韓國企業來台灣直接投資者的觀點分析韓國特質的經濟地理

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(1) . 國立臺灣師範大學地理學系第四十三屆碩士論文. Economic Geography of Korean-‐ness in Taiwan: From Foreign Direct Investors’ Perspective . 指導教授：王文誠研究生：曲譜心. 中華民國一零二年六月 .

(2) 國立台灣師範大學地理研究所碩士論文摘要研究所別：地理研究所碩士班論文名稱： Economic Geography of Korean-‐ness in Taiwan: From Foreign Direct Investors’ Perspective 指導教授：王文誠研究生：曲譜心 This dissertation contributes to an understanding of Korean firms’ operations as direct investors in Taiwan. The theoretical framework of the study is positioned to economic geography. The empirical focus is on the Korean investment and operation decisions in Taiwan. The research problem of the study asks how multinational corporations (MNC) in different business sectors utilize, perceive and react to the feedbacks in the host country’s corporate environment. This has been only possible with the fieldwork that consists of one-‐on-‐one interviews with 14 MNC representatives in eight different industries at the Taiwanese branch. In this paper, economic geography literature has studied the paradigmatic shift occurring toward multinational Korean firms operating in Taiwan and Korean-‐ness they carry. This rests on propositions. First, from a structural perspective economic actors are situated in contexts of social and institutional relations. Drawing on Storper's holy trinity, we define four ions as the basis for analysis in economic geography: technology, organization, production, innovation, and interaction. The present study argues that the investigates the ways that Korean MNC as Foreign Direct Investors interact and form networks in Taiwan as well as the ways they obtain knowledge and information. The study states that MNC highly depends and utilizes the already-‐existant networks in Taiwan to reach the local market and to obtain the market knowledge for innovation and productivity. Second, the present study argues that economic processes within Taiwan are contingent in the economic actors’ strategies as well as the environment of the firm in the host country, specifically in economic and technological aspects. Therein, we engage a particular spatial perspective of economic processes using a geographical lens. Third, in dynamic perspective economic processes that are embeddeded culturally and that also entail to the historical events, having shaped the society’s perception about Korea and anything that is related to it over time and consequently have been an impact on buyers’ economic decisions. Korean-‐ness is the state of being Korean, the perception that others hold toward and description about Korea. This study 2 .

(3) investigates how ‘Korean-‐ness’ plays a role or has an impact for Korean MNC operating in Taiwan. The empirical results suggest that Taiwan has been a great stepping-‐stone market in prior to enter market in China, Japan, or even Southeast Asia for various reasons that are contingent to the similarities that are found culturally, linguistically, and to the patterns found in characteristics of Taiwanese market specifically to certain industries. According to the various characteristics of the industries, the levels of dependency on local networks vary, but only those require production networks involve in the processes and scales of global economic activities. Moreover, the empirical results also indicate that Korean-‐ness has impact on MNCs in varying degrees. Weak fondness has shown towards Koreanness in two B2B firms, and strong resentment has been shown towards three B2C firms indicate that firms in different industries react to Korean-‐ness differently. The results indicate Koreanness plays a significant role particularly to B2C firms and they scan their corporate environment continuously in order to anticipate and respond to the needs of Taiwanese market. Therefore, respondents in expansive scope of industries in Taiwan regarded Korean-‐ness as important. 關鍵字：economic geography, ‘Korean-‐ness’, ‘Holy Trinity’, social embeddedness . 3 .

