China remains attractive to most South Korean investors, in
particular the big ones, Chinese officials said amid reports that
many South Korean firms are winding up their operations in China
without following the correct procedures.
"A few small South Korean enterprises closed down in Shandong
province because of cost increases caused by renminbi appreciation
as well as changes in the taxation policy. It's quite normal," said
Liu Xiaojiang, deputy director of the Shandong department of
foreign trade and economic cooperation.
The province is a major investment destination of South Korean
enterprises in China.
"At the same time, however, the number of projects in which
South Korean multinationals have invested keeps increasing in our
province. Five such projects are under way in Shandong," he said,
adding the province remains one of the best destinations in China
for South Korean and Japanese companies.
Earlier reports said beginning from the second half of last
year, more and more South Korean investors have been closing down
operations in China without following the legal closing procedures
as the Chinese authorities strengthen labor and environmental laws
and also as labor and material costs increase.
South Korean businesspeople are reportedly leaving without
properly disposing of the facilities and keeping employees in the
dark.
Between 2003 and 2007, 206 South Korean companies folded in
China without following the correct procedures, all in Shandong
province, South Korean media said. Only 55 companies reportedly
followed the proper procedures.
Hong Ji-in, head of the South Korean commerce ministry's trade
cooperation bureau, was quoted by the local Yonhap news agency as
saying the government is weighing possible steps to penalize
businesses that leave China without following the correct
procedures, such as allowing Chinese workers to take legal action
against their employers in South Korean courts.
Hong said the foreign ministry will set up help desks at its
embassy in Beijing and its consulate in Qingdao.
An existing network of offices run by the Korea Chamber of
Commerce and Industry and the Korea Trade-Investment Promotion
Agency will be used to advise businesspeople.
More than 19,000 South Korean companies are operating in China,
with their total investment amounting to some $21 billion. Some 95
percent of them are small and medium-sized enterprises.
(China Daily February 21, 2008)
