, the area was filled with thickets of very tall grass. When discovered, rough stone instruments were excavated at the cave entrance, which revealed that this area was home to prehistoric people.

Anmyeondo Nature Recreation Forest
www.anmyonhuyang.go.kr
Anmyeondo Nature Recreation Forest is located at the center of Anmyeondo Island, the sixth largest island in Korea. It was originally a waterway, built during the Joseon Period (1392-1911) to help with transporting ships, but eventually became an artificial island. One of the must-see events at Anmyeondo Island is the sunset. Kkotji beach's sunset is known as the best in all of the west coast, where the blue sea, the recreation forest, and the sunset all create an amazing view.

Gyeryongsan National Park
http://gyeryong.knps.or.kr
Gyeryongsan National Park stretches across Daejeon, Kwangju, and Nonsan districts. This magnificent mountain is 845.1m above sea level and was made a national park in 1968. Gyeryongsan's name comes from the fact that the ridgeline looks like the top of a chicken

Mt. Maisan Provincial Park
http://jinan.jeonbuk.kr
Mt. Maisan Provincial Park is located in Jinangun, Jeollabuk-do. During the Silla Dynasty, it was called Seodasan, during the Goryeo Dynasty,

Chungjuho Lake
Chungjuho Lake is a multi-purpose lake made from damming a river. It is clean, and the largest lake in Korea. At the Chungju Dam Ferry Dock, ferries

198

Living Environment in Korea 199

IV. Foreign Direct Investment in Korea

Yongchulsan, and finally named Maisan during the Joseon Dynasty. Maisan is called by different names depending on the season because the mountain reveals a variety of colors and sceneries.

Dadohae Maritime National Park
http://dadohae.knps.or.kr
Dadohae Maritime National Park covers the areas of Sinangun, Jindo-gun, and Goheung-gun of Yeosu-si and Wandogun in Jeollanam-do. It became Korea's 14th National Park on Dec. 23, 1981, and with an area of 2,344.91 km², it is the largest one in Korea, encompassing many small and large islands and various rock formations. In the park, the blue sky and ocean blend harmoniously with the white sandy beaches, and the thick surrounding pine forests add to the lovely atmosphere.

up of 250 smaller islands, and is famous because a dry section of land appears to rise from the middle of the sea near the end of February and middle of June in the lunar calendar. Because this phenomenon resembles the parting of the sea in the Old Testament’s Book of Exodus, the event is known as “Moses’ Miracle.”

Tongdosa (Temple)
www.tongdosa.or.kr
Tongdosa is the most important temple of the 15 parishes in Korean Buddhism J o g y e O r d e r. T h i s temple, one of the three largest temples in Korea, was built in 646, the 15th year of Queen Seondeok’s reign over the Silla Kingdom, when monk Jajang yulsa came back to Korea from Tang Dynasty of China with Buddha bones and robe.

Muju Ski Resort
www.mujuresort.com
As a recreation area opened in 1990 in Deokyusan National Park, the Muju Ski Resort is an area of leisure and recreation with ski hills and winter sports facilities. There are 23 slopes with ski jumps and Nordic courses. The Silk Road is the longest run nationwide with a length of 6.2km, and the level of difficulty is just right for beginners and intermediate-level skiers. The steepest course within Korea, the Raider Course is located at the peak. Muju Resort also hosted the 1997 Winter Universiad.

made of granite. Seokguram is known to have been built along with Bulguksa Temple. According to the historical text, the Samgukyusa of the Goryeo Dynasty, Kim Dae-Seong built Bulguksa for the parents of his present life, and Seokguram for the parents of his former life.

Beomeosa (Temple)
www.beomeosa.co.kr
Beomeosa is located at the base of a famous mountain in Busan, Mt.Geumjeongsan. The temple was built about 1,300 years ago by the monk Ui Sang. The original Beomeosa Temple building was lost during the Imjinwar (Japanese invasion of Korea in 1592) but was renovated in 1713, and has remained as it is today. The temple’s daeungjeon, or main shrine, is one of the most delicate and luxurious architectural examples of the Joseon Dynasty (1392-1910).

Cheomseongdae Observatory
culture.gyeongju.go.kr/culture
This is the oldest existing astronomical observatory in Asia. Constructed during the reign of Queen Seondeok (632-647), it was used for observing the stars in order to forecast the weather. This stone structure is a beautiful combination of straight lines and curves, and was designated as National Treasure No. 31 on December 20th, 1962.

Hongdo Island
Hongdo Island is located 115km southwest of Mokpo Harbor, and is actually composed of about 20 separate islands. It gets its name from its unusual reddish-brown color. When the sun sets over the island, the whole area takes on a reddish glow. The shore here is dotted with cliffs bearing diverse rock formations. Hongdo, along with its blue ocean and surrounding green forests, remains the most spectacular sight in the South Sea.

Southeastern Korea
Seokbinggo (Ice Store House)
Seokbinggo means a freezer made of rocks. It is an ancient refrigerator found only in Korea. It is located in Gyeongju, the ancient capital of the Silla Era (BC 57-AD 935). The appearance of this wonderful artifact is humble and simple, but you will not be disappointed at the entrance of the freezer for you can feel the cold from inside the structure.

Juwangsan National Park
http://juwang.knps.or.kr/eng
Mt. Juwangsan (721 m) is the smallest of the domestic national parks. Mt. Juwangsan is not so steep, making it a great place to walk and enjoy the wonderful scenery. There is a legend that King Juwon of Silla (57 B.C.~A.D. 935) lived on this mountain after turning Silla over to Goryeo. This is where it got its name 'Juwang'.

