The recent international political and economic environment in Central Asian countries have recently been undergoing rapid change. Given the situation, the importance of analyses on cases of investment by foreign companies in Central Asian countries have become more important.
The investment climate of Central Asian countries is generally acknowledged to be inadequate. The procedures for establishing businesses are complex, business practices lack transparency in any sense, and government policies are inconsistent. Also, infrastructure is poor due to lack of investment for roads, railroads, and ports. Therefore it is necessary, through various analyses, to prepare diverse strategies for investment in Central Asian countries.
This study focuses on analyzing characteristics of investment of foreign companies in Central Asian countries. We find several implications in this study for Korean companies concerning future strategies for investment in Central Asian countries.
First, there is a high possibility that service sectors in Central Asian countries will expand from continued economic development. The progress toward greater openness in markets of Central Asian countries will also increase the possibility for opening of several service industries that are now closed to foreign investors. Therefore, competitive Korean companies will be able to enter the various service sectors like insurance and banking. In addition, there will also be much potential with respect to investment in fundamental service sectors like education and medicine, which are not strong in Central Asian countries.
Second, human resource management in Central Asian countries will become more globalized and organized in accordance with social changes of these countries. Thus Korean companies that expect to invest in Central Asia would have to adopt a more transparent system of recruiting and incentive programs for employees, as roles and functions of labor unions in Central Asia will expand compared to present.
Third, Korean companies should prepare marketing strategies based on the those of foreign companies currently doing business in Central Asia. The analyses on social changes in Central Asia should also be reflected in their marketing strategies. As Central Asian countries’ economies grow, the importance of both global strategy and localized marketing strategies will increase. The economic development of Central Asia will also lead to the expansion of the middle class and strengthen its purchasing power.
Generally, Korean companies that will be doing business in Central Asia should try to adopt investment strategies that will accord with socio-economic changes in Central Asian countries. Another factor that should be considered is that economic cooperation among Central Asian countries and with CIS countries will increase. As a result of these processes, the Central Asian economy will integrate into a single economy. The economic integration will promote intra-regional trade and change the trends of investment and trade through institutions like common custom duty, etc.
Also, Central Asian countries will continue to foster policies for industrial diversification along with their economic development strategies. Each Central Asian country has adopted its own economic development strategy but all revolve around the same core concept: development of manufacturing industries. Central Asian countries want to lower the share of energy industries and agriculture in their economies, and expand that of manufacturing. Therefore, the focus of Korean companies’ investment should be on the manufacturing industry that each Central Asian country plans to promote.
Central Asian countries have common characteristics including a socialist past, their status as transition countries, the importance of personal connections and a certain degree of non-openness. These characteristics have had much influence on their economies. Therefore, the peculiarities of these economies were major considerations  when foreign companies invested in Central Asian countries. However, the characteristics listed above have decreased in significance as their economies have become more capitalistic and institutionalized during transition periods. Accordingly, Korean companies must keep these factors in mind when engaging in human resource management, and preparing marketing strategies related to investment in Central Asia.