Chapter 4. Networks and Interactions of Korean firms in Taiwan
4.5 Defining of ‘Koreanness’ in Taiwanese Market
Fig. 4-‐9 GPN of Dental Firm B
4.5 Defining of ‘Koreanness’ in Taiwanese Market
Korean-‐ness is a term developed in this study to describe the state of being Korean, which includes having characteristics that are strongly correlated to Korea. Granovetter attempts to use embedded sociology to explain one’s economic activities in the market. Although there have been differences in definition on the economic actors, buyers and sellers, but the knowledge on the social relations holds true on the study that I have delivered. My research on Taiwanese market in the perspectives of FDI from Korea has clearly shown that economic interpretations of interactions between economic actors should be discussed more thoroughly than mere rational thinking of individuals. People make economic decisions based on their social relations. Economic activities are established in the society constituted by groups of people and their interactions. Most economic models that rely on an assumption where people make decisions based on their human rationality (Lounsbury and Hirsch 2010).
However, people make decisions not on their pure rationality, but in fact, they rely on rationality that is socially constructed and culturally contingent.
Definitions of these social relations are different from those of Granovetter’s, but this research has shown that the knowledge is inferred and obtained from the social relations to a great degree. Social relations in this study account for
those are as small as familial unit and as big as societal unit. These networks, familial and societal units, are close-‐knitted and concrete, in which economic actors trust heavily to the knowledge coming from these networks.
Within the market, the roles of Taiwanese are delivering economic activities.
When there are consecutive patterns in economic activities, the collective identities need to be examined because identities organize the meanings, whereas roles only organize the functions (Castells 2010). Identities are stronger sources of meaning for an individual than roles because identities become identities only when social actors internalize the meanings after meanings are constructed by them and for themselves.
In prior to examine the minds of the local Taiwanese, the complex formation of Taiwanese identities in business environment needs to be dealt: specifically, how, from what, by whom, and for what the identities of the collective are constructed. Castells (2010) proposes a distinction between three forms and origins of identity building in terms of the person that constructs collective identity and for what largely determines the symbolic content of the identity, and its meaning for those identifying with it or placing themselves outside of it.
It is important to note that Taiwanese are pro-‐Japanese and in many industries of Korean firms interviewed have been having hard time dealing with competition against the Japanese. This may be from the reasons why that before the concept of ‘Korean-‐ness’ is formed, Taiwan has been exposed to the Japanese features that Japanese firms have brought to the market, and also during its colonized years under Japan. In other words, Taiwan as a market has a distinct perception of Japan, which has long been developed and established, since its colonized years. As much as the perception about what is ‘Japanese’ is fixed, ‘Korean-‐ness’ has been developed and is beginning to have a fixed form with the exposure to Korean pop culture. Most of Korean MNCs have confessed their competition against the Japanese firms and therefore, this study has included the competition against Japan and Taiwan, specifically, Korean MNCs’
market penetrations against local Taiwanese firms and Japanese firms (See Fig 4-‐10).
The knowledge that is prevalent in Taiwan is pro-‐Japanese stance and an anti-‐Korean sentiment. Small to big, almost every familial and societal unit is supportive of Japanese. Family unit is the smallest unit of a society, and Taiwan is an island that has a history that has fought for its freedom of people against Chinese communist powers. Except the aboriginals whom were present even before those from all the provinces of Mainland China enter, the society is made up of people escaping from Chinese communist power as soldiers. Therefore, the society in Taiwan is consisted of people with similar interests and motivations. Whilst fighting for the democracy, Taiwanese fully used and furthermore improved the foundations and additional facilities that the Japanese have built in the colonial years. In the study delivered by Cumings (2002) on Japanese imperialism with test cases of Korea, Taiwan and Vietnam of French imperialism, he writes
“A legacy can be good, bad, or indifferent. The legacy of rich parents to their children might be seen as good; an alumni legacy to an entering freshman fraternity class bad; and a railroad running from Hanoi to Saigon neutral, good or, bad, depending on your point of view. As it happens, the comparative points of view of Korea, Taiwan, and Vietnam are very different and offer much food for thought about nationalism and colonial resistance, development and modernity.”
