Beijing-Seoul cooperation need of the hour

By Wendy Min Source:Global Times Published: 2017/10/6 9:58:11 Last Updated: 2017/10/9 22:48:23

Illustration: Liu Rui/GT

While many believe that tourism, cosmetics and soft power in the form of K-pop entertainment are the main money makers for South Korea, they are not the pillars of its economy. Responsible for making the country one of the Four Asian Dragons, many flagship industries like shipping, electronics, automobiles and semiconductors are slipping into a state of stagnation. Once the pride of the nation, they face ever-mounting pressure and fierce competition from many countries in the region, especially China.

South Korea has caught up with other leading OECD economies but with power shifts, geopolitical changes and no major solutions to structural difficulties such as an aging population, low fertility rates and diminishing growth, many young Koreans are becoming pessimistic. 

"We didn't crash during the Asian financial crisis," a South Korean friend told me. "We might not be so lucky now! I never thought this day would come so fast."

Tech giants Samsung Electronics and LG Electronics have seen rapid development, but their market shares in global smartphone sales are slowly slipping through their fingers. Chinese brands Xiaomi and Huawei are rising. Often dubbed "the New Samsung," Huawei was visible in almost every developing country where I backpacked. Chinese companies are going global like South Korea did before and they are showing no signs of stopping. 

Similar to electronics is the shipping industry. From 1970 to 1990 was a period of escalating shipping demand in Asia. This was made possible through government support, lower labor costs and advancements in technology transfer. 

As South Korea overtook Japan, the Chinese shipping industry was still in an early stage of development. The shipping industry has always enjoyed a "too big to fail so you have to save us" status. China was winning in price and Japan exploiting a weak currency. The government was aware of the issue. 

But voluntary redundancies and mergers and acquisitions are not long-term solutions. What the shipping industry needs is restructuring to address manpower and environmental issues. This could be a lesson for all since without such changes, no matter whether the economy rebounds or trade volumes and oil prices go up, the industry will not recover quickly. This latest "Korea slips, China rises" is deja-vu for Europeans who recall South Korea taking over their shipping markets. Since competition will only continue, collaboration and rescue plans must be maintained. 

Finally, South Korea's semiconductor industry, the second largest in the world, has also faced developments from Chinese counterparts. State-led approach coupled with South Korea's high technology allowed major semiconductor giants like Samsung and SK Hynix to keep their noses ahead. But things are changing. In addition to a global decline in demand for computer chips, it is difficult to stop other regions taking on a more technological and market-oriented approach to their own development. 

China's latest five-year plan indicated a research and development budget worth up 2.5 percent of the country's GDP for 2016-20, a 0.4 percent hike from the previous five-year period. It is wishful thinking that other competitors will not challenge this ranking. Although aggressive, business competition can be seen as healthy and an urgent incentive to boost one's own scientific and research capacity. 

Furthermore, dangerous times often open up opportunities for multilateral collaboration. Such ideas are needed more than ever to weather the tough times that engulf this world. The government is focused on North Korea and political unrest. But it should not forget technological development, business collaboration and support for the next generation. 

Speaking with young South Koreans allowed me to better understand how they view their country, the competition they face from China and what this means for the relationship between the two nations. Perhaps it is too early to believe that South Korea is heading toward doom. 

"Yes we are slipping," said one friend. "No one can be on top forever and China is our competitor. I'm scared for my country and worried that China will not work with us. We have an old saying 'healthy competition is fine and cooperation is even better.'"

The author is a freelance writer. She was born in China, raised in Australia, educated in China, Australia and France.


blog comments powered by Disqus