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Foreign-invested exporters' outsized market share spurs economic security concerns

Published: 20 Nov. 2025, 16:52

Containers are waiting to be shipped at a port in Pyeongtaek, Gyeonggi, on Nov. 14. [YONHAP]

Foreign-invested companies, which make up just 6 percent of Korean exporters with more than $10,000 in annual exports, account for 15 percent of the country’s total outbound shipments, underscoring their growing importance in Korea’s trade performance.

Experts say this rising influence calls for a more structured screening system that incorporates economic security considerations.

Korea had 2,531 foreign-invested companies exporting more than $10,000 in 2024, representing just 6.4 percent of the 39,743 Korean exporters in that category, according to a report released by the Korea International Trade Association (KITA) on Thursday.

Despite their relatively small share, their export volume reached $99.9 billion, accounting for 15.2 percent of Korea’s total exports of $655.7 billion. In other words, foreign-invested firms contribute disproportionately to the country’s export performance.

By nationality of investor, U.S.-based companies contributed the most with $21.13 billion in exports, followed by Japan with $14.2 billion, Singapore with $10.77 billion, Australia with $9.13 billion and Britain with $7.02 billion. Many foreign-invested companies operating in Korea have helped diversify exports, support domestic production and reduce import dependence in key industries such as semiconductors and automobiles, particularly in materials, parts and equipment.

One example cited in the report is Goulds Pumps, a Dutch industrial pump manufacturer, which has contributed to expanding domestic production of centrifugal pumps, a product segment previously dominated by imports.

“Growth in the performance of foreign-invested companies leads not only to higher exports but also to increased employment and other spillover benefits,” a KITA official said.

Containers are piled up at a port in Pyeongtaek, Gyeonggi on Nov. 6. [NEWS1]

However, the report notes that as economic security concerns rise globally in relation to foreign investment, Korea must refine its prescreening and post-management systems to maximize benefits while preventing potential risks.

Countries such as Britain and Canada already have systems allowing authorities to reopen approved cases and order strong corrective measures — such as divestment — if urgent national security concerns arise.

In 2021, Nexperia, a Dutch company majority-owned by Chinese investors, acquired Welsh semiconductor company Newport Wafer Fab, but the British government later ordered Nexperia to divest its 86 percent stake on national security grounds. Canada similarly ordered Hikvision, a Chinese CCTV manufacturer, to cease operations and dissolve its Canadian business.

The United States screens foreign investment through the Committee on Foreign Investment in the United States, an interagency body chaired by the U.S. Treasury Secretary.

Korea revised the Enforcement Decree of the Foreign Investment Promotion Act in August 2024, enabling the government to subject foreign investments deemed potentially harmful to national security to a Foreign Investment Committee review within 90 days. If the investment fails to pass screening, the government may force the transfer of shares.

Export-bound containers are stacked at Pyeongtaek Port in Gyeonggi on Oct. 16. [NEWS1]

But the KITA report argues that Korea should go further by including indirect investments — cases in which a foreign entity acquires shares in another foreign-invested company to gain de facto control — in the scope of the national security review. A bill that would incorporate such measures into the act is pending in the National Assembly.

“Foreign investment can significantly impact supply chains and national security as a whole,” said Jung Hee-chul, the head of KITA’s Trade Promotion Group. “To both expand foreign investment inflows and safeguard economic security, Korea must strengthen institutional frameworks and build operational experience to ensure consistency and predictability.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NA SANG-HYEON [[email protected]]