By Lee Hyo-sik
Staff Reporter
The ongoing global economic slump is far from over and a greater crisis may be looming large for South Korea in the coming years, according to one of the world's most influential management consultants, warning the nation should remain vigilant and continue to overhaul its economic structure.
In a forum organized by the Korea Federation of Small and Medium Business on Jeju island Saturday, Ohmae Kenichi, better known as ``Mr. Strategy,'' suggested Asia's fourth largest economy should place greater emphasis on China and Japan for future growth, rather than the United States. He also urged domestic companies to focus on their core businesses, refraining from ``reckless'' expansion into other sectors.
``There have been many talks these days over whether the current economic downturn here has yet hit the bottom or not. But I think Korea could still head downward or remain in a slump at least for five years. The global economy will likely show an L-shaped pattern on the prolonged sales decline in the U.S. and other advanced economies,'' said Kenichi, who was selected in 1994 as one of five management gurus in the world by The Economist.
He said Korea and the United States may face greater economic difficulties in the future because their growth has been fueled largely by excessive leverage over the years. But Japan will perform relatively better, thanks to its aggressive overseas expansion and experience of dealing with past recessions.
``To overcome the global economic slump, the international community needs to jointly inject $10 trillion into the financial market and set up more reliable and trustworthy credit rating agencies and global financial institutions, replacing Standard & Poors and the International Monetary Fund. In the long run, the European Union, China, Brazil, India, Turkey, Vietnam and Thailand will lead the world economy,'' the investment guru said, projecting that the EU, the United States, China, India and Japan will be the world's five largest economies in 2020.
He declared the end of U.S. dominance on the global stage, suggesting Korean businesses should turn their eyes to China's booming consumer market and Japan's cash-rich senior citizens. ``I think it will take at least five years for the United States to rebound from the current slump and the rest of the world should stop relying on the U.S. market.''
Kenichi said China is no longer export-oriented, adding that the world's fastest growing economy this year has largely been powered by domestic demand. ``Korean companies should not regard China as a cheaper production base. It is time for them to introduce attractive products and increase shares in China's rapidly expanding consumer market.''
Additionally, local companies should target senior citizens in Japan who hold large amounts of cash, stressing Korea should strategically nurture medical and tourism industries to attract more older Japanese tourists, the consultant said.
``For instance, it could construct a silver town exclusively for Japanese senior citizens on Jeju island, a famous tourist designation among the Japanese. Also, companies here should focus on their core sectors and build up international competitiveness to survive intensifying competition. If they try to diversify into unfamiliar industries, they could jeopardize the whole organization,'' Kenichi said.