More South Korean companies eyeing PH

By Max V. de Leon, BusinessMirror

Posted at Dec 27 2012 09:03 AM | Updated as of Dec 27 2012 08:56 PM

MANILA, Philippines - More South Korean companies are looking at establishing presence in the Philippines instead of China as they take note of the lower wage and use of the English language here, the Philippine Trade and Investment Center (PTIC) in Seoul said.

Nicanor Bautista, PTIC-Seoul commercial counselor, reported to the Department of Trade and Industry (DTI) head office in Manila that the Philippines was even cited in a news article of the Korea Economic Daily (KED) as being the preferred destination of South Korean small and medium enterprises (SMEs).

Bautista said among the reasons mentioned by the South Korean companies in locating to the Philippines were the average wage at about $300 per month, which is only half the wage in China, and the common use of the English language in the country.

Also, he said, these companies are seeking alternative markets as a strategy to combat the global economic crisis.

According to the Korea Export Import Bank, 69 South Korean companies established a new corporation in 2009, 74 companies in 2010 and 82 companies in 2011 in the Philippines.

In the first quarter of this year, the KED article said that the number of new companies in the Philippines increased to 22 from last year’s 19. Among these new companies are Nurian International (garments), Iam (electronics) and Koren (electronics).

“Together with a local conglomerate, more than 20 [South] Korean SMEs with plant operations in China had an exploratory mission in the Philippines last month, according to the article. As mentioned by a delegation member, the Philippines is an attractive investment location because of its lower labor cost compared to China, and better infrastructure like roads and power compared to Vietnam,” Bautista said in his communication to the DTI head office.

The Korean Chamber of Commerce and Industry in the Philippines also noted the increasing investment inquiries from South Korean SMEs in the last few months.

Also according to the KED report, Bautista said, most of these SMEs have plants in China. But because of language, infrastructure, religion and cost competitiveness, China is fast losing its attractiveness to foreign investments.

The Korea SME Institute said that the labor-intensive companies are no longer considering investing in China. Instead, they are looking to Asean countries such as the Philippines as possible alternative locations for their expansion, while China is now being looked at as a market and no longer as production base.