Korea has become a leading business and logistics hub in Northeast Asia. Despite the global impact of the COVID-19 pandemic, foreign direct investment (FDI) in Korea surpassed US$20 billion for the sixth consecutive year.
So, what underlies Korea’s stable economic development and investment environment?
The Korean peninsula is strategically located for trade as it is surrounded by the sea on all three sides. Furthermore, the government’s export-driven economic policies have helped foster the growth of Korea’s international logistics industry centered around the Seoul metropolitan area and the Busan region.
The Incheon airport ranks third in the world in cargo transportation and the Busan port is the world’s second largest transshipment hub. In 2020, due to the COVID-19 pandemic, non-contact activities began to emerge as the norm, leading to a 10% increase in the volume of parcel deliveries compared to the previous year.
Korea’s logistics firms used advanced technologies such as big data and artificial intelligence to adapt to the soaring demands.
The expansion of carrier services also triggered a rapid growth in the cold chain market. Distribution of vaccines and pharmaceuticals in particular requires advanced technology to accurately control time and temperature. This is leading to more investments in cold chain distribution centers and related equipment such as temperature controlled containers.
In July 2020, the Korean government announced the Korean New Deal in response to the changing socioeconomic system and to prepare for the great transformation into a leading country.
As part of the digital new deal, the government is pursuing the establishment of a smart logistics system. The logistics industry equipped with state-of-the-art technologies and digital infrastructure aims to provide foreign investors with great business opportunities and thus increasing FDI in the country.