Seokguram Grotto (Mt. Tohamsan)
www.sukgulam.org
The official name of Seokguram, National Treasure No. 24, is Seokguram Seokgul. Designated as a World Cultural Heritage Site by UNESCO in 1995, it is an artificial stone temple

The “Moses’ Miracle” of Jindo
www.jindo.go.kr
Jindo Island is the third-largest island in Korea, next to Jejudo and Geojedo islands. It is made

200

Living Environment in Korea 201

IV. Foreign Direct Investment in Korea

Hallyeo Maritime National Park
http://hallyeo.knps.or.kr
Halleyo Maritime National Park was designated as a National Park in 1968. It is composed of parts of the southern coast and Namhaedo Island and Geojedo Island on the southern coast. Hallyeo Maritime National Park is famous for an incredibly beautiful sunrise and sunset on Haegeumgang of Geojedo; Bijindo Island is famous for its native plant, the Palsonyi Tree.

Since the Russo-Japanese War of 1905, Japan has continuously declared their dominion over the islets, which has led to diplomatic problems between South Korea and Japan. Presently, South Korea exerts her governance over the island with security guards on Dokdo Island. Houses were built on the rocks and a small harbor as well.

Jeju Island
Manjanggul
http://english.tour2jeju.net
Manjanggul is a cave that resembles a mysterious Greek palace, with stalactites of various shapes and sizes.

Teddy Bear Museum
www.teddybearmuseum.com
The Jeju Teddy Bear Museum contains two galleries, a museum gift shop, and a museum cafe. You can enjoy a view of Jungmun Beach from the museum’s outdoor garden.

Oedo-Botania
www.oedobotania.com
Oedo-Botania is a marine botanical garden located in Hallyeo Maritime National Park, which has a beautiful view of the crystal blue South Sea and surrounding landscape. It is 4 km away from Geojedo Island. In April, the island is covered with plethora of flowers. The Venus Garden displays twelve sculptures and a western-style garden. At Paradise Lounge, one can enjoy the sunshine and the sea while drinking beverages.

Sangumburi
Sangumburi means ‘a hole in the mountain.’ More than 420 kinds of temperate plants grow in clusters. In the fall, silver eulalia flowers grow thickly in waves, creating a breathtaking scene.

Seongsan Ilchulbong Peak
Seongsan Ilchulbong Peak is a stone peak with exotic scenery and is known as the best place to see the sunrise in Korea. The 99 peaks surrounding the crater is considered one of the 10 most beautiful sights on Jeju lsland.

Ulleungdo Island
www.ulleung.go.kr
This is a pentagonshaped island located 92 km away from Dokdo. The island is a mountain island made from volcanic eruptions. Its highest peak is called Seonginbong Peak, and there is a village along the coastline on a slope. On the north side is a caldera crater which collapsed to create the Nari Basin and the Albong Basin.

Busan Aquarium
www.busanaquarium.com
The Busan Aquarium contains over 35,000 kinds of fish, algae, reptiles, and amphibians. This state-of-the-art facility is one of Korea’s top aquariums, covering an area of 36,000m² and with three underground levels as well as outdoor park. On the first underground level you can find an undersea simulator, a souvenir shop, and several places to eat, while on underground levels two and three you can find the aquarium displays which make the Busan Aquarium a must-see destination.

Dokdo Island
www.dokdo.go.kr
Dokdo is an isolated island in the eastern reaches of the nation's territory. It is composed of two main islets, Dongdo (East Island) and Seodo (West Island).

Seongsan Ilchulbong Peak

202

Living Environment in Korea 203

Appendix
Major Logistics Companies in Korea Foreign Organizations in Korea Logistics Related Organizations in Korea Korean Embassies KITA (Korea International Trade Association) KOTRA (Korea Trade-Investment Promotion Agency)

Appendix

Major Logistics Companies in Korea
COMPANy BuSINESS wEBSITE

Hanjin Shipping STX Pan Ocean Hyundai Merchant Marine Glovis Korea Line Corporation SK Shipping EUKOR Car Carriers Korea Express Samsung Electronics Logitech Samsun Logix Pantos Logistics Hanjin Daeyang Shipping Hyundai Logistics CJ-GLS Heunga-A Shipping Sinokor Merchant Marine Hi Logistics Railway Transportation Division Hansol CSN KCTC KCTC International Dongwon Industry Joyang Logistics International Sebang

Shipping Shipping Shipping 2PL Shipping Shipping Shipping 3PL 2PL Shipping 2PL 3PL Shipping 3PL 3PL Shipping Shipping 2PL Trucking 3PL 3PL 3PL 3PL 3PL 3PL

http://www.hanjin.com http://www.panocean.com http://www.hmm²1.com http://www.glovis.net http://www.korealines.co.kr http://www.skshipping.co.kr http://www.eukor.com http://www.korex.co.kr http://www.selc.co.kr http://www.samsunlogix.com http://www.pankorea.co.kr http://www.hanjin.co.kr http://www.dyship.com http://hyundaiexp.co.kr http://www.cjgls.com https://www.heung-a.co.kr http://www.sinokor.co.kr http://www.hilogistics.co.kr http://cyber1001.co.kr http://www.hansolcsn.com http://www.kctc.co.kr http://www.kctcintl.co.kr http://www.dwml.co.kr http://www.joyang.com http://www.sebang.com

206

Major Logistics Companies in Korea 207

Appendix

COMPANy

BuSINESS

wEBSITE

Sebang Express Youngjin Enterprise Yoosung TNS CK line Kukbo Transportation KMTC KMTC Air-Sea Service KIFT Maxpeed Han Express Sunjin Shipping haewoo GLS Korea Logistics Samik Logistics Digital Partner In Logistics Assist Korea Taiyoung Shipping Union Transport Nonghyup Logis Dongjin Shipping Korea Pallet Pool Korea Container Pool Korea Logis Pool Yongma Logis Lotte Logistics

