Foothold of ‘One Belt, One Road’
With a heavy rain pouring down, the Korean press delegation visited the Yantai China-South Korea Industrial Park in Yantai City located in Shandong Province, China, on June 23. There were plenty billboards lining the roads around the park, which read “Choose Yantai, Way Forward for the Future” and “Cross Park Development in Two Nations, Growth through Strategic Partnership.”
As a port city in Shandong province, Yantai has stressed the connection between China’s One Belt, One Road Initiative and Korea’s Eurasia Initiative, focusing on the attraction of Korean firms. The China-South Korea Yantai Industrial Park is at the center of it. Yantai is in an ideal location to expand to both the sea and the continent with the Port of Yantai, one of the top ten ports in China. The coastal city has a population slightly more than seven million and is only about 448 kilometers from Seoul, closer than from Beijing. The China-South Korea Yantai Industrial Park, one of the joint development projects between the two countries specified in the South Korea-China free trade agreement (FTA), is also one of the cross development projects between the two countries, along with the other two industrial complexes to be constructed in Yancheng of Jiangsu Province and Huizhou of Guangdong Province. The three industrial parks are being driven connecting with the Saemangeum development project in Korea.
Yantai, which is currently designated as a marine economic, smart city and global e-commerce city for the Chinese central government to promote, has specified the pilot zone under the plan to intensively foster the life science, smart manufacturing, automobile manufacturing, marine technology and high-tech and service industries in the China-South Korea Yantai Industrial Park. The city already attracted the investment worth US$1 billion. With a total area of 32 square kilometers, the pilot zone will be jointly invested and operated by Huaan Group and Yantai City.
The industrial park in Yantai, which has been selected as a pilot project of the Korea-China FTA by China’s central government, will receive various supports through regular vice minister meetings between the two countries. The Shandong provincial government has also confirmed 24 support policies in nine sectors. In particular, it will provide financial infrastructure, such as Internet private equity fund creation and global stock investment, in the industrial park. Yantai municipal government will also offer a series of support on trade, investment, finance and transportation according to the actual demand of companies operating in the industrial park.
Rapid Investments Increase after Signing Korea-China FTA
The investment and trade between South Korea and Yantai are rapidly increasing this year. In particular, Korea’s investments in Yantai City from January to the end of May this year amounted to US$160 million, up 65 percent from a year earlier. There are about 120 passenger flights a week connecting the city with Incheon and Busan in Korea and 17 air freights a week connecting the city with Incheon. The Port of Yantai operates 13 ships to major Korean ports, including Incheon, Pyeongtaek, Gunsan and Busan, every week, and the amount of cargo loading and unloading reaches 100 tons a day.
On May 25, the China-Korea Cartoon Experience Center, jointly established by Yantai 1861 Creative Industrial Park and Korea Manhwa Contents Agency, opened, while the Hua’an International Korea Town in Yantai for Korean firms and Koreans had its groundbreaking ceremony on May 28. In the medical sector, Hanmi Corporation China, which was set up with US$ 200 million investment from Hanmi Pharmaceutical Co., received official approval from the authorities to establish on May 31. In June, Luye Bobath Rehabilitation Hospital and Luye Elium Plastic Surgery Hospital, which were invested by Korea, opened and started providing medical services.
Best Platform, Bridgehead to Enter Chinese Market
Yu Dong, director of Commercial Bureau at the Yantai municipal government and in charge of the China-South Korea Yantai Industrial Park Construction Office, said, “The China-South Korea Yantai Industrial Park will play a role as the best platform and bridgehead for Korean firms to enter into the Chinese market. The establishment of production plants, logistics centers and R&D centers in the industrial park will promote the convergence of market, technology and capital between the two countries.”
He added, “The existing core business of Yantai City, such as machine manufacturing, electronic intelligence, food processing and chemical industry, and its new business, including advanced equipment manufacturing, energy conservation and environmental protection, biotechnology, animation and design, will correspond well to Korean industries, and it will boost the overall cooperation between companies in both countries.”
Zhang Yongxia, the mayor of Yantai city, said, “The China-South Korea Yantai Industrial Park, which is created with the China-South Korea FTA, is a crucial opportunity to strengthen the cooperation with Korea and to have a mutual development. We will continue to push ahead with innovation and openning-up policies, and foster an international business environment, so that the industrial park could become the best choice for Korean companies.”
She also said that Korea is closely related with Yantai in terms of trade and culture as the city’s biggest foreign investment country and trade partner, stressing not only industrial cooperation but also cultural and tourism exchanges. Zhang added, “Korea shows great power in cultural content and it is welcomed in China. We hope that Yantai will become a bridgehead for Korean content makers to tap into the Chinese market.”
The total number of Korean investment projects in Yantai city stands at 3,625 and the total amount of investments is US$5.51 billion. The figure is a twelfth of the total Korean investments to China. Currently, nine Korean conglomerates, which are top 500 corporations worldwide such as Hyundai Motor Co., LG Electronics Inc., POSCO Co. and Hanwha Group, operate business in Yantai. The trade between Yantai and South Korea amounted to US$11.08 billion in 2015, around twenty-fifth of the city’s total trade with foreign countries. The gross domestic product (GDP) of Yantai City recorded US$103.5 billion (117.78 trillion won) as of the end of 2015, the 20th largest in the nation. With a population of 7,014,100, the per capita GDP of Yantai City amounts to US$15,000. Total sales of companies headquartered in the city reach US$245.7 billion.
Starting with the China-South Korea Yantai Industrial Park, the Korean press delegation made a tour of Korean facilities in Yantai, including the likes of subsidiaries of Doosan Infracore and LG Electronics, Yantai Korean School, Yantai-Dalian Railway Ferry and Changyu Wine Museum.
In particular, Doosan Infracore China Corp (DICC), which was the first Korean conglomerate to open its office in Yantai with the investment boom in China after establishing diplomatic ties with China in 1992, has invested US$73 million in the excavator and wheel load sectors up to now since its founding in October 1994. The company has had the largest share in the Chinese excavator market for eight years in a row. It also ranked first in terms of customer satisfaction in the Chinese excavator market for the 11th consecutive year. As part of corporate responsibility activities, DICC donated 10 million yuan (US$1.5 million) to China Youth Development Foundation and established 37 “Hope Elementary Schools” all over China. The company currently has an annual production capacity of 9,600 excavators and 2,160 wheel loads. With the slogan of “Spread out to Whole World Based on China,” it is establishing a solid foothold as a global export base of economic models of excavators and wheel loads.
Yantai Korean School was founded in 2001 to meet the rapid increase in the need of Korean school curriculum for Korean children due to the improvement in economic exchanges between the two countries after establishing diplomatic ties in 1992. However, the number of Korean residing in Yantai decreased from 30,000 in 2008 to 15,000 in 2016 as Korean companies in the city tried to localize and leave for other countries, including Vietnam. Accordingly, the number of students dropped as well. Kim Chang-eun, principal of Yantai Korean School, said, “We hope that the school can have an opportunity for another leap with the success of the China-South Korea Yantai Industrial Park from the latest Korea-China FTA.”
Just like the slogan “Start with Yantai, Win the Future,” I wished for successful achievements of the city’s investment attraction from South Korea and the mutual growth of the two sides. I went to sleep on the last night in Yantai while thinking about the meaning of convergence of the market, technology and capital between the two countries, which the director of commerce bureau at Yantai city government mentioned. The city of Weifang was waiting for me as another journey.