FAGAT 2004 in Malaysia/March 13, 2004
Presented by Mr. Gabriel Kook Hong Lee/The Chairman of Printing Exporters Association in Korea
(Part 2)
Forward
The topic of this 7th FAGAT meeting is 'The Asian Printing Industry In The Globalization Era.' Globalization! This phenomenon is more recognized and emphasized all over the world in this 21st century therefore it seems that it only began and started to gain emphasis in the 21st century. But in truth it has already been in progression since the latter half of the 19th century when the free market was in full flourish.
The globalization of 19th century began with the expansion of trade. In this period the trade was often explained by the difference of endowed resources. But today globalization is based on the scale of turnover and profit that is produced by the enterprise. This shows that the impetus of globalization today is not the trade itself but the movement of capital.
The big wave of the innovative information technology assisted by the shift of capital has expanded business across borders and is working as a driving force in the globalization. The printing industry, being part of the communications industry has already joined the main axis that is leading this information oriented society.
What is the Korean printing industry doing to move with this trend at this time? In this report, we will examine how the globalization policy of the Korean government can influence the
Korean printing industry and what the globalization is understood among the Korean printers.
Let's look at the current situation of Korean printing industry and how they accommodate the change based on their understanding of globalization.
1. The Globalization Policy of Korean Economy and the Change of Korean Printing Industry
1. Export Oriented Economic Policy and the Printing Industry
The export oriented economic policy that was started in the late 1960s has contributed in many ways to strengthen Korean industry in general and its competitiveness. Due to this policy the overall industry started to react to the change of demand caused by internationaltrade. Every company tried to build up their own competitiveness for the overseas market.
Naturally, the international trade was rapidly increasing its role in the Korean economy.
The printing industry however was more focused on importing new equipment to adopt new technology rather than exporting its printed materials to overseas. In the 1970s, computer system was introduced for electronic typesetting and in the 1990s DTP system was introducedto open up the new age of multimedia. The printing Industry however did not stand out in the export market compared to the other industries.
2. The Globalization Policy of the Korean Government
Entering the 1990s, The Korean government started to push 'Internationalization or Globalization' as its national strategy. Then it spread throughout Korean society, culture, and economy with the open trade policy engaged by the nation.
Thanks to this policy the term globalization has become a precondition for the strength of national competitiveness and survival. In addition to this, the policy has induced the change in attitude from the authoritative government to the practical enterprise. This was followed bya 'sales foreign policy' and the economic value gained a priority in establishing national policies.
After the mid 1990s, the Korea, Japan and USA trade triangle structure started to breakdownand the trade imbalance with Japan ran into the red. Moreover the economic crisis overcomeby the assistance of IMF required a new structure of Korean enterprise and open financial market to overseas.
3.The Penetration of Globalization into the Society
Entering the year 2000, the Korean economy started to overcome the economic crisis slowly. At this time an open economic structure was built with clear understandings of the globalization movement and its inclusion is clearly stated in the economic policy.
The 21st century has been distinguished as the information and knowledge era and so much so the globalization movement has become more popularized. The general acceptance of globalization can be seen in the popularity of English education and people becoming more open minded. This general consciousness of globalization opened up worldwide vision and prepared for the unlimited competition in the world market.
4.The Globalization Movement of Korean Printing Industry
The Korean printing industry was affected by the globalization policy of the government and began to join this mainstream of change gradually. As a result of that, the modernization of printing technology and equipment were carried out in keeping pace with the digital age.
On the other hand there was a movement to open up the export market and the Korean Federation of Printing & Information Industry Cooperatives took the lead in this work. In theyear 2000, the value of print export totaled over 200 million USD and this achievement continued throughout 2001. But in 2002 the total export of printing Industry declined and it resulted in a 35% drop in export value compared to that of year 2001.
5. Recovery of Export and Printing Industry
The recovery of the Korean economy was eagerly expected in 2003 with the establishment ofthe new government. However domestic and foreign affairs were in a negative trend and went through a difficult period again because of economical and political issues caused by the unstable administration. Adding to these difficulties were the labour strike of the cargo driver, the typhoon Maemi disaster, nuclear weapon issue with the North Korea, SARS and the Iraq war.
During last May growth was expected to be less than 2 % of GDP as overall industrial productivity declined to 0.9%. Since experiencing the downturn in the first half of 2003, the business climate started to show positive signs. In September 2003, GDP showed positive signs by increasing to 6.7% and rose even more to 7.4% in the last quarter. It indicated thatdomestic business showed clear signs of recovery. Export was one of the contributing factors to this business recovery.
