The Power of Transparency in Industry: Lessons from Global Leaders

The South Korean stock market trembles at the news of a Chinese semiconductor company's IPO. Industries such as shipbuilding, automotive, batteries, and smartphones have sequentially lost their leading positions, and now even advanced memory sectors are feeling the pressure. Competing with China through sheer volume and speed is a strategy destined for failure.

The crisis facing South Korean industry is not merely an industrial crisis but a crisis of spirit and philosophy. The resources needed to respond to China are not capital or factory size, but transparency. It is essential to internalize both external transparency, mandated by the system, and internal transparency, achieved by industry players themselves. The Nordic and Baltic countries serve as excellent benchmarks; we must start anew with a mindset geared toward a century of innovative reform, building on what they have achieved from the depths of defeat and territorial loss.

Philosopher Byung-Chul Han, in his book "The Transparency Society," warns that the transparency modern individuals blindly trust is a digital panopticon designed by capital and systems to control humanity. While he is correct, he refers to external transparency, whereas our industry currently requires both external and internal transparency. For Kierkegaard, this means shedding the crowd's shell and standing alone before truth, while for Kant, it involves purging greed and distrust from the inner courtroom. For Hannah Arendt, it is the act of creating irreplaceable value among the three forms of human labor: labor, work, and action.

On the opposite side lies the shell industry. Enron disappeared after pouring resources into accounting fraud and stock price manipulation. In the South Korean stock market, cases of split and duplicate listings leave small shareholders with nothing but shells. China has graduated from the factory model invented by the U.S. and is now poised to control 33% of global manufacturing, with projections suggesting it will soon reach 45%. Moreover, South Korea's last bastion of advanced memory is rapidly being pursued.

Denmark, with a population just one-tenth that of South Korea, maintains its position as the market leader outside China, despite the latter's dominance of six out of the top ten global wind power companies. This resilience stems from a philosophy of self-discovery that turned its gaze inward after losing one-third of its territory and 40% of its population following the Second Schleswig War in 1864. The poet Holst's slogan, "Let us find what we lost outside within," was embodied by Enrico Dalgas, who dedicated his life to reclaiming the sandy lands of Jutland, and Grundtvig, who established folk schools that excluded exams and degrees, cultivating the soil of the spirit. In this space, where class masks were unnecessary, the living words exchanged became a form of trust capital, converging costs of surveillance and control to near zero.

The industrial flowering of this soil is exemplified by the Thisted wind project. When the government and large capital insisted that nuclear power was the only alternative, teachers and students from the Thisted alternative school dug the foundation with shovels and hand-carved 24-meter blades to complete a 2-megawatt generator in 1978. These self-reliant individuals created blueprints and know-how, distributing them freely worldwide. This was an act of altruistic transparency, offering knowledge without conditions. On this blueprint, nineteen-year-old Henrik Stiesdal self-taught himself to assemble the generator, and the small ironworks Vestas recognized the technology, leading to a licensing agreement in 1979 that propelled it to become the world's leading wind power company.

When Gerard Philips and his brother started their light bulb business in a dilapidated factory in Eindhoven in 1891, their father, Frederik Philips, stipulated that "no dishonest money should be earned." This principle, which emphasizes transparency in financial statements and refraining from deceiving customers or appropriating partners' intellectual property, has become ingrained in the DNA of ASML, a subsidiary of Philips, over a century later.

The philosophy of honesty flourished at the Philips Physics Research Institute, founded by physicist Gilles Holst in 1914. By eliminating bureaucracy and ensuring autonomy, members shared data and hypotheses without concealing failures, establishing a prototype of psychological safety. ASML, which became independent from Philips in 1984, began as a project with 47 engineers in an old tent. Chief Technology Officer Martin van den Brink, after being directly contradicted by a young engineer during a meeting, admitted, "You are right. I was wrong, and you were correct," and established the methodology of triangulation, making bad news the starting point of discussions. Upon seeing a dirty workbench, he instructed, "Dirty machines tell lies; start by cleaning the floor."

The true value of transparency emerges in times of crisis. In the late 1980s, when a semiconductor recession forced parent company Philips to restructure, ASML, which was spending on research and development without generating revenue, was first in line for liquidation. Board member Henk Boet read the situation beyond the financial statements, persuading stakeholders that if this investment failed, the entire European equipment ecosystem would collapse, leading to a loss of technological sovereignty. He secured a bailout of 30 million guilders.

