Thursday, December 31, 2009
Tuesday, December 29, 2009
Monday, December 07, 2009
South Korea's giant family-based conglomerates are thriving, but they may be crushing small companies
By Moon Ihlwan
Song Kyu Heon harbors no illusions about the strength of the chaebol, the family-controlled conglomerates that dominate South Korea's economy. Nonetheless, as chief executive of tech services company Openbase, Song was confident he could beat chaebol -backed rivals to win a multimillion-dollar deal to upgrade the computer systems at a Korean bank. His client roster, after all, includes Citibank (C), LG, heavy equipment maker Doosan, and dozens of other high-profile companies and government ministries. As a longtime contractor with the bank in question, Openbase knew its systems well, and a team of 20 engineers had been preparing a bid for a year. But in October, Song lost the deal to an affiliate of a top chaebol. "There's no such thing as a level playing field here," Song says in his fifth-floor corner office overlooking Tehran-ro, a street that's sometimes called Korea's Silicon Valley.
Song's tale is typical of small and midsize companies in South Korea. While the chaebol unquestionably have fueled the country's growth in recent decades, they're so powerful that they may be hampering innovation and threatening Korea's continued economic success. "With the chaebol's deepening influence hurting fair competition with suppliers and startups, the country risks losing its economic dynamism," worries economist Kim Sang Jo of the Economic Reform Research Institute, an independent policy group.
A DIVERGING ECONOMY
In spite of the worldwide financial crisis, Samsung, Hyundai, LG, and other chaebol have recently reported impressive jumps in sales and profits. But not much of that prosperity has trickled down. While the big companies expand, "the rest of the Korean economy is still struggling," says Maarten Kelder, head of Asia-Pacific at consulting firm Monitor Group.
Korea's reliance on the chaebol is deepening. The top 10 exporters represented 43% of shipments abroad last year, up from 31% in 2001, according to the Korea Development Institute, a state-funded think tank. And the 50 largest companies—most of them chaebol affiliates—accounted for 38% of the country's total output in 2005, up from 30% a decade and a half earlier, the KDI reports. "The chaebol model has served well as a stepping-stone for growth so far, but it is likely to be a stumbling block in the future," says Lee Kye Ahn, a former CEO at Hyundai Motor and now a prominent member of the opposition Democratic Party.
In tech services, for instance, most big conglomerates have subsidiaries that take care of their sister companies. With guaranteed profits from those contracts, these players can afford to undercut the likes of Openbase when competing for work with outside clients. "If not for the huge advantages and influence of the chaebol, Openbase could be a major player," says Baek Seung Gon, vice-president of eBest, a small tech-services player.
The list of the leading IT services companies in South Korea offers ample evidence of chaebol strength. Among the top 10 players, only No. 5, a subsidiary of state utility Korea Electric Power, isn't affiliated with a chaebol. It's the same story in advertising and logistics, with chaebol affiliates dominating the top 10 in both industries. "The chaebol have become so dangerously powerful that you must put a bridle on them," says Lee Dong Gull, a former financial regulatory official who now teaches economics at South Korea's Hallym University.
The reach of the chaebol is such that smaller rivals often work for them as suppliers, so those companies are afraid to speak up. More than a half-dozen executives declined to talk on the record about their relations with the chaebol. And those who agreed to speak were reluctant to give much detail. Openbase, for instance, works as a subcontractor for chaebol tech-services players, so CEO Song is unwilling to name either the bank with which he was trying to get a contract or the rival that beat him.
Other small Korean companies fret about the power of the chaebol. A supplier of interior parts for Hyundai Motor, for instance, says that while the automaker is reporting record earnings, he is barely breaking even. "During fat years the big guys [hog] all the profits," says the supplier's general manager, who asked that his name not be used for fear of retaliation from Hyundai. "They let us get by but never allow us to have a big enough margin to invest in research." Hyundai counters that it treats its suppliers fairly.
Another problem is that the best and brightest university grads want to work for the chaebol—starving startups of talent. Less than 10% of the 4,000 students who graduated this year from Yonsei University in Seoul, for instance, got jobs at small companies. And officials at Yonsei, one of Korea's top three schools, say most of that 10% would have preferred jobs at the chaebol. "I've never thought of seeking a job elsewhere," says Kang Hye Jeong, a 27-year-old marketer at Samsung's handset unit, who says she has visited more than 20 countries in her four years at the electronics giant. "You couldn't expect such global experience at a smaller company."
Given the difficulty of standing up to the chaebol, financing is tough for startups. Brokerage Korea Investment & Securities recently failed to raise a $90 million fund for tech startups, and the main index of Kosdaq, the South Korean equivalent of Nasdaq, has fallen 84% since its peak in March 2000, while the benchmark Kospi index of larger companies has risen 68%.
Korean policymakers acknowledge the need to help the small fry compete with the giants on a more equal footing. Seoul in August earmarked $7.5 billion to finance joint research between universities and smaller companies in new growth areas such as renewable energy. "The policy focus for future growth will be on encouraging competition by liberalizing markets and helping smaller firms create intellectual property," says Noh Dae Lae, deputy minister at the Ministry of Strategy & Finance.
