Most South Korean firms that have sent their manufacturing work overseas have no plans on returning, a survey found.
A study commissioned by Korea Economic Research Institute (KERI) showed Wednesday that 96 percent of the companies surveyed had no plans on reshoring. The survey was conducted on 150 manufacturers with foreign outposts and revenue of more than 100 billion won ($88.7 million).
When asked about the chances of bringing the work back home, only two said it was “under consideration” while four answered it was an option if domestic conditions improve or the situation abroad deteriorates.
The main reason for not returning was the need to expand global markets at 77.1 percent. This was followed by high wages in Korea (16.7 percent) and the rigidity of its labor market (4.2 percent).
Korean companies appear to be taking more of their production overseas in a strategic move to expand their global markets and offset the risks of trade protectionism, explained KERI.
Most of the respondents (67.4 percent) planned on maintaining their investment scale overseas. About 24.3 percent were thinking about expanding, with 5.6 percent searching for more favorable sites and 2.1 percent considering scaling down.
When asked what measures were most necessary to encourage reshoring, labor market flexibility ranked first (29.4 percent), followed by deregulation (27.8 percent), financial assistance (14.7 percent) and extended corporate tax cuts (14.2 percent).
By Kang Doo-soon and Kim Hyo-jin
[ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]
