[Business Diplomacy] Korea becomes popular destination for US governors

South Korea seems to have been a popular destination for US state governors. This year alone, four governors leading the US industrial heartlands of the Midwest and the South visited Korea to meet with corporate partners and attract new investors.

“We're very excited about the relationship that we have built with Korea and Korean companies and we want it to grow,” Kentucky Gov. Andy Beshear said upon his first visit to Korea in July. “If there are ways that we can improve and be more welcoming, we want to know them.”

In July, Texas Gov. Greg Abbot also visited Seoul and toured the Samsung Electronics’ chip manufacturing complex, vowing full support. Georgia Gov. Brian Kemp’s visit came in June, to promise an all-out support for Korean companies operating in his state. Arkansas Gov. Sarah Sanders, who served as White House press secretary for former US President Donald Trump, made her visit in March.

In the last couple of years, Korean companies have been ramping up investment in the US, bringing the attention of the state governments eager to attract foreign investments.

Last year, the percentage of Korea's overseas direct investment in the US reached a 35-year high, amounting to $22.7 billion and taking 43.7 percent of the total overseas direct investment of $63.4 billion made in the year, according to the Korea International Trade Association.

During their trips to Korea, the governors filled their itineraries with meetings with top executives of conglomerates here, such as Samsung Electronics, SK Group and LG Group.

"Considering that Korea is a manufacturing powerhouse, the country would be a plausible destination for governors to attract investment. China is out, and Japanese companies appear to have grown passive to go overseas," an industry official said under the condition of anonymity.

"They would also want to attract big conglomerates, which would likely bring partner firms with them."

Among the massive investments Korean companies are making in the US is Samsung Electronics' whopping $45 billion plan to build an advanced semiconductor manufacturing plant in Texas.

Georgia succeeded in bringing Hyundai Motor Group to build its $7.59 billion electric vehicle manufacturing plant and additional billions of investment from Korean battery makers LG Energy Solution and SK On for their battery plants adjacent to the automotive facility.

With an aggressive incentive package, Kentucky also secured investment from SK On. BlueOval SK, the joint affiliate between SK On and US auto giant Ford, is spending $5.8 billion to build a battery plant in the southeastern state.

"We provided one of the largest incentive packages in our history. That was a multi-million dollar investment by the Commonwealth of Kentucky," Kentucky Gov. Beshear said.

In addition to a forgivable loan to help with upfront expenses, the state has built a training facility on-site to help BlueOval SK provide the 5,000 employees up and ready to work as soon as the factories kick off production.

As companies worry about the impacts of the upcoming US presidential election on their operations and existing policies they benefit from, the governors promised to do their best to minimize losses.

"While we don't know who's going to win the election in November, we know one thing for sure. Regardless of who wins, Texas will continue to be No. 1 state for business and collaboration with Korea to make their home country better and the company and the state better," Abbot said in Seoul.

For Korean companies to better deal with the uncertainties in operating their facilities in the US and increase their influence, they should leverage the relationship with state governments, using them as "another communication channel" to reach the federal government, Kentucky Gov. Beshear said.

“Remember those investments (in US states) create good American jobs which is a good insurance policy to ensure that it continues. No president wants to derail a strong economy,” he added.

Attractive support programs from the state governments, geographical benefits, expanse of land plots, cheap power and talent pools are selling points of the Midwestern and Southern states, according to industry sources.

"(From a corporate perspective) we see a limited number of states as plausible candidates having the right infrastructure and resources such as land, power and access to water. Those states are eager to bring investments to their states with well-prepared support packages," an industry official said.

SK hynix, the world's second-largest memory chipmaker, considered those merits to decide on its investment of $4 billion to build its advanced chip packaging plant in Indiana.

“The US has a lot of big tech clients leading the artificial intelligence market, and actively investing in advanced chip packaging technology,” an SK official said.

“We had many candidates in mind, but we chose Indiana because the state government was very active in supporting our investment. We also seek active collaboration with Purdue University there, as it is one of the prestigious schools for advanced technology."

For companies, how much a state gives attention to their projects and goals and understands, is also a factor for choosing their investment destinations.

"It is important that needs are met at both ends, for the companies and the state government. When the conditions on the two sides are met, then it would be about choosing the best incentive packages offered by the states," an industry official explained.