JC History Tuition Online - What does Daewoo do - Asian Tiger Notes

What does Daewoo do?

Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Find out more about the fall of a formerly prominent business conglomerate in South Korea, Daewoo Group. [Video by Asianometry]

Background
Daewoo (대우) refers to the ‘Great Universe’. On 22 March 1967, the Daewoo Group was founded by Kim Woo-Choong. Kim was the son of a provincial governor. Notably, Kim’s father used to teach Park Chung-hee, who later became South Korea’s authoritarian leader.

In the late 1960s, Kim relied on government loans to develop export-driven industries. His access to government loans was made possible with the Second Five-Year Plan from 1967 to 1971, which targeted export-oriented production. Within this period, the South Korean economy experienced an average growth rate of 9.6%. Also, the share of manufacturing in exports rose from 60 to 70%.

Diversification
At the early stages, he focused on the production of clothing and textiles, given the country’s sizable and affordable labour supply. Before 1972, Daewoo focused on its core business by purchasing three businesses, two textile producers and one leather processor.

In the 1970s, Daewoo moved to new areas, such as the production of cars, ships and oil rigs, which aligned with General Park Chung-hee’s plan to promote heavy and chemical industrialisation under the third Five-Year Plan from 1972.

By mid-1970s, Daewoo catapulted to economic success. Barely eight years after the company was established, Daewoo’s exported exceeded $300 million, which was equivalent to more than 4% of South Korea’s combined exports. In 1975, Daewoo owned 23 companies, 30 overseas branches and employed 35,000 workers.

Daewoo was originally a textile firm but also ended up making electronic goods, cars, and ships, in accordance with subsequent government economic plans. In fact, Kim entered the shipbuilding business against his will – Park forced him to do it. Daewoo Shipbuilding & Marine Engineering Ltd. now generates annual revenues of well over U.S. $10 billion.

An excerpt taken from “Korea: The Impossible Country: South Korea’s Amazing Rise from the Ashes: The Inside Story of an Economic, Political and Cultural Phenomenon” by Daniel Tudor.

Case Study: Daewoo Electronics
It can be observed that the founder Kim embarked on diversification to expand his business plans. One such example is Daewoo Electronics, which was formed in 1971, which began its first step by assembling radios and amplifiers. Two years later, a large-scale plant was set up in Kumi, enabling its to make its mark in Korea as one of the key electronics producers.

Daewoo Electronics’ growth acquired several firms. It acquired Joo-Ahn Electronics in 1975 and Dae-Han Electronics in 1983; the former allowed Daewoo to become a major producer of radios, while the latter became a core of its consumer electronics production. […]

Later, it supplied amplifiers to Germany’s Telefunken and Zenith of the USA. By 1982, Daewoo diversified itself as a comprehensive consumer electronics maker, exporting televisions, VCRs, cassette recorders, car stereos, refrigerators and washers.

An excerpt taken from “Technology Transfer and International Production: The Development of the Electronic Industry in Korea” by Jin W. Cyhn.

Daewoo Electronics’ success could be traced to its strategy of focusing on Original Equipment Manufacturing (OEM). In 1981, the Japanese multinational company, also known as the Nippon Electric Company (NEC), approached Daewoo Electronics to iron out plans for an OEM arrangement. The Korean chaebol was identified as a viable organisation, given its capacity for large-scale production.

Daewoo Electronics benefited from its contract manufacturing role with Japan’s NEC in terms of technological learning. The NEC engineers facilitated the transfer of technology through various forms of interactions. For instance, Daewoo engineers were advised to used more accurate electronic measuring devices by their Japanese counterparts.

A crumbling empire?
However, Daewoo’s economic track record was blemished by financial mismanagement, which surfaced in the wake of the 1997 Asian Financial Crisis. By the end of 1997, the Korean conglomerate accumulated a debt that was five times its equity. By 1999, Daewoo racked up debts of about US$50 billion.

The fall of Daewoo will undoubtedly be seen as an important event in Korea’s postwar economic history. The government did not altogether avoid support for the firm, since debt was rolled over and some core firms were not liquidated. Moreover, in September and October, the government was forced to establish massive funds to support the investment trust companies, which were big purchasers of Daewoo bonds.

An excerpt taken from “Resolution of Financial Distress: An International Perspective on the Design of Bankruptcy Laws” by Simeon Djankov, Constantijn A. Claessens amd Ashoka Mody.

What can we learn from this article?
Consider the following question:
– Assess the view that the economic transformation of South Korea between 1970 and 1990 was exaggerated.

Join our JC History Tuition to learn more about the Global Economy and the Asian Tiger economies. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What is POSCO in South Korea - Asian Tiger Notes

What is POSCO in South Korea?

Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Learn more about the world-renowned steelmaker POSCO [Video by Arirang News]

The steel industry in South Korea: A historical background
In the 1960s, the steel industry in South Korea was largely absent. Three decades later, Korea became the world’s sixth-largest steel producing country. This development can be explained by General Park Chung-hee’s aim for Korea to be self-sufficient in steel production.

Steel has been commonly known as the ‘staple of industry‘, in which this versatile metal is highly applicable in many basic industries, such as shipbuilding, construction, machinery and automotive. Hence, its complementary nature further underpinned South Korea’s economic success.

Enter Park Tae-Joon
In 1967, the Korean government picked Pohang as the location for the construction of the first integrated steelworks. The Korea Tungsten Company was selected as the end-user of the integrated steelworks. The president of the Korea Tungsten Company was Park Tae-Joon.

Park Tae-Jun was known for prioritizing “speedy operations.” Under his direction, the construction of POSCO in the early years were completed well ahead of schedule which not only saved time but millions of dollars (Seo 2011). This was even more extraordinary considering that the construction site was formerly a barren sand field that lacked any related and supporting infrastructure.

[…] CEO Park was also well known for his diligence and dedication. Park believed that the best way to lift his employees’ total commitment to work was for him to set a good example. Park spent most of his time on site with the workers while the first steel plant was being completed. He promptly abandoned all leisure activities and hobbies to focus on the plant construction. Park’s diligence had a marked impact on all of POSCO employees, who were motivated to follow the footsteps of their CEO.

An excerpt taken from “Strategy for Korea’s Economic Success” by Hwy-Chang Moon.

Park Tae-Joon was then appointed to helm the newly-formed Pohang Iron and Steel Company (POSCO) on 1 April 1968. However, POSCO’s developments were not entirely smooth-sailing from the start.

Although the Korean President Park Chung-hee engaged foreign steel companies to form the Korea International Steel Associates (KISA) in 1966, the POSCO leader received confirmation that the securing of loans from KISA was not possible. In response, Park Tae-Joon capitalised on his extensive networks in Japan to find a solution.

In December 1969, the “Korea-Japan Framework Agreement” was signed, granting POSCO the right to sign a technology service contract with Japan Group. Japan Group comprised of three companies (Yawata Steel Works, Nippon-Kokan KK and Fuji Steel Corporation) that offered their technological expertise to facilitate the construction and operation of integrated steelworks in South Korea.

Korea’s economic rise in the 1970s
On 1 April 1970, POSCO launched Phase 1 of its comprehensive construction of the Pohang steelworks at Yeongilman Bay. POSCO’s objectives were aligned with the Korean government’s, in which General Park later put forth the Heavy and Chemical Industrialisation (HCI) Plan in 1973.

Creating domestic capabilities for steel production was a vital step for sustainable economic development, given the changes to American foreign policy in Asia by the early 1970s. The diminished American military presence in Indochina and parts of East Asia made General Park Chung-hee more certain that the formulation of a HCI Plan was the right step to take.

The deteriorating condition of military security put the HCI drive on a qualitatively different plane as well. With President Nixon’s visit to China in 1972, the U.S. Seventh Infantry Division’s withdrawal from South Korea in 1971, and the U.S. military disengagement from South Vietnam in 1972, Park’s urgency in developing the steel industry as part of South Korea’s modern defense industries rose dramatically.

[…] The launching of HCI profoundly strengthened the status of the steel industry within the hierarchy of the national agendas. Park looked at the steel industry as the engine of deepening industrial development. This change of perception within the inner policy circles led to the announcement in July 1973 of plans to construct a second integrated steel mill upon the completion of POSCO. To support the simultaneous development of the shipbuilding, electronics, machinery, and nonmetal materials industries, Park called for increasing the South Korean steel production capacity from one million tons in 1973 to ten million by 1980.

An excerpt taken from “The Park Chung Hee Era: The Transformation of South Korea” by Byung-Kook Kim and Ezra F. Vogel.

What can we learn from this article?
Consider the following question:
– How far do you agree that the economic transformation of South Korea between 1970 and 1990 was the result of business conglomerates?

Join our JC History Tuition to learn more about the Global Economy and the Asian Tiger economies. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How did South Korea grow so fast - Asian Tigers Notes

How did South Korea grow so fast?

Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Find out more about the railway development in South Korea. [Video by Railways Explained]

Historical background
Before South Korea transformed to an advanced economy, it was in a desolate and backward state. Between the 1950s and 1960s, South Korea was largely dependent on agriculture. Unfortunately, the Korean War further set the nation back as the destruction wrought by conflict left much of its infrastructure in ruins.

Under the regime of President Syngman Rhee (이승만), South Korea relied on foreign aid and assistance, which mainly came from its Cold War ally, the USA. Even so, South Korea experienced high unemployment and widespread poverty, thus the aim of economic transformation seemed improbable at that time.

