'Make it business unusual'

Bryan Hopkins

This is the third in a series of letters by experts to President-elect Park Geun-hye. — ED.

By Bryan Hopkins

Dear Madam President-elect

I send my whole-hearted congratulations on your election as the new President of Korea.

The next five years will be critical for the success of the Korean economy. It will determine whether Korea joins the ranks of the advanced economies such as the U.S. and Western Europe or whether it remains stuck in between the advanced economies and those of the emerging markets.

The dilemmas that may be facing you are not only pressures from chaebol to expand the economy using such conglomerates as the engines of growth, but also the pressures from anti-business forces in the form of economic democratization to diminish the role of the chaebol.

To expand the economy and increase Korea’s share of the global economic pie, I hope you vigorously implement policies to take it to the next level while addressing society’s concerns over the economic power of the chaebol. This means your administration has to address a number of issues including those below.

First, I hope you remember that Korea is an export-driven economy. Its success in the past has been based on Korean conglomerates expanding globally into such markets as the U.S., the European Union (EU) and China by offering well made products at competitive prices to end users.

This is especially true of companies such as Samsung Electronics and LG Electronics, who have become leaders in the global consumer electronics industry and Hyundai Motors which has become a leader in the automotive industry.

In order for such success to continue, you will have to encourage continued capital investment as well as promote economic certainty required by industry for further facility investment and expansion. This in turn will benefit small- and medium-sized companies that will also share in such development.

Second, as foreign investment in Korea increases, your administration will have to encourage predictability and corporate transparency. To promote itself as a major center of foreign investment and a global free trade hub, Korea still has to overcome international concerns generated by the Lone Star matter.

It also needs to ensure that the Korea-U.S. Fair Trade Agreement and other free trade pacts are implemented and not nullified as some political organizations have demanded. Predictability, transparency and uniform enforcement of trade, financial and investment laws will go a long way in restoring the global business community’s faith in Korea and encourage additional needed foreign direct investment.

Last but not least, the incoming administration has to recognize that China and other emerging markets are catching up to Korea in terms of competition. Chinese, Indian and Thai companies are making great inroads into industries dominated by Korean companies.

The U.S. economy is increasing as well, resulting in expansion of U.S. companies, including Google, Apple and General Electronics. Korean industry has to become more nimble, flexible and dynamic in the future if it wants to successfully compete in global marketplace.

This calls for Korean business not only to dramatically increase research and development but for governmental policies that not only encourages capital investment but policies that change the focus of the educational system to encourage creativity over memorization.

To be successful in the future, Korean companies must focus on becoming global leaders through innovation, product development and the invention and implementation of new technologies. This will only come with an educated work force that prizes creativity and independence.

Failure to do so may ultimately render Korean companies non-competitive which will negatively affect any chances for long term economic expansion and prosperity. I hope, Madam, that you consider these points I mention in all sincerity.

Bryan Hopkins is a professor at Sejong University’s graduate school of business.