Promoting & Attracting FDI

Inside The Asian Wonders:

South Korea
대한민국

Lets look inside how a war destructed

country transformed itself into the
11th Largest Economy in the World.
Inside The Asian Wonders:
South Korea
대한민국

Promoting & Attracting FDI

Course: International Business (INB 372
Section: 03, Semester: Spring 2020

Submitted To:

Adina Malik (ALK),

Lecturer,
Department of Marketing &
International Business,
North South University
Table of
Contents
1. Team Details
- Team Members 01
- Work Allocation 01

2. Introduction to South Korea

- Brief 02
- Map of South Korea 03
- Meaning of South Korean Flag 04

3. Knowing the Country Mechanisms

- Economical System 06
- Political System 07
- Legal System 08

4. The Culture
- Culture in Brief 09
- Norms: Folkways 10
- Norms: Mores 11
- Determinants of Culture 11
- Hofstede’s Theory of Culture 12

5. Regional Economic Integration

- South Korea and APEC 13
- South Korea and OECD 14
- South Korean Free Trade Agreements (FTAs) 14-15

6. Business in South Korea

- Key Local Companies and MNCs in South Korea 16-17
- Why Multinationals are investing in South Korea 17
- Location and Key Resources 18

7. CPI and FDI

- Corruption Perception Index (CPI) of South Korea 19
- Foreign Direct Investment (FDI) in South Korea 20
- CPI affecting and attracting FDI 20

8. Extras
- South Korea Fun Facts 21
- References 22
 Team Members

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Fa h i m K Huda L
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Sl. No. Name
1 Zunaid Islam
2 Raidah Ashrafun Omar
3 Omar Fahim Khan
4 Inzamam Ur Rashid
5 Nusrat Huda Laisa
6 Mohtasim Daiyan Rafid
Work Allocation
ID Number Contributions
1911727030 -Political, Legal System of South Korea
-Regional Economic Integration
-Major Companies in South Korea, Why MNCs
are investing in the country.
- Full Magazine Designing
1911337630 -Economical System of South Korea
-Culture of South Korea (Writing and Designing)
-Idea Generation
1911758030 -Location, Key Resources of South Korea
-South Korea Flag Philosophy, Country Map
- Fun Facts
1911741630 -South Korea Introduction
-Corruption Perception Index (CPI)
- CPI Affecting FDI
1831694630 -Determinants of Culture
-Fun Facts
-Idea Generation
1811483030 -Foreign Direct Investment (FDI)
- CPI Affecting FDI
- Idea Generation

01
 Inside The Asian Wonders:
South Korea
대한민국
South Korea is a country in East Asia, sharing a border with North Korea. The name
Korea comes from “Goryeo”, which means “Land of high mountains and sparkling
streams”. Seoul is the capital of South Korea. Seoul is very famous for many things.
This is one of the most high-tech cities of the world, Seoul is also called the city of
shopping malls. South Korea has one of the highest literacy rates with 97.9% in the
world. It has one of the biggest economies in the world. South Korea now has the 3rd
largest economy in Asia after China and Japan, also the 11th largest in the whole
world. It is also the world’s 7th largest exporter.

But South Korea was not always that much developed. It was one of the poorest
countries a few decades back but in few generations, they became one of the high-
est income-generating and developed country. South Korea is very developed in
electronics, telecommunications, automobile sectors. But South Korea is not only
developed in IT and automobile industry, they have the world’s largest entertainment
industry.

South Korea’s culture and K-pop is now considered as “Trend-wave”. In terms of

contributing in the country’s GDP, there is a K-pop (Korean Pop) boyband called
“BTS” (Bangtan Boys) comes with the multinational giants like Samsung and Hyund-
ai. BTS is accounts for $4.65 Billion of South Korea’s GDP. South Korea is very unique
on its own. Every male citizen is from 18-35 years old are required to complete at
least 21 months of military service. South Korea is also known as the capital city of
plastic surgery. South Korea holds the record of developing in such a short time and
they are still developing everyday. South Korea will be one of those few countries
who will lead the world economy in future. South Korea is the home of every multina-
tional giants and they has their own developed companies that are dominating
worldwide. So, for investing, South Korea is a very suitable option.

