GEOGRAPHICALLY-REMOTE nations can communicate effectively and bridge their cultural gaps if each is open to the culture of the other, and have profitable businesses to run. Slovakia has appeared on the map for South Koreans thanks to their ambitious investment plans here, while Slovaks have discovered South Korea since those plans began to be implemented in this part of Central Europe. Today, there is much more to the ties than just business interests, as South Korea’s first ambassador to Slovakia, Park Yong-Kyu, proves. He has done it all: opened an embassy, travelled across the country, learned about all things Slovak, and has even run Slovakia’s famous Košice Peace Marathon.
The Slovak Spectator spoke to Ambassador Park about the business environment and its challenges, investment in research and development, education reform, the challenges of e-government and cross-cultural communication.
The Slovak Spectator (TSS): A recent survey on the Attractiveness of Europe for Foreign Investors, published by Ernst & Young, shows that Slovakia has broken into its Top Ten this year, reaching eighth place in terms of inward foreign investment per capita. What do you believe makes Slovakia such a competitive investment destination?
Park Yong-Kyu (PYK): There are four major contributing factors, with political stability being the most important one.
Slovakia has also adopted sound economic policies; the country has joined the European Union, the Schengen zone, and in January 2009 it is set to adopt the euro: all very wise decisions. Then the government is providing attractive state aid and full support to foreign investors. The 19-percent flat tax also has played its role.
Another factor is of course the location: Slovakia is a gateway to the EU for many non-EU member countries. In the future your country will gain further importance since the EU will continue to expand and thus Slovakia will serve as a gateway to many countries further east such as Ukraine, Georgia and even Russia. This is an important factor for companies based in Slovakia because they are trying to expand their markets to the east. For example Russia and other countries further east are already significant markets for carmaker Kia. Samsung and Kia are also trying to expand into markets in the Middle East and Africa, and Slovakia’s location is very convenient for such plans. Then there is the flexible labour market, since Slovakia still offers relatively low labour costs and Slovak workers are hard-working.
I would also list one more important factor: Slovak people are friendly and open-minded to foreigners, while the country offers beautiful nature and immense cultural heritage, which is also very important for the investors.
TSS: There are about 70 Korean companies in Slovakia, which together account for about 10 percent of the country’s GDP. Has investment potential already been exhausted or do you see room for more investments?
PYK: The production of Samsung and Kia generated about $10 billion last year, which is 10 percent of Slovak GDP, while South Korean companies produced 16 percent of Slovakia’s exports. Right now the Korean investments are mainly in the manufacturing sector. In the future we can diversify into other sectors where Korean companies can invest: the higher-value-added service sectors such as logistics, information communication technology, construction and transportation. South Korean companies could also participate in public-private partnership projects since they have a very good record in the construction business in the Middle East and Asian countries. A Korean company is building the tallest building in Dubai, for example. However, Korean construction companies have not reached the European market yet.
TSS: What are the challenges for the countries of the region, including Slovakia, if they wish to remain competitive?
PYK: One of the challenges is definitely the lack of infrastructure, and then also improvements in public services, especially when it comes to e-government and providing these services online. In South Korea the public service improved drastically after modern high-tech software and technology was applied. This has reduced bureaucracy to a minimum. When we apply for some documents or, for example, even a visa it takes from two to three days. Everything is wired and no paper has to be shifted between ministries. Everything is done electronically, through intranets.
E-government dramatically reduces costs while making the operations of foreign investors more efficient. I think that in this aspect Slovakia still lags behind. I have heard many complaints about the bureaucratic burden from Korean investors. For instance, they have to submit ten documents to apply for a residency permit. They often expect the same level of services that they get in South Korea. In my country you rarely need to go to government offices.
TSS: Some countries further east already offer even cheaper labour and more attractive tax incentives and Slovaks sometimes wonder whether these potentially more favourable conditions might lure foreign investors away.
PYK: Labour costs and the availability of labour is only part of the consideration for foreign investors, and the low cost of labour does not occupy such a large part of their mind when they decide on investments. There are other advantages that Slovakia has over these countries and these still outweigh the labour-cost factor. For the time being, I do not expect there to be serious competitors to Slovakia.
