Grabbing the stellar moment
The author is an editorial writer of the JoongAng Ilbo.
Earlier this year, Kim Chong-in, an octogenarian and former acting leader of the opposition People Power Party (PPP), used the phrase “stellar moment,” which has multiple connotations and insights. The expression comes from German word “sternstunde,” which is used to describe a moment of glory. It could be a peak or turning point in life.
Kim used the expression when mentioning presidential candidates, but it also could be applied to Korean companies. Household corporate names Samsung Electronics, Hyundai Motor, LG and SK drew international spotlight when they were cited one by one by U.S. President Joe Biden during the live joint press conference with visiting Korean President Moon Jae-in to show his appreciation for their near $40 billion investment plans in the United States.
Before the 21st century, Korean companies were peripheral. Their copycat products hardly stood out next to U.S. and Japanese brands. Their names are now familiar around the globe. Supremacy in core tech has made them shine as stars. They chose to be hedgehogs rather than foxes by perfecting core areas they excel at, which American business consultant Jim Collins described as a winning strategy in his book “Good to Great.”
Grabbing the stellar moment is crucial. By building a massive-scale next-generation chip foundry in the U.S., Samsung Electronics does not belong to one country, but the globe. No can boss around the dominant chipmaker.
Beijing, which often wields its influence on Seoul based on Korea’s reliance on the Chinese market and its support on North Korean issues, is humble before Samsung Electronics since the company has become too valuable not just for the United States and China but the entire world.
Pure-play foundry TSMC of Taiwan, which enjoys a similar rank, also plays international. It is building six facilities in the U.S. With presence in America, it can offset pressure from Beijing. TSMC is also planning to build a foundry in Japan after setting up an R&D center there.
Hyundai Motor produces motor vehicles around the world. LG and SK also have expanded their global footprints through batteries. Korean flagships generate around 80 percent of their revenue from overseas. They have become multinational. Their expansion will pick up once they increase output in the U.S. through the momentum of the rivalry between America and China. When they produce in the U.S., they could have a competitive edge against traditional industrial powers like Japan and Germany. Korean companies also will be better able to fend off Chinese competition.
The stellar moment has arrived, but there is a shadow over it as well. As companies expand overseas, they can abandon their home turf. They have been scaling back business at home due to anti-chaebol environment and powerful labor unions under the liberal Moon Jae-in administration. Hyundai Motor has not built a new plant for the last 25 years. It has contributed to a factory project in Gwangju, but that cannot be meaningful as it will produce compact cars.
At this rate, an industrial vacuum can deepen. Only last year, local companies took 72,000 jobs overseas. The count adds up to 491,000 from 2011 to 2020. We must catch the stellar moment and jobs at the same time. The government must appreciate enterprises like the U.S. does. It must stop rapidly raising the minimum wage and remove some regulations. Otherwise, the exodus of jobs and businesses will continue.