Chapter 320
Chapter 320
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Translator: crow
Chapter Title: Side Story 11: The End of the Myth
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The operations carried out by Korea throughout 1973 dealt a massive blow to the United States.
Coup prevention ops, Watergate ops—even just counting the big ones, the damage America suffered was immense.
But compared to the damage inflicted by Korea's conglomerates, this was nothing.
“W-We’re filing for bankruptcy.”
“What?”
By the end of 1973, Texas Instruments, the flagship of America’s electronics industry, filed for bankruptcy.
“No, you can’t collapse.”
“We had no choice.”
Texas Instruments was the first American company to create handheld calculators and microcontrollers, so the shock to Americans was enormous.
But this was just the beginning.
“We’re shutting down our business too.”
“What?”
A month later, IBM—the birthplace of DRAM and computing services—collapsed, followed by comprehensive semiconductor giant Intel.
“At this rate, our entire electronics industry is done for!”
The successive bankruptcies of America’s electronics firms clearly showed the limits of subsidy policies.
“You have to realize from the start that subsidies can’t cover all the losses.”
In a chicken game, only the dinosaurs that achieved economies of scale could survive.
And those dinosaur-like electronics giants were in Korea.
“Keep the pressure on. We need to wipe out our competitors while we can. When else will we get a chance like this to kill them off?”
Sesung, one of Korea’s conglomerates, even put on a show revealing its massive factory under construction in Shenyang to the world.
“Once the 4th factory starts operating, transistor production will quadruple from current levels.”
“Pardon? Quadruple?”
“Look at the size of that factory. You think they can’t manage quadruple?”
“Y-Yeah, you’re right.”
Of course, Sesung’s factory production claims included some bluffing.
But every country seeing this overwhelming scale thought differently.
“They’re wrong. There’s no way we can compete with the Koreans like this.”
“Sesung’s the kind of guys who could hit quadruple and then some.”
More output meant even lower prices.
That would obviously widen losses even further.
“Time to cut losses.”
“Let’s dump it quick. Doesn’t look like there’s any hope.”
Shareholders of electronics firms began rapidly selling off their stocks.
“We can’t continue business like this. Does everyone agree?”
“We agree.”
Major shareholders went through board meetings to dispose of factory equipment and lay off employees, initiating shutdown procedures.
Sesung cackled as it watched its competitors crumble.
“This bluffing is working great, huh?”
“Of course it is. We actually have the capability to do it.”
Korea’s dominance in electronics was so overwhelming that just showing a bluff made everyone panic.
Reversing this board was practically impossible.
No, this superiority wasn’t limited to electronics.
Korea’s dominance spanned the entire manufacturing sector.
“From toothpicks to satellites, Daehan supplies everything itself. Who can compete with us?”
Korean conglomerates ruled the world with vertical integration, economies of scale, and government backing.
Against these tyrants dominating the global market, the only cry from resisters was one thing.
“Tariffs! Raise tariff barriers!”
Without tariff barriers, they couldn’t even compete with Korean goods.
“You think 10% tariffs can match us?”
Not just high-end goods—even in low-price segments, they lost to Korea.
Korea’s competitiveness, with factories in India and China, was overwhelmingly formidable for any nation.
Of course, even these triumphant Korean conglomerates had their headaches.
“Running factories in China and India makes quality control tough.”
When factories were in Korea, quality control was relatively easy.
With a highly educated workforce, training was efficient, and comprehension was high.
But not in China or India.
Even cherry-picking the best-trained workers, quality was far below Korea’s.
“Even doubling training time doesn’t cut it.”
Language was an issue too.
Using English for convenience led to communication breakdowns.
So, workers would pass training fine but mass-produce defects.
“Hey, I just taught you not to do it that way.”
“Sorry, sir.”
This improved somewhat with long-term employee retention.
The problem came after they quit.
“The Chinese are making and selling knockoffs?”
“Look at this.”
Chinese entrepreneurs hired ex-workers and copied Korean products exactly as taught.
They even mimicked Korean company names.
Kumdae became Gundae.
Eunsung became Dongseong.
Korean firms suffered greatly from these Indian and Chinese knockoffs.