3PL Stevedoring Trucking Shipping Trucking Shipping Forwarder 3PL 3PL Forwarder Forwarder Forwarder Trucking Trucking Warehousing Warehousing Shipping Trucking Forwarder Shipping Lease Lease Lease 3PL 2PL

http://www.sebangexpress.com http://www.yjent.com http://www.ystns.co.kr http://www.ckline.co.kr http://www.kukbo.com http://www.kmtc.co.kr http://www.kmtcas.co.kr http://www.kift.co.kr http://www.maxpeed.co.kr http://www.hanex.co.kr http://www.sunjinsa.co.kr http://www.haewoo.com http://www.korealogis.com http://www.samik21.com http://www.dpl.co.kr http://www.assist-korea.co.kr http://www.taiyoungship.co.kr http://www.uniont.co.kr http://www.nonghyuplogis.com http://www.djship.co.kr http://kpp.logisall.com http://kcp.logisall.com http://klp.logisall.com http://www.yongmalogis.co.kr http://www.llc.co.kr

Foregin Organizations in Korea
EMBASSIES
NATION TEL NATION TEL

Algeria Apostolic Nunciature Argentina Australia Austria Bangladesh Belarus Belgium Bolivia Brazil Brunei Bulgaria Cambodia Canada Chile China Colombia Congo Costa Rica Cote d’ lvoire Czech Republic Denmark Dominican Republic Ecuador Egypt El Salvador Finland France Gabon

82-2-794-5034~5 82-2-736-5725 82-2-797-0636 82-2-2003-0100 82-2-732-9071 82-2-796-4056~7 82-2-2237-8171/3 82-2-749-0381/4 82-2-998-0884 82-2-738-4970 82-2-790-1078 82-2-749-0381/4 82-2-3785-1041 82-2-3783-6000 82-2-779-2610 82-2-738-1038 82-2-720-1369/1 82-2-722-7958 82-2-707-9249 82-2-3785-0561~2 82-2-720-6453 82-2-795-4187 82-2-756-3513 82-2-739-2401~2 82-2-749-0787~9 82-2-753-3432~3 82-2-732-6737, 6223 82-2-3149-4300 82-2-793-9575~6

Germany Ghana Greece Guatemala Honduras Hungary India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Kuwait Laos Lebanon Libya Malaysia Mexico Mongolia Morocco Myanmar Netherlands New Zealand Nigeria Norway Oman Pakistan

82-2-748-4114 82-2-3785-1427 82-2-729-1400 82-2-771-7582 82-2-738-8402~3 82-2-792-2105 82-2-798-4257, 4268, 0962 82-2-783-5675/7, 5371~2 82-2-793-7751~2 82-2-774-6455 82-2-3210-8500 82-2-796-0491/5 82-2-2170-5200 82-2-394-9716, 391-8906 82-2-749-3688 82-2-796-1713~4 82-2-794-6482/4 82-2-797-6001/3 82-2-795-9203 82-2-798-1694 82-2-798-3464 82-2-793-6249 82-2-790-3814~6 82-2-737-9514 82-2-3701-7700 82-2-797-2370 82-2-795-6850 82-2-790-2431~2 82-2-796-8252~3

208

Foreign Organizations in Korea 209

Appendix

NATION

TEL

NATION

TEL

OTHER ORGANIZATIONS
NAME wEBSITE TEL

Panama Paraguay Peru Philippines Poland Portugal Qatar

82-2-734-8610~2 82-2-792-8335/1174 82-2-757-1735~7 82-2-796-7387 82-2-723-9681 82-2-3675-2251~3 82-2-798-2444~6

Sri Lanka Sudan Sweden Switzerland Thailand Tunisia Turkey U.A.E Ukraine United Kingdom USA Uzbekistan Venezuela Vietnam

82-2-735-2966~7 82-2-793-8692 82-2-3703-3700 82-2-739-9511/4 82-2-795-3098 82-2-790-4334~5 82-2-794-0255 82-2-790-3235/7 82-2-790-5696 82-2-3210-5500 82-2-397-4114 82-2-574-6554 82-2-732-1546~7 82-2-739-2065

Australian Tourist Commission BUREAU VERITAS Korea U.S. Agricultural Trad office Det Norske Veritas(DNV) Food and Agriculture Organization of The United Nations Japan National Tourist Organization Nippon Kaiji Kyokai(NK) JETRO Seoul Center Korean-American Educational Commission Korea Arab Friendship Society Korean Committee for UNICEF Korea Foreign Company Association (KOFA) Korea-Japan Cooperation Council Korean National Commission for UNESCO Chinese Resident AssociationSeoul Korea Lions Club

www.australia.or.kr www.bureauveritas.co.kr www.atoseoul.com www.dnv.co.kr www.fao.org www.jnto.go.jp/kor www.classnk.or.jp www.jetro.or.kr www.fulbright.or.kr www.koafs.or.kr www.unicef.or.kr www.forca.org

82-2-399-6506 82-2-555-8924 82-2-397-4188 82-2-723-7593/4 82-2-584-3156 82-2-777-8542 82-2-776-3625 82-2-739-8657 82-2-3275-4000 82-2-730-5897 82-2-735-2315 82-2-3462-0505 82-2-755-0745

Republic of South Africa 82-2-792-4855 Romania Russian Federation Saudi Arabia Singapore Slovakia Spain 82-2-797-4924 82-2-318-2116~8 82-2-739-0631/4 82-2-774-2464~7 82-2-794-3981, 5420 82-2-794-3581~2

www.unesco.or.kr

82-2-755-1105 82-2-776-8416

www.lionsclub.org/kd www.lr.org www.macao.or.kr www.rotary.org www.seoulforum.or.kr www.eagle.org www.asiafoundation.org www.jcci.or.jp www.worldbank.org www.tatsel.or.kr www.mtpb.co.kr www.atoseoul.com www.atoseoul.com www.ipsoseoul.org www.undp.or.kr www.unep.or.kr www.virginia.or.kr www.who.int/en

