South Korea is struggling to lure companies with operations overseas back to the country despite expanded incentives aimed at helping local factories compete with China and South-East Asia, reported the Financial Times.
Park Young-sun, minister for small to medium-sized enterprises and start-ups, said the government was redoubling efforts to encourage companies to return home, as the country grapples with rising unemployment and slower growth stemming from coronavirus.
“It remains to be seen if the reshoring trend will accelerate but I think our incentives will influence the decisions of high value-added manufacturers,” Park told the Financial Times.
A recent survey showed that only 8% of 200 South Korean SMEs with operations in China and Vietnam said they were willing to return home, according to local industry association K-Biz. “Despite the changed environment amid the pandemic, it is hard to expect substantial progress with reshoring, unless there are stronger incentives for relocation to offset the sunk cost from offshoring,” said Park Seok-gil, an economist at JPMorgan.