When it comes to Korea, foreign scientists wear tinted glasses. Korean scientific reports have refused and international joint studies stopped without reason abroad after 2005. Korean scientist Hwang Woo-suk’s published a paper about stem cells that raised the hopes of patients with hard-to-cure diseases, which turned-out to be a fabrication. Foreign scientists totally lost faith in Korean scientists. This is one kind of a ‘Korean discount’.
In the case of purchasing a product, we look one the bottom of the product to identify its origin. Koreans hesitate to pick up something that is a ‘made in China’ product, so oftentimes, ‘made in China’ turns into a ‘made in Korea’ product. What about the reputation of ‘Made in Korea’ products abroad? Several Korean corporations are devalued as much as or more than 30 percent of the products real value in some other countries. We call this a ‘Korean discount.’
Korean discounts are a phenomenon, which Korean stocks or products are traded at a dumping price just in the name of ‘Made in Korea’. “Some large Korean enterprises do not present themselves spontaneously with a ‘Made in Korea’ label”, said an official of Korea Trade-investment Promotion Agency (KOTRA). According to him, many foreigners recognize Hyundai as a Japanese corporation for its similar pronunciation of Japan’s motor Co. Honda, LG as an American corporation for its English name. In reality, the value of Korean products and services are estimated at about 100 dollars compared to German products at 155.28 dollars, and Japan at 148.91 dollars, which is investigated by The Institute for Industrial Policy Studies (IPS) in 2007. That investigation was from men and women who responded from America, China, Europe, Japan and other 21 countries. In other words, the value of ‘Made in Korea’ is more undervalued than other industrialized countries, bringing loss of national wealth as a result. Consequently, undervaluation of corporate values means that Korean enterprises should invest more capital in production to be regarded as well as other rival countries.
The division of Korea and North Korea’s nuclear issues make it hard for the world top three rating agencies to arise Korea’s national credit ratings in the stock market. In addition, restructuring of the U.S troops in South Korea is also one of the national security factors. Despite high incomes compared to Japan or China, foreign sport mercenaries are reluctant to come to Korea for such reasons. Meanwhile foreign investors point out sufficiency of Korean corporate transparencies and excessive regulations as more serious problems. Particularly, in a stock market, the Korean discount is the most outstanding. In accordance with one investor, foreign investors have tended to put a premium on Korean enterprises if their governance structure is improved. Another problem is that Korean accounting standards do not fit international standards and uncertainty in the relationships among labor, capital and Korean politics. The official of KOTRA indicated the gap between small firms and large enterprises. “Small companies have mainly exported through a form of original manufacturing contracts (OEM). Overseas sales are occupied 70 to 80 percent by large enterprises”, he added.
German products are known for its effectiveness whereas Japanese products are noted for their delicateness. Like such, Korea needs to be known to the public for their merits to get rid of Korea discounts. Secondly, companies should concentrate on its technological aspects rather than the price. Due to emerging markets like China or India, Korea has difficulty in competing for low prices with them. So technology-oriented industrial strategy is necessary such as IT, steel and motors, which are highly ranked on the world market. Moreover, effort for linking between corporate brands and national brands are required. The Ministry of Commerce, Industry and Energy and KOTRA has developed the ‘Premium KOREA’ fitted in industrial technology and trade in 2006. The purpose is to change the old image of ‘Korean discount’ to a higher quality image. The Ministry will participate in overseas exhibitions along with dispatching export delegations and exhibiting Korean goods to adjust a new image of Korea. The official of KOTRA emphasized on ‘Premium KOREA’ as an image for exported goods. Also, The Ministry made a ‘Korea brand map’ and planned to promote detailed overseas marketing.
Many foreign investors who fly over to China and India are returning to Korea for their expected-earnings and decreased dangers in geopolitics. However, China and India are given about a 25 percent premium. Therefore, Korea needs to put more effort in terms of improving corporation circumstance and national images. If an effective national image is recognized by foreigners, we are to accomplish numerous business works in diverse fields. In fact, people like a certain country’s product, not for the correct understanding about them, but for the good image toward them. Thus, by eliminating negative factors of a Korean discount, it is certainly possible to make a ‘Premium Korea’ product.
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