The performance of Korean Subsidiaries Overseas improved from the previous year thanks to increases in their market shares abroad.

According to the 2011 Business Performance of Korean Subsidiaries Overseas report published by the Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Yong Hwan Kim, “ Korea Eximbank”) on November 9, a total of 4,429 local subsidiaries recorded USD 553.5 billion in revenue, USD 19.8 billion in operating profits, and USD 12.3 billion in net profits during 2011.

※ Business performance of 3,893 Korean foreign subsidiaries in 2010: USD 478.8 billion in total revenue, USD 14.4 billion in operating profits, and USD 9.6 billion in net profits

The foreign subsidiaries averaged USD 125 million in sales, an increase of 1.6% from USD 123 million the previous year.

Significantly, profitability improved with an average net profit of USD 2.8 million, up 12.7% from USD 2.5 million in 2010.

The overall net profit margin of 2.2% in 2011 represent a slight increase from 2.0% in 2010.

By industry, manufacturing and wholesale & retail sales sectors recorded net profit margins of 2.2% and 1.3%, respectively. The mining sector recorded 14.6% thanks to the sharp rise in oil prices.

By region, subsidiaries in China made slight gains in net profit margins from 3.2% in 2010 to record 3.4% in 2011, primarily due to increased domestic consumption. Subsidiaries in the US recorded 1.3%, turning positive for the first time in the past 5 years.

Notably, subsidiaries in developing nations outperformed others by generating 77.5% of the total revenue and 59.9% of the total net profit earned by foreign subsidiaries.

* Top Ten Countries in terms of net profit in 2011: China, Indonesia, the U.S, Brazil, Yemen, Slovakia, Russia, India, United Kingdom, Australia and the Czech Republic

In addition, it was clear that this type of foreign direct investment had a substantial impact on Korea’s total exports and imports as well as on parent companies.

In 2011 exports from parent companies to subsidiaries overseas totaled USD 174.4 billion, accounting for 31.4% of Korea's total exports.

On the other hand, imports by parent companies from subsidiaries overseas totaled USD 144.9 billion and accounted for 18.4% of Korea's total imports.

The rate of return on FDI increased from 11.7% to 13.5% year-on-year.

Parent companies benefitted from the enhanced profitability of their foreign subsidiaries, for example, through the payout of a total of USD 2.73 billion in dividends to Korean investors.

A Korea Eximbank official noted, "It is significant that Korean subsidiaries overseas have maintained such an upward momentum last year, despite the eroding profitability of Korean companies and the sluggish economies of developed countries. Their business performances will have increasing significance in the years to come for Korea’s economy by expanding it volume of trade and the inflow of profit remittances."

In late-November, Korea Eximbank plans to publish the 2011 FDI Report containing information on the business performances of Korean subsidiaries abroad.