When the main factory burned down in 1990, management chose to share photos of the charred factory and a recovery roadmap with global clients instead of controlling the media, resulting in no order cancellations.

In 2012, during the development of extreme ultraviolet (EUV) lithography equipment, ASML approached competitors Intel, TSMC, and Samsung, admitting its limitations and funding shortages, proposing to share development costs in exchange for equity. The three companies purchased 23% for €3.85 billion and provided €1.38 billion in support over five years, allowing ASML to maintain control while integrating competitors into its roadmap.

The principles of the supply chain also emerged from this experience. While over 100,000 precision parts are included in the latest equipment, ASML manufactures only 15% directly. Since 1983, ASML has maintained a relationship with German supplier Carl Zeiss based on mutual respect for scientific integrity, without a mandatory contract. When optical errors occurred, Zeiss admitted that the cause lay in its internal lens polishing process. In 2016, as Zeiss faced increased management risks, ASML opted to buy 24.9% of its shares for €1 billion instead of cutting prices, providing an additional €760 million in support. The result was ultra-precise mirrors with a difference of only 0.1 millimeters between mountains and valleys when scaled to the size of the Earth. The seed of lithography equipment that China cannot surpass began with the absolute honesty and transparency left by the Philips founders in 1891.

TSMC, which holds over 70% of the advanced foundry market, operates on similar principles. Morris Chang learned the value of standing alone before truth at Harvard, studied physical laws at MIT and Stanford, and gained experience in statistical process control at Texas Instruments for 25 years. When he founded the company in 1987, he eliminated the opacity typical of Asian companies, such as backdoor deals and nepotism, and the international accounting standards and board governance required by early major investor Philips served as a shield against local favoritism.

Honesty transcends morality to become the algorithm of business at TSMC. The clearest test came during the 2009 40-nanometer process crisis. A process defect caused significant losses for key client NVIDIA, but the existing management refused compensation. Morris Chang, who had retired, returned to transparently acknowledge the technical fault, flew to Silicon Valley, admitted, "We were wrong," and offered over $100 million in damages, reaching a settlement within two days.

In the early 2000s, when fine processes hit the 193-nanometer wall, Nikon and Canon were focused on dry technology to reduce wavelengths. When TSMC's research team proposed immersion lithography, Intel and Japanese companies dismissed it as unscientific, while only ASML paid attention to the data. TSMC openly shared real-time manufacturing data and defect information, forming a team that broke down confidentiality barriers and pushed Japanese companies out of the high-end market.

The core of the Nightingale project, which secured the 10-nanometer and 7-nanometer processes, was not labor time but data trust. Under the principle of not competing with customers, TSMC serves as a neutral party through its open innovation platform (OIP) and chiplet standards, allowing partners to combine core assets without fear of technology leakage. Samsung has belatedly established a similar platform, but customers are reluctant to share design secrets with Samsung, a competitor in finished products like smartphones, limiting customer expansion.

For TSMC, European regulations have transformed into industrial power that eliminates competitors. By joining the 100% renewable energy initiative, TSMC has committed to purchasing all offshore wind power at a fixed price for 20 years, thereby eliminating financial risks for Denmark's Ørsted project. The question posed to South Korean manufacturing is clear: the hierarchical culture of top-down command and the closed nature that conceals bad news are the most lethal poisons for sustainable transparency.

In 1996, NVIDIA was at a crossroads just before bankruptcy. During development, it realized that its first product's architecture diverged from the market standard set by Microsoft’s DirectX, and the company's funds were running low. Jensen Huang approached the representative of its contractor, Sega, confessed that their architecture was wrong, and requested to terminate the contract while asking to keep the $5 million development fee as an investment. Sega agreed to this honesty, and with that money, a new chip was developed, leading to success. This transparent acknowledgment of defects became the ultimate survival strategy, embedding the legacy that transparency is the strongest capital.

This principle transcends individual virtue to become NVIDIA's management structure. The principle of setting goals not against competitors but in the shortest time possible based on physical laws, reducing middle management so that over 60 executives directly interact with the CEO, prohibiting secretive reporting, and conducting all discussions in public are all part of this approach. In an industry where changing companies every few years is the norm, the reason core architects stay for over 20 years cannot be explained by compensation alone.