Despite the fact that Taiwan was held by Japan from 1895 to 1945, longer than any other colonies, Taiwan’s own unique pre-‐colonial experience. In fact, its contrast to Koreans’ experience of Japanese colonial rule would enhance the understanding of Taiwanese case of supportive of Japanese to this day. Korea, a nation and a society that has well-‐recognized and understood history, has a long and continuous history, where appointed Kings would rule over the nation. The history of Korea has had an independent existence on its territory. The responses of the Koreans and the Taiwanese to Japanese colonial rule are distinctively different. Korea sees Japanese imperialism as a ruthless incident where they have aborted their drive for modernity under the pursuit of Japanese interests over the course of thirty-‐five years of colonial rule (Cumings 2002).
To Koreans, the mere mention of the idea that Japan has contributed to the modernization of Korea or that colonial period has contributed to postwar
growth calls forth indignant denials and raw emotions. Koreans do not believe there has been anything positive inherited from Japanese colonial rule.
On the other hand, Taiwan was an island that has no administrative department of the old Qing dynasty. It was just a part of a nation, not a nation itself. Many authors argue that there was less nationalism in Taiwan and therefore less hatred of the Japanese. When Korea and China were full of unrest, in terms of seeking for independence, Taiwan did not have a big independence question like Korea had, which led devoid of any unrest at the time. An observant traveller Hyman Kublin noted, “…Independence, if it is ever considered at all in Taiwan, is evidently regarded as hopeless, not even worth thinking about.” The Japanese took over Taiwan and pacified the island within five months, found almost none resistance in the north, only some in the south.
Mere recalcitrant were the aborigines in the mountains, who remain to this day, not to colonialism, but to modernity (Cumings 2002). Minor resistance against the Japanese can be linked to the situation of tenancy in Taiwan. One of the reasons why Taiwanese people did not resist in the way that the Korean people did could be explained that Taiwan had no increasing tenancy that South Korea had. In fact, land and wealth distribution became more equal between 1931 and 1945. Responses to the Japanese colonial rule is different to a great degree, where an observant American traveller noticed some Taiwanese wore Japanese clothes and he wrote “I can’t recall ever having seen a Korean in getas and kimono.”
The administrative structures such as police networks that the Japanese built in both Korea and Taiwan had penetrated and organized people in an unprecedented manner. In particular, Goto Shimpei, the paradigmatic Japanese colonizer, helped to develop the police systems in Taiwan in the late 1890s (Cumings 2002). Patty Tsurumi described
“Under Goto, the police became the backbone of regional administration.
In addition to regular policing duties, the police supervised the collection of taxes, the enforcement of sanitary measures, works connected with salt, camphor, and opium monopolies, they superintended road and irrigation improvements, introduced new plant
specimens to the farmers and encouraged education and the development of local industries.”
Furthermore, reforms that Japanese brought to Taiwan were not being resisted against, but were in fact appreciated, especially from Taiwan’s Chinese settlers. The structure of organized control is perceived differently in Korea and in Taiwan. When Japanese colonial rule is perceived as a general verdict of exploitation in Korea, but the same rule is understood as a general verdict of modernization in Taiwan. In fact, Taiwan is described to be one of the most successful colonial programs in the world. Japanese not only rationalized Taiwan’s agriculture, but they have also brought structure to the island. Under the Japanese, first-‐ever government is established, and political force and political guile have imposed strict public order and organized control have penetrated to every town and village (Cummings 2002).
