Annually in an executive-level commentary, I share thoughts for the upcoming year. Looking back at 2010, North Korean saber rattling took on new meaning with several overt military confrontations against South Korea.
Meanwhile, South Korea's economy saw little sign of a double dip recession, which had worried some experts going into 2010, instead we saw continued growth in Korea's global brands. This was further strengthened by the G-20 Summit that showcased, among others, Korean technology leaders Samsung, Hyundai-Kia Motors, and LG.
Related to U.S. and South Korea relations and following an amended agreement for the Korea-U.S. Free Trade Agreement, we should soon see the treaty ratified by Congress. Advocates see the FTA boosting annual commerce between the two nations into the billions of Dollars.
Looking forward to 2011, North Korea will continue to be a concern. Issues include the Kim regime's succession plans, threats of more border clashes, and an unchecked nuclear arms program. Hoping to address these concerns, we'll see strong outside diplomatic and political pressure for renewed 6 Way Talks, and to quell future border confrontations. I'll continue to monitor and share news as it unfolds. Even in a worst-case scenario, Korean global business and local economy would bounce back and move forward, especially since much manufacturing is now done overseas.
Next, The stellar trade performance has enabled Korea to enjoy one of the fastest recoveries among OECD countries. Private consumption will continue its robust recovery, growing 4.1% in 2010. With strong exports and facilities investment, bullish stock markets, and low interest rate policy households will continue to enjoy increased income, improved wealth effect, and a reduced burden of servicing debt that will increase household purchasing power.
Building on the momentum of the past 2 years, expect Korea's export-driven firms to push their organizations to carve out even greater market shares. Look for bold announcements and sales targets such as #1 in global sales or production vs. the older "Top 10" or "Top 5" quest. In this effort, expect top Korean firms to expand their organization through M&A. For some, this breaks from a tradition of building and growing from within vs. acquisitions.
Additionally, as I noted last year, expect more foreign firms to aggressively target South Korea as a top emerging market. In other words, with Korea performing well many global firms and brands once focused on North American or European business partnerships will now seek out Korean opportunities. This will unfold with global businesses looking to launch new product lines (and brands) in Korea, as well as leading international firms offering their services to Korea's top companies.
For foreign businesses entering the Korean market or partnering with Korean firms, I suggest they take efforts to understand not only the culture, but also business norms and expectations. For example, your key management needs access to coaching and someone to answer their questions on topics ranging from strategy to the impact of routine management changes within their Korean partner's organization. It's a small upfront investment and less costly than the consequences, which can include lawsuits, local and expat employee turnover, and months of missed goals and low productivity--not to mention tensions between you and the client over expectations.
Finally, expect further growth in Green technology (wind power, solar, and eCars) and government-led initiatives like "Work Smart." With regard to Green, most of Korea's major Groups have boldly entered the renewable and sustainable market and plan to expand sales globally. This includes state of the art manufacturing facilities for wind turbines, solar cells, next generation batteries, and electric power trains.
In the shift to these new technologies, forward-thinking firms are moving towards a creativity-centered organizational and workplace culture.
On one level, "Work smart" was introduced in Korea to address the quality of life issues raised by its traditional long working hours. According to a Samsung Economic Research Institute report, "Work smart" will spread in 2011, and has a goal to increase productivity and creativity. Work smart includes not only eliminating unnecessary busy work, but grants autonomy in choosing working hours and gives teams the "work from home" option.
To conclude, understanding the dynamics of Korea's economy, markets, and major business groups is vital. It is critical to take into consideration Korea's past and current trends. Culture, global influences, cyber-communication, and a 24-hour workday add to this complexity. Bridging Culture Worldwide is dedicated to providing much needed research, analysis, and critical thinking to provide you with answers and insights 24-7-365.