Technological transitions follow the same logic. NVIDIA created a separate CUDA platform for chips originally used only for game graphics, anticipating future markets, even as Wall Street derided it as a waste. Eventually, its market capitalization plummeted from $12 billion to $2 billion. However, when Professor Geoffrey Hinton's team utilized two of the company's graphics cards (GPUs) to open the door to deep learning, NVIDIA pivoted from its past cash cow to become an AI company.

Europe has created the "Brussels Effect," leveraging access to its single market of 450 million people to demand environmental and human rights regulations from global companies. This is the so-called normative power of Europe. The current order requires proof of carbon and human rights embedded in the entire product lifecycle through transparent digital data to enter the market. Under the principle of double materiality, which mandates climate risks to be disclosed in monetary terms and probabilities, previously invisible environmental risks have been elevated to financial variables that determine procurement rates and stock prices. Double materiality means reflecting both the impact of companies on the environment and the impact of the environment on companies in financial statements.

The practical cost bill is already in effect with the Carbon Border Adjustment Mechanism (CBAM). Carbon-intensive products entering Europe must submit certificates corresponding to their embedded carbon emissions, and immediate impacts are anticipated for South Korea's steel and chemical industries, which have a high export share to Europe. South Korea argues that it also implements an emissions trading system and requests special treatment, but this does not hold against the carbon price gap between the two markets. The first implementation of the Digital Product Passport (DPP), which records the carbon history of products, targets batteries. It mandates the digital submission of information throughout the entire lifecycle, from raw material extraction to recycling, and if any data is missing or suspected of being falsified, sales are completely blocked without exception.

In response to this wave, the approaches of China, Japan, and South Korea diverge. Japan, led by the Ministry of Economy, Trade and Industry, is synchronizing its national system with European standards, completing the world's first interoperability demonstration by March 2025 through the Uranus project. China, controlling the battery supply chain, has smooth data access, and its subsidiary of Geely, Volvo, has already equipped its batteries with a passport in collaboration with the UK carbon certification software company Circular. Moreover, it is early commercializing hydrogen reduction steelmaking facilities to bring carbon emissions close to zero, effectively nullifying the regulations. South Korea has missed the golden opportunity to establish a national representative platform, leaving small and medium-sized enterprises without capital and IT infrastructure in a data blackout zone. However, while Europe has the capacity to design norms, it lacks the precise mass production infrastructure for commercialization. Additionally, the U.S. struggles to match manufacturing costs due to labor expenses, so proactively establishing a transparency system could present a significant opportunity for South Korea. The moment it seizes the ability to convert opaque process data into trustworthy data for the West, the path from being a norm-dependent country to a norm creator opens up. It is urgent to unify fragmented tasks across ministries such as the Ministry of Climate, Industry, and SMEs to establish a control tower for trade and ESG.

China accounts for over 30% of global manufacturing value-added, with CATL and BYD commanding 60-80% of global market share in solar, batteries, and electric vehicles. It has recorded the world's number one research achievements in 66 out of 74 key technology areas and posted the largest trade surplus in history in 2025. In contrast, the U.S. recorded the largest trade deficit in history for the same amount. While the U.S. has tilted towards a litigious culture, China views the state as a single machine. Unable to win on straight roads, it has shifted its value chain from engines to batteries, becoming the world's largest electric vehicle empire.

One area where China's opacity is particularly noted is in circumventing rules through subsidies. Direct subsidies alone account for 1.73% of GDP, and when combined with tax, land, and credit benefits, the figure rises to 4.4%. The problem is that this ecosystem is extremely opaque. Government-led funds disguised as private equity funds proliferate, and a $100 billion semiconductor fund created in the third round focuses on overcoming choke points in advanced lithography equipment and design software controlled by the West. Under a structure where state finances can absorb failures indefinitely, companies produce at virtually negative marginal costs, collapsing the global price mechanism.

This accumulated opacity has been exposed on the global stage. The Communist Party effectively controls state-owned enterprises while claiming they operate according to commercial logic, circumventing WTO subsidy sanctions. The monopolistic position in the global supply chain has been weaponized to punish countries that offend political sensibilities. However, the very conditions for success are flawed.