82-2-897-8001 82-2-734-8970 82-2-778-4402 82-2-738-3077 82-2-755-4568 82-2-780-8065 82-2-732-2044 82-2-3210-2411 82-2-399-0900 82-2-779-5417 82-2-779-4422 82-2-397-4188 82-2-397-4188 82-2-747-8191 82-2-790-9562 82-2-720-1011 82-2-739-6251 82-2-503-7533

CHAMBERS OF COMMERCE
NAME wEBSITE TEL

Llyod’s Register Macao Tourist office Rotary International Seoul Forum for International Affairs The American Bureau of Shipping (ABS) The Asia Foundation The Japan Chamber of Commerce and Industry The World Bank Group Tourism Authority of Thailand Seoul Office Tourism Malaysia U.S. Agricultural Trade Office U.S. Wheat Associates, Inc. (USW) UNIDO IPSO Seoul (UNIDO) United Nations Development Programme (UNDP) United Nations Enviroment Programme (UNEP) Virginia Economic Development Partnership World Health Organization (WHO)

American Chamber of Commerce in Korea The EU Chamber of Commerce in Korea Seoul Japan Club French Korean Chamber of Commerce and Industry Korean German Chamber of Commerce & Industry The British Chamber of Commerce in Korea The Canadian Chamber of Commerce in Korea The China Council for the Promotion of International Trade Korea Swedish Association Australian Newzealand chamber of Commerce in Korea U.S. Commercial Service - Korea's web site

www.amchamkorea.org www.eucck.org www.sjchp.co.kr www.fkcci.com http://korea.ahk.de www.bcck.or.kr www.ccck.org www.ccpit.org www.korswe.or.kr www.anzcck.org www.buyusa.gov/korea/ko

82-2-564-2040 82-2-725-9880 82-2-739-6962 82-2-2268-9505~7 82-2-3780-4600 82-2-720-9406~7 82-2-554-0245~6 82-2-551-4611~3 82-2-3408-3305 82-2-790-3308 82-2-397-4535

Korea Chamber of Commerce & Industry (KCCI) International Chamber of Commerce

http://english.korcham.net www.iccwbo.org

82-2-6050-3114

210

Foreign Organizations in Korea 211

Appendix

Logistics Related Organizations in Korea
NAME wEBSITE

Ministry of Land, Transport and Maritime Affairs Ministry of Knowledge Economy Free Economy Zone Planning Office Korea Customs Service Busan Port Authority Korea Container Terminal Authority Incheon Port Authority Gyeonggi Pyeongtaek Port Corporation Ulsan Port Authority Incheon International Airport Corporation Korea Airports Corporation Korea Railroad Korea Rail Network Authority Korea Highway Corporation Busan Jinhae Free Economy Zone Authority Incheon Free Economy Zone Authority Gwangyang Bay Area Free Economy Zone Authority Yellow Sea Free Economy Zone Authority Saemangeum Gunsan Free Economy Zone Authority Daegu Gyeongbuk Free Economy Zone Authority Korea Maritime Institute The Korea Transport Institute Korea Research Institute For Human Settlements The Federation of Korean Industries Korea Federation of Small and Medium Business Korea Employers Federation The Korea Chamber of Commerce & Industry Korea International Trade Association Korea Trade-Investment Promotion Agency

http://www.mltm.go.kr http://www.mke.go.kr http://www.fez.go.kr http://www.customs.go.kr http://www.busanpa.com http://www.kca.or.kr http://www.icpa.or.kr http://www.gppc.or.kr http://www.upa.or.kr http://www.airport.kr http://www.airport.co.kr http://www.korail.com http://www.kr.or.kr http://www.ex.co.kr http://www.bjfez.go.kr http://www.ifez.go.kr http://www.gfez.go.kr http://www.yesfez.go.kr http://www.sgfez.go.kr http://www.dgfez.go.kr http://www.kmi.re.kr http://www.koti.re.kr http://www.krihs.re.kr http://www.fki.or.kr http://www.kbiz.or.kr http://www.kef.or.kr http://www.korcham.net http://www.kita.net http://www.kotra.or.kr

Your success is our commitment.
Korea invites you to take advantage of unparalleled business opportunities in the region. Boasting the world's most highly-developed IT infrastructure coupled with a world-class airport and ultra-modern ports, Korea is the ideal place to base your logistics operation to expand into Northeast Asian markets.

212

213

Appendix

Korean Embassies
NATION TEL ADDRESS

NATION

TEL

ADDRESS

Czech Denmark East Timor Ecuador Egypt El Salvador Ethiopia Fiji Finland France Gabon Germany

420-234-090-411 45-3946-0400 670-332-1635 593-2-2970-625~8 20-2-3761-1234~7 503-2263-9145 251-11-3-728111~4 679-330-0977 358-9-251-5000 33-1-4753-0101 241-73-4000, 4168 49-30-260650 49-69-9567520 49228-943790 49-40-650677600

Slavickova 5, 160 00 Praha 6-Bubenec, Czech Svanemollevej 104, 2900 Hellerup, Denmark Avenida de Portugal, Motael, Dili, East Timmor Av. Naciones Unidas y Av. Repulica de El Salvador EDIF. Citiplaza Piso 8, Ecuador 3 Boulos Hanna Street, Dokki, Cairo, Arab Republic of Egypt 5a. Calle Poniente #3970, entre 75 y 77 Av. Norte, Col. Escalon, San Salvador, El Salvador P.O.Box 2047, Addis Ababa, Ethiopia 8th Fl., Vanua House, Victoria Parade, Suva, Fiji Fabianinkatu 8A, 00130 Helsinki, Finland 125 rue de Grenelle, 75007 Paris, France B.P. 2620, Libreville, Gabon Stülerstr. 10, 10787 Berlin Lyoner Str. 34, 60528 Frankfurt am Main Bonn-Mittelstr. 43, 53175 Bonn, Germany Kaiser-Wilhelm-Str. 9 (3.OG) 20355 Hamburg P.O.Box Gp 13700, No.3 Abokobi Rd. East Cantoment Accra, Ghana 115 27, 2 Mesogion Ave, Athens Tower A building 19th Fl. Athens, Greece 5 Avenida 5-55 Zona 14, Edificio Europlaza, Torre 3, Nivel 7, Ciudad de Guatemala, Guatemala C.A 5/6th Fl., Far East Finance Center, 16 Harcourt Rd., Hong Kong 1062 BP Andrassy ut 109, Budapest, Hungary New Delhi-9 Chandragupta Marg, Chanakyapuri Extension, New Delhi-110021, India Kanchanjunga Bldg., 9th Fl., 72, Peddar Road, Mumbai 400026, INDIA Kav. 57, Jalan Gatot Subroto, Jakarta, Selatan, Indonesia No. 18, West Daneshvar St, Sheikhbahai Ave, Vanak Sq, Tehran, Iran M915 St.10 H11 Babilon Street, Al-Jadria, Baghdad, Iraq