[…] Korea’s GDP per capita in 1950 was $156, lagging against Ghana and the Philippines. In many ways, it was the poster child of an underdeveloped and fragile state among the lowest income group of nations, according to the World Bank. Income levels were lower than that of most Asian countries, similar or lower than that of most African countries in those days, and much lower than many South American countries such as Brazil and Argentina.

An excerpt taken from “The Economic Development of South Korea” by Seung-hun Chun.

Phases of Economic Development
In summary, the economy of South Korea went through three key phases:

  1. 1954-1960: Import-substitution industrialisation
  2. 1961-1979: Export-oriented industrialisation
  3. 1980-1990: Stabilisation and diversification

On 16 May 1961, General Park Chung-hee (박정희) launched a military coup d’état, replacing President Yun Po-sun (윤보선) with himself at the apex of the political structure. Afterwards, Park declared martial law, which lasted for 29 months until October 1963. The military government pursued two key aims: poverty elimination and political stabilisation.

State-guided industrialisation under Park
The Park regime then introduced its very first Five-Year Economic Development Plan (1962-1966) to transform South Korea. As a result, the Economic Planning Board (EPB) was established. The EPB, which was initially known as the Ministry of Construction, was tasked with planning, budgeting and the attraction of foreign capital. In essence, the EPB focused on policy coordination through budget allocation.

In addition, two think-tanks were set up to support the government’s economic policies in the late 1960s, such as the Korea Institute of Science and Technology (KIST). Formed in 1966, the KIST’s main role was to undergo research and development (R&D) to support national efforts to achieve economic growth. This institute helped with the process of industrial modernisation, as seen by technological breakthroughs like the development of Korea’s first colour television in the early 1970s.

KIST made important contributions to growth of the shipbuilding, steel, chemical and electronic industries in Korea. The success of KIST led the Korean government to set up subsequent state-funded research institutes dedicated to research relevant to specific knowledge-intensive industries, including the Korea Institute of Machinery and Materials, the Korea Institute of Chemical Technology, and the Electronics and Telecommunications Research Institutes. In 1970, these state-funded institutes accounted for 58.51% of total nation R&D expenditures.

An excerpt taken from “Routledge Handbook of Science, Technology, and Society” by Daniel Lee Kleinman and Kelly Moore.

An exemplary model: Enter POSCO
The Park administration realised the self-sufficiency in steel was vital to kickstart economic development in the 1960s. As such, the Pohang Iron and Steel Company Limited (POSCO) was formed in 1968 with Park Tae-Joon (박태준) at the helm. In 1973, POSCO began production. Notably, the state-owned PSCO was ranked the world’s six-largest steel producer in 1986, commanding an annual output of 11.3 million tonnes. With technical support from Nippon Steel, POSCO became one of South Korea’s most profitable enterprise.

The Korean steel industry became the catalyst and linchpin for a number of industries, such as automobiles, shipbuilding, containers, railroads, construction, and appliances, which complemented one another in a virtuous vicious circle of economic growth over the last three decades. POSCO and importance of the state development in economic development as one of the good and significant examples.

An excerpt taken from “Designing Public Procurement Policy in Developing Countries: How to Foster Technology Transfer and Industrialization in the Global Economy” by Murat A. Yülek and Travis K. Taylor.

Likewise, other private businesses contributed to the economic transformation of South Korea, such as Hyundai. These chaebols defined the economic development of South Korea.

What can we learn from this article?
Consider the following question:
– How far do you agree that the economic miracle in South Korea was result of Park Chung-hee’s leadership?

Join our JC History Tuition to learn more about the Global Economy and the Asian Tiger economies. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What does the flying geese model suggest - Asian Tiger Economies Notes

What does the flying geese model suggest?

Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

The Flying Geese model
According to the Japanese economist Kaname Akamatsu, Asian economies could grow based on a ‘flying geese model’. (FG model). Akamatsu noted that ‘Wild geese fly in orderly ranks forming an inverse V, just as airplanes fly in formation‘. After Japan achieved rapid economic recovery in the post-WWII years, it took the lead in economic development, whereas its neighbouring countries like Taiwan and South Korea followed suit.

During the 1930s, a Japanese economist, Kaname Akamatsu, initially sketched out a long span of history involving the evolutionary interrelationships of a developing Asian country (Japan) with the advanced West. His interest was to examine how developing countries in general may catch up with the advanced ones through their mutual interactions.

[…] Akamatsu presents a stylized four-stage model of evolving trade patterns of a typical developing country along its development process (catching-up), where the existing manufactured products are clustered into two broad categories: “consumer goods” and “capital goods”.

An excerpt from “The Asian Developmental State and the Flying Geese Paradigm” by the United Nations Conferenceo n Trade and Development.

