For 35 years (between 1910 and 1945), the Korean peninsula was under Japanese occupation. After coming out of office, South Korea’s goal was to beat its predecessor economically, with the No. 1 target for Korean exports exceeding a Japanese exporter.
In 1980, the total export of Korea only 13.4% of exports of $134 billion in Japan. The ratio has gradually increased, to 35.9% in 2000, then to 60.6% in 2010, and to 85.2% in 2021.
Year after year, the newspapers in South Korea announce that the time is fast approaching when they will beat the Japanese in exports, and in a recent article the Koreans hope that 2024 will be the year in which the goal will be achieved. How did he get here?
Historical background and economic growth
After the Second World War, Japan emerged as an economic superpower, a leader in technology and manufacturing, explains Mokter Hossain, associate professor at Qatar University. The rapid industrialization and adoption of Western technologies sets a precedent in the region. South Korea has always looked to Japan as a model for economic development. South Koreans studied Japanese business models, and since the 1960s, South Korea has intensively supported and developed the approach of Chaebols (large family business conglomerates), which imitated the Zaibatsu / Keiretsu system in Japan.
What is the chaebol system?
Chaebol is a legacy of South Korean history. After armistice ended the Korean War in 1953, the country’s military dictators reached out to a handful of families for special loans and financial aid to rebuild the economy. Companies expanded rapidly and moved from industry to industry until they became sprawling conglomerates.
Even as companies grew in size, wealth and influence and traded shares on stock exchanges, they remained controlled by families – usually led by a president who was also the head of the a family Generational leadership changes have sometimes disrupted chaebol families, forcing companies to split or divide into smaller groups.
More than two decades ago, during one such family struggle, Hyundai was divided among the founder’s six sons. The eldest son took control of Hyundai Motor, which is now one of the largest companies in South Korea. Under Chung Eui-sun, the grandson of the founder, the family runs the global automaker.
Over time, the image of the chaebol system has been affected major corruption scandals.
What is the Zaibatsu/Keiretsu system
Zaibatsu usually refers to the large conglomerates of pre-World War II Japanese companies that controlled various sectors of the Japanese economy. They were conservatory type structures owned by wealthy Japanese families and/or clans.
Zaibatsu became popular among management experts after the term appeared in the book History of Financial Power in Japan (Nihon Kinken Shi). The term was not commonly used in Japan until the mass media adopted it in the late 1920s.
Zaibatsu began with government policies to encourage state entrepreneurship at a time when agriculture accounted for 70% of Japan’s national product and about three-quarters of Japan worked in agriculture-related jobs. The government used income from land taxes to finance the construction of industries necessary for Japan’s economic development.
In the 1880s, the Japanese government sold some state-owned enterprises to a carefully selected financial oligarchy.
The government also provided incentives such as special permits, funding and other benefits. Although Japan desperately needed foreign technology, know-how and capital, the government adopted a policy to exclude foreign entrepreneurs, with few exceptions.
After the First World War, when Japan’s economy made great progress, the interests of the zaibatsu interfered with the political arena, and their activities became intertwined with those of the government. In the end, The Potsdam Declaration (city in Germany, ed.) which was signed in 1945 and outlined Japan’s surrender after the second world conflagration, calling for the liquidation of the zaibatsu as a step towards the democratization of Japan’s postwar economy.
Technological competition
Japan was a leader in the global technology market at the end of the 20th century, with giants such as Sony and Panasonic. It was known for quality electronics, innovation in televisions, cameras and game consoles. South Korea, with companies such as Samsung and LG, has become a leader in the 21st century. They “defeated” Japan’s dominance in electronics, especially in smartphones, televisions and semiconductors.
Competition in the automotive industry
Japanese brands such as Toyota, Honda and Nissan have long been known for their reliability and technological innovation. They have dominated the global automotive industry, especially in the US and Europe.
South Korean manufacturers Hyundai and Kia immediately took notice and tried to take the place of the Japanese in international markets. They initially competed on affordability (price) but then focused heavily on quality, technology and electric vehicles.
Cultural influence and soft power
Japan’s cultural influence is significant, with anime, manga and video games recognized around the world. Japanese culture was an instrument of soft power, raising its global image and opening markets for its products. The Hallyu wave from South Korea, which includes K-pop, Korean dramas and movies, has seen explosive growth. Brands often use this cultural influence to promote their products, especially in markets where Hallyu has a strong fan base.
Trade disputes and political tensions
The relationship between Japan and South Korea is complex, with historical and territorial disputes sometimes affecting trade relations. For example, Japan’s restrictions on the export of certain products have had a significant impact on South Korea’s technology industries. South Korea has tried to reduce its dependence on Japanese imports by investing in domestic production of key materials and components.
Innovation and Research and Development (R&D)
Both countries invest heavily in research and development, always trying to outdo each other in areas such as robotics, artificial intelligence and green technology. Japan’s strength lies in its deep research culture and long-term investment in technology, while South Korea’s rapid change and aggressive investment strategies in cutting-edge technology keep competition strong.
Global supply chains and economic integration
Japan and South Korea are integral parts of global supply chains, especially in electronics and automobiles. Their competition often affects global market trends and supply chain dynamics. Both countries seek to diversify their economic partnerships and trade agreements to reduce overdependence on specific markets and gain a competitive advantage.
Consumer electronics and household appliances
In the field of consumer electronics and home appliances, the competition between Japanese and South Korean companies is evident in their continuous race for innovation. While Japanese brands are traditionally seen as symbols of quality and durability, South Korean brands have quickly caught on, offering advanced technology and design at competitive prices.
Global economic changes and future prospects
The rise of China as a major economic player has affected the Japan-South Korea dynamic, as the two countries compete to maintain their economic position in the region. Future competition is likely to revolve around new technologies such as renewable energy and next generation vehicles.
2024-08-18 08:48:00
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