Kim Jong-un should visit HanoiI went to Hanoi last week, economic prospects in Korea were murky, as it will not be easy for college graduates to find work this year. In Hanoi, Vietnam National University is one of the country’s elite schools at which students hope they can find jobs that pay $600 a month. Jobs in state-run companies are safe, but they are more interested in finding work at foreign companies. A local Samsung official said the standards among Asian students have become more uniform due to the Internet and globalization. He said Hanoi University graduates are as qualified and sharp as their Korean counterparts. Samsung is considering building a research center that could recruit thousands in Vietnam. Young Koreans may have to compete with Vietnamese job-seekers, who will do the same work for a much lower salary.
Samsung’s mobile phone factory in Hanoi has 103,296 Vietnamese employees, who are supervised by 103 Korean managers. Thousands rotate in and out of a cafeteria as big as a soccer field at mealtimes. They eat their meals at super speeds using both a spoon and a pair of chopsticks with the same precision skills they employ in assembling smartphones. Few wear glasses because they naturally have good eyesight. A female worker fresh out of high school gets $353 a month including overtime, an amount that is one tenth of the $3,715 paid to Korean workers and 30 percent of what is paid to Chinese. About 40 percent of Samsung’s smartphone exports are rolled out from the lines in the Vietnamese capital. Samsung had to boost output from cost-effective Vietnamese factory in order to compete with Japanese rivals helped by the cheaper yen and China’s fast-rising smartphone latecomers like Xiaomi.
During my stay in Hanoi, I could not help thinking about the Kaesong industrial Complex in North Korea. The inter-Korean joint venture industrial park has been running for 10 years. It employs about 53,900, just half the work force at Samsung’s Hanoi factory. The revenues are incomparable. The Kaesong Complex last year recorded revenues of $469.9 million. Samsung’s Hanoi factory exported $23.6 billion worth of phones. The Kaesong Complex turns out cheap apparel and textile products while the Samsung Hanoi plant makes high-value-added smartphones. Wages also differ greatly. A worker at the Kaesong Complex earns an average of $141.4 a month - less than half of what workers at the Hanoi plant get.
I let my imagination fly. What if Samsung built its smartphone factory in Kaesong? At the Hanoi plant, over 100,000 employees are hired locally. Separately over 100,000 employees work in factories that supply parts to Samsung. When including the rest of the supply chain, about 800,000 Vietnamese people are employed thanks to one Samsung smartphone factory in Hanoi. In other words, there could have been 800,000 jobs for North Koreans had Samsung taken its smartphone production line to Kaesong. LG Electronics also recently opened up a manufacturing facility covering 800,000 square meters (956,792 square yards), a space large enough for 114 soccer fields, in Haiphong, Vietnam to turn out TVs, mobile phones and home appliances for the domestic and overseas markets. North Korea’s economy could have doubled - or tripled - in just a few years if Samsung and LG had both moved their production bases there.
Korean capital is in search for new investment targets. It has shifted from China to Vietnam. What if it went straight to Kaesong instead? There are mountains of hurdles before Kaesong could be home to international companies as Hanoi is. First, Pyongyang would have to have the sanctions lifted through six-party talks and separate bilateral negotiations with the United States to solve its nuclear weapons problem. It would have to strike trade pacts with foreign countries to receive capital and loans from the International Monetary Fund and individual investors. North Korea would also have to revolutionize its rigid management and address traffic, customs and telecommunications problems.
When you stand in Hanoi, the direction of the two Koreas is clear. The two states both aspire to make richer nations for their people. Deregulation is the key to easing the job bottleneck for young people. But various bills to remove regulations and revitalize the South Korean economy are challenged by the opposition. North Korea gets the spotlight with tales of executions of generals and other horror stories.
Kim Jong-un should visit Hanoi. His father also promised to learn Vietnamese-style opening and reforms. Our opposition leaders should also go to Hanoi. They may think differently after seeing the dynamics generated by the happy marriage between young Vietnamese people and Korean capital.
JoongAng Ilbo, June 2, Page 30
*The author is an editorial writer of the JoongAng Ilbo.
by Lee Chul-ho