Application on Asian economies
Although the FG model was developed in the 1930s, academics have based their research on this model in subsequent decades. While Japan was at the forefront of economic development in Asia, the ‘four tiger’ economies, namely South Korea, Taiwan, Singapore and Hong Kong, played catch up.

After the 1970s, when Japan moved into an upper ladder of technological-intensive sectors such as the automobile industry and machinery after the first energy crisis in 1973-74, Taiwan and Korea kept chasing behind Japan’s footstep by moving to an upper ladder of technological sophistication with some varieties in the second phase; while Korea developed its brand name of automobiles, Taiwan, due to the limit of domestic market for scale economy, chose to develop auto parts and machinery tools instead of manufacturing the whole passenger cars.

An excerpt from “A Century of Development in Taiwan: From Colony to Modern State” by Peter C. Y. Chow.

For Taiwan, the government emulated Japan by focusing on labour-intensive production and exported to industrialised economies, like the USA, in the 1960s. In the 1970s, Taiwan then shifted from labour-driven to capital-oriented industries in response to rise labour and import costs, which were exacerbated by the twin oil shocks.

To some extent, it was the ‘flying geese’ pattern of industrial development by following the footstep of Japan’s industrialisation in the post-war era. Meier argued that it was a process of ‘learning by exporting’ by picking up the industrial sectors that Japan left when it moved up on the ‘ladder of comparative advantage’.

[…] Taiwan, as one of the first tier of the flying geese, faced more competition in the second stage of EP (export promotion) from the second tier followers in South East Asia and China after its economic reform and openness.

An excerpt from “Connecting Taiwan: Participation – Integration – Impacts” by Carsten Storm.

What can we learn from this article?
Consider the following question:
– Assess the importance of the ‘Flying Geese’ model in explaining the phenomenal growth of Taiwan from the 1970s to 1980s.

Join our JC History Tuition to learn more about the rise of Asian Tiger economies and the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How did Giant become the biggest bicycle manufacturer in the world

How did Giant become the biggest bicycle manufacturer in the world?

Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Learn more about the Taiwanese bicycle manufacturer Giant [Video by Cycling Pulse]

Humble beginnings: A SME run by family and friends
In 1972, a 36 year-old engineer King Liu founded Giant with a group of associates, including Tony Lo, in Taichung (臺中). Lo was a business graduate from the National Taiwan University. Interestingly, Liu cycled to work at first to understand his product better.

In 1977, Liu secured a contract to produce bicycles for an overseas American company Schwinn, which was known for its 10-speed steel machines. Giant then functioned as an Original Equipment Manufacturer (OEM). Liu, who was fluent in Japanese, visited Japan to study the bicycle production process, replicating suitable work practices at Giant.

An unexpected turn of events: Turning setbacks into opportunities for success
In 1981, Giant set up its own bicycle brand as an Original Brand Manufacturer (OBM). It was a bold and unusual move as products that were manufactured in Taiwan were still viewed as low-quality and cheap.

Five years later, Giant brought its bicycles to the global market, starting with the Netherlands. Lo had identified Netherlands as a suitable European headquarters due to its geographical location, comprehensive infrastructure and integrated transport network. From there, Giant exported to other European markets. By the mid-1980s, Giant exported nearly 10 million bicycles a year.

The own-branding strategy was intensified when Schwinn shifted its OEM orders to its joint China’s company (China Bicycle Company) in 1985. Under this adverse condition, Liu steered the company into a new direction, through rapidly expanding its overseas branches around the world, in order to fill up the excess capacity generated by Schwinn’s withdrawal. The overseas branches were all targeted on pursuing entrepreneurial profit by promoting its own-brand Giant bicycles. Its overseas branch was established in Netherlands in 1986, the Us in 1987, Japan in 1989, Canada and Australia in 1991, and mainland China in 1992.

An excerpt from “Entrepreneurship and Taiwan’s Economic Dynamics” by Fu-Lai Tony Yu.

In the 1985, the US-based Schwinn switched to a Chinese supplier to keep production costs low. As a result, nearly three-quarters of Giant’s revenue had been affected. Yet, Giant did not relent. Instead, the company capitalised on the low production base in China, setting up two production plants in China, namely in Shanghai (上海) and Jiangsu (江苏).

Close collaboration with the government
In 1986, Giant launched a joint project with the government-funding Industrial Technology Research Institute (ITRI). They explored use of advanced materials to create carbon fiber bicycle frames. Giant also worked on other technology diffusion projects for aluminum welding with Chun Shan Institute of Science and Technology (CSIST).

Giant’s R&D efforts had paid off as tts revenue rose to over NT$ one billion.

In 1987, Giant pioneered the mass production of carbon bicycles, particularly the model called Cadex 980C. Lo dubbed it ‘Project 88’. Giant had applied computer-aided design and volume production techniques to manufacture these carbon fiber road bicycles. By 1991, Giant manufactured 20 thousand units of carbon bicycles.

