The aim of this study is to examine the current state of the foreign direct investment(FDI) of Korean and Japanese companies in China. With the comparative study of Korean and Japanese FDI in China in terms of investment scale, business type, ownership and reasons of investment, we tried to ascertain the problems and successful factors of FDI in China.
As a consequence of enhance the possibility of successful FDI in China and let them evaluate the possibility of success in advance to the company managers who plan to enter into China, it could bring into the effect of mitigate the 'industrial vacancy' in advancing country.
For the purpose, various data was utilized. For the Korean companies' FDI in China, 「Overseas Direct Investment Statistics Yearbook」 by Korean Export & Import Bank was applied. For Japanese FDI in China, FDI statistics by Ministry of Finance and survey data by Japan External Trade Organization(JETRO) was actually applied. The findings of this study may summarized as follows;
Since year 2000, even though the FDI of Korean and Japanese company in China shows an increasing trend both in investment case and amount, the increasing trend of Korean companies in investment case was more rapid but that of Japanese was more high in investment amount. The average investment amount of Korean company was a small scale marked up 0.8 million US dollar per a case, whereas, that of Japanese reached up 1,060 million dollar. In the invested business type, the Korean companies' FDI ratio in China reached up 88.5% in manufacturing industry which was more high than 79.6% of Japanese.
The Korean companies' FDI in China still comparatively more high in labor intensive light industries, however, that of Japanese is comparatively high in the technology intensive industries, such as 'Electronics','Transportation'. As for the ownership side of FDI in China, until 1995, the ownership of Korean companies stay in beyond 50%, but after 1996, it shows rapid increase to 100% ownership. When the reasons of FDI in China is considered, the main purpose of Korean companies is to export products produced by utilizing the low wages to the other countries, whereas, the Japanese company went into China to make internalization of company earlier by diversification of foreign production and sales bases.