“This is a Kumdae product, right? Exchange it.”
“Ma’am, look closely. This is a ‘Gundae’ product.”
Some brazen firms used identical names outright.
Korea took a significant image hit from these fakes.
There were plenty more headaches besides.
“What’s this about suddenly moving the electronics import window inland?”
“It’s French government policy.”
From absurd foreign “import suppression strategies,”
“We can’t take your ad contract.”
“Why?”
“Too many hate calls from Asia-phobes. Can’t do business.”
To race-related issues.
Korean conglomerates’ headaches piled up daily.
Yet the chairmen leading them saw every sign as opportunity.
“Why would they copy us so blatantly if we weren’t killing it?”
“They’re scared stiff of us, that’s why they’re throwing up barriers.”
“Hate us all they want—good products will sell.”
Korea’s economic titans kept pushing forward.
The most aggressive was Kumdae.
“Kumdae’s food isn’t just autos and machinery. Our next growth engine is distribution.”
Kumdae spared no investment in distribution, which it entered during the Lee Seong-jun era.
The result: Kumdae Mart, the dinosaur of retail.
“Start your day with Kumdae.”
Kumdae Mart expanded ferociously, centered on Korea and Asia.
Started with 50 stores.
By 1973, it had grown into a behemoth with 2,300 stores worldwide.
Kumdae Mart fully leveraged its massive size.
“You know you lose $5 a day if you’re not in Kumdae Mart?”
Using overwhelming economies of scale, Kumdae crushed market rivals.
“Even if net profit dips, higher sales mean gains.”
Kumdae starved competitors with low-margin, high-volume strategies.
In the process, upstarts like Walmart all shuttered.
“Ah, those small-fry with pennies? They deserve to die. What business do minnows have in the mart market?”
As Korean conglomerates’ offensives expanded across all industries, Western terror peaked.
If 12th-century Mongols conquered the world militarily, 20th-century Korean firms were conquering economically.
Western firms rushed into alliances for survival.
Just as Japan’s chip makers formed Elpida against Samsung, Westerners bulked up via mergers.
“Mergers and acquisitions. Shut up and merge!”
Western governments, Wall Street, and the City supported M&A aggressively.
“No merger, no support.”
In this process, dinosaur firms to challenge Korea began emerging.
GE was representative.
Already a megacorp, GE swallowed bankrupt assets and electronics firms, reborn as a fearsome monster.
Governments pushed monopolies onto these dinosaurs.
“Side effects? Who cares. We’re all going bust to the Koreans anyway.”
To fight Korean firms, they abandoned old principles.
Western society shifted to total war against Korean conglomerates.
Of course, this shift came at great cost.
M&As inevitably bred massive unemployment.
Already high from recession, Western unemployment ballooned from M&A fallout.
“Jobs! We need jobs!”
Western recession deepened further.
People panicked seeing neighbors fall.
“Keep spending like this, and you’re done if you lose your job. Cut back on everything if you don’t want to end up homeless.”
Consumer spending shrank production, which shrank jobs, which shrank spending—a vicious cycle.
“Can’t the government just print money to fix it?”
“Yeah, right—with treasuries wrecked from subsidy wars, what support?”
Western governments were helpless against rapid contraction.
As Western society plunged into sharp recession, ripples hit the Third World.
“Orders from Europe and the US—only a quarter of last time.”
Third World nations, sucking honey behind the economic war, now drowned in recession waves.
“Suddenly?”
Third World states shook in shock.
Growth rates were even more dramatic.
“Negative growth?!”
Most Third World commodity exporters’ reversals were practically foretold.
The impact boomeranged back to Korea.
“Growth forecast’s coming in under 5%.”
“What?”
From West to Third World suddenly in slump, even soaring Korea wasn’t unscathed.
“What about all the inventory we’ve produced?”
The golden age of selling everything produced ended abruptly.
Thus, the myth of Korean conglomerates—and the economic war—ended.
At the economic war’s tail end loomed a terrifying downward spiral of depression.
“Hold tight. The crash is starting.”
Panic from the bubble’s end.
Its shockwave was enough to shake the very order Korea built on growth myths.