[INTERVIEW] U.S. faces 'K-investment wave' as Korean firms go global

Industry

Published: 02 Nov. 2023, 16:07 Updated: 03 Nov. 2023, 17:30

[INTERVIEW] U.S. faces 'K-investment wave' as Korean firms go global

Thomas Byrne, the honorary ambassador of foreign investment promotion for Korea appointed by the Ministry of Trade, Industry and Energy, says in an exclusive interview with the Korea JoongAng Daily that Korea's soft power helps advance and secure foreign investments. [THE KOREA SOCIETY]

Korean investment into chips and electric vehicles (EVs) is a big deal in the United States. So is Hallyu, which is helping to spread Korean culture to the world. Thomas Byrne, who the Ministry of Trade, Industry, and Energy recently appointed an honorary ambassador for foreign investment promotion for Korea, believes the United States is facing something like a Hallyu of investment — what he calls a “K-investment wave” — as Korean chipmakers and automakers push aggressively into overseas markets and set up factories around the globe.

“All of the states want to catch this wave,” Byrne said in an exclusive interview with the Korea JoongAng Daily.

Byrne is currently promoting the 2023 Invest Korea Summit that will take place in Busan Nov. 6 through Nov. 8. The summit, hosted by the ministry and organized by the Invest KOREA within Korea Trade-Investment Promotion Agency (Kotra), will bring over 250 foreign investors in semiconductors, EVs, secondary batteries, and energy from over 30 countries to the southern port city to explore business opportunities in Korea. Organizers hope that the summit will help promote Busan's bid for World Expo 2030.

“Korean investment is growing rapidly, surging 33 percent to $72 billion from 2017 to 2021 in actual investment in the U.S. by Korean companies,” Byrne said. “Over the past year or two, Korean companies have pledged another $100 billion. So this is really remarkable, what’s going on. And in the state of Georgia, Korean companies once were in the back of the pack in terms of making foreign direct investments. Now, in the past few years, they’ve been in the forefront. There’s more Korean investment coming into the state than from any other country.”

Foreign direct investment (FDI) pledges to Korea also reached an all-time high of $23.95 billion during the January-September period — a surge of 11.3 percent on year, according to data from the ministry.

Byrne believes that soft power plays a crucial role in securing foreign investment both in and out of Korea, and that the spread of Hallyu will help propel the K-investment wave.

He mentions the global streaming giant Netflix's plan to invest $2.5 billion in Korean content over the next four years, calling the pledge “a big game changer in terms of the U.S. FDI going into Korea.”

Byrne has also been sitting as president of The Korea Society — a U.S.-based nonprofit that fosters collaboration between the United States and Korea through cultural programs, policy discussions and activities to promote economic development — since 2015.

The following are edited excerpts of the interview with Byrne about his mission, as both honorary ambassador and The Korea Society president, to foster U.S.-Korea relations.

Q. What are the themes of this year's Invest Korea Summit? Any highlights we should look out for?
A. I understand that the two major themes are “global Korea building bridges” and “innovative Korea.”

In that regard, as an honorary ambassador, I believe that the economic trade investment, technology, cooperation, relationship between Korea and America are the biggest global bridges that Korea can have. U.S. is the largest economy. It's the most dynamic large economy.

It is a predictable investment environment despite some glitches with the latest industrial policies. But some of those challenges and hurdles are being worked out between the U.S. and Korea. It's not just Korea. It's Japan, and even the European Union.
So, in that respect, it's good to have this down in Busan.

And then, “innovative Korea.” Korea’s economic history has been in really a vast catchup. For a while, the country was in a fast follower phase. But now, Korean companies are developing cutting edge technologies, and they're highly innovative.

Byrne at his office in New York, where The Korea Society is based at. [THE KOREA SOCIETY]

What are your ambitions that you’ve set as the honorary ambassador to promote foreign investment in Korea? In particular, do you have any road maps in mind about strengthening cooperation between the two countries?
One, I'd like to build on what we've done what we've done in The Korea Society. One of the two key fundamental aspects of the organization is that it helps build cultural bridges.

It helps to bridge the cultural divide between Korea and the U.S., which is really helpful to do the next big task, and that's to build up broad public support for the Korean-American relationship.

Traditionally, The Korea Society has been very focused on the security relationship and the diplomatic relationship. After all, the decree of The Korea Society was formed by Gen. James Van Fleet [the United Nations commander under the 1950-53 Korean War] and so that's always been a traditional focus [of our organization].

But keeping in mind that the relationship between Korea and the U.S. has deepened and broadened into this multidimensional relationship in particularly with trade and investment, that's been another focus of The Korea Society.

