
South Korea (also referred to in this paper as the Republic of Korea – ROK) is Poland’s most important partner. Unfortunately, the number of South Korean projects realised in Poland tends to decrease as Polish authorities lose public tenders to regional competitors such as Hungary and Serbia. This paper explains why Serbia may replace Poland as a strategic outsourcing centre for South Korean companies in Central and Southern Europe.
In mid-March, the Serbian ambassador to South Korea indicated that Serbia could become a major food supplier to South Korea, citing the fact that almost thirty percent of the total amount of corn imported by Korea comes from his country. Moreover, Korea was seen as a potential model for Serbian economic reform. These are the qualifying words of the Serbian government and the current centrist leader, Aleksandar Vučić, who has led Serbia since May 2017. Innovation and technology are driving South Korea’s economic development, which is of particular interest to the Serbian leadership.
When assessing Belgrade’s dependence on Seoul, the role of South Korea in the Serbian economy cannot be underestimated. Between 2020 and 2021, bilateral trade increased by almost fifty percent, from EUR 250 million to EUR 370 million. Serbia’s imports from South Korea include electrical and electronic equipment and machinery, such as boilers and IT systems. This is due to the role of South Korean companies in the field of digitalisation and improvement of electronic services for public administration in Serbia.
By 2020, the value of Serbian exports to South Korea will be less than EUR 10 million. In 2021, Serbian exports will be multiplied by eleven through the export of ore slag and ash to South Korea for a value of almost EUR 110 million. South Korea represents one per cent of Serbia’s foreign trade, and Serbia accounts for less than half a per cent of South Korea’s exports.
Historical Background
Historically, South Korea established diplomatic relations with the former Socialist Federal Republic of Yugoslavia on 27 December 1989. The former Yugoslavia had close relations with North Korea. Until 1989, the former Yugoslavia maintained close relations with North Korea. Kim Pyong-il, the half-brother of Kim Jong-il, served as a military attaché at the North Korean embassy in the Serbian capital, Belgrade, from 1982 to 1984.
South Korean Foreign Minister Choe Ho-jung visited Yugoslavia in March 1990. Yugoslav President Borisav Jović visited South Korea and signed an air transport agreement in November of the same year. Meanwhile, Serbia and South Korea opened resident embassies in February 1990. Despite the dissolution of Yugoslavia in April 1992, relations between the two countries continued, although to a lesser extent due to the unstable situation in the Balkan region. Institutionally, these two European countries also maintain their respective embassies. Since 2015, there is also an office of the Korea Trade-Investment Promotion Agency (KOTRA) in Belgrade. KOTRA contributes to and aims to develop bilateral relations between South Korea and Serbia.
Economic Cooperation
Until 2014, the two countries lacked meaningful cooperation due to the ongoing civil war in this European region, which remains unresolved as of January 2023. The situation changed in the mid-2010s when the Serbian leadership understood the potential economic impact of South Korea on the Serbian economy. By 2022, one in every four hundred Serbians will be working for Korean companies. The COVID-19 pandemic was the next driver of increased cooperation between Serbia and South Korea. In April 2021, Serbia received its first set of COVID-19 vaccines from South Korea. Seoul also provided significant financial assistance to Serbia in relation to the migrant crisis. However, as of February 2023, there are no humanitarian agreements between the two countries. This humanitarian cooperation does not lead to increased opportunities, but it certainly improves the awareness of the Serbian population when it comes to South Korea. The issuance of a postage stamp in 2015, marking 25 years of diplomatic relations between Serbia and Korea, has reinforced this awareness.
In terms of investment relations, unlike 2014, when no foreign direct investment from South Korea was recorded, the following two years saw more than EUR 62 million invested, marking the period of the largest inflow of FDI from South Korea in the last 10 years. Since 2016, the volume of FDI has been decreasing, and in 2019 it amounted to EUR 5.8 million. From a reciprocal perspective, there are no Serbian investments in the ROK.
A relatively small number of companies from South Korea operate within the territory of Serbia. The first significant investment relates to the construction of an auto parts factory named “Jura Shinyon” in 2010. There are two additional investments: “LS Group” (wire industry) and ” Kyungshin” (cable industry) launched respectively in 2019 and 2021. Its success would hide the failure of “Jura Shinyon“ which closed its production of car spare parts due to large business losses. “Jura Shinyon” was also not fully respecting its workers as the company forbids its employees to use toilets during long shifts and female employees were even denied break time.
The Serbian government’s strategy is to offer clear incentives to foreign companies wishing to invest in the country. For example, the aforementioned „Jura Shinyon” Jura has invested 60 million euros in Serbia between 2010 and 2021, but almost half of this investment (28 million euros) was subsidised by the Serbian government.
Direct flights between Belgrade and Seoul could also emphasise this economic cooperation. In 2017, the deputy foreign minister of the Republic of Korea, Cho Hyun, emphasised the great interest of Korean companies in participating in the concession of the Belgrade airport, as well as in establishing a direct flight between Seoul and Belgrade.