(4) Table of Contents Chapter 1. Introduction ....................................................................................... 7 1.1 Research Setting .................................................................................................................. 7 1.2 Research Problem/Aims of the research ................................................................. 17 1.3 Positioning and the Scope of the Study ..................................................................... 18 1.4 Limitation of the Study ................................................................................................... 18 1.5 Outline of the Study ......................................................................................................... 19 . Chapter 2. Research Method ............................................................................ 21 2.1 Case Study ........................................................................................................................... 21 2.2 Data Collection .................................................................................................................. 25 2.3 Sampling & Field Work Process ................................................................................... 27 . Chapter 3. Networks of Foreign Firms in Taiwan ..................................... 31 3.1 Holy Trinity ........................................................................................................................ 31 3.2 Embedded-‐ness ................................................................................................................. 39 . Chapter 4. Networks and Interactions of Korean firms in Taiwan ..... 41 4.1 Taiwanese Business Environment in the Context of Korean Firms ................ 41 4.2 Creation of Knowledge and Information: Technology ......................................... 46 4.3 Creation of Knowledge and Information: Organization ...................................... 54 4.4 Spatial Organization: Territory ................................................................................... 68 4.5 Defining of ‘Koreanness’ in Taiwanese Market ...................................................... 73 4.6 Changing the perception of ‘Koreanness’ ................................................................. 83 . Chapter 5. Conclusion and Suggestion .......................................................... 88 References .............................................................................................................. 98 Appendix I. Questionnaires for Face-‐To-‐Face Interviews (Type I; General) ............................................................................................................... 100 Appendix II. Questionnaires for Face-‐To-‐Face Interviews (Type II; Detailed) .............................................................................................................. 101 . 4 .

(5) Figures Fig. 3-‐2 Cross-‐border Regions for the Performance of Cosmopolitan and Non-‐cosmopolitan Knowledge in Technology ................................... 36 Fig. 3-‐3 Region for Technology and Organization Evolution ................ 36 Fig. 3-‐4 Space where Provides Flow of Information ................................ 37 Fig. 3-‐5 Place for Communication-‐based Interpretative Convergence .................................................................................................................................... 38 Fig. 3-‐6 Concept of Conventional-‐Relational Transactions ................... 38 Fig. 4-‐1 Expansion Types of Korean Firms in Taiwan ............................. 41 Fig. 4-‐2 Provision Types of Products/Services Korean Firms in Taiwan ..................................................................................................................... 43 Fig. 4-‐3 Types of Industries that the Interviewed Firms Operate ....... 44 Fig. 4-‐4 Conventional-‐Relational Linkages of Korean Firms ................. 56 Fig. 4-‐5 Non-‐Cosmopolitan Knowledge ........................................................ 68 Fig. 4-‐6 GPN of Home Appliances Firm ......................................................... 70 Fig. 4-‐7 GPN of Automobile Firm .................................................................... 71 Fig. 4-‐8 GPN of Dental Firm A ........................................................................... 72 Fig. 4-‐9 GPN of Dental Firm B ........................................................................... 73 Fig. 4-‐10 Fondness of Taiwanese Market of Various Business Sectors .................................................................................................................................... 82 Fig. 4-‐11 Market Fondness & Resentment towards Korean Brands in B2B/B2C ................................................................................................................. 82 . 5 .

(6) Tables Tab. 1-‐1 Export of Korean Broadcasting Programs by Destination, 2005-‐2010 ................................................................................................................ 9 Tab. 1-‐2 Most Valuable Nation Brands Ranking in 2013 ........................ 13 Tab. 1-‐3 Gross Domestic Expenditure on R&D as % of GDP .................. 17 Tab. 2-‐1 List of Interviewed Firms ................................................................. 28 Tab. 4-‐1 Industry Types of Korean Firms Operating in Taiwan .......... 42 Tab. 4-‐2 Most-‐liked and –disliked countries for Korea and Taiwan .. 45 Tab. 4-‐3 List of Korean MNC Operating Production and Sales Networks in Taiwan ............................................................................................ 48 . 6 .