Due to the recovery of USA and developed countries economy in Europe and the fast growth of the Chinese market, total export in last cember was valued at almost 20 billion USD, this was an increase of 35% over that of last year. This shows export picked up considerably during this period.
However this increase was generated by only a few business sectors. Whilst the business such as semiconductor, mobile phone, automobile, shipbuilding and chemistry showed clear sign of recovery thanks to the export, nevertheless other business was still in a slump. Therefore the overall economy situations were still not good. The printing and publishing sectors were in a downturn. In December 2003, productivity reduced to 9.1% over that of thelast year. In 2004 government deported illegal foreign labourers, which created additional
strains under the heavy burden of a shortage of labour. This also has caused the domestic economy to shrink and slowdown. In addition the over competitiveness among printing companies has put the market situation worse.
As we look at the above, the Korean printing industry is faced with the most difficult situation ever and now is the time we have to make every effort to break through this barricade. We need to move our business into the export markets from our domestic market, which is suffering from extreme competitiveness and over capacity.
2. Print Export
Export gives a very special meaning to the Korean printing Industry because most of the printingequipment used in Korea depends entirely on import.
To date most Korean printing companies have focused on their domestic business. Therefore mostcompanies were indifferent to export business as they were making enough profit through the domestic market. Even companies that were doing export, just treated the export jobs as fillers during their low-demand season and never developed this opportunity as a main business. But the situation has changed, as the domestic printing market became saturated and suffered for overcapacity and over competitiveness.
Many Korean printing companies are starting to move their attention to the export market and areadopting a positive attitude. This kind of change is very significant among the larger companies, which have established an organized, efficient and active policy for export business.
We conducted a survey and interviewed a selected group of 100 Korean printers to find out whatthey think of the globalization and how they could apply it to their business. Most of them answered that globalization would expand their business into the overseas market. There were alsovarious answers regarding globalization. Here we will present an overview of the state of the printing industry. We will also look at the problems facing the Korean printing industry. We will examine what kinds of effort have been requested by the Korean printers to improve their currentsituation.
1. The Lack of Expert for the Print Export
As the most basic factor for print export, it is very important to have experts who have sufficient experience and knowledge of international trading and printing process and have communications ability in a foreign language. However in all sectors of the printing industry including the export market, there is a lack of experts and many Korean printers consider this situation to be a major obstruction to their export.
There are many reasons that have caused this current situation. Korean printers indicate the fundamental problem is originated in the limit of the current education and training system.
At present, many printing education bodies provide printing education, consisted of the theoryof printing process and practical training courses in Korea. However there is no educational body that offers a practical international trading course, so most printing companies that are doing export have employed a graduate from the trading department. The printing company
then has to take charge of training. The cost and time to train these people with the relevantprinting process as they do not have printing backgrounds are quite burden. Printing companies also have to pay for their employee's language course.
If we reflect on the educational situation we have, it is essential to establish a new curriculum for teaching personnel whose expertise would be for trading in print export. Of course it would require full support from the government and associations related to the printing industry. This requires a long term plan and would be a solution to developing the export market for the print industry.
2. Steady and Systematic Support from the Government
Up to now the Korean government has tried to help small to medium sized companies to encourage their export through the Small and Medium Business Administration(SMBA) and Korea Trading Agency(KOTRA). Despite that kind of effort, the Korean printing industry getsinsufficient support because of all of the other industries looking for help. Hence many Korean printers indicate all associations and institutes related to printing industry should play a crucial role in applying for and obtaining steady and systematic support from the
government.
3. Long Term Plan for the Export
Most clients in the printing industry easily change their suppliers because orders are on a job per job basis, but they are all looking for a reliable relationship with their supplier at the same time. In the case of export, it is even more applicable. Therefore it is always important to establish creditability with the clients as it helps to build up long-term relationship. But until suppliers can gain its customers creditability, they should be patient and put in a lot of effort because there are many steps in the export process. By perseverance and investment printers can make a success in print export.
4. Export Market Research and Analysis
By definition export is trading with a country that has different culture. Hence it is very important to do a research and analysis to understand its cultural background. In fact some Korean printing companies lost their export business opportunities due to the lack of understanding of the cultural differences of their clients. Therefore Korean printers have indicated that good relationships with their overseas clients can only be built up after the proper research and analysis for the export market has been done.
5. Diversification of the Export Market
At the moment Korean printing companies export their product all over the world. The largest three markets for export during 2003 were USA, Japan and China. USA was the top purchaser of exported printed matter accounting for more than 64 percents of the export market lastyear, followed by Japan and China. It is required to diversify the export market and continuethe steady relationship.
Figure 1. Printing exports to USA, Japan and China between 2000 to 2003(Unit:1,000USD)
