Thursday, December 18, 2008

iPhone, BlackBerry to Make Debut in Korea

Tech-savvy residents in South Korea will finally have access to the iPhone and the BlackBerry Bold after being shut out from the globally popular smartphones. SK Telecom, Korea’s largest mobile carrier, and Canada’s Research in Motion held an ornate ceremony at a posh Seoul hotel on Dec. 16 to mark the launch of the BlackBerry Bold in the country at the end of this month. It will be the first time the BlackBerry service is offered to Koreans by a major local wireless carrier.

To counter SK’s initiative, KT Freetel, Korea’s second-largest mobile carrier known as KTF, says it plans to introduce Apple’s 3G iPhone in April although it has yet to agree with Apple on pricing and other details. The rush to introduce the iPhone underscores the smartphone race underway among Korean operators trying to increase revenues in a market with a mobile subscription rate of well over 90%.

The use of the iPhone and other foreign phones has been discouraged by Korea’s regulatory requirements too. To help smaller companies develop Internet-related applications at lower costs, the Seoul government in 2005 made it mandatory for all handset makers and content providers to use a software standard for Internet access, called WIPI, or Wireless Internet Platform for Interoperability, in Korea. The Korean Communications Commission announced last week that the rule, which meant extra cost for foreign makers because of the need to modify their phones, will be abolished from April 1.

An exception to that requirement was made earlier this year for business users, paving the way for the BlackBerry Bold’s debut before April. SK says the phone will be offered to all consumers if there’s demand for non-business use. Industry watchers notes KTF, which has a 31.5% market share in Korea, has been desperately trying to offer differentiated services to narrow its gap with SK, with more than 50% share, and the iPhone could be one option.

Some analysts say, however, the iPhone probably won’t do the trick. Nokia is virtually non-existent in Korea where consumers are more attracted to phones made by local companies Samsung Electronics and LG Electronics. The two Korean electronic powerhouses each roll out scores of sleek multimedia handsets and smartphones featuring leading-edge technologies every year. The Big Two together control nearly 80% of the Korean handset market.

http://www.businessweek.com/globalbiz/blog/eyeonasia/archives/2008/12/iphone_blackber.html

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Wednesday, December 17, 2008

South Korean actress found guilty of adultery

One of South Korea's most famous actresses was convicted of adultery Wednesday in a high-profile case that drew renewed attention to a decades-old law prohibiting extramarital affairs.

Ok So-ri, who was handed a suspended jail term, had lost a battle in October to have the ban declared unconstitutional.

"I would like to say I'm sorry for causing so much trouble to society," a somber Ok told reporters after the verdict.

A district court in Goyang, near Seoul, handed Ok a suspended eight-month jail sentence, South Korean media reported, meaning she will not have to serve time. Ok's lover received a six-month suspended term.

There was no immediate word on any plans for appeal.

The sensational sex-and-celebrities case has been tabloid fodder for months, with Ok's challenge to the adultery law adding extra spice.

Last year, Ok acknowledged during a news conference that she had had an affair with an opera singer who was a friend of her husband for a few months in 2006. She stressed the affair was a result of her loveless marriage to actor Park Chul.

The court appeared to show some sympathy for Ok's predicament.

"Though the fact of adultery should be criticized, (the court) issued this ruling taking into account that husband Park Chul's responsibility was not small," the court said, according to cable news channel YTN.

She also "suffered mental pains" due to the exposure of her privacy, the court said.

Ok earlier this year filed a petition to have the adultery ban ruled an unconstitutional invasion of privacy. But in October, the Constitutional Court upheld the ban, part of South Korea's 55-year-old criminal code.

Despite decades of Western influence, South Korea remains deeply conservative and is influenced by a Confucian heritage. Those convicted under the anti-adultery law face prison sentences of up to two years, though few serve time.

Supporters of the adultery ban say it promotes monogamy and keeps families intact. Opponents argue the law violates privacy. Complaints have been filed with the Constitutional Court three times in 1990, 1993 and 2001 to abolish the law, but the court has upheld it every time.

While women's rights group were the ban's biggest supporters in the past when the law was meant to keep philandering husbands in line, in recent years some husbands have begun pressing adultery charges on their unfaithful wives.

The number of adultery cases filed in South Korea has dropped in recent years, declining to 8,070 in 2006 from 12,760 in 2000, according to the Supreme Prosecutors' Office. About 80 percent of those cases were dropped before formal charges were filed, largely because complaints were withdrawn.

Many Muslim nations have anti-adultery laws, some with harsh penalties. Taiwan, Austria, Switzerland and some U.S. states also have laws prohibiting extramarital affairs, according to the Korea Legal Aid Center for Family Relations, a government-funded legal counseling office.

http://news.yahoo.com/s/ap/20081217/ap_on_re_as/as_skorea_adultery_3

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Friday, December 12, 2008

South Korea's online economic Nostradamus, and the search for his identity

BACK in September a message appeared on an online bulletin board owned by Daum, the most popular web host in a country, South Korea, with a huge internet culture. Written by someone called “Minerva”, it predicted the imminent collapse of Lehman Brothers, a now-defunct investment bank.

Wild speculation is normally disregarded, but when it proved to be right just five days later, a prophet was born. Word raced through the “netizen” community, and when Minerva went on to predict that the Korean won would fall against the dollar by around 50 won a day in the first half of the week of October 6th, his followers began to watch the currency markets in anticipation. The won did indeed fall by about that much over the next three days.

Minerva became an internet phenomenon, with 40m-odd hits to date. Web-users combed through previous posts, looking for prognostications, and clues about his identity. Sharp comments on the state of the Korean economy and government policy only increased his standing. The media now call him “the Internet Economic President”.

The administration of President Lee Myung-bak is frequently accused of authoritarianism by opponents, so it came as little surprise when the finance minister, Kang Man-soo, admitted that officials had attempted to uncover the blogger’s identity. Some people believe him to be a senior figure in a financial firm. Others think he may even be a civil servant undermining the government from inside. All Minerva has revealed is that he is a man in his 50s.

With the government on his tail, the Minerva case is no longer just about economic prescience. As one equity analyst in Seoul puts it, “The real issue about Minerva is the government’s action…we are not in the 1970s or 1980s!” During that period South Korea was ruled by a military dictatorship, and freedom of speech curtailed.

For now, given the state of Korea’s economy—the central bank slashed rates again this week—Minerva’s identity has taken a back seat to his more recent predictions. He says the KOSPI 100 stockmarket index, now over 1,000, will drop to 500, and the value of flats in Seoul will fall by half. Such a bearish prospect may appear outlandish but, unlike Cassandra, Minerva has many believers.

http://www.economist.com/research/articlesBySubject/displayStory.cfm?story_id=12783609&subjectID=348963&fsrc=nwl
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Monday, December 08, 2008

A letter about kimchi

(click to enlarge)

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Coming to a tiny screen near you

Watching TV and movies on cellphones is so common in South Korea, people no longer think twice about it.

http://futureofless.blogspot.com/2008/12/coming-to-tiny-screen-near-you.html
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Thursday, November 20, 2008

South Korean Won Closes at 10-Year Low Against Dollar



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Blog a Hotbed of Sex Trade


Trying to lose weight, 28-year-old salaried man Kim Hyung-joon hooked up to the Internet last Sunday to learn how to efficiently get rid of his love handles.
As usual, he contacted a popular social-networking Web site, and then moved to a popular diet-specialized blog with nearly 70,000 subscribers.
Searching for tips on diets, his eyes fixed on a photo of a seductive female wearing a tight shirt and short skirt. There was a message at the bottom of the photo: "I feel lonely. I am looking for a boyfriend. Don't hesitate to visit my blog to contact me.''
What Kim found at her blog site was a couple of photos of her taken in seductive poses and a message that she was looking for a boyfriend.
He emailed her and received a surprising reply in a couple of hours. "I would like to get to know you. Please call me,'' she said in a reply with what she claimed were her phone numbers.
Later, Kim realized she was a prostitute promoting herself though the blog.
The sex business is mushrooming in cyberspace. A growing number of prostitutes have transferred their workplace to the Internet to avoid police crackdowns and this shows no sign of letting up.
"Blogs enables prostitutes to attract customers without face-to-face contact and minimize the risk of being caught,'' a police officer said.
The police have yet to figure out how many sex transactions take place through cyberspace on private homepages or blogs. But the officer said, "t's definitely increasing.''
In a parliamentary session last week, Rep. Yoon Seok-yong of the ruling Grand National Party said that 34,795 people were arrested on charges of buying sex in 2006 with 15.4 percent of them using the Web to contact their partners.
The officer stressed the amount of prostitution detected had increased following a series of police crackdowns on major red-light districts in Seoul, which succeeded in driving many brothels there out of business. For instance, the three-month-long crackdown on the red-light district in Jangan-dong in northeastern Seoul has driven more than half of all brothels there out of business, according to the police.
But it speculates most of the prostitutes who were forced to quit still continue to engage in the business in secret, either in nearby areas or on the Internet.
To contain the burgeoning online sex trade, the police last week said they would investigate suspicious Web sites. "The investigation will focus on Internet chat rooms and private blogs apparently designed to sell sex,'' it said in a statement, seeking cooperation with major Web site operators.
In Chee-beom, PR team leader for SK Communications, which operates the nation's leading social-networking Web site Cyworld, said, "We closely monitor our service around the clock to immediately delete any articles indicative of prostitution.''
Naver, Daum and other portals also said they will intensify monitoring of their sites.

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Monday, October 27, 2008

South Korean captures Skate America women's title
















South Korea's Kim Yu-Na captured the Skate America women's title here Sunday, the 2008 world bronze medalist winning the free skate and short programme in figure skating's season opener.

Kim took the free skate Sunday with 123.5 points to 115.07 for second place Yukari Nakano of Japan and 110.62 for former world champion Miki Ando of Japan in third.

