[Viewpoint]The conglomerates must step in

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[Viewpoint]The conglomerates must step in

Spring has come, but it isn’t like spring. This was a verse written in an outpouring of grief by Wang Zhaojun, a beautiful Chinese court lady who had been forced to marry a king from the Hun tribe during the reign of the first emperor of China’s Han Dynasty.
Although spring flowers were in full bloom in the barbarian land, her lonely heart, torn away from her homeland, could not feel its brilliance.
That is exactly how Korea’s economy looks in the spring of 2008.
Stock prices are nosediving and the foreign exchange rate is fluctuating.
Raw material prices are going up -- crude oil, iron ore, nonmetals and crop prices, including corn, beans and wheat.
Amid this turmoil, spring may not feel like spring.
The new administration may think it is unfair because it came into office with a determination to revive the economy by any means.
The president and his ministers are busy visiting marketplaces and construction sites, but that has no significance.
They are just showing their enthusiasm to try their best.
In fact, there is not much they can do right now.
Our government cannot do anything because of the financial troubles related to the subprime mortgage crisis in the United States. Nor can it prevent a worldwide recession. We just hope the prices of oil, raw materials and crops stop rising.
Even so, we cannot look on passively as the economy sinks to the bottom.
The government says it will ease regulations and cut taxes to increase investment, but the effect will only be tangible in one or two years.
The government may strongly desire to tinker with interest rates or foreign exchanges rates immediately, but it is not likely to have much effect.
With bad luck, in fact, unexpected side effects are a high possibility. All the same, we cannot ask small- and medium-sized enterprises to take the lead in the recovery of the economy when they are having a hard time themselves with their own livelihood.
The remaining option, then, is the large companies. The large companies should come forward.
Why?
Except for them, no one can help the economy recover. Those who can at least endure and survive the present situation are the large companies.
It is not enough to make a promise that they will increase their investments if the government reduces their taxes and removes regulations.
That is a matter of course. It’s like saying, “If one is fed, one will become full.”
When everyone is experiencing hardships, large companies should volunteer to take risks. If they did so, there would be no more anti-business sentiment or anti-conglomerate feelings.
Listen to the situation of the small- and medium-sized enterprises that have to deliver products to larger companies.
Even if they are directly hit by a steep hike in the price of raw materials, they cannot dare ask for an increase in delivery prices.
Unable to endure any longer, they discontinued delivering products to large companies, thinking they will be ruined in any case.
When the economy slows, large companies naturally cut their delivery prices.
That is the state of current relations between large and small and medium-sized companies in Korea. This kind of cost reduction cannot be called competitive power.
If the situation remains as it is now, small and medium-sized companies will collapse and large companies will lose their competitive edge.
If the economy suffers, companies of all sizes will have trouble. Instead of shifting the difficulties to small and medium-sized companies, large companies should make painstaking efforts to bear the costs to support their contractors.
Without sacrifices from large companies, it is of no use for them to cheer before the president that companies of all sizes should coexist.
Noblesse oblige is required of companies, too.
The Federation of Korean Industries, which was once marginalized to the point that it had a hard time choosing its chairperson, finally has a friendly government with the “business-friendly” Lee Myung-bak administration.
This is not to say that they have caught another chance to collude with politicians.
It is true, however, that they have the opportunity to help revive the nation’s economy.
Large companies can do what the government cannot.
Maybe the Federation of Korean Industries should present a plan of action plan for economic recovery by gathering the collective wisdom of large companies.

*The writer is an editorial writer of the JoongAng Ilbo.

by Kim Jong-soo

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