With all the gloom and doom of the global economic crisis still crowding the headlines around the world, one would think that a trip to the Invest Korea offices at the Korea Trade-Investment Promotion Agency (KOTRA) would get more of the same.  However, Chung Tong-soo put that misperception to rest right away in an interview with the Korea IT Times.  When first asked simply how KOTRA and Invest Korea are doing, he said, "We are staying about even compared to last year, whereas most nations around the world have experienced a significant drop."  He said honestly that he expected worse, because of a forecast by the United Nations Conference on Trade and Development (UNCTAD).  "There was a forecast by the UN agency UNCTAD that publishes world investment reports every year.  It forecast that global FDI flow will be reduced this year by about 80-90% over and above what happened last year."

But that is not the case for Korea.  While in 2008, there was a downturn in investment of about 80-90%, in 2009 there was not a second significant downturn, as predicted by UNCTAD. However, most other nations this year have experienced a second drop of 30 to 50% in FDI in 2009, but Korea was able to skip that downward trend.

Korea has been able to sidestep a lot of the economic troubles of other countries this year.  They were able to dodge the bullet, according to Mr. Chung, because of several factors.  "One is the prompt and decisive and sizable action taken by the government in increasing public spending and cutting the taxes starting last year, not waiting until things had got really bad," Mr. Chung explained.

He also said that companies have also reacted quickly, going into a kind of emergency mode.  This cooperation of government and corporate business has been effective.

A third factor identified by Mr. Chung is that Korea exports most of its goods to developing markets rather than advanced markets.  Whipping out some quick numbers, he said that 31.7% of Korea's exports go to the US, EU, and Japan.  But 68% go to developing nations such as the Brazil, Russia, India, and China - also known as the BRIC - and raw materials producing nations like those in the Middle East and Australia.  Since the BRIC, the Middle East, and Australia actually grew in 2008 and 2009, money from their imports has helped offset the loss of export monies from developed nations.

The final factor has been the diversity of Korean exports.  The country exports automobiles, semiconductors, cellular phones, ships, steel, LCD TVs, and many other items, which means the country's economy as a whole is not dependent on one thing.  "So if autos go down, maybe LCDs go up, and we're about even," he explained.  He brought it back to investment by saying that this kind of resilience is quite appealing to foreign investors in Korea, because it makes sense in the medium to long term.

We then spoke about significant foreign investment events in Korea this past year.  Mr. Chung pointed out that the biggest investment this year is eBay, which took over the popular Korean online shopping mall Gmarket.   eBay has already been involved in the Korean market when it bought auction.co.kr, another popular online shopping mall.  This purchase is significantly more valuable though, both for Korea and for eBay.  The other significant investment in Korea this year is in beer - specifically, Oriental Brewery, or OB.  It is well-known in Asia for producing the OB, Cass, and Cafri beers.  It was bought by an affiliate of Kohlberg Kravis Roberts & Co.

Chung Tong-soo also said that there were investments that created new industries this year.  Robert Bosch, a German technology investment company, is partnering with Samsung SDI of Korea in order to make Lithium Ion batteries, which can be used in electric cars.  "We're beginning to see more investment going into green sectors - second generation batteries, wind power, solar power.  Things like that," continued Mr. Chung.  It looks like the Korean government's push for a green energy program is working.  Also, there is an unusual investment from India.  An Indian company has bought a textile plant in Korea that has been closed for five years, and is planning to re-open it to create textile goods.  Despite the seeming difficulty of this market, and the fact that some people think Korea is no longer competitive in the textile field, the Indian company has strong faith in the possibilities.  "I'm looking at this investment with great interest," Mr. Chung said.

Mr. Chung spoke long about the significance of Korean IT in the investment and export market.  "In terms of exports, IT is clearly one of the most important sectors, together with autos and ships. So I would say certainly either the most or one of the top two or three most important sectors.  And the importance of IT will continue to grow because, even for automobiles, if you look at parts by value, IT parts make up 40% of the value already.  So autos are not just machinery, but are heavily controlled by IT.  And that'll be the case in many other sectors.  It'll become more like that for ships, smart homes, ubiquitous healthcare, intelligent transportation.  I mean, you name it, there's an IT component to just about everything we do. And the fact that Korea has strong IT capability will position Korea well for the future.  It will have the capacity to continue to grow, and its capacity to attract foreign investment."

So while the rest of the developed world is still struggling to put their overly-complex financial markets together, and Korea has already stabilized itself with its diversity of exports and investments.  The country seems to be on the correct path to success, and as IT takes over more and more sectors, this path will become more successful.  Optimism abounds at KOTRA, in Korea, and doesn't look like it's going to go away soon.

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