The CEO of a local conglomerate told the following story. His company ranks third in the world this year in terms of product sales. Every one of his employees should be in high spirits, but in reality things aren't at all rosy. "We still have a long way to go before we can reach the top spot, and we're not even sure if we can maintain our current standing," he said. "We need better technology to rank first or second in the world, but the domestic technology base is too weak."

What does it mean to be in third place in the manufacturing industry? "In a situation where the entire world has become a single global market, third place is the Maginot line -- you can be pushed over at any time if you're not first or second," the CEO said. It's true. Of all the Korean manufacturing industries, the only top-ranking contenders in the global market are semiconductors and shipbuilding. The others have been relegated to third place -- or worse -- for one reason or another.

Korea's steel industry, for example, was once the world's best, but now it only ranks in fifth place. And actually things are looking worse, with the industry writhing over rumors of a hostile foreign takeover attempt. Our automotive industry which at one point seemed unstoppable now ranks behind the auto industries of Japan, Europe, and the U.S. And Korea's mobile phone sector has been stuck in third place for several years. For a while it looked like we could stay there, but lately profitability has been trending downwards.

Hisashi Ono, president of the Seoul branch of the Nomura Research Institute of Japan, recently introduced us to the idea of the "four sandwiches." By four sandwiches, he meant the technology barrier, the language barrier, a smaller market share, and a crisis in cutting-edge projects. Of the four, the technology barrier is the one cutting Korean businessmen to the quick.

Alongside Samsung Electronics, Samsung SDI is the leader in domestic electronics technology. In 1970, it took over technology for cathode ray tubes from NEC of Japan, and later made big money by expanding its market. In 2004 it earned W700 billion (US$1=W1,043.80 as of Dec. 31, 2004) in net profits. Just a few years ago its future looked very bright as it began to focus on plasma screen TVs. But in the first quarter of this year, Samsung SDI registered an operating loss of W110 billion (US$1=W927 as of May 3, 2007).

A Samsung SDI executive engineer told a frightening story. "A lot of people think that plasma has lost out to LCD, but it's not true. We're still receiving a lot of orders. The problem is we don't have the high technology we need to make better quality plasma screens at a lower price. We're very envious of Matsushita of Japan for their plasma technology -- they're making 12-figure profits off their technology advancements."

And what of Samsung Electronics, Korea's top high-tech enterprise? Samsung employees are feeling the crisis too. With the exception of those in its semiconductor arm, each and every employee of Samsung Electronics is sweating hard because of the technology limits they have to deal with.

One example is its printer project, a next-generation field. HP, the world leader in printers, earned US$4 billion in profits in the first half of last year alone. Second-place Canon earned more than $3 billion. This sector is a golden goose, but Samsung's stumbling block is its lack of technology. "The printer industry is a mass of semiconductor, optical, and information technologies," an engineer explained. "The key is high technology, but it's hard to find engineers and researchers for this sector."

A Samsung Electronics executive said, "The sales and profits of a company in the printer industry are in direct proportion to the number of engineers it has. It's all the harder for us to catch up with our foreign rivals because of the difficulty in recruiting manpower and developing high technology." These complaints, from manufacturers and executive engineers, show clearly where Korea stands now: characterized by number three and the technology barrier.

This column was contributed by Lee Kwang-hoe, from the Chosun Ilbo’s Business News Division.