Kim captured the overall crown with 193.45 to 172.53 for Nakano and 168.42 for Ando with reigning world junior champion Rachael Flatt fourth on 155.73.

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The secret to happiness in Seoul



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Free economic zone in Songdo takes shape

As an international banker on Wall Street and in Tokyo, and as a mother who raised two kids in London, Min Hee-kyung knows what expatriates need the most.

Many years of relocating and sending kids to international schools greatly helped her in landing a job as a city marketer, she said.

"What expats are concerned the most with is education for kids and quality of life," said Min, who is director general of the Incheon Free Economic Zone`s Business Opportunity Bureau. In her recent two-hour long presentation for international investors, where the mayor of Incheon attended, she said she was bombarded with questions, mostly about educational facilities and living conditions.

The Incheon Free Economic Zone, comprised of the three regions of Songdo, Cheongna, and the island of Yeongjong, is the first free economic zone in Korea, designated by the government in 2003.

The IFEZ aims to transform these three areas into hubs for logistics, international business and leisure for the Northeast Asian region. The zone is a specially designated area to create a favorable business and living environment where foreign nationals can live and invest conveniently.

"Our best selling point is quality of life," she said. IFEZ is planned to be a self-sufficient living and business district featuring air and sea transportation, an international business center, financial services, international schools, hospitals, and shopping and entertainment centers.

Many regard the free economic zone as a test bed for Korea`s ambitious plans to transform itself into a global financial powerhouse. The plan to use the financial hub to draw global capital and financial professionals is vital to sustainable economic growth in Korea and the rest of Asia, experts say. In the wake of the global credit crunch, many regional companies have limited or no access to capital as they heavily rely on offshore financing.

"The crisis underscores the significance of the role of capital markets for the economy. Developing a financial hub will be strategically more important for Korea," said Kim Ki-hwan, chairman of Seoul Financial Forum.

Songdo will be the world`s first city to be designed as an international business district. It is the largest foreign real estate development project.

"If you look around Asia, many of the traditional cities such as Singapore, Hong Kong and Shanghai have created a financial hub," said Stan Gale, chairman of Gale International, the majority partner in the development of Songdo International Business District.

"Korea, located between China and Japan, is trying to make its own version and its first step towards a financial hub."

The conventional city development process starts creating residential districts, followed by the development of commercial property and office districts. In the case of Yeouido, it took more than five decades to make the area into what it looks like today. In Songdo, the whole process is taking place at the same time.

"We need to have a little bit of everything from the beginning," Min said. She travels abroad almost every month to hunt for potential clients. One of her toughest challenges in terms of promotion is reducing the perception gap between international investors and Korean residents.

"Most of international investors have an image of a rice paddy or production factories when they think of outside Seoul," she said.

Min has a long list of potential clients, including everything from multinational corporations, schools, museums and hospitals. Her target clients are those corporate executives who have plans to expand their Asian businesses, relocate some part of their operations or move their head offices into Incheon.

Still, Songdo is relatively inconspicuous outside of Korea and it may need more time to draw the attention of international investors, she said. Most industrial construction sites have been sold out. Some 100 foreign-invested companies, including 30 multinational corporations are expected to start their operations in 2010 and students and teachers from all over the world will pack into classrooms and university campuses.

"We`ll be able to move forward faster than now once we reach the tipping point," she said.

The new city is not just about new roads and parks and buildings, but the atmosphere and the cultural aspect of the city is another important pull factor to induce more international residents here.

"Bringing a more diversified pool of students here will definitely help us to make Songdo vital and full of life and create communities for international residents," she said.

A focused strategy, legal framework and a favorable eco-system are the critical success factors in setting up a financial hub, experts say.

"A differentiated value proposition is key to attract international investors," said John Meinhold, a global partner of A.T. Kearney.

The most challenging task to make Songdo into a truly international city is perhaps to change the way people think.

Many international investors find real estate-related regulations in Korea too complicated, calling for the need to cut through red tape. So far, the central and local governments have been too slow to make progress in their deregulation process.

"It is a complex issue, which would require extra work to deal with public sentiment and policy coordination between local and central governments," Min said.

http://www.koreaherald.co.kr/ (27 Oct 2008) ◦
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U.S. beef imports in South Korea up sharply in September

SEOUL, Oct. 26: U.S. beef imports surged in September, fueled by consumer demand for premium sirloin and rib cuts, a report by the Agro-Fisheries Trade Corp. said Sunday. The state-run corporation said U.S. imports totaled 7,030 tons worth US$43.98 million, or roughly 35 percent of the total quantity of beef brought into the country in the one-month period. In terms of total value, U.S. beef accounted for 43 percent of all imports, as U.S. cuts fetched higher prices than those imported from Australia and New Zealand.

South Korea imported 20,253 tons of beef worth $103.13 million last month. After banning U.S. beef imports outright in December 2003, South Korea allowed boneless beef into the country in April 2007 before quarantine inspections were halted in early October that year. The market was finally opened to most U.S. cuts as of June 26 after a new trade agreement went into effect. The findings showed U.S. beef imports jumped 126 percent in terms of value and 136 percent in terms of quantity compared to August when inbound shipments reached $19.45 million and 2,984 tons.

"There is steady increase in demand for beef ribs that are sold at restaurants," said an official source at Agro-Fisheries Trade. He speculated that at present pace, U.S. beef would easily outpace rivals, especially since the recent gains were made despite the fact that U.S. cuts are not sold at major retail outlets, department stores or large restaurant chains. These businesses have said they will not handle U.S. beef to avoid confrontation with consumer groups who claim that the meat in unsafe to eat. South Korea was rocked by massive nationwide protests after Seoul agreed to lift the long-standing ban on U.S. beef on April 18 this year. Imports of Australian beef, which has been the best-seller in the absence of U.S. beef, fell to 10,501 tons worth $49.47 million in September. The figure still represents about 50 percent of all imports, but is lower than the 70 percent market share the meat enjoyed in May. New Zealand beef, which ranked second, lost more ground with imports falling to 2,312 tons worth $8.42 million. South Korea also imported small quantities of beef from Mexico and the Philippines. ◦
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Suicide in South Korea

An epidemic has taken over Korea.

Suicide has always been a problem. There have been singers and actors who chose to cut their lives short in the past, but recently, such occurrences have become alarmingly frequent. The first in the current wave was movie star Lee Eun-joo, who ended her life in 2005. This was followed by a sting of high-profile suicides, including iconic actress Choi Jin-sil, transgender actress Jang Chae-won, homosexual model Kim Ji-hu and former government official Kim Young-cheol this month.

Many Koreans were shocked by the deaths of the stars they admired. A fan in his fifties killed himself, leaving behind a message: "I am Choi Jin-sil`s fan forever. I am following her." Many women in their 30s and 40s hung themselves in the same way Choi did, soon after the news of Choi`s death shook the world.

On Oct. 5, Rep. Im Du-seong of the Grand National Party cited a report by the Ministry of Health, Welfare, and Family Affairs saying the number of suicides increase greatly after high-profile suicides.

According to the report, 119 more suicides were committed in August 2003 than in the previous month when Chung Mong-hun, the former chairman of Hyundai Group, killed himself. The same phenomenon was seen in February 2005 after actress Lee`s suicide. In particular, the number of women`s suicides shot up to twice the normal rate a month after her death. Call Center 129, an institute run by the Ministry of Health, Welfare and Family Affairs, said that calls from people on the verge of suicide doubled after actor Ahn Jae-hwan recently took his life.

Suicide rate highest in OECD
According to the National Police Agency, 66,684 Koreans killed themselves over the past five years. According to the National Statistical Office, the number over the last ten years is 94,878.

That is enough people to fill a city.

Since 2003, Korea has suffered the dishonor of having the highest suicide rate among OECD countries. In 2007, 24.8 of every 100,000 Koreans committed suicide. That is more than twice the OECD average of 11.2, and nearly 10 times higher than Greece`s figure of 2.9.

Korea`s suicide rate started its rapid increase in the wake of the 1997 financial crisis. The number of suicides surpassed 10,000 for the first time in 1998, increasing by 42.1 percent within a year.

A report from the Health Ministry states that the suicide rate has climbed by an average of 13 percent every year since 2000, and is almost double the 1997 rate, when 13 out of 100,000 Koreans committed suicide. Last year, an average of 33.3 Koreans killed themselves everyday.

It was especially worrisome in 2002, when deaths from suicide exceeded that of car accidents - the most common cause of unnatural deaths in most developed countries. According to a report Rep. Jin Seong-ho of the GNP received from the National Police Agency, 51.4 percent of unnatural deaths from 2003 to 2007 were due to suicide.

Why Koreans commit suicide
Experts say social, political and economic instability is a big reason. "The Korean government has changed hands five times since 1987," says Oh Jin-tak, a professor of thanatology at Hallym University. "The problem is that everything fluctuates when governments change, such as the ruling principles, the tone and even the owners of the press. Koreans are severely insecure politically, socially and mentally."

Economic changes have also led to sudden shifts of Korean society during the past half-century.

Korea`s annual income in 1961 was a mere $82 per person, but increased dramatically during the Park Chung-hee regime in the 1960s and 1970s. Korea quickly became a developed country, and joined the OECD in 1996.

However the joy did not last long. The Asian financial crisis hit the nation in 1997, and 1.49 million people lost their jobs. "The country never actually recovered from this crisis," contends Oh.

Issues such as poverty, unemployment and bankruptcy, which have plagued the country since, then are still considered the most direct motivation for suicides. "It is assumed that the suicide rate rose because more people were undergoing serious economic situations such as inability to pay credit card bills," said an official of the NSO this month.

