[Reshoring Revealed] Japan 682, US 482 Reshoring... Korea Only 12 Locations

8 Years Since Policy Implementation, Companies Lukewarm
Support Shortage, Workforce Supply Issues Burden

[Asia Economy Reporter Junhyung Lee] The reshoring policy, which aims to encourage domestic companies that have moved overseas to return in order to revitalize the domestic economy and create jobs, has entered its eighth year of implementation, but corporate "U-turns" remain minimal. Although the government is signaling overseas companies to come back to Korea, practical reasons such as insufficient support, stringent conditions, labor costs and other production expenses, and local circumstances are preventing reshoring from creating a proper economic cycle. For these reasons, businesspeople are reluctant even to consider returning to the domestic market.

Even considering the economic scale of major countries like the United States and Japan, which have similar policies, the performance gap is significant. According to the office of People Power Party lawmaker Choo Kyung-ho and the Ministry of Trade, Industry and Energy on the 4th, only 91 companies have returned to Korea from 2014 to January this year. Among them, only one was a large company, 12 were mid-sized companies, and 78 were small and medium-sized enterprises (SMEs). Up to last year, this averages to 12.6 companies reshoring annually. Considering that the average annual number of reshoring companies was 482 in the U.S. (2014?2018) and 682 in Japan (2014?2017), the difference is considerable.

Businesspeople cited reasons such as the perceived insufficient level of support compared to the burdens of reshoring, difficulties in securing production personnel, and the necessity of overseas factories for large companies' partners. The Korea International Trade Association's International Trade and Commerce Institute explained in a report published last year that due to the narrow domestic market and the overseas expansion goals directly linked to market development, companies find it difficult to choose reshoring.

This reality is clearly reflected in surveys targeting businesspeople. In a recent survey conducted by the Small and Medium Business Research Institute on 475 domestic SMEs regarding "major response measures to global supply chain restructuring," reshoring received the lowest score. While "diversification of sales channels" received the highest score of 4.3 out of 5, reshoring scored 3.1. Researcher Eunha Kim of the Small and Medium Business Research Institute explained, "Reshoring was the lowest priority among the five options," adding, "Although 3.1 cannot be taken as an absolute value, the intention of domestic companies to return is clearly low."

In the Small and Medium Business Research Institute's survey, only 6 out of 127 small export companies with overseas production bases (4.7%) selected "relocating overseas production bases to domestic" as a COVID-19 response strategy. Other surveys showed similar results. In a survey conducted last year by the Korea Federation of SMEs, 76% of SMEs responded that they had no intention of returning domestically even if the COVID-19 situation worsened. Around the same time, a survey by the Korea Chamber of Commerce and Industry showed that 94.4% of domestic manufacturers shared the same view.

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