The Korean golf club market is the worlds third largest valued at 500 billion won (414.9 million U.S. dollars) a year, trailing only those of the United States and Japan. Korean golf products account for less than 10 percent of the market share because fashion-sensitive golfers prefer foreign brands. Ninety percent of Japanese and U.S. golf clubs that many Koreans buy, however, are made in China via original equipment manufacturing. Most of the parts are also produced in China. Many Korean clubs are as good as foreign ones in distance and accuracy and higher use of domestic brands will improve quality through competition. Buying domestic golf clubs instead of more expensive foreign brands will stimulate the economy and save dollars via an import replacement effect. Of course, Korean club makers must do their part to raise their brand recognition and consumer trust, and change public perception of their products instead of blaming consumers.
In 2006 alone, 645,000 Korean golf tourists spent 1.1 trillion won (910 million dollars) abroad. If 100,000 Koreans refrain from going on overseas golf trips each year, the service account balance is estimated to improve by 190 million dollars.
Korea also has the worlds third-largest market for whiskey aged more than 17 years. Last year, 111,500 boxes (nine liters per box) of premium whiskey brands such as Ballentines and Royal Salute were sold, leading to aggressive marketing by British and Scottish makers in the Korean market. In contrast, Japans Suntory whiskey is No. 1 in the Japanese market. It is a shame that a giant consumer of golf clubs and whiskey like Korea has no famous brands of its own. Despite rising inflation and weak domestic demand, foreign designer bags, wallets and clothing as well as golf clubs and whiskey are selling like hotcakes in Korea.
Though the coordination of world central banks has managed to calm down the U.S.-led financial crisis, global markets still face many risks. As the real economy begins to stagnate, major Korean exports such as cars and electronic appliances to the U.S. market are declining. Exports have sustained the Korean economy amid sluggish domestic demand and financial jitters, but are expected to suffer in advanced markets next year.
The Bank of Korea says the Korean economy might fail to grow more than four percent from the fourth quarter this year to the first half of next year due to the sluggish domestic economy and weaker exports. Koreans must remember when they collected gold to rescue their country from the financial crisis 10 years ago, if they want to maintain the trade balance and promote domestic consumption to protect the real economy. Koreans need to buy Korean products such as cars and golf clubs if possible, refrain from going overseas to golf, and spend more in Korea.
Dollars are running short in every corner of the country. Last year, the service account deficit hit a record 20.57 billion dollars because of 10.1 billion dollars spent on overseas trips and 4.96 billion dollars spent on overseas education costs. Koreans also spent 123.7 billion dollars to get medical treatment abroad last year, double Koreas revenue from foreign patients (57.2 billion won or 47.4 million dollars). Despite going overseas for the promise of a better education, disputes linger over forming international middle schools or raising the number of independent private high schools. Without correcting a structure in which hard-earned dollars through exports of cars, cell phones, semiconductors, ships and steel are drained through excessive tourism, education and medical services abroad, maintaining a trade surplus will prove incredibly tough.
Therefore, the government must deregulate high-end industries such as education and medicine to raise their competitiveness to the level of advanced economies. Each Korean must also recognize that his or her consumption behavior can have a tremendous impact on the lives of the people and the economy. Spending money in Korea and buying domestic products can revive the economy through improving business performance, the stock market and fund prices. To survive this global financial turmoil, Korean consumers must think of their country and spend wisely.