German Business in Korea

Transcription

1 German Business in Korea Business Confidence Survey 2017

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3 Executive Summary This summary of the Business Confidence Survey 2017 is a compilation of the survey results provided by the German companies who participated in the joint Business Confidence Survey 2017 that was conducted by KGCCI in cooperation with ECCK and ten further European chambers and councils. In total 108 European companies took part in this survey, including 35 German companies. This survey asked questions on operation status, business outlook, challenges, performance drivers and regulatory environment. This study has been prepared for general guidance only. PARTICIPATING CHAMBERS OF COMMERCE: The European Chamber of Commerce in Korea, the Belgian-Korean Business Forum, the British Chamber of Commerce in Korea, the Dutch Business Council Korea, the Finland Chamber of Commerce and Industry in Korea, the French-Korea Chamber of Commerce and Industry, the Italian Chamber of Commerce in Korea, the Korean-German Chamber of Commerce and Industry, the Norwegian Business Association, the Spanish Chamber of Commerce in Korea, the Swedish Chamber of Commerce in Korea, and the Swiss-Korean Business Council. Published in February 2018 Contact person: Young-In Sun, PR & Communications Manager Korean-German Chamber of Commerce and Industry (KGCCI) AHK Korea 8th Fl., Shinwon Plaza, 85, Dokseodang-ro, Yongsan-gu, Seoul , Republic of Korea T F yisun@kgcci.com 3

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5 Contents Survey topics 7 Range of participating German companies 8 Operation status of German companies in Korea 9 Business outlook of German companies in Korea 12 Business challenges of German companies in Korea 14 Performance drivers for the Korean economy 15 Legislative/regulatory environments and governments 16 5

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7 Survey topics I Operation status of German companies in Korea II Business outlook Measuring overall business conditions/satisfaction, business performance and plans for expansion Views on the business outlook for the next two years with specific reference to five key areas: growth, competition, profitability, productivity, and labour costs III Business challenges IV Performance drivers for the Korean economy Key business challenges in Korea in the areas of economy, finance/cost, regulation, politics, legal, and social/infrastructure Key performance drivers for improving Korean economy in the areas of Regulation/Policy, Social/ Infrastructure and Economy/Trade V On Korea's legislative/ regulatory environments and governments European companies' position and confidence towards Korea's legislative and regulatory environment 7

8 This year's survey features a diverse range of companies In which industry is your company active in? Utilities, primary energy and other commodities Transportation, logistics and distribution Pharmaceuticals 11% 2 Automotive and auto-components Other 14 % 9% Chemicals and petroleum Medical devices & other health care 17 % Civil engineering and construction Fashion and textile Financial Services (incl. insurance) Machinery IT and telecommunications (services, infrastructure) 8

9 Operation status of German companies in Korea How long has your company been operating in Korea? <2 years 14 % 2-5 years 5-10 years The majority of the German respondents have been in Korea for more than 10 years which implies that they have a good understanding of Korea. 77% >10 years What was the total revenue of your company in Korea in 2016? EUR 251 m - EUR 1 billion 2 > EUR 1 billion <EUR 1 million(m) EUR 1 m - EUR 10 m 2 54% of the German companies have a total revenue of more than 50 mil. EUR. stated a revenue of more than 1 bio. EUR. 28% 20% EUR 11 m - EUR 50 m EUR 51 m - EUR 250 m 9

10 Operation status of German companies in Korea What proportion of global revenues was generated in Korea in 2016? Is your company fully owned by a German company? >10% No 5-10% <1% 20% 94% 4 Yes 1-5% How many employees did you have in Korea in 2016? How do you view your company's performance in Korea? >1000 Discontent Average 20% 17 % Very discontent Very content 37% <50 28% Content 10

11 Operation status of German companies in Korea How would you characterize the importance of Korea in your company's overall global strategy? Increasing importance Korea is and remains an important market for German companies and their global strategies. 6 Declining importance Same level of importance How did your company's revenue in Korea change in 2017 compared to that of 2016? About the same(+/-5%) Decreased (5-10%) 17% Increased substantially (>10%) Business revenues have been increasing for 60% of the German companies. For of the respondents the revenue stayed stable in Increased (5%-10%) 11

12 Business outlook of German companies in Korea 4 of the respondents are planning to expand their operation in Korea for 2018 with a majority pursuing organic growth. Are you planning to expand your operations in Korea in 2018? If yes, by which means? Not sure Merger & Acquistions 20% Yes 13 % 4 88% No Organic growth 12

13 Business outlook of German companies in Korea Business outlook on "Growth" is highly optimistic, while outlook on Labor costs are rated most pessimistically for the next 2 years. How would you describe the business outlook for your industry in Korea within the next 2 years in terms of: Growth 9% 2 60% 9% Profitability 9% 2 Productivity 11% 60% 2 Competition 9% 14% Labor costs 2 9% Highly pessimistic Partially optimistic Partially pessimistic Highly optimistic Neutral 13