Ultimately, the chaebol may benefit from such initiatives. If the giants squeeze small suppliers so hard that they can't invest in innovation, the chaebol will hurt their own competitiveness, so programs that strengthen smaller companies will likely help South Korea's conglomerates, says Lim Kyung Mook, a researcher at the Korea Development Institute. "The important task is to begin attracting talent and funds to startups," Lim says. "We need a better balance between the conglomerates and smaller companies, a business environment where startups can grow big enough to compete with the big guys."
Wednesday, November 25, 2009
Monday, November 02, 2009
Monday, October 19, 2009
South Korea's first lady Kim Yoon-ok promoted her country's traditional cuisine, or "hansik," in a special interview broadcast worldwide Monday by U.S. cable news network CNN.
The interview, recorded at the presidential office of Cheong Wa Dae Friday, was the first part of a special series by CNN, "Eye on South Korea."
During the interview, Kim was seen preparing the popular Korean dish "japchae," seasoned vermicelli served with meat and vegetables.
"The taste of Korean food comes from the effort that goes into it and the flavor created by hand," Kim was quoted as saying by Yonhap News Agency. "We believe affection originates from mother's hands when she's cooking."
The interview was Kim's first appearance on a foreign television network since her husband Lee Myung-bak took office early last year.
Kim said cooking for her husband and promoting Korean food as an international cuisine was part of her efforts to assist the president, who "does a lot of work outside the country."
Her work also includes sending food to countries suffering from shortages, as well as introducing easy-to-make recipes, as a way of repaying the international support her country received when it was poor, she said.
"That is why now I would like to help other countries," she said.
Monday, October 05, 2009
Thursday, October 01, 2009
Sunday, September 13, 2009
Monday, September 07, 2009
Friday, September 04, 2009
BY TIM HIGGINS
FREE PRESS BUSINESS WRITER
Buoyed by improved quality, sharp marketing, impressive styling and strong sales, Hyundai Motor Co., along with its affiliate Kia Motors Corp., is now positioned to go head-to-head with the world's largest automakers.
Fueled in part by the cash-for-clunkers program, sales for Hyundai and Kia skyrocketed 47% and 60%, respectively, in August, compared with the same period a year ago. It was a standout performance.
"This is potentially a game-changing year for the brand," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.
The Korean group's performance has been so strong that it is nipping at Chrysler's heels, threatening its U.S. market share.
Hyundai and Kia together grabbed an 8% share of the U.S. market in August, beating Chrysler's 7% market share.
Jeremy Anwyl, CEO of Edmunds.com, called 2009 a pivotal year for Hyundai.
"The economy gave them a shot, and they certainly took advantage of it with creative marketing," he said. "If the vehicles deliver, then some of these market-share shifts will not be just temporary, but they could be more permanent."
Hyundai, Kia surge in soft economy
Hyundai Motor America and its affiliate Kia Motors together outsold Chrysler in August, an impressive feat for the South Korean group that has been skillful in taking advantage of a downtrodden economy to get a better foothold in the U.S. market.
Sales jumped 47% for Hyundai and 60% for Kia in August compared with a year ago, a gain partly driven by the U.S. government's cash-for-clunkers program.
Combined, the Korean group sold 100,665 vehicles last month.
"They've been revving at 900 r.p.m.s," Erich Merkle, industry analyst with Autoconomy.Com, said of Hyundai.
The Hyundai Elantra ranked No. 5 in the list of top sellers under the clunkers program.
"Consumers are looking for bargains and Hyundai is offering bargains," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.
But Hyundai's success story began long before August.
The Korean automaker has been laying the foundation for bigger success since the late 1980s when it arrived in the United States with a small car that was plagued with quality problems.
About a decade ago, the company launched a 10-year, 100,000-mile warranty program and set out to build a reputation for quality.
In recent years, Hyundai has scored high with Consumer Reports and J.D. Power and Associates for quality. The new Hyundai Genesis midsize sedan won 20 major industry awards.
"We've been working so hard on quality, recognizing that we really need to overachieve because of how the brand started in the U.S.," said John Krafcik, president and CEO, Hyundai Motor America.
That message is resonating now as car shoppers look for low-cost cars. The bad economy is encouraging some new customers to take a chance on Hyundai, experts said.
The average transaction price of a Hyundai vehicle purchased this year is $21,326, with a comparable $20,455 spent on a Kia, according to Edmunds.com. The industry average is $28,174.
"They're more likely to give Hyundai a shot than they would under normal circumstances," Jeremy Anwyl, CEO of Edmunds.com, said. "If Hyundai delivers, they've now gone into the next level. ... The risk of quality is no longer an issue."
Beyond improved quality, Merkle said Hyundai's product cadence and greater emphasis on emotionally appealing design is helping its efforts.
"If you can get the quality there and have vehicles that have a strong, emotional appeal from a styling perspective, you can win at this game," Merkle said.