The largest increases in the suicide rate have come after economic problems. The number spiked after the Asian financial crisis. It settled down for a year or two while the country was healing from the shock, but has increased since 2001. In 2003 when a credit crisis spread through the country, the suicide rate jumped again, to 24 per 100,000.

It appears Korea is going through more economic malaise. Per capita income has dropped to $15,000 this month from $20,045 at the end of last year. In turn, the suicide rate is rising.

The internet has emerged as a new factor in increasing suicides, say experts. Korea is one of the most advanced IT countries. Ninety-seven percent of Korean households enjoy high-speed internet, while 35 percent in Britain are still not signed up to any internet services at all.

But fast internet access does not always result in positive social results. Groundless rumors and real time replies to online gossip stories is thought to be the biggest reason celebrities choose to kill themselves. People also tend to make hasty decisions online. In 2003 a group of teenagers committed suicide together after meeting through an online suicide community.

Some teenagers even confuse the online world with the real world. In 2006, a 15-year-old boy killed himself leaving a note saying "Seo-mo died ... I will follow my friend Seo-mo, for our friendship." It turned out Seo-mo was only an online character in a game.

"Teenagers who are used to computer games think of death like the reset button on computers. Internet users tend to view the cyber world as reality, so there is a possibility that this kind of misunderstanding will grow," says Oh in his book, "Suicide, the Most Unfortunate Death."

Some experts say that Koreans` tendency to think that this life is all that matters causes high suicide rates. "Concentration on the materialism of this life is the most significant characteristic found among Koreans," writes Jung Su-bok, a researcher at L`Ecole des Haute Etudes of France, in his book "The Cultural Grammar of Koreans."

"It is because traditional Korean religions lack the tension between this life and the afterlife, while other religions formed a theory to connect the two somehow," Jung explains. He argues that the experience of hunger and poverty during Japanese colonization and the Korean War as well as the emphasis on development during the 1970s strengthened this tendency.
This resulted in Koreans` limited knowledge of death and their strong pursuit of wealth.

"Koreans pursue goals such as living a long life, entering first-class schools or companies and marrying a family of good standing," says Jung.

The problem is that many Koreans choose to give up their lives easily when they fail to achieve these goals. Many suicide victims leave notes lamenting how they failed in exams or in businesses, or received plastic surgery that went wrong.

"It is even impossible to count how many women killed themselves because of plastic surgery," says Oh. "Suicide caused by plastic surgery aftereffects will not decrease unless society stops the trend that encourages 'plastic beauty'," he warns.

Lack of social safety net
While ranking first in its suicide rate, Korea`s policies to prevent suicide are considered to be seriously flawed.

The basic step in coping with suicides would be to understand the current situation thoroughly. It seems, however, the government is not even capable of pinning down the exact number of suicides committed.

The statistics reported by the National Police Agency and that of the National Statistical Office do not correlate. The NSO announced that 10,688 suicides were committed in 2006 but the NPA reported 12,968. A discrepancy of around 3,000 is found every year between the two reports.

"There is a difference because the NSO makes their report based on death certificates, but the police use their own investigation sources," explained an official at the Ministry of Health, Welfare and Family Affairs. Some point out families of suicide victims are reluctant to write "suicide" on death certificates.

But experts say both reasons are unacceptable, considering that policies enacted based on either of the reports are woefully inadequate. "This shows how negligent the country is about death - which proudly presents itself as one of the 10 strongest countries in the world," said Hong Geum-ae, chairwoman of the NGO Monitoring Committee of Inspection of the Administration.

"The suicide index is a very sensitive matter to the public. The government should quickly find an alternative plan."

Moreover, experts say that there are many more suicides committed every year than recorded in the report by the police, since many unnatural deaths are classified as having unknown causes. "Over 15 percent of so-called unnatural deaths are likely to be suicides," said Han Gil-ro, a forensic pathologist.

Many analysts criticize the government`s efforts to prevent suicide as being insufficient. "They only mention vague assignments and no specific solutions at all," retorted Oh. He was referring to the "National Strategy of Suicide Prevention in Korea - The Second Five Year National Plan" of the Ministry for Health, Welfare, and Family Affairs.

Oh said that the Korean Association for Suicide Prevention was also unable to perform effectively. "They receive a budget of 500 million won every year, but it is clearly not enough," he said, adding that other countries such as Australia invest much more in preventing suicides.

Many blame the lack of a social safety net for the majority of suicides. Over 35 percent of suicides in Korea are committed by the elderly who are over 60 years of age. The senior suicide rate increased four-fold within 10 years.

"Elderly suicide increased because more seniors are suffering from disease and loneliness," explained an NSO official. Experts remark that a solid social welfare system to help them both physically and mentally would have saved many lives.

This is also the case for the young suicides. According to the NSO, suicide was the biggest cause of death among people in their 20s and 30s in 2007. Most of them were worried about employment. Policymakers have been discussing the issue of youth unemployment for decades, but had they realized it was a matter of life and death to the persons concerned, they may have been bolder in their initiatives.

While the government ponders the issue, the number of people attempting suicide is increasing by the day. In a survey done by the Korean Association for Suicide Prevention among 1,000 Koreans in 2005, 33.4 percent answered "yes" when asked "Have you ever considered committing suicide?" In another recent survey done by a consulting group, 40 percent of unemployed young people said that they had considered killing themselves more than once.

"These kinds of suicides can no longer be regarded as only personal problems," says professor Oh. "A systematical resolution is essential."

http://www.koreaherald.co.kr/ (27 Oct 2008) ◦
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Saturday, October 18, 2008

South Korea's Economy: Half Finished

South Korea's story to date has in big part been the story of what is sometimes called a “developmental state”—that is, one that uses formidable powers to direct and regulate the economy to achieve growth above all else.

The first “Miracle on the Han” worked because the developmental state, after 1961, mostly got things right. Or, rather, it got them right until it got them very wrong, resulting in the 1997 financial crisis. By then, the economy and the way it was financed had become far too complex for traditional guidance, and the state’s sense of omnipotence had blinded it to the need for structural reform. The recovery from crisis accomplished only half the structural reforms South Korea needs. There will be no second miracle unless Mr Lee accomplishes the other half.

Now that he has recovered his poise after the beef fiasco, his supporters argue that Mr Lee is just the man for the job. Under him, says Sakong Il, chairman of the president’s National Competitiveness Council, restrictions will be lifted to augment the country’s low stock of foreign investment. Small businesses will be boosted when the government cuts through red tape and lowers the minimum capital requirement for start-ups to just 100 won, from 50m won now. And rules for investment will be eased in the Seoul metropolitan area, which businesses much prefer to the investment zones in the middle of nowhere promoted by Roh Moo-hyun, the previous president. The council plans to submit 147 laws to the National Assembly this autumn, with the aim, Mr Sakong says, of raising South Korea’s standing in the World Bank’s comparisons of national competitiveness from 30th to 15th.

All this is welcome, but it is not enough. Mr Lee, as a former chaebol executive, will need to prove that he is friendly to markets, not simply to business. “When critics say the chaebol are too big, I don’t know what they mean,” says Mr Sakong. “Bigness itself is not badness; what matters more is whether the actions companies take are legitimate or not.” That is fine as far as it goes. One test for Mr Lee will be whether he and the courts continue to treat the misdemeanours of chaebol bosses lightly. An even more telling one will be whether minority shareholders will be able to seek redress against chaebol trampling on their rights.

Old habits die hard
Traces of the developmental state persist. Although Kang Man-soo, the finance minister, blames heavy taxes, subsidies and regulation for a decline in South Korea’s investment rate, he also promises “a very ambitious plan” of subsidies and incentives for boosting internet businesses such as computer gaming. Known as “e-sports”, this has emerged out of nowhere and become a huge spectator sport, employing 25,000 people in Seoul and spawning nearly 100 game-engineering “academies”.

It is an example of Korean entrepreneurial energies let loose. The government’s proposals seem to represent an old-fashioned instinct to back winners.

Both the country’s patterns of energy use and its attitude towards the environment point more towards the past than the future. Randall Jones, an economist at the OECD, notes that South Korea uses 1.5 times as much energy for every unit of GDP as does Japan. For a country that imports all its hydrocarbons, energy efficiency will, the government says, be pushed to the top of the agenda. As well as promoting a more efficient industry, that will mean weaning Koreans off their gas-guzzlers and improving mass transit.

Seoul’s air, once famously noxious, is much improved, but South Korea lags at conservation. The developmental state is also a construction state, and too often the government seems to feel that nature untrammelled is a chance wasted. Two-fifths of the country’s rich mudflats, or about 1,600 square kilometres, mainly on the peninsula’s west coast, have been “reclaimed”. That has dire consequences not only for fishermen but for seabirds and rare waders too. Almost invariably the government and the construction companies trump environmental interests.

Just as South Korea’s economy is something of a half-way house, so is its democracy. The beef protests seemed to reflect this. Only a short time after Mr Lee had been voted into office, the protesters bringing downtown Seoul to a halt argued that theirs was a more representative kind of politics. That was clearly nonsense. Yet the nation’s political establishment hardly helped its case when the National Assembly was incapable of convening.

South Korea’s labour disputes can also be ascribed to an immature democracy. Workers’ rights were suppressed during years of military dictatorship. Unions have since made up for lost time, and even illegal strikes are tolerated at some of the big chaebol. Yet the strikes do not reflect an unbridgeable divide between capital and labour: rather, nearly all South Koreans are capitalists, and many of the strikers had voted for Mr Lee. Clear leadership from him could do much to put the country’s labour relations on a more stable footing.

The sense of something half-finished colours South Korea’s diplomacy too. Mr Lee has reiterated that foreign policy rests on his country’s military alliance with the United States, which he now calls a “strategic alliance”.