(7) Chapter 1. Introduction 1.1 Research Setting 1.1.1 Making of ‘Korean Wave’ in East Asia and ‘Korean-‐ness’ in Taiwan ‘Pop culture’ in East Asia was initially formed with American cultural products, and cultural products such as music, movie, and television programs have been largely penetrated in the regions where local income levels have reached a standard that can pay the price. In economically-‐developed parts of Asia can be found the predominant American cultural products that bring impacts on cultural/moral interests in popular culture and its consumption are often focused on American imports. By and large, the generalized liberal attitudes portrayed in American popular culture have been discussed, and cultural liberalism that such cultural products contain was seen as a tool to push away the conservative Asian values. Some have desired this and others have viewed it as culturally and morally corrosive of Asian values. The American popular culture has been easily approached in every urban center in East Asia – HK, Taipei, Singapore, Shanghai, and Seoul and Tokyo, such dense flow of cultural products have been distributed in an uneven manner and never ceased to expand as well as to influence the formation what ‘America’ is or would be like in the minds of the audience. After worshipping of American popular culture, ‘East Asian pop culture’ was emergent from adaptation of strategies of Japanese popular cultural industries, and such sphere was largely formed in East Asia and South East Asia by Japanese and Korean cultures. Huat and Iwabuchi (2008) explains that dramas of these two cultures were predominant in countries that are primarily ethnic Chinese locations including the PRC, Hong Kong, Taiwan, and Singapore. The ‘East Asian pop culture’ is known to be shaped, to be exact, by Japanese invasion’ of popular culture throughout the Asian region. In prior to such ‘Japanese invasion,’ American pop culture spread in every urban center in East Asia such as Hong Kong, Taipei, Singapore, Shanghai, Seoul and Tokyo. However, Japanese production and export distribution began such East Asian pop culture, with its ability to finance expensive production promotions in spite of Japanese tentativeness about expanding into the rest of Asia (Huat 2004). Japanese’ 7 .

(8) popular cultural industries adopted adequate insights into the industrial strategies that made it successfully penetrating the Asian regional market since the early 1990s. For example, Japanese television dramas of romance featuring urban young had caught attention of many young audiences throughout the region. Following after the Japanese trendy dramas’ popularity wan in East and Southeast Asia, this is also the time when South Korea (Korea) began to export its own products into all the other East Asian locations, creating a so-‐called ‘Korean Wave’ in these locations. Korean pop culture such as films, pop music and TV dramas started to overflowed in the late 1990s and early 2000s into the East Asia and this culture came to known very quickly as the ‘Korean Wave,’ which is the term developed in 1997 by the PRC audience (Chua and Iwabuchi 2008). Exchange of Japanese cultural products has been influenced by the political aspects and formal ban on Japanese cultural products were initiated since its decolonization from Japanese imperialism, has only been lifted in October of 1998, with the Joint Declaration of the New 21st Century Korea-‐Japan Partnership (Huat 2004). By the late 1990s, Japanese trendy dramas have been replaced by and occupied by Korean imports in most of urban centers in East Asia. The export of Korean dramas among other broadcasting programs have grew in exponential terms since 2005 (Tab. 1-‐1) and least one Korean drama series on Singaporean television stations every night and the Korean drama that marked the start of hallyu 1 called Winter Sonata was re-‐broadcasted on Taiwanese television stations numerous times (Yang 2012). Therefore, importing Korean dramas had become the main target for local competitions justifying the exports as part of the ‘Korean-‐Wave,’ including Korean movies and popular music exports (Huat 2004). 1. ‘Hallyu’, ‘Korean Wave’ in English, is a term in Korean to indicate the flow and popularity of. Korean popular cultural products, specifically developed to describe the trend in East Asia 8 .

(9) Tab. 1-‐1 Export of Korean Broadcasting Programs by Destination, 2005-‐2010 . Source: Destinations of export of Korean TV programs in million US dollar, 2005-‐2010. Adapted from "The Korean wave (hallyu) in East Asia. A Comparison of Chinese, Japanese, and Taiwanese audiences who watch Korean TV dramas," by J. Yang, 2012, Development and Scoeity, 41, p.123. . Despite that Japanese cultural products have been replaced and occupied by Korean imports in urban cities of Asia, Korean cultural industry is accused of plagiarism against the Japanese products. Japanese cultural products have been illegally imported and even the government-‐owned Korean Broadcasting Station committed in copying, plagiarizing, mixing, and reproducing Japanese products into Korean products (Huat 2004). Simply put, Korean citizens like Japanese cultural products, and these products have already formed emotional roots from long time ago. However, due to colonial past, they only express enemy-‐like, ever-‐competitor on the surface political level. Korean citizens’ fondness towards Japanese cultural products has brought a turn on a public level. Government-‐owned Korean Broadcasting Station had to explain the plagiarism, and shamefully, admitted their wrong openly. Since the early 2000s, Japanese television drama faced increased competition, since Korean dramas, the cornerstone of ‘Korean Wave,’ have adopted the style of the series of Japanese drama, known as ‘trendy drama’. 9 .

