Northeast Asian Business Hub

1
Northeast Asian Business Hub
Thought on Korean Initiatives
October 29, 2004
Soonhoon
Bae The Korea Advanced Institute of Science and
Technology, Seoul, Korea -??????????????????
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Current Picture of Northeast Asia
-Lack of full reconciliation -North Korean
nuclear issue -Competition on leadership
International Relations

No foundation for sound competition and
cooperation
Economy
-Surge of China as the Worlds factory and
market -Japans high-tech capacity -No FTA yet
Common ground for Northeast Asia
-No sense of common identity as Northeast
Asian community -Collision of nationalism
Culture
3
Economic Environment for Korea
Burdens of social cost Government(60) Companies(4
0)
Stagnant domestic consumption
Stagnant job market
World market share 1991 2002 Korea
2.0 2.5 China 2.0 5.0
Competition with China
Chinas export increase (year 2003 increase by
30)
Competition with Japan
Gap in RD 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
Comparison among Economic Blocs

Kor Chn Jap
EU
NAFTA
Pop. (100 mil.)
14.5 (23.6)
3.8 (6.2)
4.1 (6.8)
Area (10thou. ?)
324 (2.4)
2,174 (16.3)
1,007 (7.5)
GDP (tril. US)
5.8 (18.6)
7.9 (25.2)
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)
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Koreas 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
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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
Koreas 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

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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
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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 MA)
• Consultancy and project financing Open
  service market

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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
Balanced development
Business Hub (Finance, management, and technology)
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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
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Thank you.