The latest news that South Korea will join the “20-50” club of advanced countries by the end of this month — surpassing the threshold of US$20,000 gross national income per capita with a population of 50 million — again arouses mixed feelings among Taiwanese about the East Asian country.
South Korea’s rapid ascent in the global economic rankings over the past decade is fascinating. People who have recently traveled to Seoul are amazed by the drastic change in the skyline along with the modernization of the city.
South Korea’s economic rise can be observed through many indicators. For example, according to a WTO report last year, South Korea was ranked the world’s seventh-biggest exporter at a value of US$466 billion, while Taiwan declined to 16th place.
In the UN’s 2009 World Investment Report, three of South Korea’s biggest conglomerates — LG, Samsung and Hyundai — placed in the world’s top 100 non-financial transnational corporations, whereas Taiwan had none. Needless to say, South Korean popular culture has taken the place of the Japanese to become the most popular in Asia, reportedly generating US$3.8 billion in revenue from overseas markets last year.
Over the past decade, Taiwan has regarded South Korea as a primary competitor, while South Korea has strived to catch up with Japan. As most Taiwanese companies were satisfied to earn money by taking advantage of China’s cheap labor with the conventional original equipment manufacturing model, South Korean companies were working hard to expand their market shares in developed countries and to bolster their reputations in emerging economies with their own domestic brands.
While South Korea has concluded free-trade agreements (FTA) with the EU, the US, ASEAN and India — accounting for a significant portion of its total trade — Taiwan still struggles with follow-up negotiations connected to the Economic Cooperation Framework Agreement (ECFA) with China and has produced no observable progress on any FTAs.
Many attribute South Korea’s latest success to the bold and proactive actions taken by its government to support local firms and blame Taiwan’s misguided industrial policies, inflexible regulations and laggard bureaucracy, for example.
Given the differences in economic structures, population and the external constraints that exist between the two countries, it is not always fair to compare Taiwan and South Korea.
What is more important is to appreciate and learn the strengths and merits of the other. From this perspective, the supportive measures adopted by the South Korean government to encourage its companies to expand overseas are not only admirable, but the close collaboration between the public and private sectors as well as the spirit of collective teamwork between large corporations and small and medium-sized enterprises (SME) are similarly worth learning from.
For example, South Korea’s trade with ASEAN countries has improved remarkably in recent years. Trade between South Korea and Indonesia, the largest nation in Southeast Asia, has increased threefold in the past few years, from US$10.8 billion in 2007 to US$30 billion last year.
By targeting this promising emerging economy, South Korea is now expected to boost trade with Indonesia to US$100 billion by 2020 with the implementation of a comprehensive economic partnership agreement. Not surprisingly, anyone who passes through the customs channel at Jakarta’s main airport can easily locate TV monitors with noticeable LG logos. Similarly, gigantic billboards advertising Samsung’s products are erected on the top of many modern buildings along Jakarta’s major avenues. With the increasing spread of South Korean factories in Indonesia, South Korean shops and restaurants have also started to flourish.