(10) Japan being Korea’s all-‐time competitor and a secret teacher, Korean dramas, in effect, have applied so many characteristics that make up Japanese ‘trendy drama’ and the whole of Korean popular culture industry appears to be the most influenced by the standards of Japanese production. Huat (2004) describes these ‘trendy dramas’ as below: …‘trendy drama’ featuring visual pleasure coming from the set and scenes, the characters, major and minor, are very well-‐dressed in designer clothes, living in cozy small apartments, eating in expensive usually Western restaurants, but above all, all the actors and actresses are beautiful men and women. In fact, the plot is secondary. The simple list of beautiful people, beautiful clothes, good food and good entertainment is what draws audience to watch these series of ‘trendy drama.’ Japanese TV dramas were controlling media in the east Asian region until 2004 when the Korean TV drama series such as Winter Sonata started to get broadcasted, and since then, the flow of Korean dramas became part of the Korean Wave hit the rest of East Asia (Chua and Iwabuchi 2008). Other drama series that made the great impact on all the predominantly ethnic-‐Chinese locations in East Asia is Korea’s Dae Jang Geum -‐ Jewel in the Palace (2003), which documents the rise and tribulations of the first female imperial physician in 16th-‐century Chosun Dynasty. In fact, Taiwan was the first Chinese-‐ethnic region that imported this Korean drama series, which later subsequently audience in in Hong Kong and Singapore screen them. Production of a popular cultural product in the case of the East Asian culture industry reflects the relative dominance of the production location in exporting its finished products. Hong Kong and Taiwan are prominent positions in the pan ethnic-‐Chinese segment of East Asian popular culture. Both had strong background in production and export capacity and occupied South Korean popular cultural industry. They also had dominant audience but were constituted of significant ethnic Chinese populations of the nearby countries such as Singapore and Malaysia, and the PRC. Economic marketization in China and the level of development of industries had made a great contribution are behind than other affluent Asian nations due to the socialism. For example, 10 .

(11) from the 1990s when the degree of censorship in the PRC strengthens, popular music performers such as those singing CantoPop switched to Mandarin for their music production in order to catch the huge mainland market. This switch allowed Taiwan to be a prominent place to train, record, and market music for all ethnic-‐Chinese singers and also to accommodate the opening up of the People’s Republic of China as a huge consumer market because much energy was needed for infusion in reviving the Chinese popular music industry in the 1990s. Dense traffic of popular cultural products have crossed national/cultural boundaries in East Asia with help of Hong Kong and Taiwan’s ability to make Korean popular culture, and first few phases of economic marketization in China, Korean dramas could spread to all over the East Asian region. Behind ‘Korean Wave’ phenomenon, there is the backing of the government as cultural export industry (Chua and Iwabuchi 2008). After Asian Financial Crisis attacked Korea severely in the year of 1997, the government decides to export Korean pop culture as part of the national export industry. In addition to the government’s backing, Korean dramas got hold of rapid importation and screening when the other affected East Asian economies sought for cheaper programs than the relatively expensive Japanese dramas. Iwabuchi (2002) explains that popular reception of Japanese represented dramas in Taiwan is based on the sense of ‘coevalness’ between the Taiwanese audience and the drama-‐mediated representation of Japanese. This sense of ‘coevalness’ is described as the feeling that Taiwanese sharing a modern temporality with the Japanese, which constitutes the dynamic vector in generating and sustaining ‘cultural proximity’ between the two (Huat 2004). Taiwan is a small island with small number of population, but with the help of such massive global ethnic Chinese consumer market, Korean dramas were regularly-‐dubbed and -‐subtitled in Chinese scripts (Chua and Iwabuchi 2008). Taiwanese youth have been favorably disposed to Korean pop culture and they are known as ‘ha-‐han-‐zu’ (哈韓族), keen consumers of Korean media and Korean-‐style goods -‐ often to the chagrin of older generations who have bitter memories of Korea signing diplomacy with the PRC while severing the relation with Taiwan (Chua and Iwabuchi 2008). In an age of globalization, Taiwanese 11 .

