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Existing investments draw new ones
11 Aug 2014 Jana Liptáková Foreigners in Slovakia
THE REPUBLIC of Korea is the most important non-European investor in Slovakia, which has had the effect of boosting mutual trade. But since Korean companies prefer their own sub-contractors, new Korean investments tend to be attracted to already existing ones. Earlier this year, the arrival of new investors, plus the expansion of some existing ones, were announced.
“The Republic of Korea ranks among the most significant foreign investors in Slovakia,” Sang-hoon Park, the Ambassador of the Republic of Korea told The Slovak Spectator. “There are about 100 Korean companies that have invested and are based in Slovakia. The majority of them are involved in automotive or electronics industries. Many of the companies have been running a successful business for almost a decade here.”
The accumulative amount of Korean companies’ investments in Slovakia reached almost €1.9 billion last year, confirming Korea’s continued status as the biggest investor among non-European countries. In terms of the amount of investments made last year, it ranked second after the Czech Republic, investing $165 million (USD), according to the ambassador.
Korean companies are also significant employers in Slovakia. The number of Slovak people working for Korean companies including Kia, Samsung and their suppliers, is about 24,000.
“We have observed that the overall number of employees in Korean companies has been steadily growing,” said Sang-hoon Park.
Several new Korean investors are set to come to Slovakia.
“Hyunnam Automotive, supplier of plastic automotive parts for Kia and Hyundai, decided in July to come to Slovakia with a €10 million project,” said Sang-hoon Park, adding that the new investment is expected to create 400 new jobs.
Jiří Šimara, analyst with Cyrrus, says Kia and Hyundai’s strengthening position in Europe is fuelling the arrival of new Korean investors.
“Kia, as well as Hyundai, are known for taking their sub-contractors with them,” Šimara told the Hospodárske Noviny daily in mid June. “There are many local Slovak companies which cooperate with the trio of the most important carmakers in the country. But it is true that Koreans especially prefer suppliers from their country.”
The Kysuce region in west-north Slovakia, where Hyunnam Automotive plans to build the new plant in Krásno nad Kysucou, benefits from its proximity to two carmakers. It is located 30 km from Kia and is less than a one-hour drive from Hyundai in the Czech Republic.
Moreover, Mobis, one of the first suppliers to follow Kia to Slovakia, is planning a €5-million investment to expand its production of car dashboards. Kia has also replaced its supplier of seats, Johnson Controls, for Hyundai Dymos, Hospodárske Noviny wrote in late July. Dymos, which originally planned to land its investment in the Czech Republic, wants to build a brand new plant in Slovakia. Both projects should create over 350 jobs.
“In fact, Kia, Samsung and some other Korean companies already established in Slovakia have been increasing their investments,” Sang-hoon Park told The Slovak Spectator. “For the past several years, Korea has always been on the list of top five foreign investors in Slovakia,” according to the ambassador.
The future prospects for Korean investments in Slovakia look bright.
“We expect even more Korean investors to come to Slovakia with the intention to stay here over the long term,” said Sang-hoon Park.
The Slovak Investment and Trade Development Agency (SARIO) confirms the position of the Republic of Korea as a significant investor bringing in projects with large added value.
Between 2002 and 2012, SARIO helped 43 Korean companies establish facilities in Slovakia. The investment projects had an aggregate value of €1.809 billion and created over 15,000 jobs. SARIO is currently working on three investment projects with firms in the Republic of Korea, with a potential investment of €54 million and the possibility of creating about 320 jobs, all in the automotive industry.
Bilateral trade between South Korea and Slovakia reached $4.6 billion (USD) last year. Korea’s exports to Slovakia decreased slightly by 4.7 percent, while Slovakia’s exports to Korea increased by 9.7 percent on a year-on-year basis, according to the Korean Embassy.
“In fact, the latter has been constantly increasing since 2010, clearly demonstrating an upward trend,” said Sang-hoon Park, adding that the most important factors that have a positive impact on the bilateral economic cooperation are Slovakia’s business-friendly environment and the Slovak people’s warm, welcoming spirit and willingness to support Korean investors.
The Free Trade Agreement between the EU and the Republic of Korea, effective since 2011, is among the factors which are positively affecting mutual trade.
“In general, any free trade agreement over the long term benefits the economic development of the country, especially in the case of a small, open economy such as Slovakia’s,” Vladimír Vaňo, chief analyst with Sberbank in Slovakia, told The Slovak Spectator. “Supporting and developing free trade is academically and empirically a win-win business for both participating countries.”
When evaluating the agreement’s impact on Slovakia’s economy so far, he pointed out that with €5.2 billion in annual imports last year, South Korea represents an 8.6 percent share of last year’s total imports to Slovakia.
“Except for the Czech Republic and Germany, only the Russian Federation is a more important trading partner for Slovakia on the import side,” said Vaňo.
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