Brain Drain from South Korea
Japanese and Chinese companies are attempting to lure South Korean engineers who have been made redundant under the ongoing restructuring in major industries.
Back in the 1970s and 1980s, Japan led the growth of the global shipbuilding industry. At that time, Japanese shipbuilders’ global market share amounted to 50%, with their workforce exceeding 160,000. However, they had to undergo massive restructuring twice after South Korean shipbuilders overtook them. As a result, the number of such workers and their market share dropped to approximately 50,000 and 8%, respectively. At the same time, Japanese shipbuilders had to stop training engineers.
These days, Japan is trying to revitalize its shipbuilding industry by attracting engineers from South Korea. “South Korean shipbuilders’ current global market share is about 20% and at least 100,000 workers are necessary to maintain it,” said an industry insider, adding, “However, the number of workers in the sector is likely to dip below 100,000 with South Korean shipbuilders planning on restructuring in the second half of this year.” He went on to say, “As more and more South Korean shipbuilding engineers are moving to Japanese companies, a recovery of the local shipbuilding industry is likely to be delayed.”
A decline in technical expertise is another concern. In general, shipbuilding engineers in charge of design and R&D become skillful after working for 10 years or so and the period is five to 10 years, three to five, and two to three for those in charge of piping, attachment, and welding, respectively. Even if the local shipbuilding sector rebounds, a shortage of skilled manpower can lead to a limited productivity growth, and then local shipbuilders cannot catch up with their Japanese and Chinese counterparts.
Chinese companies are doing the same thing in the display and automobile sectors. For example, BOE, the largest display panel manufacturer in China, recently hired a former Samsung Display employee via its partner firm in order to circumvent Samsung Display’s ban on getting a job in the same industry after retirement. “The ban is ineffective when it comes to those hiding in China,” said an industry source, adding that a number of South Korean engineers are already working for BOE.
In the automotive industry, China is attracting an increasing number of engineers and designers in their 30s and 40s, mostly in the segments including quality control, production technology, product development and powertrain. “China has concentrated on the growth of local automakers since 2013, yet their technology and design still have a far way to go,” said an industry expert, continuing, “This is why they are making job offers one after another to, for example, GM Korea, SsangYong Motor and Renault Samsung employees.”