Reinvent SERI
Samsung Economic Research Institute Annual Report 2010
President’s Message
The past year was a time of anticipation as Korea and its neighbors steadily shed the effects of the global financial crisis and started looking more to the horizon again. 2010 also was a period of reflection as we ended the first decade of the 21st century. Indeed, the global economic order has taken a dramatic shift, with emerging economies wielding a stronger voice as industrialized nations struggle with huge debt and other stifling burdens. Now, a multiple-polar global economy and bigger government presence is the new norm, breaking new ground and fanning uncertainties about future directions.
Accordingly, we at Samsung Economic Research Institute (SERI) shifted gears in 2010. An emergency research initiative that began when the global financial crisis erupted ended and scrutiny of the post-crisis paradigm began. Two major papers reflected the reprioritizing: “Post- crisis Changes in the World Economic Order and Responses,” and “A Post-crisis Korean Economy.” The former predicted changes in global economic leadership, the role of government and international cooperation in the next decade. The latter identified problems that could weigh down Korea’s economic stability and growth over the next decade and provided solutions.
Other major papers spoke to the new paradigm in Korea’s business environment. “The Mobile Big Bang and the Future of Corporate Management” explored the instant popularity of smartphones in 2010 and their impact on how companies will operate. “Global Leading Companies’ M&As” examined how new growth engines can be acquired, a new paradigm for Korean companies, which have traditionally grown organically. Finally, papers about Korea’s rapidly aging population and the role of Korean women in the workplace touched on crucial issues in the nation’s economic equation in the new decade.
In the 2000s, SERI continued to become more of a global research institute. We opened a branch in Beijing, formed joint research centers with the EU, launched an English website www.seriworld.org and an English language journal SERI Quarterly, and participated in many international seminars held in Korea and abroad. Yet, much work still needs to be done. Going forward, we will be steadfast to three principles.
First, SERI will intensify its joint and convergence research, which provides creative solutions in macroeconomics, technology and industry, corporate management and public policies. Since problems are complex and complicated in the modern society, they need to be viewed from various perspectives, including industry and technology, corporate management and social- cultural aspects as well as an economic perspective. Second, SERI will conduct “smart research” projects, which will diversify research methodology and strengthen outbound channels by adding mobile and social network services. Also, we will improve our research quality by utilizing collective intelligence on the Internet and create a research system that allows close interaction with readers.
Third, SERI will continuously enhance its brand value. SERI is highly regarded as Korea’s top private research institute, but we know complacency is a major risk. Therefore, SERI will need to continuously improve its research methods and operational processes. Through these endeavors, I believe that SERI can become the leading think tank not just for Samsung and the Korean economy, but also for the global economy as a whole.
Finally, I would like to take this opportunity to express my sincere gratitude for the care and support that you have extended to SERI. I hope that you will sustain your backing and advice so SERI’s leading role may continue in 2011.
CHUNG Ki-Young President & CEO Samsung Economic Research Institute
CHUNG Ki-Young President & CEO Samsung Economic Research Institute CONTENTS
President’s Message 02
Review of Korean Economy in 2010 05
SERI Activities 21 Research Calendar 22 Symposium & Forum 26 Publications 35 Cyber SERI 36 SERI China 42 SERI Quarterly 45 EU Brief 46 Creative Solutions 47 Top Ten Hit Products of 2010 95
About SERI 97 History 98 Organization 100 Mission & Vision 102 Research Areas 103 Consulting Areas 104 Review of Korean SERI Economy in 2010 2010 06 Samsung Economic Research Institute
Review of the 2010 Korean Economy
Korea posted robust economic growth of 6.2% in 2010. The strong performance, well above the potential growth rate, was especially commendable, considering many countries continued to reel from the aftershocks of the crisis. However, it is premature to announce that the Korean economy has completely overcome the crisis. The Korean economy’s chronic problems, including heavy reliance on the semiconductor and automobile industries, and getting jobs for the hard-to-employ, have yet to be resolved. Corporate earnings have improved but they are still behind global leading companies. Moreover, Korea’s financial markets and exports remained vulnerable to external shocks.
2011 will be a pivotal year in which the economy’s ability to fully rebound and return to its pre-crisis growth track will be tested. In this sense, major tasks for the 2011 economy can be summarized as steps that emphasize “Stability and Growth.” Korea has reached crossroads where it has to discard the previous success strategy of “Select and Focus” and adopt a new strategy of “Growth and Stability” in order to lay the foundation for sustained growth. Review of Korean Economy in 2010 Samsung Economic Research Institute 07
I. Korean Economy in Retrospect for 2010
1. Rapid Recovery of the Real Economy
Korea posted robust economic growth of 6.2% in 2010, a sharp increase from 0.2% in 2009, during the global financial crisis. The strong performance, well above the potential growth rate,1 was especially commendable, considering many countries continued to reel from the aftershocks of the crisis.
At the outset of 2010, the main task of the Korean economy was to facilitate a smooth transition to private sector-led growth from government-led growth. This was successfully done as the private sector saw signs of recovery. Thus, in both qualitative and quantitative terms, Korea’s economic growth in 2010 should be positively assessed.
During the year, government spending growth decelerated to 3.4% from the 5% in 2009. This can be interpreted as an indication of the government’s effort to restore fiscal soundness by reining in economic stimulus.2 Meanwhile, private consumption, facilities investment and exports increased sharply, a sign that private sector’s resilience had recovered in 2010.
Major Macroeconomic Indicators (Unit: %) Government Private Facilities Exports GDP Spending Consumption Investment
2009 5.0 0.2 -9.1 -13.9 0.2
2010 3.4 4.1 24.5 28.3 6.2
Note: Exports are based on customs clearance and other variables are based on national spending account. Source: Bank of Korea, ECOS.; The Korea International Trade Association, Kita.net.
1 Korea’s potential growth rate was estimated to fall to 4% due to the global financial crisis. 2 Ministry of Strategy and Finance (September 27, 2010). 2010-2014 National Financial Management Plan. 08 Samsung Economic Research Institute
Exports spearheaded the 2010 recovery. After declining 13.9% in 2009 due to depressed global trade in the wake of the global financial crisis, exports rose 28.3% in 2010 year-on-year, regaining their status as the nation’s primary growth engine. As fallout from the crisis persisted in many countries, Korea’s mainstay export industries made inroads with their primary export items to post record shares of global markets. Accordingly, Korea rose to the world’s seventh-largest exporter in 2010.
The strong recovery in exports spurred higher facilities investment, halting a two- year decline.3 In particular, two major export drivers, the semiconductor and automobile industries, pushed up overall facilities investment by as much as 24.5% in 2010.
As corporate profits rose on the back of favorable exports and facilities investment, more hiring and increased wages at companies followed. That, in turn, helped lift private consumption, which rose 4.1% despite an end to most government economic stimulus. In 2009, private consumption grew by only 0.2% mostly due to fiscal stimulus measures such as Hope and Work Project, a public work program, and the Cash for Clunkers auto program.
Creation of an Economic Virtuous Cycle in 2010
Favorable Posted 28.3% growth Exports Strong performance of the IT and automobile industries
Expansion Posted 24.5% growth of Investment Investment in machinery such as semiconductor machinery expanded.
Improvement 323,000 jobs were created in Employment The number of employed increased in the manufacturing sector for the first time in five years.
Increase Consumption grew 4.1% in Consumption Wage growth and easing of interest payments
Source: Bank of Korea.
3 Facilities investment growth stood at -1.0% and -9.1% in 2008 and 2009, respectively. Review of Korean Economy in 2010 Samsung Economic Research Institute 09
In short, the Korean economy achieved solid growth in 2010 with a virtuous cycle of strong exports - an increase in investments - improvement in employment - private consumption.
Korea’s Economic Growth
8
6 Annual Economic Growth 4 2.1 1.4 2 0.7 0.5 0 2.3 0.2 6.1 -2 -4 Quarterly Economic Growth (quarter-on-quarter) -6 2008 1Q 2Q 3Q4Q 2009 1Q 2Q 3Q 4Q 2010 1Q 1Q 3Q 4Q
Source: Bank of Korea.
However, it is difficult to say that the virtuous cycle became fully entrenched. Despite overall improvement in the labor market, the number of hard-to-employ didn’t decrease substantially. Moreover, Korea’s financial markets and exports remained vulnerable to external shocks. As a result, Korea’s recovery lost steam in the second half of 2010 as internal and external uncertainties mounted.
2. Weaknesses in 2010 Korean Economy
(1) Contrasting industrial performance In 2010, manufacturing industry’s production expanded by 17.1% year-on-year. The major catalysts were the semiconductor and auto industries, which grew 37.4% and 27.3%, respectively. In a sharp contrast with these main export engines, oil refinery and shipbuilding industries remained stagnant. It could go so far as to say that the semiconductor and auto industries accounted for half of the manufacturing sector’s entire output increase. Still, the semiconductor and auto industries’ production also led to inventory buildup that began to weigh on the manufacturing sector’s growth in the second half of 2010. 10 Samsung Economic Research Institute
Major Industries’ Industrial Production (Annual Average for 2010)
(Year-on-Year, %) 50 40 37.4 30 27.3 17.1% 23.7 20 11.4 10 6.0 3.3 0
-10 -8.2 -20 Semiconductor Automobile Electronic parts Textile Chemical Oil refinery Shipbuilding
Source: Statistics Korea, KOSIS.
Inventory Growth of the Semiconductor and Automobile Industries
(Year-on-Year, %) 80 Manufacturing sector 60 Semiconductors and parts 40 Automobiles 42 33 20 16 0 -20 -40 -60 May July Sept. Nov. Jan. March May July Sept. 2009 2010
Source: Statistics Korea, KOSIS.
(2) Improved labor market excludes disadvantaged In 2010, the overall labor market improved thanks to the private sector’s enhanced hiring capability. Government job-creation projects expired and the number of jobs in the public sector fell by 160,000 in the second half, but the private sector, particularly the manufacturing sector, offset the decline, generating 523,000 jobs.
The hard-to-employ group, which includes the jobless and university graduates still searching for their first job, did not shrink noticeably. The average number of hard- Review of Korean Economy in 2010 Samsung Economic Research Institute 11
to-employ people stood at about 1.78 million in the three years preceding the global financial crisis. When the Korean economy was reeling from the fallout in 2009, the number rose to 1.99 million. In 2010, the number remained almost the same, at 1.963 million. Despite a relatively high economic growth of 6.2% and creation of 323,000 new jobs, the number of hard-to-employ group didn’t decrease much from the previous year. This can be seen as a sign of growing income disparity, which recession had ushered in.
Job Creation in the Public and Private Sectors Hard-to-Employ Group
(Year-on-Year, 10,000, %) (10,000 persons) Average from 2009 to 2010 60 210 Total 50 1.977 million persons Public Sector 52.3 200 40 Average from 2006 to 2008 Private Sector 29.5 26.6 30 190 13.4 1.781 million persons 20 6.8 8.8 180 10 170 0 5.7 3.0 1.6 -10 160 -20 -16.0 150 -30 -22.9 179.2 175.8 179.3 199.0 196.3 -40 -29.8 140 2008 2009 2010 2006 2007 2008 2009 2010 First Second First Second First Second Half Half Half Half Half Half
Source: Statistics Korea, KOSIS. Note: The hard-to-employ group includes the unemployed, persons preparing for employment, and short-time workers who want to have an additional job. Source: Statistics Korea, KOSIS.
(3) Corporate profits rise but behind global leaders In 2010 Korean companies posted very favorable earnings results with their sales revenue and operating profit margin ratio surpassing the levels seen in the third quarter of 2008, before the global financial crisis erupted. The favorable corporate results were possible as reinforced corporate competitiveness stemming from technological accumulation and sounder financial health created synergized advantages in foreign markets, where global competitors were struggling and the won was weak. Nevertheless, operating profit margin of Korean companies still trailed that of leading global companies. It was because global companies could enjoy high profit margin even during the crisis by selling highly value-added 12 Samsung Economic Research Institute
products on the back of their high technological competitiveness and brand value. This has far-reaching implications for Korean companies.
Korean Companies’ Quarterly Earnings Results Major Companies’ Operating Profit Margin Ratio
(trill. won) Total Sales Operating profit (%) margin ratio 300 9 Microsoft 8.1 8.4 7.7 7.8 7.6 7.6 8 280 7 6.1 6.1 5.5 6 Intel 260 5 3.9 4 240 1.8 Apple 3 220 2 1 Average ratio of Korea's 218 242 247 231 216 233 246 255 255 275 276 top five companies 200 0 2008 2009 2010 1Q 2Q 3Q 4Q 1Q 2Q 3Q4Q 1Q 2Q 3Q 0 10 20 30 40 50 (%)
Note: Based on earnings results of 1,360 publicly traded Note: 1) Based on Korea’s top five companies in terms non-financial companies for the period from the first of sales. quarter of 2008 to the third quarter of 2010 as of 2) From 1Q to 3Q of 2010. December 12, 2010. Source: Bloomberg. Source: National Information and Credit Evaluation, Inc. (NICE), KisValue.
(4) Risks still remain in the financial markets In 2010, the Korean financial markets were relatively stable compared to 2009. Especially, the Korea Composite Stock Price Index (KOSPI) breached the 2,000 mark again on December 14, 2010. With appreciation of won, the average won/dollar exchange rate per annum fell to 1,156 in 2010 from 1,276 in 2009. CDS premiums, sovereign credit risk indicator also fell to 101.4 basis points, far below pre-crisis levels.
However, Korea’s financial markets still remained vulnerable to external shocks. Small and large external shocks (e.g., fiscal crises in Europe, concerns over a double dip in the United States and changes in Korea’s security situation), sent financial markets on roller-coaster swings. Review of Korean Economy in 2010 Samsung Economic Research Institute 13
Changes in Major Financial Indicators
Won/dollar CDS Premium KOSPI (p) exchange rate (won) (bp)
1,765.0 1,276.4 203.0 162.2 1,529.5 1,156.0 1,429.0 1,103.4 101.4
2008 2009 2010 2008 2009 2010 2008 2009 2010
Note: Based on annual averages. Source: Bank of Korea, ECOS; Bloomberg.
Major Financial Indicators in 2010
Looming concerns Spread of Europe's Growing concerns over fiscal crisis fiscal crisis, the sinking over a double dip The Yeonpyeong in the southern Europe of Cheonan in the US Island incident 1,300 2,100 Won/dollar KOSPI 1,250 exchange rate (right.p) 2,000 (left, won) 1,200 1,900
1,150 1,800
1,100 1,700
1,050 1,600
1,000 1,500 Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. 2010
Source: Bank of Korea, ECOS.
II. Korean Economy’s Major Tasks for 2011
Although the 2010 Korean economy performed well despite the global financial crisis, it is premature to say that the Korean economy has completely overcome the crisis. 2011 will be a pivotal year in which the economy’s ability to fully rebound and return to its pre-crisis growth track will be tested. Major economic tasks in 2011 14 Samsung Economic Research Institute
can be summarized as steps that emphasize “Stability and Growth” in order to lay the foundation for sustained growth.
1. Tasks for Stability
To stabilize the economy, a return to pre-crisis economic policies should be the top priority to prevent negative effects of emergency policies implemented to weather the global financial crisis. Although Korea’s fiscal health is relatively good, it has nevertheless deteriorated due to stimulus measures, posting a budget deficit of 30.1 trillion won and 407.2 trillion won in government debt. Considering that increased redemption of national bonds, stronger welfare policy and aging population will raise the demand for government expenditures, 2011 is the time to focus on improving fiscal soundness. Also, the Bank of Korea’s (BOK) benchmark interest rate should return to normal levels to prevent potential negative effects from the prolonged loose monetary policy during the crisis; liquidity is still high since the interest rate cuts sparked a surge. However, flexible management of economic policies is necessary to ensure the efforts will not undermine the economic recovery.
Normalization of the financial sector is also necessary for economic stability. The surge in global liquidity since the financial crisis erupted has significantly raised inflow of foreign investment capital into Korea. The inflow has disrupted Korea’s financial market, strengthening the won and weakening the effect of BOK’s low interest rates. Stabilizing the economy in 2011 is especially critical because uncertainties at home and abroad may force foreign investors to withdraw their money from Korea. Internationally, fiscal crises in Europe may linger and China may adopt a very tight monetary policy. Domestically, the security of the Korean peninsula may come under threat and economic growth could slow. Although the Korean government plans reintroduction of the tax on foreigners’ bond investment and introduction of a bank levy and additional regulation on forward currency exchange, such financial regulations alone will not be enough to mitigate a massive outflow of capital. Therefore, the government and businesses need to strengthen Review of Korean Economy in 2010 Samsung Economic Research Institute 15
Net Inflow of Foreign Investment in Securities
(US$100 mill.) Pre-Lehman Crisis During the Lehman Crisis Post-Lehman Crisis 600 500 471.2 483.6 420.9 483.6 400 Bond 420.9Bond 300 50% 45% 200 Stock Stock 100 -346.4 50% 55% 0 -100 Stock 55% (Total: 904.5) -200 Bond -300 45% -400 Jan. 06-May 08 June 08-Mar. 09 Apr. 09-Dec. Jan. 10-Dec. (29 months) (10 months) (9 months) (12 months)
Source: Bank of Korea, ECOS.
Financial Indices Based on Inflow and Outflow of Foreign Capital Classification Outflow during the Lehman Crisis Inflow after the Lehman Crisis (June 2008-Mar. 2009) (Apr. 2009- Dec. 2010) Won appreciation -29.1% +16.6% (against the dollar) Volatility of KOSPI -35.1% +51.5%
Note: Based on monthly average. Source: Bank of Korea.
their risk management to prepare for a financial market disruption at any time.
2. Tasks for Growth
For the mid-to long term, the potential growth rate of Korea is expected to decline. The growth of facilities investment has continued to slow, and the economically active population has been in decline due to the nation’s low fertility rate and aging. The OECD also predicted that the potential growth rate of Korea would drop from 4.5% in 2010-2011 to 2.4% in 2012-2025. Korea has been a model in overcoming the global financial crisis for the previous two years. At the same time, however, it has been too focused on overcoming the crisis and failed to make necessary measures to increase growth potential, even though it is urgent. To that end, it is the time to earnestly raise the bar on growth potential to better ensure stable future expansion. 16 Samsung Economic Research Institute
Annual Growth of Facilities Investment Share of the Elderly Population and Growth of Economically Active Population
(Average, %) Share of the Growth of economically (%) elderly population active population (%) 21 0.7 0.8 19 19 0.6 17 0.4 0.2 15 18.3 13 0.0 13 13.8 -0.2 5.7 11 -0.4 2.6 9 -0.6 7 -0.8 -0.8 5 -1.0 1971~1980 1981~1990 1991~2000 2001~2009 2008 2010 2012 2014 2016 2018 2020
Source: Bank of Korea, ECOS. Note: 1) Economically-active population refers to those aged between 15 and 64. 2) The share of the aged is the share of those at least 65 years old. Source: Statistics Korea, KOSIS.
