Reshoring Korean Companies and Plans for Improvement
|Author||Min, Hyeoki||Date||2020.09.03||Issue No|
Growing global uncertainty is fueling the need for stable supply networks, and key countries are adopting reshoring strategies to secure such networks at home.
● With the rise of global trade protectionism, the US-China trade war, the slow expansion of global value chains, Japan’s trade war with Korea, and COVID-19, key economic policies implemented since the mid-2000s to bolster manufacturing have evolved into strategies to secure independent supply networks through reshoring.
While the overall results of the Act on Assistance to Korean Offshore Enterprises in Repatriation, or the U-turn Act, leave much to be desired, the increase in the number of reshoring companies since 2019 is encouraging.
● Since the law took effect in 2013, 80 U-turn companies have been designated as of August 2020.
● While the rise in the number of such companies has occurred since 2019, whether this trend is expandable and the activity of these corporations sustainable remain unknown.
● For the U-turn policy to produce successful outcomes, the policy needs streamlining.
Directions for improving the U-turn policy
● (From a universal strategy to sector-specific strategies) Given the economic ripple effects of the materials, parts, and equipment, technology-intensive, medicine, and national security-related industries and their strategic importance to the national economy, strategies tailored for each sector, additional support, and the relaxing of requirements for liquidation, downsizing, and discontinuation are required.
● (Shift perspective from repatriation to stimulating domestic investment) Instead of a U-turn policy focusing on individual workplaces, the emphasis instead should be on encouraging reshoring by global corporations as well as stimulating domestic investment by companies with a presence abroad.
● (Implementation of U-turn policy in connection with domestic policy) The U-turn policy has set roles to play in the government’s industrial policy and strategies for regional development and securing domestic supply networks. Thus efforts to harmonize related policies are necessary.
● (Systematic and official assessments of performance) The overall effects of U-turn cases require analysis not only of investment and employment but also forward and backward linkage effects, necessitating a system for comparative analysis against other countries.？