Without an independent judiciary and market transparency, as seen when Apple refused law enforcement's demands for backdoors, state power can disintegrate entrepreneurs overnight. Such opacity limits the emergence of universally innovative companies. In a closed system where surveillance cameras and anti-espionage laws control every move, imitation may be maximized, but paradigm-shifting innovation cannot thrive.

South Korea must not imitate this volume offensive or control method. In envisioning the path for the next century, the best approach is to establish institutional transparency that ends the cycle of policy reversals with each regime change, to hold the physical choke points that drive both China's AI ecosystem and the U.S. big tech infrastructure, and to position itself as a trusted partner that merges advanced manufacturing with absolute transparency.

Since World War II, the U.S. has stood at the center of the international order, encompassing technology, norms, and institutions. However, it is now shaking the very rules-based order it designed. Unilateral and opaque policies have followed, and the predictability once trusted by the world has vanished. Hegemony is not maintained solely by military power; the opposing country must be able to trust in the continuity of promises for rules and alliances to hold strength.

The shift in technological indicators is clear. Chinese universities occupy a significant portion of the top ranks in evaluations that measure the output and citation of top papers, and a reversal has been allowed in the total competition of basic science. The Leiden ranking and Nature Index are examples of this. However, to conclude that this signifies a collapse of U.S. innovative capacity is superficial. In fields like quantum computing, which require high levels of foundational knowledge and solidarity among multiple allies, the U.S.-led West still holds the lead.

The structural difference lies in how talent is organized. The U.S. is a society where the most talented individuals gravitate towards abstract rule-based sectors like law, finance, and consulting, excelling in creating from nothing but treating manufacturing as low-value subcontracting, losing the tacit knowledge and process know-how required for precise mass production. In contrast, China prioritizes a real economic system where technocrats from engineering backgrounds are positioned in local administration, emphasizing the process of making and then fixing on-site.

Opacity is even more pronounced in foreign policy. Decisions to withdraw from climate agreements, halt support for over 60 international organizations, and paralyze the WTO's final adjudicatory body have followed. While the U.S. imposes universal tariffs of up to 50% on the poorest African countries, China has implemented zero tariffs on all exports to the 53 African countries it has diplomatic relations with.

Yet, the U.S. advantage has not disappeared. It still dominates the flow of dominant rules, the software that operates them, and venture capital. In this chaos, South Korea's strategy should not be a choice to side with one party but to increase its autonomy. This involves establishing irreplaceability by tying itself to the center of the global value chain, managing a two-track supply chain that distinguishes between advanced security value chains and general value chains, and promoting multilateralism among middle powers.

Francis Fukuyama has defined that an opaque society where trust in others is absent incurs significant transaction costs in legal reviews, contract enforcement, and bribery, akin to a tax on economic activity. Nex and Keeper analyzed 29 market economy countries and found that for every 10 percentage points increase in social trust, the annual per capita GDP growth rate rises by 0.8 to 1 percentage points. The World Economic Forum estimates that corruption increases business execution costs by an average of over 10%.

In the Corruption Perceptions Index by Transparency International, Denmark scores 89, Finland 88, Norway 81, and Sweden 80, maintaining the top ranks, while South Korea scores 63, placing it 31st. This gap may be a source of moral pride but manifests as a difference in economic performance. In 1766, the Swedish parliament enacted a freedom of the press law that opened public documents to citizens and abolished prior censorship, which later evolved into the world's first ombudsman system. The egalitarian norm of not considering oneself special, known as Jante's Law, has made self-serving behavior a social taboo, and the decision to establish a sovereign wealth fund that publicly discloses its investment portfolio is based on the same principle.

The internal workings of companies reflect the same grammar. Researchers at Novo Nordisk, which developed an obesity treatment, shook their heads when asked if they received monetary rewards. They transparently attributed their intellectual property to the company, supported by a structural trust that the profits would be reinvested into life sciences research through a public foundation. Motivation is not an individual virtue but a product of the system.

The value of this trust is evident in crisis response. When Nokia collapsed, leaving 18,000 people unemployed worldwide, it did not abandon this human resource. It opened its technology patents for former employees to use at low cost and activated unemployment insurance that maintained the previous salary level for up to two years for founders. As a result, over 60% of participants successfully reemployed, leading to the birth of over 1,000 new startups.

