The portion of Korea’s direct investment in China shrank last year amid intensifying competition from other global companies in the world’s second-largest and fastest-growing economy, a report said Thursday.

In the first nine months of 2010, the proportion of foreign direct investment made by Korean firms in China dropped to 2 percent from 2.7 percent in 2009, according to the report from the Korea International Trade Association.

The amount of Korean FDI in China came to $2 billion at the end of September, compared to $2.7 billion for the entire year of 2009.

“The report shows investment from other major investor nations uniformly increased in size and areas of investment, along with their cooperation with local businesses,” KITA said in a press release.

In the January-September period, the proportion of FDI from Hong Kong gained 2.3 percentage points from 60 percent in 2009.

“The expansion of investment by foreign firms in China clearly is a challenge for us, but it can also serve us an opportunity as it is helping expose weaknesses of our country’s competitors,” KITA said.

Still, the report noted that Korean firms need to continue improving their competitiveness in China, also advising them to utilize the growing popularity of Korean pop culture, known as Korean Wave or “Hallyu” in Korean.

“They must first improve their brand image. This includes both the image of the nation and individual companies. And Hallyu is still a valuable asset only our companies can take advantage of,” it said. 

(Yonhap News)