Afghanistan Algerie Argentina Australia

93-20-210-2481 213-21-79-3400~2 54-11-4802-8062 61-2-6270-4100 61-2-9210-0200

Wazir Akbar Khan, Street No. 10, House No.34, Kabul, Afghanistan 39, Avenue Mohamed Khoudi, El Biar. Alger, Algerie Av. Del Libertador 2395 Cap. Fed. (1425) Bs. As. Argentina 113 Empire Circuit, Yarralumla ACT 2600, Australia St. James Centre Level 13, 111 Elizabeth St., Sydney NSW 2000, Australia Gregor-Mendel Strasse 25 A-1180 Vienna, Austria 4 Madani Avenue, Baridhara, Dhaka-1212, Bangladesh Chaussese de la Hulpe175, 1170 Brussels, Belgium Sen Av. Das Nacoes Lote 14, Brasilia-DF, Brazil CEP:70436-900 Av. Paulista 37, 9 andar Cerqueira Cesar, Sao Paulo - SP Brasil No.17, Simpang 462 Kg. Sg. Hanching Baru, Jln Muara, B.S.B BC 2115 World Trade Center, 7A Fl., 36 Dragan Tsankov Bulvd., 1040 sofia, Bulgaria #50-52, St. No. 214, Phnom Penh, P.O box 2433, Kingdom of Cambodia Av. Alcantara 74, Las Condes, Santiago, Chile No.20 DongfangdongLu Chaoyang District, Beijing, China, 100600 60 Wan Shan Road, Shanghai, China, 200336 No.101 Hong Kong East Rd., Qingdao, China, 266061 No. 37, South 13 Latitude Road, Heping District, Shenyang, Liaoning, China 18Fl. West Tower, Guangzhou Intl. Cemmercial Center, Tiyu Road East 122 Tianhe District, Guangzhou, China, 51620 Calle 94 No. 9-39, Bogota, Colombia Apartado Postal 838-1007, Carretera a Pavas, del Restaurante Los Antojitos 75 metros al norte, Rohrmoser, San Jose, Costa Rica

Austria Bangladesh Belgium and EU Brazil

43-1-478-1991 8802-881-2088~90 32-2-675-5777 55-61-321-2500 55-11-3141-1278

Brunei Bulgaria Cambodia Chile China

673-233-0248~50 359-2-971-2181 855-23-211-900/3 56-2-228-4214 86-10-8531-0700 86-21-6295-5000 86-532-8897-6001 86-24-2385-3388 86-20-3887-0555

Ghana Greece Guatemala Hong Kong Hungary India

233-21-77-6157 30-210-698-4080/2 502-2382-4051~4 852-2529-4141 36-1-462-3080 91-11-2688-5412 91-22-2388-6743~5

Colombia Costa Rica

571-616-7200 506-220-3141

Indonesia Iran Iraq

62-21-520-1915 98-21-8805-4900~4 964-77-0725-2006

Cote D'lvoire

225-2248-6701/3

01 BP 3950 Abidjan 01 Cocody Ambassade, Rue Monseigneur Kouassi, Lot 100, Villa 33, Abidjan Cote d'Ivoire

214

Major logistics company in Korea 215

Appendix

NATION

TEL

ADDRESS

NATION

TEL

ADDRESS

Ireland Israel Italy Japan

353-1-660-8800 972-9-951-0318/22 39-06-808-8769 81-3-3452-7611/9 81-78-221-4853/5 81-11-218-0288 81-6-6213-1401/6 81-82-543-5018/9 81-52-586-9221/3 81-25-255-5555 81-45-621-4531/5 81-22-221-2751/5 81-92-771-0461~3

15 Clyde Rd., Ballsbridge, Dublin 4, Ireland 4 Hasadnaot St., Herzliya Pituach 46728 Via Barnaba Oriani 30, 00197 Roma, Italy Tokyo-1-2-5, Minami-Azabu, Minato-ku, Tokyo, Japan Kobe-2-21-5 Nakayamate-Dori, Chuo-ku, Kobe, Japan

Nepal Netherlands New Zealand Nigeria Norway

977-1-427-0172 31-70-358-6076 64-4-473-9073/4 234-9-461-2701 47-22-547090 968-24691490~2 92-51-227-9380~1 92-21-585-3950/1