Now, Giant one of the top bicycle manufacturers in the world.

Giant thinks of itself as an innovator in the fields of production and design, as well as competitive strategy. Giant was one of the first to upgrade parts and begin exporting them when Taiwan’s market became too costly. Giant was also the first Taiwanese company to use chrome alloy steel in their frames and to produce single-piece graphite bicycle frames.

An excerpt from “Strategy, Structure, and Performance of MNCs in China” by Yadong Luo.

What can we learn from this article?
Consider the following question:
– How far do you agree that Giant’s successes in export promotion were the result of Confucian culture?

Join our JC History Tuition to learn more about the rise of Asian Tiger economies and the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What does United Microelectronics do - Asian Tigers Notes

What does United Microelectronics do?

Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Learn more about the Taiwanese semiconductor company, United Microelectronics Corporation (UMC) [Video by UMC Group (USA)]

Historical context: Silicon Valley of the East
On 22 May 1980, the United Microelectronics Corporation (UMC) was formed as the first-ever private integrated circuit (IC) company in Taiwan. The UMC was a product of the state-backed technology R&D institution, known as the Industrial Technology Research Institute (ITRI).

Under the leadership of President Chiang Ching-kuo (蔣經國), the government embarked on an ambitious project to encourage knowledge and skills acquisition in the private sector to intensify Taiwan’s industrial development.

The UMC occupied the Hsinchu Science Park (HSIP, 新竹科學園區), which was modelled after the Silicon Valley.

Located in Hsinchu County, approximately 80 km to the south of the capital city Taipei, HSIP had easy access to the international airport and harbours, a skilled labour force and abundant technological resources, including two national universities and the government-sponsored ITRI. Since its inception, HSIP has received over US$500 million from the government, earmarked for the acquisition and development of land and construction of housing and factories.

An excerpt from “The Silicon Dragon: High-Tech Industry in Taiwan” by Terence Tsai and Bor-Shiuan Cheng.

Enter the age of semiconductors
Under the astute leadership of Robert Tsao (曹興誠), who became president of UMC in 1982, the UMC became the first IC manufacturer in Taiwan to provide wafer foundry services.

In the late 1980s, the UMC broadened its scope of production, venturing into Dynamic Random Access Memory (DRAMs) and telecommunications circuitry. Tsao believed that specialisation in foundry services was the ideal model for the UMC to thrive.

The UMC turned out to be a successful spin-off from HSIP, as seen by its entry to the Taiwan Stock Exchange in 1985. From then on, the UMC went further to build increasingly advanced chips, such as Static Random Access Memory (SRAMs).

A similar venture: The TSMC
In 1987, the Taiwan Semiconductor Manufacturing Company (TSMC) was set up. It was the second spin-off from the HSIP after the UMC. The company was a joint development with the Dutch company Philipps and the Taiwanese government.

Interestingly, the Chiang government had invited Morris Chang, who later became founder of the TSMC, to lead the ITRI in the early 1980s. Chang had put forward the idea of creating a foundry industry in Taiwan.

Originally the ERSO sent a team to RCA in the US to learn integrated circuit (IC) manufacturing technology. After the team returned to Taiwan, the members spun off from ERSO to form UMC, which began chip manufacturing.

[…] Chang led a team spun off from ITRI to form TSMC in 1987. The new business model proved effective, and TSMC became the largest semiconductor foundry in the world with $5.3 billion of sales in 2000. TSMC was therefore mainly a Taiwanese creation with state participation in ownership (48 per cent in the beginning).

An excerpt from “The East Asian High-Tech Drive” by Yun-Peng Chu and Hal Hill.

Evidently, the successes of the UMC and TSMC were partly attributed to the joint efforts of the Taiwanese and American governments (Electronics Research and Service Organization, ERSO, the Radio Corporation of America, RCA). By giving their founders and core team members the opportunities to acquire the technical know-how, the aim of creating a semiconductor industry in Taiwan could finally materialise.

What can we learn from this article?
Consider the following question:
– Assess the view the the United Microelectronics Corporation was a crucial piece of the puzzle in explaining the remarkable growth of Taiwan in the 1980s.

Join our JC History Tuition to learn more about the rise of Asian Tiger economies and the Global Economy. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - Why is Taiwan an Asian Tiger - Asian Tigers Notes

Why is Taiwan an Asian Tiger?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Learn more about the contributing factors that led to Taiwan’s economic miracle. [Video by Real World Economics]

Historical context: The Cold War
During the Korean War, the Truman administration committed its armed forces to defend the Republic of China (ROC) government under Chiang Kai-shek. President Truman announced on 27 June 1950 that the Seventh Fleet would be deployed to the Taiwan Strait. His intention was to protect Taiwan from any possible Chinese attack.

