Investment Climate of Korea

Investment Climate of Korea

Growth of Korea

GDP (nominal) Nominal GDP between 2003 and 2012 (Unit: USD Billion) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 644.00 722.00 845.00 951.00 1,049.00 931.00 834.00 1,015.00 1,115.00 1,129.00 Nominal GDP between 1970 and 2012 $1,049 billion (2010) $1.1 trillion (2012) $573 billion (1996) $8 billion (1970) Source: Bank of Korea

GDP (PPP) GDP per capita between 2003 and 2012 (Unit: USD Billion) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 965.8 1,038.8 1,096.7 1,172.9 1,268.5 1,306.4 1,312.2 1,413.8 1,485.1 1,538.7 GDP (PPP) between 1970 and 2012 $1.5 trillion (2012) $678 billion (1997) $19.7 billion (1970) Source: Bank of Korea

GDP per capita (PPP) GDP per capita between 2002 and 2013E (Unit: USD) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 18,858 19,696 21,138 22,783 24,617 26,501 27,513 27,709 29,717 31,220 32,272 33,580 GDP per capita between 1980 and 2013E $31,220 $33,580 (2011) (2013E) $14,175 (1997) $ 2,302 (1980) Source: IMF

Trade Volume Trade volume ranking by country in 2012 (Unit: USD 100 million) 1 2 3 4 5 6 7 8 9 10 United States China Germany Japan Netherland s France U.K. Korea Italy Hong Kong 38,824 38,668 25,757 16,844 12,474 12,439 11,494 10,675 9,859 9,479 Trade volume between 1957 and 2012 (Unit: USD) $1.06 trillion (2012) $85.7 billion (2008) $28 billion (1996) $0.46 billion (1957) Source: KITA

Inward FDI* Notification (Unit: USD billion) 15.5 15.3 Arrival * Flow data with equity & long-term loan 16.3 8.9 11.0 10.3 11.3 9.0 6.5 12.8 9.2 11.6 9.6 11.2 9.1 10.5 7.9 11.7 8.4 11.5 6.8 13.0 13.7 6.6 10.6 5.3 5.0 3.8 5.1 5.4 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Ministry of Trade, Industry and Energy

Inward FDI (Stock) $131.7 billion (2011) 1990 1993 1996 1999 2002 2005 2008 2011 Source: UNCTAD Stat. Inward Foreign Direct Investment Stock, Annual (as of 2013. 4)

Number of Foreign-Invested Companies 14,764 (2012) 1,678 (1990) Source: KOTRA

Foreign Companies in Korea 14,764 Companies (as of 2013. 4.)

Going Global

From an ODA recipient to a donor Korea is the first country in the world to go from being an ODA recipient to an ODA donor. Korea joined the DAC (Development Assistance Committee) in 2009. Korea ranked 1 st last year for rate of ODA increase. Official Development Assistance (ODA) in 2011-2012 (Among OECD DAC members) Country Rate of Increase (unit: %) Amount of ODA (2012/2011) (unit: USD mil.) Korea 17.6 1,551 / 1,325 Luxembourg 9.8 432 / 409 Australia 9.1 5,440 / 4,983 Germany -0.7 13,108 / 14,093 France -1.6 12,000 / 12,997 Japan -2.1 10,494 / 10,831 United States -2.8 30,460 / 30,783 Source: Ministry of Strategy and Finance

Global Events in Korea Four major global sporting events in Korea since 1988 Ranks 6 th globally as a host of major world events. (France - Germany - Italy - Japan Russia - Korea)

Korean Wave Goes Global Italy Search volume according to Google Trends K-pop Brazil Korean Drama USA 2005 2007 2009 2011 2013 Australia

Competitiveness

Competitiveness - Manufacturing Industries -

Global Manufacturing Competitiveness 10.00 7.98 7.84 7.65 7.59 7.57 7.24 7.13 6.64 6.60 Source: Deloitte and U.S. Council on Competitiveness 2013 Global Manufacturing Competitiveness Index

13 Korean Companies in 20 65 117 146 196 203 Samsung Electronics SK Holdings Hyundai Motor POSCO LG Electronics Hyundai Heavy Industries 235 264 266 383 429 449 465 GS Caltex Korea Electric Power KIA Motors S-Oil Korea Gas Woori Finance Holdings Hyundai Mobis

Mobile 1 st 30.4% 8 th 3.8% Source: http://www.strategyanalytics.com (2013.2.)

