Economic Crisis Fuels Anti-Foreign Mood in S. Korea

The economic crisis in South Korea has triggered anti-foreign sentiment that has sent sales of imported products plummeting and prompted fears among foreigners that such economic nationalism could spin out of control.

Executives at U.S. and other foreign firms with long experience here say that not only have sales of their products plummeted because of the “Buy Korean” campaign, but that it has also become uncomfortable to be a foreigner on the streets of Seoul.

Faced with mounting unemployment and rising prices, South Koreans are rallying against the forces perceived to be the chief cause of their woes: the International Monetary Fund, U.S. bankers and foreign goods. Rather than accepting that South Korea’s own policies caused its woes, many Koreans blame their current misery on the IMF’s tough prescriptions for reform.

Such resentment has also turned up in other hard-pressed Asian nations, especially Indonesia.

Anticipating possible trouble, President-elect Kim Dae Jung, an internationalist with strong ties to the United States, urged South Koreans last month not to turn their wrath on foreign products or foreigners and promised that “[foreigners] and their products will be treated the same as our own people.”

Choi Jang Jip, a professor of political science at Korea University, believes that South Korea’s rising nationalism is triggered by widespread insecurity over the nation’s sudden and steep economic reversal rather than deep-seated anti-American or anti-Western feelings.

“I believe these attitudes will decline after this crisis passes,” he said.

There have been isolated reports of incidents of hostility directed against foreigners, though they could not be confirmed.

“There have already been some cases where people on the subway were mistreated simply because they were Americans,” said Jay Bonacci, an advisor to Saedong Accounting Corp., an affiliate of Price Waterhouse, the U.S. accounting firm. “It’s probably going to get worse.”

The president of Chrysler Korea, Wayne Chumley, said foreign cars have been run off the road and their drivers threatened, and that at least three Chrysler dealers--themselves Korean--have received anonymous phone threats because they sell American-made cars.

Patrick Linehan, a spokesman for the U.S. Embassy here, said he had not heard reports of Americans being physically harassed or threatened. “It’s not to say it’s not happening, though we haven’t heard of it,” he said.

The country’s “Buy Korean” campaign has been so successful that it is having a devastating impact on the sales of imported products in a country that was just beginning to open its trade doors, according to foreign executives.

“We have never felt so helpless in terms of managing our business,” said the chief executive of one large multinational firm who has lived in Korea for a decade. “Koreans feel to save the dollar is to save their country. When you come down to that level of thinking, you can’t reason.”

Korean entertainers anxious to prove their loyalty are trading in their Mercedes-Benzes and BMWs for Daewoos and Hyundais on national television.

Smokers fearful of being reproached for spending money on Marlboros and Virginia Slims are lighting up Korean cigarettes like “This” and “Get II.”

And “Made in America” labels have become objects of shame among Korean teenagers who are sewing tiny Korean flag patches on their backpacks to obscure them.

The passionate response to the “Buy Korean” campaign is striking enough. But in the relatively small expatriate community here, reports of rudeness, hostility and even violence directed against foreigners also spread quickly.

One European executive representing a major consumer products company in Seoul expressed shock at having turned on his television to see a group of Korean students burning a pile of imported clothing, trinkets and books.

“It was like Nazi Germany,” he said, commenting on the level of emotionalism that has accompanied this campaign.

The anti-import mentality has spread through South Korean churches, schools and companies, tapping into the deep-rooted insecurities of a divided nation long known as the Hermit Kingdom.

There are echoes of America in the 1980s, when a backlash against Asia’s growing economic clout and widespread unemployment in the U.S. auto industry fueled a campaign of blame and at least one homicide targeting Asians, chiefly Japanese, as the cause of U.S. economic troubles.

South Korea appears to have experienced only a few isolated, mostly minor incidents directed at individual foreigners.

But unlike the U.S., where “Buy American” campaigns had little success at the cash register, foreign-based multinationals in Seoul are being hit hard by the anti-import campaign since it is coinciding with an overall reduction in spending among Koreans worried about their future.

American companies have been particularly hard-hit because they are viewed as the Western superpower behind the IMF and its $60-billion bailout.

South Korean firms are moving quickly to exploit their new allure. The Korean manufacturer of “Pro-Specs” sports shoes has boosted sales with an ad campaign asking customers, “Do you wear dollars?”

Young people are particularly vulnerable to the message that using foreign goods is unpatriotic. The employee of one U.S. firm was shocked when her child came home from school with the assignment to make a list of all the “foreign goods” found at home by brand and country.

Leading the list are imported luxury goods and high-visibility consumer goods such as cosmetics and clothing, cigarettes and liquor and automobiles, according to Korean and foreign business executives.

In most cases, price is not to blame for the sharp decline in the sales of imported goods. While the cost of imports has risen dramatically in recent months because of the devaluation of the South Korean currency, the won, most foreign companies have not yet raised their prices because they are selling inventory purchased before the monetary fluctuations or they are absorbing the additional costs.

At the fashionable Lotte Department Store in downtown Seoul, Yoon So Yeon, a 23-year-old sales clerk at the Calvin Klein cosmetics counter, said her business has dropped by 50% since the so-called IMF crisis began last fall.

Shopper Kim Hyol Hee, 25, said she didn’t think much of the “Buy Korean” campaign until she lost her job as a secretary at a struggling construction firm. Now, the smartly-dressed young woman said she is considering giving up her favorite imported cosmetics.

“I hear there are many Korean companies in trouble and if we buy their products it will help them,” she said.

Imported cigarettes, which were banned in Korea until just a decade ago, plummeted from 12% to 5% of the market in December and are expected to fall further in January, according to an industry source.

At Chrysler, Chumley said sales in December tumbled from a monthly average of nearly 200 cars to 34, and during the first two weeks of this month just 15 cars were sold--a far steeper decline than the auto market as a whole.

“Sales have virtually stopped,” Chumley said. “A lot of it is the nationalism.”

George Williams, general manager of NCH Korea Ltd., the local subsidiary of a Dallas-based manufacturer of water treatment products and solvents, has lived through several government austerity campaigns during his 15 years in Korea.

But Williams, whose firm markets its products only in Korea, said this is the first time matters have spilled over into the industrial sector. In recent weeks, some of his best Korean customers have begun canceling orders simply because his firm has foreign origins.

“We’ve had a lot of orders canceled recently just because we’ve got a foreign name, even though everyone in this company except me is Korean,” he said.

Chi Jung Nam of The Times’ Seoul Bureau contributed to this report.

* JAPAN STOCKS JUMP

Japanese stocks and the yen rose on news of possible steps to stimulate the economy. D1