The US government switched its foreign policy stance towards Taiwan from a “hands-off” approach to increased military commitment. Its purpose was to contain a possible expansion of Communist influence in East Asia.

In retrospect, Truman’s new policy of 1950 disengaged the Chinese from their hot civil war while engaging them in the global Cold War.

[…] It had secured the ROC in Taiwan from a major military showdown with the PRC on the mainland in the 1950s, it had preserved the political unity and social stability of Taiwan through the 1960s, and it had provided an opportunity for the island’s economic growth in the 1970s.

An excerpt from “The History of Taiwan” by Xiaobing Li.

Export promotion and industrial restructuring
In the 1960s, Taiwan was one of the world’s primary exporter for consumers goods, such as umbrellas, toys and shoes. In 1966, Taiwan established Export Processing Zones (EPZs). The Chiang government sought to pursue an export-driven strategy as seen by the provision of tax incentives to spur businesses to engage in international trade.

In the 1970s, the government had realised that its reliance on the maturing light industry was not sustainable, given the rise of other developing countries that possessed cheap and abundant labour. As such, it embarked on heavy and chemical industrialisation (HCI), targeting steel and petrochemical production.

In 1973, the Industrial Technology Research Institute (ITRI) was formed to facilitate the conduct of research and development (R&D). A year later, the Electronics Research Service Organisation (ERSO) was also set up, focusing on areas like electronic packaging, semiconductors and display devices. Similarly, the Hsinchu Science Park was created in 1980 to intensify efforts to develop high-tech industries. The government’s attempts have paid off as seen from the rise of tech firms like the Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC).

In August 1974, Sun contacted Dr. Pan in the United States and invited him to Taiwan to produce a study of ways in which the government could upgrade local industry, with the electronics industry playing the leading role. […] Pan recommended that the electronics industry should focus on semiconductor technology and that the technology be acquired from abroad; that a two-part strategic planning team be formed, one part in the United States and one in Taiwan; and that an organizational capability for implementation within the state be set up. A U.S. partner was to be located for an agreement for technology transfer and training.

An excerpt from “The Role of the State in Taiwan’s Development” by Joel B. Aberdach.

The 1980s tech drive: OEM and ODM
In the 1980s, the government went through institutional reforms to integrate Taiwan into the global economy. It intensified its policies of trade liberalisation and financial deregulation, opening the economy gradually. Yet, it proved challenging following the opening of China in the late 1970s as part of Deng Xiaoping’s Four Modernisations (四個現代化). Many Taiwanese manufacturers shifted production to China in response to rising production costs.

In this decade, more Taiwanese manufacturers in the electronics and technology sectors adopted either of the following two models: Original Equipment Manufacturer (OEM) or Original Design Manufacturer (ODM). For OEM, the local companies manufactured products for transnational corporations that focused on product design and R&D. Over time, some of these firms transitioned to become ODMs, such as Acer.

While the ERSO projects were important for the PC industry, the two industry leaders, Acer and Mitac, were doing OEM for ITT since 1982 and Mitac was not part of two of the three big desktop computer projects run by ERSO. […] OEM manufacturing firms can leverage their relationships with outsourcing partners to upgrade. The experience of Mitac, Acer and other fims, such as the printed circuit board manufacturer, Compeq, confirms this theory of upgrading.

An excerpt from “Technology Transfer Between the US, China and Taiwan: Moving Knowledge” by Douglas B. Fuller and Murray A. Rubinstein.

What can we learn from this article?
Consider the following question:
– How far do you agree that state intervention was indispensable in contributing to the economic miracle of Taiwan.

Join our JC History Tuition to learn more about the rise of Asian Tiger economies, particularly Taiwan and South Korea. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

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JC History Tuition Online - What are chaebols in South Korear - Asian Tigers Notes

What are chaebols in South Korea?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

Find out why chaebols play a crucial role in supporting the South Korean economy. [Video by Bloomberg Quicktake Originals]

Origins of Chaebols
Chaebols (재벌) are large family conglomerates that played a crucial role in the economic miracle of South Korea. The word “chaebols” refers to “financial clique”. After the Korean War (1950-1953), some entrepreneurs took advantage of the available opportunities, particularly the purchase of former Japanese-owned companies that were nationalised by the Rhee government. During Japanese colonial rule, these businesses dominated the manufacturing, trading and finance sectors.

The chaebols began to emerge under the patronage of the Rhee regime, and they paid the regime back through illicit political contributions. The major sources of chaebol accumulation during the Rhee period were selective allocation of import licenses and quotas, bargain price acquisition of former Japanese properties, aid funds and materials, cheap bank loans, and government and U.S. military contracts for reconstruction activities.

[…] Vested properties provided the initial base for many chaebols.

