We were on the top floor of Samsung’s headquarters in Seoul. I asked a senior vice-president of this global Korean chaebol what his company’s plans for India were. “India?” he asked, and looked out of his window, cupped his palm above his eye and scanned the distant horizon, and said, “where is India?” He turned to me, guffawed and added for good effect, “I can see China, I can see Malaysia, I can see Thailand, but I don’t see India!”
That was in the spring of 1992. Today the president of South Korea, Lee Myung-bak, is in India as the chief guest at the Republic Day parade.
In 1992, I was the first Indian journalist invited to visit South Korea as a guest of its ministry of foreign affairs. “We invite 200 foreign journalists to Korea every year. You are the first from India,” my host informed me. Korea was not a country on top of any Indian journalist’s mind at the time. As a student of economics, though, I had read in the 1970s about the “Korean model of development”. When Bela Balassa waxed eloquent about it, the economic gurus in India whom I respected pooh-poohed it.
Then in March 1991, Manmohan Singh, then chairman of the University Grants Commission, chose to speak to me at length on the lessons India must learn from South Korea in an interview he did for a special 30th anniversary issue of The Economic Times. He recalled how well into the 1960s, South Korean economists visited the Indian Planning Commission to be trained in long-term planning and the construction of plan models. Korea, like Japan, had industrialised and globalised rapidly. India had lessons to learn, Singh believed.
So it was not surprising that PV Narasimha Rao became the first Indian prime minister to visit Seoul in September 1993. A few weeks after Rao’s visit, a team of economic analysts from the Samsung Research Institute in Seoul turned up at Times House to interview me! They had been sent to study the Indian economy and explore the importance of the Indian market for Samsung products. Samsung’s visionary chairman Lee Kun-Hee was impressed by India’s new “Look East Policy”. India was beginning to discover Asia, Korea must discover India.
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I wonder how many market analysts and business strategists would have predicted in 1993 that within a decade, Korean brands would overtake Japanese ones in India. They did. As the Business Standard’s weekly take on corporate strategies, The Strategist, will show in its Republic Day edition tomorrow, Indian markets are witnessing the “Korean Takeover”!
In 1991, bilateral merchandise trade between India and South Korea was a mere $0.55 billion. By 2007, this had gone up to $8.96 billion. According to a recent paper published by the Indian Council for Research on International Economic Relations (Icrier)*, Korea’s share in Indian exports and imports was 1.01 and 1.28 per cent respectively in 1990. By 2007, this had gone up to 1.69 and 2.69 per cent. During the same period, says the Icrier study: “The value of Indian exports to Korea increased from a mere $0.24 billion to $2.46 billion while Indian imports from Korea increased from $0.314 billion to $5.4 billion during the same period.”
The increase in trade has benefitted Korea more, since it enjoys a substantial trade surplus with India. This imbalance between a developed and developing economy should be corrected. South Korea will have to find ways in which it can increase its imports, not just of goods but also services, from India and bridge the trade deficit. One way in which Korea can redress this trade imbalance is to use investment as a driver of imports. Thus, rather than import iron ore from India, Korea could import steel made in India from Indian ore. That is what the Korean steel company, Pohang Iron & Steel Company (Posco) intends to do.
The Icrier study also shows that the trade complementarity index for the two countries has increased. This would imply that the India-Korea free trade agreement signed recently should help enhance trade and investment flows, reversing the more recent trend of a decline in Korean investments into India. The Icrier study suggests that Korea must take steps to liberalise trade in film and entertainment, telecommunication and pharmaceuticals to help bridge the trade gap.
But relations between nations are about more than trade and investment. India and South Korea have shared strategic concerns in a rapidly changing Asia. Their economic complementarity and strategic convergence should bring the two nations closer. Indeed, of all the east and south-east Asian economies Korea may have been the biggest beneficiary of India’s “Look East policy” given the fundamental transformation of the bilateral economic relationship in the past two decades.
Korea exploited the vacuum created by Japan’s decade of depression and inward orientation and its long- drawn “study” of India. Even as the Japanese complained and lectured India, the Koreans moved in and established their presence. Today, Japanese brands are fighting their way back, but the Koreans are here to stay.
Few Indians are aware of the shared mythologies that run like a thread through the warp and woof of the India-Korea relationship. An early discoverer of this in the modern era was Rabindranath Tagore, who foresaw and celebrated Korea’s awakening and rise, in 1929: “In the golden age of Asia/ Korea was one of its lamp bearers/ And that lamp is waiting/ To be lighted once again/ For the illumination of the East.”
* Pravakar Sahoo, Durgesh Kumar Rai, Rajiv Kumar: India-Korea Trade and Investment Relations, Icrier Working Paper, 242, December 2009. Available at: