Sample Translations
Hwy-Chang Moon The K-Strategy E ng l i s h
Book Information
The K-Strategy (Kě „ëžľ) miraebook Publishing corp. / 2013 / 7 p. For further information, please visit: http://library.klti.or.kr/node/772
This sample translation was produced with support from LTI Korea. Please contact the LTI Korea Library for further information. library@klti.or.kr
The K-Strategy Written by Hwy-Chang Moon
pp. 36-39 The Hyundai Pony, introduced in 1974 as the first domestically manufactured c ar, was 90 percent a product of the maker’s own technology. Korea thus became the sixteenth country in the world to have a virtually independent auto industry. Exports began in 1976, first to Ecuador, later to the Middle East, and then worldwide. With the first exports of the Excel to the United States in 1986, however, Hy undai encountered difficulties. This is because, in comparison with other competing ve hicles in the U.S. at the time, the Excel fell far short in all respects except for price. According to Consumer Reports, Excel repeatedly came in at the bottom in a numbe r of consumer assessments conducted in the early 1990s, receiving negative comments such as ‘the worst’ and ‘a car I would not buy again.’ Consumer Reports also noted that this response in the U.S. boded poorly for success in other countries. For some time afterward, Hyundai quality was fodder for American stand-up comics. But Hyundai was undaunted as it undertook a strenuous exercise in product i mprovement prior to introducing the medium-class Sonata and others built to suit the American market. The company was the first in the industry to come out with a mar keting strategy of a “100,000-mile or 10-year warranty” on parts and labor. This was a breakthrough at a time when the top makers in Europe, America and Japan were o nly offering a warranty of 50,000 miles or five years. The consumer journals that had been unfavorable to Hyundai now had to reevaluate the competitiveness of Korean c ars, which thus began to gain wide-ranging recognition. Hyundai’s continuous efforts t
1
o improve quality gradually led to better overall design, which was recognized in mar kets for better-class cars. Recently Hyundai has expanded from its previous forte of s mall-and-medium cars to the introduction of the up-market Equus and Genesis models that are making headway among demanding buyers in the U.S. and Europe. An automotive specialist at The Washington Post recently praised Hyundai Mot ors in a column, in which he cited its success as an example for America’s unproduc tive politicians: “They learned from their mistakes and made the crisis work for them. They took full responsibility and didn’t waste time. And they finally made good on their promise to do better.” Hyundai Motor Company now has a firm foothold as a s trong player in the advanced markets of the U.S. and Europe, as well as in the newe r ones in India, Russia, and China. Hyundai’s success is like that of POSCO and Samsung Electronics, in that it defies analysis according to the existing economic theory of advantage. If one were t o pursue an inquiry into the Korean auto industry from the standpoint of academics w ho support the advantage-based theory or from the point of view of its management, no reason would be found to encourage or even justify the existence of such an indu stry in a country that began with a blank sheet. The disadvantages Hyundai had at it s startup, however, were successfully turned into advantages through cooperation and competition with foreign makers coupled with a strategy for involvement in internatio nal markets. Thorough benchmarking and ambitious advancement have enabled Korean busi nesses to overcome the disadvantages of the early phase of economic development an d emerge with a position of enhanced competitiveness. What have been cited as “reas ons for the inevitable failure of Korean business” paradoxically underlie its present-da y success.
2
pp. 87-88 Chad Holliday, former CEO of DuPont, a company renowned for innovation, h as also attributed the competitiveness of Korean business to the element of speed.
F
or example, as seen in Part 1, at the time when Park Tae-joon established the POSC O steel plant, it was to ensure the smooth supply of necessities for Korea’s economic development. While maintaining quality on a par with other top-ranking businesses, Hyundai Group Chairman Chung Ju-yung outdid all of them for sheer speed. Rapid d elivery and cost reduction earned high marks with customers and enhanced corporate competitiveness. According to the traditional advantage-based paradigm, a nation’s economic gro wth is determined by its natural resources. Korea, which had virtually nothing in the way of such resources, should hardly have been able to achieve its present state of e conomic growth. Even if it did develop along certain lines, its dependence on the ava ilable resources would limit its ability to shift to other industries. Petroleum-producing nations, for example, will develop petroleum-related industries, while nations with lar ge pools of labor will tend to develop manufacturing and other labor-intensive industri es. To reemphasize, however, Korean economic development did not occur in acco rdance with the traditional paradigm. That being the case, how and why was the cou ntry able to continue its pursuit of a new strategy that did not follow the passive adv antage-based paradigm? In the initial phase, it can be attributed to a strategy of work ing to outdo others for speed and enthusiasm in catering to global markets, thereby c ompensating for an absolute deficiency in natural resources. But to survive and thrive, realizing a desire to develop even faster, a strategy of continuous innovation is now perceived as the way to go.
