80,600 Jobs Created When Overseas Manufacturing Companies Return to Korea

Export-Import Bank Asserts Claims Based on 'Overseas Direct Investment Management Analysis' Report

[Asia Economy Reporter Kim Jin-ho] A proposal has been raised that quality jobs should be created through the expansion of reshoring (the return of overseas enterprises to their home country) of domestic manufacturing companies that have expanded overseas. Considering production disruptions caused by COVID-19 and the reorganization of country-centric supply chains due to US-China conflicts, it is pointed out that active support for this is necessary.

On the 9th, the Federation of Korean Industries (FKI) made this claim based on the 'Overseas Direct Investment Management Analysis' report published by the Export-Import Bank of Korea in December last year.

According to the report, as of 2020, overseas manufacturing companies recorded an average sales revenue of 113.3 billion KRW and an operating profit of 2.2 billion KRW per company. Compared to 2018, operating profit decreased by 48.7%, and sales revenue decreased by 8.9%.

In particular, the FKI analyzed based on the report that the deterioration of profitability of these companies has continued since before COVID-19. The main causes were cited as rising labor costs centered on China and increased expenses of overseas local subsidiaries.

The FKI viewed that considering COVID-19 and the reorganization of country-centric supply chains due to US-China conflicts, now is the right time to promote the return of domestic manufacturing companies operating overseas.

Based on the report, the FKI analyzed the reshoring effect of domestic manufacturing companies and estimated that 86,000 jobs would be created. It also anticipated effects of 36.2 trillion KRW in production and 11.4 trillion KRW in gross domestic product (GDP).

Kim Bong-man, head of the International Headquarters at FKI, stated, "Supply chain reorganization and the deteriorating performance of overseas manufacturing companies are opportunities that can promote the return of our companies that went abroad," and added, "It is necessary to fundamentally create a business-friendly environment, such as expanding incentives."

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