Top Korean investments in

5 March 2020

2020 marks the 30th anniversary of the establishment of diplomatic relations between the Russian Federation and the Republic of Korea. The Country of Morning Freshness is the third largest Asian investor in Russia. The volume of Korean investments in the Russian economy is estimated at $ 20 billion. It is important that did not join the anti-Russian sanctions in 2014, but since then has reduced the number of new projects in our country. Nevertheless, at the highest level, Korea is initiating attempts to stimulate business cooperation with Russia: a plan for the "9 Bridges" initiative has been agreed, including the spheres of energy, shipbuilding, shing and transport. A large number of Russian companies want to attract Korean investments, and in this special review we will analyze the main Russian projects with the participation of Korean investors. Top 6: Korea Yakult Co Ltd: $ 110 million

At rst glance, unknown to the average reader, the name hides behind itself the legendary brand of instant noodles - "Doshirak", which has two factories in Russia: in Ramenskoye, Moscow region, and in the Ryazan region. The company built its rst plant in 2004, investing $ 30 million in a 10 hectare production site. In 2010, "Doshirak" came to the Ryazan region and invested $ 25 million, creating 200 jobs. In 2020, it was ofcially announced that the Doshiraka plant in the Ryazan region will receive another 1.5 billion rubles of investment. Over the past 16 years, Doshirak has become not only an important product of the Russian light industry, but also a certain yardstick by which the purchasing power of Russians ROMIR and Lentach is judged in playful ratings.

Top 5: Samsung Electronics: $ 250 million

Since 2008, in the north of the Kaluga Region, there has been one of the most successful examples of Russian-Korean investment cooperation - the Samsung Electronics Rus Kaluga plant with an area of 460 thousand m 2 . The signing of the agreement on its construction took place during the XI International Economic Forum in St. Petersburg, and the amount of investment in construction amounted to 3.5 billion rubles. It produces 100% of Samsung TVs sold in Russia, as well as monitors and washing machines. In addition, export supplies are carried out to neighboring countries (, Mongolia) and 20 European countries. It is also important that Samsung Rus Kaluga forms the investment ecosystem of the region and contributes to solving the problem of employment among the local population: the plant provides about 2,000 jobs.

Top 4: - Avtotor: $ 300 million

The Avtotor assembly plant located in signed a general agreement with the KIA Group back in 1996, as a result of which KIA appeared on the Russian market, and the assembly of the Clarus model was launched in 1997. According to some estimates, investments from South Korean colleagues reached $ 400 million. However, due to the 1998 crisis, the plant with an extremely opaque capital had to diversify its products and switch to contract assembly under a contract with BMW and later . However, Kia was also under attack at the time - due to the Asian nancial crisis - as a result of which a controlling stake in its shares was bought out by the then more successful Hyundai Motors Company. At the moment, the , , , Cerato Classic, Stinger, Soul, Sportage, Mohave models are leaving the Avtotor conveyor. Top 3: LG: $ 370 million

Since 2006, a 50-hectare plant of another Korean chaebol and competitor to Samsung, including LG on the Russian market, has settled in the Ruzsky district of the Moscow region, where the production of 185 TV models, 88 refrigerator models and more than 100 washing machine models is presented. Obviously, the strategy of localizing components is much more protable for South Korean companies, which allows them to optimize the cost of manufactured products while maintaining quality. The advantage of localizing LG enterprises is also high technology and efciency in matters of environmental production standards and the organization of social projects in the region. The number of employees of the enterprise exceeds 1350 people.

