South Korean companies increasingly see India as a viable alternative to China

Sustained US-China tensions and other internal and external challenges have pushed South Korea to speed up diversifying its trade and investment

Despite significant hurdles to doing business, India has emerged as an attractive destination for Korean firms such as Samsung, LG and Hyundai

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South Korea’s then president Moon Jae-in and Indian Prime Minister Narendra Modi greet onlookers during their subway ride to the Samsung Electronics factory in Uttar Pradesh, northern India, on July 9, 2018. South Korean firms are increasingly looking to India as a target for investment and expansion. Photo: EPA-EFE

Haeyoon Kim

Haeyoon Kim is a senior programme officer at the Asia Society Policy Institute (ASPI) based in Washington, DC.

Published: 5:00am, 10 May 2023

“Strategic ambiguity” has been South Korea’s foreign policy formula for more than a decade. This is because Seoul’s decision not to take a side between Washington and Beijing – given its close economic ties with China and the presence of US military forces in the country – was regarded as inevitable.

The continued tensions between the two superpowers – coupled with other external challenges, including the Covid-19 pandemic, high inflation and the war in Ukraine – have further spurred middle-power and export-oriented South Korea to expedite the diversification of its trade and investment portfolio.

Amid such circumstances, a series of legislative measures initiated by the Biden administration to deter China’s growth at the expense of relations with its allies has prompted Seoul to accelerate its pivot from Beijing.

Additionally, despite China’s reopening after the pandemic, South Korea’s trade deficit with China in the first quarter of this year amounted to US$7.8 billion – the first such deficit since the two countries normalised diplomatic relations in 1992 – causing Korean businesses to reconsider the importance of maintaining a China focus.