More growth expected
A study by Banc of America Securities-Merrill Lynch this summer projected Hyundai and Kia will see even more market share growth in the next four years, largely because the group is slated to have a much larger product replacement schedule than the industry average.
Hyundai and Kia's average replacement rate over the next four years is predicted to be 27%, "well ahead of the industry average of 18%," according to the report by analyst John Murphy.
"We expect Hyundai and Kia to gain significant market share, about 3.5% over the next four years," the report said.
Half of Hyundai's vehicles are assembled at its assembly plant in Alabama, Krafcik said. Kia is to begin production at a new assembly plant in Georgia later this year.
Hyundai plans to launch seven new products over the next 24 months, Krafcik said.
So far this year, Hyundai's sales are down only 0.7% compared with last year and Kia's sales are up 3%.
For the year through August, the Korean group has a 7.5% combined market share while Chrysler is at 9.2% -- down from 11% during the same period last year, according to Autodata Corp.
Krafcik noted that a few years ago, Hyundai was on about 10% of shoppers' consideration lists. That has risen to about 30%.
He expects Hyundai U.S. sales to end the year at least on par with last year -- if not be better. That's impressive considering industry U.S. sales are down 32.1% so far this year.
According to Edmunds, 19.4% of buyers that switched from a previous brand to Hyundai in August came from Chrysler-Dodge-Jeep brands. About 23% came from Ford. A little more than 12% came from Chevrolet and 3% from Toyota.
2009 started well
The first indication that 2009 could be a good year for Hyundai came during the Detroit auto show when the Hyundai Genesis won North American Car of the Year.
Buzz grew as it advertised heavily during the Super Bowl and Academy Awards -- traditional venues for GM, which had to pull out to save money.
One commercial showed angry executives at Lexus and BMW yelling the name of "Hyundai!"
An announcer follows by saying: "Win one little award and suddenly everyone gets your name right. It's Hyundai, like Sunday."
At the same time, Hyundai launched a powerful marketing campaign that promised to allow customers to return their new cars if they lost their jobs.
Hyundai followed up with other smart marketing efforts, such as launching a clunkers-incentive program before the government's program was official and a gas-guarantee program.
"They've really been on the cutting edge with these new marketing programs at a time when consumers were looking for something fresh and new," said Schuster of J.D. Power.
Sexy and hot, the latest girl group from entertainment and media goliath S.M. Entertainment turned up the heat at their showcase on Wednesday at the Fashion Center's Event Hall in Daechi-dong, southern Seoul.
Unlike their predecessors - the near-iconic Girls' Generation - the new girls-in-town do not boast a powder-puff pink sound. For an idea of the kind of vibe this five-girl band packs, think the Pussycat Dolls or Danity Kane.
With the dance moves to match their amped-up and hard-hitting sound, Krystal, Sulli, Luna, Amber and Victoria hit the stage, writhing and wriggling in slinky black outfits. When they donned black chapeaus and did a number to Sam Sparro's sensual "Black and Gold" the whole performance took on a slightly burlesque tilt.
Tall, willowy and doll-faced, the latest addition to S.M.'s burgeoning group of talent shows promise. Two members, in particular, stood out from the group during Wednesday's showcase.
Amber - picked up by S.M. in Orange County - drew cheers with her fly dance moves and smooth rap skills. Displaying rhythm, flow and speed, the Chinese-American tomboy performed a bit of Fort Minor's "Believe Me" and then showcased her ability to deftly splice her rap into the chorus to the group's debut single, "LA chA TA."
Her low and brandied vocals, slick razor-edged bob and hip wardrobe are sure to attract boys who want to dress like her and girls who are going to crush on her.
When asked how she first started rapping, the 16-year-old girl group member, an admirer of rap artist Nas, answered: "Rap was originally a hobby of mine."
Fellow member Victoria also stood out during the showcase. Hailing from one of Beijing's leading dance academies, the lithe Chinese native graced the stage with her acrobatic skills and stellar moves.
The eldest of the group, the 22-year-old performer assumed responsibility as the head of f(x), declaring: "I want to be a hard-working leader."
A member of the press asked her if the new Asian pop dance group had plans to go abroad, to which Victoria answered that the group is slated to perform throughout Asia.
Korean members Krystal, Sulli and Luna - aged 14, 15 and 16, respectively - also showcased their talents on Wednesday. Luna wowed with her powerful vocals, while Krystal and Sulli moved to a mix of Joe, Marques Houston and T-Pain.
The audience was treated to the first performance of the group's never-before-released single "Mr. Boogie" followed by a performance of their newly-minted "LA chA TA."
Fast-paced, backed by an electronic backbeat and sensual, both singles seemed highly club-appropriate, taking away any notions that S.M.'s latest addition would inherit its girl group predecessor's sugary sound.
It is hard to tell, at this point, as to who f(x)'s target audience is. Yet it seems to be picking up on a trend towards a slightly sexier, edgier and more electronic sound, as evidenced by hit girl group songs like Brown Eyed Girls' "Abracadabra" and 2NE1's "Fire."
