By Kim Min-su
South Korea will be the ninth country whose annual export and import exceeds $1 trillion this year despite the global financial crisis.
This remarkable achievement amid tough competition in the international market is indeed commendable.
In the course of accomplishing such extraordinary trade results, South Korea successfully overcame the IMF bail-out program in 1997. Korea turned the crisis effectively into an opportunity for another economic take-off.
In fact, South Korea started its export drive with low value-added agricultural and fishery products in the late 1940s just after regaining its sovereignty from Japan.
By picking winners, South Korea has successfully reshaped its status of a less-developed country into a developed nation particularly from the 1970s through the 1990s. This paved the way for the country to become a member of the Organization for Economic Cooperation Development (OECD) members.
Korea’s economic growth strategy can be a model for developing countries.
The late President Park Chung-hee demonstrated his authoritarian but strong leadership to jumpstart the moribund economy. He was the cheerleader for mustering the Can-Do spirit among Koreans.
He picked chaebol for building public infrastructure through incentives and bullying. Unfortunately, this drove out many small and medium-sized enterprises (SMEs).
Many SMEs ― even those equipped with state-of-the–art technology and brilliant entrepreneurship ― could hardly transform themselves into larger companies. Now is the time to review whether Korea realized a fair distribution in its pursuit of realizing the $1 trillion feat.
Few deny the fact that conglomerates fueled exports and upgraded the nation’s global brand. But many of them cannot divert the criticism that they failed to share the fruits of their success with the SMEs.
Non-conglomerates have lost their competitive edge in competition with large-sized companies.
Local business giants have grown faster than the Korean economy itself. They recycled earnings into creating new subsidiaries, and penetration into lucrative business areas. Now such names as Samsung, Hyundai Motor, LG, and SK have become household names worldwide.
Conglomerates even rushed into business sectors for SMEs. The encroachment blocked the opportunity for the SMEs to become global trading companies.
Naturally, the leading conglomerates have played a key role in powering exports. Chaebol should not encroach upon SME's comparatively strong areas so that they can repeat the same success conglomerates have realized.
There has also been bad news. The conglomerates were frequently energetic in acquiring advanced technology that most of the SMEs had developed with their own R&D. The chaebol thus saved the costs that the SMEs had paid for in the development. It means chaebol used SME’s technologies.
Ironically, conglomerates were seriously reluctant to transfer essential technologies even to partner enterprises. Recently, this has begun to change, but the technology transfer issues still remain unresolved.
Chaebol have fully enjoyed the fruits on the back of the sacrifices of SMEs. From this perspective, it is a welcome development that a government-affiliated committee for a shared growth is now actively carrying out a mission of controlling and monitoring the irrational and unfair business dealings between chaebol and SMEs.
It is still premature to uncork the champagne in self-praise of the feat. It is time for Korea to move to the next stage. It is time for SMEs to repeat the shiny achievement large enterprises have made on the global stage.
The government needs to create an industrial ecology where large and small companies cooperate for mutual prosperity.
The EU fiscal crisis seems likely to persist for the time being. This will darken any prospect of an early recovery of the global economy. Despite negative external economic situation, Korea can create more Samsungs, LGs, SKs, and Hyundai Motors through industrial cooperation between small and large companies under division of labor. This will usher in an era of $2 trillion in annual external trade.
The writer is the head of the Maekyung Buyers' Guide. His e-mail address is atpresent@naver.com