South Korea was not always this affluent. For the past 100 years since 1919 when the first South Korean modern corporation Kyungbang was founded, the country has transformed itself from an agricultural economy into the one with strengths in the light industry, the heavy chemical industry and then the advanced electronic industry. As of 2018, it was the world’s 12th largest economy with GDP per capita of 32,000 U.S. dollars, 477 times higher than that of 1953 when Seoul was reduced to rubble during the war. Everyone would agree that businesses were incremental in this unprecedented achievement, especially conglomerates that were on the frontline. However, beside all that, it is not an overstatement to say that the history of the Korean economy is the history of conglomerates.
To celebrate the 100th anniversary, the Dong-A Ilbo has published a special report, “100 years of Korean businesses and their quantum leaps,” which introduces 100 remarkable moments selected by 30 experts from the private sector. Samsung’s Tokyo Declaration that the company announced its plan to venture into the semi-conductor industry came in the first place, followed by POSCO’s production of molten metal and the launch of Pony, the first South Korean car. Samsung has become one of the market leaders since then although its ambition invited mockery from Intel, which dismissed it as delusional thinking. Samsung was not alone in this. In all industries including car manufacturing, steel, shipbuilding and chemicals, South Korean companies were laughed at first. However, they have become the pillars of the Korean economy turning the impossible to the possible. The government also played a critical role by formulating a five-year development plan with an aim to develop an export-driven economy with a strong heavy chemical industry and supporting and encouraging businesses.
Unfortunately, many voice concerns that the Korean economy is now on the decline. Young people are losing hope due to a bleak job market while the economy is stagnating. This puts the country at the risk of Japan’s lost 20 years. The biggest problem is that South Korean businesses are becoming lackluster. Many companies are looking for opportunities abroad instead of investing in the domestic market. We are nearing the end of a decade and need another quantum leap for Korean businesses.
How can we make that happen? What is clear is that the days when the government lead and companies follow are gone. The private sector has surpassed the government in every aspect including creativity, knowledge and information. Businesses often say that they have low expectations for the government and that they want it to leave them alone. For another quantum leap to happen, Korean industries need to gain its energy back. However, rather than helping them regain vitality, the government is killing them, the opposite what it is supposed to do. It should not strangle businesses with regulations and interventions because of the government’s interest.
Kwang-Hyun Kim email@example.com