02
 Map of South Korea

SEOUL
GANGWON

INCHEON
GYEONGGI
G
R TH ON
E
CH NO CH
UN SOU NG
GC TH H U
HE C
ON NORTH
G GYEONSANG
DAEJEON

DAEGU
NORTH
JEOLLA
ULSAN
SOUTH
GYEONSANG
GUA BUSAN
NGJ
U

SOUTH
JEOLLA

JEJU

03
 Meaning of the
South Korean Flag

04
Knowing The
Country
Mechanisms
 Economical
System
A countries’ economic system could be 3 type such as,
• Market Economy
• Command Economy
• Mixed Economy
And South Korea follows mixed economy system which
means some of the businesses of South Korea are
privately owned and some of the businesses are state
owned, depending on the nature of the sector and
government can take over a company if the company run
into severe financial problems. South Korea is known for
its spectacular rise from one of the poorest countries in
the world to a developed, high-income country in just a
Seoul, South Korea in 1953
few generations. Back in time, when South Korea was
called the Republic of Korea, endured colossal
misfortunes during the Korean War that kept going from
1950 to 1953. When the war finished, the country's
economy was in a ruins, infrastructures was destroyed
and there was heavy dependency on U.S. South Korea's
economy has been developing rapidly since the 1980s.
This economic growth is called by some a miracle, and
described as the Miracle on the Han River, which has
brought South Korea to the ranks of elite countries in the
OECD. An important contributor in this growth process is
the culture of innovation that prevails in South Korea, an
atmosphere that is friendly for investors and extremely
cordial relations with most of the countries in the Asian
market. Seoul, South Korea in 2020

Benefits:
As South Korea has a strong side in infrastructure, it is easy for any local company to enter into the market. The
higher the competition bar is the higher the development will be. A dynamic private sector with a well-educated
labor force and high capacity for innovation has capitalized on openness to global trade and investment. The
potential advantages of South Korea's generally high level of market receptiveness are undermined by less
noteworthy execution in legal adequacy, government respectability, and the administration of open spending.

Risks:
One of the major risks in this economy is the increasing number of irregular workers, social inequalities are
deepening and social ties are deteriorating. The government is struggling to turn this situation around, even after
using million extra budgets mainly for job-creation projects and is urging pension. In the medium and longer terms,
South Korea will spend more on preparing measures to tackle the low birth rate, elderly poverty and low
employment among women.
06
 Political System
South Korea follows democracy as its political system. The country encompasses a presidential system
represented by a directly-elected president and a unicameral governing body, the National Assembly, in which
different political parties are represented. The most influential parties are:

- Democratic Party of Korea (DPK)

- Liberty Korea Party (LKP)

The President is the chief of the state, head of the Government and commander-in-chief of the armed forces. He
or she is chosen by a well-known vote for a single five-year term. The President appreciates official powers and
delegates both the Prime Minister and the State Council (cabinet) with assent of the parliament. Developments in
2016-17 proved that South Korea’s democracy is among the most resilient in the world. While “populism” runs
roughshod over democratic institutions elsewhere, South Korea’s democracy has demonstrated a capacity to
overcome serious challenges.

Benefits:
Government’s direct involvement in the economy has
boosted the economic growth and industrialization by
which it has turned South Korea from an agrarian society
into a highly industrialized one.
The government has also been actively involved in industrial
and financial activities through its industries and banks.

Costs:
It might be costly to do business in South Korea as
government policies and system are very rigid and failure to
comply would result in huge costs.

Risks:
LKP, the opposition party of the current ruling party has
evidences of high corruption, thus if elected in the coming
election, would lead to a great risk for the South Korean
Economy.

Mr. Moon Jae-in, President, South Korea

07
 Legal
System
South Korea has a mixed legal system combining European civil law, Anglo-American law, and Chinese classical
thought. Other than this, the country mainly follows a civil law legal system as the laws are influenced largely by the
European civil law system. However, the US law has influenced more recent legislations. South Korea does not
recognize a federal legal system. The Civil law system in South Korea is based on concepts, categories, and rules
derived from Roman law, with some influence of canon law, sometimes largely supplemented or modified by local
custom or culture. It has the following characteristics:

1. A comprehensive framework of rules and standards as a rule organized in codes and effectively available to
citizens and jurists.