P.O.Box 1058 Ravi bhawan Tahachal, Kathmandu, Nepal Verengde Tolweg 8, 2517 JV, The Hague, The Netherlands 11th Fl., ASB Bank Tower, 2 Hunter Street, Wellington 6011, New Zealand No. 9 Ovia Crescent Off Pope John Paul II Street Maitama, POBox 6870, Abuja, Federal Republic of Nigeria Inkognitogaten 3, 0244 Oslo, Norway Way No. 3023, Bldg., No. 1921, Shati Al Qurm Muscat, Oman slamabad-Block 13, Street 29, G-5/4, Diplomatic Enclave II, Islamabad, Pakistan 101, 29th Street(Off. Khayaban-e-Mohafiz) Phase VI, DHA, Karachi, Pakistan Calle 51 E, Ricardo Arias, Campo Alegre, Edificio Plaza P.B., Republica de Panama Fl., Pacific MMI Bldg. Section 21, Allotments 2&3 Champion Parade St., Port New Guinea Moresby, Papua New Guinea Av. Rep. Argentina 678 esq. Pacheco Asuncion Av. Principal No. 190, Piso 7, Santa Catalina, La Victoria, Lima, Peru 10th Fl., The Pacific Star Bldg., Makati Av. Makati City 1226, the Philippines ul. Szwolezerow 6,00-464, Warsaw, Poland Av. Miguel Bombarda 36-7, Lisboa 1051-802, Portugal P.O.Box 3727 West Bay, Diplomatic Area, Doha, Qatar Blvd. Mircea Eliade Nr. 14, Sector 1, Bucharest, Romania Moscow-St. Plyushchikha56, Building 1, Moscow, Russia Vladivostok-Pologaya St. 19, 690091 Vladivostok, Russia Diplomatic Quarter, P.O.Box 94399, Riyadh11693 27, route de la Corniche Ouest x rue David Diop, Fann Residence, B.P. 5850 Dakar Fann, Dakar, Senegal Uzicka 32, 11000 Belgrade, Serbia and Montenegro 47 Scotts Rd., #08-00 Goldbell Tower, Singapore 228233

1-4, Nishi 12, Kita2, Chuo-ku, Sapporo, Hokkaido, Japan Oman Osaka-2-3-4 Nishi-shinsaibashi, Chuo-ku, Osaka, Japan Pakistan 4F Wako Hiroshima 5-28, Hukuro-Machi, Nakaku, Hiroshima, Japan Nagoya-1-9-12, Meieki Minami, Nakamura-ku, Nagoya, Japan Niigata-2 chome, 1-13, Hakusanura, Niigata, Japan Yokohama-118, Yamatecho, Naka-ku, Yokohama, Japan Papua 1-4-3 Kamisugi, Aoba-Ku, Sendai, Japan Fukuoka- 1-1-3 Jigohama, chuo-ku, Fukuoka, Japan P.O.Box 3060, Amman 11181, Jordan Kazakhstan, Astana, 010000, Office No.91, 92, 93 · Kaskad · business-centre, Kabanbai Batyr Av.6/1 P.O.Box 30455-00100 GPO, Nairobi, Kenya T: 254-20-2220000 Portugal 351-21-793-7200 974-4832238 40-21-230-7198 7-495-783-2727 7-4232-40-2222 Qurtoba Block 4, Street 1, Jaddah 3, House No.5, Kuwait Qatar Lao-Thai Friendship Rd., Ban Watnak, Sisattanak District, Laos Romania Diplomat Bld. 2F, Presidential Palace Street, Baabda, Lebanon Russia P.O.Box 4781, Abounawas Area, Gargaresh St., Tripoli, Libya Lot No. 9&11, Jalan Nipah, Off Jalan Ampang 55000 Kuala Lumpur, Malaysia Saudi Arabia 966-1-488-2211 221-33 824-0672 Lope de Armendariz No. 110, Col. Lomas de Virreyes C.P. 11000, Mexico Senegal Calle. Maniel No.13, Los Cacicazgos, Santo Domingo, Dominican Republic P.O.Box 1039, No. 10, Olympic St. Sukhbaatar District, Ulaanbaatar, Mongolia 41, Av. Mehdi Ben Barka, Souissi, Rabat, Morocco Singapore 65-6256-1188 No. 97, University Avenue Road, Bahan Township, P.O.Box 1408, Yangon, Union of Myanmar Serbia 381-11-3674-225~7 and Montenegro Paraguay Peru Philippines Poland 595-21-605-606 51-1-476-0815 63-2-811-6139/44 48-22-559-2900 675-321-5822 4 Panama

507-264-8203, 8360

Jordan Kazakhstan Kenya Kuwait Lao Lebanon Libya Malaysia Mexico Dominica Mongolia Morocco Myanmar

962-6-593-0745/6 7-7172-925-591~3 254-20-22220000 965-2533-9601~3 856-21-352-031/3 961-5-953167~9 218-21-483-1322/3 60-3-4251-2336 52-55-5202-9866 1-809-482-6505 976-11-32-1548 212-37-75-1767 95-1-527-142/4

216

Korean Embassies 217

Appendix

NATION

TEL

ADDRESS

NATION

TEL

ADDRESS

South Africa Spain

27-12-460-2508 34-91-353-2000 34-928-23-0499

Greenpark Estates #3, 27 George Storrar Dirve, Groenkloof, Pretoria 0181, South Africa Madrid- C/Gonzalez Amigo 15, 28033 Madrid, Spain

1-213-385-9300 1-671-647-6488 1-646-674-6000

3243 Wilshire Blvd., Los Angeles, CA 90010 125 C Tun Jose Camacho St., Tamuning, Guam 96913 460 Park Ave. (57th St.) 6th Fl. New York, NY 10022 One Gateway Center 2nd Fl. Newton, Boston, MA 02458 NBC Tower Suite 2700, 455 North Cityfront Plaza Drive, Chicago, Illinois 60611 700029 Afrociab 7, Tashkent, Uzbekistan Av. Fransisco de Miranda, Centro Lido, Torre B, Piso 9, Ofic. 91-92-B, El Rosal, Caracas, Venezuela 4th Fl., Dae Ha Business Center,360 Kim Ma St., Ba Dinh District, Hanoi, Vietnam Hochimin City- 107 Nguyen Du St., District 1, Viet Nam 3rd Fl., Redbridge, Eastgate Bldgl, 3rd Street/Rober Mugabe Rd., P.O.Box 4970 Harare, Zimbabwe

