Leading Article: Cleveland's part in South Korea's rise

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The Independent Online
IT IS no small thing for Samsung, the South Korean conglomerate or chaebol, to be investing pounds 450m in a manufacturing plant in Cleveland. It is big news for the North- east, where Samsung is expected eventually to create 3,000 jobs in a region of high unemployment. It is also a significant step in South Korea's progress towards a more liberal and international economy.

To attract it to Britain, the Government offered pounds 80m in sweeteners.

It was right to do so: as Margaret Thatcher's policy of attracting Japanese investment showed, the gain far outweighs the cost. Much more than jobs has been created over the last decade. Japanese methods of lean production and total quality have been learnt at first hand by British management and employees. Britain's success in attracting Japanese investment has clearly been an important factor in Samsung's decision.

The Cleveland complex will produce consumer goods ranging from microwave ovens to computer monitors, and is expected to stimulate investment by other companies in related activities. Although Samsung has been producing television sets in Teesside since 1969, the Cleveland plant is of a different order of magnitude.

No one would have thought such a venture possible 40 years ago, when South Korea was emerging under a military dictatorship from the ravages of the war against the north. The big leap has been achieved over the past 20 years, when the government has nurtured the country's economy, spearheaded by the conglomerates, through the first phase of industrialisation. Those decades were, like Japan's earlier equivalent phase, characterised by a high level of protectionism and a mistrust of foreign economic influence.

The limits of that process have, as the Korean government clearly recognises, now been reached. The Samsung investment is part of phase two, in which South Korea continues to emulate its Japanese model. Research and development will be stepped up, overseas market penetration intensified.

There will be a greater emphasis on added- value production and domestic markets will gradually be liberalised.

The immediate motives for Samsung's Cleveland investment are proximity to the European market and avoidance of the anti- dumping duties with which the European Commission unfairly penalises competitive imports from countries like South Korea. Beyond that, however, it represents a large step into the international arena for a country with the potential to become a substantial force in the world economy.

Unification with the economically prostrate north will come one day, bringing many problems of reconstruction but a combined population of 66 million. When the history of Korea's emergence on to the world stage is written, the Cleveland investment will surely be worth at least a few paragraphs.