Large Corporations Weary of Moon Administration Regulations Say, "Maybe We Should Try Moving to the US"

Top 20 Representative Companies by Major Industry Survey
[Biden and Korean Companies] 'Concerns and Expectations' 45% of Large Corporations "US Investment Still Undecided"

[Asia Economy Reporter Kim Hyewon] Nearly half of the leading companies in various domestic industries have yet to finalize their investment plans in the United States following the inauguration of the Joe Biden administration. Samsung Electronics is taking a cautious approach to investment in the U.S., continuing lengthy discussions with local authorities regarding the construction and expansion of semiconductor plants. However, there is a discernible trend of expanding business overseas, where there are many incentives for foreign investment, leaving behind the anti-business sentiment and stringent regulatory policies of the Moon Jae-in administration. ▶Related article on page 3

On the 8th, Asia Economy conducted an urgent survey on ‘The Biden Administration’s Inauguration and Domestic Companies’ U.S. Strategies’ targeting 20 leading companies across major industries including semiconductors, home appliances, automobiles and parts, steel, petrochemicals, shipbuilding, shipping, secondary batteries, renewable energy, machinery, and defense. The results showed that only 10% of respondents indicated a change in their U.S. market investment strategy following the Biden administration’s inauguration.

The proportion of responses stating ‘undecided’ or ‘no change’ was equally 45%. Companies with undecided U.S. investment plans reported having only roughly completed a draft (33.3%) or about half completed (11.1%). A representative from one of the four major domestic conglomerates explained, "The economic recovery outlook due to the COVID-19 pandemic is highly uncertain, and detailed policies from the Biden administration, which are crucial for investment plans, have not yet been released." There is a consensus to first observe the new administration’s COVID-19 management and policy direction before finalizing investment plans.

Among the companies that responded ‘there is a change (10%)’ in their U.S. investment plans, some are considering mergers and acquisitions (M&A), including acquiring technology firms. Additionally, among companies planning to maintain investment levels similar to previous years, some intend to make additional investments in eco-friendly vehicles and renewable energy industries?sectors highlighted as promising under the Biden administration?as well as plan M&A activities related to hydrogen companies.

Regarding the outlook on the won-dollar exchange rate, one of the biggest variables affecting domestic companies’ U.S. investments, most predicted a weaker dollar (stronger won). The 20 companies expected the won-dollar exchange rate this year to fluctuate between an average of 1,053.9 won and 1,163.4 won, indicating a stronger won compared to last year’s actual transactions. These companies plan to manage exchange rate risks through various hedging methods such as localizing production plants or fixing exchange rates via currency swaps according to market conditions.

Lee Jaesu, head of the Regional Cooperation Team at the Federation of Korean Industries, analyzed, "Rapid exchange rate fluctuations are undesirable and difficult for export companies to adapt to. A decline in the exchange rate reduces the profitability of export companies and poses a risk of damage to the Korean economy, which is highly dependent on exports."

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