The spread of the Korean culture in Serbia
When it comes to the spread of Hallyu in Southeast European countries, this region has been a late adopter of the booming Korean culture, mainly due to a lack of interest among the civilian population in each other’s cultures. The COVID-19 pandemic changed the situation, as the lack of physical interactions led to a sharp increase in social networks, which facilitated the spread of Korean culture among Serbia’s 6.7 million inhabitants.The organisation of Korean cultural events in Belgrade, such as the local K-POP festival, has been promoting awareness and understanding of Korea among the Serbian public since 2015. The ROK is also funding Korean studies in Serbia through elective Korean courses at the University of Novi Sad. A university in Seoul, the Hanguk University of Foreign Studies, also offers a degree in Serbian, one of the six Slavic languages available for study. Without Serbian universities offering degrees in Korean studies, South Korea may continue to be perceived as exotic and unknown.
Findings
Despite a limited cultural partnership, there is strong business cooperation, which is obviously asymmetric between the two countries. Serbian investments in the ROK are practically non-existent. The presence of South Korean investment in Serbia could be boosted if the country joins the EU. Serbia officially applied for EU membership on 22 December 2009. Croatia’s entry into the EU in January poses a significant threat to the future of relations between the two countries, as it will undoubtedly streamline investment procedures. Another weakness of South Korea’s presence in Serbia is the small number of its citizens in the country. According to the South Korean Ministry of Foreign Affairs, there are sixteen South Korean citizens in North Macedonia, thirty in Kosovo and one hundred and thirty-six in Serbia as of 2021.
From a broader perspective, the South Korean authorities have chosen two countries within the CEE region where they would maintain a high position. The first country is Poland, where South Korea was the main foreign direct investor in 2021. Among the southeastern European countries, Serbia leads in trade with the Republic of Korea, as evidenced by the decline in South Korean exports to Croatia since 2016. The ROK is also Serbia’s third economic partner in the Asia-Pacific region. As mentioned in the introduction of this paper, Poland is losing its strategic position as an outsourcing centre for South Korean companies. The Polish authorities urgently need to understand the reasons for their failure to win public tenders.
Seoul and Belgrade have goals that can be mutually beneficial. Seoul wants to expand its reach to other markets around the world, partly reducing its economic dependence on China, which can be perceived as an authoritarian state. China is a huge economy, but Serbia has an available and growing skilled labour force that South Korean companies can tap into. A second argument is that Serbia has unique advantages, such as one of the lowest corporate tax rates in Europe at 15 percent. Third, there is also an agreement between these countries to avoid double taxation on income. Fourth, in 2010, the two countries signed an agreement to reduce trade barriers for some 2,000 agricultural and industrial products. Serbia and other CEE countries have the strengths and economic potential to help South Korea achieve these goals. On the other hand, Serbia needs foreign investment from developed countries like the ROK to boost investor confidence in its overall economic viability and as a compelling argument for faster EU accession.
On the legal front, there is a compelling case that could potentially shape bilateral interests. South Korean authorities have issued an arrest warrant for Terraform Labs founder Do Kwon, who is hiding in Serbia, accusing him of violating South Korea’s capital markets law. In February 2023, a team of South Korean prosecutors travelled to Belgrade to ask the Serbian government for help in tracking down Do Kwon. The Serbian authorities agreed to cooperate, probably in order to maintain good relations with South Korea. The future of the case is uncertain because, firstly, South Korean prosecutors have so far been unable to convince a court in Seoul that the charges against Do Kwon have merit. Secondly, the lack of a bilateral extradition treaty between South Korea and Serbia could potentially jeopardise the extradition.
From October 2024, the future of South Korea-Serbia relations will also depend on the future outcome of the Russian invasion of Ukraine, which could be the start of a wider war. This context would make it difficult to draw any viable and long-term conclusions regarding the Republic of Korea-Serbia relationship. If the Serbian authorities somehow support the Russian authorities, this could also jeopardise relations between Belgrade and Seoul, as EU sanctions could be passed on to Belgrade. This is possible because about 85 per cent of Serbia’s gas supply comes from Russia.
A more optimistic approach could be based on the recent visit of KIA CEO Ho Sung Sing to Serbia in October, where he highlighted not only the improving cooperation between the two countries in the field of high technologies and the automotive industry, but also the growing interest of South Korean companies in investing in the Serbian market. If the Serbian authorities cooperate in the Do Kwon case, it could significantly boost bilateral relations between the two countries, as Seoul could rely on Belgrade in legal matters.

Nicolas Levi Analyst on North and South Korea. He is an assistant professor at the Institute of Mediterranean and Oriental Cultures of the Polish Academy of Sciences. Author of 7 books, more than 20 academic articles, and over 50 analytical reports on the Korean Peninsula, Poland, and related issues. He conducts lectures at top universities in Poland and abroad.
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