SINGAPORE companies have been flocking to South Korea to set up shop. They see the country as a possible entry point for expansion into North Asia.
In August, lifestyle products maker Osim opened its first outlet in Seoul Hyundai Department store.
At the same time, the Government of Singapore Investment Corp (GIC) acquired two branches of South Korean clothing, furniture and household goods retailer 2001 Outlet. There are plans to acquire eight other branches of the firm over the next three years.
The Ascott Group, a subsidiary of CapitaLand, inked its first contract to operate serviced apartments in Seoul last month.
Ascott chairman Lim Chin Beng, who saw a niche in the market, said in a statement: 'There are good prospects for the serviced residence business in Seoul given the shortage of upper-tier internationally managed serviced apartments in the city.'
Ascott chief executive Cameron Ong said: 'We plan to expand in Seoul and the major cities in Japan. In China, we will operate in more secondary cities and increase our portfolio.'
SembCorp Logistics, who started a joint venture with a Korean firm last year, recently signed a memorandum of understanding (MOU) with the Korea Container Terminal Authority to look into investing in Gwangyang Port on the south coast.
Its Seoul-based deputy general manager, Mr Goh Puay Guan, told The Straits Times: 'In order to be a leading regional logistics services provider, we need extensive distribution coverage in Korea to complete our Asian network.'
With its existing China operations, the firm is positioning itself as a logistics service provider for companies exporting out of China into South Korea and vice versa.
The deregulation and opening up of the South Korean market is another plus.
Mr Goh said: 'As foreign companies invest here, we can provide for their logistical needs.'
Some investments have already paid off for Singapore firms. In one of the largest-ever foreign real-estate investments in the country, GIC Real Estate bought the Seoul Finance Centre for US$400 million (S$666 million) in 2000.
The 30-storey building, which was then empty, now has an occupancy rate of 90 per cent.
South Korea and Singapore, which expect to sign a free trade agreement by the end of the year, have a strong trading relationship.
South Korea was Singapore's eighth-largest trading partner last year with total trade amounting to US$11.3 billion.
Singapore is South Korea's seventh-largest foreign investor with foreign direct investment of more than US$249 million in the first quarter of this year.
Last year, Singapore poured US$236 million into the country. While the picture is rosy, IE Singapore's chief executive officer, Mr Lee Yi Shyan, sounded a word of caution to potential investors.
'Singapore companies should bear in mind the language and cultural barriers as well as the country's militant labour movement,' he said.
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