Like so much of its history, Korea’s economic development from the mid-20th century onward was heavily entwined with nationalism. The Park Chung-hee regime regularly invoked national pride in mobilizing its citizenry to build the nation’s industries from the ground up. Park, a staunch nationalist, sheltered local businesses from foreign competition and shunned foreign direct investment.

Times, of course, have changed, and Korea’s markets have seen continual liberalization since democratization. Liberalization of the wholesale and distribution industry began in 1989, followed by the full liberalization of the retail sector in 1996, with the accession of the country into the Organization for Economic Cooperation and Development. Koreans now consume foreign products with abandon, while foreign brands line every major thoroughfare. 

Yet, consumer nationalism arguably still endures today. Many Koreans retain a preference for domestically produced food, encapsulated in the expression “Sin to boori,” roughly translated as “the body and ground are one.” In a study conducted by Korea Chamber of Commerce & industry in August last year, 62 percent of Koreans expressed a preference for domestic food over produce imported from overseas, even where the latter was cheaper, citing concerns about quality and safety. Chinese produce caused the most anxiety, followed by imports from Japan, the U.S. and Europe.

Such preferences aren’t necessarily restricted to what consumers put in their bodies either.

Global youth

In a 2009 joint Korean-U.S. study presented in the Journal of Global Marketing, Korean consumers were shown to perceive LG televisions produced in Korea to be of higher quality than the same TVs produced in Malaysia.

The reported also noted that previous research had indicated that Koreans generally placed greater importance on the country of origin of a product than Americans. Most recently, many foreigners living here have speculated as to whether public anger over Costco’s noncompliance with a Sunday-opening ban has been motivated in part by nationalistic sentiment.

Kwon Ik-whan, a professor at John Cook School of Business at Saint Louis University, rejected that view, saying that consumer nationalism is increasingly becoming an anachronism.

“The engine of the Korean markets is in large metropolitan areas in Korea such as Seoul, Busan, Daegu, etc.,” said Kwon, who has studied the relationship between ethnocentrism and consumer behavior. “They are global-minded consumers, especially the younger generation. There is no such thing as ‘pure Korean-made’ goods as the Korean economy becomes globalized. The consumers in Korea are smarter than many people, especially politicians, are led to believe. The consumers are shopping for value, not based on origin of production.”

A representative for Consumers Korea also pointed to a generational shift in attitudes.

“Today, it is a global era and there are so many brands and so many prices that consumers don’t care about whether a product is domestic or not, just about the price and quality,” said a spokesperson for the consumer advocacy group.

“Especially young people don’t care about domestic brands. If they like the product, they buy it, so I think nationalism is becoming less important.”

Not only is consumer nationalism a throwback to the past, said Kwon, but it could be potentially ruinous for the national economy.

Powers of protectionism

“Korea cannot afford to cling on the old concept of consumer nationalism if she really wants to be a global player,” said Kwon. “If the majority of consumers feel nationalism is the way for future prosperity in Korea, their entire economy may collapse as the share of Korean GDP accounted for by exports has been rising ever since in mid-1980s. The engine has been export and import. Everyone in Korea has been benefiting from this global economy. Consumers should be aware and be informed of the global nature of their economy.”

Individual consumers’ preferences are not the only factor in determining what makes the weekly shopping basket. Much depends on government subsidy and tariffs’ influence on price and availability. Shin Gi-wook, a professor at the sociology department of Stanford University, said that protectionism has done more to push Korean consumers toward domestic products than feelings of national identity, pointing out that foreign stores such as Costco do roaring trade here.

“To be sure, in certain times like during the financial crisis, we saw some elements of it (consumer nationalism). However, it was government policy of protectionism rather than consumer nationalism that put some constraint such on foreign products,” said Shin.

Where some see greater consumer choice, however, others see the potential decimation of local industries by large multinationals. The Korea-U.S. Free Trade Agreement passed the National Assembly in November last year only after bitter resistance from opposition parties, civic groups and farmers, who argued that the pact would leave local businesses unable to compete with their American counterparts.

