FDI marks high with huge Chinese investment

Foreign direct investment (FDI) to Korea in the first six months of this year reached its highest level of $10.1 billion, about 40 percent higher than the same period last year.

The increase was largely due to mass investment from China, which increased by more than seven times to $2.4 billion from last year’s $330 million, according to the Trade Ministry.

The drastic inflow of Chinese investment was due to an interest in investing in new fields.

In the past, Chinese investment was heavily centered on tourism businesses such as resort complexes in famous tourist spots like Jeju Island. But this year, investment in the gaming industry and in food and pharmaceuticals has expanded significantly.

The Korean gaming industry, including PC and mobile games, received FDI from China worth about $540 million, the largest portion from the country.

Tencent, China’s largest Internet and game service provider, announced in March that it would invest 530 billion won ($523 million) in CJ Games, and also said it would create a joint fund worth 50 billion won for start-ups with local venture capital.

Food products also saw big investment as more Chinese people rely on imported foods and are not satisfied with their locally produced goods. In the first six months, China invested about $210 million into Korean franchise businesses.

The local medicine industry received Chinese investment worth $22 million toward pharmaceutical businesses and $5 million toward dietary supplements.

The ministry said that the new record set in the past six months is a positive sign of investment to come.

“China recently started shifting its foreign investment strategies to put in money depending on future potential, instead of the stability of investment,” said Wee Seung-bok, director general at the investment division of the ministry. “In the past, China mostly invested in foreign countries with vast natural resources and with globally known brands. Korea was not an attractive place to put money in.”

Total incoming FDI to Korea in the first half has increased continuously over the past few years. According to the ministry’s data, FDI was at $4.3 billion in the first half of 2010, $5.4 billion during the same period in 2011, $7.1 billion in 2012 and $8 billion last year.

BY KIM JI-YOON [jiyoon.kim@joongang.co.kr]