The whole world has been keeping its eye on Mongolia’s economic growth. Although Mongolia has experienced considerable socio-economic instability during the process of the regime transition in the early 1990s, it has managed to establish the market economy in a relatively short period of time and reached an annual average growth of 9% in the mid 2000s. Despite the rapid fall in the growth rate due to a global financial crises, Mongolia has quickly recovered its trend to accomplish astonishing 17.4% in 2011.
For such reasons, the international assessment on Mongolia has undergone noticeable changes. Leading international organizations and assessment institutions are presenting optimistic prospects for Mongolia’s economic growth, while foreign investments into Mongolia continue to increase. With such changes in Mongolia’s investment environment, expanding opportunities for market entry has become an urgent issue for Korean businesses.
Given such background, this research provides a systematic analysis of Mongolia’s overall investment environment, and identifies management situation and difficulties of Korean firms in Mongolia, in order to elicit ideas for specific measures and policy implications in order to expand market entry by Korean businesses. In particular, this research tries to provide detailed information and analysis through a survey research on 59 Korean firms in Mongolia, along with in-depth interviews of local professionals and company representatives.
Chapter 1 forms an ‘introduction’ that includes the significance and objective of this research, literature review to emphasize the contribution of this research, research methodology and the overall structure of this research.
Chapter 2 describes ‘Mongolia’s economic situation and mid to long-term prospects,’ providing an overview of Mongolia’s current economic state, its main policy objectives, and mid to long-term prospects for growth. Mongolia’s major industries include mining, agriculture and stock-farming, manufacturing (cashmere and textile processing), wholesale and retail, and tourism among others, while mining is the engine of growth. Mining represents about 20% of the GDP, about 60% of the total industrial production, and about 80% of total exports. The share of agriculture and stock-farming is decreasing, but still holds the largest number of employees. The share of manufacturing is under 10%, but helped by aggressive industrial policy initiated by the Mongolian government, it is showing a growing trend. The wholesale and retail, and the real estate business sector is consistently increasing their respective shares due to economic growth (driven the mining industry), or the so-called spending effects.
Presently, the main economic policy objectives of Mongolia include the development and diversification of industries to fully implement the benefits of its resource-based economy, along with price stabilization, reduction in unemployment rate and poverty eradication, effective application of economic policies, industrial policy realization, and control of the macroeconomy, among others. The Mongolian government hopes to provide and meet the mid-term national development strategy and realization plans in accordance with abovementioned policy objectives. Successful implementation of these policy goals is likely to shed a light of optimism to Mongolian mid-term economic outlook.
The third chapter, ‘Mongolian investment environment,’ analyzes in detail the overall investment environment of Mongolia, along with its infrastructure, labor system, and legal and institutional structures. Despite its vast territory, Mongolia is a country with a small population and generally poor infrastructure. For such reasons, the Mongolian government is increasing its investment in infrastructure for railway and road expansion, expansion of airway services, securing energy supply, information and communication technology development according to its mid-term national development strategy.
Labor market of Mongolia is characterized by its small labor population in comparison to other Asian countries. Particularly apparent is the imbalance between the demand and supply in the labor market, with high levels of unemployment despite increasing job openings due to rapid economic development. It is explained by the lack of skilled workers and low wages causing movement of local labor to foreign markets.
For its part, the Mongolian government has been improving its legal and institutional structures to promote foreign investment. It has established several laws on foreign investment to assure that foreign and domestic investors have equal rights in production, sales, and investment. The government has also concluded the Stability Agreement for foreign investors, including provisons on free trade areas, approved the use of land, applied low levels of tariff along with other incentives.
Chapter four, ‘Foreign investments to Mongolia and their strategies’ discuss the current circumstances and trends in FDI to Mongolia. The chapter provides a comparative analysis of the investments and entry strategies of China, Russia, Japan, Canada, United States, and the EU countries. Currently, China is first in foreign direct investment to Mongolia, which can be explained by the increase in China’s demand for Mongolian mineral resources and the relatively good condition of railways and transportation routes between China and Mongolia. Chinese businesses concentrate on various types of mineral resource development, while avoiding overlapping investments with other businesses.
Russian investments in Mongolia generally involve mines, mineral processing factories, and infrastructure already built during the past Soviet era. Unlike their Chinese counterparts, Russian businesses prefer joint investment, which is the traditional method of cooperation between Mongolia and Russia. On the other hand, Japanese investment is relatively low primarily due to geographical reasons, but is increasing nonetheless. Japanese businesses have been cooperating with local Mongolian businesses and investing in manufacturing, foodservice, and information and communication industries, but recently turned its attention to mining as well. Canada is another leader in investment, with the 6th largest total investment volume among foreign investors. Because mining industries require large volumes of capital, investment by Canadian businesses occurs in various ways, including individual investment, joint investment with Mongolian businesses, and joint investment with a third-party. United States, which is 8th in terms of its total investment volume, has been also investing primarily on mineral resources, but recently expanded into other industries such as trade, foodservice, and banking.
Chapter five, ‘Investment to Mongolia by Korean businesses and their management evaluation,’ introduces the current state of Korea’s investment to Mongolia, analyzes the motives for investment motivation, obstacles in local management, and their achievements based on a survey research on 59 Korean businesses in Mongolia. The research also provides a basis for policy implications for future business entry included in this chapter. According to the survey results, Korean businesses focus primarily on mining, services, wholesale and retail, lodging and foodservice industries, while manufacturing has a very low share. The businesses are mostly small scale with less than 10 employees, but their sales volume vary accordingly, and a large number of them have entered the market in the end of 2000s when optimistic prospects on Mongolian economy were dominant.
It turns out that most Korean businesses in Mongolia had experienced a lot of difficulties due to complex administrative structures, investment approving institutions, and frequently changing behavior of their local partners. They were also forced to procure their resources and operating funds in Korea due to Mongolia’s underdeveloped manufacturing system and poor banking infrastructure. The goods and services of the local Korean businesses were mostly sold in local markets, with the quality of those goods and services being above the average, and garnering high brand awareness. Also, because of the poor distribution network in Mongolia, local sales were occurring either directly by Korean businesses or indirectly through local partners. The greatest obstacles included difficulties in collecting loans and payments due to poor banking infrastructure, and price competition with cheap goods from China. Greatest difficulties in wage and employee management were rapid increase in wages and the high employee turnover rate. Overall, the business environment in Mongolia is characterized by particularly poor infrastructure; and while there are some problems in procurement of raw materials and resources, employment, and management of the personnel; there were almost none in terms of labor management conflicts, surtax refund, or the local administration interference.
The net profits of local Korean businesses appear to have increased continuously over the last three years, which has led businesses to consider expansion or at least maintenance of status quo rather than withdrawal or volume reduction. Also, these businesses are aiming to strengthen their marketing strategies and expand their entry in local markets, while trying to bestow the impression of good quality on their anchor products. In observing the overall business obstacles experienced by these enterprises, there are readily noticeable problems in employment, wage, and taxes; while the problems are not as apparent in terms of banking, foreign-exchange, and investment barriers. Looking into concerns raised to Korean government and public agencies, the businesses were most in need of stronger consular functions, investment information services, and banking support. On the other hand, concerns raised to the Mongolian government include issues regarding visa services and long-term visas, freedom of economic activities for foreigners, and improvements in the distribution sector. 
Based on these findings, chapter six, ‘Measures to expand Korea’s investment to Mongolia’ reconfirms the need for investment expansion, introduces the promising sectors for entry expansion of Korean businesses, and provides policy suggestions for the Korean government in establishing an active support system.
In sum, Mongolia’s investment environment holds potential in mining, plant industries, infrastructure development, tourism, banking, and manufacturing sectors for Korean businesses. Korean government needs to provide structured investment information, come to an agreement on visa waivers, reinforce consular services, place greater efforts to improve the image of Korea, and reinforce the local human networks.
In conclusion, considering the overall prospects of Mongolia’s economic growth and market expansion, Mongolian government’s efforts to stabilize its laws and institutions concerning the economy and investment, the quantitative investment growth to Mongolia, the entry expansion and diversification of Korean businesses constitutes urgent policy priorities

