IN SOUTHEAST ASIA: THE CASE OF SOUTH KOREA1

Yong Hee Kim, Seoul National University

BACKGROUND vestments were made by the government in firms which produce goods for export purposes. Domestic Needs to societies differ at different times, but markets were too small to generate rapid concern for --improving the lives of in­ economic growth in a short period of time. Conse­ dividuals, families and communities in which we quently, industries which produce goods for domes­ live--is fundamental to any society. Korea is not tic use did not get government attention where an exception. government investment is crucial for launching a business. Korea has a spectacular story of economic progress. For the l ast two decades, Korean economic growth The other was a campaign conducted by the govern­ has been one of the most rapid and sustained among ment to encourage the use of domestic products the developing countries in the Southeast. Gross during the late 1950 ' s to the mid 1960' s. These National Product (GNP) has increased, on average, products were poor in quality and weak in durabil­ more than 8 to 15% annually in real terms since ity, compared to imported products. As in Japan, 1962 when a series of economic development plans the government tried to protect domestic indus­ were implemented. In the economy, the focus tries by raising trade barriers against imports. changed from agricultural industries to heavy and The situation was worsened by predatory activities manufacturing industries. Investment in produc­ of sellers . tion- and export-oriented firms has been one of the main concerns of the Korean governmental At that time, a gr oup of women who became annoyed policy followed by national defense. at predatory practices of sellers in the market­ place turned their attention to the consumer move­ More consumers have become affluent today than in ment in countries like the United States and any previous generation. Disposabl e income per Sweden in order to learn about the consumer experi­ capita skyrocketed from $80 in 1962 to $1 , 500 in ence in these countries to see how consumer needs 1980. The 1976 data indicates that the lowest 20 were reflected in policies. They were deeply percent of all income is taken by 5.7 moved by President Kennedy ' s Bill of Consumer percent of all while the highest 20 per­ Rights--the right to safety, to be informed, to cent is assigned to 43.5 percent of all house­ choose and to be heard. The women are still ac­ holds. 2 This data may not be reliable since the tive in improving the r elationship between buyers stati s tician, under a government official, tends and sellers providing services such as consumer to distort the figures. Consumption patterns of complaints associated. mostly with products and ser­ households indicated that Engel ' s coefficient has vices, displaying shoddy products and publishing a slowly decreased from the 1960's (30%) to the monthly report of evaluation and compari son among 1980's ( 20%). the products in frequent use. However, in general, consumers are not likely to utilize such services Due to the data l imitation and lack of research because the majority of consumers do not have in­ regarding consumer experience in Korea, a compre­ formation about the existence of these resources. hensive report about the current situation is not Besides, the information provided by the organiza­ feasible. Thus, this paper is based on personal tion tends to be t oo inaccurate to be used in interviews with several significant consumer lead­ decision making due to non random sampling and ers, mass media including television, radio and large product quality variation . The mass media newspaper commentaries, magazines, and my personal also played a role in the 1970's by sporadic perception into the problems that Korean consumers reports regarding unsafe and shoddy products, face. adulterated foods, fraudulent sales practices and misleading advertisements. In the 1980 ' s, fre­ The history of consumerism in Korea is very short quent discussion of consumer problems in the mass in comparison with the history of consumerism in media contributed to public awareness by cl arifying the United States. In order to identify the under­ what basic rights and responsibilities should be. lying forces of consumerism in Korea, it is help­ ful to describe some of the consumer issues as In Korea, there are as many as eleven private con­ they developed. s umer organizations but their activities are very limited due to the lack of specialists and funds . Significant ones are the Korea Citizen ' s Alliance THE RISE OF CONSUMERISM IN KOREA for , Consumers Union of Korea, Public I nterest Research Institute, Korean Women' s In general, t he Korean consumer movement was trig­ Association, Korean National Council of Women, gered by two forces. One is the by-product of the National YWCA of Korea, Korean Federation of First Five Year Economic Development Plan for the Housewives Clubs, National Conference of House­ period 1962-1966. During this period, large in- wives and the Betterment of Homelife .

