"Global Companies Show Willingness to Invest in Korean Biohealth and New Industries Post-COVID"

Survey of 454 Global Companies and Potential Investors in Korea
Increased Interest in Pharmaceutical, Bio, and Health Investments Due to COVID-19, with Continued High Interest in Machinery, Robotics, and Electrical/Electronics Sectors

[Asia Economy Reporter Kim Hyewon] Global company Q, based in the North American region, is showing interest in greenfield investment to establish research and development (R&D) and clinical centers in Korea. This is because they judged that the COVID-19 pandemic presents a timely opportunity for Korea's bioindustry to leap forward. Japanese company P is also seeking investment opportunities in new businesses such as mobility in Korea. They are actively discovering startups with high capabilities in commercializing artificial intelligence (AI) and big data technologies. Chinese company S is seriously considering Korea as an R&D and production base for medical and healthcare manufacturing.

According to a survey, 3 out of 10 global companies have increased their investment interest in Korea due to COVID-19. Many global companies highly evaluate the potential for development in Korea's pharmaceutical, bio, and health sectors, as well as new industries linked to the 4th Industrial Revolution such as ICT convergence after COVID-19.

According to the report "Analysis of the Impact of COVID-19 on Global Companies and Foreign-invested Companies' Investment in Korea" by KOTRA and Invest Korea (IK), obtained by Asia Economy on the 11th, a survey of 454 global companies already operating in Korea or potential investors showed that 31.8% responded that their investment interest in Korea would increase after the end of COVID-19. 62% said it would remain the same, and only 6.3% said it would decrease. Compared to many policy organizations including the OECD, which expect global foreign direct investment (FDI) to drop by at least 30% this year due to COVID-19, Korea's relative investment interest is considered high.

By industry, 26.5% of manufacturing and 37.1% of service sectors answered that their investment interest in Korea has increased. Among manufacturing, the sectors with increased investment interest in Korea were machinery and robotics (34.4%), electrical and electronics (30.3%), and pharmaceutical, bio, and health (30%). The research institute analyzed that this means investment interest in Korea has risen in the pharmaceutical, bio, and health sectors due to COVID-19, and interest in the existing core industries of machinery, robotics, and electrical and electronics remains high.

More specifically, when asked about promising Korean investment sectors after COVID-19, global companies selected 'IT and mobile technology services' (41.8%), 'medical and bio startups' (35.1%), and 'automation and AI' (27.1%). This was followed by 'materials, parts, and equipment' (23.3%) and 'logistics and distribution specialized services' (10.1%). This is analyzed as proof of Korea's industrial growth potential and capabilities in these fields due to COVID-19. In fact, in additional interviews by the two organizations, North American company V considers Korea suitable as a production and export hub due to the openness of free trade agreements (FTA) and is exploring M&A in raw material production. European medical device company A is in the stage of reviewing investment in Korea, anticipating increased demand due to COVID-19.

The industry pointed out that as interest in Korea has increased after the COVID-19 pandemic, efforts to attract increased investment in promising new businesses by foreign-invested companies should be strengthened, and 'pinpoint support' measures needed by foreign-invested companies should be prepared to prevent their departure. This aligns with President Moon Jae-in's vision presented in his '3rd Anniversary Special Address,' which includes the 'New Industry New Deal' plan. President Moon proposed a vision to transform Korea into a global factory of advanced industries and change the world industrial map.

For example, in this survey, when 176 foreign-invested companies already operating in Korea were separately asked, 72.6% responded that they would maintain investment in Korea after COVID-19, but the proportion planning to reduce investment was 14.3%, higher than the 7.4% who planned to expand, raising concerns about potential withdrawal. Also, the multiple-choice items that global companies said they need support for to continue their business and investment in Korea were 'expansion of incentives (subsidies)' (55.6%), 'tax and financial support' (55.2%), 'regulatory relaxation' (40.3%), and 'improvement of logistics and distribution systems to facilitate supply of raw materials and product sales' (17.16%), in that order.

This content was produced with the assistance of AI translation services.