As President Obama participates to the Nuclear Security Summit in Korea, it might be appropriate to take a fresh look at Korea. Before coming to Seoul, he announced the US candidate to the presidency of the World Bank, the Korean-born Jim Yong Kim, President of Dartmouth College and a world expert in health care.
Korea's history since World War II has not been its best friend. Hesitant between war and peace, free market economy and bureaucracy, powerful Chaebols and mismanaged banks, the country managed to develop competitively in a number of sector, sometimes beating its giant neighbor, Japan.
The eruption of a nuclear risk in North Korea and the development of a dynastic neighbor have, in a certain way, liberated the country from its complexes towards a militaristic country at its border. The question is no longer whether the Republic of Korea is a democracy, but how to manage the threat from the North. Korea is an essential element to a peaceful Asia. It sees itself as an ally to the "West." We need to treat them more as a partner than a vassal.
The economy is solid. Its talent for electronics, its initiatives on the green energy front, its now reliable car industry (including electric), its technology are making Korea a serious competitor to Apple, Sony. Toyota and Nissan meet KIA in all the markets they were dominating. LG and Samsung have become global brands.
What is, however, interesting, is the emergence of a increasing number ofsmall and medium enterprises. For all the glamor of its key brands, there are tens of thousands of entrepreneurs who want to compete. This is probably where the biggest opportunity lies for foreign partners of Korea.
Its nationalism is definitely robust: Korea fought against any attempt to purchase one of its key banks by HSBC, some US private equity funds sued some of their companies in court, and fight for intellectual property is heating up. In some recent cases, foreign companies who had obtained a judgment from the Korean courts experienced the fierce resistance of the Korean bureaucracy. It would be a mistake to underestimate the pride of Koreans.
Taking Korea seriously is not an altruist behavior: Korea does not need any form of charity and holds on its two feet. One needs to go beyond the conventional wisdom, understanding that no Asian joint venture or acquisition is easy. Treating Korean enterprises as grown-ups is key to a successful partnership. The recently signed Korea-US Free Trade Agreement is there to establish the fairness of the relationship. Every party must now play the game adequately.
While attracting foreign direct investments, Korea is still ambivalent on acquisitions. Acquisitions are simply another face of a direct investment. Foreign companies look at acquisitions or direct investments in the same movement. In a mature market, investing directly is not always rational.
There is no need to idealize Korea. But it is hard not to admire the resolution of a country surrounded by big brothers and an enemy. The country nurtured one of the most successful pop music (do you know K-pop or Girls Generation?) or Olympic athletes (remember Yu Na Kim?), great classical artists and remarkable academics as well. It is a country of talents.
It is by engaging with openness that "Western" companies will find in Korea the right, loyal and reliable partners. This is not true everywhere... Success stories of foreign investors in Korea are abundant.
Korea has come of age. It needs to be treated as an adult, no more, no less! Perhaps is it also time for the Korean government to consider its citizens and enterprises as adults?
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