3
pp. 104-107 If that is the case, then why do businesses engage in imitation? Nations, busin esses and individuals all lack many things in the initial phases of development. First of all, they may be lacking in capability, being unable to discern what talents are req uired by societies and markets at a given time and insufficiently able to analyze prod ucts accurately. They may also lack the ability to control various interrelated factors a nd to establish a strategy for development. Imitation is the way to solve all these pro blems easily. After the Korean War, the country at large and business in general were in a fragile state with neither the infrastructure nor the experience to undertake a course of industrialization. Lessons could be learned from Japan as a more developed neighbor. Being unable to make an accurate judgment of what products were desired in domes tic and overseas markets at that time, they proceeded to copy the products that foreig n companies were making. Given the insufficiency of capital and technology, it would have been very risky to invest simultaneously in multifaceted development, which w ould have had serious governmental as well as commercial ramifications. Hence, busin esses and the Korean government decided to concentrate on a number of major indust ries, with substantial benefits accruing to a few chaebol [jaebeol], or big business gro ups, with demonstrable capabilities. Such incentives obligated the businesses to master advanced technology quickly and begin mass production soon in order to attain the profitability necessary for investment in other areas. The easiest way to achieve this was, once again, outright imitation of what other businesses were doing. The above picture [p. 101] depicting the Apple-Samsung-Nokia relationship off ers an interesting perspective. While Samsung Electronics was able to make some hea
4
dway in the smartphone market with its Apple imitation, Nokia still kept ahead by in sisting on doing its own thing. Samsung based its growth on the study and imitation of what Japanese companies were doing, but has recently outstripped them in terms o f competitiveness. Hyundai Motor Company also developed by studying and imitating American automakers at first and later those in Japan, thereby showing good results i n current international markets. Vietnam, which has developed rapidly apace with China, has lately been descr ibed in the world press as economically unsettled. As was once the case in Korea, th e government there has undertaken indiscriminate lending to state enterprises while ai ming for business diversification. In this connection, The Wall Street Journal stated th at Vietnamese state enterprises were expanding in the same octopus-like pattern as the Korean chaebol, with all the attendant risks. Strictly speaking, though, state enterpris es in Vietnam only look like knock-offs of Korean chaebol on the surface. During the Asian financial crisis in the late 1990s, the chaebol suffered but survived, to make a strong comeback on today’s global business scene. Vietnam’s state enterprises, on the other hand, would not have experienced their present difficulties had they imitated Ko rea’s chaebol by eliminating their shortcomings and making efforts to develop from a more rational perspective. The point to note here, however, is not that Vietnamese state enterprises are c alled knock-offs of Korean chaebol, but rather that businesses like Microsoft, Samsun g Electronics and Hyundai Motor Company are not called knock-offs of Apple, Sony and Mitsubishi. These have shown better development trends than the enterprises they imitated.
pp. 157-159
5
At the time when the Korean economy was growing at full tilt, the people’s d rive to overcome poverty and the Dedication based on Goal-orientation and demonstra ted Diligence were rarely found in other developing nations. And the presence or abs ence of this Dedication is evident in the disparity in their economic growth. We can see the importance of this Dedication in the fact that there are countries that started u nder conditions similar to or even more favorable than Korea’s, yet today they have a lower standard of economic development. Dedication may be the last of the ABCD items in the K-Strategy, but for economic development it represents the most basic e lement. The next stage beyond “developing” is “semi-developed.” This phase can be de fined by the development of manufacturing characterized by quality products, expansio n of industrial estates, and efficiency. These characteristics can be easily summarized by the ABC of the four-letter K-Strategy formula, namely Agility, Benchmarking, and Convergence. Particularly important in each of these respective areas are Speed, Imit ation, and Mixing. The Korean government’s concentrated investment in manufacturing enabled it t o grow more rapidly than other industries and in turn provided its citizens with many job opportunities. In addition, the country adopted the model of imitating the product s of advanced nations and enterprises, and this enabled it to export quality products a t prices lower than those of other developing nations. With the revival of simple man ufacturing and the build-up of a requisite level of production infrastructure, the indust rial zones such as Kyong-in and Imhae were organized in order to concentrate on lig ht industry as well as the heavy and chemical industries. Electronic and household pr oducts would be produced mainly in the area around the capital city of Seoul, while shipbuilding and chemical industries were centered in Busan and Ulsan in the southea
6
st part of the country. These areas became focal points for Korea’s economic develop ment. The establishment of industrial estates serves to accelerate the advancement of corporate enterprises and facilitates the maintenance of low production cost through ec onomy of scale. The strong goal-orientation of the government and the commitment of the citiz enry bolstered the concepts of Speed, Imitation and Mixing, doing much to maximize the efficiency of national and industrial development. Notwithstanding the fact that th e major corporations or chaebol are a concern in present-day Korean society, their bir th and background involved an emphasis on the elements of convergence and efficien cy in product manufacturing on industrial estates capable of quality output. At that ti me the government actively backed enterprises that could make the best use of insuffi cient resources and actualize their ambitions for development. Thanks to this level of official support, the major enterprises were able to make huge strides as efficient man ufacturers of quality products.
*****END*****
7