Akio Okawara
Executive Director
Sumitomo Shoji Research Institute, Inc.
The Winter Olympics in Vancouver recently drew to a close. This quadrennial festival of sports includes some events that we do not often see, and many of the scenes were gripping to watch on TV. In Japan's case, the competition that drew the greatest attention—and the highest ratings—was the women's figure skating, which unfolded as a battle between South Korea's Kim Yu-na and Japan's Mao Asada. South Korea certainly made its presence felt in Vancouver, coming away with six gold medals, including Kim's, and 16 medals in all, placing fifth in the world by this measure.
The Olympics are billed as a festival of peace, but they are at the same time a stage on which countries compete to show their might. So, even though the events are sporting, the rivalry is intense, and the results are emblematic of the rise and fall in countries' power profiles.
South Korea's higher profile is not limited to the Olympics and other sporting arenas, such as ladies' professional golf; it has also become prominent recently in the world of business. Names like Samsung and LG have taken top place in the global markets for products ranging from flat-screen TVs to semiconductors and mobile phone handsets, and Hyundai Motor is now expanding its sales in China, India, and other emerging economies. These companies' successes are attributed to the strategies that they have tailored to match the needs of each market.
A news story that was of particular note in this connection was the report that a consortium led by the Korea Electric Power Corporation won the contract for construction of a set of nuclear power plants in the United Arab Emirates. It is a huge project, involving a total of $40 billion, including operational support funding. Reportedly the top-level sales effort by President Lee Myung-bak was instrumental in closing the deal. Here too we see South Korea's strategic approach at work.
The emerging countries now face the need to undertake major improvements in their social infrastructure, including water supply and sewerage systems, electric power supplies, railways, roads, airports, and seaports, in order to keep up their economic growth. It has been estimated that the total demand for infrastructure in the world between now and 2030 will be more than $40 trillion. By its nature, infrastructure is highly public, and in international competition for contracts it is crucial to have government support in various forms, including institutional finance and trade insurance. Success depends to a considerable degree on the integrated strength of the nation.
A prime example of integrated national strength at work is seen in China's success in quickly springing back from the global economic downturn, which it was able to do by fully tapping the power of its state capitalism.
At the Olympics, victory ultimately depends on the prowess of the athletes themselves. In the business arena as well, success in winning contracts depends largely on the competitive prowess of the companies involved—but, like it or not, governments are coming to play an increasingly important role. We have entered an age in which Japan's corporations may be unable to make their way on the global stage unless they can work together with the Japanese government to tap the nation's integrated strength.