Investment diversification is urgently needed. In 2005-2009, 53.4% of facilities investment was made in the electronics industry and transportation equipment or in information technology and the auto industry. As such, Korea’s facilities investment is disproportionately concentrated in only a handful of industries and vulnerable to economic shocks. Also, little investment in other industries makes it difficult to build up capital. Accordingly, Korea should broaden its economic base, encouraging especially promising industries that can be future growth engines, such as solar cell, bio and electric vehicle industries, to improve competitiveness and seize market dominance ahead of others. In addition, investment in relatively lackluster service industry is also urgent. In this sector, Korea is ranked among the bottom of the OECD members in most of indices: the share of the service industry’s output in GDP (60%); the share of the employed in the service industry (67%); and productivity of the service industry (US$31,590 per capita). Further investment in value-added service industries such as health and medicine, finance and tourism is necessary to boost growth potential and create jobs.
Steps are necessary to harness the existing workforce in order to cope with a shrinking economically active population. First, to raise the birthrate, the government should support childcare to help women balance work and family Review of Korean Economy in 2010 Samsung Economic Research Institute 17
Ratio of Facilities Investment per Industry in the Manufacturing Sector (%)
(%) 39.5
15.4 13.0 13.9
6.0 2.8 4.4 1.7 1.7 1.2 0.4
Food Textile Wood Petro- Non-metal Metal MachinePrecision Transportation Others chemical equipment equipment
Note: Average of 2005-2009. Source: Bank of Korea, ECOS.
Service Industry Productivity of OECD Countries
Luxemburg France Finland Italy US Germany Among the bottom UK Greece of the OECD members Spain in service industry's Japan productivity Australia (US$31,590 per capita) Portugal Poland Korea 051015 Nominal value added per one worker (US$10,000)
Note: The graph is based on 2008 data except for Australia and Portugal (2006) and the US and Japan (2007). Source: OECD Statistics. demands. Then, to respond to the nation’s aging population, it should fully employ the potential workforce by encouraging economic participation. In detail, the government should reduce youth unemployment by raising the work ethic of the younger generation and nurturing high performance in the classroom and at work. In addition, short work time should be widely adopted to encourage women’s participation in economic activities, which is much lower than key OECD member countries. Ultimately, Korea will have to provide the foundation to reshape the labor market model to double-income households. 18 Samsung Economic Research Institute
It is also imperative to increase the participation of the middle-aged and the elderly in the workforce. Concerns have risen especially about the impending flood of baby boomer retirements. This is the very reason why the wage peak system, which helps retain older workers’ experience and know-how, and stronger job training are sought. Meanwhile, expanding immigration is worth considering as maintaining productivity with only the native workforce is proving to be more and more difficult. Bringing in foreign talent would resolve shortfalls in the workforce.
Lastly, efforts should continue to make an integrated society. Korean society is experiencing several conflicts, mainly due to widening income gaps. According to SERI’s Social Conflict Index, Korea’s social conflict is fourth, after Turkey, Poland and Slovakia. Furthermore, income disparity is being intensified as the share of the fifth quintile rises while that of the middle-income family decreases. Conflicts may deepen in 2011 due to some social issues such as pending ratification of the Korea-US free trade agreement and free school meals. Those issues can cause confrontations between different classes or political parties. Therefore, resolution of disparity and conflict management should be high priorities in social integration. Creating better jobs for the low-income people would put them on a stronger employment ladder, where they can rise to the middle class. This process, which will help ease social polarization, should be supported with investment in education and measures such as childcare assistance.
At the same time, conflict management capabilities of the government and society need to be continuously improved. To resolve this, seeking communication with the public and resorting to a third arbitrator or a professional agency can be helpful for policy issues that may cause conflicts. Moreover, public trust and civic awareness should be raised by educating citizens to respect law and order. Review of Korean Economy in 2010 Samsung Economic Research Institute 19
III. Implications
Although Korea successfully surmounted the financial crisis in 2010, it is likely to face new challenges such as higher macroeconomic uncertainties and intensified competition among global companies. The growth momentum of the global market is expected to decrease and the strong won will weaken the price competitiveness against exports from other countries. Moreover, leading global companies are recovering from the global financial crisis, preparing for serious competition again while those of emerging countries are becoming global players, expanding their markets. Considering the circumstances, 2011 will be the year to assess the real capabilities of Korean companies.
The government should create an economic strategy in 2011 that is aimed at establishing a foundation for stable growth. It should face growing uncertainties for the future as the world economy expects low growth after the global crisis and worries about another crisis occurring. Therefore, Korea has to shift its focus from the previous success strategy of “Select and Focus” to a new strategy of “Growth and Stability.” Companies should brace for uncertainties at home and abroad, proactively preparing for the future. First, they should enhance their risk system to minimize damage that can stem from any shocks. They should also establish an early warning system. Then, they need to make an advance investment for the future in response to intensifying global competition. Lastly, they should seek investment opportunities in promising industries through M&A with global companies while establishing a creative corporate environment to be more competitive in technology and design, in addition to low pricing. 䤋 Photo Gallery SERI SERI Activities 2010
Research Calendar Symposium & Forum Publications Cyber SERI SERI China SERI Quarterly EU Brief Creative Solutions Top Ten Hit Products of 2010 22 Samsung Economic Research Institute
Ten Major Global Trends in 2010 Korea’s Ten Major Trends in 2010 Seven Major Issues for Global Corporate Management in 2010 Ten Major Tasks Facing Korea in 2010 Causes of Sluggish Facilities Investment: Focus on Structural Factors Effectiveness of Korea’s Fiscal Policies and Fiscal Soundness The Positive and Negative Aspects of the US Economy in 2010 Background to Recent Foreign Exchange Rate Volatility and Prospects Management and War: Managerial Wisdom Gained from the War Game China’s Cutting-edge Industries Brain Science Meets Management: Marketing Strategy Utilizing Brain Science The Expanded Model for Job Sharing: Japanese Companies’ Two Jobs Cases Jan. Smartphones Shaping the Future Reassessing Korea’s National Debt How to Cope with Risks of Global Production System Rare Metals and Industrial Competitiveness: Efforts to Secure Supply and Response Measures Climate Change Economics Trends in Discussions on US Fiscal Soundness and Policy New Three Highs and the Korean Economy MICE Industry: Opportunities and Challenges Paradigm Changes in Innovative Invention Dynamic Capability Controls the Uncontrollable Transformation of Business Models in Mobile Big Bang Era Learning from Korea’s Success in Speed Skating New Growth Strategy of Korean Companies Fiscal Crisis in Southern Europe and Outlook Feb. Economic Value and Effect of 2010 Winter Olympics China’s Exit Strategies: Impact on Korean Economy New Growth Engine: Infrastructure Market in Emerging Countries Global Economy’s Transition to a New Normal Seven Winner Corporations in Global Economic Crisis Japanese Companies Seek Opportunities in the Emerging Economies Inflationary Pressure Analyzed Using Liquidity Indices Global Financial Crisis and Green Growth The Possibility of a UK Fiscal Crisis and Outlook Risk Assessment of Household Debt and Its Impact on Consumption Work SMART Augmented Reality-driven Future Changes Forever-young, 100-year-old Micherin Zhuangzi’s Wisdom in Communication SERI Economic Outlook for 2010 Korean Peninsula Security Index: Survey Results for First Quarter 2010 Consumer Sentiment Survey for First Quarter 2010 March Research Calendar Samsung Economic Research Institute 23
CEO Information: Current issues and keywords for top executives and policymakers SERI Focus of the Week: Weekly publications on key developments and analysis of the Korean and global economy SERI Management Note: Timely delivery of major domestic and global issues related to corporate management Issue Paper: SERI researchers’ incisive opinions on the economy, management, industry and policy
Korean Economy According to Economic Well-being Index Opportunities in the Middle East Emergency Measures to Boost Low Fertility Won/Dollar Exchange Rate Approaching 1,100: Economic Impact and Implications Financial Crises and Changes in Employment Environment for Foreigners India’s Infrastructure Market and Investment Opportunities Diagnosis and Assessment of Recent Employment Trends Reinforced Environmental Regulations and Green Protectionism Changes in the Photovoltaic Industry Management Based on Diverse Business Ties Display Devices Expand Their Boundaries Hidden Relationships in Organizations: Organizational Network Analysis Social Media Moves Employees’ Minds SERI EMGC 200 - Analysis of Global Companies in Emerging Economies April
Lessons from Global Company’s M&As How to Respond to Patent Disputes and Technology Theft Korean Society Is Turning Multicultural How Advanced Korean Society Is Why Hasn’t Japan’s Fiscal Crisis Come to the Fore? Assessing the introduction of the Cost of Fund Index (COFIX) and Policy Suggestions Analysis of Greek Fiscal Crisis from Political and Economic Perspectives Outlook on the Global Grain Market in Second Half 2010 Green Management through 3Rs Enlightened Self-interest Management Risk Management of New Business Projects Leadership Using Emotional Intelligence: Draw Positive Energy from Employees Economic Outlook for Second Half 2010 Consumer Sentiment Survey for Second Quarter 2010 May
Mixed Outlooks for Global Economy in Second Half of 2010 The 5th Local Elections, Major Challenges? Mobile Big Bang and Future Corporate Management SERI’s Financial Stress Index and Korea’s Financial Market A List of 20 Books for CEOs Korea’s Booming Exports Exit Strategy to Restore Fiscal Health Southeast Asia’s Economic Recovery and Implications for the Korean Economy Causes of Sluggish Construction Investment and Implications Emission Credit Exchange: Its Meaning and Tasks Ahead Growth Strategy in Manufacturing: Servicization Rediscovery of Tradition Learning Risk Management from Nature Empathic Listening Makes Good Leaders Korean Peninsula Security Index: Survey Results for 2nd Quarter 2010 Fiscal Crisis in Southern Europe and Outlook on the Eurozone Economy The Need for GTA and Expected Effects June 24 Samsung Economic Research Institute
New Business Opportunities in Slow Trend The Era of Social Economics and Social Media The Optimal Public Debt Ratio Economic Effects of Youth Unemployment and Fundamental Measures - Restructuring the Education System The Content of ECFA and Responses Korea’s Higher Vulnerability in Foreign Exchange Compared to Stocks Solutions to Local Government Fiscal Crisis Outlook on Yuan Appreciation Strategy to Innovate the Service Industry through Smartphones and LBS Brand Integrity Smart Grids and New Business Opportunities Communication and the World Cup in South Africa Local Success in Emerging Markets: Fending Off Multinationals Post-Crisis Global Financial Regulations Global Leading Companies M&As And Successful Strategies of Each M&A Type Governance and Response to Financial Crises July
Korea-Japan Relations A Green Life Revolution Ushers in a Low Carbon Era China’s Newly Emerging Global Companies Imbalance in External Assets and Liabilities and Its Implications US Economic Recovery Hinges on Private Sector’s Spending Power Conflicting Views on Future Economic Conditions Market-oriented Methods to Manage Water Resources Cloud Computing Services Cradle to Cradle: A New Paradigm for Environmental Protection Deciphering the Human Genome and New Business Opportunities Three-dimensional Strategy to Tackle Work Stress The Socioeconomic Consequences of Korea’s Shrinking Middle Class Consumer Sentiment Survey for Third Quarter 2010 Inconvenient Truth Revisited Innovating College Education to Increase Youth Employment Aug.
Shrinking Global Food Supply Threatens Korean Economy Obstacles Facing Korea’s Working Mothers The G20 Seoul Summit, Its Implications Is Real Estate in a Long Slide? The Red Light Is on in Japan’s Managerial Environment Strong Yen and Its Implication on the Korean Economy Recent Trends in the Global Education Market Power of Overcoming Adversity: Resilience Amazon’s Endless Change From Superman to Avatar Humanism-based Management Korean Peninsula Security Index: Survey Results for 3rd Quarter 2010 SERI Economic Outlook for 2011 Korean Companies’ Networking Activities Sept. Research Calendar Samsung Economic Research Institute 25
Currency Rows Two Years after the Global Financial Crisis Impact of Tablet PCs on Media Industry US-China Friction & Global Economy Changes in the Competition Structure of the Global Financial Market Four Characteristics of Recent Inflation Budget Authority, the National Parliament and the Korean Government China’s 12th Five-Year Plan Facebook, Leading the New Wave of Global Communication An Idol Group-led New Korean Wave Making SMEs Stronger through Globalization Heart-to-Heart Communication in the Workplace Close Economic Ties between China and North Korea Green Protectionism and the Responses Korea-EU FTA and Corporate Response The Consumption Market in Emerging Economies Baby Boomer Retirement: Impacts and Solutions Mobile Bing Bang-Triggered Changes in Corporate Management Korea’s Recurring Financial Volatility Oct. Collective Intelligence, A New Source of Value Creation Will Emerging Economies Continue Robust Growth? A Post-G20 Korea China’s Strong Green and Bio Industries Simultaneous Rally in Stock and Bonds What Korea Can Learn from the 2010 Nobel-winning Economic Theory India’s Rising Inflation Optimal Foreign Currency Reserves and Implications Ways to Take on the US$1.6 billion Muslim Market Keyword for Growth, Platform High Reliability Organization Creative Abrasion Winners and Losers of the Global Financial Crisis Policy Outlook after the US Midterm Election Working Mothers and Corporate Response Consumer Sentiment Survey for Fourth Quarter 2010 2010 SERI-PCNB NBDO Change in China’s Growth Strategy: From Investment and Exports to Consumption Nov. Major Issues for Korean Companies in 2011 Business Opportunities from New Leisure Trends Top 10 Hits in Korea of 2010 A Post-crisis Korean Economy: 10 Years down the Road Possibility of Spain’s Fiscal Crisis and Future Outlook Export Diversification: Impact on Korean Economy Evolving Patent Business Customers moved by Netflix’s Magic Korea’s AMOLED Industry Managerial Wisdom Gained from Greece’s Tragedy The Signing of the KORUS FTA and Future Tasks SERI Economic Outlook for 2011 Korean Peninsula Security Index: Survey Results for Fourth Quarter 2010 China’s Newly Emerging Companies Korea’s Local Autonomy in Crisis Addressing Climate Change through Market Mechanism Dec. 26 Samsung Economic Research Institute
Symposium Samsung Economic Research Institute holds symposiums on major issues of the Korean economy, in an effort to share expertise and play a leading role in Korea’s future development.
Feb. 17, 2010 Economic Impact of the Cap and Trade System in Korea and Its Scale-up Strategies Host: Samsung Economic Session 1 Research Institute AIntroduction of Studies on Cap and Trade System’s Economic Impact and its Scale-up Strategies | LEE Jee-Hoon, Research Fellow, SERI
ASpillover Effects from Introducing Cap and Trade Using Dynamic Computable General Equilibrium Model | KANG Hee-Chan, Research Fellow, SERI
AProspects of Introducing Cap and Trade and Major Issues | PARK Ho-Jeong, Professor, Korea University
Session 2
AStrategies for Introducing Cap and Trade in Korea Based on the EU-ETS Experience | David Turberfield, Managing Partner, ERM Korea
AGlobal Companies’ Strategies on Cap and Trade | Philippe Rosier, President, Rhodia Energy Services and Orbeo
AGreen Growth Cooperation of South and North Korea and its Execution Strategies | LEE Han- Hee, Research Fellow, SERI
Panel Discussion
AModerator: JUNG Ku-Hyun. Advisor, SERI
AParticipants: KIM Jeong-In, Professor, Chung-Ang University; KIM Yong-Gun, Chief Economist, Korea Environment Institute
March 23, 2010 International Sports Events and National Brand
Host: Presentation Korean Olympic Committee, ASuccess of Korea in Vancouver Olympics and Enhancement of National Brand | LEE Dong-Hun, Presidential Council on Research Fellow, SERI National Branding, Samsung Economic AEconomic Effects of Vancouver Olympics | LEE Chang-Young, Research Fellow, SERI Research Institute AInternational Sports Events Marketing and Implications | KANG Joon-Ho, Professor, Seoul National University
AThe Meaning of Hosting the Winter Olympics in Pyeongchang | KIM Nam-Soo, Director General of Planning, Pyeongchang 2018 Bid Committee
Panel Discussion
AModerator: HONG Sun-Young, Senior Vice President, SERI
AParticipants: KIM Keun-Soo, Director, Presidential Council on National Branding; HAN Choong- Min, Professor, Hanyang University Symposium & Forum Samsung Economic Research Institute 27
April 7, 2010 2010 Korea-China International Economic Forum
Host: Session 1. International Role of the Korean and Chinese Economies Sungkyunkwan University, AModerator: KIM Jun-Young, Vice President, Sungkyunkwan University Samsung Economic AChinese Economy After the Global Financial Crisis, CAO Fengqi, Director, Chinese Finance Research Institute, Peking University Association AChina’s Future and Korea-China Relations on the Basis of Economic Social Development Stage, CHUNG Duck-Koo, Chairman, NEAR Foundation (Former Minister of Economy, Commerce and Industry)
Session 2. Prospects of China’s New Economic Development System
AModerator: ZHANG Guo You, Professor, Guanghua School of Management, Peking University
AProspects of China’s Economic Development and Plans for Korea-China Economic Cooperation, JU Guo Yu, Professor, Sungkyunkwan Graduate School of China
APost-crisis Restructuring of the Chinese Economy, TANG Min, Deputy Secretary General, China Development Research Foundation
AThirty Years of China’s Economic Catch-up and Prospects Compared to Korea | LEE Keun, Professor, Seoul National University
Session 3: New Economic Cooperation Model of Korea-China
AModerator: LEE Ho-Jae, Professor, Sungkyunkwan Graduate School of China
ANew Challenges Facing Korean and Chinese Businesses | KIM Yong-June, Professor, Sungkyunkwan Graduate School of Business
AKorea-China Financial Cooperation Plans following China’s Financial Reforms | DONG Wenbiao, Chairman of Board of Directors, China Minsheng Banking Corp.
ACase Studies on Korea-China Business Cooperation | LI You, President, Founder Group
June 23, 2010 Market Opportunities from the Rise of Emerging Market Economies and Responses by Korea, China and Japan Host: Ministry of Knowledge Economy, Session 1: Market Opportunities from the Rise of Emerging Market Economies Samsung Economic SERI Selections of 30 Promising Emerging Market Economies | JUNG Ho-Sung, Research Fellow, Research Institute SERI
Promising Export Products and Infrastructure Market | KIM Jung-Woo, Research Fellow, SERI
Promising Consumer Markets in Emerging Economies | LEE Dong-Hun, Research Fellow, SERI
Strategies and Responses in Advancing into Emerging Market Economies | BOK Deuk-Kyu, Senior Fellow, SERI 28 Samsung Economic Research Institute
Session 2: Korea-China-Japan’s Response Strategies After the Global Financial Crisis
Japan’s Response Strategies | SADAMORI Keisuke, Deputy Director General for Trade Policy, Ministry of Economy, Trade and Industry of Japan
China’s Response Strategies | CHEN Zhou, Minister Counselor of Economic and Commercial Office, Embassy of China in Korea
Korea’s Response Strategies | PARK Chung-Won, Director General of Industry and Knowledge Economy, Ministry of Knowledge Economy
Panel Discussion: In Search for a New Korea-China-Japan Industrial Cooperation Plan
Participants: HAN Sun-Hee, Director General of Business Information, KOTRA; PARK Seung-Rok, Director of Division of Corporate Research, Korea Economic Research Institute
Moderator: PARK Bun-Soon, Senior Fellow, SERI
Dec. 3, 2010 Post-crisis Course of the Korean Economy: Challenges and Tasks in the Next Decade Host: Samsung Economic Research Institute Session 1 Global Financial Crisis and Tasks for the Korean Economy in the Next 10 Years | KIM Yong-Ki, Senior Fellow, SERI
Expanding Domestic Demand for Stable Growth | RHEE Tae-Hwan, Research Fellow, SERI
Dimensional Structure of Korea’s Industries | BOK Deuk-Kyu, Senior Fellow, SERI
Building a Korean-Style Flexible and Stable Employment System | SOHN Min-Jung, Research Fellow, SERI
Session 2
Prevention of Financial Crises and Strengthening Intermediary Functions | JEONG Young-Sik, Research Fellow, SERI
Social Integration for Sustainable Growth | LEE Dong-Won, Research Fellow, SERI
Panel Discussion
Moderator: HONG Sun-Young, Senior Vice President, SERI
Participants: JEONG Kap-Young, Professor, Yonsei University; PARK Won-Am, Professor, Hongik University; LEE Jong-Wook, Professor, Seoul Women’s University Symposium & Forum Samsung Economic Research Institute 29
Regional Samsung Economic Research Institute oversees a regional economic forum in 11regions. Economic The forum provides business-related information based on SERI reports and other Forum knowledge for company leaders. It also promotes a broad exchange of views and ideas at regular monthly seminars. Through this interaction, SERI helps bolster the competitiveness of local business communities and assists regions in economic development.