Labour-intensive manufacturing businesses might move to other countries since the cost of labour is decisive for them. But Samsung and Kia have already made huge investments in Slovakia and brought a lot of suppliers here from Korea. It would be rather complicated to now move them to a different country.
Then there is the automotive cluster stretching from Ostrava in the Czech Republic to Žilina. Kia is considering building another engine factory in Žilina to supply Hyundai in Ostrava. There is a synergy between the two companies. All this makes relocation very unlikely: in 30 years, maybe.
When I visited Galanta, I was asked the same question. Samsung came there from Ireland and Spain and the locals were concerned about the possibility of Samsung moving to Romania or Bulgaria. I explained to them that there is a difference between an assembly factory, which is easier to move, and a complex production plant. Now we have an LCD production factory in Voderady, which is a high-tech and added-value investment amounting to €320 million which supplies LCD panel products to Sony and Samsung. They are unlikely to leave. They came here to be near to their customers.
TSS: According to a survey from the Programme for International Student Assessment (PISA), which measured the skills of 15-year-olds, South Korean children were at the top of the chart when it came to reading skills. On a 626-point scale South Korea came first, with 556 points, followed by Finland and Hong Kong-China. What makes the Korean education system so successful at teaching children elementary skills?
PYK: There are great achievements within the Korean education system but also great challenges. We have a very strong cultural background which stems from the Asian philosophy of respecting scholars and teachers, evolving from the teachings of Confucianism in which parents sacrifice themselves for the education of their children. Scholars and teachers are one of the most highly respected professions in Korea and are very well paid jobs. Since Korea does not have many natural resources it relies heavily on human resources. But frankly, we also have very serious problems.
Koreans are very good at elementary and high-school level in reading and maths but they sometimes lack creativity. Also the study burden is so huge at the elementary and high-school level that students sometimes burn out by the time they reach university.
Many high school graduates who have the finances go to the United States or the United Kingdom to study. We now have more than 100,000 Korean students studying in the United States.
We take very seriously the need to modernise the education system. However, the emphasis on university education has some drawbacks: 80 percent of high school graduates go to universities in Korea. They do not want to work as blue-collar [i.e. manual] workers and thus there is a lack of labour in the blue-collar sectors.
Right now we have more than one million immigrant blue-collar workers. All this creates some social problems since the university graduates would rather remain unemployed than take blue-collar jobs. The Korean government has been working on reforming the system. We are now setting up international schools and making sure they can learn English at home, rather than sending them abroad.
TSS: Slovakia is still lagging behind in investments into research and development, while academia here is slowly developing links with business. What is the situation in your own country in this area?
PYK: My government spends about 3 percent of GDP on research and development, which is one of the highest rates of investment in research. I understand that only five countries, including Sweden, spend so much on research and development. There is of course very close cooperation between industry and the universities, with hundreds of research institutes all over the country. Initially, these institutions started as government projects, but today Samsung and Hyundai have their own research institutes, which are much larger and better-equipped. They also co-work on many research projects with universities and there is a very close link between industry and academic institutions.
TSS: In March it was announced that the Korean government offered two scholarships to Slovaks for Masters and PhD programmes. Is there potential for academic cooperation between the countries? What fields of Korean academia could, in your opinion, be interesting for Slovaks?
PYK: In fact we had five available scholarships but unfortunately we got only two candidates. There wasn’t enough interest, though the scholarships are very generous, providing airfares and covering living expenses. Maybe Korea is still a distant country and relatively unknown. I hope that next year we will be able to fill all the slots. One of the obligations is that they have to undergo some basic Korean language training and maybe that is the difficult part.
We have almost completed the opening of the Korean chair at Comenius University in Bratislava. Next spring there will be a series of Korean lectures with one Korean professor coming here and teaching Korean language and culture. It is part of the East Asian studies programme. We have been working on this project for almost two years, starting shortly after I arrived here.
As for possible cooperation between universities, there are very good universities in Korea and each has a research institute. They are especially strong in the natural sciences. Korean industries such as the automotive and electro-technical industry have a very strong presence at these schools, as do the steelmaking, shipbuilding and chemical industries. There is a lot to share from the Korean experience in these areas.
