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Korean textile businesses that moved to China to survive in the face of spiraling costs at home are closing down, having been defeated in competition with their local counterparts. Ten out of 16 firms that settled in Qingdao, Shandong Province, it is said, have already shut down or moved on to Southeast Asia where wages are lower.
The technological gap in the textile industry between Korea and China has all but gone, and that means Chinese companies are pouring cheaper products into our country. One report has it that every six or seven out of 10 items of clothing sold here are Chinese. The Korean textile industry is being overwhelmed by our giant neighbor.
The problem is not confined to textiles. There are only two or three industries where Korea has a clear head-start of China, including semiconductors and cars. The technology gap in home appliances, steel, chemistry and shipbuilding has shrunk to between one and three years. In mobile phones, our primary export item, China is making headway because of price competitiveness.
Buoyed by US$600 billion foreign exchange reserves, China has started buying up top-notch American technology businesses. Following LENOVO's purchase of IBM's personal computer business, CNOOC, one of China's state-controlled oil companies, is negotiating the acquisition of Unocal, a California oil and gas company. As China entices foreign investment away from Korea and secures technologies by acquiring businesses in developed countries, its progress in the technology race is speeding up exponentially.
That Korean companies are being shoved out by their Chinese counterparts means they are being squeezed out of world markets too. In the long term, the Korean economy will crumble. If Korea¡¯s government, business and people cannot improve the country¡¯s economic and social systems, the Samsung Economic Research Institute (SERI) warned Tuesday, the country¡¯s potential growth will plunge to 2.6 percent.
If things remain as they are today, SERI says, Korea will fall back into a third-world status, a mere tool buffeted between China and Japan. We thought we stood at the threshold of becoming a developed nation thanks to the hard work of preceding generations, but the ground is slippery and we are losing our hold. The nation¡¯s leaders including the president, meanwhile, are above taking note of these realities.
(englishnews@chosun.com )
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