[The Korea-Japan Trade war] Gyeonggi-do's effort on "Technological Independence"

Gyeonggi-do is willing to become a pillar of "Technological Independence" in Korea.

Korea and Japan might be close together on a map, but they stand in opposition because of their shared history. In 2019, the wounds of this painful past were reopened, leading to what referred to as the Korea-Japan trade dispute or the Korea-Japan economic war.
The events that triggered this dispute are by no means recent; Korean-Japanese relations have been turbulent throughout history. The specific issues in this case stem from the Second World War when Koreans experienced suppression and exploitation under Japanese colonial rule.

The Korea-Japan trade dispute came as a wake-up call that, to be a strong technological and economic leader, and the issues of the past notwithstanding, Korea needs to diversify sources and localize production of some core materials and components. 

Here we take a look at what has transpired between these two countries and what actions Gyeonggi-do has taken during the Korea-Japan trade dispute. 

Historical Roots of South Korea & Japan Trade Dispute

From 1910 to 1945 Korea was under Japanese colonial rule

Korea and Japan's historical relations go back centuries and are characterized by an abundance of conflicts as well as mutually beneficial engagements such as trade.

However, in 1910, events took a darker turn when Korea was annexed by Japan and fell under Japanese colonial rule, a situation that endured until 1945. Throughout this period, Japan attempted to exert control over the Korean Peninsula by eradicating the Korean language and culture. Furthermore, as colonial rule continued, Japan began extracting Korean natural resources, appropriating land, and forcing Koreans to serve as labor. 

In 1965, the two countries signed an agreement that reinstated diplomatic relations, but many believe that this agreement failed to fully address the injustices experienced by Koreans. 

As a result, Korea still bears the scars of Japanese colonial rule. Some of those who were forced to become labors and ‘comfort women’ (women taken against their will to work in Japanese military brothels) still live among us.

What Is Going On Between Korea And Japan? 

In 2018, the Supreme Court of Korea ruled that some Japanese companies, including Nippon Steel & Sumitomo Metal Corp and Mitsubishi Heavy Industries, should pay compensation toforced wartime laborers, and in some cases, to their descendants. 

Japan believes that the 1965 treaty addressed such issues and the Japanese government expressed dissatisfaction with the Supreme Court’s decision. As a result, they pushed the Korean government to reverse the ruling. The dispute escalated and, in the end, Japan implemented export restrictions on core materials used in the production of semiconductors in Korea.

Diplomatic efforts to reverse Korea-Japan tensions failed and, in August of 2019, the Japanesegovernment removed Korea from its trade "whitelist" – a list of favored countries that face fewer restrictions in terms of trade. Within the same month, Korea retaliated by removing Japan from its own equivalent of a trade whitelist.

The actions of the Japanese government also lead to public outrage in Korea where the Japanese government's responses to the issues of forced labor and comfort women are deemed by many to be unacceptable. Members of the Korean public decided to impose a grassroots ban on Japanese imports, travel, and even cultural products.

How Has Gyeonggi-do Responded?

Gyeonggi Provincial Government has set plans to produce core materials and parts nationally

South Korean provincial governments have also stepped up to support the Supreme Court's decision through a variety of tactics. Gyeonggi Provincial Government has taken a stand by promoting the national production of the core materials and parts.

Gyeonggi-do has set forth plans to create additional support for the manufacturing industries that could be affected by the reduced imports of material and parts. Gyeonggi-do has invested in projects that make Korea a competitive pole with regards to core parts and materials and plans to create a hub for the semiconductor and display manufacturing industries. The plans include:

·  Averting the crisis faced by the manufacturing industries: investment of 200 billion South Korean Won, between 2019 to 2022, to strengthen the production of materials and parts.

·  Supporting the creation of a hub for the semiconductor and display industries: investment of 30 billion South Korean Won to reach self-reliance in the production of the material and parts. (Reduce the reliance on Japanese imports from 94% to under 50% for materials, 52% to under 30% for essential equipment) 

·  Promote the development of cutting-edge technology and the necessary resources: establish R&D centers focused on developing essential manufacturing equipment, propel the commercial deployment of Russian innovative technology.

·  Create a 'material and parts cooperative cluster': create a globally outstanding semiconductor cluster, the designation of Ansan as a Research and Development Special Zone, Yongin's semiconductor cluster-complex, early propulsion of an industrial complex for material and parts enterprises.

Gyeonggi-do hopes that by supporting local production of core materials, parts, and equipment -- with the help of 20 research centers, organizations, and companies -- it can become a pillar of South Korea's "technological independence". To achieve this, an agreement was signed in December 2019 to establish the 'Academic-Industrial Cooperation' to provide full-scale support for the independence of semiconductor and display material/parts/equipment industry.

Several companies in Gyeonggido have succeeded to localize the production

Which Companies Have Started Localizing the Production?

Some of the businesses in Gyeonggi-do have already managed to take a step in response to the situation and are paving the way by research and development as well as the production of core materials and parts for the semiconductor and display industry.

·  Serve Co. Pallet is a small-sized business that has succeeded in localizing the production of aerospace-grade aluminum. It has been recognized as the top Korean company that is localizing parts and materials in the aerospace field. They have also come to receive recognition from other countries.

·  Dongjin SemichemCo., LTD. has plans for becoming the first national producer of photoresist in Korea. Photoresists are crucial material in the electronics industry.

·   LT Materials, a leading producer of core parts for the LED industry, has taken the initiative to localize the production of display parts.

·   Jusung Engineering is another key player in the local production of display parts as well as semiconductor equipment.