South Korea has already sent troops to Iraq and Afghanistan in support of American-led reconstruction, and Mr Lee says that in future it will spend more on aid and contribute more to peacekeeping and antiterrorism operations. This reinvigorated alliance, the president’s foreign-policy advisers explain, will not only boost South Korea’s global standing but also provide leverage with tricky neighbours, notably Japan and China, where relations are bedevilled by land and history.

That is probably wishful thinking. For no matter what efforts South Korea makes on the global stage, it is still a shrimp among whales in its own region, and even there the power of its American godfather may decline in relative terms. Only the unification of a divided peninsula might bring South Korea the standing it craves. And given the fearsome problems North Korea would carry with it, even that is far from guaranteed.

http://www.economist.com/surveys/displaystory.cfm?story_id=12237141


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South Korea's Chaebol (conglomerates): Companies OK; Leaders Behaving Badly

The rapid international rise of companies such as Samsung Electronics and LGE underlines a sea change in South Korea’s chaebol in just a decade. Before the Asian financial crisis the leading 50-odd chaebol were heavily indebted. With the help of cheap credit they had been able to get into any business that took their—or the government’s—fancy. After the crisis, about half the chaebol went to the wall; at the time, Daewoo’s collapse was the biggest corporate bankruptcy in history. The remainder were forced to shed hundreds of businesses or divisions in order to keep afloat and concentrate on what they did best. Those that learned the lesson have done very, very well.

Many of the changes have gone deep. After the crisis, foreign investors were welcomed, and now around half of the shares of Samsung Electronics and LGE are foreign-owned. South Korea made a vigorous attempt to improve corporate governance, increasing the rights of minority shareholders, boosting the role of outside directors, punishing improper disclosure and requiring the chaebol to publish consolidated financial statements. Shareholders may now, at least in theory, pursue class-action suits against the country’s biggest companies.

The previous two progressive administrations, less enamoured of big business than the current one, also took aim at the dominance of the biggest chaebol and their controlling families. By putting a ceiling on shareholdings in other companies held by chaebol-related firms, the Korea Fair Trade Commission (KFTC) hoped to cut through the rat’s nest of cross-shareholdings through which the founding families typically exercise control. The KFTC argued that the complex structures discouraged transparency, disadvantaged minority shareholders and raised the risk that bankruptcy in an affiliate might bring down the whole group.

In practice the new rules were hardly draconian. Exemptions were made for chaebol that had good internal monitoring systems or that formed a holding-company structure. Moreover, no South Korean government appears able to resist the temptation to use the chaebol for policy ends. Some of the biggest ones were exempted from the ceilings on outside shareholdings because they were giving support to Roh Moo-hyun’s favourite initiatives, such as investing in sectors designated as “growth engines”, promising to help build the “enterprise cities” that Mr Roh hoped would spread growth to the regions, or even attempting to do business with North Korea. As a result, the founding families of large business groups, using circular chains of shareholdings, continue to exercise control even though, says the OECD, they hold an average of only 6% of their group’s shares.

In almost any other OECD country this would be a scandal. In South Korea such foibles are too easily tolerated. Moreover, the chaebol’s ruling class displays an extraordinary degree of delinquent behaviour, and only rarely does it suffer the consequences, as it did in the case of Kim Woo-choong and Daewoo’s collapse.

A roster of recent misdemeanours illustrates the point. Last year Kim Seung-youn, the chairman of Hanwha, an explosives, construction and insurance group, confessed to going to a bar and, helped by his goons, beating up the staff. He said it was in retaliation for his own son having been hurt in a scuffle. Last year, too, the chairman of Hyundai Motor (and son of Hyundai’s founder), the world’s fifth-biggest carmaker, was convicted of embezzling $90m from his company. In 2003 the head of SK Group, a telecoms, oil-refining and construction conglomerate, was convicted of illegal share swaps designed to keep the group in family control. All three men were pardoned by President Lee Myung-bak on South Korea’s national day in August. Only Mr Kim served any time in jail.

The biggest case concerns the Samsung Group, South Korea’s largest, and its recent chairman, 66-year-old Lee Gun-hee. Samsung has long been accused of corrupt practices: Mr Lee was convicted of political bribery in the 1990s, though escaped without penalties. In April he was charged with tax evasion and breach of trust. But more serious allegations of bribery were dropped—even though he had been fingered by Samsung’s former chief lawyer, who spoke of a huge slush fund.

Mr Lee has also been charged with transferring control to his 40-year-old son and heir, Jay Y. Lee, by arranging for Samsung affiliates to sell shares to the younger Mr Lee at artificially low prices. After the charges he resigned, on live television, “to take legal and moral responsibility”. Yet though Mr Lee technically faces a life sentence, few believe he will spend much, if any, time in jail. Nine other Samsung officials have been charged, but none has been detained—partly, the government says, out of concern that the economy might be harmed. Although Mr Lee is no longer chairman, Samsung executives in private talk as though he were still running the group.

How do the chaebol families get away with it? Many of them grew from black markets, smuggling and other rackets that thrived after the Korean war in the early 1950s, thanks to vast amounts of American aid and military spending, and to the policies of import substitution favoured by South Korea’s strongman, Syngman Rhee. When Park Chung-hee seized power in 1961, the junta marched many of the racketeers through Seoul wearing dunce caps and placards with slogans such as “I am a corrupt swine”. As Mr Cumings recounts, it was Lee Gun-hee’s father, Lee Byung-chol, who proposed to Park that the swine seek foreign capital and equipment to launch the South Korean economy. Park called in ten of the leading businessmen and agreed not to jail them if they invested their “fines” in new industries that would sell to foreign markets.
The rest is history. To this day chaebol families are more admired for their economic contribution than reviled for their criminal propensities, which are often viewed as the foibles of a ruling aristocracy. The chaebol families are the closest thing South Koreans have to royalty. The clans intermarry and their shenanigans fill the gossip pages, as well as providing much of the inspiration for the television soap operas of the “Korean wave”—yet another South Korean export hit.

http://www.economist.com/surveys/displaystory.cfm?story_id=12237177

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South's Korea's Export Juggernaut

JUST as South Korea, in historical terms, sees itself as a little thing among overbearing powers, so many of its businessmen and policymakers now feel that the country’s export machine, the thumping heart of the economy, is being squeezed by two giants. On one side is Japan, whose high technology and sophisticated production give it an edge in exports. On the other is China, whose low wages allow it to compete ruthlessly on cost, even as it learns to make ever more complex products. What, South Koreans wonder, is their economy’s place in Asia’s future?

They may be overreacting. Certainly, China’s rise up the production chain has been swift and, in some cases, ferocious; and the South Korean won has been the strongest of the region’s currencies since Asian growth took off earlier this decade, even if it has softened somewhat this year. Yet South Korea has responded admirably to increased competition and a stronger currency, notching up double-digit export growth for the past five years. It is now the world’s tenth-biggest exporter, and apart from a cyclical slump in Asian export growth that appears to be caused by America’s and Europe’s sharply slowing economies, there is plenty of reason to think that its success can continue for a while.

To date, China has proved a boon for South Korea’s exports. Having overtaken America in 2003 to become South Korea’s largest trade partner, it runs a bilateral trade deficit thanks to large imports of capital equipment and parts from South Korea. This growing bilateral trade reflects the knitting-together of production networks all over Asia, centred on China. China’s share of South Korea’s total exports of unfinished goods—that is, parts—rose from just 1% in 1992 to 27% in 2004, according to the IMF. Now China’s bilateral deficit is narrowing as South Korea imports more intermediate goods from there. Yet much of this is the result of South Korean investment in China.

South Korean manufacturers are still improving their own competitiveness. Partly thanks to modest wage growth, labour productivity in manufacturing has grown by an average of 10% a year since 2002. Indeed, the stronger won appears merely to be the flip side of that productivity growth. Currency strength, certainly, is squeezing profits in some areas, notably for small- and medium-sized businesses that are less efficient than larger firms, as well as for the big carmakers.

South Korean exports have not only grown but become more sophisticated as production has shifted out of low-value-added goods such as textiles that rely mainly on cheap labour. Korea’s spending on research and development is equivalent to nearly 3% of GDP a year, one of the highest rates among developed economies. According to the IMF, high-value-added products—things like cars, consumer electronics and top-of-the-range ships—now make up half of Korea’s exports, up from a quarter in 1990.

South Korea today is more of a whale than a shrimp in several global industries. In memory chips it is home to the world’s biggest maker of flash memory (Samsung Electronics) and the two biggest makers of DRAM chips (Samsung and Hynix). It has the third-largest steelmaker (POSCO), the fifth-largest carmaker (Hyundai Motor), and the world’s three biggest shipbuilders (Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering, or DSME). It is a leading producer of mobile handsets and of LCD screens for televisions, computers and much more.

Heavy industry, as Shaun Cochran of CLSA, a brokerage, puts it, is the country’s “sweet spot”. Take shipbuilding. As Hyundai’s founder, Chong Ju-yung, was boasting posthumously in those television advertisements this summer, there was no shipbuilding industry in South Korea until the 1960s. When the country’s dictator, Park Chung-hee, summoned Chong and told him to produce oil tankers, for which there was a sudden demand, Chong went straight to Greece and scooped up two contracts to build 260,000-tonne tankers, promising his customers delivery within two years, sooner than anyone else. He had neglected to mention that at that moment he lacked even a shipyard. He then waved the order in front of Barclays Bank, which lent him enough money to build a modern yard. No one in South Korea knew how to do that, so Chong dispatched 60 engineers to Scotland to learn. The ships were delivered before the deadline. This famous story, concedes Bruce Cumings of the University of Chicago in a refreshingly revisionist modern history, “Korea’s Place in the Sun”, may be apocryphal in its details, yet it has a strong whiff of truth about it.

