Investment Trends & opportunities in Korea · 2019-11-23 · FTA with 52 Countries Trade Volume in 2018 (USD 100 Million) *Source: MOTIE, KITA Australia 303 New Zealand 31 ASEAN 1,597

November 13, 2019

Investment Trends & opportunities

in Korea

1. Why invest in Korea

2. Current investment in Korea

3. Future investment Opportunities

Index

Why invest in Korea?

1 2 412

29 30

48

71

90

100

128

150

171 171178

Free80-100

ModeratelyFree60-69.9

MostlyUnfree50-59.9

Repressed0-49.9

MostlyFree70-79.9

Index ofEconomic Freedom

Economic Freedom (2019)

*Source: The Heritage Foundation (January 2019)

"2019 Index of Economic Freedom"

Business Environment

Rank

BusinessFreedom Ranking

Rank

1

2

4th

6

15

16

22

41

130

Country

Hong Kong

Taiwan

Korea

Singapore

U.S.

Germany

Japan

Switzerland

China

Why KOREA: Leading Industries

Korea’s Leading Industries

DRAM Display Ship-building

LithiumBattery

Smart-phones

Chemicals

*Source:

IHS Markit

(Sales in Q4 2018)

*Source: IHS Markit

(Smartphone display

sales in Q3 2018)

*Source:

Clarkson Research

(Orders in 2018)

*Source: KITA,

UN Comtrade

(Exports in 2017)

*Source: B3

(Small-sized lithium

battery sales in 2018)

*Source: SA

(Shipments

in Q4 2018)

71.8% 57.8% 44.2% 40.7% 37.6% 18%

(Acrylonitrile-butadiene-

styrene copolymer: ABS)1st

Global Market Share of Korea’s Key Industries

Market Share

4.1%Automobiles

7th5.2%Petrochemicals(Ethylene)

4th

*Source: Korea Petrochemical Industry

Association (Production capacity in 2018)

4%Steel

5th

*Source: World Steel Association

(Crude steel production in 2018)

8.5%Cosmetics

4th

*Source: International Trade Center

(Exports in 2018)

*Source: Korea Automobiles Manufacturers

Association (Production in 2018)

ICT DevelopmentWhy KOREA: Leading Industries

*Source: OECD (2017) "Digital Economy Outlook 2017"

ICT Products Exports (2016)ICT Development Index

*Source: International Telecommunication Union (ITU) (2017)

“Measuring the Information Society Report 2017”

(USD Billion)Iceland

Korea

Switzerland

Denmark

UK

Japan

Germany

U.S.

Singapore

China

China 469.34

U.S. 140.34

Taiwan 120.60

Singapore 110.95

Korea $ 110.33 B

Germany 62.44

Japan 53.62

1st

2nd (2017)1st (2010, 2015, 2016)

3rd

4th

5th

10th

12th

16th

18th

80th

“SEP owners can get income from patent royalties, securing

price competitiveness when providing new equipment for

5G base station or smartphones. Countries with many SEP

holding companies can expand 5G infrastructure at a low

cost, having the upper hand in next generation services.”

New Investment Opportunities : 5G

5G Competitiveness

*Source: Iplytics, Nikkei, Yonhap News (2019)

World’s First 5G Commercialization

(April 3, 2019)

4.9%

7.9%

13.8% 13.9%

25.2%

34.0%

일본 스웨덴 핀란드 미국 한국 중국

2ndIn the World

Share of 5G-related SEP Filing

by Country(SEP: Standard Essential Patent)

New Investment Opportunities: FTA

FTA with 52 Countries

Trade Volume in 2018 (USD 100 Million)

*Source: MOTIE, KITA

Australia 303

New Zealand 31

ASEAN 1,597

China 2,686

Singapore 198

Canada 115

U.S. 1,316

EU 1,200

India 215

Turkey 72

Vietnam 686

EFTA 81

Colombia 18

Peru 33

Chile 63

World’s 3rd Largest FTA Territory

Korean Wave in culture

Current Investment in Korea

FDI StatisticsFDI in Korea

*Source: Ministry of Trade, industry and Energy (MOTIE)

6,4

71

12,7

96

11,5

66

11,2

48

10,5

16

11,7

12

11,4

84

13,0

73

13,6

73

16,2

86

14,5

45

19,0

00

20,9

10

21,2

96

22,9

48

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

USD

26.9 B

2018

Decl

are

d a

mo

un

t (

USD

Millio

n)

17.2% YoY

FDI by SectorFDI in Korea

Agro-livestock, fishery, mining

Electricity, gas, water, construction

Manufacturing

Services 1.4%

38.9%

24

14.3%

288.2%

2017-2018 YoY growth

*Source: MOTIEDecl

are

d a

mo

un

t (U

SD

Millio

n)

14,73115,512 15,369 15,583

4,556

5,015

7,237

10,0491,617

714

321

1,246

6 55

21

2015 2016 2017 2018

FDI by RegionFDI in Korea

Americas Asia Europe Middle East

2017-2

018 Y

oY

gro

wth

(%

)