14 Business challenges of German companies in Korea Together with "Economic growth" and "Rising labor costs", "Market access barriers", "Ambiguous rules & regulations" and "Lack of sufficient & qualified talents" belong to the most significant business challenges for the companies. (Top 15 business challenges for German companies in Korea by order of significance.) How significant do you perceive the following challenges are to your specific business in Korea? Economic growth of Korea / Economic growth Ambiguous rules & regulations Market access barriers 9% 17% Rising labor costs 11% 51% Compelling against non-compliant competitors 2 Licensing and certification rules 9% Economic nationalism / anti foreign business 2 Discretionary enforcement of regulations 9% 2 Customs procedures / customs audits 9% Local currency appreciation / depreciation 2 Lack of sufficient & qualified talents Tax rates / tax procedures / tax audits 29% Attracting & retaining talents 14% 17% Global economy growth 2 14% 37% 4 20% 4 37% 17% 37% % % 20% Labor disputes 20% 20% 37% 17% Highly insignificant Neutral Partially insignificant Partially significant Highly significant 14

15 Performance drivers for the Korean economy Rule of law and Fair competition are the top economic performance drivers in terms of significance. (Top 6 economic performance drivers by order of significance. ) How important do you consider the following factors of Korea's economic performance in the coming years? Rule of law / transparent policymaking and implementation 51% 4 Promote more fair competition 11% 49% Access to financing / liberalized capital markets / free convertibility of KRW 4 4 Monetary policy reform 14% 49% Fiscal spending and government spending reform 11% 11% 4 Capacity for innovation 20% 4 Highly insignificant Partially significant Partially insignificant Highly significant Neutral 15

16 Legislative/regulatory environments and governments "Discretionary enforcement of regulations" and "Discrimination against foreign companies" are the top two legislative/regulatory obstacles. How significant are the following regulatory obstacles to you when you are doing business in Korea? Discretionary enforcement of regulations 17% 37% Discrimination against foreign multinational companies 2 Unpredictable legislative environment 9% 2 2 Licensing requirements / registration processes for products 14% 2 2 Administrative issues 11% 37% 14% Highly insignificant Partially significant Partially insignificant Highly significant Neutral 16

17 Legislative/regulatory environments and governments Are you confident that the Korean government will start to implement meaningful reforms? Do you believe that reforms implemented this year have helped your business? Not sure 9% Yes Not sure Yes 54% 37% 6 No No How has doing business in Korea for your company developed over the last couple of years? About the same Become easier Become more difficult German companies demand more meaningful reforms. Doing business in Korea has become more challenging over the last years. 60% 17

18 Legislative/regulatory environments and governments On market access and trade related issues, do you believe that the position of the European institutions (EU or EU Delegation (Korea), European states' ministries or embassies) Do you perceive any unfair or unfavorable handling of foreign companies in Korea by the Korean government, compared with domestic companies? dont' know could benefit further from Treated equally Favorable treatment compared to domestic companies 17% is overall well balanced/ about right 2 Unfavorable treatment compared to domestic companies 71% is too pasive Within your business sector, how have government policies relevant to foreign companies business environment changed over the past two years? Have increasingly discriminated in favor of foreign companies No opinion Generally more fair now How do you perceive government policies relevant to foreign companies business environment will change over the next two years? Will generally be more fair As fair as they were No opinion 9% Will be as fair as now % 9% Generally much less fair now Will increasingly discriminate against foreign companies 14% 14% Will generally be much less fair 18

19 Legislative/regulatory environments and governments How do you rate the effectiveness of Korea's IPR laws and regulations? Highly ineffective Enforcement of laws and regulations (%) Written laws and regulations (%) Partially ineffective 9% Neutral 57% 4 Partially effective 29% 11% Highly effective Is there a case that your company has missed out any business opportunity in Korea because of market access or regulatory barriers? No Yes 4 57% 19

20 Legislative/regulatory environments and governments How confident are you in Korea's litigation and arbitration processes for settling commercial disputes? Evolvement of the number of permanent positions within your company in Korea. Unsure Confident 20% In % 54% 4 Over next 2 yrs (expected) 11% 54% Not confident About the same Decreased Increased What is the level of your staff turnover in 2017? How did your market share evolve in 2017 versus 2016? 10%-20% 20%-30% Over Below 10 % About the same Increased 51% 49% 17% Decreased 20

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22 AHK Korea About KGCCI (AHK Korea) The Korean-German Chamber of Commerce and Industry (KGCCI) is the first contact in Korea for Korean-German business activities. The Chamber has been promoting economic relations between both countries since its foundation in KGCCI is the voice of the Korean-German business community in Korea and a bridge between German companies and Korean governmental bodies. The chamber provides a wide range of services supporting companies in entering the German and Korean markets through their global service brand DEinternational. Services include market studies, business partner search, business trip support, tradeshow support and the like. AHK Korea Member of the worldwide German Chamber Network At 130 locations in 90 countries around the world, the members of the network of the German Chambers of Commerce (AHK, short for Auslandshandelskammer in German) offer their experience, connections and services to German and foreign companies. AHKs are located in all countries which are of special interest for German companies and are closely connected to the Chambers of Industry and Commerce (IHKs) in Germany. Together, they support German companies in setting up and extending their business to foreign countries. The umbrella organization of the IHKs is the Association of German Chambers of Commerce and Industry (DIHK), which also coordinates and supports the AHKs. The AHKs are supported by the Federal Ministry of Economics and Energy on the basis of a decision by the German Bundestag. 22

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24 Contact person: Young-In Sun, PR & Communications Manager Korean-German Chamber of Commerce and Industry (KGCCI) AHK Korea 8th Fl., Shinwon Plaza, 85, Dokseodang-ro, Yongsan-gu, Seoul , Republic of Korea T F