The Korean Wave

How the Koreans turned themselves into one of the world’s strongest economies
Poking delicately into the Sea of Japan, the little peninsula has proved an irresistibly tasty morsel to its hungry neighbours. But no matter how often they try to swallow it, South Korea, like plasticine, comes out the other end largely intact. – extract from the Lonely Planet Guidebook

In the 1950’s, after being flattened by war, Korea was one of the five poorest countries in the world. Knowing what we know about Korea (in 2004, South Korea joined the trillion dollar club of world economies) and how often we use Korean made television, handsets and computers, I can hear you saying: “Are you sure about that?”

As it turns out, the peasant farmers were so poor they hovered around US military bases for years in the hopes of finding offal to eat. To this day a soup is still made with chunks of Vienna and spam that saw the light of day in the austere post war period. It is called Phudit-seegeh, and I find I rather like it.

So it turns out to be true. Korea in the 1950’s was, with India, one of the poorest countries in the world. 58 years later, despite the fact that the country remains sliced through the middle, South Korea is the world’s 13th largest economy (behind India interestingly enough, and ahead of Australia), and it is projected to be the second wealthiest nation per capita by 2050. Currently Korea’s GDP per capita is roughly the same as Spain’s. Given America’s current problems, and the fact that the sub-prime crisis has had virtually no impact on the Far East, it’s quite likely that South Korea may prove to be the undisputed leader in terms of the wealth of its citizens in the medium term. Whatever turns out to be the case, the South Korean model for success bears scrutiny. How have they done it?

History

There are not many countries in the world with the bragging rights to so much history. Korea’s has enjoyed sovereign status – as a single, independent country – for over 13 centuries. The historical record provides the Korean people with a tremendous reserve of meaning and value, despite the inchoate push and pull forces of the modern media machine. While these forces may be oppressively strong and compelling in other younger countries, when competing with 5000 years of tradition, the newest fad is easier to see and contextualize as just that.

In 645 AD Chinese Tang Dynasty troops invaded Korea (always a bad idea) and were eviscerated in the 60-day battle at Ansi. The victory of the people of Goguryeo was not the first time Koreans had united against a common enemy, but this particular battle has always held special significance. In 918 AD a new dynasty was founded by General Wang Geon. It was called Goryeo, and it lasted until 1392. It is for this period that Korea found the name that it bears today. It is fascinating then that we know Koreans as Koreans not based on the last historical period (the Joseon Dynasty lasted until 1910) but on the period prior to this. This demonstrates in just one sense the extent to which history has formed the Koreans into the uniquely resilient and obdurate population that swarms through the nation’s capital and beyond.

Struggle

Powerful nations such as China (in its various incarnations) and Japan have attempted, unsuccessfully, to devour the tiny peninsula. That is not to say that Korea is either invulnerable, or that it has no scars from the various adventures and incursions launched over Korean lands. The North-South split is evidence enough of the schisms of war they have endured, and it is a wound that Koreans consciously or subconsciously struggle with every day.

When I was in Seoul in April, during a lunchtime toast, our host toasted to world peace and north-south reconciliation. That is how ingrained the idea of a painful struggle is ingrained into everyday life. The Koreans accepted ‘the Struggle’ as part of life a long time ago, and this is a crucial first step on the long journey to success.

Isolation

The lonely hilltop temples epitomize Korea. These are places of calm; and thus Korea refers to itself as ‘The Land of the morning Calm’.
It may not seem like a positive trait, but Korea’s isolation provided them with an opportunity to develop as a cohesive and integrated group. And just as South Africa was forced to develop technologies (such as SASOL’s synthesis of coal to liquids) during the sanctions imposed on the Apartheid government, so too have the Koreans developed all manner of innovative technologies. An early sign of their potential was the ‘invention’ of Hangul in 1446, when King Sejong decided that Korea needed their own alphabet and writing system. The 24 letter alphabet is brilliant in its simplicity, and by world standards, one of the most modern.

South Korea is some 700km from Russia’s easternmost outpost – Vladivostok. Their geo-physical location in the Far East above the Tropic of Cancer means they are some distance from large centers of commerce such as Singapore, Dubai, New York and others. Seoul is virtually equidistant between both Beijing and Tokyo – around 2 hours flying time in either direction. The extreme position geographically does have a benefit though in that they enjoy 4 very distinct seasons. Summers are oppressively hot and humid, winters are the opposite, with average temperatures often remaining below zero for long periods of time. These large climate differences also stand behind the ability of the Koreans to adapt.

