[Viewpoint] Global branding and the G-20Korea may have just passed a major hurdle in the realm of achieving true global leadership.
Only a short while ago, the world was witnessing currency disputes roiling the global economy. However, with a surprise agreement on the biggest reform ever in the governance of the International Monetary Fund and also an encouraging consensus declaration on the need to avoid “currency wars”, the guillotine hanging over our heads may have been removed, at least temporarily.
Nations will now try to hammer out a long-term solution at the upcoming G-20 Summit, but it was very clear that at the recent G-20 meeting of finance ministers and central bankers that Korea played a crucial mediator role. This positive development should be a catalyst for better things to come at the actual summit that will without a doubt test the willingness of nations to again put aside differences and form a consensus on a set of more permanent measures to chart a stable course for the global economy.
For Koreans, the G-20 Summit is certainly an opportunity to display effective diplomatic skills, but obviously there is more to gain from this global event, which has become the premier forum in global governance. If past summits are any indication, the short- to long-term benefits of hosting the G-20 are very substantial, as the influx of visitors guarantees an uptick in money spent by tourists that even ambitious national tourism campaigns can only dream of.
Event-related visitors will spend money on accommodations, shopping and dining. The Samsung Economic Research Institute estimates direct spending by visitors of around $40 million during the summit period, well in line with the experience from other G-8 and G-20 Summits, with the economic impact potentially as high as $85 million if ripple effects from direct visitor spending are also included. The 2005 APEC event in Busan saw an estimated 7,000 visitors. This time around that number is expected to reach up to 20,000.
If job creation from investments related to the G-20 Summit, such as hotel renovation and infrastructure upgrades, are included, along with additional income generated from services like security and organizational support, then the immediate economic benefit is expected to reach well above $100 million, and employment creation from the summit may well exceed 5,000 jobs, judging from comparable international events.
Nevertheless, these are only the short-term effects of hosting the G-20 Summit in Seoul, while the more indirect and longer-term benefits contain much more upside potential.
In a world where new-media technologies help spread the news faster than ever, the importance of branding cannot be underestimated.
Come the G-20, Korea and especially Seoul will be covered in broadcasting, front page reports in influential international newspapers, and thousands of stories churned out by various news wire services. These written and broadcast stories will have one thing in common: the dateline “Seoul, South Korea.”
In fact, our research, based on secondary sources that have studied the benefits of hosting an event such as the G-20 Summit, estimate that the value of the immediate promotional effects from media coverage during the actual event could hit roughly $100 million, as it was reportedly the case with the estimated value of immediate media coverage during the 2009 G-20 Summit in Pittsburgh, with about 7,000 stories written.
This could multiply by several times over a longer period. For the G-8 in Gleneagles, Scotland, for example, it was estimated that the total value of media coverage not only during the actual event but also including the following six months increased to a level approaching $1 billion.
This is an once in a lifetime opportunity in branding the country and Seoul. Needless to say, boosted awareness and image will lure more tourists, businesses and investments to Korea and Seoul in the future.
In addition, one should not forget the pride felt by Koreans of being the first Asian host and chair country for the G-20, as well as the invaluable experiences gained from handling such a complex, global event. In short, one can’t really place a price tag on such intangible benefits.
Assuming that the apparent success of the recent G-20 meeting of finance ministers and central bankers might serve as an indication for consensual decision-making at the actual summit, and for effective world leadership demonstrated by the Korean hosts, then the only risk to a successful summit in Seoul would be disruptions like violent protests and the like.
The impact of such unfortunate events can also be measured. The 2001 G-8 Summit in Genoa, when thousands of protesters went on the rampage, resulted in damage that was estimated at $45 million at the time. Of course, the damage to reputation resulting from the related media coverage would be far higher.
Let’s hope that the Seoul G-20 Summit will be reported as a success - tangible progress for the world economy with consensus around a set of important and forward-looking economic policy measures, and a smooth event that will show Seoul and the Korean hosts in their very best light.
*The writer is the managing director of McKinsey’s Korea Office.
By Dr. Roland Villinger