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[Opinion] Competition Welcomed

Posted May. 05, 2006 03:18,   


In terms of competitiveness, Korea is being caught up with by China while lagging behind Japan. Chinese products are not all about agricultural products and cheap light-industry goods such as socks any longer. The Korean steel industry is getting anxious due to Chinese products having low prices as their competitive edge. Made in China products are strong in consumer electronics ranging from air conditioners and washing machines to refrigerators and liquid crystal display (LCD) TVs. Chinese manufacturer Haier openly declared that in five years, it would establish itself as one of the “top three consumer electronics makers” in Korea.

In petrochemicals, textile, communications devices and consumer electronics, China’s technological levels have already reached 95% of what Korea has. The Korea Development Bank (KDB) estimates that China might surpass Korea in almost all areas in just five years. The Ministry of Commerce, Energy and Industry (MOCIE) also forecasts that in five years, the technological gap between the two countries in mobile communications and handsets, which is currently about two years, might narrow down to 1.5 and 0.5 years for code division multiple access (CDMA) and communication devices, respectively. Developing higher value-added, more cutting-edge and more technologically-sophisticated products is the only possible way for us not to be defeated by Chinese products rushing toward us as fiercely as dust storms.

Japan’s competitiveness is still too far ahead of ours to get any closer. The Korea Trade Investment Promotion Agency’s (KOTRA) Korea Trade Center in Tokyo recently published a report that sounded like self-deprecation: “One of the few Korean products outdoing Japanese ones might be citron tea.” The annual number of Hyundai automobiles being sold in Japan—full-size and compact—is less than 3,000. It was analyzed that with the quality level of Toyota’s “Corolla” being graded 100, points given to Hyundai Motor’s vehicles were a meager 80-85 points; even German carmaker Volkswagen got only 90-95 points. Korea has only nine exports that rank first in the global market, in contrast to 47 for Japan.

Korea has been deemed to be an information technology (IT) powerhouse, but its growth has mainly been thanks to imported components and technologies. Its heavy dependence on Japan in importing precision devices has kept it from translating export expansion into an increase in domestic employment or household incomes and recovery of domestic demand-oriented industries. Korea is sandwitched between China—the world’s most populous nation—and Japan, a country with the world’s most sophisticated technologies and one of the largest economies around the world. This reality reminds us of the analogy suggested by Samsung founder Lee Byung-cheol: Putting a catfish into rice paddies where mudfish are raised, you actually find the mudfish there growing much better. Korea should be a country that eventually becomes a world-class country after being squeezed between and sought after by the “catfish-like” competitors, Japan and China, and struggling and making every effort to survive. Be it within or without the country, competition is something you should never be afraid of.

Kim Chung-sik, Editorial Writer, skim@donga.com