There are several links between Korean and Slovak universities: one of them is the Slovak Technical University, which has been cooperating with one of the most prestigious Korean universities, POSTECH, which is owned by Pohang Steel, the second largest steelmaking company in the world.
TSS: How successful are Slovaks and Koreans in crossing the language and cultural barriers to communication? In its early stages of operation, Kia organised meetings for its employees at which they discussed the cultural differences and had an opportunity to explain their own culture.
PYK: Slovakia was until recently relatively unknown to South Korea. Before Samsung came to Slovakia in 2002, there had been practically no contact between the two countries. Then suddenly there was this mass immigration of Koreans to Slovakia who were trying to communicate with the Slovak workers. Of course there were some misunderstandings. As time has gone by, a more essential understanding has developed. It is crucial for Koreans that they make the workers comfortable with their company and create for them the best possible working conditions. They have various programmes to promote mutual understanding. They have also been trying to teach the Slovak workers some basic Korean; they are also learning the basics of Slovak. Right now there are no major problems and most companies have created a very harmonious working environment.
TSS: What, in your opinion, are the most notable differences - for example, in corporate culture - that people need to understand?
PYK: There is a strong sense of togetherness in Korea, putting the interests of the nation, state or company before your own interests, but not in the sense of a kind of communist collectivism. It is absolutely voluntary and works as part of our own historical tradition. We really are ready to sacrifice personal interest in the interests of the family, company or country.
I have been working for the Korean government for over 30 years and I am eligible for four weeks of holiday, but I actually find it very difficult to spend four weeks on holiday every year because of the shortage of manpower and my many responsibilities. If I feel that I can relax for four weeks without damaging my performance I will do that.
Korea is not a very big country, but is surrounded by huge countries such as Japan, Russia and China. So it is rather our karma to work hard and remain vigilant to survive. Our peninsula has been a battleground for big powers and we have learned our lesson that when we are weak we can’t keep our independence. And we still live under threat from North Korea. This constant sense of danger might have led us to develop our instincts for survival.
TSS: You are the first ambassador of the Republic of Korea to Slovakia. What are the challenges of the first ambassadorial mission to a country, especially to a country which is both geographically and culturally quite distant from your homeland?
PYK: Opening a new embassy is a big challenge: you have to set up the infrastructure, create the network of contacts and institutions, such as the Korean school. We are now working on establishing the Korean Chamber of Commerce in Slovakia. We have over 60 companies here but we do not have a formal association for them. Of course we also had to study Slovakia, its history, people, language, culture, etc. I tried to travel as much as I could and have made it to many parts of Slovakia.
I love the Slovak nature, especially the Tatra mountains, as the Slovak landscape is very similar to Korea’s. I also try to promote mutual understanding by talking to the Slovak people, especially university students, about Korea and Slovak–Korean relations. This kind of public diplomacy is very important part of my job. Obviously, my first priority is to expand and further facilitate our economic relations. Without the Korean companies coming to Slovakia, we would not have an embassy here.
TSS: What was your main motivation for taking part in the Košice Peace Marathon?
PYK: I ran my first full-course marathon in Rotterdam, in the Netherlands, and Košice was the fourth time I had run such a race. Marathon-running is my passion and I can compare it to practising diplomacy. The first thing you have to do is prepare; you need a four-month training programme to be physically and mentally ready. Then you have to be persistent and patient enough to overcome the critical point during the race, which often comes around the 30-kilometre point. Then you need partnership, since you need co-runners as your partners. Otherwise, it would be really boring and exhausting to run on your own for four long hours. You really need someone to spur you on by overtaking you. There is an invisible bond between you and other runners even though you do not have time to talk with them. It is a fascinating experience, just like diplomacy.
Total area: 98,480 square kilometres
South Korea has 9 provinces and 7 metropolitan cities. Since the 1960s, it has achieved astonishing economic growth, and in 2004 it joined the trillion dollar club of world economies.
Source: CIA Factbook
8. Dec 2008 at 0:00 | Beata Balogová