Korea’s three big shipbuilders are thriving. Competing fiercely against each other, though by unwritten agreement not for staff, their order books are nearly full up to 2013. South Korea has two-fifths of the world market in new ships (which account for 8% of its exports), whereas China and Japan have to make do with a quarter-share each.

Seen from a helicopter, the vast DSME yard at Okpo Kojé island, near the south-eastern industrial port of Busan, looks impressive: great walls of steel rise up from the dry docks as enormous gantries offer up bows and other hull sections to assemble the world’s biggest container ships, liquefied natural gas (LNG) carriers and giant floating depots for storing and processing offshore oil and gas. On the ground, all notions of human scale are lost.

DSME’s chief executive, Nam Sang-tae, says that China is not a chief competitor, despite the state aid from which its shipbuilding industry has benefited. It cannot match South Korea for prompt delivery, and although Chinese shipyards offer low costs, they turn out relatively low-tech vessels, such as bulk carriers and run-of-the-mill oil tankers. South Korean yards are more interested in building, say, high-tech LNG carriers, which keep their cargo at -163ºC.

A new type which Daewoo Shipbuilding was the first to build regasifies the methane before it is piped ashore. The design and manufacture of deep-sea rigs, much in demand now that many oil and gasfields on the world’s continental shelves have been exploited, is even more challenging than building advanced ships, and offers higher profit margins; indeed DSME wants to operate as well as build specialised offshore oil rigs because oil companies pay such lucrative fees.

All the South Korean shipbuilders throw a lot of money at research and development. Each has a large design institute, and they generously support university engineering faculties.

Mr Nam is also sanguine about the effect of shipping’s notorious boom-and-bust cycles on his business. Patterns of global logistics are changing, he says, spurred by a growth in world trade and a China-led hunger for resources, so more ships are needed overall, not just new kinds. Climate change, Mr Nam says, offers further opportunities. The potential viability of Arctic sea routes in future is prompting a demand for vessels strengthened to withstand ice. Another growth area is “winterising” oil rigs to cope with drilling in cold climates. Pressure for cleaner transport also helps (bunker fuel used by most of the world’s shipping is filthy).

Okpo is a company town where DSME has its own hospital, cinemas and international school for the families of overseas clients who come to keep an eye on their ships under construction. There are dormitories for single young men and women respectively, one on each side of the bay. Internet forums host thriving dating and matchmaking services, and newly married couples get to move out of the dormitories into their own flats. The town has an income per person of over $30,000, the second-highest in the country.

Iron constitution
Daewoo Shipbuilding was nationalised when the Daewoo chaebol of which it formed a part continued to pile up debts even when the financial crisis was over, entering new businesses with what turned out to be criminal insouciance. Kim Woo-choong, the chaebol’s founder, eventually admitted to accounting fraud and embezzlement worth over $30 billion, and in 2006 was sentenced to ten years in jail before being pardoned. Yet the company’s shipbuilding arm has thrived.

The government has floated a minority of DSME’s shares on the stockmarket. Later this year it is due to sell the controlling stake to one of four prospective buyers. Among the bidders is POSCO, the shipbuilder’s main steel supplier, which itself was started from scratch by the state in the late 1960s, using $120m of war reparations paid after Japan and South Korea normalised their relations. Foreign investors and development experts in Washington, DC, had given warning that a dirt-poor country like South Korea should not aim for self-sufficiency in steel. Yet the company, which was privatised after the 1997 financial crisis, has become a symbol of national pride. POSCO fed the country’s industrial beast and is now, by several measures, the world’s most efficient steel producer.

South Korea’s industrial structure is unusual, says POSCO’s boss, Lee Ku-taek. Its steel consumption per person is the fourth-highest in the world, yet most of the steel eventually goes overseas: nearly 100% in the case of POSCO’s shipbuilding clients, and 60% in the case of Korean carmakers. The steelmaker also serves South Korean construction companies abroad, for example in Dubai. Its customers’ eagerness to conquer fiercely competitive markets overseas may have kept POSCO lean. “Steel’s competitiveness here has made South Korea what it is,” says Mr Lee, “and I’m hugely proud of that.”

Now that he is hoping to buy DSME he sees the chance to double the shipbuilder’s value, which the stockmarket currently puts at $6 billion, by concentrating on complex products such as oil rigs. In shipbuilding, Mr Lee points out, the less you need to weld, the more you save. POSCO, he says, can tailor plates to specific ships, making the product much cheaper.

After two decades of building up its domestic market, says Mr Lee, POSCO will spend the next two decades establishing a powerful presence overseas, through greenfield sites and acquisitions, including in mines that can secure the company’s supply of ore. It will be following the example of South Korea’s consumer-electronics companies, which sometimes used almost military methods for their push overseas. At LG Electronics (LGE) they tell a story of a country manager who was dropped into Algeria during the civil war when other multinationals kept away, put off by the risk. When he emerged several years later, he had built up a multimillion dollar franchise.

The country’s biggest successes in consumer electronics are LGE and Samsung Electronics. Only a decade ago consumers abroad hardly knew them, and if they did it was as makers of cheap knock-offs of classier brands, notably Sony. Today they have annual sales of $43 billion and $92 billion respectively, along with a reputation for making hip and sophisticated mobile handsets, MP3 players, televisions, digital cameras and more. LGE, for instance, is the world’s largest maker of plasma televisions; Samsung has recently overtaken Motorola to become the second-biggest maker of mobile phones. Samsung’s stockmarket capitalisation, at over $80 billion, has raced past Sony’s and is second only to Apple among consumer-electronics companies. Samsung Electronics now makes the televisions on which Sony sticks its name badge.

All we need is love
Dermot Boden, LGE’s new chief marketing officer, explains that much still needs to be done to realise the company’s global ambitions, but his appointment, as a non-Korean, indicates the direction in which the best South Korean companies are going. South Korean companies, like Japanese ones, tend to recruit managers internally, rewarding length of service and often putting generalists into positions calling for special expertise. Exceptionally, LGE this year brought five overseas specialists to form part of the 20-strong top team of executives, among them Mr Boden, an Irishman who had earned a reputation for building consumer-goods brands.

Branding, says Mr Boden, is what LGE needs now. The company has superb products and offers excellent service. (It needs to in South Korea, where impatient customers put down the phone if it is not answered within ten seconds.) Yet emotional attachment to LGE’s products, Mr Boden points out, remains low. Products come and go: a new mobile-phone model, for instance, is typically on sale for only about six months. It is a brand that encourages the customer to keep coming back—and if he likes LG mobile phones, he might consider buying, say, an LG television. Samsung has already gone down this road, raising its profile by sponsoring the Olympics and Chelsea football team.

http://www.economist.com/specialreports/displaystory.cfm?story_id=12237117
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North and South Korea: The Odd Couple

AT THE heart of North-East Asia sits a failed state with the worst human-rights record on Earth. The regime maintains its grip by putting one in 20 of its population in military uniform. One in 40 has spent time in the gulag. Mobile phones and the internet are forbidden, except for the elite, and radio and television sets are made to tune only to government stations.

Unauthorised travel within the country is banned, at least in principle. Food shortages are chronic, and a decade ago the regime’s malign neglect created a famine that killed between 600,000 and 1m people. The famine still casts a long shadow, and not just through malnutrition and stunted growth; recent studies of refugees have pieced together a picture of a population that, in wide swathes, remains traumatised—and there are fears that famine conditions might be returning.

Now fresh uncertainties have arisen with reports that North Korea’s dictator, Kim Jong Il, may be seriously ill. That has underlined how little the outside world knows about North Korea. What to do about this failed state, which happens also to possess the material for nuclear bombs, is likely to be the region’s single biggest challenge over the coming years.

Slap next to all this sits the epitome of globalisation’s success, whose men on average are three inches (7cm) taller than their poorer neighbours. Half a century ago South Korea’s economy was on a par with Upper Volta’s. Today its citizens have an average income per person of $20,000. They enjoy the highest penetration of broadband internet on Earth, along with a popular culture of television shows and music that has become a highly bankable Asian export known as the “Korean wave”.

South Korea’s success is often called the “miracle on the Han”, after the river that runs through the 23m-strong capital, Seoul. Yet a more obvious explanation is the sweat and the tears of a people with a passion for work and self-improvement, coupled with generally enlightened economic policies since the 1960s—often in the face of what is now known as the “Washington consensus”. As well as a modern economy, this impassioned people has also fashioned a constitutional democracy out of a military dictatorship, again with sweat and tears and not a little blood.

The regime in the north tries hard to keep its citizens in the dark about the south’s success, and in South Korea six decades of separation have done much to weaken the blood ties which, in both states’ official rhetoric, are supposedly unbreakable. Reunification of the peninsula remains a hallowed goal on either side. Yet for most people in the south, North Korea is not just another country but another planet. Some 10,000 North Korean defectors now live in the south, but despite efforts by the government and others they live mostly on the fringes, despised by many South Koreans and ill-qualified for decent jobs. “The Crossing”, a film with a star cast released in Seoul this summer, authentically recreates everyday life in the north and explores why its citizens are driven to leave their homeland. Yet it was quickly eased out at the box office. South Korea is ill-prepared, psychologically, politically and economically, for the unification presumed to follow the eventual collapse of the north.

The cost of such a collapse scarcely bears thinking about—and South Koreans for the most part are trying their best not to do so. The task would make West Germany’s absorption of East Germany look like a doddle. South Korea is merely a middle-income country, with only a minimal social safety net to offer its own people, let alone abject North Koreans, who are perhaps 15 times poorer than their southern counterparts (whereas East Germans were two or three times poorer than West Germans at the time of unification).

