About a month ago, I visited the Dalian Shipbuilding Complex of STX Offshore & Shipbuilding in China at the invitation of STX Business Group which celebrated the 10th anniversary of its foundation. About 28,000 employees worked at the complex under an integrated production system, producing parts and building ships on a total area of some 5.5 million square meters (1.7 million pyeong),

which is 1.7 times the size of Yeouido. With apartment buildings for the workers and their family near the shipyard, Changxingdao, one of the most underdeveloped regions in China, was reborn as the so-called "STX Town." However, it was a pity that such a giant shipyard had to be built in China, not in Korea. Here, we need to reason with the decision of STX on Dalian rather than any coastal city in Korea as a site for its investment.

Obviously enough, it was the one-stop administrative service of the central government and the local government of Liaoning Province in China that helped Korea's STX Offshore & Shipbuilding build the world's largest shipbuilding complex not in its homeland, but in Dalian, China. They have simplified all communication channels for corporate investment, according all rights on the city government so that its officials made door-to-door visits to address civil complaints. The provincial government even expanded infrastructure, including the construction of the 100km-long expressway from Dalian Airport to the STX construction site.


At the dawn of the 2000s, STX came up with an idea to expand its existing Jinhae Shipyard to foster it as a next-generation production hub, boosted by the boom in the global shipbuilding business. Its shipyard expansion plan, however, was baffled by opposition of environmental groups and some residents. For the very same reason, its plan to secure a reclaimed land on Sujeong Bay, Masan, to build a shipbuilding block factory also hit a snag. Due largely to such a domestic investment barrier, STX came to pick Dalian as an alternative.

The investment environment of China is a far cry from that of Korea's. The factory was built on an area of 1.7 million pyeong in the Dalian tidal flat in just two years. The central government and the local government of Liaoning Province in China have simplified all communication channels for corporate investment, according all rights on the city government of Dalian, to provide one-stop administrative service free of any intervention by the central and provincial governments. Its officials made door-to-door visits to address complaints by citizens.

The provincial government even expanded infrastructure, including the construction of the 100km-long expressway from Dalian Airport to the STX construction site. In April last year, STX Dalian won permits to build large-size ships, which is a rarity for a foreign company, and secured a chance to evolve into a world-class shipyard.

The government has been in hot pursuit of across-the-board institutional reforms in corporate management, including regulatory improvement. As a result, Korea's ranking appraised by the World Bank jumped from the 23rd in 2008 to the 16th in 2010 in corporate environment. In the meantime, corporations remained more and more satisfied with regulatory reforms. In actual business,

however, investors sometimes have no other choice but to turn their eyes overseas owing to various regulations and civil complaints. In many cases, some civic groups and residents make excessive demands for industrial facilities, and local governments in charge of handling such complaints often ask the investors to deal with them on their behalf.

Then, enterprises are likely to shoulder more expenses to defuse the complaints than originally planned or miss a proper timing for investment. For instance, it took just six months to create an area of 1.7 million pyeong for the Dalian Shipbuilding Complex by cultivating mountain