An excerpt from “In the Shadow of Violence: Politics, Economics, and the Problems of Development” by Douglass C. North, John Joseph Wallis, Steven B. Webb and Barry R. Weingast.

Additionally, these Korean entrepreneurs were aided by the Rhee government through the latter’s use of import-substitution policies. The local market was insulated from foreign competition in targeted sectors, biding time for these companies to flourish. In other words, close networks between the entrepreneurs and government were vital in enabling the rise of private businesses.

Following the military coup led by General Park Chung-hee in 1961, the military government switched gears, transitioning towards an export-driven economy. The Park regime had identified local businesses to support its industrialisation plans. Through continued support in the form of incentives like preferential tariffs and low interest loans, these Korean businesses thrived.

Enter Byung-chul: Founder of Samsung
Pragmatic and competent Korean entrepreneurs like Lee Byung-chul and Chung Ju-yung had surmounted obstacles and leveraged on available opportunities to dominate local and world markets. In 1938, Lee formed Samsung Trading (삼성물산). Although the Korean War had disrupted his plans, Lee remained determined to expand his business globally. After the end of the war, he set up Samsung Trading’s branch office in Tokyo, Japan.

Whilst under the Rhee government, Lee capitalised on the business opportunities granted by the former’s import-substitution policies. He established a sugar and flour manufacturing company known as Cheil Jedang (씨제이제일제당 주식회사) in 1953 and a textile company called Cheil Mojik (제일모직) in 1954.

Lacking know-how in textile production during its early days, [Cheil Mojik] engaged in technology transfers with European and Australian firms to learn spinning, grinding, shearing, raising, and milling technologies. With the rise of export-orientation industrialization strategies during the 1960s, Cheil engaged in exports, starting with 8000 lbs. of worsted yarn, exported to Hong Kong in 1961.

An excerpt from “The Routledge Companion to Asian Family Business: Governance, Succession, and Challenges in the Age of Digital Disruption” by Ho-Don Yan and Fu-Lai Tony Yu.

After the rise of Park’s military government, Lee re-positioned Samsung Trading and Cheil Mojik as key Korean exporting companies. In 1969, Samsung was given a chance to venture into the electronics industry. Lee sought help from Japanese electronics firms Sanyo and NEC (Nippon Electric Company) to access foreign technology.

Lee Byung-chul also sought to identify and leverage other new business opportunities for Samsung, taking advantage of strong economic growth and the rapidly advancing skills of Korean engineers. The group expanded into shipbuilding through a combination of acquisitions and new shipyard constructions.

[…] In the 1980s, as Lee Byung-chul sensed global business opportunities earlier than others, Samsung took the lead among Korean manufacturers in setting up overseas factories in order to strengthen its global market presence. This new direction was particularly visible in the electronics industry, where Samsung had become a major global competitor. It invested into production sites in Portugal, the UK, and the USA.

An excerpt from “Entrepreneurship in Korea: From Chaebols to Start-ups” by Martin Hemmert and Jae-Jin Kim.

What can we learn from this article?
Consider the following question:
– Assess the significance of private businesses in contributing to the economic miracle of South Korea.

Join our JC History Tuition to learn more about the rise of Asian Tiger economies. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - When was Acer founded - Asian Tigers Notes

When was Acer founded?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan]

Retrace the steps and find out how Acer was formed in the 1970s [Video by Acer]

The Origins: MultiTech
In 1976, Stan Shih (施振榮) founded MultiTech with six others, including his wife Carolyn Yeh (葉紫華). The company began its journey as an Original Equipment Manufacturer (OEM) by producing video games and distributing electronic imports. In the 1980s, MultiTech expanded its production by involving Amex as its first international distributor.

Multitech… it’s not just another new computer company. It is a leading manufacturer in the computer age, and its Taiwan manufacturing facility is the largest for personal computers. Since 1976, Multitech has been a pioneer in microcomputer technology. Today its products are sold in more than 40 countries. Earning a world-wide reputation for consistent high-quality, Multitech products have captured the loyalty of large OEMs, VARs and distrubtors.

An excerpt from “Multitech – the computer family that carries many famous names” by PC Mag, 13 May 1986.

The Rising Star: Acer
In 1987, MultiTech was renamed to Acer, signifying its entry as a key player in the Personal Computer (PC) industry. Shih capitalised on the low labour costs in Taiwan to accelerate export production. By 1991, more than two-thirds of Acer’s sales were accrued from foreign markets. Although Acer sought to position itself as a full-line PC supplier, about a third of its sales was still derived from OEM in the mid-1990s.

In addition, Acer had the support from the Taiwan government to engage in a joint-project with Texas Instruments (TI) to produce semiconductors in the famed Hsinchu Science Park. Joint ventures proved advantageous as Acer acquired technology to broaden its scope of production and improve quality.