The name of the group, in particular, seems to bear some scientific futuristic significance. A play on the mathematical notation for function, "f" signifies "flower" and "x" represents the female's double X chromosome.
While the band is brand new, several of its members have appeared on both the small and the big screen. Krystal - younger sister to Girls' Generation member Jessica - starred in boy band SHINee's music video "Juliette" prior to her debut. Sulli racked up acting experience in two SBS dramas and several films, while leader Victoria starred opposite Korean pop star Rain in a Samsung Anycall commercial that aired in China.
Their new single "LA chA TA" was released online on Tuesday. The band is slated to make their television debut on MBC on Saturday.
Sunday, August 30, 2009
Saturday, August 22, 2009
In the sprawling, densely populated capital city of South Korea, Lee Hye-young and her husband Kim Soon-kyo are nothing if not typical citizens. Which is to say, even the most mundane, everyday aspects of their lives are carried out at technology's leading edge.
Consider their respective commutes to work early one recent morning. Lee clambers onto a city bus, headed to her office job in the southern part of the city. She pays using her radio-frequency-identification (RFID) card — it has a computer chip in it — part of a transit program conceived and implemented by the city government. The card is smart enough to calculate the distance she travels on any form of public transit, which determines the fare. She can then use the same card to pay for the taxi she hails to finish her journey to work. Sometimes her husband, the deputy marketing manager at a small chemical company, drives her to work. But not today. A few months ago, he applied online to join a program offered by the city that promises insurance discounts, reduced-cost parking and a tax break if he leaves his car home one business day a week. The city sent him an RFID tag, which he attaches to the windshield so the city can monitor compliance. It took him just minutes to fill out the application on his home computer, and now, he says, he saves the equivalent of $50 a month. From the city's standpoint, the estimated 10,000 fewer cars on the road each day means less congestion and less air pollution in one of the busiest cities in East Asia.
For a decade, Seoul has had the justifiable reputation of being one of the most wired cities in the world. After the Asian financial crisis devastated the South Korean economy in 1997, the Seoul city government, the national government and the private sector all made a concerted effort to move the country's economy from one reliant on heavy industry to one that included information technology — a shift that by most measures has been a resounding success. Today, according to data compiled by Strategy Analytics, a U.S.-based technology market-research firm, an astonishing 95% of households in South Korea have a broadband connection. (Tiny Singapore is second, at 88%, and the U.S. comes in at No. 20, with just 60% hooked to broadband.) The entire city of Seoul, whose metro-area population is more than 20 million, is already one giant hot spot, with wireless access available from virtually anywhere within city limits for a small fee.
That level of connectedness, either via high-speed cable or through the ether, has not only transformed South Korea's economy; it has changed forever the way this massive city is governed, how individuals receive services and interact with city hall and how prospective contractors solicit business with the city.
Start with clean government. All city contracts are now put out to bid online, and all bids are posted. That transparency, Seoul Mayor Oh Se-hoon tells TIME, has reduced corruption in the city significantly in the past 10 years. "Since all information is disclosed real time over the Internet, influence-peddling over the bargaining of government permits becomes impossible," he says. "The online system tracks the flow of approval routes and leaves behind evidence in real time. If a manager holds on to an application for too long, he becomes a suspect. So administration becomes faster and uncorrupt." And while every big-city mayor may boast that his government is less corrupt than the last guy's — and corporate corruption has been an acknowledged problem in South Korea — Seoul has been named the world's most "advanced and efficient e-government" for several years by a U.N.-sponsored e-government-evaluation agency.
The city services accessible via Internet technology are already vast and growing rapidly. When Lee was returning home from work one day, she needed to pick up a copy of her social-security certificate. She did so at a subway station near her office, using a fingerprint-recognition kiosk: she placed her thumb on the machine, it read her print, and out popped a copy of the document. If she had so desired, she could have also printed real estate and vehicle registrations. It goes without saying that Lee pays her city taxes and utility bills online — or with her mobile phone's browser — and recently she dialed 120 to find out why the electric company had overcharged her. She was calling the Dasan Call Center, a 24/7 government agency that fields all questions regarding city services. A service rep did a quick check, confirmed the error and made sure her bill for the next month would reflect the correction.
Seoul has even greater e-ambitions. It has begun to implement a project called Ubiquitous Seoul — or U-city — which will extend the city's technological reach. Seoul's nearly 4-mile-long (6 km) Cheonggye Stream walkway, which runs through the high-rises of downtown Seoul, is the site of a U-city pilot project. Via their phones and laptops or on touchscreens located in parks and public plazas, citizens can check air-quality or traffic conditions or even reserve a soccer field in a public park. The city also sends out customized text messages. The city's chief information officer, Song Jung-hee, says those with respiratory problems can get ozone and air-pollution alerts, and commuters can get information about which route is the most congested at any given time. The city calls these real-time, location-based services.
