By Na Jeong-ju, Kim Young-jin
Staff Reporters
Few will argue that South Korea has long been overly dependent on large family-controlled conglomerates, called chaebol, for economic growth.
In terms of efficiency, it has worked. Korea, once among the poorest countries in the world, quickly became the world's eighth largest exporter and is now on the threshold of joining the league of most advanced nations.
So, does it have to keep the strategy going forward?
According to Euh Yoon-dae, chairman of the Presidential Council on Nation Branding, and Hermann Simon, author of the worldwide bestseller Hidden Champions, an analysis of little known but powerful small and mid-sized firms, the country must take a different course now.
They exchanged views on how to overcome the challenge of chaebol-oriented growth and Korea's economic future at a meeting in Seoul, Thursday, arranged by The Korea Times on the sidelines of the Innobiz Global Forum.
At the forum, Euh and Simon gave speeches on the country's efforts to upgrade Korea's international image and on how to foster Korean's hidden champions, respectively.
``There is a clear gap between the international performance of successful Korean firms and the perception of Korea as a country,'' Simon said.
``Awareness and trust can be built through personality. I see very little presence of Korean personalities on the international scene. I don't know whether Korean top managers and politicians are sufficiently active in seeking to have a presence.''
The German added that it was not easy to change a business culture in a short period of time, but a reorientation of societal values toward entrepreneurship and small- and mid-sized enterprises (SMEs) will be vital to move the Korean economy forward.
The term, hidden champions, has become a buzzword here as the Lee Myung-bak administration has taken steps to nurture SMEs that show they have a global competitive edge and high growth potential.
On March 18, Minister of Knowledge Economy, Choi Kyung-hwan said in a report to President Lee Myung-bak that the country should develop 300 hidden champions by offering tax cuts and other financial incentives as well as technological support to them.
The government plans to support their overseas marketing activities and help them improve their financial health, develop new technologies and create long-term growth strategies, according to the ministry.
Chairman Euh said the globalization of Korean hidden champions is crucial not only for the country's economic future, but also for its efforts to enhance Korea's global reputation.
``One of the problems with Korea selling our image is that a lot of foreigners know about Korean products but don't know their country of origin. Samsung is known as one of Asia's multinational firms, but most people think it's Japanese,'' said the former president of Korea University.
``But even though they recognize the superiority of Korean products ― from companies like Samsung and LG ― the image of Korea in terms of country of origin is not as good.
Compared to German, American or Japanese companies we face a mental `country of origin' discount of 30 percent.
``One of our agenda items is how to reduce the gap between the image of Korean corporations and the image of the world-brand Korean products,'' he said.
Euh lamented that Germans, French and Americans don't know much about Korean products although people in Asia know if a firm is Korean because of Korean popular culture and geographical proximity.
``I've argued that one way to increase Korean brand awareness is to build up hidden champions. Citing your writings, I argued that the reason why the Germans and Japanese are very competitive in the international market ― even though there has been a depression in the world economy ― is because of their hidden champions,'' Euh said.
``Those countries can rely on reliable products produced by smaller companies that have a competitive advantage in terms of quality and service.''
Simon proposed that Korea should use sports to increase its global presence.
``The single person who has done the most for the Korean image in Germany is Cha Bum-keun, who played in the country's professional football league of Bundesliga in the 1970s and 80s. His name is still well known today,'' he said.
``People are interested in Korean culture, but you have to take it to them. Sports and athletics are a very important way to transport and create an image of a country because it is practically the only area where there is global communication.''