Because technological capabilities were seen as necessary core competence and proximity to sophisticated customers was important to building these capabilities, Acer invested abroad to be near these customers. Initially, Acer penetrated OECD markets in Europe and North America. By 1993, Acer had moved from assembling PCs in Taiwan and Malaysia and shipping to European and US customers to assembling abroad with strict quality standards.

… By 1995, Acer, with a market value of US$2 billion, began to split itself into 21 public companies, listed on stock exchanges around the world, to open the company to foreign investment.

An excerpt from “Multinationals and East Asian Integration” by Wendy Dobson & Chia Siow Yue.

What can we learn from this article?
Consider the following question:
– Assess the importance of government intervention in shaping the rise of Acer.

Join our JC History Tuition to learn more about private businesses in Taiwan as part of the Rise of Asian Tigers topic. The H2 and H1 History Tuition programmes feature online learning lessons that cover content review and the development of answering techniques for essay and source based case study.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - Why is Hyundai so successful - Asian Tigers Notes

Why is Hyundai so successful?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan]

Learn more about the history of Hyundai to find out how it grown to become a dominant Korean automaker [Video by Hyundai]

Humble beginnings
Chung Ju-yung was born in poverty-stricken family that relied on farming to make a living. After the end of the Second World War, Chung established the Hyundai Engineering and Construction Company (HECC). The HECC began its operations as a civil engineering subcontractor that provided maintenance and repair work in the 1950s.

A turn of events: The Korean War
During the Korean War, the HECC took on projects by the United States Army, enabling it to expand into one of the leading construction companies in South Korea. Furthermore, Chung worked with the Rhee administration to secure construction projects for the development of local infrastructure.

When General Park Chung-hee took over in the 1960s, Chung continued to obtain contracts to entrench Hyundai’s market dominance, such as the development of the Gyeongbu Expressway. Externally, the HECC helped to develop infrastructure in Vietnam and the Middle East, which proved to be a fortuitous time for diversification.

The success of HECC in the construction industry, aided by support from the Park military government, enabled Hyundai to diversify into the automobile and shipbuilding industries and establish the Hyundai Motor Company and Hyundai Heavy Industries in 1967 and 1974.

… This aggressive entry into the Middle East market had important implications for the growth of both HECC and the Hyundai Business Group. It enabled HECC to become an international construction company no longer dependent on its domestic market. Moreover, the rapid expansion of its heavy industrial construction projects created a large internal demand for materials, enabling Hyundai to strengthen its monopoly position in the domestic construction market during the 1970s.

An excerpt from “The Chaebol and Labour in Korea: The Development of Management Strategy in Hyundai” by Seung-Ho Kwon and Michael O’Donnell.

Enter Hyundai Motor
Initially, the Hyundai Motor Company (HMC) forged a joint agreement with the US-based Ford Motor Company. Yet, the lack of consensus over managerial and marketing issues led to the termination of the partnership in the early 1970s. In 1976, HMC developed its first car, the Hyundai Pony, in 1976.

The Hyundai Pony as described by George Turnbull [Video by ThamesTV]

The Hyundai pony was developed with the support of the Mitsubishi Motor Company that sought to expand its market access beyond the shores of Japan. Hyundai was granted a technical licensing agreement, which enabled it to develop its very own nameplate cars.

Additionally, Chung roped in George Turnbull, who was formerly the president of the British Leland – an automotive company. Turnbull assumed the role as vice president of the HMC. In two years, Turnbull oversaw the development of the car production facilities in Ulsan.

By 1976, the new plant was completed and the first cars began rolling off the assembly line. Chung named the new model the Pony, a familiar name to many Koreans who were brought up on American Western movies. The Pony was a 1.2 liter rear-wheel-drive subcompact of modest quality. No market research had been done. Chung and his company had simply designed and built the car they thought the Korean people should have. President Park guaranteed the financing; Hyundai built it. It was Korea’s first national car.

An excerpt from “Made in Korea: Chung Ju Yung and the Rise of Hyundai” by Richard M. Steers.

From mid-1970s onwards, the HMC moved beyond the limited domestic market to the export markets. Alongside other similar automakers like Daewoo and Kia, the HMC increased export production in the 1980s. Hyundai Motors set up a production facility in 1985, which had an annual capacity of 300,000 units. By the mid-1980s, more than half of the total car production was exported, enabling the South Korean economy to benefit from continued current account surpluses by 1989.

What can we learn from this article?
Consider the following question:
– Assess the reasons for the rise of Hyundai from the 1970s to 1980s.

Join our JC History Tuition to learn more about chaebols and other factors relating to the Asian Tigers. The H2 and H1 History Tuition programmes feature online learning activities to consolidate your content awareness and improve answering skills. Attend our free writing practices to improve your time management and application techniques.

We have other JC tuition classes, such as JC Math Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.