Should S. Korea join the OBOR or Not?
I am teaching the Principles of Management course (MGS2030, 2017 Summer) now.
In my class, I encourage my students writing 'reflection essay' for each learning module.
Two students discuss One-Belt-One-Road (OBOR) initiative in terms of S. Korean business perspective for Module 5: Contemporary Issues of Management.
Please read the following essays, and what do you think?
Jeonghwan (Jerry) Choi, PhD, MBA, ME
Assistant Professor,
Kean University (Wenzhou).
S. Korea should join the OBOR!
REFLECTION ESSAY
Course: Principles of Management
Module 05 :Contemporary Issues of Management
Name (Pingyin& English): Nick
In 2013, China's president, Xi Jinping, proposed establishing a network of railways, roads, pipelines, and utility grid that would link China and Central Asia, West Asia, parts of South Asia and parts of Europe. OBOR comprises more than physical connections. It aims to create the largest platform for economic cooperation, including policy coordination, trade and financing collaboration, and social and cultural cooperation. OBOR can benefit everyone involved through open discussion. South Korea is a neighbor country of China. It is also an Asian country. In March, 2015, South Korea joined Asian Infrastructure Investment Bank. And the development of OBOR drew great attention from all walks of life of South Korea.
So, should South Korea cooperate with China and work together for the joint implementation of OBOR?
And I thing South Korea should join the OBOR. Because there is no doubt that the initiative will provide economic opportunities for South Korea. And according to the "Vision and Actions" plan, three provinces of China(Liao ning, Ji lin and Hei long jiang) will become sea-land "window" linking Russia, Mongolia and other areas in the Far East. So Korean government could get many opportunities for cooperation with Eurasia. OBOR can contribute to build a Northeast Asian economic zone. And South Korea will benefit from it.
The construction and development of OBOR is closely related with South Korea.OBOR will invest and construct a great amount of infrastructure including railways, roads, pipelines, and utility grid that would link China and almost the whole world. South Korea could take advantage of these infrastructure to transport their products and stimulate its economic growth.In Kazakhstan, a Central Asian country, South Korea's Samsung and LG electronics products occupy the local market share as high as 80%. And the number of South Korean cosmetics agency is increasing too. However, most of South Korea's products are transported across the mainland of China. The products were shipped to Lianyungang, Jiangsu province of China, and then arrived in Almaty by the "New Asia" regular freight train. This railway line officially opened in February 25th, 2015, is one of the important achievements of "China Belt and Road Initiative construction. For South Korea, this railway also has a special significance.
South Korea will have new way to connect with Europe if it join the OBOR.OBOR will provide an opportunity to improve the logistics environment of South Korea.Nowadays, the two most common logistics networks between South Korea and Europe are sea freight and railway. Shipping is cheap, but it takes a long time. It takes forty or fifty days from South Korea to European ports. Although South Korea could use Siberia railway, the shortest logistics network connecting South Korea and Europe is China's new Eurasian Continental Bridge. The rapid development of OBOR will be helpful for the construction of the new Eurasian Continental Bridge. As a result, providing South Korea a new way to connect with Europe is undoubtedly good. It will help South Korea has more close connection and business communication with European countries and create huge profit.
South Korea could also get benefits from taking part in building infrastructure in developing countries, development of resources and new industries.Many countries involved in OBOR are developing countries. These countries are facing great challenge of development also have great developing potential. However, these countries' infrastructure including railways, industries, roads and so on needed to be upgraded.South Korea could accept these developing countries' infrastructure building projects and get benefits from it. Also South Korea will have more resources due to its convenient connection with other countries. Also, as a member of OBOR, South Korea has the same right compared with other countries to enjoy the benefits from new kinds of industries that developed by all member countries of OBOR.
In the construction of OBOR, China put forward the concept called "community of destiny", its core is interconnection which means expand economic cooperation by connecting highways, railway and port to build infrastructure with neighbor countries. In this process, if South Korea take an active part in it and strengthen the cooperation with China, both China and South Korea will get benefits. And I think China and South Korea should disregard previous enmity and work on OBOR together. It will be helpful for both countries' development. Especially for today's South Korea weak economy, I think OBOR will stimulate South Korea's economy and make it has a fast economic growth.China and South Korea should make a joint efforts to develop a better world through the bond of OBOR. South Korea could get a lot of benefits from OBOR. And I hope the sound of the OBOR chorus will spread loud and wide across the world and make the world better.
Reference
Tai Hwan Lee. "One Belt, One Road Strategy and Korean-Chinese Cooperation". Web. June 13,2017.
Tian Jinchen. "One Belt and One Road: Connecting China and the World". Web. July 2016. June 13, 2017.
