By Kim Hyun-cheol
Staff Reporter
CEOs of foreign companies here feel Korea has quality workers and purchasing power, but needs to globalize its business practices and standards.
The state-run trade agency KOTRA reported Monday that the country is likely to play the key role of an industrial hub in the future, but has to be prepared for threats from a fast-growing China and risks of contraction of the local market due to the dwindling birthrate.
KOTRA made the report after interviewing 15 foreign executives.
Marketwise, Korea has a sufficient edge to attract foreign investment as it has a well-trained workforce with high ethics and a vast domestic market with quality customers, they said.
"I believe Korea's best industrial advantage lies in its manpower," said Olivier Guilluy, president of Lafarge Plasterboard Korea, a Korean unit of the French-based Lafarge Group.
The country is also a trustworthy test-bed for products, according to Boeing Korea President William Oberlin, because success in Korea can easily spread to other markets after testing on customers with sophisticated and reasonable tastes.
A stable political and social structure makes Korea stand out among its rivals, along with the cooperation and open-mindedness of central and provincial governments, they said.
"Korea is more credible than many other Asian countries with regard to its legal system and the stability of its government," Solar World Korea's CEO Joerg Walberer said.
On the less positive side, however, it has a relatively stiff labor market and strong financial restraints on companies. Also, the existence of Korea's own standards rather than global ones makes it hard for foreign investors to further expand their Korean businesses, the interviewees said.
Most of the CEOs pointed out that both employment circumstances and organization cultures were stiff, with labor costs overly high and employees overly influenced by job titles at work.
Such inflexibility could be a daunting obstacle when trying to expand business here, said John Walker, chairman of Macquaire Group.
Takao Hashimoto, president of Daikin Air Conditioning Korea, said that some industrial standards commonly used in Korea are very different from internationally certified ones.
Some also expressed concern over excessive centralization, KOTRA said, citing a remark from Doran Capital Partners Chairman Pietro Doran that Korean banks "tend to shun lending money outside of Seoul."
They also advised Korea to revise its tax regulations and roll out measures to further improve the quality of life for foreign residents, as well as subpar financial services.
Overall living conditions and related services were satisfactory despite frequent traffic jams, but prejudice against foreigners is still occasionally visible, they said.
State-backed promotion is necessary to attract more investors to Korea, the CEOs added.