Korean Sees Asian Lessons for US
AMERICA'S free enterprise system actually constrains the international competitiveness of United States technological firms, says the chief executive officer of a leading Korean electronics firm. An absence of US government subsidies and investments for research and development have left American industries trailing their innovative Asian counterparts, asserts Young Kimm, chairman of TriGem Corporation, Korea's largest computer company, with $300 million revenue in 1989.
Mr. Kimm, who has been developing technology businesses in the Pacific Rim for 30 years, maintains that start-ups as well as small and medium size companies should be nurtured ``because that's where the new ideas come from.'' He figures the laissez faire system in the US would benefit from more control.
Some American economists and executives agree to some extent, urging the US government to adapt an ``industrial policy'' to help high-tech companies.
Kim also criticizes the frequent and largely unregulated mergers and acquisitions of US companies. These, he says, rob firms of their development potential. The short-term approaches of dealmakers allow them to quickly turn a profit, but do little if anything for financing research and new products.
By contrast, the tendency in corporate Korea is to allow the small and medium-size companies to grow, Kimm notes. At first, ``the government watched as big conglomerates swallowed up small companies. The 30 largest conglomerates in Korea account for more than 50 percent of Korea's gross national product.'' Today, he says, the government is promoting small business development and encouraging investments in key technologies. Tax incentives are awarded to investors in these areas.
While making efforts to spread out its manufacturing base to include smaller firms, Korea's economy remains shallow, says Kimm. The economy would be stronger if there were more small-scale development firms to offset the role of conglomerates.
``Government guidelines,'' such as those set by Seoul and Tokyo, would greatly benefit US industry, Kimm says, especially when its foremost competitors receive government help.
In a recent address to the Korean Foreign Trade Association, Howard Lewis, the US National Association of Manufacturers vice president for international economic affairs, identified areas where Korean government controls went too far to protect Korean industries.
Referring to reports that American and other Western goods were being removed from Korean shelves after Seoul decided to curb domestic consumption, Mr. Lewis called the government's action unfair to Korea's trading partners: ``Korea's desire to do something about a balance of payments deficit in the first quarter of 1990 is laudable.... [But] the choices available to all countries are limited by their relationships.... Countries like Korea, Japan, and the US do not have the option of cutting consumer spending by cutting out imports as a consumer choice. Only consumers themselves can do that.''
Kimm calls US corporate planning and achievement, when measured on a quarterly or semiannual basis, shortsighted. ``My company looks at things in terms of two years. We assess the effectiveness of our operations over a long period of time because we recognize that it takes time for changes to take hold.''
Corporate patience is short in the US, he says. Because US management ``is always concerned about the bottom line profits, there is no job security.''
Kimm sees the Korean model of corporate management as falling in between that of Japan and the US.
``On the Japanese side, every major decision comes from the bottom up,'' he says. The plan is studied from every angle to ensure that it is economically viable and that the employees are properly trained to take on the new program. ``Everyone knows what's going on while they're preparing it, and so the decision at the top is just a rubber stamp. In Japan it takes a long time to reach a decision, but once it's made, it's quickly implemented because everything is in place.''
In US firms, says Kimm, the decision is made at the top, and quickly, ``but it takes a long time to implement. There's no ground work done in advance, so there's no sense if it can really work.''
Kimm likens Korean management to a dictatorship, although decisions still flow from the bottom up.
``It's very authoritarian,'' he says. Scrambling to compete with Japanese producers has spurred Korean firms to move faster toward new development. ``In Korean firms, the preparation time is very quick - faster than the Japanese.
Kimm, who opened up the first Japanese office for Control Data Corporation, says that most US-Japanese joint ventures ``have failed inevitably because of a management clash.'' US investors in Japan ``pressure for the American way of doing things,'' he says. `
`For example, if a US-Japanese joint venture wants to enter a trade show in Tokyo, there better be a Japanese running the booth, not an American.'' Marketing in Japan and in Korea he says, must be done by locals who know the language, customs and business climate.