[The Korea Herald] Is consumer nationalism relevant today?

By John Power

Like so much of its history, Korea’s economic development from the mid-20th century onward was heavily entwined with nationalism. The Park Chung-hee regime regularly invoked national pride in mobilizing its citizenry to build the nation’s industries from the ground up. Park, a staunch nationalist, sheltered local businesses from foreign competition and shunned foreign direct investment.

Times, of course, have changed, and Korea’s markets have seen continual liberalization since democratization. Liberalization of the wholesale and distribution industry began in 1989, followed by the full liberalization of the retail sector in 1996, with the accession of the country into the Organization for Economic Cooperation and Development. Koreans now consume foreign products with abandon, while foreign brands line every major thoroughfare.

A shopper buys goods at a supermarket in Seoul. (Yonhap News)

Yet, consumer nationalism arguably still endures today. Many Koreans retain a preference for domestically produced food, encapsulated in the expression “Sin to boori,” roughly translated as “the body and ground are one.” In a study conducted by Korea Chamber of Commerce & industry in August last year, 62 percent of Koreans expressed a preference for domestic food over produce imported from overseas, even where the latter was cheaper, citing concerns about quality and safety. Chinese produce caused the most anxiety, followed by imports from Japan, the U.S. and Europe.

Such preferences aren’t necessarily restricted to what consumers put in their bodies either.

Global youth

In a 2009 joint Korean-U.S. study presented in the Journal of Global Marketing, Korean consumers were shown to perceive LG televisions produced in Korea to be of higher quality than the same TVs produced in Malaysia.

The reported also noted that previous research had indicated that Koreans generally placed greater importance on the country of origin of a product than Americans. Most recently, many foreigners living here have speculated as to whether public anger over Costco’s noncompliance with a Sunday-opening ban has been motivated in part by nationalistic sentiment.

Kwon Ik-whan, a professor at John Cook School of Business at Saint Louis University, rejected that view, saying that consumer nationalism is increasingly becoming an anachronism.

“The engine of the Korean markets is in large metropolitan areas in Korea such as Seoul, Busan, Daegu, etc.,” said Kwon, who has studied the relationship between ethnocentrism and consumer behavior. “They are global-minded consumers, especially the younger generation. There is no such thing as ‘pure Korean-made’ goods as the Korean economy becomes globalized. The consumers in Korea are smarter than many people, especially politicians, are led to believe. The consumers are shopping for value, not based on origin of production.”

A representative for Consumers Korea also pointed to a generational shift in attitudes.

“Today, it is a global era and there are so many brands and so many prices that consumers don’t care about whether a product is domestic or not, just about the price and quality,” said a spokesperson for the consumer advocacy group.

“Especially young people don’t care about domestic brands. If they like the product, they buy it, so I think nationalism is becoming less important.”

Not only is consumer nationalism a throwback to the past, said Kwon, but it could be potentially ruinous for the national economy.

Powers of protectionism

“Korea cannot afford to cling on the old concept of consumer nationalism if she really wants to be a global player,” said Kwon. “If the majority of consumers feel nationalism is the way for future prosperity in Korea, their entire economy may collapse as the share of Korean GDP accounted for by exports has been rising ever since in mid-1980s. The engine has been export and import. Everyone in Korea has been benefiting from this global economy. Consumers should be aware and be informed of the global nature of their economy.”

Individual consumers’ preferences are not the only factor in determining what makes the weekly shopping basket. Much depends on government subsidy and tariffs’ influence on price and availability. Shin Gi-wook, a professor at the sociology department of Stanford University, said that protectionism has done more to push Korean consumers toward domestic products than feelings of national identity, pointing out that foreign stores such as Costco do roaring trade here.

“To be sure, in certain times like during the financial crisis, we saw some elements of it (consumer nationalism). However, it was government policy of protectionism rather than consumer nationalism that put some constraint such on foreign products,” said Shin.

Where some see greater consumer choice, however, others see the potential decimation of local industries by large multinationals. The Korea-U.S. Free Trade Agreement passed the National Assembly in November last year only after bitter resistance from opposition parties, civic groups and farmers, who argued that the pact would leave local businesses unable to compete with their American counterparts.

Nam Hee-sob, an Intellectual Property activist and critic of the U.S.-Korea FTA, said that small local business should be protected from industry behemoths.

“I think it is impossible to ban the entry of foreign companies into Korea because we committed to opening our market but we can introduce some measures to promote fair competition or protect SMEs,” said Nam, noting that millions of Koreans depend financially on SMEs.

Nam said it was important to support local companies when possible, but also accepted that choosing a brand was a matter of consumer choice. He noted that many Koreans tend to see associate high-priced foreign goods with quality, noting women’s preferences for foreign cosmetics and handbags.

Nam rejected the suggestion that anger over Costco was because of nationalistic sentiment, but he said that penalties to punish the wholesaler should be much greater.

“The reaction of the people is because Costco does not abide by the regulations of the local government. If the same thing happens among domestics companies, I think we can see the same reaction,” said Nam. “I think we need stronger measures such as temporary suspension of business if they continue to fail to follow the regulation.”