Earlier this year, the city rolled out U–safety zones for children, a program using security cameras, a geographic-information-system platform and parents' cell-phone numbers. Participating families equip their kids with a U-tag — an electronic signature applied to a coat or backpack that allows a child to be tracked at all times. If the child leaves a designated ubiquitous-sensor zone near a school or playground, an alarm is automatically triggered alerting parents and the police. The child is then located via his or her mobile phone. The city plans to increase such zones rapidly. To some Americans, the Big Brother–ish qualities of the U-city push can be a tad unnerving. But Seoul officials point out that the U-safety-zone project is entirely voluntary, and the technologically sophisticated citizens seem to have few objections.
Seoul over the past decade has become a hotbed of early adopters, and global powerhouses from Microsoft to Cisco Systems to Nokia use it as a laboratory. The level of connectivity provided by the city's electronic infrastructure means "ubiquitous life" has become an inescapable catchphrase in Seoul. "Almost all new apartment complexes now advertise home networks and ubiquitous-life features," says Lim Jin-hwan, vice president for solution sales at Samsung Electronics. In a nutshell, that means every electronic device in the home can be controlled from a central keypad or a cell phone. Biorecognition lock systems open apartment doors, and soon, Lim says, facial-recognition systems will be introduced.
As megacities continue to grow and become more complex, it's likely that many will have to get wired just to stay manageable. Seoul took the considerable risk of being out front, but it has demonstrated the potential payback when the city government, and not just the citizens, is one of the early adopters.
Wednesday, August 19, 2009
By Jennifer Kim
The last time I was in Seoul, South Korea, I barely reached my mother’s shoulders. This time around, I was the one looking after her, and being asked if we were sisters. Needless to say, returning to Seoul as an adult — especially as a jewelry market editor — allowed me to appreciate the city in a new light.
One of my favorite finds was Ah-Won Crafts in In Sa Dong, an area of many interesting alleyways filled with antique shops, handmade arts and crafts, and a slew of charming cafes and restaurants. Ah-Won is the Zen-like boutique of an amazing artisan who works mostly with metal. She creates one-of-a-kind pieces, including simple brushed-silver pendants and rings, intricate floral brooches topped with coral and amber, and a collection of dinnerware and flatware.
Another great discovery was in Ga Ro Soo Gil, a tree-lined street of boutiques and cafes in the Apkugeong area. Dami is a literal jewel box of a shop, about half the size of a Manhattan subway car. It’s filled to the ceiling with every sort of intricate bauble you can imagine: semiprecious cocktail rings, multihued hoop earrings and grosgrain ribbon barrettes in every color
Of course, Seoul also has plenty of Chanel, Dior and Gucci, but I found the street markets in downtown Seoul more interesting. They’re a loud, crowded jumble of carts selling an endlessly random assortment of socks, toys, clothing, stationery, candy and on and on. They’re also a great place to try Korean street food, and if you’re feeling adventurous, you can graze on some dried squid legs with red pepper paste, potato sticks (like extra-fine French fries), roasted ginko nuts and steamed corn.
When I’d had my fill of Korean food, some friends took me to a very trendy Japanese fusion spot in Ga Ro Soo Gil called Hattori Kitchen. It’s a dim little izakaya place with a counter and eight bar stools. (If they’re all taken, better luck next time.) It serves just a few dishes every night — the thing to do is ask the owner, Ji Young Sohn, to pick for you. She’s a quirky and energetic young woman who dances behind the counter, cooking up plates of noodles in between texting her friends and fiddling with the stereo.
Everyone’s favorite dish appeared to be udon salad, cold udon served with iceberg lettuce, slivers of carrots and cucumbers in a sauce she dare not describe. As good as it was, my fondest memory was finishing off a bottle of Korean rice whiskey called So-Ju with my friends, then practically dancing our way home.
Monday, August 17, 2009
He'd visualize different scenarios, come up with strategies.
"The good players, the great names that you've mentioned, when they tee off with Tiger, their competitive juices sort of flow out and they go head to head and try to win," Yang said through an interpreter. "For me, I don't consider myself as a great golfer. I'm still more of the lower-than-average PGA Tour players."
Not anymore. In a matter of four hours Sunday, Yang's life — and that of every aspiring golfer around the world, but particularly in Asia — changed forever.
Not only did the 37-year-old South Korean become the first Asian player to win one of golf's majors — the PGA Championship — he took down none other than the sport's No. 1 guy to do it. Phil Mickelson, David Duval, Ernie Els, Sergio Garcia — they all tried and failed.
Not Yang, who was poised, unflappable and determined throughout.
Not bad for someone who took up golf at 19 simply as a way to pay bills and ended up finding the job of his dreams.
"Honestly, I'm not prepared, I think," he said. "It's going to be a bit tough, sure, I know that. It's going to be fun, too. But honestly, I've never been in this spot, so I really can't assess it. This is my first time. I'm just going to try to go and improvise."
Pretty good plan, considering that's what got him here.
Yang — his full name is Yong Eun Yang — grew up on an island called Jeju, about an hour by plane from Seoul. His father is a farmer and his older brother is in the agricultural business, too. Yang wanted to be a bodybuilder, and dreamed of someday owning his own gym.