Jan. 2010 Daejeon Beyond Survival and Toward Greatness KIM Kwang-Ho President of Combi Marketing Research Center
Gwangju 2010 Gwangju Economic Development Plan PARK Gwang-Tae Mayor of Gwangju Metropolitan City
HWANG In-Seong Gyeongnam Top Ten Korean and Global Trends for 2010 Vice President at SERI
HWANG In-Seong Feb. 2010 Gimhae Top Ten Korean and Global Trends for 2010 Vice President at SERI
Korea’s Development and the Entrepreneurship Daegu CHANG Jin-Ho of Samsung Founder Lee Byung-Chull Professor at Yonsei University Top Ten Korean Trends for 2010 and Daejeon LEE Dong-Hun Response Strategy Research Fellow at SERI Pressing Issues and Outlook of KWON Soon-Woo Jeonbuk the Korean Economy Vice President at SERI
Chungnam Green Growth and Implications for the Future DO Gun-Woo Research Fellow at SERI
Pressing Issues and Outlook of HONG Sun-Young Ulsan the Korean Economy Senior Vice President at SERI Economy and Development of Gwangju PARK Joon-Yung South Jeolla Province South Jeolla Governor Pressing Issues and Outlook of Busan PARK Bun-Soon the Korean Economy Senior Fellow at SERI KIM Jae-Yun Gyeongnam Promising Industries after Recession Vice President at SERI
Korea’s Development and the Entrepreneurship Jeju CHANG Jin-Ho of Samsung Founder Lee Byung-Chull Professor at Yonsei University
Chungbuk Strategy for Strengthening Corporate Soft Power HAN Chang-Soo Research Fellow at SERI
March 2010 Gimhae 2020 Lifestyle Changes and Promising Industries LEE Dong-Hun Research Fellow at SERI
Daejeon Creative Management and the Role of CEO LEE Yong-Hwa Research Fellow at SERI
Pressing Issues and Outlook of Daegu SHIN Chang mock the Korean Economy Research Fellow at SERI
OM Jung-Myung Chungnam China’s Tightening Policy and Its Impact on Korea Research Fellow at SERI 30 Samsung Economic Research Institute
Ulsan Post-crisis Consumption Trend and Responses LEE Min-Hoon Research Fellow at SERI
Development Strategy for Jeju KIM Hyun-Joo Jeju Free International City Research Fellow at SERI
Gwangju Green Growth and Implications for the Future DO Gun-Woo Research Fellow at SERI
Economic Value and Effect of Gyeongnam LEE Dong-Hun Winter Olympics Research Fellow at SERI Korea’s Global Financial Hub Strategy Busan OHN Ki-Woon Editorial and Busan s Role Writer, Maeil Business Newspaper
Reverse Thinking Strategy for Chungbuk YOO Seok-Jin Korean Companies in 2010 Vice President at SERI Business Management Lessons from Small, April 2010 Daejeon LEE Eon-Oh Strong Companies Senior Vice President at SERI International Sports Events and Daegu LEE Dong-Hun Effect on Businesses Research Fellow at SERI
Jeju Future of Jeju Island in a Global Age HYUN Seong-Soo Auditor at Cheil Worldwide
Chungnam Crisis and Responses of SMEs SONG Jin-Gu Professor at JEI University
Ulsan Green Industries and Development Strategy DO Gun-Woo Research Fellow at SERI Reverse Thinking Strategy for Busan YOO Seok-Jin Korean Companies in 2010 Vice President at SERI
PARK Seok-Jae President Jeonbuk The Way of the Universe at Korea Astronomy and Space Science Institute Pressing Issues and Outlook of Chungbuk SHIN Changmock the Korean Economy Research Fellow at SERI
Gwangju Pressing Issues and Outlook of the Korean Economy HWANG In-Seong Vice President at SERI
Post-crisis Consumption Trend Gyeongnam LEE Min-Hoon and Responses Research Fellow at SERI
May 2010 Daejeon Post-crisis Consumption Trend and Responses LEE Min-Hoon Research Fellow at SERI
Ulsan 2020 Lifestyle Changes and Promising Industries LEE Dong-Hun Research Fellow at SERI YOO Duck-Sang Jeju Future Vision of Jeju Island and Development Tasks President at Jeju Development Institute
Busan KOR-US Relations and KOR-US FTA LEE Tae-Sik Former Ambassador to the US
Daegu Rediscovery of Japanese Companies LEE Woo-Kwang Research Fellow at SERI Symposium & Forum Samsung Economic Research Institute 31
OH Jong-Nam Professor Jeonbuk Preparing for 30 Years After Retirement at Seoul National University
Requirements for Becoming a Leader-Lessons Chungnam RYU Ji-Seong from Great Leaders of History Senior Fellow at SERI Business Management Lessons from Gwangju LEE Eon-Oh Small, Strong Companies Senior Vice President at SERI Creative Management and Gyeongnam LEE Bum-Il the Role of CEO Executive Vice President at SERI DO Gun-Woo Chungbuk Green Industries and Development Strategy Research Fellow at SERI
HWANG In-Seong June 2010 Daejeon Pressing Issues and Outlook of the Korean Economy Vice President at SERI
Strategy for Korean Companies to Survive SONG Byung-Nak Gimhae Honorary Professor at Seoul in the Fierce Competition National University Reverse Thinking Strategy for Korean Ulsan YOO Seok-Jin Companies in 2010 Vice President at SERI
LEE Woo-Kwang Busan Rediscovery of Japanese Companies Research Fellow at SERI
Reshuffling of Global Competition Jeonbuk NOH Dae-Lae Administrator and Regional Competitiveness of Public Procurement Service Green Industry Trends and Daegu DO Gun-Woo Korean Companies’ Responses Research Fellow at SERI
KIM Jae-Yun Jeju Information Technology Shaping the Future Vice President at SERI
OH Jong-Nam Professor Chungbuk Eudaemonics: Ways to Live a Rich Life at Seoul National University
YANG Seung-Ryong Gwangju Why the Gwangju Commodity Exchange? Professor at Korea University
Changes in Global Economy and the Gyeongnam KWON Soon-Woo Second-half Outlook on the Korean Economy Vice President at SERI LEE Min-Hoon Chungnam Post-crisis Consumption Trend and Responses Research Fellow at SERI
Community Business: New Option to July 2010 Daejeon KIM Young-Soo Spur Regional Economic Activity Professor at Soongsil University Green Industry Trends and Gimhae DO Gun-Woo Korean Businesses Responses Research Fellow at SERI
LEE Min-Hoon Daegu Post-crisis Consumption Trend and Responses Research Fellow at SERI
Community Business: New Option to HAHM Yu-Kun Ulsan Spur Regional Economic Activity Professor at Konkuk University Opportunities in Emerging Markets and Busan BOK Deuk-Kyu Korean Companies’ Responses Senior Fellow at SERI 32 Samsung Economic Research Institute
Business Climate in the Next Jeju YOO Seok-Jin Ten Years and Corporate Responses Vice President at SERI
Jeonbuk Information Technology Shaping the Future KIM Jae-Yun Vice President at SERI
LEE Min-Hoon Aug. 2010 Gwangju Post-crisis Consumption Trend and Responses Research Fellow at SERI
Opportunities in Emerging Markets Gyeongnam BOK Deuk-Kyu and Korean Companies’ Responses Senior Fellow at SERI Business Climate in the Next Ten Years Chungnam YOO Seok-Jin and Corporate Responses Vice President at SERI KIM Jae-Yun Chungbuk Information Technology Shaping the Future Vice President at SERI
KWON Ki-Duk Sept. 2010 Daegu Information Technology Shaping the Future Research Fellow at SERI Green Industry Trends and Daejeon DO Gun-Woo Korean Businesses’ Responses Research Fellow at SERI Business Climate in the Next Ten Years Gimhae YOO Seok-Jin and Corporate Responses Vice President at SERI
Ulsan Rediscovery of Japanese Companies LEE Woo-Kwang Research Fellow at SERI
Busan Information Technology Shaping the Future KIM Jae-Yun Vice President at SERI
Green Industry Trends and Jeonbuk DO Gun-Woo Korean Businesses’ Responses Research Fellow at SERI Five Keywords in Business Environment Chungnam CHUNG Kweon-Taek and Human Resources Management Strategy Vice President at SERI Governance by Gwangju KANG Un-Tae Mayor of the Gwangju Metropolitan Government Gwangju Metropolitan City
Changes in Economic Environment and Jeju LEE Min-Hoon Future Consumption Trend Research Fellow at SERI Community Business: New Alternative Gyeongnam KIM Young-Soo to Spur Regional Economic Activity Professor at Soongsil University Companies’ New Communication Chungbuk LEE Dong-Hun Strategy in Social Media Era Research Fellow at SERI 2011 Outlook on the Korean Oct. 2010 Daegu HWANG In-Seong Economy and Corporate Environment Vice President at SERI
Gimhae Information Technology Shaping the Future KWON Ki-Duk Research Fellow at SERI 2011 Outlook on the Korean Ulsan KWON Soon-Woo Economy and Corporate Environment Vice President at SERI Companies’ New Communication Daejeon LEE Dong-Hun Strategy in Social Media Era Research Fellow at SERI Symposium & Forum Samsung Economic Research Institute 33
2011 Outlook on the Korean Busan JEONG Young-Sik Economy and Corporate Environment Research Fellow at SERI 2011 Outlook on the Korean Jeonbuk HONG Sun-Young Economy and Corporate Environment Senior Vice President at SERI Business Climate in the Next Ten Years and Chungbuk CHUNG Kweon-Taek Human Resources Strategy Vice President at SERI 2011 Outlook on the Korean Economy Jeju CHUNG Ki-Young and Corporate Environment President & CEO at SERI 2011 Outlook on the Korean Economy Gwangju KIM Deuk-Kab and Corporate Environment Senior Fellow at SERI 2011 Outlook on the Korean Economy Gyeongnam SHIN Changmock and Corporate Environment Research Fellow at SERI 2011 Outlook on the Korean Economy Chungnam HWANG In-Seong and Corporate Environment Vice President at SERI 2011 Outlook on the Korean Economy Nov. 2010 Daejeon CHUNG Ki-Young and Corporate Environment President & CEO at SERI 2011 Outlook on the Korean Economy Gimhae KWON Soon-Woo and Corporate Environment Vice President at SERI Business Climate in the Next Ten Years and Busan CHUNG Kweon-Taek Human Resources Strategy Vice President at SERI
Jeonbuk Survival Leadership in a Fiercely Competitive Age KIM Kwang-Ho President of Combi Marketing Research Center
Learning from Popular Culture: Ulsan LEE Seung-Jae The Formula of Big Hits Reporter of Dong-A Ilbo Creativity in Business Jeju HAN Chang-Soo Management-Focused on Cases Research Fellow at SERI
Gwangju Information Technology Shaping the Future KWON Ki-Duk Research Fellow at SERI
Business Environment in the Next Ten Years Gyeongnam YOO Seok-Jin and Corporate Responses Vice President at SERI
Chungnam Information Technology Shaping the Future KIM Jae-Yun Vice President at SERI 2011 Outlook on the Korean Economy Chungbuk CHUNG Ki-Young and Corporate Environment President & CEO at SERI Business Management from Dec. 2010 Gimhae HAN Chang-Soo Perspective of Creativity Research Fellow at SERI Photovoltaic Industry and Future of Chungbuk DO Gun-Woo North Chungcheong Province Research Fellow at SERI Companies’ New Communication Daegu LEE Dong-Hun Strategy in Social Media Era Research Fellow at SERI Crisis Diagnosis and Responses for Jeonbuk SONG Jin-Gu Creative Organization Professor at JEI University 34 Samsung Economic Research Institute
Leadership Using Emotional Intelligence: Ulsan YE Ji-Eun Draw Positive Energy from Employees Research Fellow at SERI
KIM Jin-Hyuk Jeju Failure, the Seed of Great Success Research Fellow at SERI
Learning from Popular Culture: Busan LEE Seung-Jae The Formula of Big Hits Reporter of Dong-A Ilbo Background and Prospects of Gyeongnam JEONG Young-Sik Global Currency Disputes Research Fellow at SERI
Contacts for Regional Forum Membership
Busan Economic Forum Busan Chamber of Commerce & Industry 82-51-990-7062 Daegu Economic Forum Daegu Chamber of Commerce & Industry 82-53-756-3036 Gwangju Economic Forum Gwangju Chamber of Commerce & Industry 82-62-350-5863 Daejeon Economic Forum Daejeon Chamber of Commerce & Industry 82-42-480-3042 Ulsan Economic Forum Ulsan Chamber of Commerce & Industry 82-52-228-3103 Gyeongnam Economic Forum Changwon Chamber of Commerce & Industry 82-55-210-3001 Chungbuk Economic Forum Chungbuk Research Institute 82-43-220-1194 Chungnam Economic Forum Chungnam Northern Chamber of Commerce & Industry 82-41-556-7131 Gimhae Economic Forum Gimhae City Government 82-55-330-3447 Jeonbuk Economic Forum Jeonju Chamber of Commerce & Industry 82-63-288-3013 Jeju Economic and Tourism Forum Jeju Chamber of Commerce & Industry 82-64-757-2164 Publications Samsung Economic Research Institute 35
SERI Books Publications by Samsung Economic Research Institute attempt to deepen public knowledge and contribute to society. Their focus is on the economy, society and business management. Outside authors as well as SERI researchers contribute to SERI’s annual book list.
March 19, 2010 Rediscovery of Japan LEE Woo-Kwang
April 30, 2010 North Korean Nuclear Threat and the DIME Approach JEON Kyong-Mann, LIM Soo-Ho, BAHNG Tae-Seop, LEE Han-Hee April 30, 2010 Falling in Love with Brand CHOI Soon-Hwa, LEE Min-Hoon
May 17, 2010 Discussion on the Post-crisis Era JUNG Ku-Hyun, HONG Sun-Young, KIM Yong-Ki, et al. May 26, 2010 Fragmented Power: Europe and the Global Economy Translated by Yonsei-SERI EU Centre
June 18, 2010 Recurring Global Financial Crises KIM Yong-Duk
June 25, 2010 Community Business HAHM Yu-Kun, KIM Young-Soo
Aug. 16, 2010 China’s Tomorrow MOON Chung-In
Nov. 12, 2010 Future Industry Watch Samsung Economic Research Institute Dec. 1, 2010 SERI Outlook 2011 KWON Soon-Woo, SHIN Changmock, et al.
SERI Essays SERI Essays are a collection of insights from Korea’s leading intellectuals that identify directions for Korean corporations and society at large. Their incisive and thought-provoking criticisms aim to stimulate open discussions on issues relevant to the creation of a knowledge-based society.
Jan. 28, 2010 Over-production, Recession and Governance LEE Jae-Kwang
April 19, 2010 Greater East Asia PARK Bun-Soon
July 19, 2010 Overseas Construction Projects: A Strategic Approach KIM Young-Tae 36 Samsung Economic Research Institute
Cyber SERI : Korea’s No.1 Knowledge Service
Cyber SERI provides the greatest value to its customers Cyber SERI is a comprehensive brand for the websites of Samsung Economic Research Institute. SERI’s websites serve as information conduits to both domestic and global audiences and play a vital role in positioning SERI as the hub of the knowledge ecosystem in Northeast Asia. Cyber SERI is dedicated to facilitating communications and the exchange of ideas globally.
yyy Cyber SERI Website Features
SERI.org Open Knowledge Ecosystem
SERI.org, Korea’s representative knowledge platform, has positioned itself as Korea’s No.1 website in economic research and looks to build an “open knowledge ecosystem” with the same prestige in a joint effort between SERI and its members. SERI.org has various communication channels, including its e- newsletter SERIZINE, mobile web service, five-minute video reports based on major SERI publications, and social media services such as SERI Twitter and Facebook, which enjoy high popularity among its members.
Launched in October 1996
Main Features (As of December 2010) - Provides free reports to members - Operates interactive member services, including the Open Knowledge Forum, the Creative Zone and the Cyber Forum - Supports forum activities via mobile web services - Briefs of latest reports are distributed through social media including Twitter and Facebook to enhance communication with SERI members - Users can view SERI reports and books published by SERI via smartphones - Number of Members: 1.79 million - Number of Contents: approx. 2.8 million - Number of Twitter followers: 50,000 (the fourth largest among Korean companies) Cyber SERI Samsung Economic Research Institute 37
SERICEO.org The Knowledge Source for Business Leaders
SERICEO is an “online video-based knowledge service” for CEOs and business leaders. SERICEO aims to provide essential knowledge and information to CEOs in a timely and comprehensible manner to help enhance the competence of Korean CEOs and companies.
Launched in September 2001
Main Features (As of December 2010) - Quality content by SERI researchers and distinguished contributors - Timely briefings on latest issues and insights on the economy, business and industry in five-minute video format - Various programs for CEOs ranging from management and economy to culture, history and philosophy - Number of Members: approx. 11,000 - About 10,000 videos are available
SERICEO’s Major Services
Online Services Offline Services
Multimedia Briefing CEO Network - Timely briefings on the latest issues on the economy, - Breakfast seminar: One of the largest regular monthly business, industry and culture/art trends in five-minute executive breakfast meetings, with more than 1,500 video format members sharing information on management, - Four videos provided on a daily basis economy, industry and culture (approx. 10,000 videos are available) - Humanities seminar: Aimed at fostering members’ imagination and business insight
Email Service CEO Information - Daily: New and recommended content - Exclusively provides CEO Information in print to the - Weekly: Weekly highlights presidents of the Samsung Group (52 issues a year) - Monthly: Monthly best/breakfast seminar 38 Samsung Economic Research Institute
SERICEO Customized Service
SERICEO provides customized services to companies that are tailored to their unique characteristics. The services are used for the purposes of improving the competency of core human resources and strengthening ties with VIP customers. Starting with the customized website for Samsung Life Insurance launched in June 2003, SERICEO is operating 21 customized websites as of 2010.
