France and Korea can increase cooperation in developing markets in Africa, Southeast Asia and potentially North Korea, said David-Pierre Jalicon, the chairman of the French Korean Chamber of Commerce and Industry, adding that the two middle powers should collaborate strategically for their long-term economic benefit.
“France has always favored multilateralism,” he said during an informal meeting with Herald Corp. CEO Kwon Chung-won last week at the company headquarters in Seoul.
“Korea has traditionally relied on superpowers the United States and China, but it can diversify its partnerships and strengthen ties with France -- another middle power -- to exploit opportunities in emerging markets as well as for greater innovation.”
Noting that the two economies maintained healthy trade relations, with trade amounting to about 8.4 billion euros ($9.7 billion) last year, having increased as a result of the European Union-Republic of Korea free trade agreement, Jalicon said France had a trade surplus, but that this was not important in and of itself. It is crucial to strengthen strategic cooperation, he stressed, as innovation best occurs through the synergy of competitive advantages and different ideas.
In March every year, the French-Korean chamber organizes La Francophonie Economique, an economic forum for French-speaking countries, including France, Canada, Switzerland, Belgium, Morocco, Senegal, Algeria and Ivory Coast, among others. South Korea is an observer state.
According to the French diplomatic service, the aviation industry is a driver of French exports to Korea, comprising 34 percent of total trade. This is followed by chemicals, metals, fashion and leather goods, electronics, agrifood products and cars. France is also a leader in luxury goods, ranking second in the perfume and cosmetics sector and fourth in the pharmaceuticals sector.
In terms of investment, nearly 200 French companies operate in the services, automobile, transport, high-tech, chemicals and petrochemicals, hospitality, pharmaceuticals, cosmetics and luxury goods sectors here.
“Cooperation in innovation offers major prospects given the quality of basic research and fabric of innovative startups through the French Tech initiative in France, as well as Korea’s accelerated development of digital technologies, small and midsized companies and start-ups,” according to France Diplomatie.
France was the fourth-largest European investor in Korea in 2016. Half of French foreign direct investments here were in financial services, at roughly 3.5 billion euros. However, Korean investments in France remained low during the same period with 900 million euros -- putting Korea in 37th place in terms of foreign direct investment.
Compared with the finance- and services-oriented British economy and the manufacturing-strong German economy, the French economy is strong in both areas, Jalicon said. Aided by startup incubators and research centers across the country, France is a leader in innovation, particularly in the internet of things, as well as in legal consulting, finance, software development and hospitality.
Having lived and worked in Korea for over 20 years, Jalicon is also the CEO of D.P.J. & Partners, a firm specializing in architecture, engineering, interior design and retail. He came to Korea in 1996 as a consultant working on the TGV high-speed train.
“Despite the efforts of the Moon Jae-in administration to help Korean companies reshore and increase investments at home, they will increasingly globalize, which is unstoppable,” said Kwon. “The Korean economy is facing heavy headwinds at the moment, but new wealth can be created in untapped markets with our partners.”
Kwon noted that major South Korean conglomerates had undertaken extensive research on the North Korean economy and on optimal sectors for future investment. For foreign firms, infrastructure development, energy, resource extraction and processing and tourism hold great potential for investment and joint ventures with Korean companies, he said.
Turning to France, Jalicon explained that the administration of Emmanuel Macron had succeeded in increasing flexibility in the nation’s rigid labor market. “Before, negotiations on wage and working conditions were done on the sectoral level represented by labor unions, but they will be done on the company level from now on, bringing more flexibility.”
Vocational training is provided for people in between jobs, and that has made it easier for French companies to hire as well as fire. At the same time, the government has lowered the corporate tax rate from 33 to 25 percent, and capital income tax is flat at 30 percent.
By Joel Lee (email@example.com