SEOUL, Aug. 2 (Korea Bizwire) – The Korean economy is changing, with startups meeting both success and failure, and companies that fail to adapt to the new market realities will eventually perish.
In a recent survey conducted by the Korea Chamber of Commerce & Industry (KCCI) and 71 regional organizations, 49.9 percent of 2,400 surveyed manufacturers replied that their source of profits is on the decline.
“We’re living in a generation where even if a company develops a new technology, competitors and markets are changing so fast that its getting hard to compete and catch up to new innovations that follow,” said the KCCI. “And if companies fail to brace for mid and long-term changes, they’ll eventually be consumed by commoditization.”
When asked ‘how long could your company last without reacting to the changing domestic and foreign economic environment’, 8.4 years was the average reply. Electronics manufacturers were the most pessimistic, reporting an average 6.5 years, followed by the automobile industry (8 years), machinery and steel industry (9 years), oil refineries (10 years), and textile manufacturers (15.9 years).
Regarding how fast companies were adapting to the changing environment, if it was changing at 100 kilometers per hour, 74km/h was the average.
“We developed an eco-friendly product after watching Japan’s extensive use of wasabi in various industries,” said the CEO of a company that makes environmentally-friendly soap and shampoo using wasabi. “But shortly after our launch, a Japanese firm released a line of wasabi-based cosmetics, while a European company is marketing cosmeceuticals that are also made from wasabi components.”
Convergence (24.8 percent) was deemed most important by respondents as the means to survival, followed by cost saving (17.2 percent), social contribution (13.3 percent), and creative talents (13.2 percent). And although 66 percent of manufacturers agreed that traditional industries have reached their maturity, they also agreed that there’s room to boost sales through convergence.
“The role of the CEO is more important than ever for effective convergence,” said Shin Hyun-han, a business professor at Yonsei University. “CEOs need to be active and constantly learning. They need the acute insight to recognize what is right and what isn’t.”
The surveyed companies considered the energy and the environment industry (34.4 percent) as the most promising, ahead of the biotech and health industry (21.5 percent), ICT fusion (19.2 percent), and ICBM (Internet of Things, Cloud, Big Data, Mobile) (15 percent).
“The three-year survival rate for Korean companies is 38 percent,” said Lee Dong-geun, vice chairman of the KCCI. “If companies are distracted in pursuing short-term profits, they can eventually lose their ground in the market. This is also why innovative ideas are essential.”
By Kevin Lee (email@example.com)