Main Features - Establishes an exclusive education infrastructure customized to each company (including the development and operation of customized websites) - Reflects a company’s management philosophy and culture and provides selected contents that are in line with company objectives - Dedicated teams to the customized website provide close management services (service, marketing and call center)
Companies Using SERICEO Services (21 companies)
Name Website Members
Industrial Bank of Korea www.ibkfriend.com CEOs of SMEs
Woori Bank www.waclub.co.kr Branch managers
Kyobo Life Insurance www.kyobolove.com Sales performance managers
Shinhan Bank www.shheros.com Branch managers/Department heads Financial Sector Korea Life Insurance www.k-seri.com Agency managers Samsung Life Insurance www.pension-esociety.com Retirement pension subscribers
Samsung Fire and www.seriallife.co.kr Agency managers Marine Insurance Hana Bank www.hanaseri.co.kr Branch managers
LIG Insurance www.ligvictory.com Branch managers
Hyundai Kia Automobile Group www.hkprime.co.kr Executives and managers
Corporate KT www.ollektpark.com Major executives Sector Cheil Worldwide www.ideaschool.cheil.com All employees
Samsung C&T www.secchange.com Major executives
Ministry of National Defense www.mkiss.or.kr Soldiers in executive positions and related military public servants Ministry of Land, Transport www.storypark.or.kr Level 5 civil servants and above and Maritime Affairs Korea Coast Guard www.neocean.or.kr Level 7 civil servants and above
Officials Benefit Association www.mypoba.or.kr Members State-Owned National Assembly www.e-assembly.or.kr Lawmakers and level 5 civil servants and above Ministry of Foreign www.serimofat.org Heads/department heads and above Affairs and Trade of diplomatic establishments abroad The National Unification www.peacenuri.or.kr Members of the standing committee Advisory Council Agriculture Forestry Fisheries www.okdapceo.com CEOs of agricultural foods companies Information Service Cyber SERI Samsung Economic Research Institute 39
m.SERICEO.org SERICEO in My Hands
m.SERICEO.org offers SERICEO members the same content provided through traditional PCs on mobile devices like smartphones by providing customized content exclusively for mobile devices. Mobile services for ordinary viewers and customized services for companies are also provided.
Launched in January 2011
Main Features - Four new video clips are simultaneously uploaded onto m.SERICEO.org and PC websites on a daily basis - Interfaced with PC service to provide stdudy record, study hour and content evaluation - Users can register for offline seminars (e.g. SERI’s breakfast seminars) via m.SERICEO.org
SERICEO.cn Online Knowledge Source for Chinese Employees at Samsung Group China
SERICEO China provides Samsung employees in China with information on China’s economy, management and industry, all in the Chinese language. The service also includes items to bolster individual capabilities. Two to three contents items are uploaded daily, with more than 90% of SERICEO China users responding “satisfied” or “very satisfied” in a user satisfaction poll. The website is considered to be the best knowledge service for local employees.
Launched in October 2007
Main Features (As of December 2010) - Five-minute multimedia content covering the Chinese and global economy, management and industry - Information on Samsung Group’s managerial philosophy, history and key values - Provides communication venues where employees can share information and knowledge - Number of Members: 12,000 - Number of Content: 2,562 video clips; 346 reports. 40 Samsung Economic Research Institute
SERIWorld.org Business and Economic Information Portal for a Global Audience
As a global window on events in the Korean economy, SERIWorld.org serves as an English channel that presents SERI’s research on the global environment and domestic development, ranging from macro- economic trends, management, industry, public policy to security concerns on the Korean peninsula through full-text reports, researcher columns and video reports. SERIWorld.org shares with its readers many of analyses and policy solutions to a broad community of government officials, business leaders, scholars and general readers. SERIWorld.org also operates various communication channels, including weekly newsletters and social media service such as SERIWorld Facebook and Twitter, to facilitate communication with the global society.
Launched in November 2004
Main Features (As of December 2010) - Provides reports and columns on Korean and global macroeconomic trends, management, industries, and security concerns on the Korean peninsula - Issues Korea Economic Trends, a weekly review of Korean economic and management trends - Provides five-minute video briefings for enhanced understanding of the Korean economy - Number of Members: approx. 70,000 - Number of Content: 6,549 reports; 1,232 video clips; -181 columns Cyber SERI Samsung Economic Research Institute 41
SERIJapan.org Knowledge Bridge between Korea and Japan
SERIJapan functions as a link for Korea and Japan to exchange knowledge and information, enabling both countries to grow as true partners. The website was redesigned in January 2008 to make it easier for members to access information, and offers SERI research papers in Japanese.
Launched in June 2005
Main Features (As of December 2010) - Provides information on Japan’s economy, management, industry and culture through reports, video clips and statistics - Offers financial databases of Korean companies, CEO interviews and M&A data - Provides reports through Nikkei Telecom and Factiva - Number of Members: approx. 7,000 - Number of Content: 2,448 reports; 914 video clips
SERIChina.org Website of SERI’s Beijing Office
SERIChina seeks to become a knowledge bridge between Korea and China, providing information on major economic, management and industrial trends and issues in China all in the Chinese language.
Launched in March 2006
Main Features (As of December 2010) - Offers economic, management and industrial information on Korea and China through reports and video clips - Number of Members: 35,000 - Number of Content: 344 reports; 35 video clips 42 Samsung Economic Research Institute
SERI China After receiving authorization from the Chinese government on May 31, 2005, SERI China became SERI’s first milestone in global research.
With the vision of becoming a leading think tank promoting the continual growth of the Chinese economy, society and business by providing creative and essential knowledge, SERI China is taking a firm root as a top foreign private research institute in China. Through early warnings on the changes in the Chinese business environment and proposals to bolster competitive advantage, SERI China has assumed the role of a respected opinion maker not only to enhance corporate competitiveness but also to contribute to Chinese society.
SERI China also plays a role as a pioneer in the globalization of SERI as it endeavors to deepen its expertise, implementing three missions and striving for greater proficiency in both theory and practice through continuous exchanges with China’s state institutions and universities.
A leading think tank promoting the continual growth of the Chinese economy, society and Vision business by providing creative and essential knowledge
The Three Support Samsung Group’s Business in China as a “Strategic Advisor” Missions of Contribute to Enhancing Samsung Group’s Image in China by Contributing to Chinese Society SERI China Globalize SERI
Current Status of SERI China
Classification Founding (2005-2006) Expansion/ Establishment (2007-2010)
Research Activities Research Activities - Research and operations independent from SERI - Build up collaborative research system with SERI headquarters headquarters in Seoul and expand support for the Samsung Group - Publish regular reports (weekly/monthly/quarterly) - Publish regular reports (weekly/monthly/quarterly/semi-annual and issue reports Outbound Activities - Pursue recommended projects, joint research and consulting projects - Network with opinion leaders in China Knowledge Management Research - Host seminars and - Open educational website tailored to Samsung China Group Activities employees (SERICEO China)
Outbound Activities - Initiate an advisory board and hold regular meetings in Beijing (eight members) and Shanghai (five members) - Hold essay contests for university students - Expand exchange with research institutes and universities in China
- Researchers (eight) - Researchers (14 within three teams) - Expatriates (two) - Knowledge management workforce (seven) Organization - Translation/administrative workforce (three) - Expatriates (three) - Total: 13 employees - Translation/administrative workforce (five) - Total: 29 employees SERI China Samsung Economic Research Institute 43
Performance of SERI China in 2010
01 Regular Reports
China Business Focus - Forty-seven editions published (94 separate reports)
SERIChina Review
Restructuring China’s Auto Industry Impact of the Launch of the International Board in the Stock
Reform of Chinese State-owned Companies and Guojin Mintui Market on Foreign Companies
Competition in and Prospects of China’s Internet Industry Apple’s Business Strategy and its Implications
Sponsorship Strategy of China’s Sportswear Industry Analysis of China’s Shanzhai Electronic Products
China’s Top Ten Promising Technologies in 2010 China’s Energy Crisis and Development of Alternative Energies
Global Management of Telecommunication Companies in China’s Carbon Trade Market
China China’s High Speed Railway System
Loan Crisis of China’s Small and Medium Enterprises Tencent’s Competitiveness and Mobile Internet Strategy
Entry of Multinational Companies into the Western Region Three-Network Convergence, the Present and Future
China’s Auto Insurance Industry: Mounting Deficits and Challenges of China’s Manufacturing Industry
Countermeasures Market Opportunities and Prospects for the App Store
Development Strategy of China’s ERP Companies Growth and Prospects of Online Group Buying
3G Strategy of China’s Mobile Phone Manufacturers Traditional Culture and China’s Family Businesses
China’s Economic Policy in the Second Half Upgrade and Strategic Shift of the Home Appliance Industry
Ping An Insurance Leads Financial Conglomerates
Issue Reports
Rapidly Growing New Energy Industry Opportunities and Challenges of Smartphone Manufacturers
Foreign Investments of Chinese Companies Consumption Patterns of Ba Ling Hou (Chinese people born in
Development and Prospects of Guojin Mintui the 1980s)
Promotion of Foreign and Domestic Demand to Bolster Exports The Impact of China-ASEAN FTA on the Regional Economy Brand Strategy of Home Appliance Manufacturers after M&As Formation and Expansion of Bank Risks State-owned Companies and Market Integration Market Mechanism for Low Carbon Economy
Economic/Industrial Trends Reports
Economic Trends in the Second Half 2010 and Outlook
Economic Outlook for 2011
Industry Outlook 44 Samsung Economic Research Institute
02 Consulting Projects
Current Status and Prospects of the Solar Industry Opportunities and Threats of Doing Business in China
The Digital Media Industry “12-5” Industry Policy
Economic Statistics and Environment of Major Cities Estimated Demand and Prospects for PTA Market
Cross-strait Cooperation in Each Industry Current Status and Prospects of the LED Market
03 SERICEO China Service
This service provides information in video-clip format on the economy, management, industry and culture to approximately 13,000 business executives/staff employed in Samsung Group China
Launched in October 2007
Produces 13 new items every week on topics including management strategy, marketing, leadership, industry outlook, persuasive psychology, business Korean, consumption trends and innovation
04 Outbound Activities
Operation of the SERI China Advisory Board
Comprised of 13 advisory members, including deans of prominent Chinese universities, presidents of state-owned research institutes and media figures (eight from Beijing and five from Shanghai), to discuss issues in Chinese politics, economy and society in quarterly meetings
Contribution to Korean and Chinese Media
Interviews and columns to Korean broadcasting companies and major newspapers
Research reports to journals and websites in China - About 130 reports to about 50 magazines including China Entrepreneur and China Economic Net
Blog activity and web links on major Chinese websites publicizing SERIChina.org - Around 500,000 visit SERI China blogs annually at Sina, 163.com and Sohu. - Web link to SERIChina.org at 24 websites in China including Sina Management/China Economic Net, Foreign Investment Web and China HRD Management SERI Quarterly Samsung Economic Research Institute 45
SERI Quarterly In January 2008, Samsung Economic Research Institute launched an English journal, SERI Quarterly, to elevate its international profile. Published in January, April, July and October, this collection of insights and research from SERI and outside experts provides expertise on the global and Korean economies, industries, policies, corporations and businesses to a worldwide audience. SERI hopes the publication will establish a research network for experts on Korea and East Asia. SERI Quarterly is continuously gaining recognition as an influential business journal and becoming popular among CEOs.
SERI Quarterly’s readership includes CEOs of major companies; leading financial institutions; business schools; economic/management research institutes, embassies within Korea; Southeast Asian, European and North American corporations; MBA students; companies and business leaders who have a keen interest in the Korean economy and its businesses; overseas brands operating in Korea; consulting firms; and government officials involved in economic policy making. Most of the subscription demand is from overseas.
Outbound of SERI’s Research Results SERI Quarterly
Main Features - Features essential information for global CEOs regarding Korea - Specialized in analysis of Korea and East Asia - Number of issuances: four times per year - Number of subscribers: approx. 80,000 worldwide
Editorial Standards Ability to: - Prompt follow-up research - Stimulate entrepreneurship that turns crisis into opportunity - Suggest differentiated ideas that challenge existing research 46 Samsung Economic Research Institute EUEU Brief Brief
EU Brief Samsung Economic Research Institute runs the Yonsei-SERI EU Centre in strategic partnership with Yonsei University. The Centre was established to raise awareness about the EU by promoting student exchanges between Korea and the EU and supporting education and research on the EU. It aims to serve as a hub for research, education and networking, targeting not only Korea but the wider Asian region. As part of this endeavor, the EU Centre publishes EU Brief, with the support of the European Commission.
First published in June 2009, EU Brief was released on a monthly basis through March 2010 and then became a bimonthly newsletter. As of December 15, 2010, there have been 14 editions in total. EU Brief covers the latest information on macroeconomics, politics, trade, industry, society/culture and legislation in the EU. Experts from the EU, including professors and SERI researchers, analyze major EU issues, select themes and contribute articles. The Yonsei-SERI EU Centre looks to build a research network with EU experts, leveraging EU Brief as a platform.
Outbound of Current News Related with European Union Bimonthly Newsletter EU Brief
Main Features - Specialized in analysis of EU-related issues - Features essential information for EU experts in Korea and other foreign countries - Number of issuances: Six times per year - Main readership: Europe-based Korean institutions and companies, Europe-related research institutes at home and abroad, the National Assembly, universities and media
Yonsei-SERI EU Centre www.yonseri.org Creative SolutionsSERI 2010 Frequent Financial Market Instability: Background and Solutions A Post-crisis Korean Economy Is the Global Financial Crisis Over? Escalating Global Currency Tension New Normal in the Global Economy Rising Consumer Markets in Emerging Economies and Response Strategies Social Media Popularity and New Communication Strategies Smartphone Shaping the Future China’s Green and Bio Industries and Korea’s Countermeasure China’s Emerging Global Companies 48 Samsung Economic Research Institute
Frequent Financial Market Instability: Background and Solutions
Creative Solutions 01
01_Background and Objectives
Korea has experienced frequent bouts of financial instability, considering its relatively large economic size (the world’s 15th largest economy in terms of GDP as of 2009). Good examples are the 1997 currency crisis, credit card crisis in 2003 and financial crisis rumors from 2008 to 2009. Such financial instability isn’t confined to the financial sector. It spills over into the real economy, causing a recession, deepening bipolarization and lowering the country’s sovereign credit rating. Thus, Korea’s efforts to achieve stable economic growth suffer setbacks.
This study attempted to measure Korea’s financial instability by using time series and comparative analyses and the effect of financial instability on the real economy. It used a complexity model to review the aforementioned periods of financial instability and identified the causes behind the recurring financial instabilities in Korea. Lastly, this study selected emerging countries that have a low level of financial instability to discover the reasons behind their crisis avoidance. Based on these analyses, the study offered suggestions on how to temper the market’s vulnerability.
02_ Key Findings
This paper applied Samsung Economic Research Institute’s Financial Stress Index Samsung Economic Research Institute 49
to measure the degree of Korea’s financial instability. In examining the main causalities of the 1997 and 2008 crises, the foreign exchange market was identified as the chief culprit in triggering volatility throughout the financial sector. Financial intermediary market and stock markets were secondary catalysts.
Compared to major countries, Korea’s financial intermediary market and foreign exchange market have been unstable since the 2008 global financial crisis, particularly the latter. In contrast, the nation’s stock markets have been relatively stable and rebounded strongly from their lowest levels of the crisis. In both the pre- and post-crisis periods the stock market has displayed an average level of instability compared to major countries.
SERI Financial Stress Index Comparative Analysis Pre- and
Post-crisis by Components Creative
(Dec. 1998=100) 100 Post-crisis 1997 Banking Pre-crisis Currency Crisis䛳 Global Sector Volitility 80 Financial
rssUsal Stable Unstable Crisis Crisis Exchange Market Funding (Nov. 1997-Jun. 1998, 8 months) Pressure Index Spread 60 (Oct. 2008-Jan. 2009, 4 months) Threshold for a Crisis 40 (Average + 1.5 x Standard deviation) Depreciation Stock IT Bubble Burst Rate of the Market Credit Card Debt Crisis Currency Value Volitility 20 Average Financial Stress Index
0 Foreign Exchange Stock '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 Rate Volatility Market Returns
Note: Crisis stage: SERI FSI Average SERI FSI of the Note: 1) Location near the external line means entire period + Standard deviation x 1.5 unstable. Stable stage: 0 SERI FSI < Average 2) Each category has sub-sectors, which delineate an
Unstable stage: Average SERI FSI of the entire period SERI interval of 20% of the total number of countries. Solutions FSI < Crisis
According to analysis of the effect of financial instability on the real economy, financial instability has a negative effect on both private consumption and investment. The foreign exchange market instability, in particular, has the biggest influence on private consumption and expenditure while financial intermediary market instability has the biggest effect on facilities investment. 50 Samsung Economic Research Institute
Effect of Financial Instability on Consumption and Investment (Unit: trill. won, %) Actual Decline in the 4Q 2008 Decline in Foreign Actual Decline in Financial (Quarter-on-Quarter) Exchange Market Intermediary Market Private Consumption 4.8 1.1 5.9 & Expenditure (81.2%) (19.5%) Facilities 1.9 3.0 3.3 Investment (57.2%) (90.4%)
Note: 1) Based on constant prices of 2005, actual decline by financial instability is a decline from the average from the 1Q 2005 to 4Q 2007. 2) The effect of financial instability should be measured separately. Otherwise a multi-collinear problem can occur. 3) Consumption and investment functions are a SERI macroeconomic model combined with financial debt and financial stress index. 4) Since financial instability affects other variables such as GDP and GNI, its effect was controlled.
Next, to analyze the reasons of recurring financial instability, the study reviewed the 1997 currency crisis, the 2003 credit card debt crisis and the 2008 global financial crisis. It also used complexity analysis method to complement shortcomings of factor analysis. The results showed that financial instability repeated due to structural factors such as the financial sector’s high external dependence, vulnerability of financial market structure, low competitiveness of financial firms and weak government supervision of financial risks. A lack of dynamic control on the nation’s financial system was also a cause. Consequently, the Korean economy had to deal with a new type of crisis because preventive measures implemented after previous crises were not able to handle new types of actions by various financial players.
