South Korea Sets Hopes on Hanover Trade Fair
April 21, 2009
Of all the EU countries, Germany is South Korea’s biggest trading partner as well as the biggest investor in Korea after the Netherlands. Germany and South Korea are both export-driven economies with a strong base in manufacturing.
Both countries’ strengths supplement each other in an ideal way, says Korea’s Minister for Knowledge Economy, Lee Youn Ho: “In terms of industrial plants and machinery, Germany is number one worldwide, whereas Korea is specialised in IT products. So we have a lot to gain from increased cooperation.”
Major German companies such as Siemens and chemical giant BASF have been successfully practising this kind of cooperation with Korean partners for years.
This year, however, the Hannover Messe is overshadowed by the global economic crisis, with world sales of machinery likely to decline by 10 percent this year. Relying largely on their exports to the global market, Germany and South Korea have been particularly hard hit.
Shrinking economies and fears for jobs
Their economies are both expected to shrink in 2009. Like many affected countries, South Korea has announced an unprecedented stimulus programme, which is worth 17 billion euros.
The government’s main concern, besides ensuring that companies have enough liquidity, is jobs, says Lee: “As far as creating and preserving jobs is concerned, we want to prioritise so-called ‘green growth’. ‘Green growth’, green technology will be our future strategy.”
“Green growth” seems to be a buzzword at this year’s Hannover Messe. Germany’s president Horst Köhler has also called for an “ecological industrial revolution”.
Priority on boosting exports
But whereas the Korean government realises that stimulating domestic demand is necessary,
Lee Youn Ho adds that there are limits to re-inventing the economy: “We have certainly noticed that we’ll have to increase domestic demand. On the other hand, the sheer size of our domestic demand is not enough for our economy. That is why we want to do both: Stimulate domestic demand and further boost our exports.”
The Hannover Messe provides an excellent opportunity to do just that. And despite the crisis, Minister Lee remains optimistic: “It’s only the second day, so I think it really is too early to make a judgement.”
“At present, there are more than 210 Korean companies participating in the fair, making it one of the largest Korean participations ever in an international trade fair. Accordingly, we have high hopes and I am confident that we’ll be very successful.”
The economic relationship between Korea and Europe is likely to grow closer in the near future: The EU and South Korea are scheduled to hold a bilateral summit in Seoul on May 23 and hope to finalise a free-trade deal within the next few weeks.