Display 1st 24.5% 2nd 23.4% Source: Displaysearch (2013.2)

Lithium Battery 1 st 26% 3 rd 17.5% Source: B3, a Japanese market researcher (2013.3)

DRAM 1 st 42% 2 nd 26% Source: isuppli (2012 Q4)

Shipbuilding 1st 35% 2012 Source: Clarkson

Automobile 5th 5.4% 2012 Source: KAMA

Steel 4 th 39.1 MT 20th 16.3 MT Source: http://www.worldsteel.org (2012)

Competitiveness - Creative Industries -

Potential of Korean cultural goods (2012) 119 (unit: USD bil.) 70 59 58 $68.7 billion 38 4.8 Contents Source: Korea Customs Service, Korea Creative Contents Agency

Culture A Promising Korean Industry World s 10 th cultural industry, according to market size (2011) 1 2 3 4 5 6 7 8 9 10 United States Japan China Germany U.K. France Italy Canada Brazil Korea 36.3 Entertainment & Media Market Size in Korea (unit: USD bil.) 45.5 43.6 38.6 40.1 41.9 47.5 2010 2011p 2012 2013 2014 2015 2016 Source: PWC (2012), Global Entertainment and Media Outlook

Scientific Infrastructure

IMD World Competitiveness 31 st ( 08) -> 22 nd ( 12) 16 30 ECONOMIC PERFORMANCE 8 10 19 GOVERNMENT EFFICIENCY 23 32 32 24 BUSINESS EFFICIENCY 25 26 22 INFRASTRUCTURE 5 14 21 28 31 42 42 54 Source: IMD World Competitiveness Yearbook 2012

Bloomberg Innovation Index Korea 1 st 3rd 3rd 5 th 4th 8th 32nd R&D intensity Productivity High-tech Researcher Manufacturing Tertiary Patent activity density concentration capability efficiency

Patent Applications (2010) 0 100,000 200,000 300,000 400,000 500,000 USA (1) China (2) Japan (3) Korea (4) Taiwan (5) Germany (6) Russia (7) Canada (8) India (9) Australia (10) * Source: IMD World Competitiveness Yearbook 2012

National R&D Spending 33

R&D Expenditure of Korea 500.00 450.00 400.00 350.00 300.00 2.68 2.79 3.01 3.21 3.36 3.57 3.74 4.03 4.5 4 3.5 3 2.5 250.00 200.00 2 150.00 1.5 100.00 1 50.00 0.5 0.00 2004 2005 2006 2007 2008 2009 2010 2011 0 Total R&D Expenditure (USD 100 mil.) USD 1 = KRW 1100 Of GDP (%) Source: National Institute of Science & Technology Evaluation and Planning (KISTEP)

Wireless Broadband Usage 120 OECD wireless broadband subscriptions per 100 inhabitants, by technology, June 2012 100 80 Dedicated mobile data subscriptions Standard mobile broadband subscriptions Terrestrial fixed wireless Satellite 60 40 20 0 Source: OECD, June 2012

Business Environment

Doing Business in Korea 1 2 3 4 5 6 7 8 9 10 Singapore Hong Kong New Zealand United States Denmark Norway U.K. Korea Georgia Australia 8 th 8 th (14) Resolving Insolvency (24) Starting a Business (26) Dealing with Construction Permits (2) Enforcing Contracts (3) Getting Electricity 19 th 16 th (3) Trading Across Borders (75) Registering Property 23 rd 2008 2009 2010 2011 2012 Paying Taxes (30) Protecting Investors (49) Getting Credit (12) Source: World Bank Doing Business 2013

The Global Financial Centres Index By z/yen (Since 2007) 6th (2012.09) 43rd (2007.03)

Logistics Infrastructure Incheon Intl Airport No.1 in passenger service for 8 years Door-to-door delivery Busan Port World s best same-day delivery system 5 th largest for cargo handling

Human Resources: Population (25-34) w/ Tertiary Education (unit: %) Singapore Korea Taiwan Japan Canada Ireland Norway Lithuania New Zealand United Kingdom Luxembourg Israel Belgium Australia Hong Kong 30.00 35.00 40.00 45.00 50.00 55.00 60.00 65.00 70.00 75.00 Source: IMD World Competitiveness Yearbook 2012

Profitability in Korea All countries Korea (unit: %) 18 16 14 13.80 12 10 11.01 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 * Source: U.S. Department of Commerce, Bureau of Economic Analysis * Rate: Direct Investment Income / Direct Investment Position

FTA

FTA: The present 61% EFTA EU Turkey USA Korea India Singapore ASEAN Peru Colombia Chile

Tariff Concession for Manufactured Goods Korea-EU FTA Korea-US FTA Level of concession % of items Korea EU Korea US Amount of import (%) % of items Amount of import (%) % of items Amount of import (%) % of Items Amount of import (%) Instantly (A) 90.7 69.4 97.3 76.7 89.9 81.0 87.3 85.5 Over 3 years (B) 5.1 22.4 2.1 16.6 6.3 13.2 4.1 6.9 (A+B) 95.8 91.8 99.4 93.3 96.2 94.3 91.4 92.4 Over 5 years 3.7 6.9 0.6 6.7 1.9 1.5 4.0 3.4 Over 7 years 0.5 1.3 - - - - - - Over 10 years - - - - 1.9 4.2 4.6 4.2 Total 100 100 100 100 100 100 100 100