Structural Factors by Complexity Analysis
Economic Linkages Financial Sector's Structural Vulnerability High External Exacerbating Crises of Financial Market Low Dependence System Competitiveness Level of Financial Firms Excessive Systemic Risks Poor Government Supervision of Financial Risk Decline in Self-control Individual Level Bounded-rational Behaviors 51 Creative Solutions Samsung Economic Research Institute Economic Research Samsung s s ’ ’ s level of financial ’ Major Policy Tasks Strengthen international coordination Supervise and regulate “hot money” Improve foreign exchange market Resolve capital market weaknesses Enhance financial firms’ Strengthen supervision and regulations Strengthen the role of foreign currency reserves in stabilizing the financial markets Establish a new early warning system Establish comprehensive financial policies and oversight inflows from abroad global competitiveness on foreign exchange soundness ˝ ˞ ˟ ˠ ˡ ˢ ˣ ˝ ˞ s case is worth noting because Korea s case is worth noting ’ Major Policy Directions High External Dependence Market Structure Competitiveness Exchange Soundness 1. Reduce Financial Sector’s 1. 2. Improve Vulnerable Financial 2. 3. Enhance Financial Firms’ 3. 4. Strengthen Foreign 4. Establish a Dynamic Control System s financial instability level and review of past and overseas financial s financial instability level and review ’ Improvements in Dynamic Control of the Financial System Improvements in Structural Aspect Policy Directions and Major Policy Tasks This paper performed a comprehensive examination of Korea 03_ Implications instability and offered solutions. It provided an in-depth analysis of Korea instability and offered Also, a comparative analysis was made on Chile, Taiwan and the Philippines, which and Taiwan was made on Chile, analysis Also, a comparative to the shocks from the Korean economy but remained resilient were similar to the countries had a sounder The analysis found that all three global financial crisis. Chile had a More specifically, regime compared to that of Korea. foreign exchange and the markets while Taiwan and competitive financial good market infrastructure the degree of financial financial stability by restricting Philippines maintained liberalization. Chile market opening and financial markets are open and liberalized like the Latin American country. American country. are open and liberalized like the Latin financial markets measures to secure financial stability based on diagnosis the study proposed Lastly, of Korea directions and nine policy tasks. instability cases. It suggested four policy 52 Samsung Economic Research Institute
financial instability, its effect on the real economy, an international comparative comparison, analysis of past domestic and overseas cases and concrete policy suggestions.
More specifically, SERI Financial Stress Index, a measure to gauge Korea’s financial instability, was constructed to analyze the effect of financial instability on the real economy. In addition, it differs from existing studies as it presented structural and dynamic factors behind recurring financial instability and provided concrete policy suggestions about how to maintain Korea’s financial stability. Samsung Economic Research Institute 53
A Post-crisis Korean Economy
Creative Solutions 02
01_ Background and Objectives
The shock of the global financial crisis has sent Korea’s economic growth reeling to below the long-term trend line and sparked a high level of economic volatility. From Creative the fourth quarter of 2007 to the first quarter of 2009, volatility in Korea’s economic growth was the ninth highest among the 33 OECD member nations and the lack of foreign exchange liquidity unsettled the financial market with fluctuating stock prices and foreign exchange rates. Future market conditions seem unfavorable to the Korean economy as well. Over the next 10 years, global imbalances that accumulated during the pre-crisis period will be adjusted and fiscal and monetary policies will normalize to roll back unconventional measures taken during the financial crisis. Rebalancing the global economy will likely entail fierce competition and conflicts of interest among nations, entrenching the global trend of slow growth. Once slow growth takes root, Korea’s sociopolitical conflict over
limited economic share is expected to heighten. Solutions
This paper explored ways to prevent a repeated economic crisis, discover sector tasks that would help the Korean economy maintain sustainable growth amid internal and external changes and deduce desirable policy options. To that end, this paper diagnosed the post-crisis landscape facing the Korean economy according to each sector (macroeconomic, industry, employment, financial market and social integration) and contemplates the desirable future directions for the Korean economy. 54 Samsung Economic Research Institute
Challenges Facing the Korean Economy and Tasks for the Coming Decade
02_Key Findings
In the face of deteriorating external environments and festering internal conflict, the Korean economy has to preempt another crisis and bring GDP growth back to pre- crisis levels. To that end, a stable growth strategy, aimed at boosting potential growth rates and reducing GDP volatility, is needed. In other words, emphasis should be placed on stability, which includes a reduction in GDP volatility, and an increase in potential growth rate. Samsung Economic Research Institute 55
Sector tasks to achieve stable growth are as follows:
˝ To weather expected low growth of the global economy, an equal amount of emphasis should be placed on both exports and domestic demand expansion. Boosting domestic demand is an effective option when export-driven growth is hard to sustain and is a powerful tool to absorb external shocks. Revitalizing domestic demand necessitates an increase in private spending by stabilizing expected household income. Weak consumption is mainly caused by instability in expected household income. Thus, if instability is taken down to 30%, private consumption as a share of GDP is estimated to rise from 53% as of 2009 to 58%.
˞ As for industry, Korea needs to shift away from the current lopsided structure, which favors only a few selected industries and a subset of export markets to an Creative advanced industrial structure through a multi-dimensional strategy. To complement the double-headed structure, namely the IT and traditional flagship industries, export strategies in tandem with global demand should be drawn up for non-flagship industries. And synergy between upstream and downstream businesses should be enhanced by connecting traditional flagship industries to the service industry. In addition, while dependence on certain export markets, especially China, should be scaled back, cross-border demand groups should be developed to minimize the potential risks that can arise from high dependence on certain export markets.
˟ In terms of employment, a Korean-style, flexible and stable employment system
should be urgently adopted to address three structural problems -- low employment, Solutions a dual structure (a stark difference in employment environments based on company size and form of employment) and restructuring of self-employment. The job market for youths and females has continued to be sluggish since the global financial crisis began and the dual structure of the labor market has deepened. Also, the continued restructuring of the self-employment sector has resulted in the biggest decline in the share of the self-employed among the OECD member nations. Therefore, flexible wages and working hours, customized employment safety nets, reinforced on-the-job training and educational innovations should be realized to 56 Samsung Economic Research Institute
bring flexibility to the labor market and achieve employment stability.
ˠ For the financial sector, a stable, growth-oriented financial system should be established to prevent future financial crises and ramp up support for the real economy. Korea has seen repeated financial crises due to its expansion of market opening, deepening dependence on overseas markets, vulnerability in the financial market and poor risk management. Thus, increasing macroeconomic soundness and enlarging the foreign exchange and capital markets should be pursued in the mid- to long-term for the sake of stability. Meanwhile, large financial institutions, specializing in corporate finance, should be nurtured by taking advantage of existing government-run banks, and ways to turn short-term floating money into industrial capital should also be considered.
ˡ Lastly, social integration should be taken to a new level. Conflict-torn societies undermine stable growth. The results of an empirical analysis showed that the more conflictive a society becomes the more GDP per capita decreases with increased GDP volatility. Although Korea’s income polarization, which has been deteriorating at the fastest clip among the OECD nations, continues to fuel conflict, Korea’s ability to address conflict is far from desirable. Therefore, to achieve stable growth, trust building, improving the government’s handling of conflict, reinforcing support for the unemployed and nurturing the middle class should be pursued to boost social integration.
03_Implications
In anticipation of possible changes in the Korean and global economies over the next decade, this paper stressed the importance of the Korean economy’s transition to a stable growth regime. In addition, this paper sets out stable growth strategies for each sector (macro-economy, industry, employment, financial market and social integration) to help Korea brace for the next decade. As the global economy is expected to shift to a low growth mode owing to the Samsung Economic Research Institute 57
cascading effects of the global financial crisis, the role of the economic growth engine played by exports seems unsustainable. Furthermore, maintaining the existing industrial structure could dent the status of Korean industries in the global economy. If the current economic system continues to be pursued and no efforts are made for stable growth, the future outlook for the Korean economy would be, to say the least, gloomy. Drastic changes are needed to obtain both stability and growth. And efforts for social integration should be made to minimize conflict-causing factors that can arise when changing the existing system.
Sector Changes over the Next Decade
Changes (past two decades ª the next decade) High economic growth and growth in trade Macroeconomy ª Low growth and deterioration in export environments Cooperative labor division among Korea, Japan and China
Industry Creative ª Threats from China and efforts to counterbalance Japan Relatively sound job creation Employment ª Weakened job creation following low economic growth Excess liquidity, Establishment of a dollar recycling system Financial Market ª Expansion of excess liquidity and sudden capital in- and outflows Easing of internal conflict with the expansion of the economic pie through exports Social Integration ª Growing importance of domestic adjustments such as FTAs and industrial restructuring Solutions 58 Samsung Economic Research Institute
Is the Global Financial Crisis Over?
Creative Solutions 03
01_ Background and Objectives
It has been two years since the global financial crisis erupted. On the surface, the worst part of the crisis has ended with the global economy starting to regain positive growth momentum thanks to coordinated financial policies. However, the GDP levels and trade volume of developed nations remain below pre-crisis levels, sustaining concerns about the global economy. In addition, currency disputes have intensified, undermining international cooperation seen after the crisis erupted. This paper attempted to determine whether the financial crisis is truly over, whether the global economy is on the right track to recovery and what challenges await.
02_ Key Findings
To confirm whether the crisis has ended, we measured the degree of normalization in the sectors that triggered the global financial crisis. Since the global financial crisis was caused by financial deterioration and deleveraging by households and companies on the heels of the US subprime mortgage meltdown, which was triggered by global imbalances and excessive investment in risky assets, the paper examined the US property market, balances sheets of households, and corporate investment and financial institutions’ health. The results were as follows:
First, the epicenter of the crisis, the US housing market, remains in the doldrums 59 Creative Solutions Samsung Economic Research Institute Economic Research Samsung s ’ with prices below average levels seen during most of the 2000s. The government most of the 2000s. levels seen during below average with prices rates have stimulated sales in homebuyers and ultra-low interest provided support to the housing market. With enough overall to lift the national some areas, but not unemployment around 9%, assistance and persistent expiration of government A full recovery in the US sales will be under prolonged pressure. housing prices and far off. housing market seems in spending to cut their debt in advanced economies have reined Second, households their debt remains 20 to 40% higher than their pre- load by 5 to 10%. However, is required. That will be challenging, housing bubble levels, so further deleveraging hampering the US and European economies. considering the high unemployment facility investment is unlikely until a Third, a full-blown recovery in corporate Although corporate earnings have improved, recovery in demand becomes visible. uncertainties over the future continuing With there is substantial overcapacity. preferred to hold liquid assets rather than make economic situation, companies have long-term investments. and EU financial institutions, according to our Fourth, financial soundness of US of government bailout funds and write-offs research, has not recovered despite the share of distressed bonds increased and distressed bonds worth US$2 trillion: toughened financial regulations are loan-loss provisions declined. Furthermore, likely to prolong a credit crunch faced by financial institutions. of each government Next, the study looked at whether a variety of fallout effects risk management policies (e.g., fiscal deterioration & inflation risk) were resolved. risk management policies (e.g., fiscal deterioration & inflation risk) were improve fiscal Fist, developed nations are carrying huge sovereign debt. To since situations, governments have to either raise taxes or cut spending. However, not easy to such measures can be unpopular and stunt economic growth, it is in view of the huge sovereign debt of developed implement them. Moreover, fiscal countries, consumption and investment will likely be depressed before soundness is achieved. 60 Samsung Economic Research Institute
Second, zero interest rates and quantitative easing policy can drive up inflationary pressures and create property bubbles. At the moment, inflationary pressures are not palpable. But if excess liquidity is left unattended for long, inflation and asset bubbles may come to a head. Yet the economic outlook is so opaque that countries have delayed retrieving their liquidity. What is worrisome is that corporate investment may be hurt by limited credit lines that occur as liquidity is withdrawn.
03_ Implications
It will take at least one to three years to see robust recoveries in the US and Europeans housing markets, corporate investment and marked improvement in the financial health of households and most financial institutions. In addition, the negative effects of emergency measures to weather the crisis, including a large sovereign debt and inflation will take at least three years to dissipate enough to alleviate deep concerns. In this sense, the global financial crisis is not over but ongoing. As many years will be required for the global economy to return to normal, the global economy is expected to slow down in 2011. To make matters worse, weakened international collaboration, evidenced by currency rows, slam the brakes on a global economic recovery.
What about the Korean economy? The Korean economy has rebounded, buoyed by government stimulus, but it is too early to declare a full recovery. Weakening international cooperation and the global economic slowdown can crimp exports. Moreover, the Korean government cannot sustain its economic stimulus packages for much longer because of fiscal deterioration. And, a recovery in the private consumption and corporate investment remains sluggish. Therefore, the government needs to review its economic strategies in line with such risk factors both at home and overseas.
The speed of normalizing interest rates and obtaining fiscal soundness should be appropriately controlled. In the mid and long term, structural vulnerability of the 61 Creative Solutions Samsung Economic Research Institute Economic Research Samsung ¦ ¦ ¦ ¦ at least three years before A delayed recovery dampened consumption A delayed recovery dampened back an Weakened income bases hold soundness and improvement in financial an continued deleveraging delay economic recovery investment A stalled recovery in facilities due to overcapacity and uncertainties will take some Normalization of credit supply distressed bonds time due to high volume of and reinforced financial regulations Achieving fiscal soundness will take a long time because of fears over a double dip Slow economic recovery will spur expansion of liquidity for the time being two to three years before normalization, ¦ Current Situation Outlook Overall Evaluation In the doldrums Improving but still below pre-crisis levels Switching to positive growth, but sluggish in absolute terms Financial soundness improved / Asset quality is still in poor shape Fiscal deterioration is serious Excess liquidity normalization in 2011, : Overall Assessment of the Global Financial Crisis of the Global Overall Assessment US Housing Market Household Financial Health Corporate Investment Financial Institutions’ Financial Health Advanced Countries’ Fiscal Situation Global Liquidity normalization Note Korean economy that is sensitive to external shocks also should be addressed by Korean economy that is sensitive to companies have to explore new export markets propping up domestic demand. And, steel themselves against an unfavorable trade and develop new technologies to the leadership displayed at the G20 Seoul environment. At the same time, utilizing coordination, Korea should focus on Summit to achieve new forms of international sustainable growth. steering the global economy towards 62 Samsung Economic Research Institute
Escalating Global Currency Tension
Creative Solutions 04
01_ Background and Objectives
Global tension over currency values intensified in 2010. The US imposed anti- dumping duties on Chinese products to pressure China to appreciate the yuan. The US House of Representatives also passed legislation for economic sanctions to be imposed on China and other countries if they are found to be manipulating their currencies. Although the Senate did not take up the House measure, the bill further inflamed tensions with Beijing, which had earlier imposed anti-dumping tariffs on US goods. The currency dispute spread to Japan and emerging-market economies like Thailand and Brazil with these countries intervening in their currency markets to strengthen their export competitiveness.
The global currency row spilled over into global trade conflicts and fueled volatility in foreign exchange markets, threatening the recovery of the global economy. This paper analyzed the background of the global currency tension and its future development. The impact of currency tension on the Korean economy was also examined and responses were suggested.
02_ Key Findings
Four factors sparked the global currency tension. First, countries competed to have their exports more attractive as a means to boost their economy. Stimulus measures 63 Creative Solutions Samsung Economic Research Institute Economic Research Samsung Induce depreciation of currency and slow appreciation - Cause of global imbalance: US overspending - Stresses independence of currency policy - Maintain weak yuan - Impose anti-dumping tariffs on US products - Criticize quantitative easing of industrialized countries - Restrict capital transactions - Intervene in currency market - Concerns over excess financial market volatility Rising importance of exports Economic slowdown + Exhaustion of stimulus measures - Judge yen appreciation as abnormal - Demand appreciation of yuan legislation that impose economic sanctions - Pass on currency-manipulating countries - Quantitative easing - Intervene in currency market - Benchmark rate cut and quantitative easing manipulators as currency - Criticize China and Korea - Cause of global imbalance: Depreciation of yuan - US midterm elections - Boost domestic demand Background of Global Currency Tension and monetary expansion implemented to weather the global financial crisis have the global to weather expansion implemented and monetary and options. Thus, they relied more been exhausted so nations had fewer largely achieve sustained growth. more on exports to means to boost exports. foreign exchange rates is an effective Second, adjusting prohibits member nations from imposing Organization Trade Since the World in the interest of countries to duties, a devalued currency was unilateral protective competitive in foreign markets. make their goods price a divisive debate about imbalances in the global Third, the US and China engaged in China on a devalued The US blamed its current account deficit with economy. notion that its currency is the root of global Chinese yuan but China rejected the of US consumers and the government. imbalance. Rather it blamed the profligacy stoked the flames. Ahead of the interim political and economic situations Finally, visible measures for US politicians needed to come up with elections in November, authorities were in no hurry to see the yuan job creation. On the other hand, Chinese 64 Samsung Economic Research Institute
appreciate quickly. A much stronger yuan would weigh down China’s economic growth due to its high dependence on exports and the significant role foreign- invested companies play in the economy. Political considerations also contributed to resistance to US demand for yuan appreciation.
This paper predicted that tension over currency values that was developing around September 2010 would deepen for the time being. In fact, the pressure on China to allow a flexible yuan increased after the US House of Representatives passed its bill on imposing punitive tariffs on nations that are deemed to be currency manipulators. The US government also sought discussion on currency adjustment at the G20 Seoul Summit in November and the International Monetary Fund and Brazil broached the same discussion. In contrast, China insisted that fast, significant yuan appreciation is impossible and accused the US of politicizing the value of the yuan.
The paper concluded that the currency fight would stop well short of turning into a full-blown currency war because, above all, the US and China would not want the acrimony to get out of control. The currency debate was viewed as part of the pre- election rhetoric in the US and the two countries’ strategic desire to secure strong economic positions. The US is concerned about China unloading its massive cache of US Treasury bonds, and Chinese authorities have to be cautious about being so inflexible that it would threaten China’s exports to the US market.
The paper predicted a compromise such as a tacit agreement between the US and China or international coordination instead of trade protectionism or China being named a currency manipulator. It also predicted that any international cooperation would be similar to the G7 agreement in Dubai in 20031 that led to slight depreciation of dollar, rather than the Plaza Accord of 1995,2 which plunged the greenback’s value. This is because the current situation is more similar to that in 2003 and US-China relations are much more strained today than in 1985.
