South Korea
Korea celebrates the 70th anniversary of national liberation on Aug. 15. People are asking for a bigger role in enterprises to create another miracle on the Han River.
According to Statistics Korea, the country increased its GDP 31,000-fold, from 47.7 billion won (US$40.7 million) to 1.485 quadrillion won (US$1.265 trillion) between 1953 and last year, to rank 13th in the world. During the period, the ratio of its primary industry decreased from 48.2 to 2.3 percent, while that of the manufacturing sector jumped from 7.8 to 30.3 percent. Its exports skyrocketed from US$2,500 to US$72.7 billion as well, to account for 3.1 percent of the global total, which is the sixth largest in the world.
Such rapid economic growth was led mainly by Korean enterprises. Korea, which had resorted to foreign aid, launched its first five-year economic development plan in 1962, and Samsung, Hyundai, LG, and SK benefitted from it to become leading global players.
The Samsung Group’s sales and aggregate market value soared from 29 trillion won (US$24.7 billion) to 380 trillion won (US$323 billion), and from 7.6 trillion won (US$6.5 billion) to 340 trillion won (US$290 billion) between 1993 and 2014, respectively. The number of its employees more than tripled to 420,000, too. The Hyundai Motor Group’s market capitalization and sales increased 29-fold and 11-fold each between 1999 and 2012, as well.
Korea is facing a crisis at this moment, though. Its economic growth rate for this year is estimated at less than 3 percent, and the slowdown is likely to continue for a while amid adverse external and domestic conditions. Its smartphone and automobile industries have reached their limits, while China and Japan are posing a serious challenge. They are about to catch up with Korea in the semiconductor industry, too.
On the Bloomberg list of the world’s top 500 companies, the number of Korean enterprises fell from seven to three in 10 years. Samsung Electronics fell six notches and Hyundai Motor Company slid no less than 159 notches, while Hyundai Mobis, POSCO, and the Korea Electric Power Corporation disappeared from the list this year. On the contrary, the number of Chinese companies increased approximately seven-fold from seven during the last 10 years and the Japanese companies on the list are showing much better performances than before these days.
Last month, the Hyundai Motor Group’s overseas sales volume declined 7.4 percent from a year ago. Samsung Electronics’ global smartphone market share fell 4.1 percent during the period, as Apple and Chinese handset manufacturers attracted more customers.
The business community is claiming that a structural reform is the key to the situation. The idea is that the lack of flexibility in the job market, excessive environmental regulations, and corporate governance structure vulnerability to foreign funds can be dealt with by means of the reform, and then new growth opportunities can be found to overcome adverse economic conditions.