[GLOBAL EYE]Korea shuns foreign interestsYou might think that I am trying to bring down Korea when the entire country is thrilled at the glorious achievement of Dr. Hwang Woo-suk. It is only natural that the Korea we know is different from the image of Korea others have. Nevertheless, the “state of the nation,” from diplomacy to the national economy and overseas image is somewhat puzzling.
Allies candidly express their dissatisfaction toward us, and the economy, in which we take the most pride, is still in a low-growth quagmire. As the national brand image of Korea has fallen, we need to pay attention to the advice to re-establish our sovereign identity urgently.
Steve Marvin, the head of Korea equity research at Deutsche Bank, had precisely predicted the crisis of near national bankruptcy in 1997, and now compares Korea to “Alice’s Wonderland.” When the export growth rate falls, the income of exporters worsens and the negative impacts of the rising won and exchange rates will apparently continue, he finds it strange that the Korean authorities are convinced that the market is improving and businesses are psychologically elated and singing happy tunes. Optimism is an option, but he warns that the individual and corporate investors are likely to miss the right timing to strategically respond to the situation and suffer more due to a gap between reality and perception.
The 2.7 percent growth rate in this year’s first quarter compared to the same period last year is proof of this. The Korean economy grew by 1.7 percent from the previous quarter, a shockingly meager figure compared to 3 percent and 5 percent in the United States and Japan, whose economies are far greater than ours. When the growth engine is rapidly cooling, the authorities responsible for policies blame the hoarding of the tobacco retailers and the sluggish domestic consumption due to the Lotto boom. Indeed, Korea is a wonderland.
The distrust over Korea is responsible for the so-called “Korea discount” phenomenon in which stocks of Korean companies are sold below their proper price. After the foreign exchange crisis, Korean companies have been reforming corporate governance to the point of being criticized to have fallen into the “pitfall of transparency” and have worked hard to protect the interests of shareholders by increasing dividends. However, we have a long way to go until the transparency of fund operation is secured, and when the unique bureaucracy, complicated regulations, militant labor unions and high logistics cost are added up, Korea is even less attractive to foreign investors.
The “Korea discount” is not limited to the corporate sector. Not only the sovereign competitiveness ratings but also the college rankings of Korean universities are falling. Other countries even suspect that the Korean soccer squad made the semifinals in the World Cup thanks to generous decisions by the referees. Last week, the Anholt-GMI Nation Brands Index, a survey on 10,000 citizens of 10 major nations, indicated that the brand image of Korea was in the lowest group, behind China and India. Especially when asked about the image of the Korean government, one third of the respondents said “unpredictable,” and the answers included “dangerous,” “sinister” and “unstable.”
We can blame the lack of understanding due to the language and cultural barrier, but we certainly lacked the national-level effort to publicize ourselves by adjusting national data to international standards. Foreign chambers of commerce in Korea have complained that foreigners cannot understand official documents because they are rarely written in English, and translations are often inaccurate.
We are not qualified to advocate “soft power.” While the economy cannot survive without international trade and foreign investment, the anti-foreign capital sentiment is prevailing. We have earned the distrust of allies by confusing foreign policy and alliance issues with domestic political problems. We advertised the distrust between close allies by publicly condemning advice given on a personal level at a closed-door meeting. We might deserve the title of “wonderland” after all.
* The writer is a senior columnist of the JoongAng Ilbo.
by Byun Sang-keun