Look East!

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Look East!

The Peace Odyssey 2016 sponsored by the JoongAng Ilbo in the name of regional peace took a group of thought leaders in politics, academia, media and culture on a 1,400-kilometer (870-mile) journey along the Russian Far East bordering North Korea and China. The vast territory was once home to Balhae (698 - 926), the medieval kingdom of Goguryeo, and a refuge for independence fighters and other Joseon citizens fleeing Japanese colonization.

For Koreans the land remained exotic, former Soviet territory blocked by North Korea. But it was surprisingly close. It took less than three hours of flying to arrive from Incheon. Compared with the American and European continent, it is within Korea’s neighborhood. More surprises awaited after landing as there were South Korean reminders almost everywhere. Samsung Electronics phone shops were spotted on the streets, LG air conditioners were attached to buildings, and Korean cars ran on the roads.

K-beauty, or Korean beauty care products, was in full swing there. Budget makeup labels Missha and It’s Skin run shops in downtown Vladivostok. The Hotel Hyundai stood as a luxury landmark in the port city. Hyundai Heavy Industries has been farming beans and corn over endless fields that span 20,000 hectares. Korean power appeared formidable in the massive territory.

Russia has been eagerly pursuing South Korea. Russia was once a proud member of the BRICS nations, a growing emerging economy group that also includes Brazil, India, China and South Africa. But Russia was hit hard by the global recession and plunge in oil prices.

Its financial squeeze only worsened due to sanctions from the United States and Europe after it forcibly annexed Crimea from Ukraine.

The furious and never-ceasing expansion in China posed a stark contrast with the slow, faltering development of the Russian Far East, which accounts for nearly double the space of all of South Korea. Moscow is fretting that the vast land will one day be dominated by the Chinese due to their rapid proliferation in the region. This is why Russian leader Vladimir Putin has been eager to campaign to develop the Far East front with help from nations other than China.

The land offers immense opportunities for South Koreans. Despite the capital and technology they possess, South Korean enterprises have not been able to expand at home due to expensive labor costs and heavy layers of regulations that make it difficult to add a single production line. The Far East could offer a breakthrough. By making inroads into the Russian Far East, Korea could lessen its excessive reliance on China and seek a buffer from increasing protectionist barriers on the external trade front following the British decision to bolt from the European Union.

Koreans have always capitalized on opportunities and done well overseas. SK Group drew more than half of its revenue from abroad last year. Other companies have been shrewd and successful in their overseas investments. One of the purposes of building factories overseas used to be to avoid customs levies, but as the protectionist wave escalates due to complaints about trade powerhouses like Korea, local companies have an even bigger reason to localize production in overseas territories to expand their businesses. Korean manufacturers have been hit with heavy punitive tariffs on steel and chemical exports and more Korean products are in danger of facing tough levies by governments in punishment for doing better than their local counterparts.

A crisis can be a window to opportunity. Korea could find the opportunity in the Russian Far East. The government must provide aggressive support. As former President Roh Tae-woo offered a turning point in our relationship with Russia by agreeing with his Soviet counterpart Mikhail Gorbachev to normalize diplomatic ties in 1990, President Park Geun-hye should pave the way for Korean enterprises to make forays into this vast land of opportunity.

The two nations sought joint development and modernization of border ports — Rajin in North Korea and Hasan in Russia — but the project was deadlocked by North Korea’s nuclear and missile threats. Still, the Russian border area could help South Korean enterprises expand and also provide a fulcrum to pry North Korea out of its hermitic ways.

Korean enterprises hungry for new opportunities could develop the area into a manufacturing base. China and Japan have been vying to enter the area ahead of the opening of the North Arctic sea route. The Trans-Siberian railway can transport cargo quickly to the west and other parts of Europe from there. Korean companies can use the region as a stepping stone for expansion in Eurasia.

JoongAng Ilbo, Aug. 25, Page 30

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

Kim Dong-ho
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