2. A well-organized framework that favors participation, arrange, and consistency, based on a coherent and
energetic scientific classification created from Roman law and reflected within the structure of the codes.

3. A versatile framework, with civil codes maintaining a strategic distance from over the top detail and
containing common clauses that allow adjustment to change.

Restrictions:
The South Korean government has imposed heavy
restrictions on doing business with North Korea under the
National Security Act. In addition, there were restrictions on
engaging in financial transactions with Iran under the Foreign
Exchange Transactions Act.

Benefits:
The Legal system is very strong in South Korea and one
cannot easily break rules.
The country has rigid property rights and licensing system.

Costs:
Doing business is costly in South Korea due to strong legal
system and heavy legal restrictions.

Risks:
Despite the strong legal system, there were corruption cases
filed against large South Korean companies like Hyundai
Motor, SK Group, Lotte Group. However, none of these
companies could come out of the legal binders with their
influence as in South Korea the law is equal for every citizen
in every economic class.

Ignorance of the law is no excuse in any

country. If it were, the laws would lose their
effect, because it can always be pretended.
-Thomas Jefferson

08 Supreme Court, Seoul, South Korea

 Culture Of
South Korea
A culture is a system of values and norms that are shared
among a group of people and that when taken together
constitute a design for living. South Korea is a country with
full of values and norms. Country’s core values are:

1. Koreans are anxious to learn and be educated

2. They like maintain everything without any mistake
3. Korean like to work as collectively rather than individually
4. Koreans are goal oriented
5. Loving and respecting parents is one of the vital valeus of
koreans
6. Korean are likely to be materialists.

Norms are the social rules and guidelines that precribe

appropriate behavior in particular suituations and can be
further subdivided into Folkways and Mores.

FOLKWAYS:
It is a traditional behavior or way of life of a
particular community or group of people. South
Korean people are full of folkways norms.

Meetings and Greetings

Bowing is the traditional way to greet in South Korea.
Handshakes is often accompany the bow among men.

09
 Communication Style
Communication can be complicated in South
Korea due to an inherent dislike of saying “no”
as it is considered poor etiqutte. Discussions
can be a way to avoid refusing. Non verbal
communication is advantageous in meetings.
Patience and politeness are highly required. Personal Space
Koreans are very conservative about their personal
space. It is offending for Koreans to be touched by
somebody with whom they just met. direct eye
contect and pointing fingers are also very offensive.

Gift Giving Etiquette

Koreans are liberal and they like making
people happy with gifts.

Dining and Food

Food and dining are significant part of Korean
culture and are utilize to fabricate connections.

Visiting Home
Korean’s home is considered an honor.
Entering with shoes is not acceptable.

10
 Mores:
Mores are social norms that are widely observed within a particular society or culture. Mores
determine what is considered morally acceptable or unacceptable with any given culture.

Determinants of Culture
1. Religion:
South Kore supports religious freedom. Confucianism, Buddhism and Chritianity are
the main formal religion. .
2. Political philosophy:
Introduction of Western culture in the late 19th century, Silhak, alongside Sohak, or Western
learning, added to the improvement and spread of thoughts that animated the progressive
modernization oh Korea.

3. Economic Philosophy:
During the 1950s South Korea had animmature, agrarian economy that relied intensely upon
outside guide. The military intiative that rose in the mid-1960s and drove the nation 25 years
may have been despotic and, on occasion,oppressive, however it’s down to the earth and
adaptable promise to financial advancement brought abouth what got known as the
“wonder on the Han River ”.

4. Education:
South Korea has the highest rate of education in the world

5. Language:
South Korea share only one language that is Korean.

6. Social Structure:
Most of the Koreans considered themselves to be the middle class.

11
 Hofstede’s Theory of Culture
Hofstede’s cultural dimensions theory is a frameworkfor cross-cultural communication. It
identifies four dimensions: Power distance, Uncertinity avoidance, Individualism or collectivism
& Masculinity versus femininity.

