[THE VIEW] Diaspora for Survival: Korean Companies on the Move

From Hyundai to Samsung, Accelerating Overseas Relocation of Major Corporations
The Exodus of Global Companies from Korea and Its Far-Reaching Impact

As the presidential election approaches, anti-business policies are pouring out from the candidates' camps. Proposals range from taxing corporate reserves for redistribution, to raising corporate taxes for large companies, and policies that shift responsibility onto major corporations under the pretext of expanding welfare and strengthening redistribution?so-called "responsibility-shifting" policies are being announced almost daily. In addition to taxes, there are also numerous direct regulations on business operations. Even the introduction of a 4.5-day workweek has been proposed as a policy. These are typical responsibility-shifting and divisive policies that blame companies for rising prices and increasingly difficult living conditions.

In this regulatory environment, South Korea has become a place where companies are forced to leave in order to survive, due to high labor costs, powerful labor unions, and anti-business regulations. Hyundai Motor Group is preparing to complete its new plant, Hyundai Motor Group Metaplant America, in Georgia. LS Group has begun building a subsea cable production line in Virginia and established its subsidiary, LS GreenLink, effectively making a full-scale entry into the U.S. market. Samsung moved its production base to Vietnam long ago, and Hanwha Aerospace has already acquired the U.S. aircraft engine parts manufacturer EDAC Technologies and is operating Hanwha Aerospace USA in Connecticut.

Under the banner of strategies to grow into global companies, these firms are also actively hiring overseas talent. This can be interpreted as laying the groundwork for expanding their global operations. Starting in 2025, Samsung will lower the barriers for hiring international students and significantly expand the participating affiliates. Previously, applicants needed at least two years of relevant experience after earning a bachelor's degree, but now experience gained during master's or doctoral studies is also recognized, broadening opportunities for graduate students. Hanwha is also hiring overseas talent through a separate process for those who have earned degrees in English-speaking countries. This is a strategy to secure top talent early amid global competition for technological supremacy.

When large corporations relocate overseas, the impact is not limited to a single company. Small and medium-sized partner companies connected to large corporations, as well as restaurants, cafes, and other businesses that depend on these corporations, all face bankruptcy when a large company leaves. In the early 2010s, when Samsung Electronics moved its mobile phone production line to Vietnam, small and medium-sized partner companies in the Gumi region were hit hard. Orders dried up, factories stopped, jobs disappeared, and the local economy ultimately declined.

An employee inspecting mobile phones at Samsung Electronics' Thai Nguyen factory in Vietnam. Photo by Samsung Electronics Vietnam Corporation

In contrast, Samsung Electronics now produces more than 100 million smartphones annually in Vietnam, creating jobs for over 100,000 people and supporting thousands of local partner companies, thus contributing to the revitalization of the Vietnamese economy. If taxation of retained earnings, government tax pressure, and regulations on working hours and intensity continue, the economic downturn experienced by Gumi could become a problem for all of South Korea.

In stark contrast, other countries are fiercely competing to attract businesses by implementing pro-business policies. For example, the United States, Singapore, and Ireland have driven stable job creation and economic growth through business-friendly policies. In particular, President Donald Trump's tariff policies have benefited American manufacturers such as Ford and encouraged foreign companies to relocate their production bases to the United States.

Singapore has established itself as the Asian headquarters for global companies by offering a simple and investor-friendly corporate tax system, including exemptions on a certain percentage of taxable income during the early years of establishment. Ireland has attracted the global headquarters of companies such as Google, Facebook, and Apple with low corporate tax rates?12.5% for general companies and 6.25% for high-tech firms. These policies have greatly contributed to Ireland's economic growth and job creation, and continue to attract investment from multinational corporations.

These countries understand that businesses are the foundation of the economy. For now, South Korea's leading conglomerates and robust small and medium-sized enterprises are barely supporting the nation. Ultimately, the key driver of economic growth is the vitality of businesses, and if current trends continue, the exodus of companies will become an unavoidable reality. While short-term redistribution and welfare expansion are important, it is urgent to create a balanced policy environment that can maintain and develop corporate competitiveness over the long term. Whether to succumb to the sweet temptation of redistribution and welfare policies and give up the pillars of the economy, or to build a nation where businesses thrive and overcome crises, is now up to the choice of the people.

Kyung Nakyung, Professor of Computer Science, National University of Singapore