On November 25, Korea Eximbank (www.koreaexim.go.kr, Chairman Kim Dongsoo) announced the publication of its "Analysis on Foreign Direct Investment Management for the 2009 Fiscal Year," a multi-perspective analysis on the management performance of 3,481 local subsidiaries of foreign direct investment.
According to Korea Eximbank, developing economies have continued to achieve economic recoveries despite the global financial crisis and have recorded a net profit rate of 1.3%, compared to -0.3% recorded the previous year.
A Korean subsidiary in China, our biggest FDI country, recorded a net profit rate of 2.8% in 2009 due to China's continuous economic growth and the government's economic stimulus measures. Compared to the average growth rate of 1.3%, 2.8% may not seem to be such a great accomplishment but when compared to the -1.3% growth of a subsidiary in the US (due to weak domestic demand,) 2.8% is significant.
The net profit rate in 2009 of companies in major industries such as manufacturing and wholesale-retail trade increased by 2.5% and 0.1%, respectively. Local subsidiaries in mining recorded 16.2% in net profits thanks to oil price increases and greater investment in development.
According to a 5-year analysis on a group of corporations (data submitted by 770 corporations), the net profit rate increased to 2.0% in 2009 from 0.4% in 2008, the year the global financial crisis occurred. 2.0% is even better than the profit rate of 1.1% achieved in 2007, the year before the financial crisis.
An official from Korea Eximbank stated, "This is a significant improvement and a meaningful result considering the fact that Korea increased its market share in many industries including automobiles and semiconductors despite the slow economic recovery from the global financial crisis in many developed countries. With the economic recovery centered in developing economies such as China and strengthened competitiveness of Korean enterprises, local subsidiaries are expected to continue positive business performances in 2010."