Las Palmas-Luis Doreste silva, 60-1, 35004, Las Palmas de G. Canaria, Spain 1-617- 641-2830 No. 98, Dharmapala Mawatha, Colombo 7, Sri Lanka 1-312-822-9485 House No.55, Al-Jazira Street 56, Khartoum², P.O.Box 2414, Khartoum, Sudan Uzebekistan 998-71-252-3151~3 58-212-954-1270 84-4-3831-5110~6 84-8-3824-8531~4 Laboratoriegatan 10, 102 53 Stockholm, Sweden Venezuela Bern-Kalcheggweg 38,P.O Box 28,3006 Bern Switzerland Geneva-1 Avenue de l'Ariana Case Postale 42, 1211 Geneva, Switzerland Rm. 1506, No. 333, Sec. 1, Kee-Lung Rd., Taipei, Taiwan Plot No. 97, Msese Road, Kingsway, Kinondoni P.O.Box 1154, Dar es Salaam, Tanzania 23 Thaim-Ruammit Rd., Ratchadapisek, Hway-kwang, Bankok 10320, Thailand 16 Rue Caracalla, Notre-Dame 1082 B.P. 297, Tunis, Tunisie Alacam Sok No. 5, Cinnah Caddesi, Cankaya, Ankara 06690, Turkey P.O.Box 3270, Abu Dhabi, U.A.E. Zimbabwe 263-4-756541/4 Viet Nam

Srilanka Sudan Sweden Swizerland

94-11-2699036/8 249-1-8358-0031/2 46-8-5458-9400 41-31-356-2444 41-22-748-0000

Taiwan Tanzania Thailand Tunisia Turky UAE Ukraine U.K. Uruguay U.S.A.

886-2-2758-8320/5 255-22-2668788 66-2-247-7537/41 216-71-799-905 90-312-468-4822 971-2-443-5337

38-044-246-3759/61 43, Volodymyrska St., 01034, Kyiv, Ukraine 44-20-7227-5500 598-2-628-9374/5 1-202-939-5600 1-404-522-1611 1-415-921-2251/5 1-713-961-0186 1-206-441-1011 1-808-595-6109 1-646-674-6000 60 Buckingham Gate, London, SW 1E 6AJ, U.K. Av. Luis Alberto de Herrera 1248, Torre II, Piso 10, Montevideo, Uruguay 2450 Massachussettes Ave., N.W. Washington, D.C. 2008 (HQ of Korean Embassy in the United States) 229 Peachtree St., Suite 500, International Tower, Atlanta, GA 30303 3500 Clay St., San Francisco, CA 94118 1990 Post Oak Blvd., #1250, Houston, Texas 77056 2033 6th Ave. #1125 Seattle, WA 98121 2756 Pali Highway Honolulu, Hawaii 96817 335 East 45th St., New York, NY 10017

218

Korean Embassies 219

Appendix

KITA (website: www.kita.org)
Korea International Trade Association
HEADQuARTERS

KOTRA (website: english.kotra.or.kr)
Korea Trade-Investment Promotion Agency
HEADQuARTERS

Seoul

82-2-6000-5114

Fl.46, Trade Tower, Samseong-dong, Kangnam-gu, Seoul Korea

Seoul

82-2-3460-7114

13, Heolleungno, Seocho-gu, Seoul, Korea

BRANCH OFFICE

BRANCH OFFICE

Tokyo Beijing Shanghai Singapore Washington New York Brussels

81-3-5472-2641 86-10-6505-2671/3 86-21-6236-8286/7 65-6323-1161 1-202-828-9282~6 1-212-421-8804/6 32-2-639-0990

Kamiyacho Mori Bldg. 2F 4-3-20, Toranomon, Minato_Ku Tokyo, Japan #1201, China World Trade Center No.1, JianCuoMen Wai Da Jie, Beijing 100004, China #3201, New Town Center No.83, Lou Shan Guan Road, Shanghai, 200336,China 79 Anson Road #10-01 Singapore 079906 Suite 216, 1660 L Street, NW, Washington, DC 20036 460 Park Avenue, Suite 1101 New York NY, 10022 USA Avenue Louise 165,1050 Brussels, Belgium

Guangzhou
廣州市東山區環市東路339 廣東國際大廈 主樓 1010 TEL: (86-20)8334-0052 FAX: (86-20)8335-1142 http://www.kotra.or.kr/unicenter

Los Angeles
4801 Wilshir Blvd. Los Angeles, CA 90010 U.S.A TEL: (1-323)954-9500 FAX: (1-323)954-1707 http://kotrana.com

Nagoya
23Fl.,Nagoya Intl Bldg,47-1, Nagono1-Chome, Nakamura-Ku, Nagoya-Shi TEL: 81-52-561-3936 FAX: 81-52-561-3945 http://www.kotra.or.jp

Madrid
Torre Europa, Paseo Castellana, 95, 10, 28046, Madrid, Spain TEL: (34)91 556 6241 FAX: (34)91 556 6868

New York
460 Park Ave, New York. NY 10022 TEL: (1-212)826-0900 FAX: (1-212)888-4930 http://www.kotra.or.kr

Melbourne
Level 3, 468 St. Kilda Road, Melbourne, VIC 3004 TEL: (61-3)9867-1988 FAX: (61-3)9867-2688 http://www.kotra.or.kr/mel

Dallas
3030 LBJ freeway Suite 1200, Dallas, TX 75234 TEL: (1-972)243-9300 FAX: (1-972)243-9301 http://kotrana.com

Moscow
Rm 908, WTC, 12 Krasnopresnenskaya nab. Moscow, 123610, Russia TEL: (7-495)258-1627 FAX: (7-495)258-1634 http://kotra.or.kr/moscow

Dubai
PO BOX 12859, SHEIKH ZAYED RD, DUBAI, UAE TEL: (971-4) 332-7776 FAX: (971-4) 3291300 http://www.kotra.or.kr/dubai

