The Federation of Korean Industries and the Japan Business Federation co-hosted a seminar in Seoul on October 19 on the subject of change in supply chain in East Asia and South Korea’s and Japan’s response to it.
“It is said in South Korea that Japan has high non-tariff barriers, but this matter can be dealt with by South Korean companies’ merger with and acquisition of Japanese companies as in the case of the acquisition of Sharp by Taiwan,” Waseda University professor Yukiko Fukagawa said at the seminar, continuing, “Industrial cooperation between South Korea and Japan should focus on the fields where one of the two has things to catch up with, such as finance and technology, and new and emerging fields like Industry 4.0 and the sliver industry and they need to expand their cooperation in third countries as well.” The professor also pointed out that both governments need to show more interest in the six aspects of corporate tax, environmental regulation, labor market reform, electricity pricing, foreign exchange policy and FTA expansion to maintain their economic growth momentum in the current era of low growth and this is because the investment attractiveness of each country is likely to be determined depending on which one is better at innovation in these aspects.
Korea Development Institute researcher Jung Sung-hoon said in response that the South Korean heavy and chemical industries will no longer be able to enjoy a great benefit from the Chinese market because the service sector is showing a higher growth rate than the manufacturing sector in today’s China. “South Korea and Japan are supposed to compete with each other in many cases in that they share lots of major export items, but this also means that the two countries can work together in opening up new markets,” he explained, adding, “Their strategic cooperation is required in Eurasian countries in particular, where Japanese and South Korean enterprises’ business has yet to be expanded a lot.”
LG Economic Research Institute senior analyst Lee Ji-pyeong, in the meantime, pointed out that South Korean and Japanese industries are becoming increasingly complementary to each other these days while the degree of competition is on the rise between the South Korean and Chinese manufacturing sectors.
Japanese journalist Shuhei Ikehata, chief of the NHK Seoul Bureau, mentioned that South Korean enterprises need to manage risks in their business with China by deepening their relations with the other countries and regions as Japanese companies do by means of the so-called China+1 strategy. “One example of this risk management strategy is the LNG plant established in Indonesia by the Korea Gas Corporation and Mitsubishi Corporation,” he went on to say, adding, “Japan and South Korea are culturally similar to each other and, as such, can work well with each other in doing business in third countries.”