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Saving South Korea Saving South Korea
by Joseph Gatt
2020-03-25 09:52:58
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A few notes which hopefully will be helpful to South Korea.

-Coca Cola and Pepsi sales have declined steeply in the last 10-15 years. Many reasons explain the decline: competition from home-made and other drink companies, the tendency for people to opt for drinks with “more natural ingredients” and also the nature of drinking has changed. Coca Cola and Pepsi were family drinks, but families are smaller in size, tend to eat meals individually and many other factors.

But. Coca Cola and Pepsi are still very healthy companies, with some anxiety about the future. Why? Coca Cola and Pepsi don't own banks, and tend to be careful about how much debt they tend to take out. The low debt-rates mean they can adjust production to meet demand, thus cut production costs and maintain healthy revenues. Demand goes up, produce more. Demand goes down, produce less.

skore001_400_01Also, Coca Cola and Pepsi have diversified their business to everything from mineral bottled water to fruit juice to sports beverages to other beverages. But Coca Cola and Pepsi did not venture into the AI or electronic cars or smartphone or microchip business. They did have money and could have invested it on that, but they stuck to their drinks.

Another note that I'm sure Koreans will keep in mind. Coca Cola and Pepsi did not invest in the alcoholic beverage business! Now imagine beer, wine or liquor made by Coca Cola or Pepsi. That would have been something. And if Coca Cola and Pepsi were owned by Koreans, I'm sure they would have their soju and makkoli brands. Something to think about in business management.

-So what lessons can we draw from Coca Cola? Americans want to lead a happy, healthy, decent life. Koreans want to become eternal gods.

Let me explain. In most countries, we are well aware that we are not eternal. We usually avoid taking unnecessary risks, and we aim for realistic goals. Not always, but in business, that's usually the case.

In Korea, Japan and China. CEOs would get 7 billion people to worship them if they could. That's how hungry they are for power. Now this megalomania and delusion of grandeur is actually a sign of very deep insecurities. Most Korean, Japanese and Chinese CEOs do not tolerate the slightest criticism or shaming imposed on them, even when it's a subtle hint.

So below, I will give some advice to South Koreans that I hope they will think about.

-First off, ppali ppali culture, or “fast, fast” culture is not always a good thing. When it's providing a service, that's a good thing. I like that in South Korea I tend to get my coffee, sandwich or meal in less than three minutes. In most countries, I have to wait for about 20 minutes or more.

However, when it's academia, the thought process, business reports, or anything that involves analytical thinking, putting ideas forward and so on, doing so quickly is never a good idea.

How many Koreans walked out of meetings with me simply because they were too impatient to listen to my (very condensed) reasoning?

Now I have to thank Koreans because they are the ones who taught me how to write deeply but concisely. If it were not for the Koreans, I'd be writing 10 page papers no one would read. I learned this exercise with the Korea Times, where I was only allowed to write public articles twice a month, in 750 words or less. So I had to say as much as I could in 1,500 words a month!

Unfortunately, shabby thinking is part of Korea in many business circles. To give you an idea, over the last 10 years, there are way too many “foreign” restaurants in Korea. Now many Koreans opt for “foreign” (non-Korean) food because they can jack up prices with “foreign food.” Problem is, “foreign restaurants” tend to be expensive, yet don't provide the kind of quality and atmosphere that justifies such high prices. The setting and food is almost like fast-food, yet they charge 20 or 30 dollars a meal. Such restaurants often go out of business very quickly.

So “fast, fast” culture means very often not thinking long enough or hard enough about problems, which leads to lack of creativity and other issues.

-Second, there is a culture of sabotage in Korea. If you sabotage businesses and individuals, don't be shocked your economy is flagging. Sabotage includes big business scamming small business in all kinds of way, big business stealing the ideas and products of small businesses, and big business simply taking small business to court in Kafka-like trials. In Kafka's novel, Joseph K. commits no crime, gets arrested, and gets accused of all sorts of crimes he does not commit, and keeps getting hammered down with crimes and more crimes as the laws keep changing to humiliate Joseph K.

-Third, there is a lack of goodwill from South Korean leaders. South Korean leaders don't want to work for their country as much as they want people to worship them. That has to change.

-Finally, something South Korea and Japan has trouble understanding, along with China. Here's how economic growth works (it's called Bendorf's law in statistics) but let's keep things simple. This year, I make 100 bucks a month on my job. Next year, my wages rise to 200 dollars. That's a 100% rise. Next year, 400 dollars. Next year, 800 dollars a month. The year after that 1,600 dollars a month. The year after that 3,200 dollars a month.

Now when I hit that 3,200 dollars a month ceiling, I can't keep getting 100% growth every year. Now my income will grow 3%, or 2% or maybe 5%. My income might decline 3%, or at least might decline if adjusted to inflation.

I know in 2005 many “experts” including the IMF were predicting that South Korea, Japan and China were going to keep growing at 10% rates until 2030 or even after that. And the IMF knows nothing about Bendorf's law. To be clear, the IMF is a bunch of Harvard Graduates who take home fat paychecks and watch YouTube videos or Netflix all day, and who write their reports in “ppali ppali fashion.”

So I hope there's something to think about, and I hope the dialogue will go on. More importantly, I hope the economy becomes smoother and more efficient in South Korea.

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