GWANGJU and SEOUL – India and Pakistan, get a grip: make football, not war. Call it the ginseng economy. Call it – as did a report from the Hyundai Research Institute – the RED economy, an acronym for resilient, enthusiastic, dynamic. The Red Devils’ unprecedented success in the World Cup soccer finals has been translated into an economic euphoria that South Koreans themselves thought would be extremely unlikely in a country still healing from the ravages of the 1997 Asian financial crisis.
Soccer-crazy South Korea is nowadays a monumental, crowded, nonstop supermarket dressed in red. Auto makers, banks, phone companies, appliance makers, brokerages, consumer-goods manufacturers, department stores are all in seventh heaven with their team making it to the semi-finals – beyond all expectations. Banks have lowered their interest rates. Industrial plants are working to maximum capacity. Commercial orders pour in from everywhere. Consumers spend like there’s no tomorrow – or maybe there is: the final in Yokohama this Sunday, June 30.
Last Sunday morning, the day after the Red Devils sent Spain back to Madrid after their quarter-final win, the Shinsegae department store in Gwangju was pure mayhem. Enthusiastic locals were eagerly benefiting from what is being called the “semi-final marketing” strategy: discounts on everything from fridges and cell phones to French wine. Designer suits were selling for less than US$35. The whole country is awash in promotions. Anybody who bought a brand-new Daewoo Nubira in May and June qualified for a “quarter-final discount” of about $900. LG Investment Securities sent 10 lucky-draw customers on an all-expenses-paid holiday in Spain – the last place on Earth people would want to be spotted in a “Be the Reds!” T-shirt after Spain accused the referee in its match with South Korea of favoritism. Kookmin Bank chose 6,500 clients to win fridges, washing machines and flat-screen TVs. And addicts to Internet shopping were enjoying 30 percent discounts on 50 Samsung products – including home-theater systems.
Dutchman Guus Hiddink – the national coach whose statue will soon be ubiquitous all over South Korea – could not help but become an advertising icon as well. His ad promoting the Samsung credit card and featuring his trademark victory uppercut is broadcast practically nonstop. But the supreme strike of genius in the ad world goes to KTF – the No 2 South Korean mobile operator. Rival KT Corp is No 1 on the market, and also one of the official World Cup sponsors. But KTF’s ad agency counteracted with the idea of not only sponsoring the Red Devils – the fanatic Korea team’s supporter club – but also coming up with the slogan “Korea Team Fighting.”
So Korea is absolutely bursting with KTF banners everywhere. Foreigners with some sense of humor cannot but enjoy the crazy syntax and warped appropriation of the English language of most Korean rally cries: “Be the Reds!” certainly gets the Golden Boot award. But Korean Team Fighting strikes an even deeper chord. Samsung chairman Lee Kun-hee – who incessantly praises the merits of Guus Hiddink, “the CEO of the Korean team” – describes the players as “warriors.” It wouldn’t be any other way in a society as competitive as Korea. In the Korean collective unconscious, Korea Team Fighting also evokes tae kwon do, the universally popular Korean martial art.
As many Koreans are seeing soccer as war by other means, they point out it’s more than fitting that the semi-final match against Germany fell on June 25 – the anniversary of the beginning of the Korean War in 1950 when North Korea invaded South Korea with 135,000 men.
But one war that they are not relishing is the ongoing media battle declared by the Italian and Spanish press, angered that their vaunted teams were bundled out of the competition by the minnows of the tournament – and some poor refereeing. Southern European fingers keep pointing to Chung Mong-Joon as the main culprit of the bad refereeing decisions that turned out to favor Korea. Chung is an all-powerful vice president of the Federation Internationale de Football Association (FIFA), soccer’s world controlling body, president of the organizing committee of the World Cup, president of the Korean Football Federation, executive director of Hyundai – one of the key World Cup sponsors – and a member of the South Korean parliament. Italians and Spaniards are still arguing – with absolutely no substantial proof – that Chung is being rewarded for having found the perfect way to alleviate FIFA’s financial crisis, and the rewards would even include an anti-doping system in the World Cup supervised by Korean doctors.
South Korean consumers and the millions spontaneously gathering in the streets to cheer the Red Devils are immune to conspiracy theories. In downtown Seoul, businessmen prefer to rave about South Korea as the leader of the re-emergence of Asia, or how international investors are becoming Korea-crazy. Dutch companies are already having a ball. Heineken is selling 20 percent more beer than usual: sales of other foreign beers have stagnated. ING Life – the Dutch-based insurance giant – is selling life plans tied up with Dutchman Hiddink’s new status as god-king. There are 279 Dutch companies doing business in South Korea: the Netherlands is the third-largest foreign investor after the United States and Japan, with projects totaling almost $11 billion.
Everyone may be baffled by the Red Devils’ success, but everyone is also quickly learning some essential lessons. Jim O’Neill, a chief economist at Goldman Sachs, said in Seoul, “It was unpredicted that such emerging markets as Korea and Turkey would have reached the semi-finals in the World Cup, indicating that future global economic situations may be unexpectedly altered.”
Former science and technology minister Suh Jung-Wook is one among many emphasizing the benefits for South Korea of the Hiddink method – based on transparency and merit and not on cronyism, peppered with a dash of flair. But he adds that “it does not take a Hiddink to turn any of the Korean companies into a globally competitive force. What is needed is greater regulatory reform and corporate flexibility, particularly in the area of labor management.” The Hyundai Research Institute report highlights an atmosphere “in which people and companies work in a transparent, fair and spontaneous manner” – just like the Red Devils themselves.
South Korea’s golden aim is not solely to win this World Cup (although that would be a wonderful bonus): it is to become the privileged hub of Northeast Asia, and move from 11th- to eighth-largest economy in the world. The Red Devils’ saga has given a massive turbo-boost to the whole process. The two new inescapable mantras repeated in every Korean corporate environment are “improved national image” and “Korea brand recognition.” Opportunities abound to capitalize on this upgraded South Korea.
Hyundai and affiliate Kia Motors, which in 2001 became the 10th-largest auto makers in the world, want to be No 8 in 2002 – surpassing Japan’s Nissan – and nothing less than No 4 in 2010. Researchers at the Hyundai Institute are calling for the government to launch an agency specifically to handle investor relations. Figures are being revised by the day: the Hyundai Institute report predicted a few days ago that Korea’s advance to the quarter-finals would generate at least $2.4 billion in direct and indirect economic benefits.
But with the ongoing consumer boom, the possibility of an export boom, a tourism boom and the spinoff opportunities to be enjoyed by the upgraded Korea, some economists are saying the figure could be at least triple that figure. Before the World Cup, the Korean Development Institute estimated revenues would be up to $9 billion, and 350,000 jobs would be created. Added-value created by the World Cup was estimated at more than $4 billion – 1 percent of South Korea’s gross domestic product (GDP).
Embattled President Kim Dae-jung more than welcomes the booms. Plagued by scandals involving two of his sons on corruption and bribery charges, he is supposed to unveil a revamped way of managing South Korea after the World Cup final on Sunday. He has already apologized on TV to 48 million Koreans for his “failure to supervise his sons properly.” He is busy preparing a frenzy of meetings with key ministers – economy, education, home affairs, foreign affairs – and has already decided to close down the Kim Dae-jung Peace Foundation for the Asian-Pacific region, whose staff have been charged as go-betweens for both Kim’s sons and a cluster of businessmen, and which has allegedly been involved in money-laundering.
But for the average South Korean, all that matters now is the success of the Red Devils – and an inevitably bright future for the RED economy. Millions couldn’t be happier, as once again Asia is beating the West at its own game.