But when he was about 17 or 18, he blew out his knee. He was, he said, "like anybody else in the world, an average Joe."
Then a friend suggested he go work at the local driving range. It paid minimum wage, but Yang could eat and sleep there.
"The driving range was no longer than the tent we are in right now, probably about 60 yards, tops," he said, while speaking in the interview room. "The first grip I ever had was a baseball grip, and I was just whacking it into the net. It just felt fun."
The more he played, the more he fell in love with the game. He practiced for three months before he played his first round, and shot 101. It was three years before he broke par.
There have been a few successful Asian golfers over the years — Japan's Isao Aoki finished second to Jack Nicklaus at the 1980 U.S. Open — but Korea has been late to the game. Yang didn't even have a coach when he first started playing, teaching himself by watching tournaments on TV — his early idols were Nick Faldo and Nicklaus — and watching videotapes. He thought maybe he'd be a club pro or teach at a driving range.
But the more he learned about golf, the more his horizons expanded. He started playing tournaments in Korea, then moved to the Japan Golf Tour. He's played on the PGA Tour the last three years, going through qualifying school in 2007 and 2008 before winning at the Honda Classic earlier this year.
"My life has been sort of very slow, actually," said Yang, the only member of his family who lives outside of Jeju. "And I've always tried to take it a step at a time. I didn't really look and envision myself 10 years, two decades away."
Which is why, though he knows its significance, he can't yet fathom what his victory at Hazeltine National will mean to South Koreans and Asian players and fans, in general.
Golf is hugely popular in Asia, the game's fastest-growing market. But while it has produced some stars — 17-year-old Ryo Ishikawa of Japan carries a head cover that looks like a Cabbage Patch Kid doll of himself, complete with spiky hair, sunglasses and visor — the game is still a work in progress.
The men's game, at least.
Since Se Ri Pak won the LPGA Championship and U.S. Women's Open as a rookie in 1998, seven Korean players have combined to win 11 majors on the LPGA Tour. Yet Yang and K.J. Choi are the only PGA Tour players who learned the game in South Korea before coming to America.
China has no players on the PGA Tour. Jeev Milkha Singh, who finished tied for 67th on Sunday, is the first Indian golfer to play at the Masters and qualify for the U.S. Open.
"Golf in Asia has been growing steadily, so to have the guy who finally found a way to beat Tiger on Sunday is so big for the region," said Geoff Ogilvy, an Australian. "It's hard for us here in the U.S. to imagine the impact this will have."
Added PGA of America CEO Joe Steranka, "Earlier this week, I said the addition of golf to the Olympics is the single biggest thing to accelerate the growth of the game. I stand corrected. ... There are now going to be other Asian nations saying, `OK, how are we going to prepare our players to go play on the international stage?'"
Knowing one of their own has broken into golf's mainstream by winning a major is sure to inspire and motivate young players throughout Asia. Indeed, in South Korea, golf fans woke up at 4 a.m. for the final round, some rushing over to a sports club in the Seoul suburb of Bundang when it opened two hours later.
"Seeing Yang ranked 110th in the world win against Tiger Woods, the best player in the world, I felt so proud to be a Korean today," Kim Soo-mi said as dozens of golfers practiced at an indoor driving range.
That's a heavy burden to put on Yang. Based on his performance Sunday, he'll be able to handle it.
He admitted he was nervous before playing Woods, and didn't sleep very well Saturday night. Once he stepped on the first tee, though, the nerves disappeared.
After all, he said, it wasn't as if they were in a UFC fight and Woods was going to bite him.
He was aggressive all day, making the two biggest shots — his chip on 14 and his approach on 18 — when he needed to. He was calm, never once getting caught up in the circus that is Tiger Woods in the last group on the final day of a major. Dozens of cameras track Woods' every move, the galleries are massive and golf etiquette is the last thing fans are worried about as they rush to see the next shot. Yang even had some fun with it, smiling and waving at a TV camera as he crossed the bridge at the turn, and giving a Woods-like fist pump when he made that spectacular chip on 14.
And when it was all over, hoisted his golf bag over his head — shades of the bodybuilder he once wanted to be.
"I guess the fearlessness comes from the fact that I know I'm doing my dream job," Yang said. "Every day I'm living my dream."
Saturday, July 25, 2009
By Moon Ihlwan
Seoul - Even as Asia remains a bright spot for General Motors (GM), its Korean subsidiary looks more like the hapless parent company than GM's fast-growing Chinese operations. GM Daewoo Auto & Technology lost $702 million in 2008, and this year its sales are off by nearly half, to 261,000 vehicles in the first six months. Now the Korean unit says it's on the cusp of a critical liquidity crunch. "Things look ugly at GM Daewoo," says Stephen Ahn, head of research at brokerage LIG Investment & Securities in Seoul.
GM Daewoo's woes stem largely from its close ties to the rest of the global auto giant. The unit made about 900,000 cars and shipped kits for an additional 1 million vehicles for assembly at factories in other countries last year, accounting for about a quarter of all GM auto sales worldwide. But some 90% of those cars are branded as Chevrolets, Buicks, and other GM nameplates that have seen sales plummet.
