The Economic Status of Industrial Personnel in Korea, China, and Japan

(Source from Reuters/Alamy)

Currently, South Korea’s cargo union is on strike in December, exceeding about 10, causing gas stations to stop supplying gagoline to ordinary consumers and causing problems due to the failure to supply cement to construction sites.

Small and medium-sized construction companies are on the verge of bankruptcy because PF funds in the era of high interest rates have already been blocked.In addition, the subway union’s strike also disrupted operations. In response, the Korean government is trying to resume work by issuing a compulsory order to return to work.

China is facing a chaotic situation due to land disputes with Taiwan and economic difficulties with the U.S., as well as the long-term reduction of production personnel and factory manufacturing sites due to the COVID-19 blockade, and the communist government’s unique politics and control in the third term of the Xi Jinping regime.

(Source from Reuters/Alamy)

However, the situation in China seems to be difficult enough to consider relocating Apple’s manufacturing plant to IndiaJapanese economic experts and media diagnosed that “the credit price, which relied on Abenomics’ ultra-low interest rates and the yen’s low, has returned for nearly a decade.

” The side effects of maintaining large-scale financial easing for too long appeared in the form of a “32-year low in yen value.”


Some experts compare the current Japanese economy to cars with broken brakes and speed sensors. The Japanese economy’s control system was broken as companies moved a large number of production facilities overseas to avoid a surge in the value of the yen.

Japan’s overseas production ratio rose from 4.6% in 1990 to 22.4% in 2020. In 2020, the number of overseas subsidiaries of Japanese companies was 25,700, up 54% from 2007.

Overseas sales of listed companies also increased by 30% to 230 trillion yenOn top of that, the yen’s depreciation is amplifying the import burden.

In July, the yen’s real effective exchange rate (the exchange rate representing the overall ability of the currency) fell to 58.7 levels in 1971.

This means that Japan’s purchasing power has retreated to the level of 50 years ago. Japan has more than 400 trillion yen in overseas assets.

It has been the world’s No. 1 for 31 years. Dividends and interest income earned in foreign currency through overseas assets were the last safeguards to prevent a sharp decline in the yen.

This is because the value of the yen has risen when foreign currency imports are converted into yen.

However, Japanese companies, accustomed to long-term ultra-low interest rates, are reluctant to convert dividends and interest income into yen.

This is because there is no place to invest in yen in Japan, where deposit rates are “zero (0)” and 10-year government bond rates are 0.25%.

The prospect that the yen’s value will continue to fall in the future is also why Japanese companies do not exchange their income from foreign currency.

An official from Japan General Trading Co. said, “It is more profitable to reinvest overseas with high interest rates than to increase yen assets.”It is also pointed out that a more serious problem with ultra-low interest rate addiction is the mass production of “zombie companies.”

They say that companies that should have been eliminated from market principles due to their low competitiveness and profitability are living on ultra-low interest rates.

As the number of zombie companies increases, talent and funds that need to flow into competitive companies do not circulate. Japan is a kingdom of small and medium-sized enterprises.

According to the “Small and Medium Business White Paper” published by the Small and Medium Business Administration in 2020, there are 3.59 million companies in Japan as of 2016. Of these, 3.58 million, or 99.7 percent, are small and medium-sized enterprises. The number of small and medium-sized companies is expected to not decrease further after COVID-19.

This is because the Japanese government has implemented a “zero-zero loan” that lends money without collateral or interest to support financing of small and medium-sized companies. Zero loans have served as a welcome rain for small and medium-sized companies under financial pressure, while it is pointed out that it is a measure to rapidly increase zombie companies.Six major technologies, such as casting, molds, plastic processing, welding and bonding, surface treatment, and heat treatment, and root industries such as injection, press, 3D printing, and precision processing, are unique to small and medium-sized Japanese companies.

In the past, in the era of globalization, one country imported key parts and materials from Japan, processed them in the middle, and sent them to China, and finally assembled them in China and exported them to the world.

The Korean economy also benefited a lot from the division of labor in Northeast Asia, but now the paradigm of the global economy has changed, and the logic of the Cold War is being applied more strongly than the cost reduction using economies of scale.

Japan’s economy seems to be in crisis, but Japan’s small and medium-sized companies in the root industry have tremendous technology and know-how, but they are not exposed.

The same goes for the majority of small businessesized enterprises. The Middle East is legislating and strengthening local manufacturing production and local employment as government measures.

It is necessary to develop the ability and wisdom to actively utilize the technology of Japan’s root industry, the initiative of Korean companies, and the mandatory local production in the Middle East by demonstrating the virtues of discovery, connection, and challenge.

To this end, Hub Forward seems to be using digital platforms to register intellectual property rights of Korean and Japanese companies in the Middle East market and to resolve various information asymmetry for current manufacturing production.

EJ SONG


ASIA JOURNAL

spot_img

Latest Articles