Twenty years ago, China was undoubtedly a country where everything exploded except bombs.
Meaning, there wasn’t a single thing that was properly made.
Industrial goods, intermediate goods, raw materials—nothing was intact. TVs exploded, watches exploded, even food exploded. It was, quite literally, a paradise of defective products.
But China, once like that, has recently become a country where things “don’t explode as much.”
The number of defective Chinese-made products has visibly decreased, and its technological and manufacturing capabilities have improved so dramatically that the national brand has grown by leaps and bounds. Not only in industry, but also in basic science, China has made remarkable advances, becoming the third country after the United States and the Soviet Union to send a probe to the moon.
And all of that was accomplished with its own technology.
“...”
But the more successful China’s rise became, the less we could bring ourselves to laugh.
Because Chinese companies, once reliable customers, were gradually turning into competitors.
In the early 2000s, Korea’s shipbuilding industry was an overwhelming global powerhouse with a market share of nearly 40%, but in just twenty years, it had lost that position to China.
Steel was the same. Currently, Chinese products dominate the global steel market with a 60% share, while Korean steel, once a symbol of industrialization, has fallen to around 6%. Of course, that was still a fairly decent result, enough for fourth place... but as you can see, it had become a market where anything but first place was meaningless.
-Clang! Clang! Clang!
I fell into such thoughts as I watched the blast furnace leisurely operating off the coast of the East Sea.
Labor costs are truly frightening. China, where everything but bombs used to explode, was now smashing our rice bowls one by one with its low-price offensive.
If my memory was correct, spring never came again for Korea’s steel market. Chinese steel was simply too cheap to challenge for market dominance again.
Of course, China’s growth was not eternal either. As their GDP per capita rose, their market share began to collapse, but the next in line was India, not Korea.
There were definitely industries in the global market that only countries with cheap labor could handle.
“It’s a pleasure to meet you, Team Leader. I’m Chairman Park Gyeongcheol.”
After waiting an hour, I was able to meet Chairman Park.
Since I had visited without notice, I thought I might not get to see him, but fortunately, he had time.
Was he that free...?
“Yes, it’s a pleasure to meet you, Chairman. I’m Team Leader Lee Sejun of the Pension Fund Risk Team.”
The main executives had come out to welcome me as well, and I knew very well why they were treating me like a division commander.
“Team Leader... we can explain everything.”
They were currently backed into a dead end.
“It is true that our market share has fallen due to China’s low-price offensive, but it is a problem we can overcome. Pasco is doing everything it can for production innovation, and by 2030, we plan to replace 60% of all processes with automation.”
“I see...”
“And how can China’s low-price offensive be called corporate competitiveness alone? According to the data we’ve obtained, most of it is a brutal dumping attack backed by Chinese government subsidies such as R&D support and interest-free loans. If we can just get through this crisis, we can definitely restore domestic steel to its proper standing.”
He urgently grabbed my wrist.
“So please, help us just this once. Of course, our exports to the U.S. aren’t particularly large in themselves, but how are we supposed to endure a 50% tariff without any justification? If that kind of strong-arm policy from America continues, then at least stop domestic companies from relocating their factories overseas. If you do even that much, Pasco can survive this bitter winter.”
“Tariff negotiations are still ongoing. Our position is also highly unfavorable at the moment...”
“That is precisely why I’m saying this. The Blue House is protecting automobiles even while opening the rice market, so how can it be this indifferent to our steel? Please persuade the United States to lower item-specific tariffs as well.”
“Chairman...”
“It can be done! It’s worth trying! As far as I know, America’s tariff on China is currently 150%. If the U.S. government imposes 150% on Baowu and Hebei Steel and about 15% on us, we can sufficiently make up for our price competitiveness.”
I knew why his voice sounded so urgent.
Despite China’s low-price offensive, Korea and Japan’s positions in steel were secure at third and fourth place, and that was because Pasco had shifted to a premium steel strategy.
But China, where everything but bombs had exploded twenty years ago, had now caught up with almost all of our domestic industrial technology.
His cold calculation was that, if steel market share were left as it was, the premium steel market would certainly be eaten away as well.
“I see. Then there are a few things I’d like to ask.”
“Yes, please ask anything.”
“How much low-carbon steel are we currently producing?”
“...Pardon?”
All the executives suddenly looked flustered.
“Why? Do we not have any green steel at all?”
“Ah, no. I’m sorry. I’ve been asked many questions about steel technology, but this is the first time anyone has asked about carbon-emission reduction technology.”
“What is the current state of the technology?”
“To be honest... we are preparing in several directions. The existing blast furnace method cannot reduce carbon emissions. Accordingly, we are researching hydrogen steelmaking technology, which Europe began developing first, from multiple angles.”
“I’d like to hear the exact level of your technology. As I understand it, Europe jumped into technological development right after the 2016 Paris Agreement. Then is our technology roughly ten years behind?”
Chairman Park, who had been flustered for a moment, soon composed his expression and spoke.
“Strictly speaking, an exact comparison of technological capability is impossible. They may have started first, but there is still no country in Europe that has succeeded in commercialization. However, based on what we’ve inferred through various channels, we estimate that domestic technology is about five years behind. But the general assessment is that commercialization is still a long way off for both Europe and us.”
