Foreign direct investment in Korea's auto industry. The number of auto parts subcontractors directly supplying parts and components in Korea totaled 878 as of the end of 2003. Among them, large-sized companies numbered 69, while there were 809 small & medium companies. Of the total, the 148 foreign-invested firms accounted for 16.9%. The number of foreign advanced parts manufacturers investing in Korea outnumbered those in Japan, supplying about one-third of total demand by local auto manufacturers. Foreign investment has prompted the domestic auto parts industry to streamline the organization and sharpen their competitiveness as well. Direct investment by foreign auto manufacturers in the domestic industry as of the end of 2003 totaled 227 cases, worth US$236.61 billion. Breaking it down by nation, Japan ranked first, followed by the United States, Germany, the Netherlands, the UK and France.
Foreign Direct Investment by Nation
The number of foreign auto manufacturers operating in Korea has been on the rise. According to KAICA, the number of foreign-invested auto parts manufacturers including tier 2 or 3 reached 227 as of 2003 year-end, which accounted for 19.3% of the total in Korea. Foreign-invested firms recently supplied 35% of the total demand of Hyundai and Kia. Foreign investors' market share in Korea is expected to rise in line with rapidly increasing investment.
The auto industry's facility investment in 2003 marked around US$2.5 billion, up 25% from a year ago. The production, particularly in exports, has been soaring. Foreign investment is thus forecast to increase further, beginning in 2005 when diesel engine passenger cars will be put on the market.
Global Top-20 Operating in Korea
Source: A&D monthly report, 01/2005 edition
Investment by global top-100 auto parts manufacturers. Among the world's 100 largest auto parts manufacturers, 34 firms have invested in Korea, which outnumber those investing in Japan. When including the top-100 of relevant industries such as tire manufacturers, the number of those who have invested or are considering investing will increase to 47.