The currency exchange mechanism for the Chinese yuan is a semi-fixed rate and the yuan is not fully convertible, making it difficult for countries besides China to 65 Creative Solutions Samsung Economic Research Institute Economic Research Samsung Sept. 1987 ª Yes 143.0 (65.7%) 1.81 (57.0%) 806 (10.6%) 3.72 (-20.4%) Japan/Germany) Measures Japan/ Germany: ª ª ª ª Cooperation US$600 billion ® s underlying economic ® ’ (Appreciation Rate) 892 Fiscal and Monetary 2.84 2.96 1979 Second Oil Shock US (US 237.0 Favorable Conditions for Sept. 1985 Sept. 2005 ª Yes 111.0 (3.5%) 1.23 (9.2%) 8.09 (2.3%) Japan/EU: 1,030 (13.1%) China/Japan) China: Conflict currencies had floating foreign ª ª ª ® ª ® Cooperation/ Lack of Fiscal ’ US$1.9 trillion ® US (Appreciation Rate) 1.12 8.28 (US US and Monetary Options 114.9 1,164 Sept. 2003 2001 IT Bubble Implosion Oct. ª China) Yes 81.9 (4.3%) 1.39 (7.5%) 6.67 (1.8%) 1,112 (5.2%) Crisis ® China: Conflict ª ª ª ª (US US$4.0 trillion ® Aug. 2010 (Appreciation Rate) 1.29 6.79 85.5 Exhaustion of Fiscal US 2008 Global Financial 1,180 and Monetary Measures 2 1 3 Country Currency Imbalance Yen/Dollar Won/Dollar Yuan/Dollar Dollar/Euro Dynamics of Crisis Eruption Size of Foreign Global Economy Global Economic Exchange Market Economy Boosting Capabilities of Each Appreciation Period Classification 2010 2003 Dubai G7 Agreement 1985 Plaza Accord : of foreign exchange market refers to daily average amount of global foreign exchange market transactions Size 1. The agreement advocated a greater flexibility in foreign exchange rates, which reflects each country On September 22, 1985, financial ministers of G5 (US, West Germany, Japan, France and UK) met at the Plaza Hotel in New On September 22, 1985, financial ministers of G5 (US, West Germany, Japan, France and UK) met at the Plaza Changes in Exchange Rates Differences Common Factors Situations 2010, 2003 Dubai G7 Agreement and 1985 Plaza Accord Situations 2010, 2003 Dubai Note 2. Appreciation versus US dollar. 3. German Mark/US dollar for 1985 Plaza Accord. York and agreed to intervene in the foreign exchange markets to drive down the value of the US dollar. Under the accord, the York and agreed to intervene in the foreign exchange markets to drive down the value of the US dollar. Under US agreed to strengthen fiscal soundness, while Japan and Germany agreed to implement specific stimulus measures. 1 2 similar to the 1985 Plaza Accord when the cooperation between US, Japan and similar to the 1985 Plaza Accord when the cooperation between US, These countries Germany was relatively easy. currencies. exchange rates, making it relatively easy to coordinate in adjusting while fiscal and Foreign exchange transaction volume was also lower than now, monetary measures were options to boost the economy. induce yuan appreciation through currency markets. In addition, it is not easy for it is not easy markets. In addition, through currency appreciation induce yuan due to the massive volume their currencies through intervention countries to weaken economies like emerging exchange transactions. Finally, of worldwide currency on a massive scale due to their high to adjust their currencies China find it difficult likely is an agreement to drive economic growth.Less dependence on exports fundamentals. 66 Samsung Economic Research Institute
03_ Implications
This paper analyzed the causes of global currency tension on economic, political and international considerations, and forecast the future development of the conflict in comparison with the 2003 Dubai G7 Agreement and 1985 Plaza Accord. The situation four months after the paper was released was similar to what was predicted. No currency war erupted and the US and China moderated their verbal jousting.
This study implied that Korea needs to craft responsive measures to a possible economic slowdown and financial market volatility. Appreciation of the Korean won and global trade conflict will adversely affect the export-dependent Korean economy. Inflow of foreign investments taking advantage of exchange gains and an eventual outflow may raise volatility in Korean financial markets. Financial authorities need to stabilize foreign exchange markets and take preemptive measures to handle trade conflicts, which have heightened in risk. Also crucial is management of short-term capital flow and strengthening foreign exchange soundness to prevent market volatility. 67 Creative Solutions Samsung Economic Research Institute Economic Research Samsung 05 Solutions Creative which characterizes the post- ” New Normal, “ of the pre-crisis global economy was characterized by high of the pre-crisis global economy was ” Old Normal, “ 01_ Background and Objectives and Objectives 01_ Background of the recession, which was triggered by the The world economy has put the worst has been slow and however, pace of recovery, global financial crisis, behind. The the global economy may undergo uncertainties remain high. In addition, longstanding imbalances that contributed fundamental changes as it addresses significantly to the crisis. As such, the New Normal Normal New Economy in the Global crisis global economy, is receiving broad attention. is crisis global economy, The and deregulation based on trust in the market. growth rates among real economies in risk-taking investment led to asset bubbles, The downside was that an increase widening global imbalances. As the financial which fuelled excessive spending and as crisis recedes, the Old Normal will likely be viewed with greater skepticism market participants discard past practices and look for new order. how the This report asked the question: What will be the New Normal? It examined attempt to New Normal would change global economic trends and conditions in an as assist economic players, including governments, corporations and individuals, they decide strategies to respond to the altered world economic system. 68 Samsung Economic Research Institute
02_Key Findings
In this report, it is assumed that the formation of the “New Normal” would occur on three planes: 1) a dilution of greed and excessive consumption, owing to lessons learned from the financial crisis; 2) a shift in power as the US-led unipolar international system breaks down and the international currency system changes; and 3) a more visible government presence due to private sector growth constraints and diminished trust in the markets’ self-regulatory discipline.
1. Low Growth Era In escaping from the crisis, the global economy will slip into a low growth phase due to side effects from crisis response measures. The main culprits behind the low growth will be sluggish consumption and investment. Households that previously increased consumption while mounting more debt will deleverage for some time, meaning they will increase their savings as they repay their debt. Adding to that, sluggish employment and a tepid housing market will constrain spending. An immediate recovery is also unlikely in facilities investment as it is expected to take a while to resolve the issue of excess facilities due to lackluster demand. The low growth is also attributable to an aggravated fiscal position and trade conflicts in the aftermath of the crisis.
2. New Financial Regulations and Deleveraging The focus of the financial regulatory reform is to improve the micro-economic soundness of financial institutions and the macro-economic stability of financial systems by initiating stricter regulations and monitoring for equity capital. To that end, tighter regulations will be applied to banks equity capital and excessive risky investment will be avoided, while the monitoring of large financial institutions is strengthened. All these measures will lead to deleveraging and a reduction in risky investment by financial institutions with distressed financial soundness. This, in turn, is anticipated to put a damper on the growth of the financial sector. 69 Creative Solutions Samsung Economic Research Institute Economic Research Samsung have m the euro, yuan, and special drawing rights (SDR) m spending. At the same time, consumers are demanding that spending. At the same time, consumers ” good “ and ” moderate There are calls for a new reserve currency and efforts are being made including There are calls for a new reserve currency and efforts However, launching regional currencies in an attempt to reduce dollar dependency. alternatives to the dollar 5. Weakening Dollar’s Reserve Status 4. Multi-polar World Order will move away from the current uni-polar In terms of global governance, the world go through a transitional period where both a system with the US at the center and coexists, finally reaching a bi-polar system bi-polar system and multi-polar system Strategic and Economic Dialogue, which led by the US and China. The US-China the possibility of a bi-polar system. However, took place in July 2009, first declared system during the transitional period the coexistence of a bi-polar and multi-polar will be able to serve as the leading dialogue will depend on whether the G20 the global community will instrument. As a multiple world order emerges, experience both cooperation and conflict. This is because although international due to cooperation is crucial in a multi-polar system, conflicts are inevitable the G2 and contradicting interests. In sum, the future global order will be unstable as G20 nations go back and forth from conflict to cooperation. corporations fulfill their social responsibilities. To meet the demand, companies will meet the demand, companies To corporations fulfill their social responsibilities. investment opportunities in the fields of green pay more attention to creating new emissions. business, environment and low carbon 3. Low-carbon Economy and Green Life Economy and 3. Low-carbon the international community of the growth-oriented paradigm, the limitations With growth. Regarding devise a plan for sustainable economic is now trying to around the world are making a nations in particular, greenhouse gas emissions, regulations. emissions and establish stricter environmental to cut concerted effort phase of the Kyoto Protocol system, after 2012 when the first Under the post-Kyoto on emissions. are to reduce and put a stricter cap ends, more countries by has been replaced over-consumption On the consumer front, mass- and “ 70 Samsung Economic Research Institute
limits in terms of liquidity, economic size and financial market, therefore, the dollar is forecast to remain as the reserve currency for the time being. But the dollar is expected to lose value due to the large twin deficits and sluggish economy. With a weak dollar, global capital is likely to shift from the US to emerging economies like China, and from dollar denominated assets to gold and the commodity market. In the process, a risk of bubbles forming in the emerging markets or commodity market may arise. And as various currencies are used for transaction and multiple regional currencies are adopted, financial indicators such as currency exchange rates may fluctuate within a wide range and regional protectionism could surface.
6. Commodity Wars In the aftermath of the financial crisis, demand for oil in advanced economies has been on the decline, but has risen in non-OECD member countries. The surging demand is especially noticeable in China and India, where it is likely to shoot up further over the next decade on strong economic growth and rising population and income. Therefore, a fierce commodity war is in sight as emerging economies struggle to get their hands on raw materials to keep up with the demand. With its US$2 trillion foreign currency reserve and cash-rich state-owned companies, China has invested US$21 billion in developing overseas resources. As for India, it is targeting Africa, which has abundant resources that have yet to be developed. The fiercer the competition becomes, the more influence resource-rich nations are going to wield.
7. Keynesians Comeback Major economies view the role of the government as essential for an economic recovery and sustainable growth because households and the financial industry, which were once the main growth engines, are now unable to fulfill the role. The fall of the two driving forces has given rise to the Keynesian economics, which emphasizes fiscal expansion to compensate for the shrinking private sector. Government intervention for economic growth will also likely gain more importance. Such phenomena is already evident with the US President Barack Obama setting a goal to double the nation’s exports within five years and strongly 71 Creative Solutions Samsung Economic Research Institute Economic Research Samsung s heavy external dependence, the rise of emerging economies, stricter rise of emerging s heavy external dependence, the ’ financial regulations and green growth provide growth opportunities as did the IT financial regulations and green growth capture these opportunities, blueprints should be drawn up to boom in the past. To bring about stable economic growth where the prepare for external shocks and to are in balance. In addition, Korea needs to turn financial sector and the real economy economy into opportunities which the nation the changing landscape of the global in areas where it has remained an underdog can use to improve its competitive edge its global status. such as the financial sector and raise 03_ Implications of the Old Normal no New Normal signals that the mindset The coming of the become necessary to brace for threats and longer holds true. Therefore, it has Normal. Whereas low growth, commodity opportunities that come with the New growth of the Korean economy due to the wars and trade conflicts hamper the nation demanding China to appreciate its currency to make this possible. And the Chinese to make this possible. its currency China to appreciate demanding to dole out is continuing attempt to boost the domestic economy, government, in an purchases. for home appliances and automobile subsidies and cut taxes 72 Samsung Economic Research Institute
Rising Consumer Markets in Emerging Economies and Response Strategies
Creative Solutions 06
01_Background and Objectives
The global financial crisis has precipitated a fundamental change in the world economic landscape. For advanced economies, which had long spearheaded the global economy, the crisis cost them economic and political status and prestige. At the same time, as the US, Japan and western European countries struggled to regain their footing, emerging economies pushed ahead, coalescing into a new economic force.
As the global economic landscape shifts, emerging economies deserve greater scrutiny and analysis. Before the crisis, these economies served primarily as factories and mines to the world, offering abundant, cheap labor and natural resources. In the wake of the financial crisis, however, their burgeoning middle class populations have become the focal point of global companies on an even greater scale. Luxury makers, for example, have streamed into the Chinese market to compensate for their diminishing earnings in Europe and North America after the crisis. It is not just luxury brands that have flocked to the trough. China has already become the world’s largest market for automobiles and TVs, while sales of IT products have recently soared. At the Apple store in Shanghai, you can see the catchphrase “Chinese customers are always right” and employees wear T-shirts that say “Made in California & Made for China” in Chinese. It has become impossible even for IT giants like Apple to survive without emerging markets like China. 73 Creative Solutions Samsung Economic Research Institute Economic Research Samsung s ’ which is rapidly becoming a m s export items to the markets were introduced, along s export items to and other nations. ’ m s traditional export items. Mainline export items for Korea like mobile s traditional export items. Mainline ’ 02_ Key Findings 02_ Key markets for Korea (KEM 30) were selected as consumer begin, 30 key emerging To to. The KEM 30 consists of 30 promising markets that Korea needs to pay attention designated by the International countries markets among the 149 emerging costs compared to their potential as an export Monetary Fund that have lower entry South Africa market. The KEM 30 includes BRICs, This study examined the implications emerging consumer markets have for the markets have consumer implications emerging examined the This study part of the report, promising and Korean companies. In the latter Korean economy and Korea markets emerging with market strategies that fit each of these markets. with market strategies force in the global economy size + growth rate) of 260 trade items was Next, the market attractiveness (market Comtrade. As a result, 50 promising items to analyzed by factoring in data from UN medicines, These items included fertilizer, sell in the KEM 30 market were chosen. construction, all of which are not among and equipment for civil engineering Korea were also selected. Clothing, beverages, phones, automobiles, and semiconductors despite their relatively smaller markets motorcycles and tires were also nominated (US$1 billion to US$10 billion), since the markets have strong growth rates. the characteristics of the KEM 30 market were studied based on data from Lastly, The KEM 30 are home to 4.5 billion people, or 65.9% of the world Euromonitor. 51% of the population is in the under 20 age these countries, total population. Within the fact that many of the KEM 30 nations apart from the BRICs bracket. However, makes it have unstable sociopolitical conditions and relatively small markets challenge, emerging meet this for companies to enter these markets. To difficult economies are grouped as follows to grow their market size. 74 Samsung Economic Research Institute
The KEM 30 nations were divided into four groups based on their income and population
Six groups were identified based on similarities in their consumption spending structure
Five trans-national consumer groups with similar cultural characteristics were identified
Grouping the KEM 30: Identifying Large Consumer Groups
Criteria Groups Countries
˝ Russia, Mexico, Brazil, Iran, Turkey Four groups ˞ 10 nations including China, India and Indonesia based on 30 countries ˟ 10 nations including the UAE, Poland and Lebanon income/population ˠ South Africa, Ukraine, Iraq, Morocco, Uzbekistan
National ˝ Morocco Group: Groups Pakistan, Nigeria, Egypt, South Africa, Morocco Six groups ˞ Romania Group: based on similarities Indonesia, Poland, Kazakhstan, Hungary, Romania 18 countries of consumption ˟ Vietnam Group: Thailand, Vietnam spending structure ˠ Mexico Group: Argentina, Mexico ˡ Turkey Group: Malaysia, Turkey ˢ Ukraine Group: Saudi Arabia, Ukraine
Five groups ˝ The rich ˞ Teenagers ˟ Muslims Trans-national based on cultural ˠ Upper middle class ˡ People in their 20s 30 countries Groups characteristics
03_ Implications
This study was notable in that promising emerging markets and export items were identified and micro analysis was conducted on the features of consumer markets, which led to identifying effective strategies. The study was also distinct from other studies in that it discovered emerging markets and export items that fit the Korean economy and analyzed the characteristics of each emerging market in detail, which has rarely been done in other studies. The implications this study have for Korean companies and policy regulators are as follows:
First, in-depth comprehension of emerging markets is required. Before advancing 75 Creative Solutions Samsung Economic Research Institute Economic Research Samsung into emerging markets, efforts should be made to fully understand not just their to fully understand should be made efforts markets, into emerging philosophical background. structure, and culture, social but their history, economy, that cater to local customers provide products and services It is impossible to aforementioned factors. without knowing these Nations and companies must have distinctive features. Second, Korean products markets into emerging are looking to move more aggressively around the world and pack, it is essential to put out products get ahead of the after the crisis. To countries tend to focus Consumers in emerging services that are of distinctive value. are well experienced at making products at on prices, and indeed Korean companies to their counterparts in the US, Europe and low and mid-range prices as opposed prices by value products with affordable Japan. Thus, they need to focus on making sites and by leveraging their experience improving productivity at manufacturing and expertise. need to seek co-prosperity. countries emerging targeting companies Lastly, gain abroad are unsustainable. When devising Strategies that only look for unilateral Korean companies need to pursue win- business models and market entry strategies, success to markets not only brings emerging win strategies where their entry into countries. economic growth in emerging Korean companies but also promotes 76 Samsung Economic Research Institute
Social Media Popularity and New Communication Strategies
Creative Solutions 07
01_ Background and Objectives
Unlike the one-way production and transfer of news, information, and entertainment from main media outlets via the mass media, social media allows anybody to create content and deliver it through relationship-based communication channels. With the popularity of social media such as Twitter, Facebook, YouTube and me2DAY rising, communication is being redefined. This report covered why people use social media and how social media is better than the conventional media. It also identified business principles in using social media for communication.
02_ Key Findings
Attractions of Social Media Social media is popular all over the world. Various types of people are using social media because it satisfies their basic desire to reveal themselves and look into others’ lives, provides customized information and works as a stimulant in daily life. Specifically, the features of social media are as follows. First, it provides a “window” for people to express themselves which works as a useful outlet for their narcissistic desire to stand out and draw attention. Second, users can become familiar with the looks, tastes, and interests of those they are interested in. In business, this is a useful trait to identify the activity, interests and opinion (AIO) of target groups. Third, users can obtain the latest news on what they need. When information comes from 77 Creative Solutions Samsung Economic Research Institute Economic Research Samsung Attractions of Social Media Then, what are the values of social media compared to other communication tools? Then, what are the values of social media impact First, social media rapidly distributes information and has a long-lasting and the compared to the mass media. Shorter content requires less time to spread disseminate lack of editorial deadlines and broadcasting schedules allows users to exposed, content can have a continued impact Also, once content right away. through copies or parodies. social media creates a small-world network where Second, in terms of the target, number of people, as the network requires content is easily distributed to a large and classes, fewer steps for sharing information. As it transcends national borders Values of Social Media an acquaintance, instead of the mass media, it becomes more meaningful. Lastly, it becomes more the mass media, instead of an acquaintance, social media, they can break from their daily routines. Through people can escape bring change into their lives. and repetitive daily routines and away from boring users can look into other reflected through social media, where And such wishes are way to escape. people s lives as a 78 Samsung Economic Research Institute
social media will open the World of Mouth (global) that stems from the Word of Mouth (local).
Third, social media is more affordable than mass media. Users can enjoy most of social media services for free. Also, the homogeneous user networks based on characteristics such as lifestyles and demographics allow businesses to easily develop target groups or gain access to them.
Fourth, relationships in social media are established based on adding each other as friends and interactions, instead of one-way communication. Therefore, heart-to- heart, sincere communication and trust-building are possible. In this way, social media eliminates misunderstandings which can occur in unilateral communication, and builds trust.
New Communication Strategies First, companies should start “Issue Framing.” Even a good communication tool is useless unless the circumstances and context are right. It is critical to create such an environment so that positive news is stressed while negative issues are suppressed. Communication in social media includes responding to the market, instead of a unilateral delivery of messages from the company. Relationship-based social media is not just a new media channel, but an appropriate tool in building relationships with individual consumers. Through communication on products, companies and/or employees, companies can build close relationships with consumers. Therefore, they should create attractions via social media to draw interest and create an ecosystem where consumers will voluntarily create and distribute content.
