A warning to chew onA new warning has come out that Korea could be sandwiched between the fast-developing and advanced countries ― not catching up with the advanced ones while being chased by the rising ones. This time it came from a Japanese man living in Seoul. Hisanoshi Ono, the Seoul branch head of the Nomura Research Institute, argued that “Korea is facing a crisis in technology, profits, market domination and high-tech industries,” during a seminar hosted by the Korea Chamber of Commerce and Industry.
Automobiles, parts and material industries have fallen short in terms of technology compared to other advanced countries and are losing their price advantages against developing nations. Korea’s shipbuilders have the biggest market share in the world, but profit rates there are sharply falling, claimed Ono.
Steel manufacturing and pharmaceutical companies, which need huge sums of money for investment and research, are losing competitiveness by not actively engaging in the mergers and acquisitions market. Smaller and weaker companies should integrate with bigger companies to form a stronger business.
Information technology and service industries end up doing sub-contract work because there is a lack of intellectual assets. They also do not have well-known brands that represent their products and services. There is not one major industry that is free from being squeezed by competing industries in the surrounding countries. If individual industries lose their competitiveness, it will lead to lower economic growth. That, in turn, could cause the economy to collapse.
The sandwich theory is not new. Since the start of this year, economic leaders have begun to publicly worry more often. They are not saying the economy will fall apart all of a sudden. Korea can manage for now, but if Korea can’t overcome the current situation, 10 or 20 years later it will be different. We will lose our means of survival. If we can’t establish proper growth engines for the future generation, it may not be a matter of whether Korea becomes an advanced country or not. It may be whether our sons and daughters get get a decent job or not.
The sandwich theory is not intended to reproach the government’s policies or to arouse anxiety. People who are against the theory should stop using resources to think up opposing theories. Instead, they should spend the time and effort on developing newer growth engines. The first step to overcoming the sandwich crisis is to deregulate and let businesses find their own feed.