Korean Economy is suffering from declining export and domestic demand. Its export has been decreasing 13 months in a row and it recorded -18.5% last January. The causes are various. The first and most conspicuous one is change in China’s economic policy. China’s economy has been focused on export. They have imported mostly intermediate products for exports from South Korea, which accounted for a quarter of Korean exports. However, China’s economic focus has moved from export to domestic demand. This policy change has been carried on systematically for a long time, and it is affecting Korean economy negatively. The second major cause is the devaluation of the yen. Japan has higher technical skills and with this devaluation, is offering products at lower prices than Korea. In the case of domestic demands, the seriousness of household loans dooms the prospect of domestic spending. Also, the United States raised their interest rates and many foreign investors have already started to relocate their money to the United States. Looking farther away, the decreasing productive labor force in Korea and the development in robot technology and the Internet of Things are also casting a bleak outlook on the Korean economy.

How to escape the crisis: Fair Competition

My solution for escaping the economic crisis is building fair competition system in Korea. Currently Korean economic system is not fair. Thirty years ago, Intel was a small-sized company and Microsoft was a venture business, but now they’re bigger than IBM. How could this happen? It was possible because their economy had dynamism which allowed small and venture companies to grow into large conglomerates with their skills and diligence. In many countries including the United States, the average number of self-made millionaires is 70 among the 100 most wealthy. However, in Korea, the number is only 20, which clearly shows how inflexible Korean economy is. After the 2016 financial crisis, the difference in salary between small and middle business workers and conglomerate workers has widened to about two times. Young people can’t find hope and possibility in this atmosphere.

Example cases to implement fair competition

Let’s take the film industry. In order to make movies, we have many steps: planning, investment, filming, distributing, screening, etc. In Korea, several conglomerates are doing all the steps. What this system causes is that it is hard for small filing companies to find good screening opportunities no matter how well they make films. Another example for implementing fair competition can be found in software development. Enterprise software is the most promising software development sector. However, Korea is way behind in this area. The reason is that most conglomerates develop their own enterprise software. How wasteful it is! They could outsource the development, which will lead to building world-class software development firms in Korea. A similar case is in hotel business. Since most conglomerates are running their own hotel, there is no world famous hotel brand in Korea. We are not as developed as Japan or the United States yet. We need to go further. In order to escape this crisis and build a more successful country, we should innovate market system, create new industries and employ solid north Asian strategies like Global Smart Grid. I firmly believe that things like these will invigorate Korean economy again.

Translation by Kang, Soo Jung

President of Salt&Light