The sociology of economic life adequately describes the impacts of
‘Korean-‐ness’ has on the Taiwanese market and also the reasons why Taiwanese choose certain branded products, specifically Japanese. Korean firms largely complain for its competition against Japanese firms, in other words, Taiwanese peoples’ loyalty towards Japanese brands. Taiwan is known for its infamously pro-‐Japanese stance. The country that Taiwanese like the most besides Taiwan is Japan. Although the percentage has reduced from 2009(52%) to 2011(41%), the percentage of answering “Japan” is much higher than other countries such as China, European countries, and United States. In 2011, 75% of Taiwanese citizens think that they feel close to Japan. Among those of 75%, 15% of them feel, at personal level, extremely tight with Japan. And more than 50% of Taiwanese have answered that Taiwan’s relationship with Japan, at political level, is good (Japan 2012). This links to their loyalty towards Japanese products, whether it’d be cultural products like animations or be plane-‐ride to see the nature in Japan. The decision of economic activities is well influenced by the social relations as well as the knowledge of and perceptions about Japan, and such phenomena can be described as Granovetter’s classified definition of
‘over-‐socialized’. Korean firms in Taiwan, though in exceptions where a small portion of the market can be classified as under-‐socialized, choosing the
products regardless of the brand image but are low in price; however, most of the times, they experience the market being ‘over-‐socialized’ with generalized morality-‐ preference towards the Japanese brands and biased perceptions towards the Korean brands, or anything that is related to Korea, which in this case considered as ‘Korean-‐ness’.
To Taiwanese, the word ‘Korea’ can link them to many social incidences – halt in diplomacy, impartiality in sports competition, hindrance in growing of mobile industry – which may have highly been formulated by the work of media in Taiwan. In today’s network-‐based society, media can play the role of command and control centers, and they coordinate, innovate, and manage the information in the market as well as entangle the economic actors (Coe et al.
2004). In fact, media can be viewed as Anna Wintour in fashion industry practicing her power to control the general trend of apparel (Tokatli 2008).
Taiwanese media created negative vibe against the Korean brands by continuously reporting incidences where Taiwanese citizens destroy Samsung monitors in public or bringing a picture of North Korean dictator Kim Jung Il’s photo to a Taiwanese baseball match against Korea (Interview L, 2013/11/18;
Interview O, 2013/12/10). Many interviewees showed the sense of bewilderment at the resentment against Korea in Taiwan because it has not been the case before. The resentment has been obvious, especially from the direct feedbacks from the market that Korean representatives obtain. The foundation of mutual trust that has built upon the friendship between Chiang Kai Shek and President Park was vanished when Korea insisted to uphold “One China”
principle as part of “1992 consensus”. Since the year of 1992, Taiwan has faced a litany of diplomatic troubles. One of the incidents that Taiwan has faced and hold grudge to this day is Taiwanese embassy becoming downgraded to a trade office in South Korea, when Korea switched partners to China and allowed China to use the very location in Seoul that Taiwanese was using (Henckaerts 1996).
Anti-‐Korean sentiment in Taiwan has no precedent in history, and there is no solid sovereignty dispute between the two countries. Neither Taiwan had experiences in fighting against Korea in a war, nor Taiwan had ever flooded by Korean nationals, and even in historic times, Koreans have never been a
significant population in Taiwan. Neither the intensity of the rage against Korea has existed, nor there have been plausible reasons to grab from history.
The media in Taiwan have formulated anti-‐Korean resentment on the island.
The repeatedly showing Taiwanese news media have continued to influence the Taiwanese’ perceptions of Korea. In Taiwan, Korea is known as a country with a bad record of unacceptable manners, being ruthless in sports competition. It is only the recent incidents about Festival Dan Wu that holds true among all others accusations. Intensity of hostility against Korea was raised when Korea registered ‘Festival of Dan-‐Wu’ as Koreans under the title of ‘Festival of Dan Wu in Gang-‐Leung’. While China had many intangible heritage of humanity to register, Korea registered this festival to UNESCO Masterpieces of the Oral and Intangible Heritage of Humanity. In addition, Taiwanese media have repeatedly reported Korea’s act of affirming the distortion of history. For example, Taiwanese cable channel TVBS has broadcasted that Koreans say that they have invented soybean soup. Other Taiwanese media such as China Times and UDN reported that Korea insists that Confucius is Korean by referring to one of the main newspaper called Chosun News in Korea. Chosun News of Korea, one of the oldest and major newspapers in South Korea that is known for its conservative political alignment, have never reported such way and that it made it clear that they have never made reports like that. There have been many accusing incidents against Korea for being a dogged nation that distorts history and insists of many Chinese inventions as Koreans. Repeatedly reported news about Korea has successfully formed a tension and anti-‐sentiment against Korea, leaving Koreans in Taiwan and in Korea dumbfounded. For example, a student at St. John’s university branch in Taipei has made an unusual request to President Ma to clear up misunderstandings that Taiwanese have of Koreans6.