(12) consumers of Korean dramas and its pop culture have created and experienced transnational consumption space, where they negotiate their own subjectivity formation such as cultural or gender identities. Perception of ‘Korean-‐ness’ has been deeply affected by positive perception on Japanese-‐styled goods. Korea has been the second-‐ or third-‐most visited country for Taiwanese people, following after Japan and the PRC. As the result of ‘Korean Wave,’ not only people but also the products and services are exchanged between Korea and Taiwan. ‘Korean-‐ness’ is a term developed in this study to describe the state of being Korean, which includes having characteristics that are strongly correlated to Korea. Both Korea and Japan are from East Asia and they have made a great impact on the world since their openness to the outside world for the sake of their civilization, and neighboring countries like Taiwan has greatly impacted by these two cultures. Throughout the 1980s and 1990s, Japanese ‘trendy’ dramas have captivated consumerist modernity have fascinated Taiwanese audience, and these audience in colloquial term is known as ‘ha-‐er-‐zu’ (哈日族) (Chua and Iwabuchi 2008). Although Taiwan has the memories of colonization under and wars against the Japanese, Taiwanese youths have been favorably disposed to Japanese pop culture. Their keenness to Japanese products is still carried over to this day. And often, Korean companies have hard time doing business successfully in Taiwanese market due to the perceptions of Taiwanese have on Japanese goods. Even though Taiwan is very open to foreign cultures and foreign goods, being an island that has been invaded by many different countries, most of Korean firms have difficulties targeting Taiwanese market successfully. Taiwan and Korea both have undergone the same bitter history of Japanese colonization; However, Korea and Taiwan have different perceptions about Japan. Korea used to impose an official total ban on the import of all Japanese cultural products in 1945, which was only lifted up in 1998 with the signing of the Joint Declaration of the New 21st Century Korea-‐Japan Partnership that allowed the media freely flow in between the two nations (Chua and Iwabuchi 2008). . 12 .

(13) With no record in history until that Taiwanese holds grudge about 1992 incident where long-‐lasting friendship between Korea and Taiwan abolished with Korea’s establishment of diplomatic relationship with the PRC, Taiwanese people have mixed, and particularly two extreme perceptions about Korea, consists of love and hate. In the beginning of the year 2009, Korean government has built the Nation Branding project as part of the country’s 10-‐Point Plan, after reviewing the U.S. newspaper media, with the aim of moving up from the rank 33 out of 50 countries to the 15th rank by 2013. Though there has been put much effort to active development of a country’s image and reputation and Korea has accomplished to move up to 16th rank (Tab. 1-‐2) as well as the exchange of goods and services between the two countries are ever more flourishing, Taiwanese’ negative perception towards Korean-‐ness has made a negative impact on Korean firms to this day. Tab. 1-‐2 Most Valuable Nation Brands Ranking in 2013 Source: Adapted from "The Annual Report on Nation Brands," by Brand Finance Nation Brands, Dec 2013, p.6 2013 Ranking (2012 Ranking) . Country . 1 (1) . United States . 2 (2) . China . 3 (3) . Germany . 4 (5) . United Kingdom . 5 (4) . Japan . 6 (6) . France . 11 (11) . Russian Federation . 12 (10) . Italy . 13 (15) . Netherlands . 14 (14) . Switzerland . 15 (16) . Mexico . 16 (17) . Republic of Korea . 13 .