Second, companies should define the operator and its role. They also need to employ specialists for better communication and make continuous efforts to improve their competitiveness. Communication specialists should act as a “curator,” instead of a “manager,” of information and media. As such, the specialists should have a deep knowledge about the company and be able to identify characteristics of various forms of media. In addition, all employees need to interact with outside personnel to 79 Creative Solutions Samsung Economic Research Institute Economic Research Samsung Expressing anger or lying ” quick response. “ and ” sincerity, ”“ fun, “ should be refrained. Social media is not an implement a trans-media strategy. companies need to Lastly, media. Therefore, companies should take an alternative but a supplement to mass information, short fact-based messages are integrated approach. In delivering better for relevant information is providing sufficient for mass media while effective with social media and gaining their loyalty social media. Enticing consumers smooth out the communication To strategy. through mass media is also a good audiences process, portfolios should be formed in line with business characteristics, and individual media characteristics and coordinated with communications materials. This research analyzed consumer (user) mind and action, explained why businesses This research analyzed consumer (user) mind and action, explained why on new need to keep a close eye on social media and suggested solutions the sudden communication strategies using the media to find the reasons for 03_ Implications improve the effect of communication. As for risks that can emerge, guidelines need can emerge, As for risks that of communication. the effect improve by all employees to minimize them. to be made and shared content for communication. should diversify and systematize Third, enterprises with business performances and media, companies mainly dealt conventional With internal and now they need to harness even products, however, information on new work environments such as activities which include not only external corporate consumers and contribute to also activities to get closer to career building, but depict themselves as a socially this content, they can effectively With society. responsible company. of their tone and manner in delivering content. Fourth, companies need to be careful and initiate communication. The basic Only interesting content can draw attention keywords are 80 Samsung Economic Research Institute
popularity of social media across the globe. In addition, it provided best practices that can be employed right away, introducing the potential of social media for various uses and examples of advanced companies.
The popularity of social media will not wane soon. Rather, social media is expected to become a part of daily lives in the way the Internet and television did. Therefore, companies should not simply consider social media as a tool for communication and marketing, but harness it for cooperation for research and development, communicating thoughts and feelings to build corporate culture and decision making on an interactive basis. Furthermore, they should seek new business opportunities in various areas including social commerce, social games, social analytics, and social dating. 81 Creative Solutions Samsung Economic Research Institute Economic Research Samsung 08 Solutions Creative day begins with a smartphone “The s just the opening; the market share is s just the opening; the market share ’ ” Combined with Wi-Fi, availability of Internet access with full browsing, and Combined with Wi-Fi, overtaken introduction of a fixed-rate payment system, smartphones have interface with a touch-screen and conventional mobile phones. The user-friendly to resist. voice recognition that facilitates easy Internet access is simply too hard from the Although the overall mobile phone market was sluggish due to fallout global financial crisis, smartphone sales remained unabated. 02_ Key Findings 02_ Key 01_Background and Objectives and Objectives 01_Background Internet era. Its role in daily life may be The smartphone has launched the mobile saying: best summed up by one group of users Smartphone Smartphone Future Shaping the expected to almost double to 40% by 2013. Not only has the smartphone altered expected to almost double to 40% work is done and reshaped the business lifestyles, it has transformed how and related industries. This report examined environment of information technology on daily life, business models and markets the sweeping impact of the smartphone and probed the implications. and ends with it. reached 250 million units, accounting for 20% As of 2010, the sales of smartphones that of the total mobile phone market. But 82 Samsung Economic Research Institute
Global Market and Prospects for Smartphones (Unit: mill, %) 2007 2008 2009 2010 2011 2012 2013 Sales Volume of Mobile Phones 1,151 1,209 1,114 1,202 1,306 1,432 1,568 Sales Volume 121 143 178 254 351 469 604 Growth Rate 49 18 24 43 38 34 29 SmartPhones Proportion 10.5 11.8 15.9 21.1 26.9 32.8 38.5
Source: Estimated by Samsung Economic Research Institute.
The study analyzed changes driven by smartphones from three perspectives.
The first change has been in lifestyles. The young “mobile” generation quickly embraced the smartphone, appreciating its ability to be a platform for information, perform work, create social networks and entertain itself. The young consumers as well as segments of older ones will keep smartphone sales buoyant.
Traditional consumption of information and media will rapidly transform into digital form. The upcoming generation will have the greatest access to information in the history of mankind. As office work commonly executed by PCs can now be
Future Driven by Smartphone
Creation of the most Mobile Limitations of time and Smartphone powerful individual (automobiles) space were overcome, information device speed and efficiency Rapid access to improved massive amounts of Homeinformation Work Mobile PC Internet anytime,anywhere phone
3R generation: Experience 'reality' without limitation of time and space by 'reaching' unlimited amount of information and human network in 'real time'
2. New Markets and 3. Structural Change in 1. Changing Lifestyle Business Models Competition among Companies Live, Work, Communcate. Entertain in Mobility Young mobile generation Mobile application market Paradigm shift in mobile expands telecom industry Business linked to other Realize mobile office industries New form of competition Improve social Mobile traffic management communication significantly business 83 Creative Solutions Samsung Economic Research Institute Economic Research Samsung ” anytime, anyplace office, anytime, “ will become a reality. This will eventually affect building/city designs and reduce building/city designs eventually affect This will will become a reality. real-time conventional work days. Furthermore, associated with rush-hour traffic will bring about marked mobile online communities communication through scope and speed of communications. improvements in the of new markets and new business is the increasing emergence The second change software for the smartphone. suppliers are creating a slew of models. Application the main sources of revenue for application Games and books are currently (SNS) and mobile shopping will likely to suppliers, but social network services expand in the future. will continue to diversify into advertising, Revenue models for mobile services revenue models will be combined These merchandise sales and paid-for-services. customizations and video/3D technology, with SNS, location-based services, In addition, as smartphones become used in resulting in a broader array of sectors. will be created. For example, the auto other industries, new business opportunities information/entertainment and telematics industry will use smartphones to provide via smartphones and tablet PCs will likely services. In education, mobile education models The advertising industry also will see more business become more popular. with advertisements. Meanwhile, by combining location-based services reality such as Google Goggles, which commercials will use sources of augmented uses pictures to search the Internet. to secure The third change is the shifting structure of competition. In order and the leadership in mobile areas, IT companies involved in hardware, software telecom Internet will be locked in a full-scale battle. The paradigm of the mobile The industry in particular is shifting from voice communication to applications. success of the mobile phone industry will require comprehensive competitiveness also will that includes handsets, operating systems and services. Competition such as become more and more heated among makers of mobile Internet devices netbooks, tablet PCs and e-book readers. completed with smartphones, the mobile office, or the the mobile office, with smartphones, completed 84 Samsung Economic Research Institute
Future Mobile Devices
03_ Implications
The main feature of this paper was systematic analysis of the possible changes that the smartphone will have in the future. The popularization of the mobile Internet led by smartphones is expected to spur faster and greater changes than those that emanated from fixed-line Internet services in the past. In that respect, the study charted a path for follow-up studies.
The study provided various ways for companies to respond to the new era of mobile Internet. They included: 1) provide comprehensive services that encompass mobile phones, software and services; 2) focus on overcoming weaknesses in software, content and applications; 3) establish systems that can innovate by absorbing outside resources and manpower efficiently; and 4) create block competitiveness through broad partnerships.
The study considered the current smartphone market to be in the first phase of competition. In the second phase, due to smaller differences among smartphones, it will be even more important to differentiate functions and specifications. And open web-based applications will have a greater influence. In this transitional period, a strategy that creates success factors in the smartphone market and drives a new 85 Creative Solutions Samsung Economic Research Institute Economic Research Samsung competition structure through new technology and innovations in services is in services and innovations new technology structure through competition try to reengineer their in other industries should needed. Also, companies They should technology. models by employing mobile production and business and develop a closer themselves through speed management constantly transform to their requests. in order to better respond relationship with customers 86 Samsung Economic Research Institute
China’s Green and Bio Industries and Korea’s Countermeasure
Creative Solutions 09
01_ Background and Objectives
China, for decades the so-called factory to the world, is mounting a concerted effort to move up the value chain in order to broaden wealth and stimulate domestic spending. Its “Independent Innovation” strategy of industrial development launched in 2006 has strengthened with investment levels exceeding advanced countries still reeling from the global financial crisis. Among the new industries attracting particular attention in China are green and bio industries. They are being seen as the new growth engine, largely replacing the parts assembly work done for global companies in recent decades.
China’s hunt for green and bio industry solutions calls for leapfrogging over advanced countries by leveraging cost advantages, the giant domestic market and economies of scale. Under these circumstances, Korea cannot compete with the same kind of catch-up strategy that it employed in the past against international rivals.
In addition, accelerating industrial convergence has created an environment where loss of competitiveness in the new industries can even erode the power of already strong industries. This report analyzed the competitive advantage of the two countries and suggested countermeasures Korea could employ to compete against the first-mover advantage that China has already seized in its strategic industries. 87 Creative Solutions Samsung Economic Research Institute Economic Research Samsung wind m and the reasons why China is and the reasons why m outperforming was analyzed. Then, countermeasures for Korea were sought. For analyzed. Then, countermeasures outperforming was industries were identified changes in the key products of these Korea to excel China, were suggested. and convergence and future technologies 3) Electric Vehicles became the first developer of the plug-in hybrid BYD, a leading Chinese company, government electric vehicle in 2008 and started mass-production in 2010. The to nurture promises to provide 100 billion yuan in assistance over the next ten years years behind the domestic market of electric vehicles ahead of others. Korea is two synergy China in developing and mass-producing electric cars. For Korea, creating 2) Solar Power world in solar cells, supplying 46.9% of the China is also the top producer in the in crystalline solar cell production, it has market. Based on the process innovation including parts and materials (poly-silicon, become a strong player in all fields, (solar cells and modules). Therefore, ingots and wafers) and finished products research on Korea should focus on nanotechnology-based materials in line with batteries to develop next generation semiconductors, panel display and rechargeable ultra-thin solar cells. China became the No. 1 producer of wind turbines in the world in 2009. The China became the No. 1 producer enterprises acquired technologies in achievement was possible because state-owned partnerships with advanced companies and a short period of time thanks to of domestic parts. In response, Korea needs to government policy requiring the use turbines. Then, it turbines and offshore large go one step further and develop super and providing operational and maintenance should expand to building wind farms services. 1) Wind Power 02_ Key Findings 02_ Key cash-cow industries and Korea were compared in four In this report, China power, solar power, electric cars and biomedicine electric cars solar power, power, 88 Samsung Economic Research Institute
in its globally strong industries such as auto, electronics and electric power industries and developing them into a system industry is necessary.
4) Biomedicine China ranked fourth in publication of research papers, third in investment in stem cell R&D and fourth in the pharmaceutical market. China has already exceeded Korea in these areas and is threatening Japan. The country is especially strong in chemical-based medicine made based on traditional Chinese medicine and biomedical fields such as stem cell and gene therapy. Accordingly, Korea should establish global R&D networks that attract outstanding talent, encourage translational research based on clinical research and move onto the global market to develop future competitiveness.
China’s Competitiveness and Korea’s Countermeasures in Green and Bio Industries
Basis for China’s Competitiveness Current Status Korea’s Strategies - Domestic Market: The world’s - New Construction in 2009: - Develop technology biggest market + Regulations China 13,803MW, to build a large-scale Wind to use domestic parts Korea 42MW (7MW) offshore wind Power - Technological Competitiveness: - Three Chinese companies power generator Borrowing ª Learning ª in world top 10, and 0 Korean - Expand the field of wind Independent development companies power businesses - Cost Competitiveness: - Focus on materials such as Production of labor-intensive xWorld Market Sharey polysilicon, leveraging its cells and modules based on technological advantage Polysilicon Module Solar low labor cost - Take the next generation Power - Economies of Scale: China 28.0% 43.2% ultra-thin solar cell market Increased production facilities Korea 18.4% 5.4% ahead of others in line with market growth - Technological Competitiveness: - Improve the proportion of Cooperation among industries, xPerformance in Electric Vehicley domestically manufactured academic, and research institutes eletronic parts Electric for R&D and partnership The Year EV was Number of first produced EV models - Introduce sophisticated Vehicles with major foreign companies IT technologies to widen - Vitalization of the Domestic China 2008 110 the business field to Market: Government subsidies Korea 2010 9 include intellignet cities and charging infrastructure
- Science Technology: 48 Japan Chnia Korea - Harness internationally Secured talent and genetic 39 renowned “star” scientists information database 174 and build a network for 15 150 Bio- - Companies: Rapid 76 cooperative researches medical commercialization of new drugs - Bolster translational Numbr of Numbr of listed researches - Government: Nurtured SCIE papers companies market and companies (2008, 1000 papers) (2008) - Move into foreign markets 89 Creative Solutions Samsung Economic Research Institute Economic Research Samsung s quantitative ’ -based Solution dynamism or voluntary Convergence ’ s mass-production of simple s mass-production ’ Creation of New Demand Cost Advantage s key industries in response to China s key industries in Increase ’ in Demand of Scale Ecomonies Korea’s Countermeasures against China 03_ Implications 03_ Implications through creative R&D value innovation, creating new demand Korea needs to seek and be pursued with focus on the concepts Creative R&D should and convergence. which has abundant low- next generation to compete with China, technology of the should be developed, researchers. Systems and solutions cost engineers and Korea converging manufacturing items based on the economies of scale. Against China based on the economies of scale. manufacturing items advantage, Korea can initiate pilot projects to test innovative products, leveraging advantage, Korea can initiate pilot Korean customers its qualitative advantage such as participation. 90 Samsung Economic Research Institute
China’s Emerging Global Companies
Creative Solutions 10
01_ Background and Objectives
China became the world’s second largest economy behind the US in the second quarter of 2010, with gross domestic product (GDP) reaching US$1.34 trillion to climb past Japan’s GDP of US$1.29 trillion. As the Chinese economy relentlessly expands at a very swift pace, its companies are attaining global prominence. The average sales growth of China’s top 100 companies was 17.1% in 2009 and 46 Chinese companies ranked among the top 500 global companies in 2010, up from 20 in 2000.
State-owned enterprises in energy, electric power and telecommunications, such as PetroChina, Baosteel and China Mobile have long been the main economic drivers, but emerging private-sector companies will likely to play a bigger role. Having secured strong technological prowess, quality and brand power from the start of business, these private companies have already become global players or are on the threshold of aggressively operating abroad. They are lined up in the automobile, heavy industry and electronics sectors, which are Korea’s flagships, and in green and bio industries, Korea’s new growth engine industries.
Against this background, this paper analyzed the competitiveness of China’s globalizing private companies that will likely compete with Korean counterparts, and proposed ways for Korean companies to respond. 91 Creative Solutions Samsung Economic Research Institute Economic Research Samsung s flagship telecoms ’ s mobile telecom industry. ’ s competitiveness derives from ’ s fifth largest shipbuilder only four shipbuilder s fifth largest ’ s private companies. First, start-up CEOs are not flinching from challenging First, start-up CEOs are not flinching s private companies. ’ demands of leadership. Equipped with strong entrepreneurial spirit and enthusiasm, Equipped with strong entrepreneurial demands of leadership. knowledge and technology. their companies with specialized CEOs are heading capability and are companies have strong technological Second, leading private importance of developing independent Recognizing the committed to quality. more open research and development (R&D) technologies, they are shifting to a arrangements. Third, they have structure through alliances and cooperative and acquisitions (M&As). Based on abundant expanded rapidly through mergers government support, they have built core funding capabilities and active networks through M&As. technologies, brand and distribution the potential to become global include Huawei In major industries, companies with and Geely Automobile Holdings, and in Rongsheng Heavy Industries Technologies, Holding, BYD and Mindray Green Energy Yingli the new growth engine sector, Medical International. former Chinese army officer founded in 1988 in Shenzhen by Huawei Technologies, yuan, became China Ren Zhengfei with capital of just 20,000 02_ Key Findings 02_ Key behind the rapid rise of this paper summarized three factors Based on case studies, China equipment maker amid the rapid growth of the country equipment maker amid the rapid growth The company took 20.6% of the global mobile equipment market in the second The company took 20.6% of the global mobile equipment market in who quarter of 2010, closely following rival Ericsson and Nokia-Siemens, Huawei accounted for 33% and 20.8%, respectively. its low-cost skilled R&D manpower. Labor cost per R&D employee is US$45,000 at its low-cost skilled R&D manpower. Huawei, only one-fifth of that of Ericsson and Nokia-Siemens. Rongsheng Heavy Industries became the world years after it began operations. Known for slashing production time, it completed its years after it began operations. Known for slashing production time, it completed its second first ship in 2005, four months before the scheduled delivery time. By recently announced it had already won contracts to build 85 ships. Rongsheng year, 92 Samsung Economic Research Institute
it would enter the high-end liquid natural gas (LNG) carrier market, challenging Korean shipbuilders that have been leading the market for more than 10 years.
Geely Automobile moved onto the global stage after taking over Swedish luxury brand Volvo in 2010. Geely was established in 1986 as a maker of refrigerators, and subsequently moved into motorcycles and then cars. By overcoming the difficulties through M&As, Geely gained a firm foothold in China’s auto market. CEO Li Shufu, the company’s founder, was only 34 years old in 1997 when he boldly declared his intention to enter China’s car business, describing himself as China’s Henry Ford. However, unable to get production approval due to state regulations he had to settle for a nearly bankrupt, licensed truck plant at a prison in Sichuan Province. To develop independent technology, Li bought a stake in a London taxi maker and an Australian automotive transmission manufacturer. By acquiring Volvo, Geely has secured brand, source technology and overseas sales network, and is poised to compete with Korean automakers.
Yingli Green Energy Holding is one of the notable companies in solar energy. It has been one of the fastest growing companies in the 175-year history of New York Stock Exchange. Yingli was established as a cosmetics firm in 1987 by Liansheng Miao. After visiting Japan in the early 1990s, he realized the potential in the solar energy and made a bold entry into the solar cell market in 1998. By 2009, Yingli became the world’s fifth largest photovoltaic cell maker and fourth biggest module assembler.
Yingli’s rapid growth was driven by Liansheng’s military leadership. A former military executive, Liansheng built a strict and self-motivated corporate culture on belief that military has the strongest drive in achieving goals. Liansheng greets the incoming employees at the company gate at 6 a.m., and employees do exercise briefly and study English before work. He constantly emphasizes that the employees should take the initiative, and promotes employees who make innovations regardless of hierarchy. 93 Creative Solutions Samsung Economic Research Institute Economic Research Samsung list ” s first mass- ’ s environment. It ’ Info Tech 100 Info Tech “ s growth potential was especially s growth potential ’ s 2010 global s 2010 global ’ s leading medical device manufacturer, ’ s third-largest patient monitoring device maker behind GE s third-largest ’ BYD earned the No. 1 ranking in BusinessWeek the No. 1 ranking BYD earned of companies, surpassing Apple which came in at the second place. Beijing Apple which came in of companies, surpassing a Chuan-Fu established Research Institute researcher Wang Nonferrous Metal out making rechargeable now BYD Auto in 1995 and started company that is LED lighting, automotive phones, and later expanded into batteries for mobile including electric models. BYD batteries and cars, highlighted when billionaire investor Warren Buffet acquired a 10% stake in the acquired a 10% Buffet billionaire investor Warren highlighted when by catching up with synergy million in 2008. BYD created company for US$230 and at the same time expanding research and advanced technologies and products new car development period, which is similar development. It operates a 24-month Automobile in the Tsinchuan the acquisition of to that of Japanese carmakers. With BYD introduced Korean and Japanese 2003 that had a model called Alto, including F2 and F3. technologies and launched new models, BYD built the world On the back of aggressive R&D expansion, F3DM, in 2008. The price is only half the US$40,000 produced plug-in hybrid car, being developed by General Motors and Toyota estimated for electric cars currently carmaker plans to enter the On the back of such rapid growth, the Chinese Motor. with two models of F3DM and e6, an all-electric US and European markets in 2011 range of 330 kilometers. car with a single-charge Mindray Medical International, China competitiveness. to enhancing global is strengthening R&D capability in its efforts Stock Exchange listed company in September 2006 Mindray became a New York to which it and in 2008 and paid US$200 million to acquire US-based Datascope European had been an OEM supplier for five years, securing networks in the US and markets. Mindray is the world focuses on manufacturing products specifically catering to China Healthcare and Philips Healthcare. It started in 1991 as a supplier of foreign medical Healthcare and Philips Healthcare. It started in 1991 as a supplier of foreign of selling equipment but soon started manufacturing after recognizing the difficulty 94 Samsung Economic Research Institute
medical devices of developed countries in China. In the 1990s, hospitals in China lacked air conditioners and air purifiers, which had led to frequent failure of medical devices that were sensitive to humidity and dirt. In 1993, Mindray launched China’s first patient monitoring device. It is now actively pursuing R&D and new product development, poised to compete with foreign medical devices makers.
