SEOUL, Nov. 28 (Korea Bizwire) — An absolute majority of South Korean manufacturers with offshore plants are not considering returning home due mainly to the need to expand overseas markets, a poll showed Wednesday.
The survey of 150 such manufacturing companies, taken by the Korea Economic Research Institute (KERI), showed 96 percent of respondents have no plans to reshore their production facilities.
Only two companies replied they are mulling moving manufacturing facilities back to South Korea down the road. An additional four firms said they may consider reshoring if conditions in South Korea improve or host-country situations worsen.
Slightly over 77 percent of the firms ruling out reshoring cited the need to expand their overseas markets as the leading reason, followed by high wages in South Korea with 16.7 percent and the rigidity of the domestic labor market with 4.2 percent.
“The results are seen as indicating that South Korean manufacturers think highly of their overseas production bases as a means to tap foreign markets and cope with escalating protectionism,” said KERI, which is affiliated with the Federation of Korean Industries, the lobby for family-controlled conglomerates.
The survey also showed 67.4 percent of the respondents saying they will maintain the current level of overseas investment down the road, with 24.3 percent planning to scale up investment. Only 2.1 percent replied they will reduce investment.
In order to promote South Korean manufacturers’ reshoring, the companies called on the government to make the local labor market more flexible, push for deregulation to boost corporate vitality and provide financial support, according to the survey.
“The findings show that it is more important to create a favorable business environment than to provide tax benefits and direct aid in order to coax more manufacturing firms to return home,” KERI said.