(14) FDI is a key to examine the process of the Korean Wave making an impact, if any, to Taiwanese market. Specifically, ways that the Wave brought positively to the operation of Korean companies in Taiwan, in two aspects using a theory called ‘Holy Trinity’, whether there have been change in perception among the Taiwanese about Korea, and lastly, whether there have been increase in FDI as a result of ‘Korean Wave’. 1.1.2 Foreign Direct Investment in Taiwan FDI is one of the indicators of the increasing interdependence of economies in global terms, and Taiwan and Korea has only attracted attention to the significant increase in amount of its FDI flow since 1990s. Developed market economies have majorly been the great source as well as the major destination of world investment stock; and the world economy, specifically since the mid-‐1980s, has experienced a rapid increase in FDI flows faster than world trade or output (Korhonen 2005). Taiwan is a much welcoming-‐place for foreign direct investment (FDI). Unsurprisingly, with government relaxing its restrictions on investments from China to improve cross-‐Strait relations, there have been three rounds of opening up Taiwan’s markets to Chinese capital (PwC 2013). FDI performance index for service sectors in 2003 is 59.5, which is high for its relative size of the economy. (Research for Economy and Finance 2007, Tab. 9). UNCTAD's World Investment Report published the ranking of 141 countries worldwide in 2006, and Taiwan FDI in 2002-‐2004 ranked 19th place, and FDI performance index retrieved in 2003-‐2005, Taiwan ranked 126th place. (Research for Economy and Finance 2007, Tab. 10). However, according to the data retrieved in 2000-‐2002, FDI in Taiwan only indicates 0.9% and 11.3% for flow and stocks, respectively. These figures indicate significantly low number in comparison to Singapore(45.7%, 22.2%), and Hong Kong (38.4%, 10.7%), but higher than Korea in stocks (2.1%, 1.9%) (Research for Economy and Finance 2007). The amount of FDI increases with the increase of one citizen's income, and Taiwan has expanded its engagements with China since the election of President Ma in 2008. Nine rounds of high-‐level bilateral talks and have signed between 14 .

(15) Taiwan and China, with the aim of increasing economic exchanges across the Taiwan Strait (PwC 2013). China has become the largest trade partner for Taiwan, and investment protection and promotion, customs cooperation have been signed in August 2012 to protect cross-‐Strait investors, and bilateral services trade agreement has also been signed by the two sides in June 2013 to further open service sectors to each other (PwC 2013). Unfortunately, according to the data published by the UN, in the year of 2012, FDI in Taiwan has only maintained 1/3 of that of 2007, whereas the other neighbourhood countries such as Hong Kong and Singapore's FDI incremented 20% from 2007, and 10% in Korea (天下雜誌 2014). FDI geography is a significant aspect to look at regional growth and industrial upgrading. FDI can be a major source of regional growth as it can create important technology spillovers in the regional economies. Furthermore, FDI plays an important role in the process of introducing new technology and improvements in the credit allocation mechanisms (Timmer and Ark 2000). This is done by having augmentation of the domestic investment effort as well as associated technology spillovers. This thesis covers from corporates’ perspectives investigating the ways in which they utilize internal (firm-‐specific) and external (territory-‐specific) factors. The framework to be established will have holistic analysis of economic and social processes occurring in the space called Taiwan. This analysis of economic and social processes includes the economic agents and their interactive networks. Exploring means of Korean MNCs’ gaining and building unique local resources in local Taiwanese networks at the helm as well as the relationship between localization and firm performance, the factors that have been involved to make a successful localization, and other competitive resources specifically used in operation in Taiwan are explored. 1.1.3 Multinational Korean Firms in Taiwanese Market Korea, Asia’s fourth-‐largest economy, has always had its economy dependent upon exports due to its lack of natural resources. It has become a major player among the world’s top exporting nations, and by the year of 2012, . 15 .

