[Inside Chodong] Our Attitude Toward Facing the "Gray Rhino"

The U.S. Presidential Election Is Predictable, Regardless of the Winner
Preparing in Advance Could Turn Risks Into Opportunities

A senior official from the economic ministry I recently met described the upcoming U.S. presidential election, which is about ten months away, as a "predictable variable." It is too early to predict whether President Joe Biden will serve another term, former President Donald Trump will return, or a third party will seize power. Nevertheless, given the various confusions experienced after changes in the U.S. presidency in recent years, the possibility of being caught off guard like in the past seems low.

This is true, but whether you know it’s coming or not, getting hit by a hawk hurts the same. If it can be avoided, it should be avoided; if not, it is appropriate to prepare in some way?whether by building stamina or putting up a protective shield.

For South Korea, which relies on trade for its livelihood, the unprecedented changes in the current trade environment are unwelcome signals. The belief in mutual benefit through free trade has been fractured. The U.S. and China clash over every issue as they compete for superpower status. Since China entered the international trade order, its large market and cheap labor have supported the global economy in the 21st century, but abnormal signs are emerging one by one. The prevailing view is that it remains to be seen whether China’s efforts to shift from a real estate-centered economic structure and drive various new industries will be effective.

Politics and economics, once loosely separated, are now closely intertwined, making economic security a crucial task for political leaders. If producing the same quality product cheaply was once a virtue, now leaders must also consider a structure that ensures stable supply. This realization came from the fact that supply chain ecosystems can collapse instantly due to COVID-19, war, or unexpected natural disasters. Europe’s enactment of the Critical Raw Materials Act, following the U.S. Semiconductor Support Act (CSA) and Inflation Reduction Act (IRA), is ultimately in the same context. These are strategic moves to reduce external dependence and strengthen vulnerable parts of the supply chain.

Even the U.S., with its vast resources, the dollar’s status as a key currency, and combined soft and hard power, now puts national prioritization and protectionism front and center. Whether it is Trump’s "Make America Great Again" or Biden’s encouragement to "Buy American, Build American," their presidencies reflect the spirit of the times, regardless of whether the rhetoric is right or wrong. Both our companies and government officials have taken on the challenge of solving this complex equation.

What business executives dislike most is uncertainty rather than recession or various regulations. Predictable risks can be prepared for and countermeasures found accordingly. Facing an opaque future is something any human being, not just a CEO, would naturally avoid. The term "gray rhino" refers to large and small warning signs of risk that can be identified in advance. It describes situations where, despite having the capacity to anticipate and respond, failure to act proactively worsens the problem. It is a call not to complacently accept known risks but to prepare even more thoroughly.

When the IRA was enacted in the U.S., there was a prevailing forecast that Korean-made electric vehicles would immediately face poor sales. This was because the tax credit, which effectively acts as a subsidy, applies only to electric vehicles made locally, leading to the logic that consumers would buy fewer Korean-made EVs. However, the outcome did not follow expectations. Thanks to belated efforts to enter the market and exceptions made for commercial vehicles, companies refined their products accordingly. We know that preparing in advance brings even greater benefits.

Choi Dae-yeol, Deputy Head of the Industrial IT Department

This content was produced with the assistance of AI translation services.