P yeongchang has finally realized its dream to host the 2018 Winter Olympic Games.
Pyeongchang, which had refused to give up despite its two times’ failures in hosting the 2010 and 2014 Winter Games, was chosen as the host city of the 2018 Winter Olympics in an overwhelming first-round victory at the 123rd Interna-tional Olympic Committee meeting in Durban, South Africa on July 6. Pyeon-gchang got 63 out of 95 votes in the first round of voting, beating rival cities Munich (25) and Annecy (7) by a wide margin.
What was distinctive this time was the way in which the entire nation joined hands for winning the bid. President Lee Myung-bak, influential business leaders, the residents of Gangwon Province and the Korean public rallied behind the city. While German Munich and French Annecy only received the support of half of their respective populations, Pyeong-chang got the backing from 90 percent of its residents along with successfully proving how much they wanted the Games.
With this winning, Korea will soon become the fifth country after France, Italy, Germany and Japan in the world to have achieved a so-called grand slam in terms of hosting global sporting events. It has already hosted the 1988 Summer Olympics, the 2002 World Cup, last year's Formula One, the Athletics World Championships scheduled for next month, and the coming 2018 Winter Games.
Reflecting Korea’s Rise in International Status
Pyeongchang took an overwhelming 63 of the IOC’s 95 votes. This was possible because IOC members from all continents voted for Pyeongchang -- a proof that many countries have a fresh view of Korea. The Winter Olympics have been mostly hosted by countries in Europe and North America, with Japan the only Asian country. International Olympic Committee President Jacques Rogge says he was stunned by Pyeongchang's decisive victory in the bid for the 2018 Winter Olympics, adding, “I was surprised by the one-round victory and I was surprised by the margin.”
The feat was not achieved overnight. Korea has already given an indelible impression to the world through its winter sporting prowess, with figure skating champion Kim Yu-na entrancing audiences and our speed skaters sweeping the gold medals at the 2010 Winter Games in Vancouver. Korean pop groups are popular across the continent and beyond, Korean films and soap operas have captivated hearts in Asia, the Middle East and Latin America, and Korean food is enjoyed worldwide. Home appliances and cars made by Korean firms like Samsung, LG and Hyundai are starting to show a premium image. All these together have taken Korea to such a competitive stance.
Korea succeeded in enhancing its international status by hosting the 1988 Seoul Olympics. For many Koreans, this was an historic event to show the world what Korea “can do.” It also served as an opportunity to prove that Korea was no longer a small country just torn apart by the 1950-53 Korean War, but a dynamic Asian economy. Korea's trade volume grew nine fold from US$112.5 billion in 1988, when Seoul hosted the Summer Olympics, to US$1 trillion this year, while GDP expanded five times over that period from US$192.3 billion to US$1.14 trillion. By hosting the Winter Olympics seven years from now, the country once again will be able to let the world know the nation beyond just a manufacturer of smart mobile phone, ships and automobiles.
The challenge now is to make sure the Pyeongchang Olympics become another milestone to improve the national image and status further. “The Pyeongchang Olympics can provide a breakthrough for Korea’s new 21st century strategy,” said Song Byung-rak, a professor emeritus of economics at Seoul National University. Lee Young-tak, the chairman of World Future Forum, said, “We could achieve an enormous boost for the national brand if we combine the success of Pyeongchang Olympics with the image of Korea as represented by the Korean Wave, IT technology, and the remarkable performance of Korean designers who are making their name in leading international design competitions.”
Generating US$61 Billion Worth of Economic Effects
Economists have been busy also in totting up the potential benefits of the 2018 Winter Olympics. The Korea Tourism Organization expects the number of foreign visitors to rise from the current 1.3 million per year to reach the 2-million mark, saying the Olympics will serve as an opportunity for the province to take off as the “resort hub” of Asia.
Industry insiders expect some 390,000 foreign tourists to come to Korea to watch the Games spending 721.3 billion won(US$677.9 million), which will produce 1.2 trillion won of economic effects. Some 200,000 domestic tourists will generate 400 billion won of economic effects. And government spending on the Olympics will result in a 3.1 trillion won consumption stimulus. That comes to 21.1 trillion won in direct economic effects or 1.8 percent of Korea’s GDP of 117.3 billion won. The indirect effects are also expected to be huge. After the Olympics, Korea could become a more popular winter holiday destination. A 10-percent increase in the number of foreign tourists, which now stands at 10 million won a year, will bring Korea 32.2 trillion won of economic stimuli over the following 10 years.
Meanwhile, the Hyundai Economic Research Institute claimed the games will generate 64.9 trillion won(US$61 billion) of direct and indirect economic effects. They will generate 21 trillion won of direct economic effects by boosting investment and consumption, and 43.8 trillion won of ensuing indirect effects over the following 10 years. Investment will spur construction of sporting venues, transportation networks and accommodation facilities to the tune of 16.4 trillion won.
The improvement of Korea’s international status also could in turn boost the brand recognition of the country’s top 100 companies. Just a 1-percent increase in brand recognition would result in a 11.6 trillion won economic advantage, Lee said. The Pyeongchang bid committee has estimated that Korea’s GDP will go up by 20.5 trillion won and some 230,000 jobs will be created.
Plan Required Beyond the 2018 Winter Olympics
However, there are also risks that the central and local governments can be put in huge debts unless sports and accommodation facilities built for the event are efficiently used. Actually, many have misjudged this delicate accounting exercise in the past, with Montreal in 1976 and Barcelona in 1992 verging on the brink of default when their excessive investments in Summer Olympic infrastructure led to record deficits. When their respective Games ended, Barcelona found itself strapped with US$2.1 billion of debt, while the central government of Spain had to shoulder US$4 billion in losses. Also in the 1998 Nagano Games, the organizing committee made US$28 million in profits, but the Japanese government ended up with US$11 billion in debts.
On the contrary, the quiet community of Lake Placid in the eastern US has become a major sports tourism attraction, drawing more than 2 million visitors a year after it hosted the 1932 and 1980 Winter Olympics. Norway’s Lillehammer, which played host to the 1994 Winter Games, has become a global tourist attraction.
If the Pyeongchang Games are to become a true success, the projects related to the event must be focused on objectives that go beyond it. The facilities must be seen as wise investments years after the Olympics have ended.
Gangwon Province is asking the central government for 2.2 trillion won to build a freeway linking the region with Seoul and another 3.7 trillion won to build a high-speed railway, in hopes of turning Pyeongchang into a resort hub for wealthy Asians. There is also talk of designating Gangwon Province as a special zone for the Olympics so that it can attract casinos, duty free shops and foreign schools. The government must think carefully which of these myriad investment ideas will truly be worth the money.