Thursday, 26 February 2009

Little Korea exits big China

The wave of FDI and skilled workers from overseas and beginning to exit China in their thousands as companies around the world retreat to lick their wounds from the current recession.

This FT article gives a snapshot of how events are playing out.

It is amusing that the Korean press officer could not comment on the exudus of Koreans from China as they had also been sent home.

Downturn drives expat exodus from Shanghai [FT]

Until recently, half the 100,000 Koreans who had made Shanghai their home lived clustered together on the outskirts of the city in “Little Korea”, a neighbourhood where the street signs are in Korean and the shops are full of LG products and kimchi food.

But with the economic crisis hitting the South Korean economy and currency hard, Little Korea is being rapidly vacated.

Korean companies are shipping workers home, cutting off school fees and repatriating wives and children without their menfolk to cut costs. They are the first large wave of expatriates to have begun leaving China’s financial capital as a result of the global economic crisis but their departure raises the prospect of a broader exodus of foreigners who may take investment, skills and job creation opportunities with them.

The press officer of the Korean consulate in Shanghai could not answer questions about the exodus of her countrymen – because her post had just been abolished and she was being sent back to Korea.

Kim Heewon, president of Seoul Plaza, Little Korea’s central shopping complex, estimates that 20 per cent of the Korean population has returned home, many of them in the past few weeks.

“Almost no one comes in any more,” says a clerk in Seoul Plaza’s golf boutique. Throughout Ms Kim’s 4,000-squ-m department store, Korean-speaking staff loiter next to Korean-branded toys, clothing and furniture, with no customers in sight.

Japanese relocation companies, meanwhile, say there has been a marked rise in Japanese families returning home from Shanghai compared with last year and they expect the pace to pick up further during the traditional peak relocation months of March and April.

Each of the Japanese housewives minding toddlers at the vast Mandarin City housing complex, where an estimated 70 per cent of residents are Korean or Japanese, say they know at least one family that has been sent home while the breadwinner remains in China.

The Japanese consulate estimates there were 48,000 nationals in Shanghai 18 months ago, but says it has no figures for the number that might have left since.

The pain has not been limited to Shanghai. A parent with children enrolled in an expensive Beijing international school says most of her daughters’ Korean classmates have left the school almost overnight.

A labour activist in the northern province of Shandong, where Korean investment has totalled $23.4bn (€18.4bn, £16.2bn) since 1988 and has accounted for 40 per cent of total foreign inflows, says the owner of a Korean-invested furniture factory left before the Chinese lunar new year in January and it has yet to reopen.

Local authorities that previously published regular data on absconding factory owners halted such reporting after thousands were left jobless when the entire Korean management of Yantai Shigang Fibre vanished last year.

“I would guess that even more have been closing since then given the worsening macroeconomic environment,” says Yuan Xiaoli, a professor at Qingdao University of Science and Technology.

Back in Little Korea, Ms Kim says the flow of Koreans is not one way. “Workers are going home, but entrepreneurs are coming here from Korea,” she says. “Our Korean people think [since] China is bigger than Korea, there must be more opportunities here than in Korea. There is no dream in Korea, but our Korean people think there is still a dream in China.”

Ms Kim is putting her money where her mouth is. She is planning to open a large golf goods store in Seoul Plaza early next month.


1 comment:

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