Reporter Eun-gu Kang [email protected]
“The biggest lesson Corona 19 has given us is the importance of manufacturing. A strong manufacturing industry is the core competitiveness for overcoming the crisis.”
Former POSCO Chairman Kwon Oh-jun said in a special interview with the Korea Economic Daily in 2021, “It is thanks to the strong manufacturing base that Korea was able to save even in the unprecedented crisis situation of a pandemic (a pandemic).” It is explained that although the service industry such as distribution, air and tourism was severely hit by Corona 19, it was less shocked than other countries because the manufacturing industry such as semiconductors, shipbuilding, steel, and automobiles was divided more than expected.
He did not spare a bitter voice toward the political world. Chairman Kwon pointed out that “the government and the ruling party should abandon impatience and have sufficient dialogue with businessmen, as the politics are unilaterally passing a law on corporate regulation, and thus the manufacturing base may collapse.” After resigning from POSCO chairman in July 2018, Kwon has been writing and researching books. On the 30th, in the private office in Samseong-dong, Seoul, former Chairman Kwon met Lee Shim-ki, the head of the industry.
▷ The global economy suffered from the coronavirus last year. Korea also has not avoided negative growth.
“I think Korea has been relatively good. It is the result of companies coping well. The government also tried, but it was a subsidiary role.”
▷ There are many evaluations that the manufacturing industry played a supporting role.
“When a crisis such as a war or an epidemic strikes, the value of the manufacturing industry that creates tangible value is revealed. It was also thanks to the manufacturing industry that the Korean economy was able to quickly recover from the pandemic shock. In the early days of Corona 19, we suffered from lack of masks and diagnostic kits. It is thanks to the excellent responsiveness of Korean companies and the strong manufacturing base.”
▷ There are many claims to advance the industrial structure by increasing the proportion of the service industry.
“I do not agree. The UK is facing major problems with manufacturing escaping abroad. Our high share of manufacturing can be an opportunity. Creating as much value as possible by strengthening the competitiveness of the manufacturing industry is beneficial to economic development and also contributes to growth.”
▷ Isn’t the dependence on the manufacturing industry too high?
“In the future, the division of industries will disappear as smartization progresses in both the 1st, 2nd and 3rd industries. In agriculture, smart farms cultivate agricultural products by automatically adjusting from water supply to temperature. Industry boundaries become meaningless.”
▷It means that the manufacturing industry up to now and the manufacturing industry in the future are different.
“All industries are becoming intelligent and smart. The shortcomings can be compensated for by smarting the manufacturing industry using advanced technologies such as big data and artificial intelligence (AI). We need to push our policies so that we can do better what we do well. With the development of the manufacturing industry, the development of the service industry also follows.”
▷ How should companies respond?
“In order to become smart in each industry, we need to have both hardware and software. We have weak software. It is urgent to cultivate a software workforce that understands big data or AI.”
▷ It is difficult to predict the business environment this year due to the recurrence of Corona 19.
“The big variable that will affect Korea is political change in the US and China. It is positive that US President-elect Joe Biden said he would abandon isolationism and solve the problem through dialogue. China needs to see how President Xi Jinping will behave as the Communist Party celebrates its 100th anniversary.”
▷ How is Korea?
“The 2022 presidential election is a variable. I am concerned that populism (populist ensembleism) will reignite ahead of the election. There is no populism that doesn’t cost money. Still, I’m worried because the budget deficit is serious.”
▷ There are also significant obstacles to economic development.
“We need to change the institutions and cultures that hinder innovation. Innovation is the only way to develop, but the government is keen to attach value to innovation. The only example is the frustration of the shared vehicle service’Tada’. These are the factors that make you worry about the future.”
▷ Apart from Corona 19, Korea has always been in crisis. What is the way out of the’sandwich’ situation between developed and developing countries?
“There must be original technology. Not only our companies are lighting their eyes, but companies all over the world are eager. You cannot win first place in all fields. You have to choose and focus.”
▷ What kind of efforts should the government do?
“We must provide support so that the company can move freely. Looking at recent legislative legislation, it is going in the direction of increasingly shrinking businesses. The governments of the United States and Japan are committed to reshoring policies for the return of domestic companies that have gone abroad. On the other hand, we are tightening regulations on businesses. It’s going backwards.”
