Chinese enterprises' investments in the Republic of Korea (ROK) tend to become diversified at present. Cosmetics and entertainment industries have become popular fields that the Chinese enterprises are chasing after.
Chinese investments going to more fields in ROK
According to the 21st Century Business Herald, of the Chinese enterprises' investments in the ROK at present, more investments go to the real estate field, followed by the financial service industry and the wholesale and retail industry.
The reason why the real estate field in the ROK attracts the most Chinese investments is that once investment scale in ROK's real estate and tourism industries exceeds 20 million U.S. dollars, the investors can enjoy the reduction or exemption of enterprise income tax for as long as seven years, said Park Seong-jun, an official of the ROK's Ministry of Trade, Industry and Energy, at a recent meeting.
In recent years, China's investments in the ROK have increased quickly.
Data of the Ministry shows that the Chinese investments in the ROK stood at 500 million U.S. dollars in 2013, 1.2 billion U.S. dollars in 2014 and 1.9 billion U.S. dollars in 2015. In 2014, the Chinese investments in the ROK's real estate industry exceeded 800 million U.S. dollars and were concentrated mainly in Jeju Island and downtown Seoul.
ROK is the first stop of the China-based Greenland Group's overseas investments. Its projects in the ROK are concentrated mainly in Jeju Island. At the end of 2014, the Chinese real estate developer announced to invest 20 billion yuan to develop a highest twin tower building in Seoul and build it into a headquarters base for the Chinese enterprises in the ROK.
Signs show that the Chinese investments have started to eye other fields. In September 2015, China's Anbang Insurance officially announced to buy stakes of Tong Yang Life Insurance for about 6.17 billion yuan, making it the first Chinese enterprise buying an insurance company of ROK.
China-ROK FTA brings convenience
The consumer retail industry and entertainment industry in the ROK also attract attention of the Chinese investors.
The consumption influence of the Chinese entering the ROK has been persistently on the rise. 5.98 million Chinese people entered the ROK in 2015 with per capita shopping expenditures reaching 1,687.7 U.S. dollars. About 7.12 million Chinese people are expected to enter the ROK in 2016 with per capita shopping expenditures estimated at 1,772.1 U.S. dollars, said Yang Jihye, an analyst of the ROK-based Meritz Securities.
Although consumption of the Chinese people entering the ROK accounts for only 3-4 percent of the total shopping expenditures in the ROK, in terms of the cosmetics consumption, the Chinese tourists' purchases account for 20 percent of the ROK's cosmetics market, said Yang.
Legend Capital under the Legend Holdings Ltd has already focused on the ROK's consumption and entertainment industries. The company started to invest overseas from the Number 6 Fund in 2014 and carry out cross-border investments on enterprises of the ROK, Japan and the United States mainly targeting the Chinese market. At present, the company has invested in a facial mask company and a visual effect company in the ROK. In addition, it also invested in the popular music production companies in the ROK, said an executive director at the Legend Capital.
The free trade agreement (FTA) between China and the ROK has brought lots of convenience. Suning Universal Co, Ltd. has invested about one billion yuan accumulatively in ROK's culture, entertainment, and medical beauty industries.
Last year, it invested in the ROK's animation enterprise, Red Rover, and became the latter's largest shareholder. The FTA will promote the two-way investments for enterprises of the two countries, said Jia Sen, vice president of Suning.
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