A LOS ANGELES TIMES - FINANCIAL TIMES SPECIAL REPORT : The Next California--The State’s Economy in the Year 2000 : The Next California / THE STATE’S ROLE IN THE WORLD ECONOMY : Financial Times Perspectives on California : The View From Abroad / SEOUL : South Koreans Focus on Tech Companies
The California economy produces more goods and services annually than Canada. And with each passing year, its prosperity becomes increasingly linked to its success in the global economy. As the state approaches a new millennium, it faces challenges that will help determine whether it will become an even bigger economic force in the world or whether it will fade amid mounting problems at home. Financial Times correspondents, based both here and in capitals abroad, give their impressions on the California economy through a special lens.
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California has attracted Korean immigrants for decades, and investment has followed suit.
The state accounts for 40% of total South Korean investment in North America, or about $1.4 billion, twice the amount that New York, its nearest competitor, has attracted, according to South Korea’s central bank.
But that may change as the big South Korean industrial groups abandon California, with its high land and labor costs, in favor of other states for manufacturing sites.
Neighboring Oregon is likely to surpass California soon in terms of South Korean investment. Hyundai Electronics recently announced that it will build a $1.3-billion semiconductor plant in Eugene because of relatively cheap land and tax incentives.
Much of the South Korean investment in California has been made by small- and medium-sized companies. Only a few large manufacturing projects have been established. The biggest is a 1986 joint venture between Pohang Iron & Steel (Posco) and USX to upgrade and operate a steel finishing plant in Pittsburg, Calif., at a cost of $400 million.
California’s main appeal to South Korean conglomerates is as an administrative center. Hyundai Motors, South Korea’s biggest car maker, has established its U.S. sales headquarters in Garden Grove.
Future South Korean investment in California is likely to consist mainly of investments in home-grown computer or media companies. Silicon Valley companies in particular have become acquisition targets of South Korean electronics companies.
And Cheil Food & Chemicals, a former Samsung subsidiary, became the second-largest outside investor in DreamWorks SKG, the entertainment studio founded by Steven Spielberg, Jeffrey Katzenberg and David Geffen, by taking an 11% stake for $300 million.
