VIEW

Photo courtesy of Yonhap News

[Alpha Biz= Paul Lee] South Korea has fallen to third place in global companies’ preferred locations for Asia-Pacific regional headquarters (RHQ), marking its first drop in four years amid concerns over rigid labor policies and increasing regulatory burdens.

According to the American Chamber of Commerce in Korea on April 15, South Korea recorded an 11.8% preference rate in its “2026 Business Environment Survey,” trailing Singapore (58.8%) and Hong Kong (17.6%). Korea had maintained second place since 2022 but slipped to third in the latest survey. Japan, China, and Dubai were tied for fourth.


The survey, conducted from January 26 to February 27 among around 60 member companies, identified labor policy and market flexibility (71%) as the top constraint to establishing regional headquarters in Korea, followed by regulatory issues (61%), including lack of alignment with global standards.

Respondents also cited legal risks for executives and regulatory uncertainty as key concerns, noting that these factors affect not only short-term investment decisions but also long-term corporate strategies.

AmCham Korea stated that while global firms continue to view Korea as a stable market, structural challengesparticularly in labor and regulatory systemsare increasingly seen as limiting its competitiveness.

Despite these concerns, the overall business environment in Korea remained relatively positive, with a net positive rating of 23.4 percentage points. However, companies are becoming more cautious, with only 46.9% planning to maintain current investment levels.

The constraints also extend to future industries such as artificial intelligence (AI), where companies highlighted the need for improvements in data utilization frameworks, cross-border data transfer rules, regulatory clarity, cloud infrastructure access, and talent acquisition policies.

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/ 알파경제 Paul Lee 특파원