Few companies return as corporate exodus intensifies

More than 2,400 South Korean companies moved overseas this year, but only 11 returned, raising concerns that U.S. reciprocal tariffs could accelerate a corporate exodus.

Data from the Export-Import Bank of Korea show that 2,437 companies established new overseas subsidiaries in the first half of 2025, up 63.8 percent from 1,488 a year earlier. New overseas subsidiaries typically number 600 to 700 per quarter, but the second quarter saw 1,745, a 138.4 percent increase from 732 in the same period last year.

The surge is largely attributed to U.S. tariffs. On April 2, U.S. President Donald Trump imposed unprecedented reciprocal tariffs on South Korea and other countries, prompting exporters to move production overseas to mitigate tariff risks. In the second quarter, 264 South Korean subsidiaries were established in the United States, up 77.2 percent from 149 a year earlier. Analysts say U.S. investment pressures and tariff barriers are likely to push even more companies to relocate overseas.

The problem is that while more companies are moving abroad, very few are returning. Data from the Ministry of Trade, Industry and Energy, submitted to Rep. Kim Sung-won of the People Power Party, show only 11 firms had been designated as “returning companies” by the end of September.

Even among these, many are reconsidering their plans. Only 34 percent of designated returning companies are expected to resume domestic operations. Since the 2013 enactment of the U-Turn Company Support Act, just 68 of 200 designated firms have successfully resettled in South Korea. High corporate taxes, weak domestic demand, and labor shortages continue to deter companies from returning, even as the U.S. tariff war adds pressure.

Experts warn that if the trend continues, South Korea could face industrial hollowing-out. As global protectionism rises and major economies seek to repatriate manufacturing, they say the government must provide stronger incentives to retain and attract companies.

“Most companies move overseas for cost competitiveness,” said Lee Jung-hee, an economics professor at Chung-Ang University. “South Korea needs lower labor costs, lighter regulations, or bold incentives comparable to the United States and Japan.”


세종=정순구 기자 soon9@donga.co