The latest strategic talks between the U.S. and China concluded without major developments. I was alarmed, however, by Chinese Prime Minister Wen Jiabao's speech. In the speech, Wen announced that China intends to use its foreign reserves of $2.13 trillion, which is nine times more than Korea's, to support Chinese companies' takeovers of foreign companies. To me, it sounded like a warning for Korea.
According to the Chinese media, Wen made his announcement at the 11th Foreign Resident Diplomats' Conference, which was held from July 11 to 20 in Beijing, where he urged the country's diplomats and companies to go on an aggressive hunt for takeover opportunities.
Of course, China's global strategy is not anything new. What is unique is that China would take steps to increase its foreign direct investment in the face of the global financial crisis. Chinese companies such as PetroChina, Aluminum Corporation of China (CHINALCO), China Telecom and Bank of China have been aggressive as it is, but this latest directive from the government likely means these public companies will step up their efforts to enter overseas markets including Korea.
Successful mergers and acquisitions have enabled Chinese companies to send out their human resources and build up their networks in overseas markets. These Chinese networks have become virtually global, posing greater challenges for Korean companies operating internationally. One effect of these challenges is already apparent on Wall Street.
A Korean identified as Kim, who attended top schools through high school, university, and graduate school in the States, returned to Korea at the end of last year after working for a year for a New York investment bank. When the economy started to go bad, Wall Street financial institutions put Koreans on the list for their first round of layoffs because Korea did not have much power in the market. "Chinese investors have become important, so Chinese employees were able to hold on to their jobs," Kim says. Another former Wall Street employee identified as Chun added, "There are quotas for Asians; while the influence of Chinese partners is increasing, that of the Korean partners is shrinking without any backup from outside."
The entry of Chinese multinationals into the U.S. market is in its early stages. But if Chinese small businesses are taken into consideration, the Chinese influence cannot be ignored. In December 2007, I had the experience of talking with MIT economist Lester Thurow about the migration of Chinese human resources to the U.S. I met him at a hotel in Manhattan.
Thurow said with the growing standard of living in China, more Chinese are moving to the U.S. "Look how many excellent Chinese scientists and engineers there are at MIT and Harvard," he said. With time, there could be a Chinese immigrant president of the U.S. who was educated in the U.S., he added.
Last year, there were 127,100 Korean students in the U.S., compared to 90,210 Chinese students. The Korean students, however, will have a harder time landing a job there. Chinese companies and their overseas subsidiaries are happy to hire graduates of foreign schools. Koreans with degrees from abroad are largely unwanted.
The latest meeting between the U.S. and China made news around the globe and showed China's importance as a partner of the U.S. I am afraid this is bad news for Korean students in America. I wonder what measures our government is taking for these students, who will soon leave the American Dream behind and return home to compete for jobs.
By Kim Ki-hoon from the Chosun Ilbo's News Desk