Lee Seong-woo, Vice President at Korea Chamber of Commerce and Industry
The relationship between Korea and Japan has a huge impact on both our economic growth and security. I am confident that it is a propitious time to strengthen the two countries’ bilateral ties.
Given the prolonged global supply chain crisis, close cooperation between the two Asian manufacturing powerhouses will benefit companies in both countries and worldwide. For instance, the global semiconductor shortage caused a tumult in the manufacturing and sale of all kinds of products. Korea’s world-class semiconductor companies and Japan’s material, components, and equipment companies need to build a close relationship to stabilize the supply system. Also, Japan has Renesas Electronics Corporation, a key semiconductor maker, whose ability to supply semiconductors heavily affects our vehicle manufacturing. A joint investment project to expand production capabilities dramatically would be in our favor.
As the Sino-American conflict rumbles on, the two countries should work together to prevent measures to contain China, such as the Chip 4 Alliance, from collapsing our business with China. We could provide improvement measures, including a business-friendly policy directed towards separation of economy and politics. Also, both countries need to strengthen their negotiation abilities to keep US protectionism in check.
Of course, the recent urea shortage highlighted the magnitude of the partnership in dispersing procurement of materials, components, equipment, and commodities -- of which we are heavily reliant on China. Promoting an economic cooperation project in a third country to overcome the chronically unstable supply of energy and metal resources would be helpful. Joint development of lithium -- the basic material of automobile batteries -- and cooperation to address unstable supply where lithium carbonate and lithium hydroxide are processed and produced is urgently needed. At present, they are processed and produced mainly in China. With EVs emerging as an integral part of next-generation vehicles, heavy dependence on a single country for the battery material will hit hard our industry’s vulnerability, as well as its politics and security.
Global supply chain snarl-ups have led to inflation. It has also caused interest rates to rise and the economy to shrink. Here we must be alert to the possibility of a feud between South Korea and Japan. The year 2009 saw Japan tightening its curbs on high-tech materials used in the display industry to South Korea, which made our economy and society reel. The Korean government marshaled huge sums of capital to devise workarounds.
The weakening Korea-Japan bilateral relationship may become a risk to Korea’s political security with a supply chain crisis and global economic shocks. We should be wary of capital outflow along with the weakening local currency, as well as stumbling stocks and bonds.
By Lee Seong-woo, Vice president at Korea Chamber of Commerce and Industry
The views expressed in this article are his own. --Ed
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