[OUTLOOK]Entering the wildernessWe often hear visitors complain that things are pricey here in Korea. Koreans also feel that when they travel overseas. Everything costs a lot, from hotel rooms to houses to everyday lunches.
Japan used to be notorious for being a country where everything cost a lot more than in other countries. People said things in Japan were three times more expensive than in Korea, and 10 times more than Southeast Asia. If you visit Japan these days, however, you will see that is no longer the case.
Although most Japanese people make better incomes than Koreans do, there are many items that are cheaper there than in Korea. Japan’s cost of living has gone down while Korea’s has increased. On top of that, the won has become stronger against the yen. Many Koreans find that going to Japan to shop is quite a good deal.
This is like people living in a poor neighborhood complaining that things are expensive there, then going shopping in a more affluent neighborhood. It doesn’t make sense, but it is happening.
In most cases, hamburgers, coffee and clothes are more expensive here in Korea than in Japan. Accessories such as ties and luxury brand scarves are almost always cheaper in Japan.
In Korea, the price of imported cars is outrageous, even when considering the high taxes. A meal at a hotel restaurant usually costs more than $100. An apartment unit costs more than 15 million won ($16,419) per square meter. A country club membership costs $1 million annually.
Prices of commodities have gone up dramatically. When things are like this, the economy cannot be healthy. It does not affect the rich. They can pay a little bit more if things cost more than before. If products are cheaper in other countries, they can fly there to get them. Koreans have long enjoyed overseas travel.
Koreans who enjoy golf used to go to Southeast Asian countries to play because the cost of a golf round was cheaper there. But these days, even in Japan the cost of a round is lower than in Korea.
Over the last Chuseok holiday I went on a golf trip to Kumamoto, Japan with my friends. To my surprise, it cost only $100 for accommodation, two meals and the golf. It is no wonder golf trips to Japan attract many Koreans. A staff member at the hotel in Japan said, “Our business is a lot better these days thanks to Korean customers.”
Koreans keep going overseas. Inside the country, Koreans need to be careful not to offend others when they spend a lot of money. But abroad, they do not need to worry about that and things are cheaper, so they feel much better there. Factories have been transferred to other countries. Citizens spend money in foreign countries. These are bad signs for our economy.
Japan suffered a similar case until the 1980s. The government gave away vouchers to promote domestic sales, but the Japanese sold them for lower prices than face value and went to Southeast Asia on shopping sprees instead.
However, things have returned to normal there, having been through the “lost decade” of the 1990s. During that period, real estate bubbles burst and many retailers went under, one after another.
The major blow was the influx of cheap items made in China. As Chinese products poured into Japan, the old-fashioned structure of retailers, which was the basis for the high price of commodities, finally broke down.
Countless department stores and other major retailers went bankrupt during that period, but because of that the economy started to become healthy again.
Some say we have also had our share of the “lost decade” because the economy has been bad since Presidents Kim Dae-jung and Roh Moo-hyun took office. Some have a baseless hope that the economy will revive after a new administration enters office.
However, things are not looking up, I would say. It is likely that we will also experience a lost decade, just as Japan did. Real estate prices have been surging and Chinese products have been pouring into Korea. Electronic appliances and cars made in China will start to prevail in Korea sometime soon.
It feels as if we are going into another decade that will be lost.
*The writer is the CEO of the JoongAng Ilbo News Magazine.
by Lee Chang-kyu