j Kwak Laeba Kor Lac 2

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CHANGING NATURE OF KOREA-LAC ECONOMIC RELATIONS

Dr. Jae-Sung Kwak (Kyung Hee University)Graduate School of Pan-Pacific International Studies, Kyung HeeUniversity

Cambios en la naturaleza de las relacioneseconmicas entre Asia y Latinoamrica

LAEBA 2012, Washington DC


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Table of Contents

1. Trade

2. Investment

3. Service Sector Integration

4. Development Cooperation

5. Conclusion: New Horizon for Trans-PacificCooperation


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Table of Contents

1. Trade

2. Investment





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Korea-LAC has been growing in favor of the former:The region has become an important exportdestination for Korea


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Korea-LAC Trade is concentrated in a small number ofcountries


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Top LAC export items to Korea


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expor s o orea are usua yconcentrated to a few

commodaties


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Top Korea import items fromLAC


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orea- e p aye animportant role in the increase of

bilateral trade


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Table of Contents

1. Trade

2. Investment





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LAC has received almost 8% ofKoreas FDI abroad


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Patterns of Asian FDIs to LAC

Three main patterns of Asian FDI to LAC

Natural Resource Seeking

Efficiency Seeking for Export

Market Seeking for Domestic Consumption

To assess the changing nature of Asian FDI in

LAC with a special attention to the value chaincreation and insertion


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POSCO, BRASIL (KOBRASCO)

Stage I: Kobrasco. Iron ore pellet plant.

I.II. III. IV.

V. VI. VII. VIII.


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POSCO, MEXICO

Stage IV: CGL Altamira.

Stage V: MPC in Puebla and San Luis Potosi

Stage VII: MESDC.

Stage VI - VIII: Posco main branch Mexico, D.F.

I.II. III. IV.

V. VI. VII. VIII.


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Samsung, Mexico

Stage II: In house PCB, local vendors

Stage IV: Processing plants, Tijuana & Queretaro.

Stage V: Marketing and brand creation

Stage VI -VII: Distribution networks and dealers.

I. II. III. IV. V. VI. VII.


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LG, Brazil

Stage II: In house PCB

Stage III: R&D center in Sao Paulo.

Stage IV: Runs 2 factories in Manaus & Taubate.

Stage V: Marketing and brand creation

Stage VI -VII: Distribution networks and dealers.

I.II. III. IV. V.

VI. VII.

Investment in Electronics: Escaping from Enclavic


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Investment in Electronics: Escaping from Enclavic

InvestmentEmpresa Inversionist

aLocal

PartnerForma de

ingreso Desde FDI MotivesSamsungdaAmazonia

Samsung.Republic ofKorea

Brazil

Completeownership

1995

Market seeking: The company has managed torank second in the Brazilian LCD TV market and hasa strong presence in mobile phones and homeappliances throughout the region.

LGElectronicsdo Brasil

LG. Republicof Korea 1995

Market seeking: The company was looking toexpand its market share inside Brazil. However,tariffs were excessively high to do it through imports.

SamsungMexicana

Samsung.Republic ofKorea

Mexico

1988

Resource seeking: cheaper labor and access tocomponents.Market seeking: Samsung has established aninternational operation in Mexico with broadnetworks that allow the company to serve not onlyLAC, but also the US and European markets

LG

Reynosa

LG. Republicof Korea 1988

Resource seeking: cheaper labor and access to

components.Market seeking: LG has established aninternational operation in Mexico with broadnetworks that allow the company to serve not onlyLAC, but also the US and European markets


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Production Chain of Digital TV,Mexico

Purchase ofLCD &

components LCD

Importfrom Korea,Japan,Taiwan,China

Local partsuppliers

Assembly

SAMEX inTijuana

LG inReynosa

Sales

Export toUS

Mexicandomesticdistrbutor

oca urc as ng o


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oca urc as ng o(Samsung Mexico, Tijuana)US$Millions

2006 2007 2008 2009

116168 197

24055

7290

98

52

120

143

150

58

72

90

103

23

12

15

20

ETCPackingElectric

PressInjection

537

445

305

43%25%

13%

661


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Korean Vendors for SAMEX inTijuana area