24.3%▲ 13.6%▲ 26.9%▲ ▽44.3%

*Source: MOTIE

Decl

are

d a

mo

un

t (U

SD

Millio

n)

2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018

8,466

5,257

6,3037,834

8,357

8,145

8,238

9,355

2,700

7,396

7,030

8,921 1,381

397

1,067

594

FDI by Investment TypeFDI in Korea

M&A

27.4% YoY

4.9% YoY

25.6%

74.4%Greenfield

2018Share

*Source: MOTIE

Decl

are

d a

mo

un

t (U

SD

Millio

n)

9,5

70

11,0

19

14,1

06

15,0

25

15,7

05

20,0

09

4,9

79 7,9

81

6,8

04

6,2

74

7,2

43

6,8

91

2013 2014 2015 2016 2017 2018

Greenfield M&A

Foreign-Invested Companies in Korea

*Source: Korea Trade-Investment Promotion Agency (KOTRA) (2018)

FDI in Korea

2007

14,608

2018

18,714

1997

3,542

1,678

1990

Australia Investment in Korea

Investments in Korea (Australia)

152

50 1

39

85

79 1

42

2,0

07

2012 2013 2014 2015 2016 2017 2018

$ 2,007 M

2018 Y

Am

ou

nt

(U

SD

millio

n)

*Source: MOTIE (based on declared amount)

Australia Investment in Korea

Investments in Korea

Infrastructure/Renewable energy

Lithium JV [POSCO]Banking/FinanceM&A

Australia 2,007 (USD Million, 2018 Declared amount) ▲ 1,310% 2017-2018 YoY growth (%)

Investment Opportunities

FEZs in Korea

Logistics

Machiney& parts

Bio pharma

Non-ferrous

metal

Marine Leisure

Ict, Machinery

Health care

IT, Aero

Bio

Smart Vehicle

Cold Chain

Logistics

Logistics

Fine Chemicals

Investment Opportunities

Investment Opportunities

Free Economic Zone

IFEZ

YESFEZ

GFEZ

EFEZ

CBFEZ

DGFEZ

BJFEZ

7Free Economic

Zones (FEZ)

105Foreign

Investment Zones

13Free Trade

Zones

1,207Industrial

Complexes

*Source: Korea Industrial Complex Corporation (2019)

Songdo International City : IT, BT, R&DYongjongArea : Tourism and Leisure,

Myeonji Area : Business City, Logistics,

Ungdong Area : Tourism, Resort, R&D

JisaArea : Cutting-edge manufacturing

Gwangyang Distric : Logistic, Intl BusinessYulchon District : Steel, Machinery, metal

Songdo International City : IT, BT, R&DYongjongArea : Tourism and Leisure,

Osong Biopolis : New bio, IT Convergence

medical equipment

Cheongjue Aeropolis : Aircraft maintenance, Aerospace

Pyeontaek Area: Automotive

component, Logistics

Hyeondeok : Tourism, Retail

Daegu Technopolis : Automotive, Machines

Suseong Medical : Healthcare, Specialty

HospitalFashion District : Fashin, Textile

InfrastructureSupport

Cash Grant

Tax Exemption

SiteSupport

LaborMarket

Logistics Transportation

Foreign Currency Exchange

Education & Research Institutions

Energy, Telecom,Water & Sewage

Investment Opportunities

Incentives of FEZs http://fez.go.kr/global/en/index.do

IFEZ – Incheon FEZ

- Incheon(Songdo) Area

- Stage I- 212,744㎡, Stage II- 216,079㎡

- Mixed-use Site Development Project. Marine Culture Tourism Complex. Maritime Infrastructure : International Passengers & Cruise Terminals

- Incentives : Tax Reduction, Subsidy Support, Real Estate Investment Immigration System

Golden Harbor Project

Investment Opportunities

Incheon Port

Pyeongtaek Port

Investment Opportunities

YESFEZ – Yellow Sea FEZ

Daegu

Yeong

cheon

Pohang

ICT Convergence

Software, Display, Mobile, Robotics

High-tech Transportation &

Machinery Parts

Automotive, Shipbuilding, Aviation

High-tech Medicine

Healthcare, Medical Devices,

Pharmaceutical

Yeongcheon

High-techPark

Sinseo Medivalley

International Fashion

District

Technop

olis

Suseong

Medical

District

Gyeongsan

Knowledge

Industry

District

Yeongcheon

IndustryDistrict

Pohang Fusion

Tech District

Gyeong

san

DGFEZ 8 Free Economic Zones DGFEZ Target Industries

Investment Opportunities

DGFEZ – Daegu Gyeongbuk FEZ

Heavy Ion Medical Accelerator

Business to Establish Foundation

of Radioisotope Fusion Research

Power Semiconductor

Commercialization Center

Dongnam Institute of

Radiological

& Medical Sciences

Busan – Radiology & Medical Science Cluster

Investment Opportunities

Invest Korea Market Place

IKMPProject

Database

• Startups & SMEs • Mature companies • Public projects

Foreign

Investors

KOTRA’s 36

Overseas OfficesKOTRA’s HQ

(Industry PM, Advisory Board)

