[Thursday morning] K-manufacturing in crisis must abandon yesterday to live

Great Hall of the People, Beijing, China, March 2015. Chinese Prime Minister Li Keqiang stood on the platform of the National People's Congress. Through a government work report, he revealed an ambitious plan to raise the self-sufficiency rate of core components and materials to 70% by 2025, and overtake Germany and Japan by 2035 and the United States by 2049. This is the beginning of “Made in China 2025.” This was not just a way to promote the industry. It was a self-reflection of the so-called “big but not strong (big but not strong, big but not strong).” “Technological innovation (?) to move away from a subcontracting base that used to assemble cheap goods and become the world's strongest technological hegemon by the 100th anniversary of China's founding in 2049 It was a declaration “Starting).”

Warning sounds are continuing that export Korea's engine, which has supported the Korean economy, is cooling down. It's a crisis in K manufacturing. Taewon Choi, Chairman of the Korean Chamber of Commerce and Industry, warned in July that “the lost decade of the Korean manufacturing industry has begun.” Referring to the qualitative growth of China's manufacturing industry, he said, “If artificial intelligence (AI) fails to revive the manufacturing industry, almost all of them will be expelled after the next 10 years.” Chairman Choi's warning is already a reality. The petrochemical complex, which fed the Korean economy by hitting the jackpot in the past, is groaning as its utilization rate drops. This is because the largest export market disappeared as China became self-sufficient in basic materials through large-scale expansion. Even the shipbuilding industry, which dominated the world with liquefied natural gas (LNG) carrier technology, is nervous about China's low volume offensive and technological pursuit. China's manufacturing industry, which we laughed at as a “fake” and dismissed as a “continental mistake,” is now dominating the global market with its ability.

China's sprint is astonishing and frightening. When Korea was under the illusion of a semiconductor boom, China gradually implemented Made in China 2025, using full government support and a huge domestic market as a weapon. Now, China is no longer the world's factory that used to make low-cost products. It has completed a “Red Supply Chain (Red Supply Chain)” that is self-sufficient in all value chains, from materials, parts, and equipment to finished products, and has become a manufacturing powerhouse leading the standards of advanced technology. Korea's main industries, such as shipbuilding, display, batteries, and petrochemicals, are now being overtaken or driven to the bottom of the world by China. China's high-tech enterprises are racing at a frightening pace in the fields of AI, robotics, and aerospace.

What is our reality like. While companies were struggling in the global market, the government and political circles were busy filling the shackles of anti-corporate laws and various regulations that reduced corporate vitality, such as the Yellow Envelope Act, mandatory share burning, and corporate tax increases. The rigid application of 52 hours a week has extinguished the lights on research and development (R&D) sites for new technologies and future food.

The manufacturing industry is the backbone of the Korean economy, which feeds and lives through exports. In order to become a developed country, the development of the service industry is also important. However, quality jobs and foreign currency still come from the manufacturing industry. If the foundation of the manufacturing industry is shaken, the national economy is bound to be shaken. The alarm that is sounding now is not a short-term problem, but a structural warning that the manufacturing industry's growth engine is being turned off. Nevertheless, the government and political sphere are focusing on populism where it is easier to get votes right away than structural reforms for future food.

In order for the K manufacturing industry to survive, it must go back and forth with a commitment to reincarnation. According to yesterday's equation of success, not only is it difficult to overcome China's pursuit, but it is also difficult to survive in the midst of a competition for global supremacy. The only way for K manufacturing to survive is to secure super-gap technology that no one can match. We must be rearmed with an entrepreneurship that tolerates failure and attempts disruptive innovation. At the same time, the restructuring and business reorganization of major industries must be carried out quickly. This is the first big deal between Lotte Chemical and HD Hyundai Chemical. As a result of this, restructuring will have to be carried out not only for other petrochemicals and steel, but for all industries.

All-round support from the government and political circles is also essential. It is an age where countries around the world are pouring out subsidies and cutting taxes to revive their manufacturing industry and strengthen competitiveness. We must also focus all of our capabilities on creating a good environment for business through drastic elimination of regulations, tax support, and securing labor flexibility through labor reform. If yesterday is not abandoned, there will be no tomorrow for K Manufacturing. There's no time to hesitate any longer. If we miss Golden Time now, we must have a sense of urgency that there is no future for K manufacturing or even the Korean economy.