Name of Corporation Year of Entry Handling Area

Cobuy 2007 Electronic components

KOMEX 2006 TV & MNT cabinet

NOSCOM 1999 Electronic injection and assembly

Taewoo Mexico 1999 TV Monitor stand base

Daedong Corp. 2000 Plastic molding (TV)

Chemtronics 2007 PBA for LCD/PDP

Daewon 1991 Van-trailer part

Daeha Cable 1997 TV and industrial wire harness, cableassembly

Samsung SDI 1995 Display device

Dongchul Mexico 1994 Bracket, heat sink

Seshin electronics 2001 EPS resin

Han-il electronicsMexico

1998 PCB assembly

S


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SamsungMexico

EfficiencySeeking


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TV Market Share in Brazil: Market Seeking


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Taubate,Brazil


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Observation: FDI

Mexico is the export platform, so the Maquilamodel persistseven if there is a growing number of market seekinginvestments.

Investment in Central America and the Caribbean isessentially textile backup by geographic proximity and low

wage. Motivations for investing in Brazil are largely in two folds,

market seeking and natural resource seeking, but recentinvestments in steel sector is motivated by efficiency seekingwhen steel makers like POSCO produce slab with Brazilianiron ore and export to Asia for further processing. (Value

Chain) Furthermore, further exceptions to the existing FDI pattern of

Mexico-efficiency seekingand South America-market seekingare found: market-seeking POSCO MPC in Puebla, Mexicoare representatives. (Value Chain)

Andean countries including Chile are abundant in naturalresources, but lacks market and industrial competitiveness.


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Table of Contents

1. Trade

2. Investment





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Service Sector Integration

IT Based Cooperation Customs computerization project in DR

Single Windows in Ecuador

IT Data / Training Centers

Infrastructure Upgrades BRTs in Ecuador, Mexico

Elec. Distribution system n DR

Airport Modernization in Colombia Look Asia in Colombia

Knowledge Sharing Program DR, Peru, Brazil


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LEOKON KOREA - BRT Bus Rapid Transit

Bus de Trnsito Rpido es un proyecto que determina a una amplia variedad desoluciones de transporte masivo urbajo basada en buses articulados en vias exclusivas.

El objetivo principal es el de brindar un servicio de transporte masivo de alta capacidadcon respecto al servicio tradicional de bus urbano.

El BRT debe tener las siguientes caractersticas:Carriles exclusivos: un carril de una calle o avenida arteria se reserve para el usoexclusivo de los buses.Calles y vas exclusivas: las calles deben ser rediseados para que todos suscarriles sean del uso exclusivo de los buses.Seal de preferencia para buses: dar un trato preferencial a los buses en lasintersecciones como por ejemplo extender la duracin del semforo en verde paralos buses, o activacin del semforo en verde cuando se detecta un bus.Buses, un sistema de recaudo automatico y control de flota


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Table of Contents

1. Trade

2. Investment





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Development Cooperation

Korean ODA is growing fast

$1.3bil(2011) >> $3bil (2015)

LAC takes up 7.5% of Koreas total ODA (00-

08) Sector Specific

Social Sector health care, rural development..

etc Economic Sector SMEs, SSC, PPP .. etc

Modalities

Loans (EDCF)

Grants KOICA


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DGA (Direccion General de Aduanas)Computerization Project (DR-EDCF $23mil)


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5. Conclusion: New Horizon forCooperation

Areas Promotion of trans-pacific value chain in Asia and LAC

LAC value chains oriented to Asia Service Sector Integration - Support to LAC regional

cooperation initiatives in infrastructure (transportation, ICT,

customs) Promotion of South-South Cooperation and Triangulation

Converging Modalities

Trade Investment Service and Projects Development Cooperation


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Thanks for your attention

Dr. Jae S. Kwak

Dept. of International Development CooperationGraduate School of Pan-Pacific International Studies

Kyung Hee University, Korea

[email protected], [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]

j Kwak Laeba Kor Lac 2

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