Power Distance:
Power Distance is defined as the extent to which the less powerful members of institutions and
organaizations within a country expect and accept the power is distrubuted unequally. South
Korea with a score of 60 is classified as a high power distance country, which means it
possesses a hierarchical society.

Uncertainty Avoidance:
This dimension focuses on how culture differ on the amount of tolerance they have of unpredict-
tability. South Korea is one of the most uncertinity avoiding countries in the world as it has score
of 85, it means they are risk averse.

Individualism or Collectivisim:
This determines wether the coutry’s workplaces prefer working in a group or individually. With a
low score of 18 in individualism, South Korea is considered a collectivistic society.

Masculinity versus Femininity:

This determines if a workplace has masculine traits which are heroism, assertiveness and material
rewards for success of feminine traits which are modesty, caring for the weak and quality of life.
South Korea is considered as a feminine society with the low score of masculinity which is 39.

Power Distance Uncertainty Avoidance Individualism Masculinity

60 85 18 39

12
 REGIONAL ECONOMIC
INTEGRATION

APEC (Asia-Pacific Economic Cooperation)

South Korea is the member of Asia-Pacific Economic Cooperation (APEC) which comprises of 21 member
states. South Korea became member of (APEC) in November 1989, which will ensure them to gain different
trading benefits among the member countries.

The objective of Asia-Pacific Economic Cooperation (APEC) is

• To sustain the development and improvement of the region for the benefit of all its people, groups and add
to the development and advancement of the world economy.
• To create and reinforce the open multilateral exchanging framework the enthusiasm of Asia-Pacific and
every single other economy.

Trading Partners Includes: Canada; China; France; Germany; Italy Japan; Korea; Mexico; the United Kingdom;
and the United States.

Benefits of being part of APEC

• Being part of APEC has enabled South Korea to

increase their amount of total trade among the
nations. Since,1989 the APEC total trade has
increase more than 6.7 times to $20 trillion as of
2015 whereas trade by the rest of the world grew
less by 5.6 times between 1989 to 2015.

• Another Benefit for South Korea is APEC makes it

easier to trade across borders: In 1994, APEC
Leaders focused on accomplishing the 'Bogor
Goals' of free and open trade and investment by
2020 through reducing trade barriers in the region
and advancing the free flow of goods and services
, administrations and capital among APEC econo-
mies. From that point forward, individuals have
gained quantifiable ground in accomplishing these
objectives.

• Being part of APEC, South Korea will avail the

benefit of faster customs Procedures. APEC
launched its ease of doing business action plan in
2009 with the goal of making it easier, cheaper and
faster to do business within the region therefore
South Korea has the highest possibility to enjoy
these services as they are part of the Regional Eco-
nomic Integration.

13
 OECD (Organization for Economic Co-operation and
Development)
South Korea is also a member country of The Organization for Economic Co-operation and Development (OECD)
which is an intergovernmental economic organization with 36 member countries, founded in 1961 to stimulate
economic progress and world trade. South Korea joined the OECD in 1996, after its enrollment to the World Trade
Organization in 1995 as a major aspect of its globalization endeavors, and has from there on ascended as an
undeniable center force, effectively adding to the worldwide network.

Benefits of being part of OECD

OECD–a group of nations sharing the estimations of majority rule government and a free market economy–was
helpful for the general improvement of South Korea's legislative issues, economy and society. As a praiseworthy
nation for accomplishing majority rule government and financial improvement, South Korea thus made a modest
commitment to the development of worldwide administration.

OECD Projected Data on Korea

South Korea’s Free Trade Area/ Agreement

The EU-South Korea Free Trade Agreement

The EU-South Korea free trade agreement (FTA) had provisionally applied since July 2011 before it was formally
ratified in December 2015. It went farther than any of the EU's past understandings in lifting exchange hindranc-
es, and was likewise the EU's first economic agreement with an Asian nation.