“Then how much budget is Pasco investing in this R&D?”
He let out a long sigh.
“To be frank, zero won. Other than government-funded R&D, there is no money the company itself is supporting.”
“Is it because of the company’s finances?”
“...As you can see. The steel industry is currently enduring an unprecedented cold wave, and Asan Steel has already implemented voluntary retirement. Our situation is no different. Dumping from China, tariffs from America... with so many piled-up issues before us, talking about carbon is close to a luxury.”
“...”
“We are truly struggling just to pay our employees’ salaries. There is no money whatsoever to invest in R&D.”
As soon as the subject of money came up, all the Pasco executives looked as if they had lost their country.
In truth, America’s strong-arm tactics and China’s low-price offensive were not the only problems right now. After the Paris Agreement, the steel industry had become a headache for every country.
Steel accounted for 25% of carbon dioxide emissions, overwhelmingly ranking first across the global industrial market. From a planetary perspective, steel mills were closer to carbon dioxide factories than steelworks. More tons of carbon dioxide were produced in a year than tons of steel.
That was why hydrogen reduction steelmaking had emerged.
Hydrogen steelmaking was a steelmaking method that eliminated blast furnaces as much as possible. Instead of using a blast furnace, it extracted iron through chemical reactions. But how could such alien-civilization-like technology be easy for earthlings?
The domestic steel industry was screaming under a triple burden: the United States and China externally, and carbon reduction in the long term.
If steel had not been a strategic material, it would have gone bankrupt long ago.
“In that case, we will invest in you. However, there is a condition.”
I searched my memory.
If my memory was correct, the one that broke China’s steel supremacy was India, and the one that broke India’s steel supremacy was the country that first succeeded in commercializing hydrogen steelmaking.
Damn it, I can’t remember clearly... I remember hydrogen steelmaking commercialization being either Europe or America, but in any case, it definitely wasn’t Korea.
“A condition, you say...?”
“The Pension Fund intends to increase its stake in Pasco. By about double what it is now.”
Chairman Park’s pupils widened.
“By double... do you mean seven million shares?”
“That’s right. We currently hold about 8%, and we plan to increase our holdings to 15%. Converted into money, it will be at least in the trillions of won.”
Gulp.
“But this money must never be used for employee salaries.”
“...Pardon?”
“Fifteen percent is only the beginning, not the end. Even if it means turning Pasco back into a state-owned company, we will not stop investing. In return, please use all of the Pension Fund’s investment for R&D.”
“Surely... you’re telling us to spend all of it on developing hydrogen steelmaking?”
“That’s right.”
One of the executives listening suddenly jumped up.
-Team Leader, that makes no sense! It’s a distant technology that no one knows when will be commercialized! Judging by the current trend, humanity will reach Mars sooner!
“That is precisely why we’re investing. Please create an overwhelming technological gap that other countries cannot catch up to.”
-That’s absurd!
“I also think what Chairman Park said makes no sense.”
-...Pardon?
“Can Pasco’s sales really improve if it survives the current crisis? If we eliminate U.S. tariffs for you, can Korean steel surpass Chinese steel again?”
When I poured out those cruel words, everyone fell silent.
“I’m sorry, but I am an investor. I know very well that China’s low-price offensive, based on labor costs, cannot be stopped. No global investment firm says there is hope for Korean steel companies.”
“...”
“So please devote yourselves to technology that will change the very structure of the industry. If you refuse, I will recommend to the Risk Team that we sell off even the current 8% stake the Pension Fund holds. We are people investing with the public’s retirement funds as well, so we cannot look after every industry’s circumstances one by one.”
When I finished speaking, Chairman Park said with a heavy expression.
“...If what you say is true, then we have no choice. If the Pension Fund sells its stake, we will be bankrupt.”
In truth, Pasco should have already gone bankrupt by now.
As an unprecedented cold wave recently hit the steel industry, the Pension Fund had increased its stake by about eightfold.
This was not bottom-fishing because they thought it would rise someday. Steel was a strategic asset, so the government had ordered it.
If even that money had not been injected, it would probably have fallen to one-tenth of its peak value by now.
“...But our immediate livelihood is important to us as well. New hiring has already stopped, and now we’re at the point where we may have to push out existing employees. It is difficult for us to prepare for such a distant future.”
“In that case, I will also raise my voice to the government.”
“Raise your voice, you say...?”
“The reason the Blue House refused the $350 billion U.S. tariff demand was because it calculated that the money would be better used to support domestic companies instead. The working-level team has probably already outlined which companies that money will support, and how.”
“Then...”
“In any case, Pasco’s biggest concern right now isn’t U.S. tariffs, but dumping by Chinese products, isn’t it? I will request multifaceted support from the government for that.”
Chairman Park and the others all looked flustered as they glanced at one another.
“R-Really? You’ll stop Chinese dumping?”
“Not all of it, but to some extent.”
“H-How?”
I smiled bitterly.
“I’ll discuss that properly with the Ministry of Economy and Finance.”