Taiwanese think that Korean has played a hindering role in Taiwan industry’s development. Therefore, when there is an alternative in the product range that Taiwanese would like to buy, majority of the Taiwanese would choose Japanese over products of Korean. Among many sectors that Korean firms have entered into the Taiwanese market, cosmetics, automobiles, and home
6 Available on http://www.koreaherald.com/view.php?ud=20110412000686&mod=skb Access Date: Apr 2
appliances firms experiences prevalent and generalized morality where Japanese branded products are better than those of Korean. The love of Japanese products cannot be compared to their passions toward ‘K-‐Wave,’ and Korean firms in these industries face a much fierce competition against the Japanese in the market. For example, there is now a term ‘K-‐beauty’ prevalent in East and Southeast Asia, and the interviewee states that
“I think we talk about K Beauty all the time….we used to focus more on researching Korean women, but now we have extended the research to Asian women” (Interview R, 2014/02/14).
Having said that, Korean firms face much competition against the Japanese, since the advanced cosmetics industry of Japanese that has secured commercial supremacy in Taiwan in earlier days. Therefore, it is a great challenge for Korean cosmetics firm to try dominating the market that is already in saturation. An interviewee from cosmetics firm explains how the firm tries many different commercial strategies to overcome the competition. She shared:
“Taiwan has a very competitive cosmetic market (the most competitive is known to be Japan). To become a successful company in this field means a lot (to this company) since the market is already too mature.
This year we are trying to put more focus in the online market since people are more willing to shop online…. Last year’s attempt to expand into Taiwan’s home shopping market was a success (not a lot of global brands are selling cosmetic products on home shopping channels).…
There are over hundreds of cosmetic brands in Taiwan” (Interview R, 2014/02/14).
Additionally, Taiwanese market has the similar responses in the automobiles and home appliances industries. The representative of Taiwanese branch for Korean automobile firm stated that
“Taiwanese market is very similar to Japanese market. It can be seen as a small version of Japanese market. The Japanese brands account for 70% of the market” (Interview K, 2013/11/07).
The interviewee from home appliances firm also described their situation in such competitive market, where Taiwanese prefer Japanese brands to those of
Korean, and therefore it causes them to sell at the lower price, facing the fierce competition against the Japanese brands in the market.
“I don't think Taiwanese dislike Korean products, but I know for sure that they dislike Korea and Korean people. In our commercial industry, they like Japan and Japanese products. We cannot sell if our selling price is same as those of Japanese products. We have to lower our price 5~10% than Japanese products to make some sales….I don’t think Taiwanese do not choose our products just because we are Korean, but I strongly believe that we have to sell it more cheaply than Japanese products because we are Korean products. We can only sell if they are available in the market at a cheaper price than those of Japanese, meaning that our brand power is relatively lower (than Japanese)” (Interview N, 2013/12/03).
Regardless they watch Korean dramas or listen to K-‐Pop, the fondness towards Korean-‐ness and Korean products depends on Taiwanese’
already-‐formed perspectives on Korea, which leads to significantly different levels of ‘being aware’ of events happening in Korea and of general Korean brands. The interviewee from home appliances industry says that
“I think Korean dramas and Korean Wave have definitely made the brand awareness that Korea has a positive turn, but those that have buying power for washing machines, refrigerators, televisions are generally in their 30s and 40s. I think they get impacted less by the Korean Wave” (Interview N, 2013/12/03).
The interviewee from automobile industry has also been facing similar dilemma in the characteristics of target audience and the influences around them possessing buying power.
“…Taiwanese employees working in Taiwan have much lower salaries than Koreans. They don’t have much money…So, to buy cars, they have to ask their parents for money, and the parents are around 50 to 60 years old, whom highly doubt the qualities of Korean products in
“…Taiwanese employees working in Taiwan have much lower salaries than Koreans. They don’t have much money…So, to buy cars, they have to ask their parents for money, and the parents are around 50 to 60 years old, whom highly doubt the qualities of Korean products in