Saturday, October 20, 2012

(STICKY) Without Samsung, there would be no Korea - Sata

COMMENT - This could be an interesting model to study for the copper part of the economy (although SMEs should be the mainstay of a diversified economy), and this should be a great opportunity to discuss the concept of Chaebol (business associations) and Keiretsu (the original Japanese model).

The likes of Samsung are large corporations which were created through heavy state support, and were always completely locally owned. In fact the government at all times has their back and ensures they have no competition from foreign corporations.

It is impossible for a non-Japanese car manufacturer to set up a car factory in Japan. What they did, was 'steal' foreign ideas to set up their own industries. This is what Zambia must do, instead of going abroad for foreign investors to take ownership of Zambia, the government must levy taxes from the mines and use the money to create Zambian Chaebols. And the state owned corporations still exist, whether it is NCZ Chemicals or even ZCCM. And ZCCM should be Zambia's 'competetitive advantage', with complete control of the copper mines in the national interest, and spawning copper product manufacturing centers left and right. When Zambia a) receives all the profits from copper and b) only exports copper products, the jobs will start showing up. Saying 'foreigners will bring jobs' is an insult to the intelligence of every aware Zambian. It is saying - all you can hope for is to serve some foreign factory owner, who will pay you whenever and whatever they deem fit. Where is the national pride? Where is the pride in the creation of uniquely Zambian products?

From Thayer Watkins' post: THE CHAEBOL OF SOUTH KOREA:

There were family-owned enterprises in Korea in the period before 1961 but the particular state-corporate alliance came into being with the regime of Park Chung Hee (1961-1979).

Park modeled this arrangement on the zaibatsu system which developed in Japan during the Meiji Era. There were significant differences between the zaibatsu and the chaebol, the most significant of which was the source of capital.

The zaibatsu were organized around a bank for their source of capital. The chaebol in contrast were prohibited from owning a bank. The Park regime nationalized the banks of South Korea and could channel scarce capital to industries and firms it saw as necessary for achieving national objectives.

Clearly, this is not how the World Bank or IMF want Zambia to develop, and why Zambia has no Chaebol 'business associations'.

From: Korea, South The Origins and Development of Chaebol:

The chaebol were often compared with Japanese keiretsu (the successor of the zaibatsu), but as David I. Steinberg has noted, there were at least three major differences.

First, the chaebol were family dominated. In 1990, for example, in most cases the family that founded the major business in the chaebol remained in control, while in Japan the keiretsu were controlled by professional corporate management.

Second, individual chaebol were prevented from buying controlling shares of banks, and in 1990 government regulations made it difficult for a chaebol to develop an exclusive banking relationship. The keiretsu usually worked with an affiliated bank and had almost unlimited access to credit.

Third, the chaebol often formed subsidiaries to produce components for exports, while large Japanese corporations often employed outside contractors.

Without Samsung, there would be no Korea - Sata
By Joan Chirwa-Ngoma in Suwon, South Korea
Fri 19 Oct. 2012, 14:00 CAT

PRESIDENT Michael Sata says there would be no Korea without Samsung as the electronics giant has more money than the Asian country. And President Sata was elated when he discovered that a Zambian, Weston Chirwa, is part of Samsung Electronics' management and described him as "industrious".

President Sata took time to meet several Korean investors with the aim of luring them to invest in Zambia. Yesterday, the President, in the company of ministers Sylvia Masebo, Given Lubinda, Bob Sichinga and Emmanuel Chenda, visited Samsung City, the home of Samsung Electronics where he pleaded with them to set up a factory in Zambia.

President Sata said Zambia's central location and its land-linked status provides an opportunity for the country to become a major supplier of Samsung products and the company's business growth.

"I can see that there is a problem with organisation here…Korea is Samsung, without Samsung, there would be no Korea today. Samsung has more money than Korea," he said.

Samsung Electronics currently has a workforce of around 200,000 employees in 72 countries where it has a presence, with its operating profit hitting US $14.7 billion in 2011 (around K77 trillion), more than double Zambia's 2012 annual budget.

Earlier, Samsung Electronics president and chief financial officer Ju-Hwa Yoon said his company, now ranked 9th among the top 100 global brands in 2012, goes where the market exists for its wide range of products, hinting that they were in a process of setting up a plant in Egypt.

But President Sata objected and argued that Zambia had a much bigger market and presented attractive opportunities for business growth than Egypt.

"You will make more money in Zambia and you will see that for yourself…Instead of going to Egypt, come to Zambia because it has the largest market than Egypt," he said. "In Zambia and many other countries in Africa, Samsung is appreciated. Having known Samsung myself for more than 20 years, I have not been impressed with your development in Zambia.

I am told you are building another factory here; why not build in Zambia? And don't blame us if other Korean companies come and we give them incentives for investing in Zambia. So my main request to you is to come and open a factory in Zambia. When you do, you will have the entire central African market.

Zambia is surrounded by countries like Democratic Republic of Congo, Tanzania, Malawi, Mozambique, Namibia, Zimbabwe, Botswana…"

And President Sata was delighted when Chirwa was among top Samsung officials who welcomed him at the Samsung City.

"…There is a Tumbuka who is working here, he is very industrious," he said, jokingly adding, "As you come to Zambia, bring him (Chirwa) along so that he can take you to Lundazi for you to see how backward they are."

Ju-Hwa also said his company, through the existing bilateral ties between Zambia and Korea, would find ways to increase its presence in the southern African country following President Sata's appeal.

After a tour of the Samsung City, Lubinda and Sichinga laid a foundation stone at a construction site for Is Dingseo - a Korean company that is seeking opportunities to invest in Zambia - on behalf of President Sata.
Sichinga said the government was looking for credible companies that could invest in low-cost housing for a majority of Zambians owing to the current housing deficit in the country.

"And I invite you to come and be part of the Investment Summit which will be held from November 26-30. Please be part of that," said Sichinga.

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