Between the great powers of Russia and Germany, Estonia has weaponized its digital platform to become a rule-setter for global cybersecurity standards. After Russia's full-scale invasion, when Ukraine's banking system and logistics network collapsed, software developers who took refuge in underground bunkers continued their operations using Estonia's e-citizenship system. With just laptops and smartphones, they accessed the Estonian e-citizenship platform to establish EU entities and receive overseas payments while paying their colleagues' wages. The core infrastructure of Ukraine's e-government app was built on this country's decentralized data exchange platform.

The starting point was desperation. When it gained independence, its finances were in bankruptcy. When the Finnish government offered to donate analog telephone exchanges, the country refused and opted for the internet instead, believing that computers could equalize a capital-deficient nation with developed countries. What hindered innovation was not technology but departmental self-interest and data monopolization. However, the government legally dismantled departmental self-interest. Government agencies that require citizens to submit the same documents twice have no reason to exist, and this principle was enforced by law, creating a decentralized structure without a central server.

Transparency was validated in crisis. When a large-scale distributed denial-of-service (DDoS) attack, presumed to be from Russia, halted national functions, professors, engineers, and white-hat hackers, who had previously been critical of the government, voluntarily gathered to defend it. This solidarity was institutionalized as a public-private joint cyber reserve force. Cumulatively, 140,000 e-citizens from 185 countries have established over 40,000 EU entities, with one program contributing €12.5 million to the national treasury in a year. These individuals operate as diplomatic allies that shape public opinion in their countries during crises, becoming assets for national existence and defense.

Today, the Baltic states have secured monopolistic core technologies that the world cannot do without, rather than submitting to great powers. This includes Lithuania's lasers, Latvia's drones, and Estonia's digital administration and security platforms. Latvia has emerged as a hub for military drones and tactical network technology, while Lithuania has monopolized scientific and industrial laser technology, establishing an indispensable position in global semiconductor equipment production. Estonia supports or exports its well-established digital administrative system to over 100 countries and has positioned itself as a cybersecurity command center or hub for the EU and NATO. Small countries endure not through territory but through irreplaceable choke points.

Denmark's transparency and trust capital are not products of short-term systems. After losing its fleet in a war with Britain and declaring national bankruptcy, it suffered defeat in the Second Schleswig War in 1864, losing one-third of its territory and 40% of its population. Enrico Dalgas, a civil engineer, dedicated his life to reclaiming the barren lands of Jutland.

Internalized transparency has transitioned into the business ecosystem, giving rise to the model of existential industry. In a top-down controlled economy, the inability to acknowledge strategic failures due to the face-saving of vested interests and the inability to stop due to sunk costs leads to stagnation. In contrast, companies with secured transparency can face their internal limitations without concealment, allowing them to shed vested interests and start anew at any time. In crisis, Bang & Olufsen shed the inertia of past successes to pioneer a mobile portable ecosystem, while Ørsted (formerly Dong Energy), which accounted for one-third of national carbon emissions, publicly disclosed data linking the risks of fossil fuel core business collapse to climate change, selling off licenses for oil and gas that generated the vast majority of its existing profits to transform into the world's leading offshore wind power company.

All of this is supported by a structure that has sustained itself for over a century. To protect its research philosophy from the pressures of founder families seeking personal gain or activist funds, a public-interest foundation holds the absolute majority of voting shares. Even in crisis, LEGO has minimized destructive conflicts by publicly sharing the realities of internal laxity and reducing the number of component types by nearly half, transparently communicating the substance and accountability of the crisis.

In the renewable energy sector, the same principle eliminates social conflict costs. In 2025, while China shook the global landscape by exceeding 100 gigawatts of new installations in the global wind market, Vestas maintained its position as the market leader outside China. Germany, which initially experienced failures by promoting top-down wind development, faced setbacks with its 3-megawatt Grobian turbine, which became scrap metal after just 420 hours of operation due to ignoring on-site trial and error.

South Korea has emerged as a nation that has escaped an oppressive growth system to achieve the values of liberal democracy. During a time when pessimism dominated academia regarding the end of the DRAM era due to the physical limits of fine processes, a researcher focused on silicon penetrating electrodes and 3D packaging research, accumulating failures such as the phenomenon of packages bending at high temperatures with students for over 15 years.

