Korean textile companies set base in Guatemala due to its geographical proximity to the US market and cheap labor. But now these companies are facing problems of higher wages, scrapping of tax benefits and a fall in demand for garments in the United States. Apart from these, corporate tax benefits now available for foreign businesses will be disappearing from next year.

Korean textile companies account for 45 per cent of the industry in the Central American country. Nearly 60 per cent of garment products in Guatemala are sold in the US market. In 2012, garment products reportedly account for 11.7 per cent of the entire exports of the country, followed by coffee (9.5 per cent) and sugarcane (7.9 per cent).

The textile industry has created nearly 90,000 jobs in his country. One Korean company alone created 7,000 jobs. These businesses are operated by Korean emigrants who migrated to Guatemala in the 1980s when a textile boom was created. Over 8,000 Koreans are now living in Guatemala.

But now, feeling the pressure, some Korean companies are mulling relocating their factories to neighboring countries, such as Nicaragua and Haiti, in search of a better business environment. 

The government of Guatemala insists it is doing its utmost to retain business, and attract more investment, by creating new incentives for foreign investors, like Korean businesses.