Given the losses, why doesn't Detroit just jettison GM Daewoo? It's too important to GM's future. The unit is a key developer of small cars for GM's global lineup; it's a vital source for engineering and parts for the China operation; and it makes a new Chevy compact due to face off with the Toyota (TMC) Corolla and the Honda (HMC) Civic. "GM Daewoo will play a more important role in the New GM's global business strategy," says Michael A. Grimaldi, president of the Korean operation.
That has left GM Daewoo scrambling to strengthen its finances. In December it had total debts of $6.8 billion. Since February, when it exhausted $2 billion in credit lines, the carmaker has sought new loans from the Korea Development Bank. The government-run lender arranged GM's takeover of bankrupt Daewoo Motor in 2002 and still holds a 28% stake. In May the KDB let GM Daewoo defer $500 million in payments. Before handing over more cash, the bank wants GM to commit to maintaining a big presence in Korea. The two sides are negotiating conditions for fresh loans, but both say they have yet to reach any resolution.
Seoul wants a guarantee because it's worried about Korea's position in the auto world. The country now offers a good compromise between high-cost, high-quality Japan and low-cost China, whose automakers have a reputation for building shoddy vehicles. But that advantage "could end in just a few years as China catches up," frets Lee Hang Koo, an analyst at the Korea Institute for Industrial Economics & Trade, a government-funded think tank.
The KDB is also seeking collateral such as more shares in GM Daewoo—something GM had resisted but is now considering. Another debt-stricken Korean carmaker, Ssangyong Motor (controlled by China's Shanghai Automotive Industry Corp.), sought receivership in February after the KDB refused to shore it up. Bailing out GM Daewoo and getting nothing in return could raise cries of unequal treatment.
Still, given the importance of GM Daewoo to both GM and the Korean economy, some kind of deal is likely. GM needs the Koreans' design chops, and Seoul doesn't want to lose the tens of thousands of jobs provided by the company and its hundreds of suppliers. "Something will be worked out eventually," says Suh Sung Moon, auto analyst at brokerage Korea Investment & Securities in Seoul. "Neither the U.S. nor Korea can afford to let it go."
Friday, July 24, 2009
The region's fourth-largest economy expanded 2.3 percent in the three months ended June 30, the Bank of Korea said Friday, as record low interest rates and government stimulus spending insulated it from the global downturn. Exports also contributed to the growth, which was the fastest in 5½ years.
South Korea joins Singapore and China among the Asian nations that have released stronger growth figures in recent weeks. Adding to the case for economic revival, the Asian Development Bank this week said East Asia could experience a "V'' shaped recovery in the next year.
David Cohen, director of Asian forecasting for Action Economics in Singapore, said "things are turning around."
Japan, the world's second-largest economy, is expected to report its first growth in five quarters next month, he said, though it remains unclear how strong the region's recovery will be.
Kang Chang-ku, an economist at the South Korean central bank, said the last time GDP grew more was in the fourth quarter of 2003 when it expanded 2.6 percent. The second quarter figures are preliminary and may be revised.
The expansion marked the second straight quarter of growth for Asia's fourth-largest economy after a contraction in the last quarter of 2008. It eked out a 0.1 percent gain in the first quarter after a contraction of 5.1 percent in the previous quarter.
China's economy, the world's third largest, grew 7.9 percent in the second quarter from a year earlier, accelerating from an expansion of 6.1 percent in the first. Singapore, meanwhile, grew for the first time in a year, its economy surging an annualized 20 percent in the second quarter.
Kwon Goohoon, economist at Goldman Sachs in Seoul, said South Korea's second-quarter figure equates to annualized growth of 9.5 percent. The Bank of Korea does not provide an annualized number.
Kwon said in a note that growth was "driven by a good mix of strong fiscal stimulus, a weak KRW (Korean won) and monetary easing."
He expressed doubt, however, that such a strong performance would be repeated the rest of the year as fiscal stimulus wanes and credit expansion slows.
In response to the global financial crisis last year and ensuing economic slowdown, the South Korean government increased spending to spur growth. The Bank of Korea, meanwhile, aggressively cut its key interest rate to a record low 2 percent, where it has stayed for five months.
The central bank said Friday that manufacturing and exports helped spur growth. Manufacturing expanded 8.2 percent in the second quarter while exports grew 14.7 percent.
South Korean exports, which slumped from late last year as consumers overseas cut spending amid the global downturn, have shown signs of improvement in recent months. The country's trade surplus has been hitting record highs.
But the result was not all good news and showed how far the economy has fallen. When compared with the same period last year, GDP, or gross domestic product, shrank 2.5 percent. That marked the third straight quarter of year-on-year contraction.
The last time that happened was in 1998, when GDP shrank from the previous year in all four quarters, said Kang, the central bank economist.
Indeed, economists are widely predicting South Korea's economy will contract in 2009 for the first time since shrinking 6.9 in 1998.
