The recent entry of China to the WTO presents some daunting challenges for Korea. Sandwiched as it is between Japan (the 2nd largest world economy) and China (the 5th largest), it has managed to build itself from a rural, war-ravaged backwater to the 12th biggest economic force in the world, which is no small achievement for such a small nation. With China’s entry to the WTO, though, the landscape has changed. At the moment, Korean goods, particularly electronics, are of much higher quality than Chinese goods, and the economy is in most ways further along the path of development. China’s rapid industrialization is striking fear into the hearts of Korean government and business leaders, though. China has much cheaper labour, very stable markets, almost no labour unrest (thanks to repression, but hey, all’s fair in the market economy, da?), and has now joined the Gang.
Unless Korea gets its act together, and understands that working smarter, not harder, is the only way to keep their competitive edge over China, dark days are ahead. A recent study found that the average productivity of Korean workers is around 36% that of American workers, and 50% of Japanese workers. How, then, has the country made such incredible economic gains in the past few decades? Fourteen and sixteen-hour work days, I guess. Work 16 hours at a 40% productivity rate, and it’s like working 8 hours at an 80% productivity rate….
It’s interesting that Korea now finds itself in a similar position, in some respects, to the one Japan was in 30 years ago…at the stage where it needs to break free of the industrial nightmare and move to the production of higher value-added products and services, while its neighbour to the east is rapidly industrializing. Hopefully Korea will manage it with the aplomb, relatively speaking, that Japan displayed.
It’s an interesting and possibly germane side note that Kim Dae Jung, who some refer to as the ‘Nelson Mandela of Korea‘, now in the fourth year of his presidency, asked Alvin Toffler at a conference shortly before the last Korean election, if, provided that his bid for the presidency was successful, Alvin and his wife would advise him on matters Future-Shocky. Alvin agreed, and one of the key findings of the report that he handed over to President Kim was that unless Korea moved to a more service-based economy, and one less agricultural and primary-industry-focused, the band would be playing Down The Toilet We Go.
(I know that’s not a real song. Sometimes I just dream things, OK?)