Bleak times lie aheadSamsung Group Chairman Lee Kun-hee warned Friday that Samsung, as well as Korea overall, was in trouble. At a civic group rally in Seoul, the chairman of South Korea’s No. 1 company said, “A very chaotic period could arrive within four to six years.” At the beginning of the year, he had compared Korea to a sandwich, jammed in between latecomer China and front-runner Japan. The Samsung chairman is known to be a reserved man and his admonition, coming not once but twice, is seen by many Koreans to be a serious sign that something is really amiss.
Numbers might explain why Mr. Lee is so worried. Samsung’s sales have dwindled to 141 trillion won ($150 billion) last year from 144 trillion won in 2005. Semiconductor sales are down and it placed a precarious third in the global cell phone market.
Unless it finds a new outlet, Korea’s best company might find itself at a global second-tier level in four to six years. This is not only Samsung’s problem. Hyundai Motor Company is doing poorly in the United States market at the moment and has fallen from first to third place in Russia in the last year. Even Korea’s shipbuilding industry is in trouble with China having -- with reason -- proclaimed it will become the world’s biggest shipbuilder by the year 2010.
According to the Korea Trade Investment Promotion Agency, our exports are lagging behind Japan and China. It is difficult to compete with China when it comes to manufacturing costs. Our brand positioning and quality are behind that of Japan. Moreover, we still import our main components and materials from Japan. Strictly speaking, our information communication technology industry, which we are so proud of, is only 36 percent domestic. It might look Korean on the outside, but it’s all Japanese inside. If our manufacturing industries fall back, then at least our service industries such as tourism, finance, medicine and education should take their place. Unfortunately, this is not happening. Our service sectors are losing their momentum, entangled in a web of regulations, while competitors such as Singapore and Thailand are racing ahead.
The crisis in Korea’s economy today is a joint production of a government that’s spent four years drenched in dogmatic ideological quarrels, businesses that have lost their spirit of challenge in the past decade and the belligerent, irrationally selfish unions. Unless we all face reality and work together to find new industries to fuel our economic growth, we might not even have to wait four to six years for bleakness to occur.