Shaking off China-phobia
When the Chinese fear the Koreans it’s called Konghanzheng, or Korea-phobia. The term was coined when the Chinese national football team was consistently defeated by Korea. That phenomenon started at the Asian Games in Bangkok in December 1978, when Korea beat China 1 to 0. Through 2010, China played 27 A-matches with Korea and didn’t win a single one. A football team selected from 1.3 billion Chinese people could not defeat a Korean team selected from 50 million. Korean people feel terrific when China fears playing their teams in football.
But that gratification is limited to sports. Now, it’s our turn to fear China and its industrial might. Earlier this month, the government’s ban on sales of Xiaomi’s Mi Smart Scale stirred controversy in social media. Xiaomi’s scale was affordable and convenient and became popular in Korea. When it was first released last year, 80,000 units sold out in two hours. Along with the company’s Mi Band and battery, Mi Scale contributed to a Xiaomi boom in Korea.
But in August, the Korean Agency for Technology and Standards (KATS) under the Ministry of Trade, Industry and Energy banned sales of the Mi Smart Scale. After a three month grace period, it can not be sold anywhere in Korea. KATS claimed that there were complains about the product. It was banned because the scale measures weight in not only kilogram — a legal unit of weight in Korea — but also in geun (Korean measurement that equals 600 grams each) and pounds. Article 6 of the law on measurement states that measuring devices and products with non-legal units cannot be produced or imported.
Consumers didn’t buy that explanation. They believed the ban was out of fear over Xiaomi’s popularity and point out that cars that show both kilometers and miles are sold in the United States. They argued that the ban constituted a kind of non-tariff import barrier, and it was a shame to impose such a ban after criticizing Japan and Europe for such barriers. The criticism on social media pointed out that the ban only elevated Xiaomi’s reputation as a company to be feared. Consumers easily saw through the true intention of the government’s thinly veiled measure based on a law that was undeniably obscure.
Just like Korea-phobia, fear of China and its industries did not happen overnight. It started with agricultural and fisheries products, followed by games and then finance, health care and IT industries. When China’s Anbang Insurance wanted to acquire Tongyang Life Insurance, the financial authorities downplayed the impact but still feared the Chinese incursion.
An insider of the supervisory authority said, “Chinese capital is ruthless. China is rising fiercely. It has only begun, but it may someday try to swallow Korea’s financial market altogether.” The Korean market has been open to the United States, Europe and Japan for a long time, but the authorities had a different attitude towards Chinese capital. After over a year, the authorities approved Anbang Insurance’ acquisition of Tongyang Insurance in June.
The fear is actually bigger of “China money” than “Made-in-China.” Chinese capital investment in Korean companies increased from $17 million last year to $1.2 billion in the first nine months of this year. Lately, investments are focused on content companies and health care companies. Tigermed acquired Dream CIS, a contract clinical research organization, and Suning Universal became the largest stakeholder of Redrover, the producer of the famous animation film “The Nut Job.”
The purpose of China advancement into Korea is to secure technology and the skills of Korean companies. There are more than 30 Korean agencies that earn fee for arranging Chinese investment in Korean companies. The film and financial industries are complaining that Chinese capital is moving in on Korea’s lucrative businesses. In fact, the semiconductor business, which Korea takes such pride in, is also affected. Chinese companies are offering key chip engineers handsome packages — three to nine times their current salaries.
It would be a lie to say that Korea doesn’t fear Chinese capital and technology. Such threats have always existed. Korea competed against technologies and capital of the United States, Japan and Europe and still accomplished the Miracle on the Han River. When one’s mentality is affected, one cannot display competence and may be defeated easily. The ban on Xiaomi was just such an over-reaction. We laughed at how nervous the Chinese soccer team was in the past. A few years ago, Samsung Chairman Lee Kun-hee told his aides that he did not fear China yet as there was no a businessman he felt threatened by. Let’s get over the fear of China before it takes hold.