Greenfield investments push foreign spending up

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Greenfield investments push foreign spending up

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The recent expansion in Korean companies’ overseas spending has largely been driven by efforts to secure advanced technology and manufacturing networks overseas, the Ministry of Strategy and Finance said in a report yesterday.

In particular, Korean companies have focused on establishing global production networks by increasing foreign direct investment, it said, singling out green field investment for its potential to improve Korea’s global competitiveness.

Korean companies’ foreign direct investment expanded from $34 billion in 2010 to $44.5 billion last year. Among the total, greenfield investment amounted to $19.8 billion, which grew from $17.3 billion recorded in 2010.

Conglomerates have been especially aggressive in buying land and production facilities in overseas markets. While conglomerates spent $15.8 billion on greenfield investments last year, up from $13.9 billion recorded in the previous year, small and midsize companies’ investments totaled $3.1 billion last year, which is the same as in 2010.

Most of the greenfield investments were focused in Asia and North America. Last year, $8.9 billion was invested in Asia, while the figure for North America stood at $5.6 billion.

Mining companies were the most aggressive, as their greenfield investment surged from $3.4 billion in 2010 to $5.5 billion last year.

Manufacturers’ greenfield investments grew from $5.6 billion to $6.5 billion during the same period, while financial companies’ investments expanded slightly from $2.8 billion to $3 billion. Investments spent on overseas mergers and acquisitions fell last year compared to the previous year. While $6.9 billion was invested for M&As of overseas companies in 2010, such investment fell to $5.8 billion last year.

By Lee Ho-jeong [ojlee82@joongang.co.kr]

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