So unification, if and when it comes, will require South Korea to field huge resources, however much help it might get from international institutions. That is a good reason to start building them up now. Yet there are also plenty of pressing home-grown reasons for more economic growth. The most important of these is a dramatic plunge in fertility. Today’s birth rate is extraordinarily low, and heading lower. This is an Asia-wide trend, but South Korea’s has fallen more than most. The total fertility rate of South Korean women (ie, the average number of births they can expect) has dropped to just 1.26 (see chart 1), down from 4.5 in 1970 and 1.5 in 2000. That is roughly half the rate at which a population replaces itself. In other words, the child-bearing generation 25 years from now will be roughly half the size of the current one. Even Japan, famous for its dearth of children, has a higher fertility rate, at 1.3.

For South Korean women, as for those elsewhere in Asia, this appears to be a good thing, offering them greater security and more autonomy than ever before within a Confucian family structure that has historically been hierarchical and male-dominated. Even better, South Korea’s mortality rate has also fallen steeply, and people can now expect to live 30 years longer than they did at the start of the country’s modernisation in 1960.

Yet the fall in the fertility rate may reflect dissatisfactions too: notably, over the difficulties faced by women who want both to work and to raise a family. Almost everyone still gets married in South Korea. In other words, the fertility rate is falling because more women are postponing marriage to nearer the end of their reproductive lives. That is partly because the burden of raising children still falls heavily on women, whereas men are consumed with work, which in South Korea, as in Japan, entails long hours and drinking sessions late into the night.

Also as in Japan, companies, despite some improvement, still discriminate heavily against women, especially those with children. Just one-third of South Korean women go back to work after having children, half the OECD average. The World Economic Forum’s ranking of sex equality puts South Korea 97th out of 128 countries. This represents a huge economic and social waste, and not only because South Korean women are better educated, on average, than their men.

Either way, the profound consequences for the economy, the government’s finances and the nation’s social structure have barely begun to sink in; nor has the impact on families. Nicholas Eberstadt, a demographer at the American Enterprise Institute, puts it with only mild exaggeration: changing fertility patterns mean that “2,500 years of East Asian family tradition stand to come to an end with the region’s rising generation.” What will it do to people if many, perhaps most, of them will no longer have brothers, sisters, uncles, aunts or even cousins? As Mr Eberstadt points out, when family structures atrophy—even in a country such as South Korea where children are treated as fondly as they are in Italy—sturdy institutional alternatives will quickly need to be found to take on the role now played by family networks.

As the South Korean population ages, the country’s high savings rate is almost bound to decline, which will have an effect on both what the economy can invest and what the government can raise in taxes. As it is, the country’s national pension scheme and a long-term-care scheme for the old are only two decades old, and their funding structure is not geared to South Korea’s expected demographic transformation over the coming quarter-century, which will involve a rapidly ageing society, a shrinking workforce and a population in absolute decline.

http://www.economist.com/specialreports/displaystory.cfm?story_id=12237163

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Tuesday, October 14, 2008

Korean Star's Suicide Reignites Debate on Web Regulation

SEOUL — Choi Jin-sil, a movie star, was the closest thing South Korea had to a national sweetheart.

So when Ms. Choi, 39, was found dead in her apartment on Oct. 2 in what the police concluded was a suicide, her grief-stricken homeland sought an answer to why the actress had chosen to end her life.

The police, the media and members of Parliament immediately pointed fingers at the Internet. Malicious online rumors led to Ms. Choi's suicide, the police said, after studying memos found at her home and interviewing friends and relatives.

Those online accusations claimed that Ms. Choi, who once won a government medal for her savings habits, was a loan shark. They asserted that a fellow actor, Ahn Jae-hwan, was driven to suicide because Ms. Choi had relentlessly pressed him to repay a $2 million debt.

Public outrage over Ms. Choi's suicide gave ammunition to the government of President Lee Myung-bak, which has long sought to regulate cyberspace, a major avenue for antigovernment protests in South Korea.

Earlier this year, the Lee government was reeling after weeks of protests against beef imports from the United States. Vicious antigovernment postings and online rumors on the dangers of lifting the ban on American beef fueled the political upheaval, which forced the entire cabinet to resign.

In a monthlong crackdown on online defamation, 900 agents from the government's Cyber Terror Response Center are scouring blogs and online discussion boards to identify and arrest those who "habitually post slander and instigate cyber bullying."

Hong Joon-pyo, floor leader of the governing Grand National Party, commented, "Internet space in our country has become the wall of a public toilet."

In the National Assembly, Ms. Choi's suicide set the country's rival parties on a collision course over how to regulate the Web. The governing party is promoting a law to punish online insults; the opposition parties accuse the government of trying to "rule cyberspace with martial law."

The opposition says that cyberspace violence is already dealt with under existing laws against slander and public insults. But the government says that a tougher, separate law is necessary to punish online abuse, which inflicts quicker and wider damage on victims.

To battle online harassment, the government's Communications Commission last year ordered Web portals with more than 300,000 visitors a day to require its users to submit their names and matching Social Security numbers before posting comments.

The police reported 10,028 cases of online libel last year, up from 3,667 reported in 2004.
Harassment in cyberspace has been blamed for a string of highly publicized suicides. Ms. Choi made headlines when she married a baseball player, Cho Sung Min, in 2000. But tabloids and Web bloggers were relentless in criticizing her when the marriage soured and she fought for custody of her two children.

TV producers and commercial sponsors dropped her. The general sentiment was that her career was over.

But in 2005, she made a comeback with a hugely popular soap opera called "My Rosy Life." In it, she dropped her cute-girl image and played a jilted wife who throws a kick at her errant husband, but reconciles with him when she learns she has terminal cancer.

This year, she broke another taboo by successfully petitioning a court to change the surname of her two children to her own.

But in an interview with MBC-TV in July, which was broadcast after her death, she said she "dreaded" the Internet, where posters had insulted her for being a single, divorced mother. The police said she had been taking antidepressants since her divorce.

In South Korea, volunteer counselors troll the Internet to discourage people from using the Web to trade tips on how to commit suicide and, in some cases, how to form suicide pacts.
"We have seen a sudden rise in copycat suicides following a celebrity death," said Jeon Jun-hee, an official at the Seoul Metropolitan Mental Health Center, which runs a suicide prevention hot line. Mr. Jeon said the hot line had received 60 calls a day, or twice the usual number, since Ms. Choi's suicide.

http://www.nytimes.com/2008/10/13/technology/internet/13suicide.html?ei=5070&emc=eta1&pagewanted=print
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Monday, September 22, 2008

Kim Jong Ill or Kim Jong Well?

THIS week rumours swirled that Kim Jong Il, North Korea’s dictator, was gravely ill. The 66-year-old, officials said in Seoul, had suffered a “collapse”. South Korea’s president, Lee Myung-bak, was worried enough to call an emergency meeting with senior aides. An anonymous American intelligence official in Washington might have been at the bedside: Mr Kim, she told reporters, was probably half-paralysed following a stroke. (Mysteriously, South Korean spooks later reported he was recovering from surgery.) A North Korean diplomat denied the claims as “nefarious machinations”, noting that the Western press had a habit of telling lies (unlike the snow-pure Pyongyang Times).

He is half-right. The Western press has recently shown lurid interest in the theory of a Japanese professor that a double has been standing in for Mr Kim, who has in fact been the Dear Departed since 2003. For years rumours have erupted about Mr Kim’s health following prolonged public absences. Each time, he has eventually waddled back into view. The last scare was in May 2007, when he stopped appearing in public, and diabetes or heart problems were blamed. A team of German heart surgeons, sworn to secrecy, was flown to Pyongyang. Yet they may have operated on any member of the elite, not specifically on Mr Kim. At any rate, by the time of an October summit with South Korea’s then president, Roh Moo-hyun, Mr Kim looked hale enough—by the standards of a man with a podgy, grey demeanour.

Perhaps something is up this time. Neither hide nor tousled hair of Mr Kim has been seen since August 14th. His absence was conspicuous at the huge celebrations marking the 60th anniversary of North Korea’s founding. They included a vast militia parade on September 9th.

Mr Kim became head of the armed forces in 1991, three years before the death of his father, Kim Il Sung, and the world’s first communist dynastic succession. Until now, Mr Kim appears not to have missed a single military parade. A foreign medical team, this time Chinese, is now back in the capital.

Some analysts have blamed Mr Kim’s health for recent setbacks in the “six-party process” meant to wean the regime off its nuclear weapons in return for aid and security guarantees. The current phase of the talks has to do with a proper accounting of the North’s nuclear programmes, in return for which America will drop North Korea from its blacklist of state sponsors of terrorism. Yet the information that North Korea has so far produced is underwhelming: it fails to cover details of existing plutonium weapons, a possible programme for enriching uranium, and proliferation activities in the Middle East.

North Korea is indignant at demands for intrusive inspections: it insists that America drop it from the blacklist before agreeing to a verification protocol. In August it stopped disabling its main nuclear facility at Yongbyon and even threatens to undo the dismantling. North Korea has also suddenly put on hold a recent agreement to launch an official investigation into the fate of Japanese citizens kidnapped during the 1970s and 1980s and taken to the North. One Western diplomat, present at a weekend meeting in Beijing between envoys from America, Japan, China and South Korea, says these four parties are “at a loss over where to go next”.

Yet for North Korea, intransigence is the norm. Its negotiating style is marked by bluster, foot-dragging, blackmail and brinkmanship. Indeed, the same diplomat notes that the North’s recent actions have been “tactically cautious”: for instance, there is no sign that Yongbyon’s dismantlement is about to be fully reversed. In their talks over abductions, the Japanese think their counterparts acted entirely rationally—from a North Korean perspective. One senior Japanese official with long dealings says that North Korean diplomats do nothing without directions from the highest level. The Dear Leader, then, if he is ill, appears to be making clear decisions.

