By Michael Jones (michael.jones@tsiglobalconsulting.com)
In this blog series, so far, we’ve discussed the economic opportunities present in 3 countries: Singapore, Hong Kong, and Taiwan. We’ve seen quite a bit of potential for growth in these areas, and all of them are absolutely worthy of your consideration for future business in the region. However, in terms of sheer weight in the global economy, all 3 of them pale in comparison to our last Asian Tiger: South Korea. What started out after World War II as somewhat of a backwater surrounded by its much more powerful neighbors has grown into an economic juggernaut, with South Korea laying claim to the 12th largest economy in the world with no sign of slowing down. Recent years have shown that South Korea is definitely a country that you need to be paying attention to; hopefully with this guide as a primer on the Korean economy, you can get up to speed on this accelerating Asian Tiger.
South Korea’s history is worth discussing up front in order to dispel some of the concerns that people may have about investing in the region. In past articles in this series, we’ve learned about how relations with other Asian powers can mean instability for our countries in question, and of course, you can’t talk about South Korea without “unstable countries” being brought up somewhere in the conversation. On the surface, the issue of North Korea does seem like a deal breaker, as an aggressive, militarized state run by a dictator who constantly spouts rhetoric about wiping the South out and is armed with nuclear weapons doesn’t really seem like an ideal neighbor for your new business investment. However, one important thing to remember is that the North Korean regime is first concerned with survival. Unlike China or other powerful Asian countries (which could probably influence international opinion to get away with interference in the other Asian Tigers), North Korea seems to realize that an attack on South Korea would spell its own end, and many international experts agree that, despite its threats, an attack would likely never happen. However, it is important to note that North Korea’s posturing can have a negative effect on the South Korean economy, as it can trigger panic in those investing there: however, simply keep in mind that the North Korean government is mostly full of hot air, and your business should be fine.
Well, despite this article being about South Korea, the very first paragraph of analysis is dedicated to North Korea…Of course, understanding the reality of the unlikeliness of a North Korean attack is important to making a decision about South Korea, but that’s not why we are here. With that out of the way, back on track! The first step towards getting to know South Korea is understanding how it got to be where it is today. As previously mentioned, the economic and social situation following the Second World War in Korea was grim, and the country had to build itself up from the ground floor. Roughly beginning in the 1960s, South Korea began to focus on industrializing its economy, which triggered a boom whose shock waves would continue to be felt all the way to the 1990s. During the boom, South Korea’s economy primarily consisted of machinery and electronics equipment: fields which still define much of this country’s output.
Towards the tail end of South Korea’s period of rapid economic growth, the Asian Financial Crisis occurred, which rocked the economies of the entire continent. Of course, South Korea was no exception to this rule. Through smart government planning and hard work, the Korean government was eventually able to recover to pre-crisis levels. Korea continued its development into the 2000s, when it faced the Global Financial Crisis of 2007. However, unlike the rest of the world, the South Korean government had a plan. By implementing similar solutions to those that were used to overcome the Asian Financial Crisis, South Korea was able to avoid the brunt of the crisis, and continue its development as the rest of the world lagged behind. This highlights one of the great strengths of the Korean economy: the ability to learn from mistakes and adapt to prevent them from happening in the future.
Out of all of the Asian Tigers, South Korea is certainly the biggest, and perhaps has the brightest future. Unlike other countries that are developing at similar rates (such as Indonesia), South Korea has a very high standard of living and much more developed infrastructure. However, it is also unlike other countries with a similar standard of living (such as Japan), as its economy isn’t falling into stagnation. It certainly is an interesting specimen. While we at TSI believe that anyone interested in investment in Asia should give South Korea a look, those involved in the previously mentioned machinery and electronics fields, as well as shipbuilding and automobiles (which South Korea is also a world leader in) should pay special attention to this Asian Tiger. With continued growth rates as well as more international visibility due to its spreading pop culture, South Korea certainly seems to be a great investment for the future.
If you have any questions about South Korea, or any of the other countries in this blog series, feel free to contact me at michael.jones@tsiglobalconsulting.com , or give us a call at 210-757-0618 for a consultation. I hope that you’ve enjoyed reading this blog series as much as I did writing it! Please check back soon for a new blog, and please, let me know if you have any suggestions for what I should cover next!