[In-Depth Look] How to Become a Winner in the Post-Corona Era

by Lee Dongwoo

Published 03 Feb.2021 14:23(KST)

Kyung-Yeop Jo, Director of Economic Research Office, Korea Economic Research Institute

Jared Diamond, author of "Guns, Germs, and Steel," cited pandemics caused by pathogens as one of the reasons for the inequality and rise and fall of human civilizations. The pandemic brought about by COVID-19 does not seem to deviate much from the historical cases described by Professor Diamond. COVID-19 is accelerating the transition to the digital era in all areas, including personal life, social activities, and production methods. The gap between countries that accurately read the flow of change and lead digital transformation and those that do not will continue to widen.

The fastest digital transformation is taking place in companies. Not only is the contactless (untact) combined with digital on-tact service industry rapidly emerging, but automation, unmanned systems, and artificial intelligence (AI) are also being rapidly promoted across industries such as manufacturing, logistics, mobility, and healthcare.

Digital transformation progresses through the convergence of various technologies such as AI, 5G, and cloud computing. Joint ventures and mergers and acquisitions (M&A) among companies preparing for the winner-takes-all digital era are active. Korean companies appear without fail in this process. This is the result of having built an industrial portfolio suitable for the digital era long ago. The foresight of great entrepreneurs who invested at every gateway of the Fourth Industrial Revolution and waited for the right time is shining through amid COVID-19.

Peter Drucker, a leading figure in management studies, regards Korea as the country where entrepreneurship is most fully realized in the world. It is hard to deny that the driving force behind Korea’s growth from one of the poorest countries to one of the world’s top 10 economies is entrepreneurship. Although entrepreneurship tends to decline over time, the fact that many people still nimbly seize opportunities and practice innovation amid uncertain risks gives hope for success in the post-COVID era.

The problem lies in politics and government. The Joe Biden administration is mobilizing all means to restructure the global value chain in the direction most favorable to the United States. If you want to sell goods to the U.S., you are required to build factories in the U.S., hire American workers, and establish value chains with American companies. In response, major Korean companies such as Samsung, Hyundai Motor, SK, and LG have been announcing plans to build factories in the U.S. one after another.

On the other hand, Korea is passing anti-market laws that drive companies overseas almost daily in the National Assembly. Since the current administration took office, 8,600 new regulations have been created, the highest ever recorded. Among these, more than 2,200 laws apply to CEOs. According to a survey by the Federation of Korean Industries, just the recently passed three corporate regulation laws and the Serious Accident Punishment Act could imprison a CEO for 61 years. The joke that running a business in Korea is like walking on the prison wall is no laughing matter. The government and National Assembly are creating a situation that damages entrepreneurship and forces businesses to give up or move abroad.

It is rare to find a country, except socialist states, where the government judges and adjusts profits, prices, wages, rents, and interest rates. The more a policy is wrapped in goodwill, the more it hinders incentives to start businesses, invest, and work, making it difficult for market mechanisms to function. This only results in everyone becoming poorer. While companies have grown into world-class leaders through change and innovation, politics and bureaucratic organizations remain at third- or fourth-rate levels. If fourth-rate actors repeatedly hold back first-rate performers, we will be recorded as losers in the post-COVID era.