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Northeast Asian Business Hub

Northeast Asian Business Hub. Thought on Korean Initiatives October 29, 2004. Soonhoon Bae The Korea Advanced Institute of Science and Technology , Seoul, Korea －韓国科学技術院教授、元韓国情報通信相. Current Picture of Northeast Asia. International Relations. -Lack of full reconciliation

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Northeast Asian Business Hub

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  1. Northeast Asian Business Hub Thought on Korean Initiatives October 29, 2004 Soonhoon Bae The Korea Advanced Institute of Science and Technology, Seoul, Korea －韓国科学技術院教授、元韓国情報通信相

  2. Current Picture of Northeast Asia International Relations -Lack of full reconciliation -North Korean nuclear issue -Competition on leadership No foundation for sound competition and cooperation Economy -Surge of China as the World’s factory and market -Japan’s high-tech capacity -No FTA yet Common ground for Northeast Asia Culture -No sense of common identity as Northeast Asian community -Collision of nationalism

  3. Economic Environment for Korea Burdens of social cost Government(60%) Companies(40%) Stagnant domestic consumption Stagnant job market World market share 1991 2002 Korea 2.0% 2.5% China 2.0% 5.0% Competition with China China’s export increase (year 2003: increase by 30%) Competition with Japan Gap in R&D investment (Korea: less than 1/10 of Japan) Increased imports of intermediate goods from Japan Deteriorated competitive edge loss of jobs (Labor market shrinks for new entrants)

  4. * ( ) : share of the world total Comparison among Economic Blocs Kor · Chn · Jap EU NAFTA Pop. (100 mil.) 14.5 (23.6%) 3.8 (6.2%) 4.1 (6.8%) 324 (2.4%) 2,174 (16.3%) Area (10thou. ㎢) 1,007 (7.5%) 7.9 (25.2%) GDP (tril. US$) 5.8 (18.6%) 11.5 (36.7%) Trade Volume (tril. US$) 2.4 (18.3%) 2.7 (20.8%) 1.7 (12.6%) NEA 3 countries (GDP 5.8 tril.US$, T.V.1.7tril.US$) APEC (21) • Pop. 2.6 bil. (42%) • GDP 20 tril. US$ (60%) • T.V. 6.4 tril. US$ (48%) ASEM (26) • Pop. 2.2 bil. (38%) • GDP 15 tril. US$ (49%) • T.V. 6.3 tril. US$ (55%) Trans-Atlantic Market Place • Pop. 0.65 bil (11.2%) • GDP 20 tril.US$ (60%) • T.V. 5.5 tril.US$ (50%) NAFTA (GDP 11.5tril.US$, T.V. 2.7tril.US$) EU (GDP 7.9tril.US$, T.V. 2.4tril.US$)

  5. Korea’s Role for Common Prosperity in NE Asia Market-customization Inbound Outbound Business Hub Investment Technology Investment Technology EU NAFTA Northeast Asia Republic of Korea Gateway Products & Services Products Material Logistics Finance Marketing

  6. Hub Strategy of Korea Cooperation by differentiation Northeast Asian market Technology of Japan Manufacturing of China World market Market focus (Intermediary roles) Korean Business Hub Korea’s competitiveness as a hub in NE Asia • Geographic proximity to China with huge domestic market & low labor cost • Geographic proximity to Japan with high technologies • Highly educated labor force and entrepreneurial skills • Strategic Advantages such as well-developed national infrastructure, overall superior • technological platform, etc. • Advanced Information Technology

  7. Business Hub (Regional Logistic Support for Manufacturing and Distribution)  Logistic hub - Vertical integration JIT Supply Trans-Shipment SCM Stand-alone transportation Parts and raw material Sub-assembly

  8. Business Hub (Specialized Regional Financial Hub) • Financial hub - Northeast Asian(Regional) focus • · Commercial banking – Reform by global practice • · Investment banking – Asset Management • (Industry restructure through M&A) • · Consultancy and project financing – Open service market

  9. Business Hub (Regional Industrial Cluster) • Emerging market focus • Market Integration through FTAs – Pursuing economies of scale & economies of network • FDI - Regional (global) corporations Japan Korea China National goal-oriented market economy Private profit-motivated market economy Brokerage Fast track industrialization Business Hub (Finance, management, and technology) Balanced development

  10. Possible Areas for Cooperation Projects leading to a Northeast Asian community Projects of infrastructure construction that would contribute to peace in the region 6. East Asia FTA (EAFTA) 7. Regional financial cooperation 8. Cooperation on environment 9. Social and cultural exchanges 1. Development of nodes for inter-Korean economic cooperation 2. Linking of inter-Korean and Trans-Asian railroads 3. Development of regional energy resources 4. Cooperation in ICT and other leading edge technologies 5. Exploration of financial resources for regional development

  11. Thank you.

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