Professor Kim Dae-jong of Business Administration at Sejong University in Seoul appeared on the MBC News Special Talk Program on Aug. 2, 2019.
The debate on the day was "Excluded from ‘White Country List’ of Japan, what are our countermeasures?" The discussion took place with Jin Chang-su, a senior researcher at the Sejong Institute, and Professor Kim Jun-hyung of Handong University.
Professor Kim said: “Excluded from Japan's ‘White Country List’ is a good opportunity for Korea’s localization and diversification of her industry. It is said that a crisis is an opportunity. Korea should take this opportunity to localize the materials and parts of SMEs and diversify their trade. ”
Here are excerpts from the view of Professor Kim:
As of 2018, Korea imported 60 trillion won worth of goods from Japan and Korea exported 30 trillion won worth of goods to Japan. The 56% of the amount imported from Japan is 30 trillion won for the parts and material industries.
Korea needs to foster small and medium companies in order to develop parts and materials industry. SMEs account for 50% of the domestic industry and 88% of employment. Component materials cannot be produced by large companies because they are produced in small quantities. This opportunity should create a framework for a win-win growth cooperation between large companies and small and medium-sized enterprises, and use it as an opportunity for localization and diversification.
If we foster the parts and materials industry of SMEs, about 300,00 jobs can be created. Korea is the world's largest producer of heavy chemicals per capita. During the Senkaku Islands conflict in 2010, Japan overcame the crisis by diversifying its import source countries to the United States as China stopped exporting rare-earth elements.
Korea can overcome the crisis by diversifying its localization. As of 2018, GDP is $ 20 trillion for the United States, $ 14 trillion for China, $ 5 trillion for Japan, and $ 1.6 trillion for Korea. In 1965, Japan's GDP was 30 times ours, but now it is three times. If Koreans tighten their belts again, they can surpass Japan in GDP.
As of 2018, Korea's total export amount is 600 trillion won, and Japan's total export amount is 730 trillion won, the difference is only 130 trillion won. If we expand our trade further, Korea could exceed Japan's exports in a few years. Currently, per capita exports of Korea is more than double of the Japan’s per capita.
The market capitalization of Samsung Electronics is currently 400 trillion won, which is higher than sales and net profit of all 10 electronic companies in Japan combined. Samsung learned to assemble radio in Japan, but now it is the world's leading IT company. You can take pride.
Korea is an export-oriented country with 80% of its total dependence on GDP, and is the world's top manufacturing-oriented industrial country. In the electronics industry, Samsung Electronics and Hynix hold 70% of the world's memory semiconductors. This year, Samsung Electronics invested 133 trillion won to become the world's No. 1 in the non-memory field and lead the fourth industrial revolution. Japan has banned the export of semiconductor materials and semiconductor equipment at this time to keep Samsung in check.
Abe is pushing for a constitutional amendment with hatred as the weapon. Nearly 100 million people died in the World War II. Abe wants to change the constitution to become a country that can start a war, but the Japanese people are opposed to it.
Our people should not be lost to Japan again. We need to develop our national power and develop our economy to become the world's superpower. As the US and Japan move toward protective trade, the Republic of Korea should expand its trade.
The manufacturing-oriented export rankings are China, the US, Germany, Japan and Korea. Korea is currently the world's fifth-largest exporter and can overtake Japan in the next few years by deregulating and expanding export support.
If the semiconductor supply chain is shaken by the conflict between Korea and Japan, IT companies around the world will be difficult. Companies like Apple, Amazon and Facebook also maintain servers with Korean semiconductors. If Korea can't make semiconductors, not only Korean companies but also IT companies around the world, including Japanese companies, will suffer a lot. For this reason, the conflict between Korea and Japan will not last long, and it is expected that companies will overcome the crisis well by localizing and diversifying themselves.
Reliance on Japan has declined by 50% from 2000 to 2015, which is why Japanese companies are also suffering from damages caused by the Korea-Japan conflict. On the other hand, Japan's dependence on Korea increased 2.6 times over the same period. Therefore, Japanese firms also rely heavily on Korea.
We have overcome many difficulties, including the 1997 IMF crisis and the 2008 financial crisis. Korea must defend the North Korea-China threat by maintaining a trilateral alliance with the United States. We must strengthen our defense power and become the world's best manufacturing center. Recently, there is anxiety about financial markets, so we need to expand foreign exchange reserves to strengthen the Korean economy.
Japan has 25% foreign dependence, but Korea has 80%. Korea can grow further if it expands trade and follows the wave of big changes such as the Fourth Industrial Revolution and the sharing economy.
South Korea can beat Japan because it has the best education enthusiasm and the best DNA in the world. All citizens must unite and make this crisis as an opportunity.