Education

Parents can watch their children at school on the internet as all classrooms are fitted with cameras. Is there a better incentive to get children studying, and teacher’s doing what they need to be doing?
Korea made investments into education immediately after the war, so that by 1958, 95% of school-age children were going to school. Literacy was just 23% in 1943. By 1987 it was over 95%. Currently literacy is 97.9% by the CIA World Factbook definition (those age 15 years and older that can read and write). It is not unusual that today Korean children arrive home from school (extra math, piano or language classes) after their parents return from work. The internet is also present in government schools, allowing teacher’s to use computers and the internet (projecting onto large screens) as a conventional, every day teaching tool.

Homogeneity

Koreans are the most homogeneous population in the world. This has its benefits. Since there are very few minority groups (minorities tend to be very small groups of immigrants, such as 20 000 Chinese and smaller groups of Japanese, Mongolians and Americans), it is easy to make single-minded decisions rapidly. South Africa stands in stark contrast, where 11 language groups need to be addressed in television and other media, road signs are constantly revised, and something as simple as choosing a football team becomes a matter of national debate (in terms of race-based quotas). Korea does not suffer any of these problems, which frees up both ordinary human resources and tremendous rates of human efficiency.

Modelling

The Koreans have not been coy about their respect and admiration for the USA. So, to a large extent, they have imported westerners (paying for air tickets, arranging their accommodation, finding them jobs in English language schools called Hagwons) and begun the effort of understanding English, and especially what they refer to as ‘American English’. They want to be able to speak like newscasters on CNN.
Korea’s fashion industry though provides an interesting caveat to the idea that Korea models itself on a western ideal. While miniskirts were legalized fairly recently, the Koreans remain fairly conservative in their dress code. Cleavage is virtually taboo. Even so Korean fashion leads the rest of Asia, and so too – oddly enough – do Korean soap operas, which has made Korea something of a model to its neighbors.
An even closer look reveals that while Koreans have embraced fast food like many other countries, Korean cuisine continues to do very well in spite of yet another foreign invasion, this time a gastronomical one. Fast food franchises have had to offer their Korean patrons "kimchiburgers" for lunch instead of cheeseburgers.

Identity

History stands at the root of the Korean identity, and it is fair to say, these roots go very deep into both the national and the individual’s psyche. It is a cohesive force. At sports events Koreans will often shout ‘Fighting’ in English. This fighting spirit is part and parcel of the Korean identity.
The social structure is patriarchal, which provides a clear line of authority. In countries where the sexes are more equal (and arguably even in some marriages) the lack of clarity in terms of ultimate authority can lead to both conflict and confusion. The countries entrenched Confucian patriarchal ideology naturally gets in the way of the realisation of gender equality, a fact that encourages Korean women to consider foreign males as partners. In the rural countryside, every 3rd marriage is between a Korean and a foreign national.

Ethics and Culture

South Koreans attribute their indigestible culture to the binding agents of Confucianism, language and pride. – extract from the Lonely Planet Guidebook

Buddhism is the spiritual foundation of the Koreans, and it is Buddhism that encouraged the Koreans to begin to reach out to Buddhist elsewhere – in China, India and beyond. Today a quarter of the population is still Buddhist, with approximately the same number professing to be Christian. 50% profess to have no religion. Confucianism introduced even earlier, today remains powerful in moderating the social order. Koreans are always watching one another to make sure no one steps out of line too much. This conservatism accounts in part for an HIV/AIDS prevalence under 0.1%. But conservatism is true in fashion, but is applied to something as simple as who (the most senior person) gets to eat first at dinner.
Koreans have a culture of sharing. This is most evident when meals are consumed. Many small plates are provided, and everyone is encouraged to eat from many different bowls and pots.

On a recent tour of the Cheong Gye Cheon stream in Seoul, when it started to rain, our hosts quickly and almost magically produced umbrellas for each individual. On trains and busses young people stand up and allow older people to sit.
Perhaps the most important is Korea’s work ethic. With an unemployment rate of just 3.2% it is difficult to think of a population group who studies harder or works more diligently than these people do.