Top 2: Hyundai: $ 1 billion

The largest Korean investments in Russia are concentrated in the automotive sector. Hyundai is generally a textbook example of how to properly develop an automobile brand in Russia. In 2010, they built a plant near St. Petersburg in the Kamenka industrial zone, more than $ 1 billion have already been invested in its development, and now it is rightfully considered one of the largest plants in Russia. In addition, by October 2021, it is planned to launch a plant for the production of gasoline engines, about which representatives of Hyundai WIA have already agreed with the government of St. Petersburg. It is assumed that investments in construction will amount to about 12.7 billion rubles. However, it is also worth noting the activities of another branch of the Hyundai conglomerate - Hyundai Heavy Industries. This concern is interesting in that in 2009 it acquired Russian farms in Primorye to open new enterprises, which became known as "Hyundai Khorol Agro", "Hyundai Mikhailovka Agro" and "Hyundai Primorye". Enterprises with an area of 6.611 million sq. meters were used for the cultivation of corn, soybeans, wheat and oats, as well as animal husbandry. On the territory of Hyundai Khorol Agro, a modern agricultural complex with a vehicle eet, new equipment and favorable conditions for workers was formed. However, in 2018, HHI was forced to sell 100% of Khorol Agro and Mikhailovka Agro as part of the business restructuring and the abandonment of non-core assets to another Korean chaebol Lotte International Company for $ 28.4 million. However, the controlling stake in Hyundai Primorye is the Korean concern HHI still left it behind. meters were used for the cultivation of corn, soybeans, wheat and oats, as well as animal husbandry. On the territory of Hyundai Khorol Agro, a modern agricultural complex with a eet of vehicles, new equipment and favorable conditions for workers was formed. However, in 2018, HHI was forced to sell 100% of Khorol Agro and Mikhailovka Agro as part of the business restructuring and the abandonment of non- core assets to another Korean chaebol Lotte International Company for $ 28.4 million. However, the controlling stake in Hyundai Primorye is the Korean concern HHI still left it behind. meters were used for the cultivation of corn, soybeans, wheat and oats, as well as animal husbandry. On the territory of Hyundai Khorol Agro, a modern agricultural complex with a eet of vehicles, new equipment and favorable conditions for workers was formed. However, in 2018, HHI was forced to sell 100% of Khorol Agro and Mikhailovka Agro as part of the business restructuring and the abandonment of non-core assets to another Korean chaebol Lotte International Company for $ 28.4 million. However, the controlling stake in Hyundai Primorye is the Korean concern HHI still left it behind.

Top 1: Lotte: $ 2 billion Lotte Group came to Russia in 2010 and implemented two signicant investment projects at once: the plant in the Kaluga region with an investment of $ 100 million. The factory produces a number of confectionery products, the most famous of which is Orion chocolate biscuits. In 2016, the Korean investor doubled its investments in its Kaluga project. The second project is the Lotte hotel in Moscow, in the construction of which more than $ 350 million was invested. It is signicant that it was from Moscow that the international expansion of the hotel holding began, which previously developed only hotels in Korea itself. Since then, Lotte has opened a number of new hotels: in 2017 in St. Petersburg, having invested $ 140 million, in 2018 in Samara, with an investment of $ 85 million. Also in 2018, closed a deal to acquire from Hyundai the main hotel in Vladivostok and a share in the authorized capital of a number of agricultural companies producing corn and soybeans in the Far East. In addition, in 2018, Lotte and the Far East Agency for Attracting Investments and Export Support signed an agreement to nance a project for the construction of a livestock complex for 2,200 head of cattle and a dairy plant in Primorye worth 1.9 billion rubles. The funds will be directed to the Moloko Primorya company, which is an investor in the Mikhailovsky TOR. The creation of 118 jobs is planned. Another important acquisition of the Korean investment group is the Lotte Business Center on Profsoyuznaya Street with an area of over 58 thousand square meters. The business center was commissioned in 2013,

The head of the company, Xing Dong Bin, was awarded the Order of Friendship back in 2015. The chaebol's leadership regularly appears at leading Russian business forums such as SPIEF and WEF. Korean investments in Russia fall on a wide variety of sectors of the economy: agriculture, food processing, mechanical engineering, electronics and household appliances, real estate and tourism. By their structure, they are one of the most diversied among Asian investors. An important feature of Korean investments is their distribution over time. Korean business began to invest heavily in Russia in 1994, and after 2014 did not reduce the volume of its investments in the Russian economy, but on the contrary increased it, a striking example of which are Lotte, Hyundai and other companies. For more information, you can leave a request in the feedback form on the website or contact the head of the Department of Trade and Economic Cooperation Natalia Sapunova +7 (963) 963-83-63, as well as by mail [email protected]

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