(16) exports account for 57 percent of the total Korean economy, according to the World Bank2. Korean companies that have enabled themselves to outside of Korea are in large-‐sizes, where various companies are within the umbrella of a few conglomerates. CEO Score, an online corporate productivity evaluation site, compiled a set of data, and out of global top 10 lists of Korea only makes up nine of the 26 major industrial sectors. This reflects the focused nature of the Korea, the major concentration of business sectors of South Korean companies in the world. Data has been gathered based on the sales made in the period of July to September of 2013. Specifically, the Korean companies focus on the business sectors such as IT, semiconductors, shipbuilding, steel and automobiles. Leading in sequence in areas such as distribution, pharmaceuticals, banking and insurance3. Taiwan, an used-‐to-‐be agrarian economy in the 1950s, evolved to be technology-‐ and knowledge-‐intensive industries that provides a great place for Korean firms with its similarities in business sectors, and its resources. Korea has had much willingness to invest, and the percentage that its expenditure on R&D is high, and the driving engine of Taiwanese economy, small-‐ and medium-‐sized enterprises have continued to be the great resources for Korean firms to do further research and to have progress in the development (PwC 2013). Most importantly, the industry that accounts for high percentage of Taiwan and South Korea’s economies is manufacturing.4 Although, since the late 1980s, local labor-‐intensive manufacturers headed their production bases towards overseas due to rising costs and relocated to neighboring countries of Southeast Asia, already-‐existing manufacturing sites have well-‐serve many foreign firms. . 2. Available on http://english.yonhapnews.co.kr/business/2014/01/22/51/0501000000AEN20140122002700320F.html . Access date: Apr 2 3 4. Available on http://english.yonhapnews.co.kr/business/2014/01/22/51/0501000000AEN20140122002700320F.html Available on . http://www.mckinsey.com/insights/winning_in_emerging_markets/south_korea_finding_its_place_on_the_world_stage. 16 .

(17) Another part that many Korean firms enjoy in Taiwan is the center for industrial innovation and R&D. In addition to other major industries include banking and financial services, chemicals, machinery, metals, plastics and textiles that they endowed with in Taiwanese market, it is high-‐tech sector of Taiwan that provided much to Korean firms (PwC 2013). Taiwanese government has been forced to gradually reduce restrictions on technology transfers to China as part of easing cross-‐Strait business restrictions, and also have offered subsidies, tax breaks and other supports to encourage domestic firms with their R&D activities. Taiwan has become an important hub for high-‐tech industries. Taiwan’s talent pool and superior R&D infrastructure subsequently enabled MNCs to establish their R&D centers in Taiwan to date (PwC 2013). In fact, R&D has been a great factor for Koreans to invest and it is one of the top expenditure in proportion to its GDP worldwide (See Tab. 1-‐3). Tab. 1-‐3 Gross Domestic Expenditure on R&D as % of GDP Countries . Gross Domestic Expenditure on R&D as Percentage of GDP . France . 2.1 . United States of America . 2.7 . South Korea . 3.2 . Sweden . 3.7 . Source: OECD Factbook 2009, Organisation for Economic Co-‐operation and Development . 1.2 Research Problem/Aims of the research The aims that I want to find in this research are: 1. To examine cultural processes that explain the ways in which ‘Korean Wave’ has shaped the concept of ‘Korean-‐ness’ and its influence on the operation of Korean MNCs in Taiwan 2. To investigate the ways that which types of industries and/or business sectors of Korean MNCs in Taiwan are impacted by ‘Korean-‐ness’ 3. To decipher forms of presence localized networking linkages and localized knowledge present in the territories that economic agents of Korean MNCs whom make up of ‘Korean-‐ness’ are involved with. . . 17 .

