Korea needs fewer wage slaves and more entrepreneurs
EARLIER this year Humax, a maker of digital set-top boxes based in Seoul, announced that its annual revenues had exceeded 1 trillion won ($865m) for the first time. For South Korea, this is something of a milestone. Humax is a classic start-up, founded in 1989 after a chat between engineering students in a bar. Alas, scandalously few Korean start-ups grow this big.
The Korean economy is dominated by the chaebol, huge conglomerates with tentacles in every stew. The biggest, Samsung, accounts for around a fifth of the country’s exports. Although the chaebol have played a vital role in South Korea’s development, they also suck up credit and obstruct the rise of start-ups. “Everyone knows you don’t compete with the chaebol” is a commonly heard refrain.
Parents of bright young Koreans typically steer them into steady careers in the chaebol, the government or the professions. As in Japan, being a salaryman (or woman) is far more respectable than running one’s own firm. “In Korea, stability is everything,” says one such parent.
Widespread youth unemployment is changing that calculation, however. An impressive 58% of Koreans aged 25-34 have attended university, but 346,000 graduates are currently out of work, up from 268,000 two years ago. Some become entrepreneurs out of necessity: almost 30,000 young South Koreans say they want to launch their own companies, one survey found. And according to the government, the number of “one-man creative enterprises” in the country has risen by 15% in the past year, to 235,000.
Young entrepreneurs often favour tech fields such as social media or gaming, where the only barrier to entry is the power of your imagination. Challenging the chaebol at, say, shipbuilding, might be trickier. The previous wave of young entrepreneurs—a result of the first internet boom, and the unemployment that followed the 1997-98 Asian financial crisis—threw up fizzy firms such as NHN, the operator of Naver (the “Korean Google”), and NCsoft, a maker of multiplayer online role-playing games. Each was once tiny but now belongs to the trillion-won club.
These new entrepreneurs are being joined by a growing band of foreigners, including ethnic Koreans from Western countries. Californian Koreans see no stigma in starting your own business. And they see South Korea, where the economy grew by 6.2% last year, as a land of opportunity compared with sluggish America. The country issues about 35,000 investor visas a year, mostly to small-scale entrepreneurs. The Seoul Metropolitan Government’s Global Centre has recently been swamped by expats seeking to attend its classes on Korean business procedures and regulations.
The city has also launched a “Youth 1,000 CEO Project”, to provide young entrepreneurs with free office space and grants of up to 1m won per month. South Korea’s President Lee Myung-bak grumbles that Korea has no Mark Zuckerberg (the baby-faced founder of Facebook).
The problem, though, is not young Koreans, who are both bright and energetic. Nor is it business-throttling regulations: South Korea does better on that score than Japan or Taiwan, says the World Bank. The real obstacle to enterprise is a society that urges its best young minds to aim low.
This article struck a chord with me. It reminded me of a course I took not long ago with Professor Baak. Perhaps, it might be interesting to let the readers know that the topic of the course was about the Korean economy. Professor Baak was likable, enthusiastic about teaching and has a quirk to impart his life knowledge to the listeners in class. Mostly, he would always advised us to find prestigious jobs to secure a stable future. Just like in the article, Professor Baak viewed the world through his cultural lenses: The need for a stable job to provide for the family.
Professor Baak was himself a product of recession, a phd student looking forward to his first job when the Asian Financial crisis struck and he needed to move from his homeland Korea to Japan to secure a teaching position. From there, he moved from a smaller Japanese university to a larger and more prestigious Waseda University. Undeniably, he was influenced the Korean and Japanese culture that securing a job is more important than paving into the unknown.
If he mentioned this to me several years ago, I would have agreed wholeheartedly with him. I am sure my parents would have agreed as well. But since coming to the States, I was amazed by the drive that the culture here has in cultivating independence and freedom. Not surprisingly, I found myself increasingly rejecting the notion that having a cushy comfortable position is the most important goal in life. Over time, I found myself increasingly accepting to the notion of doing what I am passionate about, and not following the mold that others has set aside for me.
Also, I feared for the future that is me when I returned back to Malaysia. The culture back home (or at least my environment) is suffocating where the society dictates that the best minds will seek the highest paying employment. Few ever break the mold and seek out their own ventures. Even in Malaysia, the stigma holds that being a salaryman is more respectable than a business owner. I saw Korean classmates, smart and caliber, heading back to Korea to take entry positions in the chaebols. However, none of them ever mentioned about returning home to start their own enterprise. (The classmates I surveyed are those who are raised in Korea and not the Californian Koreans mentioned in the article.) Not that I condemn seeking positions in these companies, I understand how alluring these positions are especially for entry level grads like me.
When Professor Baak talked about in class, he mentioned previously that he taught a heir of a zaibatsu (Japanese version of the chaebol) whom he has no idea of his background until that student asked for a recommendation letter from him. In class, Professor Baak seemed happy and in awe when talking about the young man, possibly thinking about that man’s bright future who might inherit the helm of the zaibatsu leadership. Yet, I kept on wondering, why didn’t he take pride in dreaming of starting his own zaibatsu instead.
p.s. I’m aware that I might have to eat my words in the future and this post might bite me.