Korean Economy?

[Japher]

Do you even think about what you say before you say it?

Do you ever read what I say? Or do you just read parts of it?

as services require less resources and are not as specialized

[DanS]

as services require less resources and are not as specialized

You just can't generalize like that. For instance, a company such as United Airlines spends a great deal on fuel, while providing a transport service. For another, JP Morgan provides derivatives (financial services) that are extremely specialized.

[Q Classic]

to dispel some notions, to explain others. this is what i understand of the economic situation, gathered from both talking with family/others and reading news reports, data, and information over the past few years.

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1. japanese items are hard to comeby in the first place. some of it is protectionism, which has gone down in recent years in many areas; the other part, specifically against japan, is that anything "cultural" is extremely difficult to import from there.
2. since the imf, a lot of that has come down. unions are still encouraged to work in harmony, but recent strikes have made things go their way--mainly because NO moohyun is a labour softie. in the restructuring since the imf, banks have liberalized and privatized to such an extent that corporations now must compete for loans, since many of the loans being made are now to private individuals. unfortunately, this has been coupled with a higher personal bankruptcy rate in recent years.
3. low income taxes are an illusion. the government sets the prices for a lot of items--sales tax is built into the prices. that's why you can buy sac sac or ghana chocolates for W500 without having to think about adding in tax. it's been done for you.
4. wages have gone up since the country became fully developed. a lot of manufacturing is being moved to china.
5. again, much manufacturing is starting to be moved overseas to china and southeast asia. the korean textile industry has shrunk in recent years, a far cry from back when it was an engine of growth. these days, the only strong manufacturing sectors tend to be in high tech (semiconductors, lcds), heavy industries (automobiles, heavy machinery) and the like.

since the 1997 financial crisis, skorea has been the only nation in east asia to move full speed ahead with severe and sweeping reforms to the banking sector. it's a lot more transparent now, but some people and workers who were used to lifetime jobs have been hit hard. there was a recent strike over a certain bank merger. a lot of previously restricted sectors are now open to foreign investment--including the financial sector.
most of the chaebol, which had been the engines of growth, have scaled back and spun off their operations in order to reduce the crushing debt-to-equity ratios they once had.
however, some of those conglomerates have been slower than others. the biggest faliure to date would have to be the daewoo group, which exists in pieces now: gm daewoo motors, daewoo electronics (owned by samsung), and so on. the other major ones have generally restructured: for instance, the hyundai group no longer has anything to do with hyundai motor: they are two entirely separate entities. samsung sold its controlling share in the auto business to renault, making samsung renault motors, and sold its renowned heavy machinery division to volvo. ssangyong, which is a conglomerate, had sold its motor division to daewoo; that same motor division recently reasserted its independence from daewoo, and now is its own independent company. ssangyong itself is largely gone.
ever since korea eliminated the stupid imf austerity measures, coupled with the private loans, most of korea's recent economic growth has actually been driven internally. consumer credit has poured new sources of revenue and funding methods into the service sector--which has been booming, and it appears that skorea may be one of the first asian economies to make the leap to a service-oriented economy. (japan itself is not a service economy yet, as it derives most of its strength from industry right now.)

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Ssanyong, Kia, Daewoo, Samsung, Bongo...there are many many Korean auto manufacturers and Hyundai.

Yes, but the cars that I have seen suck much worse than even American cars. The Korean consumer is being shafted (or shafting himself) by buying shoddy goods.

that's all pre-1997 (with the exception of Bongo--that's a van manufactured by Kia).
Kia used to be two different groups, Asia and Kia Motors; they folded into each other, and in the wake of the crisis, were bought out by Hyundai Motor.
Ssangyong was incorporated into Daewoo Motor, but when Daewoo was sold to GM, Ssangyong became independent again.
Samsung is now majority owned by Renault--fitting, since a lot of its technology derived from Nissan, Renault's partner.
so the new lineup is:
Hyundai-Kia, GM Daewoo, Samsung Renault, and Ssangyong.
all of the auto manufacturers, like korean companies in other sectors, have switched their focus from quantity to quality. hyundai and kia's cars are no longer the sh|tboxes they once were--that doesn't mean they're spectacular just yet, but they're approaching japanese cars in terms of reliability and recognition. indeed, hyundai and kia are really pushing for an image makeover here in the us, and i've been impressed by their efforts. will i buy a korean car? probably not. but their efforts are nice.
one should also note that several gm and ford cars have been manufactured by korean carmakers: the pontiac lemans was actually a daewoo model; the ford pride is actually a kia.

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What exactly are the Koreans going to become so dependent on as an import? PlayStations? Luxury Italian fashions?

koreans have started buying luxury items in recent years. that's part of the reason why cell phones, computers, and internet connectivity have skyrocketed recently. cell phones there, like in japan and finland, are often a few generations ahead of their us counterparts. it's uncool to have a phone that doesn't have camera functionality, gaming, and a bright color screen with polyphonic ring tones these days.
incidentally, the reason why koreans have focused much more on mmorpg gaming (the largest and most profitable mmorpg in the world is not everquest--it's lineage, made by korean ncsoft) is because consoles, being japanese, could not be imported until recently. computer gaming therefore became the focus. since ps2s have started selling in korea, many console companies have begun setting up a branch there: for instance, there's now square enix korea, alongside square enix usa, square enix europe, and square enix.

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If the last economic crisis wasn't enough to get the Koreans to wake up and smell the coffee then I don't see them doing it until they absolutely, positively have no other option. That means the reconing will be that much worse for their economy when the time comes.

the koreans have, by and large, woken up and smelled the coffee. it's the japanese that haven't quite done that yet.

How will the reconing come? They're already seeing it as cheaper made goods from China, India, and Vietnam are cutting into markets Korean companies used to own.

like you said, samsung's moved upmarket. so has virtually every other consumer electronic brand. LG, the other really big one, has done so as well. sony's starting to worry about competition from samsung now.

Korean made clothing used to be every where but now it's much less common because all of the multinationals have set up shop in even lower wage countries and then priced Korean (and American for that matter) made clothes out of the market.

i noted that above as well.

They're going to have to diversify their economy into services or they're going to see it crash in the next 30 years.

koreans are starting to move into IT these days. the biggest and growing industries right now are consumer electronics, entertainment (movies, music, television dramas, all of which have become increasingly popular throughout asia, in some cases "cooler" than japan's cultural exports).

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the one major thing i'd have to say korea needs to work on is developing a social net common to modern welfare states. currently, there's very little support for the unemployed, and there's nothing like social security. most social programs were never formed simply because they were trying to grow their economy before working on helping the people.
that was one reason why until recently, koreans had a savings rate approaching 33%--and that's where the capital for the chaebol loans initially came from.

[Japher]

You just can't generalize like that. For instance, a company such as United Airlines spends a great deal on fuel, while providing a transport service. For another, JP Morgan provides derivatives (financial services) that are extremely specialized.

Airlines: not so specialize in that they can supply transport to anywhere. Fuel will need to be imported which would benefit the economy.

Financial Services: would be really specialize in Korea if they are not allowed to invest in foreign buisnesses. Yet, while still specialized requires little to no resources.

Two buisness models in the service industry that would use just as much resources as one specialized manufacturing buisness model would (i.e. the automotive industry)... Thus, owning to the service industry, in this example using less resources than the manufacturing industry.