Still, speculation turns naturally to Mr Kim’s succession plan, for if he has one, he has not disclosed it. His possible heirs are little known, and include three sons and his brother-in-law. None has devoted the years spent by Mr Kim in preparing to take over. His eldest son was caught trying to enter Japan in 2001 on his way to Tokyo Disneyland; he subsequently lived and gambled in Macau. Of the other sons, both in their 20s, one is known only for his obsession with Eric Clapton, a rock star. Perhaps Mr Kim, a family man, intends that none of his relatives should be around on the day when international prosecutors come calling on the leaders of a regime that has starved, tortured or worked to death in prison camps many hundreds of thousands of its own people.

http://www4.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=1530567&story_id=12209623

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Wednesday, September 17, 2008

FTSE promotes South Korea to developed market

South Korea will be promoted to developed-market status from advanced emerging, global index provider FTSE Group said late Wednesday, in a move that will likely attract more fund flows into the Asian country.

The upgrade comes after FTSE surprised global fund managers last September by choosing to upgrade Israel to developed-market status instead of South Korea.

South Korea's promotion should lead to increased funds flows into its stock market, said Jerry Moskowitz, president of FTSE Americas, in an interview with MarketWatch.

"We estimate that just with the FTSE indices alone, it could be high as $10 billion, but we believe other index companies will follow," Moskowitz said. "The net could be as high as $25 billion of new funds flowing into the Korean stock market."

FTSE also said Wednesday that red-chip stocks, which are currently included in Hong Kong, a developed market, will be moved to China, a secondary emerging market. Red chips are Chinese companies trading on the Hong Kong exchange, but that have at least 50% of their revenues generated from business in mainland China.

The changes announced Wednesday will be implemented in the FTSE Global Equity Index Series in September 2009.

FTSE currently classifies countries as developed, advanced emerging, secondary emerging, and frontier.

Taiwan, which is being considered for promotion to developed market status from advanced emerging, will remain on FTSE's so-called watch list. The list includes countries that FTSE is actively monitoring for possible promotion or demotion.

While FTSE praised Taiwan for its progress on implementing market reforms over the past 12 months, the index provider said that no change in Taiwan's status will be made at this time.

Pakistan has been removed from the FTSE's watch list and will no longer be considered for possible demotion to frontier market status from secondary emerging.

What does the upgrade mean for South Korea?

The market reaction to South Korea's upgrade was muted Thursday, as global markets continue to be dominated by unprecedented turbulence.

In Seoul, the Kospi index fell 2.3%. It is down 27% this year.

Still, analysts say FTSE's upgrade of the market will likely be a major positive in the long term.

"Given the current deep undervaluation due to the ongoing global financial market turbulence, concerns over a local forex crisis and capital concerns, even a small positive, such as the potential upgrade, could trigger a rally," said Clemens Kang, a strategist at Woori Investment and Securities, in a research note.

Also, funds benchmarking advanced markets are ten times larger than those benchmarked against emerging markets, indicating that substantial capital inflows are possible for the Korean equity market, Kang said.

However, Kang cautioned: "We believe the upgrade will have only a limited near-term impact on the Korean market, as any net increase in foreign capital will likely begin after" the first quarter of 2009.

Analysts at Hyundai Research said that, judging from Israel's experience, Korea can expect a re-rating of market valuations as well as reduced market volatility when it's included in the developed market index.

"We believe large caps should benefit relatively more when Korea is classified as a developed market, given the attributes -- conservative, long-term based investment -- of global investment funds that will likely flow in," Hyundai Research said.

http://www.marketwatch.com/news/story/ftse-promotes-south-korea-developed/story.aspx?guid=%7b0AB719B6-7CFF-49B7-8BA6-4405F9A04BC6%7d&siteid=yahoomy&print=true&dist=printMidSection


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Kim Yong-Il's consort: a key player in North Korea?

SEOUL, South Korea - Kim Jong Il's companion and former secretary is emerging as a key player in the communist nation after the autocratic leader's stroke.

South Korean officials are keeping a close eye on Kim Ok amid some intelligence reports that she's not only nursing the ailing leader but also is signing official documents on his behalf.

Experts believe the communist leader is retaining a firm grip on power, running the nation from his bed with the help of military and communist party chiefs in line with the nation's "songun," or military first, policy. But they are not discounting the role of the woman who is seen by some as the de-facto first lady.

"She is the closest person personally to Kim Jong Il," said Marcus Noland, a North Korea expert at the Peterson Institute for International Economics in Washington. "In some ways, she's the one guarding the bedroom or hospital door. She would be in a position to convey his preferences."

Kim, 66, reportedly suffered a stroke last month and is recuperating following emergency brain surgery — though North Korean officials deny the communist leader, who was last seen in public more than a month ago, is ill.

The notoriously secretive nation bars ordinary citizens from Web access and most cannot make international phone calls. Late founder Kim Il Sung engineered a cult of personality that encompassed himself and his son, and which tolerates no criticism or opposition.

Kim Jong Il was groomed for 20 years to take over as leader, finally assuming the mantle after his father's death in 1994 in the communist world's first hereditary transfer of power. He has three sons — Jong Nam, Jong Chul and Jong Un — but does not appear to have anointed any of them as his heir-apparent.

The longer Kim — known to have diabetes and heart disease — remains bedridden, the greater the likelihood of a power vacuum, analysts say.

"If his health problem prolongs, some internal feuding for power will likely occur," said Kang Sung-yoon, a North Korea expert at Seoul's Dongguk University.

And Kim Ok may be poised to fill any void. Experts speculate the North Korean leader's dependence on her during his illness may further bolster her political clout.

"If Kim Jong Il can't communicate with others, her role will be larger," said Kang Jung-mo, a North Korea expert at Kyung Hee University.

Little is known about her. Kim Jong Il is believed to have had three wives before taking Kim Ok as his consort several years ago. She reportedly accompanied the leader on his secret visit to China in 2006.

She is said to be a pianist in her 40s who has served as the leader's secretary since the 1980s.

Furthering the intrigue, Kim's late wife, Ko Yong Hi, — mother of his two younger sons — hand-picked Kim Ok to replace her when she was dying of cancer, according to South Korea's JoongAng Ilbo newspaper.

It wouldn't be the first time an Asian leader's companion has asserted herself. Mao Zedong's last wife, Jiang Qing — nicknamed "Madame Mao" — wielded considerable power in China until her downfall after Mao's death in 1976. And Chiang Kai-shek's wife, Soong Mei-ling, rose to prominence in Taiwan in her husband's twilight years.

Official information is scarce about North Korea, a country where the regime modifies history — including the year and location of Kim's birth — to suit Kim dynasty lore.

South Korean officials refuse to divulge their intelligence-gathering techniques but are known to rely heavily on so-called "human intelligence" — information gleaned from defectors, visiting dignitaries, aid workers, tourists and others able to get into the world's most-isolated nation. Such information can be fragmentary and difficult to verify, experts say.

One South Korean intelligence officer said agents are keeping a close eye on traffic about Kim Ok, including indications she is signing some official documents on his behalf. He spoke on condition of anonymity, in line with department policy.

He said top military officers are likely carrying out key functions — but that Kim Ok probably wields more power than any particular individual.

South Korea's Unification Ministry said it has some intelligence on Kim Ok but cannot confirm reports on her growing influence. The South's National Intelligence Service also said it could not confirm the reports.

Kim's circle of advisers likely includes military and ruling Workers' Party officials, said Paik Hak-soon, an analyst at Sejong Institute in South Korea.

Paik noted the North's five top government organs — the National Defense Commission, the Korean Workers' Party Central Committee, the Korean Workers' Party Central Military Commission, the Standing Committee of the Supreme People's Assembly and the Cabinet — all have pledged their loyalty.

All five sent messages on the 60th anniversary of North Korea's birth praising Kim as a "matchless patriot and an unparalleled great man who has led our republic along the road to victory and glory."

Top officials typically do not offer such effusive congratulations for the North Korean anniversary, and the gesture appears to be an overt pledge that Kim can count on their backing, experts said.

When Kim Jong Il dies, it may be days, weeks — or even months — before the public knows, Noland said. "Then, figuring out who is running the country could take months if not a year."

On Wednesday, South Korean Prime Minister Han Seung-soo ordered the government to stop leaking intelligence about Kim, saying the rampant speculation could end up provoking Pyongyang.

"But we speculate because the North Korean government makes its living depriving outsiders of information," said Nicholas Eberstadt, a researcher at the Washington-based American Enterprise Institute.

http://news.yahoo.com/s/ap/20080917/ap_on_re_as/as_nkorea_kim_s_consort


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Saturday, September 06, 2008

LPGA's "bad idea" (Korean)



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Friday, September 05, 2008

LPGA backs down on English requirement

Under increasing criticism, the LPGA Tour on Friday backed off plans to suspend players who cannot speak English well enough to be understood at pro-ams, in interviews or in making acceptance speeches at tournaments.

LPGA Tour commissioner Carolyn Bivens said she would have a revised plan by the end of the year that would not include suspensions, although fining non-English speakers remains an option.

Bivens disclosed the tour's original plan in a meeting with South Korean players two weeks ago at the Safeway Classic in Portland, Ore., Golfweek magazine reported. The policy, which had not been written, was widely criticized as discriminatory, particularly against Asian players.

The LPGA membership includes 121 international players from 26 countries, including 45 from South Korea. Asians won three of the four majors this year.

"We have decided to rescind those penalty provisions," Bivens said in a statement. "After hearing the concerns, we believe there are other ways to achieve our shared objective of supporting and enhancing the business opportunities for every tour player."

The reversal was quickly hailed by two California lawmakers who challenged the original policy.

State Sen. Leland Yee, a Democrat from San Francisco, had asked the Legislature's legal office to determine whether the English policy violated state or federal anti-discrimination laws. If it was deemed legal, Yee said he would have pushed for legislation banning such policies in California.

The LPGA Tour plays three events in California, including its first major championship.