(18) 1.3 Positioning and the Scope of the Study The idea of ‘Korean-‐ness’ is pervasive and has been shaped in East and South East Asia with the widespread of Korean pop culture; there are two extremes in perception about Korean culture and what it is defined as ‘Korean,’ of which is described as ‘Korean-‐ness’ in this study. It investigates on how ‘Korean Wave’ is shaped to make the concept of ‘Korean-‐ness,’ and also on the cultural processes other than ‘Korean pop culture’ have influenced on the shaping of ‘Korean-‐ness’ in Taiwan. This thesis is written to help Korean MNCs about perception of the market, especially the Taiwanese market’s perception of and response to Korean products and cultures that Korean MNCs try to come across, which consequently affects the operation of Korean MNCs in Taiwan. This study is also a significant help for industries and business sectors that are seeking for successful penetration in the market and also for those that are interested in investing in Taiwan. Furthermore, the thesis will look into the forms of presence of Korean MNCs present in the territories in Taiwan, and how economic agents in Taiwanese market form localized networking linkages and knowledge forms. In perspective of Korean firms, the ways in which economic agents are devoted to region-‐specific conventions and practices whilst interacting with local or Korean economic agents, particularly in their communication, adjustment, and learning processes within economic activities and production of goods and services will be examined. Specifically, the ways in which Korean firms operate and interact in Taiwan are explored, in terms of their network formation and knowledge acquiring as well as their level of contribution to innovation and productivity. . 1.4 Limitation of the Study Initially, the aim of the study was to focus on one type of the industry, logistics, specifically, to see the flows of trade between Korea and Taiwan, and its impact on Taiwanese economy. The limitation was the lack of control over the samples and there were many rejections from the potential interviewees within the logistics and trade firms, however, this study have covered 6 out of 8 types of industries of Korean MNCs operate in Taiwan, also covers 10 out of 12 different 18 .

(19) business sectors that are in operation in Taiwanese market. Another limitation was the lack of professional knowledge for each industry that I could gain in the limited given time period. Not only that, it was hard to gain the knowledge in such wide range of industries and variety of business that Korean MNCs participate in the market. . 1.5 Outline of the Study Storper’s model is used for this study that exhibits substantive empirical domain in the field of regional economics and territorial development, using technologies, organizations, and territories to examine the study on the concept of ‘Korean-‐ness’ in Taiwanese market, the ways that Korean MNCs respond to the positive and negative feedbacks from the market, and their localized networking linkages and knowledge present in the territories. Despite the fact that Korean pop culture has been pervasive and gained much popularity in Taiwan, the perception about ‘Korean-‐ness’ differs to a significant level, where the graph would be in ‘M’ shape, either Taiwanese love or hate ‘Korean-‐ness’. There are historical and cultural processes that may explain such hostility against ‘Korean-‐ness’. Both Korea and Taiwan do not have natural resources and depend highly upon the exports of goods to the outside world, and both have experiences of Japanese colonial rules. They have also undergone democracy in the similar periods. Along with similar experiences they share as well as their geographical proximities, Korea and Taiwan have similar industry categories for goods they manufacture, which made them to become cooperative business partners as well as competitive rivals. Moreover, there are numerous historical events such as Korea’s 1992 consensus with China and also false news reports that Taiwanese and Chinese media arranged to attack the reputation that Korea has as a country reporting that Korea willfully exhorted of the ownership of origin of Dan-‐Wu Festival, Soybean soup, and the Confucious. The rest, except one event about Dan Wu Festival, are found to be made-‐up stories. Despite Taiwanese market being relatively open market to foreign goods with high level of curiosity of and tolerance to varieties of products and services 19 .

(20) introduced in the market, there are findings that Korean MNCs can look into. B2B firms experience much fondness towards ‘Korean-‐ness’ because of the usual big size of Korean MNCs with high level of financial stableness, and they have benefited in acquiring networking linkages in Taiwanese market. Moreover, the limited number of business partners that MNCs face also reduces the assumption that clients may have with the concept of ‘Korean-‐ness.’ For example, construction and logistics face fondness for being Korean MNC and the only B2C firm that has received positive response for its ‘Korean-‐ness’ is Cosmetics firm. Otherwise, Korean MNCs in B2C form often face strong resentment from the market for the concept of ‘Korean-‐ness’. Market resentment towards Korean-‐ness is prevalent in business sectors such as automobile parts, home appliances, and dental. Moreover, the perception about ‘Korean-‐ness’ is highly relevant to market penetration, and particularly to the market’s fondness toward products and services offered by Japanese firms. Therefore, Korean MNCs face high competition against the Japanese firms as well as the local Taiwanese in the market. . 20 .