As the headquarters for some of the world’s largest corporations, Seoul has become a major business and financial hub. Exec looks at this hi-tech Asian economy
Written by Rebecca Waters
Once one of the poorest economies in Asia, South Korea has transformed from a farming and fishing-based economy, into one of the most technologically advanced cities in the world.
Home to more than 10 million people in the world, South Korea’s capital, Seoul, is the world’s third-largest metropolitan area, located on the basin of the Han River in the country’s northwest.
Following the 1988 Summer Olympics and 2002 FIFA World Cup, Seoul became a global city and is now viewed as the ‘heart of Korean entrepreneurship, invention and discovery’. It is also one of Asia’s most vibrant economies; a blend of old and new, with modern high rises, and trendy shops mixed in with ancient temples and palaces.
PROS
Seoul is one of the fastest-rising centers in the hi-tech global marketplace, making it very appealing to foreign investors. The construction of the International Finance Center (IFC) in Seoul will encourage further investment, and will see the city join a circle of global landmark destinations, including New York’s Rockefeller Center and London’s Canary Wharf.
According to the Seoul Metropolitan Government, “the digital cluster of Seoul will become the centre of the global digital-based software industries.” The majority of head and branch offices of banks, stock and insurance companies are all concentrated in Seoul. The city is also home to some of the world’s largest corporations, including Samsung, LG Group, Hyundai, Kia Motors and Daewoo Corporation.
Although Seoul accounts for only 0.6 percent of South Korea’s land area, it generates around 21 percent of the country’s entire GDP. Seoul has a thriving service sector which benefits the national economy and development. Foreign Direct Investment is also mostly concentrated to this industry, accounting for around 85 percent of total investment, and growing.
The finance, real estate, telecommunications, wholesale and retail industries in Seoul are also burgeoning.
Located between Japan and China, Korea’s geographical position has enabled the country to act as a bridge for cultural exchange and trade between its neighbours. The country’s major exports include electronics, automobiles and machinery. Korea is the world’s sixth-largest automobile producer and the leading DRAM semiconductor manufacturer, shipbuilder and LCD producer.
The South Korean shipbuilding industry is also one of the most highly-developed, headed by chaebols such as the Hyundai Heavy Industries, Samsung Heavy Industry and POSCO.
With a low crime rate, the city is considered one of the safest places to travel in Asia. Public transportation is also excellent, with an extensive network of train, taxi, bus and subway services, all of which provide cheap travel around the city and South Korea. In particular, the urban rail system is often considered more user-friendly and environmentally-sound than buses, although it is costly.
CONS
Indeed, the urban transport system in Seoul is changing continuously. However, the heavy concentration of people causes various urban problems. Traffic congestion and other transportation problems have become a part of everyday life in Seoul, as a result of urbanisation and suburbanisation.
As income increases, private transport is becoming more popular than public transport, which has caused various problems. The roads and facilities are unable to cope with the rapid growth in traffic volume. Consequently, the Seoul Metropolitan Government has made greater efforts to improve these facilities; the amount of paved road increased 1.4 times from 1980 to 1996 but, despite huge efforts and much expense, the 10-fold increase in cars has overwhelmed the progress and transportation remains an issue.
While the economic development has pulled more people – and investment - into the city, Seoul is still an expensive place in which to live when compared to many other international cities. In a 2007 survey by London human resources consulting firm ECA International, it was listed as the third most expensive city in the world, following closely on London’s heels. The survey also concluded it is the most expensive in Asia - now 10 percent more expensive than Tokyo - when it comes to cost-of-living levels for foreign executives. Both rental payments and housing costs are very high considering the quality and size of the housing that is available, and for many, those properties are well out of reach.
“Five years ago, the average expatriate was paying about 35 percent more for goods and services in Tokyo than in Seoul,” says Lee Quane, Hong Kong-based general manager for ECA International. “Now, with the huge appreciation of the won over the past three years, Seoul is.”
CONCLUSION
While the currency appreciation is likely to continue, Seoul is one of the most dynamic and vibrant business centers in Asia and a hub for foreign investment. The construction of the International Finance Center will encourage investment and enhance Seoul’s global status, bringing more people into the city. This will see further demand for transport within Seoul’s urban areas, putting pressure on the city to improve its transportation system and counteract the congestion and urban problems.
After all, Seoul is still in its youth and it will be exciting to see how this hi-tech Asian city develops.