The EU-South Korea Free Trade Agreement (FTA) summary

• South Korea is the EU's eighth largest export destination for goods, whereas the EU is South Korea's third
largest export market.
• EU exports of goods to South Korea increased by 77% from 2010 to 2018. This turned the EU's trade in goods
deficit of €10.5bn in 2010 into broadly balanced trade in 2018.
• EU exports of services to South Korea increased by 82%, compared to 66% for EU imports from the country,
from 2010 to 2017. The EU had a €5.6bn trade in services surplus with South Korea in 2017.
• Over the equivalent 2010-2017 period, EU inward foreign direct investment (FDI) stocks increased by 112% and
EU outward FDI stocks (EU investments in Korea) increased by 39%.
• The EU’s most significant goods exports to South Korea are machinery and appliances, transport equipment
and chemical products.
• The main EU imports from South Korea are machinery and appliances, transport equipment and plastics.
• The EU is South Korea's biggest foreign direct investor.

14
 EFTA- Korea Free Trade Agreement

The EFTA States signed a Free Trade Agreement with the Republic of Korea in Hong Kong, China, on
15
December 2005. The Agreement entered into force on 1 September 2006 for Korea, Norway, Liechten-
FREE TRADE AGREEMENTS (FTA)

stein and Switzerland, and 1 October 2006 for Iceland. The Free Trade Agreement covers every single
significant region of exchange relations remembering exchange for products, exchange administra-
tions, government acquirement, rivalry and licensed innovation. A Joint
Committee is set up for the supervision of the Agreement, and a section accommodates
question settlement techniques. Moreover, the EFTA States and Korea concluded bilateral
agreements on basic agricultural products. An agreement on investment has been concluded between
Korea, on the one hand, and Iceland, Liechtenstein and Switzerland, on the other, as well.

U.S. - Korea Free Trade Agreement

The U.S.-Korea Free Trade Agreement entered into

force on March 15, 2012.
• U.S. goods and services trade with Korea totaled an
estimated $165.4 billion in 2018. Exports were $78.8
billion; imports were $86.6 billion.
• Korea is currently our 6th largest goods trading part-
ner with $130.8 billion in total (two way) goods trade
during 2018.
• Korea was the United States' 7th largest goods
export market in 2017.
• The top export categories (2-digit HS) in 2018 were:
mineral fuels ($10.0 billion), machinery ($7.9 billion),
electrical machinery ($5.7 billion), optical and medical
instruments ($3.5 billion), and aircraft ($3.3 billion).
• Korea was the United States' 6th largest supplier of
goods imports in 2017.
• The top import categories (2-digit HS) in 2018 were:
vehicles ($18 billion), machinery ($15 billion), electri-
cal machinery ($14 billion), mineral fuels ($3.2 billion),
and pharmaceuticals ($2.7 billion).

Lately, South Korea inked an inclusive Free Trade Agreement (FTA) with the Association of Southeast
Asian Nations and a provisional agreement with India.

15
 Key Local Companies of South Korea
Name of the Company Industry Market Capitalization Logo

1. Samsung Electronics Electronics $165.2 Billion

2. Hyundai Motor Automotive $49.8 Billion
3. POSCO Steel making $32.6 Billion
4. LG Chem Chemicals $20.0 Billion
5. BigHit Entertainment Entertainment $3.34 Billion

Samsung
Electronics
Samsung Electronics is the world’s biggest
technology firm by revenue, and by far the
largest-listed company in South Korea. Its
market cap is more than three times larger than
the closest rival — Hyundai Motor. Samsung
Electronics is the flagship subsidiary of South
Korea’s biggest business conglomerate —
Samsung Group — which has nearly 80
affiliates. The family-run group has a significant
impact on South Korea’s economy, accounting
for about one fifth of the country’s GDP.

16
 Large MNCs operating in South Korea
Name of the Company Industry Logo

1. Google Technology
2. Daimler AG Automotive
3. ExxonMobil Oil and Gas
4. Siemens Electronics
5. BASF Chemicals
6. BOSCH Engineering

Did You Know?

Why Multinationals are Daimler AG is the Holding Company
of Mercedes Benz, Maybach, Fuso

investing in South Korea?

Being the world's 15th largest economy most definitely with around 51.5 million residents. The possibility of South
Korea Business is the best activity plan as the nation offers the best ever marketplace for investors from around the
globe. A larger chunk than half of the Global Fortune 500 firms is comfortably placed in the country.