▷ How do you evaluate the role of political power?
“Basically, the principles of the free market economy must be observed, but these are neglected. Under the capitalist system, both people and companies must compete in the market for maximum effect. I am also concerned about the emergence of socialist legislation and policies.”
▷ At the end of last year, a number of laws that put a burden on companies such as the Commercial Act and the Fair Trade Act amendments have been passed.
“Companies are said to be harsh, but many elders in the business community agree that these laws are negative for the economy. We must also recognize the political power. The National Assembly has to come up and talk to businessmen and persuade them. This is the basics of democracy.”
▷ There is also a lot of concern about the Act on Punishment for Companies with Serious Accidents.
“If you pass legislation unilaterally, the manufacturing base could be destroyed. When manufacturing disappears, Korea disappears. Management opinions are not reflected at all. It is a severe law with four levels of punishment, such as punishment for representatives, imposition of corporate fines, administrative sanctions, and punitive damages.”
▷ There are many points that the government is too hasty.
“You have to throw away your impatience. The government seems to be rushing too much because of the impatience of making results within the term. We must continue the conversation with the determination that we will go to the next one if we are not in this regime.”
▷How do you see the role of economic organizations?
“We tried our way, but we need to respond to a higher level. In the United States, private research institutes such as the Heritage Foundation and the Brookings Foundation have come up with high-level policies and alternatives that go beyond government research institutions. The economic world also needs a think tank.”
▷ There are observations that the government’s declaration of carbon neutrality will affect the entire industry.
“I have no choice but to go in that (carbon neutral) direction. Companies also need to find alternatives. Steel companies are conducting research on hydrogen reduction steel making steel products using hydrogen. When I was the chairman of POSCO, I visited the National Assembly five times to make it a national project. This is because development is not easy with only POSCO.”
▷ What is the reason?
“Because there is a lot of electricity. When hydrogen is injected to reduce iron ore without emitting carbon dioxide, an endothermic reaction that absorbs heat from the surroundings takes place, and heat must be supplied by electricity from the outside. Coal or liquefied natural gas (LNG) is not enough.”
▷ Is nuclear power the only alternative?
“Honestly yes. Overseas competitors would use electricity produced inexpensively through nuclear power generation, but if Korea does not have nuclear power, the cost competitiveness of the steel industry will disappear. Denuclearization and carbon neutrality are incompatible. When creating a policy, we must respect the technology and opinions of the field.”
▷Finally, would you like your suggestions for a new leap forward in the Korean economy this year?
“We must not lose our entrepreneurial spirit. In any environment, we must continue to try new things and increase corporate value. The entrepreneurial spirit of the founders lies behind Korea’s economic development. If there weren’t their sacrifices, would there have been Korea today? We need a vision and insight to create new business opportunities.”
Who is Kwon Oh-jun…
‘The man of 鐵’as the nation’s top engineer
Former POSCO chairman Kwon Oh-jun is considered one of the best steel technology experts in Korea. After joining POSCO in 1986, he focused on technology research and developed a number of patented technologies such as’World Best, World Premier’ and’Finex Method’. He became the 8th Chairman of POSCO in March 2014 after serving as Vice President of Technology Research Institute, Director of Technology Research Institute, Director of Europe Office, President of Pohang Institute of Industrial Science and Technology (RIST), and Chief Technology Officer (CTO). During his tenure as Chairman of POSCO, he was evaluated for improving the corporate structure and profitability by reinforcing the competitiveness and financial soundness of the steel headquarters and restructuring the business. In 2016, it received the’Korea’s Best Science and Technology Award’ with the highest authority in the field of science and technology in Korea.
△ Born in Yeongju, Gyeongbuk, 1950 △ Graduated from Seoul National University Department of Metallurgical Engineering △ Graduated from Seoul National University Department of Metallurgical Engineering △ MS in Metallurgical Engineering, University of Windsor, Canada, Ph.D. in Metallurgical Engineering, University of Pittsburgh, USA △ Joined POSCO in 1986 △ President and CEO of POSCO △ Nationwide Vice-Chairman of the Federation of Businesswomen, Vice-Chairman of the Korean Federation of Business Owners △Chairman of POSTECH, Chairman of the Korean Academy of Engineering
Summary = Reporter Mansu Choi [email protected]