The government is easing the criteria for corporate "U-turns" to encourage companies that have moved overseas to return home. Until now, companies could qualify for support only by closing their overseas operations and coming back. Going forward, they will be eligible for benefits if they build a "mother factory," or leading plant, in Korea even while maintaining their overseas operations. The subsidy system has also been changed to be determined through negotiations between the government and companies, rather than the previous uniform approach. It is commendable that the government has accepted some of the difficulties raised by companies and introduced a support plan with lower barriers. However, it is regrettable that the subsidy eligibility for U-turn companies has been limited to non-capital-area regions, as this could be perceived as a location regulation rather than a measure of promotion.
Successive governments have rolled out corporate U-turn policies to create jobs and stimulate investment, but the results have been unimpressive. From 2014, when the "U-turn Company Support Act" took effect, through the third quarter of last year—a span of 12 years—only 200 companies returned to Korea. Moreover, the number has actually been declining: from 23 in 2022 to 20 in 2024 and 14 last year. To make matters worse, in the first half of last year alone, 2,437 Korean companies moved overseas through direct investment, a 63% surge from a year earlier. By any measure, the "corporate exodus" has reached a serious level that can no longer be left unaddressed.
Major rival countries are staking everything on attracting foreign companies and on the reshoring of their own businesses. The United States, leveraging the CHIPS Act and the Inflation Reduction Act (IRA), which provide large-scale subsidies, drew in domestic and foreign companies and saw U-turn companies reach 1,844 in 2021 alone. Japan, which has moved to reduce its reliance on China's "red supply chain," has concentrated subsidies, regulatory easing, and infrastructure support on companies relocating overseas production facilities back home, with some 600 companies returning each year.
The shortcut to inducing more companies to return home lies in creating a "business-friendly environment." Companies that have gone overseas will not reverse course simply because subsidy incentives are raised. Regulatory bills that run counter to global standards—such as the "Yellow Envelope Act," the 52-hour workweek, the Commercial Act, and the Serious Accidents Punishment Act—must be boldly overhauled. Normalizing inheritance and corporate taxes, which are excessively high compared with rival countries, is also an urgent task. We must not forget that corporate reshoring without reform of labor, tax, and other regulations may end up as nothing more than a hollow slogan.
