Five Keywords for a Successful Business in the New Year

It is expected that the major economies in the world like the U.S., Japan and Europe will decline compared to last year. The volatile situation in the Middle East leaves open the possibility of another oil price hike, and the continuing “weak dollar” policy of the U.S. is predicted to compromise the profitability of Korean exporting companies. It is also unclear whether the sluggish domestic consumption will recover within the upcoming year. Under such circumstance in which there is instability and the economic recession is prolonged, “fundamentals” and “risk management” will decide the fate of companies. Those companies that improve competitiveness through continuous restructuring should be able to seize an opportunity to increase their market share. On the other hand, firms that have failed to properly deal with the current economic situation will likely face difficulties.

“Market openings” will be the main stream of the country’s economy, as the Korea-Singapore FTA is to take effect and Korea-Japan FTA talks will accelerate. Koreans’ lives will be further internationalized, as the government carries out the plan to establish international schools and foreign hospitals in the Incheon Free Economic Zone. More products made in North Korea will flow into the Korean market, as the Gaesung Industrial Park project is to be further expanded in the first half of 2005. In addition, given that the rice import quota and pressures to reduce the quota system are to increase, market openings will become a buzzword in Korean society. Against this backdrop, it seems inevitable that some companies will enjoy the fruit of such market openings, while others might have a tough time.

Businesses should try to find new avenues to thrive particularly when they are in crisis. Those companies that have not made investments even with a large amount of reserve funds should waste no time in investing in a new business and a fresh development engine. As Digital Multimedia Broadcasting (DMB) is to be launched, the communications and electronics industries are expected to find a new business opportunity in this sector. Another variable is how strong the “venture boom” will last after the government endorsed it late last year. Individuals invested their money in short-term financial products, as they could not find attractive investment destinations amid low interest rates and the sluggish real estate market. But they will also be quick to find new investment destinations.

Businesses that seize an opportunity before others by “jumping into” a new industry are predicted to lead each industry. In addition, companies quick to understand the rapidly changing preferences of customers and companies that make new products based on this understanding will be ahead of others in many industries, including manufacturing, real estate, leisure and culture industries. But it seems that a shortened lifecycle of products would increase burden on companies in terms of the increasing inventory and the need for development of new products. Additionally, person-to-person communication and information sharing will be expanded through “cyworld,” a popular website, and therefore the Internet will become even more influential in society.

The quality of “visual information” that ordinary people enjoy will be drastically improved, with the decreasing prices of large digital TVs, like LCD TVs and PDP TVs. Accordingly, high-definition digital cameras, camcorders and camera-phones will gain even more popularity. As customers become more sensitive toward materials and the looks of goods, “ugly” products that cannot satisfy their senses will lose ground in the market. However, there will be new opportunities for companies that have been developing their “soft competitiveness” design abilities.

Joong-Hyun Park Sang Hoon Kim sanjuck@donga.com sanhkim@donga.com