ICT 75 Electricity/electronics 18 Chemicals/materials 6

Pharmaceuticals/healthcare 31 Public projects 18 Robot 3

Machinery/parts/automobile 32 Cultural contents 19 Logistics/retail 3

Consumer goods/prime manufacturing 23 Finance 16 Aerospace /shipbuilding 3

Business service 25 Energy/environment 16 Total 288

Registered companies (December 2018)

A platform to match Korean firms with foreign investors

http://www.investkorea.org/en/ikmp/ikmp_overview.do

Investment Highlights

• Fitness programs differentiated from existing ones: Professional trainers, who majored in physical education, have jointlydeveloped more than 100 distinctive programs by effectively combining the merits of boxing, yoga, Pilates, and strength-trainingexercises. Users can receive unprecedented effective and customized training programs because interactive games are providedthrough connected wearable devices. This has led to a 70% reenrollment rate and an investment attraction from SparkLabs, MiraeAsset Venture Investment, and others.

• Growth potential of the Chinese fitness market: The value of the Chinese fitness market was KRW 27.7 trillion (CNY 167.2billion) as of 2017, increasing by 11.2% annually. The number of people who exercise more than three times a week in China wasestimated to reach 380 million as of 2014. The number of fitness clubs increased explosively from 2,959 in 2009 to 4,425 in 2015.Company A in Japan, our major competitor, achieved BEP within one year after entering the market. In the case of the advancedfitness market, famous global brands are gaining large market shares. At present, our Chinese partners operate approximately 200sports franchises throughout China, and our company is reviewing a strategy for off-line expansion (shop in shop) in China throughtheir franchise networks.

Investment OpportunitiesPharma / Health Care: Fitness Platform

Products and Services

Products and Technology

• Major features of key technology: Two kinds of wearable devices and displays can be connected to measure individualmomentum in real time, and personalized exercise services are provided by extracting personal body/exercise data based onwearable devices and big data. The development of interactive games has implemented gamification that adds up calories burnedfrom exercise by the individual/team. More than 50 pieces of 45 min video content have been produced, and the basic formats ofrelated metadata are established.

• Competitiveness of key technology: Our company has established metadata libraries by content and is developing fitness OTTmedia services built on big data-based AI-driven recommendation engines such as tools for analyzing user body information andsocial data. In reality, off-line operations are developing and applying various programs. This serves as a foothold to implementhigher-quality, livestreaming service when the business is expanded to the online market in the future. This can also secure thecontinuity of business.

Major References

• August 2017: Founded• October 2018: Selected as a participant in SBA’s Growth Support Program• October 2018: Attracted seed capital from SparkLab and Mirae Asset Venture Investment• November 2018: Selected as a participant in the Product Process Improvement Technology Development Project hosted by the

Ministry of SMEs and Startups (SMTECH)

A community of competition and exchange with participants in real

timeWearable heart rate sensor

Integrated data Database interface

Customized fitness services

Collect health and exercise data

For a more detailed Teaser Memorandum and information, please contact the Project Manager below. Pharma / Health Care PM: [email protected]

Company Profile

Date of foundation • August 2017

Investment performance • Attracted investments: KRW 113 million from SparkLabs in October 2018, KRW 11 million

from Mirae Asset Venture Investment, and KRW 22 million from individual investors

Listed or unlisted • Unlisted

Patents and certificates• Applied for four trademarks related to a fitness platform in South Korea

Investment Requirements

(Unit: USD million)

Division 2016 (Unaudited) 2017 (Unaudited) 2018 (Unaudited)

Sales N/A 0.02 0.18

Operating Income N/A (0.13) (0.34)

EBITDA N/A (0.13) (0.34)

Financial Figures

Investment Structure • Minority (Financial Investment), Joint Venture

Amount • USD 1 million

Region • Asia (China, Japan)

(Unit: USD million)

Business Plans

• Sales plan: Our plan is to achieve an off-line sales of USD 2.24 million by 2021 by annually opening four new branches

from 2019 in a shop-in-shop manner. In addition, when a wearable and big data–based fitness app is finally developed and

commercialized in 2020, which leads to sales, the total online sales will reach USD 0.83 million by 2021.

• Investment required: To achieve the target off-line sales, our company is preparing a capital expenditure budget to open

four new branches annually, amounting to a total of USD 0.71 million by 2021, starting with spending USD 0.18 million in

2019. In addition, a total of USD 0.53 million will be invested in the working capital by 2021. To develop a fitness app, USD

0.27 million and USD 0.44 million will be invested in R&D in 2020 and 2020, respectively.

Division 2019 (Forecast) 2020 (Forecast) 2021 (Forecast)

Sales 0.39 1.33 3.04

CAPEX 0.27 0.44 0.53

R&D 0.27 0.27 0.44

Introduction of Invest KOREA

Global Alliance Project Series

Global

Alliance

Project Series

(GAPS)

Collaboration between

global enterprises and

technology-based Korean partners

KOTRA Sydney

Add: L24,1 Market St, Sydney, NSW 2000

Tel: 61-2-8233-4080

Gangsuk Suh, Director [email protected]

www.kotrasydney.org.au

www.kotra.or.kr

www.investkorea.org

Thank you