This is the story of Professor Kim Jeong-ho from KAIST. That research transformed SK Hynix into a nation of high-bandwidth memory. While the global robotics community poured budgets into bipedal humanoids, a researcher found answers in the movements of animals optimized over millions of years. A robot that walks and runs by judging terrain 20 times per second using only tactile sensors on its toes can perform its mission even in darkness or when sensors are destroyed.

This also applies to Dr. Kim Sang-bae from MIT, who created a stable ion trap method at room temperature, unlike large companies that insisted on superconducting methods, and to IonQ's CEO Kim Jeong-sang, who became the first to list a company on the New York Stock Exchange. Additionally, Woo Seong-hoon, CEO of the U.S. startup Amogee, is attracting global investment with innovative ammonia cracking technology for hydrogen storage and utilization while collaborating with Korean companies.

Noteworthy is Yuhan Corporation, which, on its 100th anniversary, became the first in South Korea's history of anticancer drugs to receive U.S. approval. The driving force behind the research team's ability to endure over 150 billion won in costs during three years of Phase III clinical trials lies in its governance structure. The largest shareholder is a public-interest foundation, blocking pressures for personal gain from the owner family or hedge funds demanding short-term dividends, enabling the investment of 1.7 trillion won in research and development budgets over the past decade. The profits from new drugs flow into the foundation's dividends, creating a virtuous cycle that returns to scholarships and welfare, representing the Korean version of the Danish existential industry model.

History also showcases South Korea's potential for transparency. The sincerity of Father Lee Tae-seok, who touched the wounds of leprosy patients in Tonj, South Sudan, with his bare hands, has not faded even after his death. In 1597, during the Battle of Myeongnyang, Admiral Yi Sun-sin led the Joseon navy of 13 ships against over 330 Japanese vessels, promising neither reinforcements nor miracles, but instead confessing and sharing the absolute reality of death with all members, leading to victory. The legacy of King Sejong, who allowed every citizen to express their inner thoughts through the creation of Hangul, is part of the same lineage.

China's five-year plans and vertical capitalism drive short-term growth through volume input. However, when crises arise, the lack of resilience to shed vested interests and the philosophical foundation to draw out the sincerity of members is evident. The lesson remains that countries lacking resources, territory, and population have overturned their power deficits with one invisible resource.

Transparency is not a technical device that can be internalized overnight by overhauling systems, nor is it completed through severe punishment to prevent corruption or sophisticated technological surveillance networks. It is fundamentally a matter of spirit and philosophy. The two axes are clear. One is external transparency that proves carbon and human rights, demanded by the global economy led by Europe, which serves as a toll fee for market entry. The other is internal transparency, which internalizes the Philips motto from 1891, "No dishonest money should be earned," into our corporate culture and the conscience of our members, posing the question of how we will survive. The fact that the lithography equipment that China cannot surpass began with absolute honesty and transparency underscores what is fundamentally important.

South Korean industry stands at a critical juncture where even its last competitive advantages are shaking. It must break free from the old inertia of hiding in closed rooms out of fear of survival and establish a psychological safety net that shares assets without punishing failures. This is not merely a slogan but a strategy. In the long term, it is an economic weapon that lowers social transaction costs and maximizes voluntary engagement from members to create added value.

While visible volume cannot defeat China, the power of invisible transparency can lead the world. Transparency is the most solid foundation for South Korean industry to endure existentially for the next century. The first step of a century of innovation begins with a single sentence acknowledging one's mistakes, just as it did in ASML's conference room.

Author's Key Background
- Department of German Language, Hankuk University of Foreign Studies
- Director of KOTRA's Munich and Hamburg Trade Offices, Global Training Center Director
- Head of the International Human Resources Division, Korea Industrial Human Resources Corporation
- Visiting Professor, National Suncheon University, Department of Trade
- Guest Professor, Sookmyung Women's University, Business Administration (2026-present)

(Publications)
- Beautiful Innovation, I Flew with Volkswagen (Translation), Intercultural Communication with Koreans (Co-authored), The Secret to China’s Industrial Rise (Amazon)



* This article has been translated by AI.

Copyright ⓒ Aju Press All rights reserved.