Ambition

Korea’s ambitions are becoming increasingly apparent. During the FIFA Soccer World Cup we saw the Korean soccer team advance far beyond expectations, finally losing to Germany in the quarter finals. Samsung, the company that comprises one fifth of Korea’s GDP, has competed aggressively with the likes of Sony, Apple and Nokia. Seoul itself aims to be ‘the best city in the world’, and the city at the centre of global commerce. Huge projects are underway to realize these ambitions, not least of all the massive Dream Hub complex (built in the Yongsan area), which comprises a spire that will be the world’s most expensive building ever built.
Right now Korea’s is busy developing its brand which is far weaker than its economic power. Many people around the world have no idea where the country is situated. The Seoul Metropolitan Government is actively recruiting journalists from around the world to spread the message, and build the brand, of where and who the Koreans are.

Consistency

The Geneva-based Airports Council International (ACI) has voted Incheon airport the world’s best three years in a row (2005-2007). This is an unprecedented achievement for an international airport.
In 1965 South Korea’s economy was put through 4 successive five-year plans, 3 of which averaged 10% growth rates for GNP. The exception was a 6.8% growth rate recorded in 1980 due to the oil shock.
In 1996 South Korea grew at 8.6%. By 2005 South Korea’s GDP was $787.5 billion, a 63% increase from 2001. In 1960 South Korea’s exports amounted to $30 billion. By 2005 this figure had skyrocketed to $284 billion. In 2007 the economy grew 5% and this is expected to contract (as are most of the world’s economies) to 4.7% this year.

Technology

Samsung is the world’s market leader in cell phones, LCD panels and semi-conductors. Samsung companies are also world leaders in shipbuilding and construction. In 2007, Samsung accounted for 21% of Korea’s total exports, and 15% of Korea’s GDP. Technology stands at the forefront of all other innovations, and technology allows for a more efficient use of energy. But it has to be said, technology is not energy.
South Korea also has advanced subway and rail infrastructure connecting the entire country, and making it accessible without one needing to have one’s own vehicle.

Momentum

South Korea is crucially the most wired country in the world, with 90% of households enjoyed blistering broadband internet. It is no accident that given such high levels of penetration, South Korea has enjoyed high levels of demand for the hardware (electronics, computers, handheld devices) to allow its population to use internet-based technologies. As such, South Korea have become and pioneers of many innovative hardware products. Among the most recent is the flash chips (operated in Apple iPods to name one http://macenstein.com/default/archives/605 ), produced by Samsung.
With South Korea sitting at the top of the internet mountain, it is also the first country to test new hardware on its own market. In the same way Korea has developed its motor vehicle market (by first selling its automotive products to a captive domestic market that is restricted from buying foreign made vehicles). Success at home with new products it just the beginning. From here, incredible momentum develops as these successful products are then rolled out to the rest of the world, often in advance of competitors.

In the years ahead, Seoul will be showcased as the World design Capital 2010. The future looks bright in some ways for the dynamic inhabitants of a peninsula half the size of California. While South Korea shares America’s almost accidental good luck to be wedges between two massive trading blocks, China and Japan, Korea differs from America in at least two major areas. One is the size of its landmass. On the one hand a smaller landmass means fewer fuel needs to get around, on the other, it means South Korea cannot grow enough food to feed itself. Food prices will be a major challenge facing countries as they attempt to hold down domestic inflation. South Korea has a comparatively small population, but is likely to feel the impact of food prices more than most. And secondly, Korea continues to suffer from a low brand image (perceived by the rest of the world). The improvement of Korean’s national image, in step with the transformation of Seoul as World Design Capital, is likely to be ground-breaking.

In the end, South Korea has emerged as a bear in tiger’s clothing. Ban Ki-Moon is a Korean serving as the current UN Secretary General. The most precious and remarkable resource has always been the South Koreans themselves.

Sources:
Seoul Press Tour Press Kit
*Anholt GMI
A Panorma of 5000 years, Andrew C Nahm, Ph.D, 4th Edition.
Re-engineering Samsung means…Changing Korea, by Michael Breen and Jung kyu-hyun, Wall Street journal Asia
CIA World Factbook