1Assistant Professor, Department of Home Management The National Council of Consumer Protection Organ­ 2world Bank cautioned the use of these data. izations consist of five consumer organizations

220 listed above which are corresponding members of Producers are not interested in consumer well-be­ the IOCU. Most of the private organizations pub­ ing in the long run. High profit in the short lish a newsletter or magazine with product infor­ term is the single most important goal of produc­ mation for about specific prod­ ers. Certain products do not remain in the market ucts, results of simple , and an­ long enough for the consumer to evaluate the prod­ swers to consumer complaints. These organizations uct quality. Product services are often emphem­ are funded by membership fees and/or subscription eral. Accordingly, the product information or fees to magazines . Compared to the proportion of consumer experience is not useful for future use. population in the United States who subscribe to Thus, Korean consumers tend to be intensive infor­ consumer magazines, i.e. sub rates, Korea has a mation seekers at the time of purchase. much lower subscription rate. Consequently, sales revenue coming from 8,000 magazines per month on Most Korean consumers prefer foreign goods over average is too low to provide much consumer pro­ domestic goods for the following reasons: first, tection activity. it is a higher status symbol for the consumer to buy foreign goods. Demonstration effect is There are as many as 15 to 20 pieces of consumer strong for Koreans. Secondly, foreign goods, protection laws and legislation in such areas as mostly imported from Western industrialized na­ food, drugs, electrical products, public health tions, have demonstrated consistent quality within and product safety. The Consumers Protection Act the brand. Technical knowledge, necessary to im­ which was implemented in 1~82 is the most compre­ prove ways to control product quality, has not been hensive stipulation of which objectives are to sufficiently developed due to the lack of exper­ protect fundamental rights and interests of con­ tise. sumers and to improve consumer decision making. Another reason is that application of basic sci­ Implementation of legislation is always a problem. ence--physics, mathematics, chemistry--to the real The haphazard enforcement often results in bene­ life situation, which is necessary for improving f itting business firms. Since government offi­ the way of life, is not well studied in the realm cials have to live on low salaries, their corrup­ of academic discipline. Consequently, social con­ tion is usually approved socially. For example, tribution to applied science such as consumer eco­ bribing public officials is frequently done by nomics to improve the quality of life is at a dis­ many drivers. Moreover, consumer protection advantage. legislation is often overruled by other pieces of legislation. In sum, high risks in the marketplaces, i.e., product hazards, sellers ' chicanery, deceptive ad­ vertising, and health and environment~l problems THE MARKET CHARACTERISTICS have prevailed and become one of the major inter­ ests of the general public. Such interests are Korean markets are producers' markets with high evidenced by mass media, i.e. , TV, radio and news­ risks to the consumer. The sell er is king. Consu­ paper commentaries, consumer complaints, and mer interests are ignored. Producers, frequently medical redords. controlled by the government, decide what is to be produced and available in the markets. The revised sequence as defined by Galbraith, prevails in the SUGGESTIONS FOR FUTURE CONSUMERISM IN KOREA majority of markets. Advertising and promotional practices f requently mislead the consumer with in­ Problems of Korean consumers are multidimensional: accurate information and distort consumer wants consumer powerlessness , irresponsible business and needs. practices and the government's low priority set­ ting on consumer well-being. To improve the posi­ Shopping activity in Korea i s a war game . Consu­ tion of consumers in the marketplace, the follow­ mers suffer from high risks in the marketplaces. ing are suggested : identification of consumer Countervailing power is almost nil. Once goods needs is the most important step in order to get are sold, refunds , replacement and repair services the best result at the minimum cost where taxpay­ are hard to come by. Consumer redress tends to be er's money should not be wasted. To do so, adequ­ an activity against the business goal of profit ate consumer research i s needed to identify consu­ maximization. Maintaining a good personal rela­ mer experience in Korean markets. For example , tionship with the seller is the best way to get owning a car i s highly costly in terms of safety. the most for one's money. A blatant example is Korea has the highest car accident rate in the often observed in the transactions f or meat and world. Design defects and the use of parts with vegetables which are sol d unpackaged, since these unset standards are a severe problem as well as products need to be graded by observation and unsafe road conditions. Car manufacturers do not weighed at the time of the transaction. Weighing want to take any level of responsibility for what and measuring devices are not standardized. Dif­ they produce. Consumers do not have information ferent product classes use different units of regarding the full cost of owning a car where pro­ scale. For example, for vegetables one "kun" is ducers do not want to release the information. In 300g, while one "kun" i s 600g for meat. "Kun" is this case, using medical records regarding injury a traditional measuring unit . Thus, it is diffi­ rates of various makes and models of cars by cult for the consumer to make price and quality degree of severity can be useful data for safety comparisons within and across the product comparison. With such information, the government class(es) . would have a base for setting safety standards. Also, consumers would be educated about the

221 possible hazards and could be educated to demand safety.

REFERENCES

World Development Report 1984. The , 1984.

Thorell!, H. B. Consumer Policy for the Third World, Journal of Consumer Policy, 5:3, 197-211.

Thorelli, H. B. Consumer Policies in Developing Countries, Proceedsings of The American Council on Consumer Interests, 1983, 147-153.

Consumer Policy for the Third World, Journal Ci"f"COnsumer Policy, 5(3), 1981, 187-211.

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