"I'm very pleased that the LPGA saw the wisdom of the concerns that we raised," Yee said. "It's a no-brainer for those of us who have been the recipient of these kinds of discriminatory acts."

State Assemblyman Ted Lieu, a Democrat from the Los Angeles area, said he would target corporate sponsors if the LPGA persisted with its English requirement.

"I'm pleased they have come to their senses," he said.

Bivens' announcement came two hours before the Asian Pacific American Legal Center planned a news conference in Los Angeles to demand the LPGA overturn its policy.

"Until they completely retract it, issue an apology to the players and the fans, I think we'll remain very concerned and interested in what happens," said Gerald D. Kim, a senior staff attorney for the center. "The LPGA has gone about this totally the wrong way."

One of the tour's title sponsors, State Farm, already weighed in this week by saying it was "dumbfounded."

"We don't understand this and we don't know why they have done it," State Farm spokesman Kip Diggs told Advertising Age on its Web site. "And we have strongly encouraged them to take another look at this."

Bivens said the tour will continue to help international players through a cultural program that has been in place for three years and offers tutors and translators.

Earlier this week, Bivens sent a 1,200-word memo to the LPGA membership to outline the goal behind the new policy. She said players would never be required to be fluent or even proficient in English, but rather would be asked to get by with the basics of the language.

She argued that international players who could communicate effectively in English would improve the pro-am experience, sponsor relations and could help land endorsements for the players.

"We do not, nor will we ever, demand English fluency, or even proficiency, from our international players," she wrote.

"To the contrary, we are asking that they demonstrate a basic level of communication in English at tournaments in the United States in situations that are essential to their job as a member of the LPGA Tour."

Yee said he understood the tour's goal of boosting financial support, but disagreed with the method.

"In 2008, I didn't think an international group like the LPGA would come up with a policy like that," Yee said. "But at the end of the rainbow, the LPGA did understand the harm that they did."

The lawmaker said he will continue with his request to the Legislative Counsel's Office, as a way to prevent similar policies in the future.

Lieu said the LPGA's explanation made it seems as though the tour felt it more important to socialize with sponsors than to play golf.

"If you're a sports fan, you should be outraged," Lieu said. ◦
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Monday, September 01, 2008

South Korean Preisdent Pardons CEOs

THE leaders of South Korea’s conglomerates or chaebols have long acted as if they were above the law. Kim Seung-youn, chairman of Hanwha, an explosives, construction and insurance group, confessed last year to beating bar workers at a building site with the help of his own goons. He was retaliating after his son was hurt in a scuffle. After a few months in jail, Mr Kim was released on health grounds, and was soon back at his desk running Hanwha. This week, to mark the day South Korea celebrates liberation from Japanese colonialism, the president, Lee Myung-bak, pardoned him and 341,863 others.

They included Chung Mong-koo, the chairman of Hyundai, the world’s sixth-largest carmaker. Last year Mr Chung was convicted of embezzling about $90m from his company, and sentenced to 300 hours of community service. Chey Tae-won, of SK Group, a telecommunications, oil-refining and construction chaebol, was convicted in 2003 of illegal share swaps designed to keep the most lucrative parts of the group in his family’s control. Mr Chey did not serve any time in prison, but was given a suspended sentence. Now Mr Lee has pardoned him, too.

President Lee came to power earlier this year pledging to raise average national income per head to $40,000 a year and to achieve 7% annual economic growth. He has appealed to chaebol leaders to boost investment and jobs. But at his inauguration Mr Lee also promised to back “business leaders who are transparent and put in an honest day’s work”. So the pardons for the three chaebol bosses look a bit odd. Many South Koreans see them as proof that the wealthy are held to different standards from those applied to ordinary citizens.

Mr Lee, a former chief executive of ten different Hyundai group units, has himself been haunted by allegations that his past personal business dealings were less than pristine, particularly with regard to his family’s property sales and the failure of an investment firm he helped found. One of Mr Lee’s prospective ministers and several presidential aides have had to resign after questions were raised over their ethics. The first cousin of the president’s wife was arrested this month after receiving money from a man who wanted to clinch a parliamentary nomination from Mr Lee’s ruling party. The president’s approval rating hovers around 20%. Pardoning business bigwigs will not help it rise.

http://www.economist.com/world/asia/displaystory.cfm?story_id=11921754

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Wednesday, August 27, 2008

LPGA says players must speak English

Concerned about its appeal to sponsors, the women’s professional golf tour, which in recent years has been dominated by foreign-born players, has warned its members that they must become conversant in English by 2009 or face suspension.

“We live in a sports-entertainment environment,” said Libba Galloway, the deputy commissioner of the tour, the Ladies Professional Golf Association. “For an athlete to be successful today in the sports entertainment world we live in, they need to be great performers on and off the course, and being able to communicate effectively with sponsors and fans is a big part of this.

“Being a U.S.-based tour, and with the majority of our fan base, pro-am contestants, sponsors and participants being English speaking, we think it is important for our players to effectively communicate in English.”

The L.P.G.A. and the other professional golf tours, unlike professional team sports, are dependent on their relationships with corporate sponsors for their financial survival.

Although Galloway insisted that “the vast majority” of the 120 international players on the L.P.G.A. circuit already spoke enough English to get by, she declined to say how many did not. There are 26 countries represented on the L.P.G.A. Tour. South Korea, with 45 golfers, has the largest contingent.

The L.P.G.A.’s new language policy — believed to be the only such policy in a major sport — was first reported by Golfweek magazine on its Web site Monday. According to Golfweek, the L.P.G.A. held a meeting with the tour’s South Korean players last week before the Safeway Classic, at which the L.P.G.A. commissioner, Carolyn Bivens, outlined the policy. Golfweek reported that many in attendance misunderstood the penalty, believing they would lose their tour cards if they did not meet the language requirement.

Even so, the magazine reported, many South Korean players interviewed supported the policy, including the Hall of Famer Se Ri Pak. “We agree we should speak some English,” said Pak, who added that she thought fines seemed a fairer penalty than suspensions. “We play so good over all. When you win, you should give your speech in English.”

She added: “Mostly what comes out is nerves. Totally different language in front of camera. You’re excited and not thinking in English.”

Major League Baseball, which has a high percentage of foreign-born athletes, said it had not seen the need to establish a language guideline. Pat Courtney, a spokesman for M.L.B., said baseball had not considered such a policy because it wanted its players to be comfortable in interviews and wanted to respect their cultures.

“Given the diverse nature of our sport, we don’t require that players speak English,” he said. “It’s all about a comfort level.”

The National Hockey League, which is based in Canada where English and French are the official languages, also places no such requirements on its players, although several clubs provide players with tutors if they express a desire to learn English.

The National Basketball Association, which had 76 international players from 31 countries and territories last season, follows a similar approach to the N.H.L.

“This is not something we have contemplated,” said Maureen Coyle, the N.B.A.’s vice president for basketball communications.

The only N.B.A. players in recent years to have used an interpreter are China’s Yao Ming and Yi Jianlian. Yao, who began playing in the N.B.A. with the Houston Rockets in 2002, no longer needs an interpreter.

In fairness, comparisons between the L.P.G.A., an independent organization not affiliated with the PGA Tour, and other sports bodies are imprecise. The L.P.G.A., much like the PGA Tour, is a group of individual players from diverse backgrounds whose success as an organization depends on its ability to attract sponsorships from companies looking to use the tour for corporate entertainment and advertisement.

Rarely are N.B.A. players called upon to play one-on-one with a corporate executive whose decision to write a sponsorship check is predicated on whether one had a good time shooting free throws with Kobe Bryant.

There is much more to it, but a large part of the economic success of a golf organization is predicated on whether a corporate entity decides to underwrite a tournament and whether a television network decides to broadcast it. All of those decisions are based on the tour’s being able to market its athletes.

The L.P.G.A. started a program in 2006 to help international players learn English and transition into American culture.

“It’s been very successful thus far,” Galloway said.

There are risks to the path on which the L.P.G.A. is about to embark. Legal experts said the new policy could result in legal action. Arthur S. Leonard, a professor of law at New York Law School and an expert on employment issues, said that in some states a potential claim of national origin discrimination could be made if the players were able to show that the rule singled out players of a particular origin.

He added that the L.P.G.A. “would be subject to the New York state human rights law with respect to any tournaments taking place in New York, and it is possible that the public accommodations provisions of that law could apply to this situation.”

Galloway said the policy had been thoroughly vetted by the tour’s lawyers and that it did not single out any one group.

“Absolutely not,” she said. “This applies to all of our membership.”

In South Korea, Yonhap, a news agency, disagreed, saying on its Web site that the decision “raises suspicions that it is targeting Korean players.”

Kwak Sang Il, an official for the Korea Ladies Professional Golf Association, said that the organization’s board of directors expected to meet to discuss the L.P.G.A.’s requirement, although the group had no comment.

Kwak said he was concerned about the impact the requirement would have on Korean players, but he said that to a degree, he could see the motivation behind the L.P.G.A.’s decision.
“When a player wins the championship, you want to expose her to the media, but if she can’t speak English well, it limits the publicity efforts of the organizers,” he said.

“We have a similar problem when a foreign player wins a title in a tournament held in Korea and the player can’t speak Korean at all," he said.

Leonard’s analysis of the L.P.G.A. policy as it related to Title VII of the Civil Rights Act, which prohibits workplace discrimination based on race, color, religion, sex and national origin, seemed to concur, up to a point.

“This is not really an English-only requirement,” he said, noting that players would not be required to speak only English. He added, “If the L.P.G.A. can show that English proficiency is a relevant qualification to competing in a professional golf tournament in the U.S., they would have a defense to any claim that they are discriminating unlawfully.”

http://www.nytimes.com/2008/08/27/sports/golf/27golf.html?hp=&pagewanted=print

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