Foreign direct investment incentives compensate for foreign investments in South Korea for their financial
commitments and at the same time bringing down startup costs. The government furnishes tax cuts to outside
organizations so as to contribute to a great extent to the Korean economy. Also, the legislature furnishes these
organizations with industrial sites, cash grants and other financial
assistance.
Some of the reasons why Foreign MNCs are so much interested for investment is South Korea are:

1. A Geographic Favorite
Anchored strategically between China and Japan, South Korea within easy travel distance of more than 60 cities
with more than a million-strong population. The US-Korea Free Trade Agreement has paved the way for South
Korean businesses to have better access to the world’s largest consumer market.

2. Infrastructural Wonder
South Korea is sufficiently resourced regarding ports, landing strips and street and rail arrange. Starting 2008,
Incheon International Airport (the nation's biggest, on the edges of Seoul) obliged 63 air bearers and 30 million trav-
elers on the way to 49 nations. In any event, stunning, inside six years of its dispatch it turned into the world's
second-biggest air terminal concerning payload stream.

3. Making the most out of Foreign Direct Investment

The South Korean government makes it so helpful for Foreign Direct Investment (FDI) that the chain response is obvi-
ous in business, innovation and the financial areas. South Korea reliably guiding endeavors to be a pleasure for finan-
cial specialists and offering purchaser arranged scene and motivating forces (e.g., agreeable and reasonable territo-
ry, progression and rearrangements of methods). Outside venture is made additionally engaging in the areas of parts
and materials and furthermore center advances and the administration segment. The administration additionally
makes it simpler to put resources into government-run enterprises and projects targeting territorial advancement.

17
 Location
When deciding where to invest, foreign investors tend to
focus on some key location activities which may include:

we’re
highly skilled workforce, advanced R&D capabilities,
high quality infrastructure, high level of disposable

inside
household income, etc. so, south Korea has strong
advantage as all these factors are already available in
their country which acts as a major tool for them to

south
attract Foreign Direct Investment. According to the World
Economic Forum Global Competitiveness Report 2019-
Koreas overall infrastructure 13th in the world.

korea
대한민국
Climate
Although relatively small, Korea has a surprisingly
diverse climate. One of the outcomes of the peninsula's
mid-latitude location is its seasonal climate. There are
very distinct temperature and moisture patterns for each
season. South Korea has a favorable business and
investment environment that serves as a framework that
enables foreign and domestic companies to conduct
business and make profit.

Key Resources
• Regardless of a reasonable assorted variety of regular assets, Korea's HR are frequently depicted as the
most significant. This was valid in conventional farming occasions, all things considered in the cutting-edge
mechanical age.

• Clean water and wood for fuel were promptly accessible to help agrarian efficiency all through the majority
of Korea's history.

• The advantages open to South Korea are coal (which drives the country); some oil (which grants them to
convey things, for instance, plastic and fuel), graphite (used for the creation of pencils and nuclear reac-
tors), tungsten (used in the gathering of lights, steel).

• Regardless, the most relevant resource right now for South Korea are the celebrations of its people and its
vigor, with the objective that resistance is amazingly high in preparing.

18
 Corruption Perception
Index (CPI) of South Korea
60
The Corruption Perception Index is a list distributed
yearly by Transparency International (TI) since 1995
which positions nations by their corruption level in the 58
country’s Government sector by taking expert opinions
and public surveys. The CPI characterizes corruption as
56
the abuse of public power for private benefit. The CPI
ranks 180 countries in the world currently on a scale
from 100(very clean) to 0(highly corrupt). As in, if the 54

score is high the country is much likely to be clean in

terms of corruption. On the other hand, if the score is 52
low the country is more likely to be corrupted. 2010 2012 2014 2016 2018 2020

If we look into the CPI of South Korea, the country always scored more than 50 and improving every year. Their
corruption level is quite low. In 2019, South Korea scored 59 out of 100 on the Corruption Perception Index report-
ed by Transparency International. The score shows that the country is more likely to be less corrupted and quite
clean in terms of corruption. The score improved by 2 points compared to 2018. In 2018, South Korea scored 57
out of 100. But it got improved and now South Korea is listed as one of the least corrupted country in the world
ranking 39 out of 180 countries surveyed. That means, in public sectors of South Korea corruption is very less
likely to be seen and the country is less corrupted.