Korea China Japan FTA EU Market U.S. Market Korea FTA Hub -> Business Hub Solid Industrial Infrastructure High Technology Sophisticated Market IP Protection Advanced Logistical Infrastructure Locational Advantages ASEAN Market World s 3 rd largest economic bloc Trade Volume: $1.294 trillion (1999) $6.838 trillion (2011) GDP: $14.283 trillion (20.5% of global GDP) Population: 1.52 billion (21.8% of the world population)

ASEAN + 6 (ASEAN: Singapore, Vietnam, Malaysia, Brunei, Cambodia, Laos, Myanmar, Indonesia, Philippines, Thailand) Regional Comprehensive Economic Partnership for East Asia (RCEP) ASEAN + Korea, China, Japan, India, Australia, New Zealand Trade Volume: $10.131 trillion (27.7% of world trade volume) GDP: $19.764 trillion (28.4% of global GDP) Population: 3.399 billion (48.7% of world population)

FTA: In the future 90% EFTA Canada Mongolia EU GCC Turkey Israel India Singapore China Korea Vietnam ASEAN Malaysia Indonesia Japan Mexico USA Central America Colombia Peru MERCOSUR Australia Chile New Zealand : In effect or concluded : Under negotiation : Under consideration

Success Cases

FDI in Korea by Industry (2008-2013) (unit: %) Finance & Insurance (16) Business services (13) Chemicals (7.3) Automobile (7.6) Real Estate & Lease (12) Distribution industry (11) Electronics (11) Source: Ministry of Trade, Industry & Energy

Case 1: Axa General Insurance Co., Ltd. (USD 1 = KRW 1100) Unit: USD million 674.99 647.90 635.73 608.69 599.15 373.61 452.76 518.74 Xavier Veyry, President, AXA General Insurance Co., Ltd. in Korea 148.27 267.33 Korean people are extremely curious but also they are a technologically savvy people. 24.75 Korean consumers know what they want and have high expectations regarding service and prices.

Case 2: Adecco Group (USD 1 = KRW 1100) Unit: USD million 51.50 59.72 63.53 64.88 38.78 41.17 43.18 30.91 33.80 22.09 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Case 3: International Business Machines Corp. (USD 1 = KRW 1100) Unit: USD billion 0.89 0.83 0.80 0.80 0.93 0.99 1.15 1.10 1.12 1.10 1.13 Joseph Kern, CFO, IBM Korea I would say that Korea is one of the most IT literate [countries] and boasts infrastructure which makes it one of the most advanced IT societies in the world. Korea is the first place a lot of companies can test new technologies and new ways of doing business.

Case 4: Deutsche Post DHL 332.38 (USD 1 = KRW 1100) Unit: USD million 272.50 301.70 240.45 240.42 211.58 215.20 199.44 191.97 174.22 159.31 Frank Appel, CEO, Deutsche Post DHL I believe there were no difficulties doing or expanding business in Korea. The business environment of Korea is good for foreign investors. I'm sure that speed is the key to gaining opportunities over your competitors, and Korea can be the best answer for speed.

Case 5: Volvo Group 2.15 2.17 Eric Nielsen, President and CEO, Volvo Group Korea (USD 1 = KRW 1100) Unit: USD billion 0.58 0.65 0.90 0.96 1.20 1.47 1.43 0.99 1.58 We have R&D operations in Germany, and the United States, but all those activities are actually controlled and their agendas set by our Korean organization. We aim to leverage our activities here in Korea on a global level by pursuing a single standard in the way we work, and that standard is managed out of Korea. We selected Korea to be the core competency center for excavators."

Case 6: SUMITOMO CHEMICAL COMPANY, LIMITED (USD 1 = KRW 1100) Unit: USD billion 1.70 1.76 2.04 1.96 1.36 0.80 1.02 1.13 Tadashi Kobayashi, President and CEO, Sumitomo Corporation Korea 0.14 0.42 These facts tell us Korea is one of the most important countries as business base for Japanese trading company working in global market.

Invest KOREA

Korea s FDI Promotion Regime Ministry of Trade, Industry & Energy Foreign Investment Committee KOTRA Korea Trade-Investment Promotion Agency Strategic Marketing SME Support Global Business Information

KOTRA s Global Business Network 119 Business Centers in 81 Countries

Invest KOREA s One-Stop Service Government agencies Overseas Network 42 Business Centers Local governments Execution Aftercare Grievance resolution Pre-Investment Provision of information and administrative services Support for site surveys, partner search and incentive negotiations

GAPS(Global Alliance Project Series) Customized supporting program for global corporations who are keen to establish business alliance with Korean companies or R&D institutes Strategic Investment Start-ups Joint Venture Medium Large Corporations Universities Technology Alliance Marketing Alliance Joint R&D Global Corporation Research Institutes R&D Outsourcing Technology Commercialization

GAPS: Global Partners April 2009 Nov. 2009 March 2010 June 2010 June 2009 May 2010 Sept. 2010 Jan. 2011 Dec. 2011 Sept. 2012 Aug. 2011 Dec. 2012

Thank you