South Korean companies are ramping up their investments in the U.S., either by founding new subsidiaries and factories or by enlarging their existing facilities.
The rise of K-food in popularity, bolstered by America’s increasing fascination with the Korean Wave – inclusive of K-pop and K-drama – has motivated Korean food manufacturers to establish subsidiaries and factories in the U.S.
Lotte Wellfood, in line with its swift overseas expansion strategy, has chosen to form a joint venture with Lotte Chilsung Beverage in America. Until now, Lotte Wellfood had been directly exporting its domestic products to the U.S. without a dedicated entity.
At present, Lotte Chilsung maintains a beverage sales operation in the U.S. Given the Lotte Group’s growing emphasis on international operations as a fresh avenue for growth, the U.S. offshoot is set to become the sales hub for Lotte Wellfood’s array of ice cream, pastries, and beverages crafted by Lotte Chilsung.
Entering the U.S. market in 2005, Ottogi is now strategizing to bolster its market presence by initiating a production subsidiary named Ottogi Food America. This subsidiary falls under the larger Ottogi America Holdings, which leads product sales. While the holding company will manage food sales, ingredient sourcing, and exports across North America, Ottogi Food America will oversee production.
Nongshim, at the forefront of the K-ramen surge, contemplates the inception of a third plant in the East. Likewise, CJ Foodville’s Tous les Jours, celebrating its 100th store launch, has plans in the pipeline for a bread production facility.
The apparel and cosmetics sectors, traditionally limited to the Korean market, are now strategizing to amplify their American footprint. Shinsegae International, having resolved in July to initiate a U.S. subsidiary named Shinsegae America International, envisions a global outreach for its signature brands, encompassing cosmetics brands like Swiss Perfection and POIRET, as well as the clothing label STUDIO TOMBOY. Established in 1996, Shinsegae International transitioned from luxury fashion brand importing to expanding its global market reach.
PharmaResearch, a biotech entity, recently inaugurated the PharmaResearch USA corporate headquarters in California. With its hallmark anti-aging brand, Rejuran, which is accessible in over 20 nations including Japan, China, and Singapore, PharmaResearch is fortifying its American presence.
Come October, the U.S. arm of STARmed, a firm specialized in radiofrequency ablation medical devices, will be operational. Concurrently, SK Telecom has funneled roughly 40 billion won (approximately $300 million) into its U.S. affiliate to globally roll out its AI service “A. (A Dot)”.
Hyundai Steel has also expressed its intentions of divesting its Chinese subsidiary in favor of escalating its U.S. investments. “In the wake of the Biden administration’s enactment of the IRA, there’s been a notable uptick in investments from Korean corporations in the U.S.,” the firm commented. It’s also on track to set up an electric vehicle plant in Georgia, targeting its completion by next year’s second quarter.
As noted by Hyundai Steel, the most substantial investments in the U.S. by South Korean firms were declared a year post the IRA’s instigation.
The Financial Times (FT) evaluated foreign investment strategies worth $100 million or more announced since last August. The findings showed South Korea leading with 20 plans, surpassing all European Union (EU) member nations (19) and clearly outstripping Japan (9), Canada (5), and Taiwan (3).
in April 2023, South Korea’s business titans – Hyundai Motor, Samsung Electronics, SK Group, LG, and Lotte Chemical – disclosed their ambitions to channel over 100 trillion won ($76 billion) into U.S. ventures in the ensuing years.
BY EUNYOUNG LEE [lee.eunyoung6@koreadaily.com]
