[EDITORIALS]Keeping an industrial baseIt is hardly news that manufacturing companies are moving production facilities to China. But if all we do is stand by and watch the exodus, the trend may threaten the foundations of our economy.
China has become a manufacturing center of the world, and its investment climate is better than that of Korea in several ways. Our economy is caught between Japan and China, perennially trailing one and being chased by the other, and the situation may be accelerating the growth of an industrial vacuum here.
A recent study by the Korea Chamber of Commerce and Industry found that 7 out of 10 manufacturers have moved their core operations to China or are planning such a move. The companies also said they are concerned that Korean industry may be hollowed out in about five years.
There is some justification in moving manufacturing operations overseas in the age of global competition. When done correctly, such moves could pave the way for the reallocation of resources to industries that produce greater added value. Technological innovation and a more sophisticated industrial and consumption structure might also result.
But a rapid decrease in factories and factory jobs here in Korea is bound to have bad effects, including an economic slowdown. Sluggish capital investment here, in the same way, could slowly eat away at our economy's ability to compete.
We are developing a high-wage, low-skills labor market that is also inflexible and prone to labor disputes. A Federation of Korean Industries study put our wage level at eight times that of China and said there is little to compensate for the wage difference in our finance, tax and physical infrastructure.
The government, the business sector and labor all have a role to play in keeping industry here. Companies should seek alternatives to moving; the government must make it easier to do business here. Most of all, we should seek out new, higher-value manufacturing lines and minimize the problems created by the transformation of our industrial sector.