Munich
Tal 12 D-80331 Muenchen, Germany TEL: (49-89) 2424-2630 FAX: (49-89) 2424-2639

Detroit
2000 Town Center Suite 2850, Southfield, MI 48075, U.S.A. TEL: (1-248) 355-4911 FAX: (1-248) 355-9002 http://kotrana.com

Milano
Via Larga 2 - 20122, Milano, Italy TEL: (39-02)795813 FAX: (39-02)798235 http://www.kotra.or.kr/milano

London
1st Floor, Brettenham House North, 12-13 Lancaster Place, London WC2E 7EN TEL: +44 (0)20 7520 5300 FAX: +44 (0)20 7240 2367

Vancouver
Suite#1320, Cathdral Place, 925 West Georgia Street, Vancouver, BC, Canada, V6C 3L2 TEL: (1-604) 683-1820 FAX: (1-604) 687-6249

220

KOTRA 221

Appendix

BRANCH OFFICE

Beijing
中國 北京市 朝陽區 宵云路 38號 TEL: 86-10-6410-6162 FAX: 86-10-6505-2310 http://www.kotrachina.org

Singapore
7 Temasek Boulevard #13-02 Suntec Tower One Singapore 038987 TEL: (65)6221-3055 FAX: (65)6223-5850 http://www.sunteccity.com.sg

Brussels
Boulevard du Roi Albert II 30, bte14 1000 Brussels TEL: (32-2) 203-2142 FAX: (32-2) 203-0751 http://www.kotra.or.kr/brussels

Amsterdam
WTC Bldg. Strawinskylaan 767, 1077 XX Amsterdam, The Netherlands TEL: (31-20)673-0555 FAX: (31-20)673-6918 http://www.koreatradecenter.nl

Vienna
Mariahilferstrasse 77-79/1/3 1060 Wien, Austria TEL: (43-1)586-3876 FAX: (43-1)586-3979 http://www.kotra.or.kr/vienna

Osaka
7th FL.,Sakaisuji-Honmachi Center B/D,1-6Honmachi 2-chome,Chuo-ku,Osaka TEL: (81-6)6262-3831 FAX: (81-6)6262-4607 http://www.kotra.or.jp

Shanghai
Room 3101,3110-3112, Shanghai Maxdo Center, No.8 Xing Yi Rd Shanghai, China 200336 TEL: (86-21) 5108-8771 FAX: (86-21) 6219-6015 http://www.kotrachina.org

Washington
1225 Eye St. NW #920 Washington DC 20005 TEL: 1-202-857-7919 FAX: 1-202-857-7923 http://www.kotra.or.kr

Taipei
臺北市 基隆路 一段 333號 國貿大樓 2214室 TEL: (886-2)2725-2324 FAX: (886-2)2757-7240 http://kotra.or.kr

Helsinki
Kauppiaankatu 3 B 11, 00160 Helsinki TEL: (358-9)638-122 FAX: (358-9)-638-611 http://www.kotra.or.kr/helsinki

Stockholm
Svardvagen 11C, 182 33 Danderyd, Sweden TEL: (46-8) 30 80 90 FAX: (46-8) 30 61 90 http://www.kotra.or.kr/stockholm

Zurich
Claridenstr. 36, 8002 Zuerich, Switzerland TEL: (41-44)202-1232 FAX: (41-44)202-4318 http://www.kotra.or.kr/zurich

Toronto
65 Queen St. W. Suite 600, Toronto, ON, M5H 2M5 TEL: (1-416)368-3399 FAX: (1-416)368-2893 http://www.kotra.ca

Hongkong
Rm 3102, 31F, Central Plaza, 18 Harbour Road, Wanchai, HK TEL: 852-2545-9500 FAX: 852-2815-0487

Sydney
Suite2404, Level24, 1 Market st. Sydney, NSW2000, Australia TEL: 61-2-9264-5199 FAX: 61-2-9264-5299 http://www.kotra.or.kr/sydney

Quingdao
靑島市 香港中路 40號 旗艦大廈 15層 TEL: (0532)8388-7931/4 FAX: (0532)8388-7935 http://www.cura.com.cn/Floor/Display.aspx?id=168

Paris
19 Avenue de l'Opera, 75001 Paris, France TEL: (33-1) 55 35 88 88 FAX: (33-1) 55 35 88 89 http://www.kotra.or.kr/paris

Fukuoka
Nihonseimei Hakataekimae Bld. 11F, Hakataekimae 3-2-1, Hakata-ku, Fukuoka-city, Japan TEL: (81-92) 473-2005 FAX: (81-92) 473-2007 http://www.kotra.or.kr/unicenter/

Chicago
111 E. Wacker Drive, Suite 2229, Chicago, IL 60601 TEL: (1-312)644-4323 FAX: (1-312)644-4879 http://kotrana.com

Copenhagen
Holbergsgade 14, 2nd Fl., DK-1057, Copenhagen K, Denmark TEL: (45)3312-6658 FAX: (45)3332-6654 http://www.kotra.or.kr/copenhagen

Frankfurt
Mainzer Land str 27-31. 60329, Frankfurt am Main, Germany TEL: (49-69)2429-920 FAX: (49-69)2533-89 http://www.kotra.or.kr/frnakfurt

Sil
1875 South Grant St, Suite 640, San Mateo, CA 94402 TEL: (1-650)571-8483 FAX: (1-650)571-8065 http://www.kotrasf.org

Kuala Lumpur
9th Fl., Mui Plaza, jalan P. Ramlee, 50250Kuala Lumpur, Malaysia TEL: (603) 2117-7100 FAX: (603)2142-2107 http://www.kotra.or.kr/kualalumpur

Hamburg
Ludwig-Erhard-Strasse 20, 20459 Hamburg, Germany TEL: (49-40) 3405-740 FAX: (49-40) 3405-7474 http://kotra.or.kr/hamburg

222

KOTRA 223

Korea invites you to unparalleled business opportunities

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->