S. Korea should not join the OBOR!
REFLECTION ESSAY
Course: Principles of Management
Module 05: (Contemporary Issues of Management)
Name (Pinyin & English): Joseph
At all times and all over the world, whatever occupations a person pursues, making a right choice is the most important thing.
In March 2015, China announced that it was going to set up One Belt One Road (OBOR) item. China would invest in the countries who were the members of OBOR, focusing on improving connectivity and cooperation among Asian countries, Africa, China and Europe. However, in October 2015, Trans-Pacific Partnership Agreement (TPP) made substantial progress, which was considered as the weapon to balance OBOR, leading by the United States. Under this background, almost half of the nations in the world have determined to participate whether OBOR or TPP. However, as a significant economic entity in this world, S. Korea have not make the decision yet.
S. Korea decision makers must choose one agreement to participate, and business managers of S. Korea must consider the benefit and loss of participating one of the agreement, influencing the government’s decision to maximize their benefits. Over the two years, from 2015 to 2017, the situation seems that choose OBOR is a better choice for S. Korea because the United States would quit PPT, and the Chinese market definitely has a huge potential. Besides, lots of analysts think the future of OBOR is bright, regarding it as another Marshall Plan. Whereas OBOR is not a rescue plan but evaluated on a commercial basis. The whole item depends on China, which means the risk is very high just like only one stock in an investment portfolio. In addition, for S. Korea itself, geography and policy issues would also come about some challenges and stresses.
Therefore, I think OBOR has a huge risk for South Korea.
First, basically supported only by China, OBOR itself will face a huge financial risk.According to the news, China warned of risk to banks from One Belt, One Road initiative, the lack of commercial imperatives behind OBOR projects means that it is highly uncertain whether future project returns will be sufficient to fully cover repayments to Chinese creditors (Weinland, 2017). Even though the China government declares OBOR is a commercial item, but lots of analysts regard it as a rescue plan. For instance, OBOR connected many countries include some huge poor areas like East India, Africa, and Middle Asia. Obviously, people in these areas have a very low purchasing power, so the investment in these areas is quite hard to recover the cost. Once China cannot support the loss, widespread bankrupt would happen in China, which could lead a new financial crisis especially throughout OBOR members. S. Korea must be hurt by the crisis if it joins OBOR.
Second, the geography of South Korea can bring challenge and risk to it.South Korea is on the south of North Korea which rejects to join any terms of organizations (Hwang, 2017). North Korea also is an uncertainty factor in the area of China and S. Korea. Therefore, if China and S. Korea have any major cooperation plans, they must consider the negative role of N. Korea. For instance, the main thing that OBOR does now is building unitive road and railway to connect all the members, so if S. Korea joins in OBOR, it cannot be excluded that China could build a cross-sea bridge between S. Korea and North-East of China, and then connect S. Korea to Russia and Europe. However, once the bridge built, it must close to N. Korea unless China does not count the cost, which would recur N. Korea’s attention or even reaction, containing lots of uncertainty and pushing the area of Northeast Asia on edge. Therefore, S. Korea would face a huge risk because of neighboring country N. Korea.
Third, join OBOR will generate political risks to South Korea.In terms of economy, OBOR and TPP are like brothers, but in terms of politics, OBOR and TPP are contrary, so the behavior of join OBOR will bring some political stresses from TPP members or to S. Korea. The issue of participating OBOR or TPP can be simply defined as the choice to close to China or America even though the United States will quit TPP, so the action of taking part in OBOR will be read as breaking away from American camp and join Chinese camp, which is not only an economic issue but a political issue. Then it’s possible that the United States treat S. Korea as another competitor and distribute a kind of sanction in some extent. S. Korea would be suffered from the political risks. For example, S. Korea’s military equipment basically depends on the United States, so once S. Korea has a political crisis with America, it’s national defense will face a huge shock, which is the most serious issue for a sovereign nation.
All in all, For S. Korea, participating OBOR has a huge risk. Because of OBOR itself high risk in business and finance, S. Korea can sustain some loss to some extent. In addition, the geography of S. Korea generates certain risk from N. Korea, and if S. Korea joins OBOR, it could face a political risk from America.The choice of taking part in OBOR is not so good as it seems like, at least the risk is so large for S. Korea, so the business managers should consider more about the benefit and loss of the choice, participating OBOR or TPP.
Reference
Hwang, B. (2017, January 14). What South Korea Thinks of China's 'Belt and Road' Retrieved June 13, 2017, from
http://thediplomat.com/2017/01/what-south-korea-thinks-of-chinas-belt-and-road/
Weinland, D. (2017, January 26). China warned of risk to banks from One Belt, One Road initiative. Retrieved June
13, 2017, from https://www.ft.com/content/6076cf9a-e38e-11e6-8405-9e5580d6e5fb?mhq5j=e2
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