Stand still and loseThe CEO of Futian Automobile contends that Chinese automakers will surpass Korea’s within five years. Their total production already exceeds ours and Chinese technology has improved to the extent that the country can manufacture its own engines. We are wrong to think that China is still a country specializing in cheap products. China has attracted research and development centers from 800 global companies, including Intel and General Electric. It has acquired the high technology of the Western world.
It is becoming harder for us to surpass Japan as well. Thanks to last year’s economic recovery, Japanese manufacturers have increased investment in equipment and facilities by 21 percent during the last 12 months. Japan’s companies are equipped with high technology and have stable relations between labor and management. If they increase investment in facilities we have little hope of competing with them. We are increasingly dependent on parts made in Japan. Vehicles made by Hyundai and mobile phones produced by Samsung use Japanese parts. Last year, Korea’s trade deficit with Japan amounted to $25.3 billion.
Korean companies are in a bind because they must compete against China in the market for finished goods while depending on Japan for components. Due to this, our economy is being squeezed at both ends of the production process and has lost momentum.
Last year manufacturing capacity increased by only 3.1 percent compared to the year before. That was the smallest increase in four years. According to the Korea Chamber of Commerce and Industry, 55 per cent of Korea’s top 500 companies in terms of sales now say that their businesses are unlikely to prosper in the future.
Companies should look at themselves before blaming others. Entrepreneurs must be brave and look for ways to defeat Japan and China. The Korean government should admit that its ideological approach to economic policies has exacerbated the current situation. Despite the administration’s emphasis on certain ideologies, there have been no improvements in the regional economy and the gap between the rich and the poor has not narrowed. The government must adopt policies that respect the market economy. The people want a vibrant economy and good jobs and they get tired of government officials passing the buck. If China grows at 10 percent and increases investment by 20 percent each year we will be left behind. We must respond. In the world economy standing still means defeat.