Game changer

By Sah Dong-seok

What if Apple didn’t make its innovative iPhones? Probably, Samsung Electronics, the nation’s flagship enterprise and one of the world’s electronics giants, wouldn’t have been as glamorous as it is today.

It’s well-known that Samsung ― as a fast follower ― has been able to grab a large chunk of the global smartphone market created by Apple, the first mover. Indeed, iPhones were a game changer for the top U.S. multinational company.

To sustain its spectacular progress over the last few years, Samsung Electronics will need its own game changer ― its sales nearly quintupled from 40.5 trillion won in 2002 to 201.1 trillion won last year. This urgency is all the more so, considering the general speculation that Galaxy S series smartphones won’t give as big a boost to the company’s bottom line as they did previously.

The importance of the electronics unit in its parental Samsung Group is peerless with its sales accounting for more than 65 percent of the group’s total sales last year. Therefore, a moment of misjudgment and carelessness would have a far-reaching impact on the group and the Korean economy as a whole.

Samsung knows this very well and has been pushing ahead with an ambitious plan to develop five new growth engines ― LED (light-emitting diodes), solar cells, car fuel cells, biosimilars and medical equipment. But none of these businesses are on track so far despite its projection to invest 23 trillion won in them through 2020.

The plan is a painful process to look for a game changer and without it, who knows Samsung and LG may fall prey to Chinese electronics giants such as Huawei and Haier in 10 years, like Japan’s Sony and Panasonic have become victims of the two Korean companies’ success?

In a sense, the true picture of the nation’s troubled corporate sector has been masked by Samsung’s singlehanded prosperity. According to a recent report, combined sales and operating profits of the 30 flagship subsidiaries of the country’s top 10 conglomerates rose by 5.6 percent and 11.3 percent respectively last year from the year before. Given the global economic downturn, these results appear satisfactory. But should Samsung Electronics be excluded, sales would remain flat and operating profits would contract by a whopping 19 percent.

It’s no exaggeration that the success of the incoming Park Geun-hye administration will hinge in large part on how the Korean economy will perform, especially in the early stages of her presidency, although there are many other pressing issues to be dealt with by the President-elect.

Over the last decade, low growth has become the norm in Korea where double-digit growth was once considered a matter of course. The birthrate is at the world’s lowest level, casting a dark cloud over the country’s long-term prospects.

Earlier this week, the Hyundai Research Institute projected that Korea will manage to reach $30,000 in per capita gross national income in 2020 and $40,000 in 2032 ― much later than most Koreans hope ― if the export slowdown and sluggish domestic consumption are protracted and the nation’s potential growth rate creeps between 1 and 2 percent. But even these projections seem overly optimistic, given the heap of problems facing the Korean economy.

Park will take office as the first woman president Monday amid a mixture of expectations and concerns. Expectations come from the fact that she is a principled female politician who pledged to create more jobs, reform the giant family-run conglomerates or chaebol and implement costly welfare programs to stop the nation’s ever polarizing trend.

Concerns come from what she has done since being elected president in December. Apart from the controversy over whether her election pledges will be carried out, Park appears to have failed to win sympathy from the public while forming her Cabinet and presidential staff for more than two months.

Most worrisome is her egregiously secretive and ``go-it-alone’’ style in personnel appointments. Little is known about how she picked her ministerial nominees and key secretaries, causing more people to worry that the incoming president might show serious problems in communicating with people like her predecessor, outgoing President Lee Myung-bak. She needs to change her self-righteous and closed-door style and seek national unity through open-mindedness.

While ``economic democratization’’ attracted voters’ attention during the election campaign, what is urgently needed is to let people believe that the economy is picking up. But the situation doesn’t warrant optimism.

Park revived the post of deputy prime minister for the economy in what appears to be a bid to rebuild the moribund economy like her father, the late President Park Chung-hee. To do this, she needs her own game changer, just as Samsung does. Or can she be a game changer herself, to leave Cheong Wa Dae as the first successful head of state five years later?

Sah Dong-seok is the chief editorial writer of The Korea Times. Contact him at sahds@koreatimes.co.kr.