Foodpolis to offer companies a route to China from scandal-free Korea

By RJ Whitehead in Iksan, South Korea

- Last updated on GMT

Foodpolis to offer companies a route to China from scandal-free Korea

Related tags Food Food industry

An afternoon in the company of a provincial Korean mayor clothed in silky blue national dress isn’t the standard recipe for a Tuesday. But he is insistent, and it’s time well spent when you consider the importance to the local economy of what Iksan’s chief dignitary is promoting.

His city, a dusty and dishevelled urban centre in the heart of South Korea’s food belt, has seen better days, though it holds high hopes that prosperity will return soon through the development of Foodpolis. The mayor’s pet project is being billed as the “Korea National Food Cluster​”; the idea is ambitious and deserves mention far beyond North Jeolla province, where it is located.

The expectation in the eyes of Park Kyung-Chul, the mercurial, perma-grinning mayor, is hard to miss as he explains what this development means for Iksan and its surrounding townships. His words, spoken through an interpreter, are recorded by Korea’s own press to drum up local public support for the multi-billion project.

Mayor on a mission

His area will benefit most, he says, from plans to build what is claimed to be the first government-supported, wide-scale industrial food complex in Asia. At 2.3m square-metres (24.8m square-feet), Foodpolis will be home to a large number of global companies and research institutes and serve as an export platform for investors to the wider northeast Asian region. 

Park says it will house the next generation of food processing and packaging technology that he hopes will drive growth and opportunity for Iksan and the broader Korean economy. This will require Asian and American companies to sign up en masse with the zone.

Located 100km (60 miles) from Korea’s new government headquarters, Sejong, Iksan was once the capital of the ancient Baekje kingdom. The nearby Mireuksa temple complex has been declared a Unesco world heritage site, but other than that and its rich surrounding rice-driven farmland and major railway junction, there isn’t much going for Iksan—certainly little to attract international attention.

But the fiscal benefits, including the offer of total corporate income tax exemption for five years; local tax-free operations for 15 years; no tariffs on capital goods imports; and rents that are either free of charge or subsidised by three-quarters, should be sufficient to pique interest in Foodpolis.

Add to that the cluster’s plans to build an industry hub that has access to roughly 50 major cities with populations of more than 1.5m people within the range of a two-hour flight; a transportation hub that enables 24-hour exports to China, Hong Kong and Japan; and a country base with nine free-trade agreements with over 50 countries in the EU, North America and Asean region, food majors will be sensing a heady brew of benefits. 

Logistically, it has good links to ports and is now just an hour away from Seoul via a new high-speed rail link. Research support comes from several food-focused universities and institutes nearby.

The idea is for Korea’s national food cluster to mimic the successes of similar established projects in Napa Valley, Food Valley in the Netherlands, the Scandinavian Oresung cluster and a less-centralised hub in the Emilia-Romagna region of northern Italy. These examples are trumpeted often by Korean politicians and are clearly points of envy.

24.8m square-feet of development on its environs will transform Iksan

Advanced food manufacturing countries have already produced tangible results through the concept of the food cluster​,” says Lee Jun-won, deputy minister for food industry policy, again citing the world’s other food hubs.

The Korean government has decided that building a food cluster will be the most effective way for the country to enter the global food market​. Our vision is to become a new centre of this by encouraging leading domestic and global food companies and research centres to move in​.”

Although it still appears as a flat green plain bereft of industry, the Foodpolis site is already around one-fifth complete and it will be ready for companies to open their doors at the end of 2016.

At the time of writing, the developers have signed 113 memoranda of understanding with a range of international and domestic business, which they have attracted on the back of a global promotional tour.

Five Korean food industry majors have signed land purchase contracts, while a further six foreign companies have announced their own investments. 

Sempio is among the Korean companies to have signed a memorandum of understanding with Foodpolis to set up a research centre and a production plant for fermented food there. 

The Korean jang​ major and specialist in kimchi sauces, which exports goods to 76 countries including China, said it was tempted by the surrounding area’s reputation for the development of fermentation and its cultivation of rice.

Deputy minister Lee

The core strategies are to establish a cluster of business-friendly infrastructure and support facilities, building a platform on which companies large and small can produce value-added goods and services for the local and regional food market​,” explains deputy minister Lee.

Our goal is to achieve KRW15tr [US$13bn] in sales, US$3bn in exports and 22,000 new jobs each year by 2020​.”

No wonder the Iksan mayor’s eyes were twinkling at the prospect of the mass job creation, presiding as he does over a municipal population of around 320,000.

South Korea believes it occupies a special place in the consciousness of the international food industry, judging by what the politicians say.

With a reputation for wholesome food, untainted by scandals, and a long tradition of developing fermented foods, they believe the country can differentiate itself from China, its much bigger and often beleaguered neighbour—at least in terms of food safety. 

Food companies in America have shown an interest in entering the Chinese market through Korea, with which they share a similar business environment​,” says Lee.

In the case of Chinese consumers, when food is produced here in Korea and then exported there, manufacturers can use the 'Made in Korea’ brand value. Therefore, Chinese food companies believe that it is advantageous to invest in Foodpolis​.” 

Korea could also play a role as a test market for companies looking to export to China but as yet uncertain about the market, the deputy minister adds.

Foodpolis is taking shape in time for its opening next year

Having spent years on the drawing board and the last 12 month signing MoUs with interested companies, the politicians behind Foodpolis are raring to go and visibly excited at the prospect of launching an Asian food hub. 

The minister can only see benefits to the country, and the mayor is delighted by the potential of its impact on the local economy. But it also appears to be something that will be of use to prudent Chinese companies looking for an avenue to bypass consumer ennui that comes from the state of their country’s manufacturing reputation. International players, too, will be keen to tap into this.

But it is yet to be seen whether such generous incentives for Foodpolis will please local residents, who will foot a large part of its bill, over the long-term. Still, widespread expected job creation and a dot on the industrial map for Iksan’s traditional farming communities will provide some definite solace. It looks like Korea has hit on to a pretty good idea with its fledgling food cluster.

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