[NOTEBOOK]Study Markets Before Taking the Leap

Whenever and wherever you meet entrepreneurs these days, the topic of discussion is China. The quicker companies have begun learning about "The World's Factory." But the interest is by no means a Korean monopoly. In Japan, they are a step ahead; product development and production have been reoriented with China clearly in mind.

"China fever" is sweeping through college campuses also. The competition to enter Chinese language programs is now tougher than the competition for English programs.

The private sector is leading the way, but it was not until Oct. 11 that the government finally got around to setting up a forum of professionals on China. Led by the Ministry of Finance and Economy, the forum brought together experts in government, business, trade groups and scholars. They will meet every quarter to exchange information and list the difficulties faced by companies in their China quest. Last week, a delegation comprising representatives from private industry and government toured industrial facilities in China.

China's rise as an economic power is not a recent phenomenon. In apparel and footwear, toys, furniture, telephone sets, cassette recorders and lighting equipment, Chinese exports are five times larger than Korea's. In 1998, Korea bragged about its status as the No. 1 exporter of fishing poles, but that standing is history. The Chinese are also ahead in refrigerators, VCRs, and motorcycles. The Korea International Trade Association tabulated that the Chinese have overtaken us in 86 items over the past two years.

The China shock has hit us hard, but the government is saying only now that it will study our giant neighbor, when the neighbor is about to become a member of the World Trade Organization.

Thirty years ago Koreans made a lot of money in construction in the Middle East, but the country still does not have a decent public think tank studying that region. What we see instead is a minister rushing onto an airplane when oil prices go up, trying to control the possible damage to our economy.

Recently a consulting company specializing in the Middle East was established by professors who speak Arabic and are well-versed in the region. The terrorists attacks on the United States happened three days after the firm opened its office. The firm says the heightened interest in the Arab world has driven a lot of people to its door.

Korea, which lacks critical natural resources, has to export goods. But we need to know about other countries and their markets before we can do that. Asking a private firm to do all the research would be expecting too much. Hence the need for a public organization.

There are 42 public research institutes funded by the government. Fourteen of those, including the Korea Development Institute and the Korea Institute for Industrial Economics and Trade, study economic issues. There are 1,514 people on the staff of these 14 institutes, and 595 of them hold Ph.D.'s. The government is spending 88.4 billion won ($68.2 million) this year on public think tanks. But the large majority of them lean toward researching macroeconomic issues. They issue papers on the growth rate and current account balance. The phrase "Policy Institute" often is part of their name, as if to broadcast the fact that they indeed do concentrate on policy. Practical information of the kind sought and used by most businesses, households and the market in general is often hard to come by.

After the Japanese attacked Pearl Harbor, schools in Japan cut down on English lessons. In contrast, Americans trained more people to speak Japanese. And we know who won the war.

The 14 public economic research institutes tend to speak of the Chinese economy in terms of indicators. If we are to win the world economic war, the public think tanks must grasp reality. They should think in terms of national strategy and the industries of the future. Shallow babble will no longer work; specialization and depth are required. One institute should each be in charge of one of the four major powers: China, the United States, Russia and Japan. And India and the Middle East are also major regions that should not be neglected.

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The writer is the economic news editor of the JoongAng Ilbo.

by Yang Jai-chan