Nam Hee-sob, an Intellectual Property activist and critic of the U.S.-Korea FTA, said that small local business should be protected from industry behemoths.

“I think it is impossible to ban the entry of foreign companies into Korea because we committed to opening our market but we can introduce some measures to promote fair competition or protect SMEs,” said Nam, noting that millions of Koreans depend financially on SMEs.

Nam said it was important to support local companies when possible, but also accepted that choosing a brand was a matter of consumer choice. He noted that many Koreans tend to see associate high-priced foreign goods with quality, noting women’s preferences for foreign cosmetics and handbags.

Nam rejected the suggestion that anger over Costco was because of nationalistic sentiment, but he said that penalties to punish the wholesaler should be much greater.

“The reaction of the people is because Costco does not abide by the regulations of the local government. If the same thing happens among domestics companies, I think we can see the same reaction,” said Nam. “I think we need stronger measures such as temporary suspension of business if they continue to fail to follow the regulation.”

By John Power  (john.power@heraldcorp.com)


Readers’ VOICE

Consumer nationalism…

Many causes are mentioned as the chief elements of success in the economic growth of Korea. Korea has become the seventh country to join the 50-20 club. Many countries are surprised at this, looking at Korea with envy. Also, because the Korea has achieved things unparalleled in history, even U.S. President Barack Obama has praised the country highly.

Among them, the zeal for children’s education in Korea is high. Enthusiasm for education in Korea made a big contribution to its development.

I also support consumer nationalism.

To consume products made in Korea will contribute to the development of companies and national competitiveness. Korean companies have strengthened competitiveness of their products in many ways, including innovative quality control. Furthermore, this plays a big role in the world market for Korean firms to increase market share.

But buying domestic products can make firms conceited and complacent. To put it plainly, it can make a firm think that the consumer is a sure thing.

Suppose a car costs less than $60,000 (about 70 million won) in the U.S while it is about 110 million won in Korea. Of course, there could be many reasons for this price difference and it is undeniable that the automaker has secured a competitiveness in the world market and has contributed to the national development. Even then there is a problem with a price difference between U.S. and Korea.

Anyway, I am positive about consumer nationalism in terms of its contribution to a company’s development. This is a distinctive feeling of Koreanness.

There was a campaign in the 1920s with intent to encourage Koreans to buy domestic products so that Korea would be liberated economically even though Korea was colonized by Japan at that time. It turned out to be a failure but showed one achievement ― it encouraged the purchase of local products.

― So Kyung-suu, Seoul

Personally I think it is great, but it can go too far; it might not be economical and sometimes companies capitalize on it. Sometimes it is not even fair against the competitors. Koreans really takes pride in their own products. Several times friends have told me not to buy certain things because they were not manufactured in Korea. Today we live in a society where almost everything is determined by economics, but sometimes it is a good thing to promote domestic companies and their products even if it hurts your wallet more. Everything should not be determined by economics.

― Jonte Hee Soo A, Suwon, via Facebook

Nothing wrong with consumer nationalism, to some extent. In the case of Korea, consumer nationalism is, in my opinion, quite unique and different from any other country in the world. Given the fact that four decades ago Korea was poorer than Ethiopia, and over the span of such a short time Korea saw an unprecedented economic development, which brought with it an extreme consumer nationalism.

It has subsided a lot and I think a healthy consumer nationalism exists in Korea today. All this brings me back to my point: Yes, it is good, but only to a certain extent.

― Jesper Hahne Severinsen, Seoul, via Facebook

The consumer market in Korea is changing and Korean manufacturers and stores don’t seem to care very much. The big thing is that there are many foreigners who are now shoppers in Korea and Korean manufacturers don’t even try to provide what they need.

Also, many Koreans have been overseas or have been exposed to better-quality foreign goods and now they expect to be able to buy those same goods in Korea. Korean stores need to wake up to these new realities.

― William Mattiford Jr, Pyeongtaek, via Facebook