Countries
Ranking for
Corruption
Perception
Index (CPI)

For some South Koreans, giving a gift

to a co-worker, teacher or business
partner is no longer a warm gesture
— it’s potentially a crime.
President Moon Jae-in

19
 Foreign Direct Investment (FDI)
FDI is known as Foreign Direct Investment. FDI means as investment as a controlling proprietorship in a business in
one country by an entity based in another country. It helps an economy to grow rapidly. Because FDI brings capital,
new technology, resources and opportunities. FDI creates new job sectors in the host country and it impacts posi-
tively on the standard of living of the host country by reducing unemployment. Also, FDI helps a country to be more
productive. When there are foreign companies to compete with, domestic companies will also have to be more
productive, efficient and they will try to be more innovative in terms of making a product or goods. Also, they will
take strategies to increase their profit margin by competing with these MNCs.

The level of CPI

Affecting FDI
FDI is Foreign Direct Investment. Not every country attracts the FDI in same amount. There are some factors
that determines whether a company should invest in this foreign country. CPI is one of the major ways to
decide in which country a company should invest. So that means CPI can attract FDI or can be a way to make
foreign investors to lose interest in investment in this country. One of the main reasons for low level of FDI in
some countries is because of high level of corruption. Corruption is the misuse of public power for self interest.
Before investing on a foreign country, the company looks into the CPI of that host country. If the CPI is below
40, it is unattractive for FDI. So, corruption can harm one country’s economy and image.

South Korea had a CPI of 57 in 2018, they improved by 2 points in 2019. Also, South Korea is one of the least
corrupted 40 countries among the 180 countries. So, South Korea is very attractive for Foreign Directive Invest-
ment. The score shows that the country is less corrupted. South Korea is attracting other companies from foreign
to invest in their country. In recent years, global companies are increasingly establishing headquarters and R&D
centers in South Korea. The number of foreign companies are increasing every year. Now, around 16000 foreign
companies invested ij various fields in South Korea. Among them 500 are Global Enterprises. The amount of FDI
in 2013 was $USD 14548M. This amount is rising since then and in 2018, the amount rose into $USD 26901M.

So, CPI level of South Korea is attractive for Foreign Directive Investment and the FDI is increasing every year of
South Korea. South Korea has a very developed IT and their infrastructure is very developed. Most of the FDI is
going in the telecommunications sector. So, high score of CPI is helping South Korea to acquire higher FDI. Low
level of corruption helped to increase the trust and interest of other foreign companies to invest in South Korea.

20
 Fun Facts
1. Largest Drinkers in Asia

2. There are just four distinct surnames: Kim, Lee,

Park, Choi or Chung.

3. Kim Taehyung, the famous South Korean boy

band-BTS vocalist was declared as the most hand-
some man in the world in 2018 by Family Star 101, a
US Based entertainment company.

4. Tetraphobia (It means to avoid number 4). It is their

unlucky number

5. Permanent Cosmetics (They are concerned with Soju, the most consumed
South Korean Drink
their appearance because of image conscious society,
therefore cosmetic surgery is a means of good invest-
ment for both men and women leading to good job
and finding a good spouse)

6. Both male and female are obsessed with makeup

7. On the South Korean island of jeju, women

traditionally go out to work while their husbands stay Jeju Island
home All South Korean roofs are curved at the ends
giving the appearance of a smile.

8. The Organization for Economic Co-operation and

KIMCHI !!!!
Development (OECD) declared that South Korea is the
country with the highest estimated national IQ on
Earth.

9. Kite flying is a well-known side interest in South

Korea, and on the most recent day of the new moon
during the Lunar New Year, individuals generally let go
of their kites trusting their misfortune will float away
with them.

10. When taking a photo, South Koreans say “kimchi”

instead of “cheese.

A South Korean girl before and after A Kite festival, floating away
Kim Taehyung, BTS Vocalist
Plastic Surgery their misfortune

21
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south-korea/

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22
Promoting & Attracting FDI

Inside The Asian Wonders:

South Korea
대한민국