There are two nations that stand out amid the global economic crisis. They are Germany and China. Germany, dubbed the engine of Europe and the last bastion of stability in the eurozone crisis, is now a model for state economy. China is widely forecast to become the world's richest nation as the global economic axis tilts toward Asia. 

What do these two countries have in common? The answer is the high competitiveness of their manufacturing sector.Germany's potential lies in its soft power that combines advanced technologies, brand trust and rational and clean state image. That's why the "Made in Germany" brand has become synonymous with high-quality products and innovation. The biggest contributors to German economic power are undoubtedly the nation's 1,300-odd manufacturers who rank among the top three in the global market. Thanks to those "hidden champions," Germany's unemployment rate recently fell to 5.9 percent despite the eurozone debt crisis. The country's annual economic growth rate also stayed in the 3 percent range, with its annual exports soaring above 1 trillion euros. 

German manufacturing sector`s strong competitiveness is generally attributed to the government`s efficient industrial policy, which promoted technological upgrading, reduced social inefficiency and attempted to diversify export markets, while many other countries relocated their manufacturing bases to emerging economies in pursuit of cheap labor. Policy consistency is also notable. In 2003, then Chancellor Gerhard Schroeder of the Social Democratic Party launched reforms aimed at restoring national competitiveness. Chancellor Angela Merkel of the Christian Democratic Union has consistently implemented the same reforms, paving the ground for labor market flexibility, tax reductions boosting corporate growth and welfare reform, which have all contributed to the dynamics of the German economy.

China`s manufacturing industry began to take off in the 1980s, when the nation was called “the factory of the world,” a term referring to a global outsourcing production base. After acquiring technological capabilities from the outsourced manufacturing plants, China launched a drive in 2005 to develop its own manufacturing technologies, particularly in high-tech industries, to achieve qualitative economic growth. In 2010, China eventually became the world`s top manufacturing country by output and ranked second worldwide in terms of investments in research and development. 

Taking a leaf out of the two countries` experiences, other nations are trying to revitalize their manufacturing sector. In the United States, the ongoing boom in low-cost natural gas from shale is driving down energy costs and boosting the recovery of petrochemicals and manufacturing industries. The so-called “reshoring” of good, well-paying manufacturing jobs back home is gaining momentum. For example, General Electric is moving part of its overseas production back to America, while Apple plans to shift production of one of its Mac computers from China to the United States. In Britain, aggressive measures to advance its manufacturing sector began last year. Manufacturing innovation centers were established at nine universities and tax cuts were extended to investments in research and development.

What is our reality? Long sandwiched between “high price and high specification” products from advanced countries and “low price and low specification” products from emerging economies, Korea`s manufacturing sector is now being threatened by “low price and high specification” products made by innovative Chinese manufacturers. China is rapidly catching up with Korea in its mainstay industries, such as electronics and automobiles. Chinese companies are already surpassing their Korean rivals in new industrial fields, such as solar energy and pharmaceuticals. The situation is not different in the textile industry, which played a key role in Korea`s rapid export growth in the 1970s and 1980s. 

In contrast to the rise of electronics, heavy and chemical, and other new industries, Korea`s textile industry has been neglected for a long time and lost its international competitiveness. The Korean textile industry this year posted the first export increase in 20 years thanks to free trade agreements with the United States and the European Union, paving the way for its renaissance. But local textile manufacturers are suffering from a severe labor shortage due to the hollowing out of production over the past two decades. 

The problems facing Korea`s manufacturing industries have just one solution ― innovation. In order to remain competitive in the global market, we have to further strengthen our manufacturing industries by producing high value-added products featuring outstanding technologies or unique Korean cultural traits and fostering global brands. The value of the “Made in Korea” brand can be further upgraded when such high value-added products are manufactured at home. To that end, priority should be given to easing regulations and securing labor market flexibility. 

Top-level human resources should be nurtured in natural sciences and engineering. Technocrats armed with expertise also are required to contribute to manufacturing innovations, which will help prevent unemployment crisis and the collapse of the middle class. A creative and advanced manufacturing sector infused with unique Korean cultural features can add to national wealth. We need to have a clear sense of mission, though the task may take time. We should patiently work to develop indigenous and creative technologies. There are no shortcuts in science and technology.