S. Korea Gears Up to Become Big Exporter

John F. Lawrence is The Times' economic affairs editor

Until two years ago in South Korea, workers at the Hyundai factory pushed cars down the assembly line because automation was so lacking and production so low. Now, two auto manufacturers here and possibly a third are preparing to produce cars for export to the United States, with modern equipment and the potential for high volume.

Government officials talk of how the fruits of a baby boom and a rising education level will boost worker productivity in the country, offsetting rising wages. It will position the country to serve two important markets, China and Japan, says Kim Ki Hwon, secretary general of the government's International Economic Policy Council.

South Korea, which has produced an economic miracle out of the ashes of war, is determined to extend its influence. Its work force appears ready to support that effort with continuation of a six-day work week--often with enough overtime to total 66 hours a week--and vacations limited to three days a year, if you count Sunday in that one long weekend.

Even more than in Japan, the goal is to build for export rather than for home consumption. Traffic jams in smoggy Seoul belie the fact that most families have no car.

Pay Scales Low

Pay is still low. One rising young white-collar worker in Seoul makes about $7,400 a year, maybe a third of what he could command in the United States.

Heavy overtime, however, has produced spending power, and the Midopa Department Store in Seoul boasts nearly the variety of goods of many American stores. Most goods are Korean-made, because the country only recently has begun planning to open its doors significantly to imports and to foreign investment. Clothing prices are relatively low--and women all over Seoul are stylishly dressed--but such big-ticket items as televisions carry U.S.-style prices.

It is a country still going through rapid change, its economy appearing far more stable than its government, where the question is whether change in leadership will be peaceful or by coup.

The sensitivity of the state to criticism is evident. An American journalist argues for nearly an hour just to keep a Japanese newspaper because it might contain stories useful to enemies of the state.

On the way to the city, the taxi passes the scene of an anti-government demonstration by students several hours earlier, dealt with by enough tear gas so that pedestrians for a good mile or more from the site still walk with handkerchiefs clutched to their noses, their eyes watering.

Still, with the Olympics coming in the fall of 1988, there is an effort to soften the government's image. One Seoul executive insists he saw some riot police with smiling faces painted on fiberglass shields.

Won't Be 'Second Japan'

Kim, the government economist, insists that Korea will not be a "second Japan," plying its goods in world markets while maintaining a relatively closed society at home.

"I don't think our trade surplus with the United States will be permanent," he says, predicting that U.S. companies will sell more here. "We cannot afford to have our markets closed (considering the export drive). Already, we are more open than Japan."

Those statements look optimistic and a bit exaggerated considering the relative lack of imports in stores and the fact that many items, including cars, are largely excluded.

He observes, however, that South Korea, relative to its consumption, imports more agricultural products than Japan.

The country has an uphill road to persuade Japanese to buy more Korean goods, which the Japanese consider inferior, but even some Japanese auto producers anticipate competition from inexpensive, bottom-of-the-line Korean models. It is a niche South Korea hopes to exploit in the United States as well.

A number of South Korean business leaders have been invited to China, despite the lack of diplomatic relations. The stage is set, when politics permit, for South Korea to trade actively with China and, if current talks are productive, on a limited basis with North Korea.

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