[Asia Exclusive] "Need to Expand Attraction of Large Corporations with Significant U-Turn Effect... Must Provide Bold Incentives"

Selected 10 Small and Medium-Sized Enterprises Returning in the First Half of This Year
74 U-Turn Companies Selected in 7 Years Since U-Turn Act Enforcement... Only One Large Corporation
Severe Shortage of Dedicated Staff for U-Turn Companies... Urgent Need to Recruit Experts

[Asia Economy Reporter Su-yeon Woo] Jang Sang-hyun, CEO of Invest Korea (IK), emphasized the need for institutional improvements and expanded incentives for u-turn companies to promote reshoring of domestic companies. While 10 u-turn companies were selected in the first half of this year alone, he expressed the difficulties on the ground, saying that inducing the return of large corporations, which have a relatively significant reshoring effect, is not as easy as expected.

In an interview held at the KOTRA headquarters in Yangjae-dong, Seoul, CEO Jang said, "In the case of large corporations, they go overseas not only to reduce production costs but also for clear reasons such as targeting local markets, so inducing reshoring is even more difficult," and emphasized, "Radical incentives are needed to bring them back to Korea."

Jang Sang-hyun, CEO of Invest Korea. / Photo by Hyunmin Kim kimhyun81@

In 2013, the government enacted the "Act on Supporting the Return of Overseas Expansion Companies (U-turn Act)" and began full-scale support for u-turn companies from 2014. Companies that have operated overseas business sites for more than two years and withdraw from overseas sites or reduce production by more than 25% to bring it back to Korea receive various benefits such as location and facility subsidies, policy funds, and various tax reductions.

U-turn companies are selected through joint screening by the Ministry of Trade, Industry and Energy and KOTRA. Since the implementation of the system, a total of 74 u-turn companies have been selected up to the first half of this year, and the number of selected companies is increasing every year. This year, 10 companies from various fields such as steel, automobiles, and chemicals were selected in the first half alone. However, although 74 companies decided to return to Korea over the past seven years, the only large corporation u-turn case is Hyundai Mobis. Compared to reshoring statuses in other countries, this performance is somewhat low.

CEO Jang emphasized that institutional support such as easing the requirements to be recognized as a u-turn company is necessary to induce reshoring of Korean companies, and at the same time, incentives for u-turn companies need to be expanded. In fact, u-turn companies hope for easing the requirements for reducing overseas business sites and receiving location and facility subsidies, expanding employment subsidies, and strengthening support measures for smart factories.

Jang Sang-hyun, CEO of Invest Korea. / Photo by Hyunmin Kim kimhyun81@

He also mentioned the lack of dedicated personnel for attracting u-turn companies as a practical difficulty. KOTRA established a u-turn support team under Invest Korea last year with the goal of attracting 100 u-turn companies and creating about 2,000 jobs by 2022. However, the current team has only about six staff members. Recently, although the president set "reshoring" as a national agenda in the 3rd anniversary address, related personnel are still severely insufficient.

He said, "Since IK is in charge of supporting u-turn companies and attracting investment from advanced companies, the u-turn support team has recently become the busiest department," and added, "To properly drive u-turn company support, government-level budget support and personnel reinforcement are the most urgent issues."

◇ Jang Sang-hyun, CEO of Invest Korea

▲ Born in 1976 ▲ Graduated from The Hill School, USA ▲ Majored in Economics and East Asian Studies at the University of Southern California (USC), USA ▲ MBA from Yonsei University Graduate School ▲ Manager of Consulting Team at CBRE Korea ▲ Overseas University Support Team at Incheon Global Campus Foundation ▲ Current CEO of KOTRA Invest Korea

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