03_ Implications
For Korea, Chinese companies should no longer be considered relatively benign counterparts but as competitors equal to advanced countries. As Korean companies had benchmarked Japanese counterparts in shipbuilding, automobiles and IT, Chinese private companies are benchmarking Korean firms and fast catching up with them. In the market for new growth industries, in particular, they are competing ahead of Korean companies in the global market alongside companies from advanced economies.
Under these circumstances, Korean companies should apply their successful experience in the digital and IT industries to new growth engine industries, aggressively tapping into newly emerging industries that are relatively behind other major foreign companies. Meanwhile, the challenging entrepreneurial spirit of Korea’s founding entrepreneurs should be recalled. Finally, Korea’s unique entrepreneurial spirit should be revitalized for an active challenge in new business areas and markets. Top Ten Hit Products of 2010 Samsung Economic Research Institute 95
Top Ten Samsung Economic Research Institute selects a list of top ten hit products and services every Hit Products year that have a major influence on the economy, society and culture of Korea. The list is of 2010 formed both to highlight the impact and importance that notable products have had on Korean society and to forecast Korea’s consumption trends.
Consumption Keywords for 2010 Based on Top Ten Hit Products
Spread of Innovative IT Platform Widespread Use of Mobile Devices Technology Mobile devices, Wireless Internet Smartphone, Social media, Tablet PC
Quest for National Pride, Enthusiasm for Underdogs’ Emphasis on Communication Passion and Perseverance Society Global sports events, G20, Nuclear power plant Superstar K2, Women’s national football team, construction orders, Active participations TV drama, Bread, Love and Dreams
Economic Uncertainties Pursuit of Function and Aesthetics Economy Concerns over economic slowdown, Currency conficts, Kia Motors’ K-series, Blueberries, Thermal clothing Security uncertainties
Consumption Keywords
More Sophisticated Pursuit of Interactive Pleasure ARediscovery of Value Widespread Use of Mobile Devices Asset Management Proxy Satisfaction and a Satisfaction through Celebrities Enthusiasm for Underdogs’ Health and Beauty Sense of Achievement Enthusiasm for Innovations Passion and Perseverance Quest for National Pride Reasonable and Meaningful Pursuing Relief and Safety Pursuit of Function and Aesthetics Pursuit of Natural Pleasure Spending Proof of Safety
Hit Products
1. UCC (User-Created Content) 1. Haptic Mobile Phones 1. Makgeolli 1. Smartphone 2. China Funds 2. Gold Medalists of the 2. Swine Flu Products 2. Superstar K2 3. Teenage National Athletes Beijing 2008 Olympic Games 3. Yu-Na Kim 3. Women’s national football team 4. Social media 4. Historical Dramas (“Daejoyoung,” 3. Transport Payment Services 4. LED TVs 5. Tablet PC “The Legend”) 4. Online Discussion Forums 5. Smartphones 5. CMA (Cash Management Account) 5. TV Drama “Beethoven Virus” 6. Kia Motors’ K-series 6. TV Drama “Queen Seondeok” 6. Real Variety Show “Infinity 6. Real Variety Shows 7. Avatar 7. Girl Groups Challenge” 7. Nintendo Wii 8. Blueberries 9. Thermal clothing 7. Corn Silk Tea 8. Netbooks 8. Walking- and Experience- 10. TV drama, Bread, Love 8. Wonder Girls 9. Donations Based Tourism and Dreams 9. BB (Blemish Balm) Cream 10. Consumer Report Programs 9. Bogeumjari Apartments 10. Wine 10. KT QOOK
2007 2008 2009 2010 䤋 Photo Gallery SERI About SERI 2010
History Organization Mission & Vision Research Areas Consulting Areas 98 Samsung Economic Research Institute
Published 15th anniversary company history Foundation 1986~1994 July 2001 Oct. 2001 Launched SERICEO.org, a knowledge service for business leaders Opened SERICEO to the public July 1986 Established as an affiliated center of Samsung Life Feb. 2002 Lim Dong-Sung inaugurated as first president Sept. 2002 Cyber SERI members top 300,000 Hosted “Future of Korea’s Venture Agriculture” symposium July 1987 Hosted first international symposium to commemorate the Nov. 2002 first anniversary Dec. 2002 Agreed with Sungkyunkwan University to jointly promote Korea General Social Survey (KGSS) July 1990 Started management consulting business SERI.org launched on Single TOPIC, the Samsung Group intranet Apr. 1991 Incorporated as Samsung Economic Research Institute May 2003 Hosted “Korean Competitiveness, Is it Alright?” symposium Dec. 1991 Launched quarterly report “Consumer Sentiment Survey” June 2003 Jan. 1993 Advanced into book publication and sales by publishing ”Catch One Second” Sept. 1993 Established an affiliate, Samsung Earth Environment Center Establishing Regional Stature 2003~2005 Oct. 1993 Started “SERI Club,” a membership-based information service July 1994 Moved to Samsung Group headquarters Sept. 2003 Jung Ku-Hyun inaugurated as third president Nov. 2003 Hosted “Future of Korea’s Venture Agriculture” symposium June 2004 Hosted “Role of Foreign Ownership in Financial Service Industry of Korea, Japan & China” symposium Recognition Building 1995~1997 Aug. 2004 Opened learning site for military officers. “MKiss,” with sponsorship by the Military Mutual Aid Association Choi Woo-Suk inaugurated as second president Sept. 2004 Hosted “Financial Reform Experience in Korea and China” May 1995 symposium Aug. 1995 Started Regional Economic Forum Oct. 2004 Hosted “In Pursuit of $20,000 Per Capita Income” symposium Launched weekly issue report, “CEO Information” Opened customized SERICEO knowledge sites (Samsung Life Feb. 1996 Held thesis award for college and graduate students to Insurance, Samsung Fire & Marine Insurance, Samsung Card commemorate the 10th anniversary and Hana Bank) July 1996 Published 10th anniversary company history Nov. 2004 Opened SERIWorld.org, an English website for global audience Sept. 1996 Moved to Kukje Center, Yongsan, Seoul Dec. 2004 Hosted “Benefits and Challenges of the Korea-Japan FTA” symposium Oct. 1996 Opened Internet homepage (www.seri-samsung.org) Feb. 2005 Started open research project, ”Digital II” July 1997 Opened research & information database to the public Apr. 2005 Hosted “Challenges of 21st Century US-Korea Relationship” Dec. 1997 Spun-off Samsung Earth Environment Center symposium May 2005 Held press conference with Foreign Correspondents’ Club members (held every quarter thereafter) SERI.org members top 1 million Korea’s SERI 1998~2003 June 2005 Launched SERIJapan.org Hosted “Making Korea a Good Country to Live: The G10 in Y10 Dec. 1998 Established IMF database (now known as “Academics’ Project” symposium Perspective on Korean Economy”) July 2005 SERI’s Beijing office SERIChina approved by Chinese Nov. 1999 Opened knowledge portal SERI.org - Home, DB, Forum, Portal government Feb. 2000 Published first World Report (Changed its title to “Global Aug. 2005 Opened Six Sigma research site, SERI6sigma.org Issue” on Aug. 16, 2004) Nov. 2005 Opened complexity theory website, Complexity Apr. 2000 Held first “Digital Symposium” Sept. 2000 Opened English website Koreaeconomy.org (Integrated into SERIWorld.org in Nov. 2004) Nov. 2000 Held “Plan for Korea-China-Japan Industrial Collaboration” th symposium SERI’s 20 Anniversary: Reinvent SERI 2006~2008 Jan. 2001 Opened Ebitzone.org, an English-language global research service (Integrated into SERIWorld.org in Nov. 2004) Feb. 2006 Established Digital Research Center and Complex System Center May 2001 Selected as No.1 global think tank site by Alexa Concluded joint research with the Japan Research Institute History Samsung Economic Research Institute 99
Mar. 2006 Samsung Economic Research Institute Beijing Office opens Apr. 2009 Launched a new report series titled “SERI Management Note” official website www.SERIChina.org Held a signing ceremony of a climate change project supported Apr. 2006 Expanded charity activities by signing a donation agreement by the British Foreign and Common Wealth Office with Community Chest Korea May 2009 Launched a video report series titled “Go Korea!” June 2006 Hosted 20th anniversary symposium “Historical Transitions in the Korean Economy and Challenges” (Reflection on the 20- Held a debate on SSGE (Seismic Shift of Global Economy) year Korean economy) June 2009 Held the “2009 Korean Economic Forum” with Joongang Daily July 2006 Published 20th anniversary company history Hosted SERI’s 23rd anniversary symposium titled “In Search for Exit from Job Shortages” Sept. 2006 Launched redesigned SERIWorld.org with focus on Korea- China-Japan-Global Promoted the Green Office Campaign Dec. 2006 Hosted first Complexity Conference (held every December July 2009 Attended a conference by the National Brand Committee thereafter) regarding the development of the Korea Brand Index SERICEO sales top 10 billion won (in subscription income) Number of SERI-Spark members tops 5,000 Apr. 2007 Co-hosted “How to Cultivate and Develop Asian Financial Aug. 2009 Published “Selected SERI Reports on Future Industries” Markets” seminar with National Institute for Research Advancement Sept. 2009 China’s National Development and Reform Commission visited SERI July 2007 Moved into Samsung Group’s new headquarters in Gangnam, Seoul Oct. 2009 Held a symposium on the “Three Pressing Issues Facing the Korean Economy and Policy Responses in 2010” Hosted 21st anniversary symposium, “Renaissance of the Korean Economy: Outlook and Strategy for the Next 10 Won the Ministry of Culture, Sports and Tourism Minister’s Years” award for special libraries in the 2009 Korean Public Library Operation Assessment Oct. 2007 Launched SERICEO China, knowledge service for Samsung China’s 1,200 executives (www.sericeo.cn) Nov. 2009 Held the fourth Complexity Conference called “Diffusion Mechanism” Jan. 2008 Launched English-language quarterly journal SERI Quarterly Feb. 2010 Held international symposium to commemorate the 100th Mar. 2008 Expanded SERICEO China service to Samsung Group China birthday of Ho-Am Lee Byung-Chull employees (14,000 people) Held international conference on “Economic Impact of the Cap Apr. 2008 Hosted International Korea-China forum with Sungkyunkwan and Trade System in Korea and its Scale-up Strategies” University to commemorate the 15th anniversary of diplomatic ties between Korea and China Mar. 2010 Held a symposium on “International Sports Events and National Brand” June 2008 Held symposium to commemorate the 22nd anniversary (New Financial Capitalism: New Financial Paradigm and the Opened a customized SERICEO site, Okdab CEO, for Ministry Global Economy) for Food, Agriculture, Forestry and Fisheries New CEO of Nomura Research Institute visited SERI July 2008 Opened SERI Spark (www.serispark.org), a knowledge service for middle to upper managers Brazilian ambassador to Korea visited SERI Sept. 2008 Held “How to Boost Korea’s Renewable Energy Industry” Apr. 2010 Held a press conference to celebrate SERICEO surpassing conference 10,000 memberships Oct. 2008 SERI.org members surpass 1.5 million Portuguese foreign minister and ambassador to Korea visited SERI Nov. 2008 Held “Upgrading Korea into a Market Economy of Mutual Prosperity” symposium Japan’s ALPS Electric President visited SERI Dec. 2008 Held “Global Financial Crisis and Korea’s Policy Responses” May 2010 Co-hosted “2010 Korean Economic Forum” with Joongang Daily symposium June 2010 Held SERI’s 24th anniversary symposium titled “Market Published SERI Research Essay No.100 issue Opportunities from the Rise of Emerging Market Economies and Responses by Korea, China and Japan” Opened a mobile website m.seri.org, the first for Korean private think tank Becoming a Global Knowledge Hub 2009~ Sept. 2010 SERI President Chung Ki-Young nominated to be civilian commissioner of G20 Summit Preparation Committee Oct. 2010 Japan-Korea Partnership Forum visited SERI Jan. 2009 Chung Ki-Young inaugurated as fourth president of SERI Held a charity photo exhibition of SERICEO members titled Signed a Memorandum of Understanding regarding the joint “Accompany” operation of the EU Centre with Yonsei University Nov. 2010 SERI placed first for third consecutive year in Hankyung Feb. 2009 Held the “Forecasting the Future”: “Mid- to Long-Term Newspaper’s ranking of economic think tanks Forecasts and Technology Strategy to Overcome the Global Financial Crisis” symposium with KISTEP Dec. 2010 Held a symposium on “Post-crisis Course of the Korean Economy: Challenges and Tasks in the Next Decade” Mar. 2009 Opened of the Yonsei-SERI EU Centre with Yonsei University 100 Samsung Economic Research Institute
Structure 9 Departments President & CEO 3 Teams 3 Centers 1 Overseas Office Number of Researchers: 113
Macroeconomics Management Public Policy Knowledge Research Strategy Research Business Department Department Department Department
Complex Systems Center Regional Development Team Climate Change Research Center
Global Studies Human Resources Research Corporate Department Management Planning & Citizenship Department Coordination Department Economic Security Team Department HR Strategy Team Education Reform Center
SERI Beijing Technology Office & Industry Department
Executives
CHUNG Ki-Young President & CEO [email protected] 82-2-3780-8500
LEE Bum-Il LEE Cheol-Hi Executive Vice President & Director Senior Vice President & Director Knowledge Business Dept. SERI Beijing Office [email protected] [email protected] 82-2-3780-8180 86-10-6566-8100-2100 (Beijing)
LYU Han-Ho CHANG Sang-Soo Senior Vice President & Director Senior Vice President Research Planning & Coordination Dept. [email protected] [email protected] 82-2-3780-8202 82-2-3780-8279 Organization Samsung Economic Research Institute 101
CHUNG Kweon-Taek Vice President & Director PARK Bun-Soon Human Resources Management Dept. Senior Fellow & HR Strategy Team [email protected] [email protected] 82-2-3780-8243 82-2-3780-8206
SHIN Hyeon-Am RYU Ji-Seong Vice President & Director Senior Fellow Corporate Citizenship Dept. Education Reform Center [email protected] [email protected] 82-2-3780-8198 82-2-3780-8122
KIM Jae-Yun LEE Byung-Ha Vice President & Director Vice President Technology & Industry Dept. [email protected] [email protected] 82-2-3780-8130 82-2-3780-8297
YOO Seok-Jin KIM Yong-Ki Vice President & Director Senior Fellow Management Strategy Dept. [email protected] [email protected] 82-2-3780-8275 82-2-3780-8085
KWON Soon-Woo KIM Deuk-Kab Vice President & Director Senior Fellow Macroeconomics Research Dept. [email protected] [email protected] 82-2-3780-8034 82-2-3780-8071
DONG Yong-Sueng HWANG In-Seong Senior Fellow Vice President & Director Economic Security Team Global Studies Dept. [email protected] [email protected] 82-2-3780-8095 82-2-3780-8036
CHOI In-Chul BOK Deuk-Kyu Vice President & Director Senior Fellow Pubilc Policy Research Dept. [email protected] [email protected] 82-2-3780-8168 82-2-3780-8208
NOH Jae-Bum KIM Eun-Hwan Vice President Vice President [email protected] [email protected] 82-2-3780-8025 82-2-3780-8033 102 Samsung Economic Research Institute Mission & Vision
Mission To be Korea’s leading provider of economic insights by building and sustaining world-class resources in knowledge creation
Create strategies and information that Become Korea’s Leading Business enhance business competitiveness Opinion Maker
Publish timely analysis on business trends and Set nationwide agendas for a growing economy changing management conditions AProvide analysis on policies for an increasingly Devise strategies for sustaining competitive advantage complex market
Vision A Knowledge Hub for Creative Solutions
Provide systematic knowledge to anticipate and understand changes in the future environment Knowledge
Become a center of global information exchange networks that create new knowledge Hub
Creative Move beyond conventional thinking through a spirit of challenge that leverages original research topics and creative research methodology
Present policies and strategies for development of businesses and the economy in preparation Solutions for an increasingly interconnected economy, both in Northeast Asia and the world
Define problems : Preemptively set agendas to develop the community and enhance business competitiveness by thorough analysis and understanding of business problems
Define solutions : Move beyond standardized approaches to provide workable, long-term solutions that are applicable in the field Research Areas Samsung Economic Research Institute 103
Groundbreaking Research Samsung Economic Research Institute generates reports Open Research on business, economy and public policy, that contribute to the Field-Based Research community through knowledge creation
Economic Research
SERI produces reports on macroeconomic trends and major issues, providing indispensable information on the public sector and the corporate world
SERI investigates global macroeconomic issues of critical importance, including international finance, international business, and human and material resources, and suggests strategic responses for the nation
SERI examines ways for Korea’s financial services industry to adapt to a rapidly changing environment
Management Research
To help Korean companies become globally competitive, SERI provides strategic intelligence on the present and future business environment, deriving readily applicable management lessons from detailed analysis of real-world business cases
SERI suggests practical solutions to challenges faced by Korean businesses in labor management and personnel issues
SERI proposes appropriate policy and strategic responses for government policy makers and corporate leaders in an environment of constant technological change
Public Policy Research
SERI supports government decision makers by providing analytical reports and examining public policy issues at national and local levels. To realize a business- friendly environment, SERI recommends policies conducive to creating a full- fledged market economy
SERI contributes to the community by doing research on local infrastructure investment, regional development and specialized local industry promotion. In addition, SERI performs research on other important issues, including education, population imbalances and welfare reform 104 Samsung Economic Research Institute Consulting Areas
Management Strategy Consulting
Global management strategies Future growth studies M&A strategies Vision-building strategies New business development strategies Complexity system Brand strategy Market-entryhcompetition strategies Restructuring strategies Marketing strategies
Samsung Economic Research Institute provides Human Resources Management Consulting management consulting services to clients in diverse areas, including financial institutions, government Strategic personnel systems agencies and local autonomous entities. Organization design Corporate culture design e-HRM in e-business Strategies to hire and retain core talent Leadership development Human resources development Reward system design Assess corporate culture
Technology & Industry Consulting
Industry forecast (trends in supply & demand, prices) Technology policy and strategy making Market research on domestic & international markets Analysis of technology trends Global R&D strategies Industry policy and strategy making New business feasibility studies
Policy & Regional Development Consulting
Financial policy making Regional development Low birth rate & aging population policies Small business policies Tourism & leisure industries Climate change & environment policy Education, finance and welfare policies Government reform