We were pretty heavily involved in promoting the [2012] South Korea-U. S. free trade agreement. The Korea Society had a big role in that, and we hope to have an influential role in promoting this new investment wave between Korea and the United States.

It's mainly coming into Korea so far, and The Korea Society gives a great platform for that.

What about The Korea Society’s role in attracting more FDI to Korea? Are you working on any policies or research around this?
In general terms, we serve as a platform where we try to build up public awareness and public support for this all the potential in Korea.

One area that we're trying to gain some traction in is small modular reactors, or SMRs. These advanced nuclear reactors provide clean energy, carbon free clean energy and also energy security.

So this is an area that I've been working on with a boutique investment firm, and we're trying to we're trying to develop a program in this. Hopefully everything will work out early next year, but it's one area where we can serve as a platform.

What The Korea Society can do is to connect such investment firms with Korean solar makers, such as Hanwha Solutions’ Q Cells. For such green energy projects to pull through, they need to get U.S. approval for U.S. investment. But in order for that to happen, things have to be manufactured within the country.

American companies don't really manufacture a completely integrated set of solar panels. But there is a Korean company [Q Cells] that's set up in the state of Georgia, and they'll be the first totally vertically integrated solar cell manufacturer in the United States. From the silicon to the final product and everything in between.

Byrne sits as the president and CEO of The Korea Society, the non-profit organization headquartered in New York which works to foster partnerships between Korea and the U.S. [THE KOREA SOCIETY]

What are some of the major trends or opportunities that you believe can foster Korea-U. S. investment?
As I said before, it looks to be it has the potential to expand very dramatically. The type of investment that catches a lot of attention is anything related to EVs.

So it's the manufacturing of EVs in the United States — Hyundai Motors will start that out with their plant in Georgia — but it's also battery production. Two years ago at our annual [The Korea Society] dinner we recognized the Van Fleet Award given to LG Group Chairman Koo Kwang-mo and General Motors CEO Mary Barra for their roles in fostering ties between the two countries.

LG Energy Solution and General Motors formed a joint venture, Ultium Cells, in 2021 and formed three plants in Ohio, Michigan and now Tennessee.

And so there's this whole supply chain of products that go into EV business, and that's in the forefront.

Of course, Samsung, they're trying to expand the chip manufacturing capacity in the United States, which has really declined in recent years over time. And there's a whole host of other investments that are coming in.

And when these big investors move in, they often bring Korean suppliers or they build up local companies that are part Korean or American because they have strong backward linkages, as we say in economics.

As you’ve mentioned, some of the hurdles that Korean chipmakers, such as Samsung Electronics and SK hynix, face have been largely resolved as the U.S. government has allowed them to continue their operations in China. However, the trade war between the U.S. and China continues. The latter has announced an export curb on graphite, a key material used to make EV batteries that Korea almost entirely depends on. What is your advice on Korea’s position in facing this geoeconomic challenge?
Unfortunately, geopolitically and geoeconomically, the world is becoming more fragmented, and you have these tensions arising.

Well, it certainly adds costs to doing business. And it adds uncertainty, which adds extra costs, too, to trade and investment. However, I think the big thing to keep in mind is that it's encouraging that the U.S. government is showing some flexibility and some concern for the commercial positions of these Korean companies and how they would be negatively affected.

But at the same time, they [Korean companies] need to keep in mind, over the long term, where they are better off and which market will be bigger and offers greater profit opportunities. And I think clearly that's the United States.

And, you know, it used to be said that it's only a matter of time, maybe a matter of whatever it is, by 2025 or 2030, that the Chinese economy will be bigger than the U.S. It's a matter of when, not if. But now there's a lot of uncertainty given that China has run into some serious headwinds in becoming a dynamic economy. So the U.S. is a better bet over the long term.

However, you’ve got to live day to day, too. So there are challenges, and I hope the U.S. government is mindful and flexible on that. Because if it's not, it's going to jeopardize Korea's appetite for accelerating investments in the U.S.

From your perspective, what are the economic advantages that Korea has over other countries? What are its strengths and weaknesses?
One of the weaknesses, as opposed to investment coming in from U.K. companies or companies in the Netherlands, is that people aren't all that much familiar with Korea.

Korea is a new phenomenon, and that's why the entertainment wave is so important because it helps to bridge that gap. You can start a conversation between a Korean business owner and an American business owner by saying “I watched a certain movie,’” “I'm a fan of some K-pop,” or “My kids are fans of some K-pop phenomenon.” And it helps to bridge the cultural divide.

The advantage that the nation holds, that the Korean companies have, is that they're innovative. They have cutting-edge technologies, and when they invest in the United States, they create a lot of jobs, they help build communities, and they do things quickly. So as you know, the ppali [the Korean word for quickly] mindset.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]