국문요약 

제1장 서 론 
1. 연구의 필요성과 목적 
2. 선행연구의 검토 및 연구의 차별성 
3. 연구의 방법 및 구성 

제2장 몽골의 경제 현황과 중장기 전망 
1. 몽골경제의 주요 현황 
2. 몽골경제의 주요 정책과제 
3. 몽골경제의 중장기 성장 전망 

제3장 몽골의 투자환경 분석 
1. 몽골의 전반적인 투자환경 
2. 인프라환경 
3. 노동환경 
4. 외국인투자 관련법 및 인센티브 

제4장 주요국의 대몽골 투자 현황과 전략 
1. 대몽골 외국인직접투자 현황 및 최근 추세 
2. 주요 투자국가별 분석 
3. 국별 진출전략 비교 분석 

제5장 한국기업의 대몽골 투자 현황과 경영실태 분석 
1. 한국의 대몽골 투자 현황 
2. 투자기업의 투자동기 및 경영성과 분석 
3. 현지 경영의 문제점과 애로사항 
4. 경영성과 분석과 시사점 

제6장 결론: 한국의 대몽골 투자 확대방안 
1. 투자 확대의 필요성 
2. 한국기업의 유망 투자 진출분야 
3. 정부의 적극적인 지원체계 구축방안 

참고문헌 

부  록 

Executive Summary