Still, the outlook is better than it was earlier this year.
Kwon said Goldman Sachs recently revised its forecast, predicting a contraction of 1.7 percent in 2009 instead of the earlier expectation of a 3 percent shrinkage, given the strong stimulus impact in the first half and prospects for a recovery in exports in the final six months of the year.
Tuesday, July 21, 2009
Friday, July 17, 2009
Michael Han, CFA
Matthews International Capital Management, LLC
Korea has gone through crisis before—it was one of the worst hit during the 1997–98 financial turmoil. And yet, Korea emerged from that test even stronger than before. Korea used its experience of crisis as a spur for further reform. At a basic level, growth comes from productivity improvements in the domestic economy—Korea understands this and has been developing its internal markets and labor skills. It has also remained open to the global economy, eschewing protectionism and embracing trade. These have all helped it negotiate crises in the past and will do so again. Indeed, Korea remains one of the richest economies in Asia and its success in navigating crises and the challenges it faces are probably being studied with keen interest in capitals around the region.
Thus far, Korea has been weathering the storm caused by global financial crisis better than expected. Its GDP in the first quarter remained flat while most of its peers in developed economies reported sharp declines. The nation's major exporters in the auto, IT and industrial sectors gained market share during the downturn, thanks in part to Korea's devalued currency. As a result, sentiment toward the Korean market seems to be turning positive compared to what it was only three to six months ago. Looking ahead, we believe it is essential for investors to understand the country's economic fundamentals as well as the opportunities and challenges Korea presents for them.
Ironically, one reason why Korea seems to be enduring the current crisis relatively well is because the nation experienced a major financial crisis in the not so distant past. The collective experience of Korea's government and businesses became a valuable asset when the country was faced with the current global crisis.
Two years ago, in a commentary titled, "Then and Now", Mark Headley vividly described Korea during the Asian financial crisis. Specifically, he commented on how then President Kim Dae Jung's progressive reform ended Korea's long-time protectionist policy when he opened the market to foreign capital, recapitalized banks and eliminated debt-ridden Chaebol companies. Chaebols, large conglomerates which had previously enjoyed government-sponsored easy money and protectionist policies, were forced to go through an unprecedented restructuring of balance sheets and governance models. Chaebols that voluntarily restructured themselves became role models for corporate governance reform. For example, their money making businesses began investing more in themselves to become globally competitive rather than subsidizing the firm's unprofitable businesses. As a result, their companies have taken market share from domestic and global competition and enhanced their market status. Korea took the view that there was no easy way out—companies had to pay down their debt and most heavily levered chaebols have delevered their balance sheets since then. Today, well-capitalized Korean companies are investing aggressively while their global competitors are struggling with deteriorating financials.
During the Asian financial crisis, there were also reforms in the supervision and oversight of Korea's financial systems. The nation's old accounting standard—influenced by the Japanese system, but considered next to useless in investment analysis—was replaced by a U.S. GAAP-style standard. The infrastructure for investing, including public disclosure rules and shareholder protection schemes were also enhanced, making Korea's market more transparent and investable. Such measures shore up confidence in times of stress by reducing the amount of uncertainty that investors face.
The playbook from the late-1990s became a valuable intellectual asset for Korean bureaucrats. During the 2005–2007 bubble period, Rho Moo Hyun (Kim's successor) implemented stringent lending policies to contain real estate prices that were being pushed by the global liquidity boom. In addition, banks were forced to double the loan loss provisions in good times. Such prudent policies saved Korean banks from major disasters in the mortgage sector that punished their peers in the developed world. That said, Korean banks still have problems of their own; for instance, they relied on short-term overseas funding for long-term assets. As the global credit crisis deepened, Korean banks faced difficulties refinancing their short-term debt and had to rely on government/central bank support for funding.
Human Capital—A Sustainable Growth Driver
Korea's past success came from its passionate people who work among the longest hours in the world. Education is a national obsession in Korea—as The New York Times reported, a parking lot attendant whose son becomes a doctor or lawyer is more admired than a millionaire whose children do poorly in school. Korea has achieved the most significant advancements in higher education penetration rates among Organisation for Economic Co-operation and Development (OECD) member countries; roughly 55% of the country's younger generation (25–34 year olds) achieved a tertiary education while just 10% of their parents' generation (55–64 year olds) reached the same level.
Korea's long school year—230 days—is also noteworthy and drew attention when President Obama's public school reform agenda pointed to the United States' relatively short 180-day school year as a significant problem. Fundamentally, continuous investment in Korea's human capital supports a strong long-term case for the country.
A Nimble, Diversified Economy
Through financial crises, Korea never turned its back on global markets and this has surely helped many of its companies sharpen their competitive positions. Korea has demonstrated that it can be very nimble in adapting to the ever changing global economy. In the early-1990s, developed markets such as the U.S., Europe and Japan, accounted for 45% of Korea's exports; today they represent just 30%. Textiles and apparel previously accounted for 14% of exports and now their contribution is under 5%. Korean companies are well diversified across the IT, industrial, material and domestically oriented sectors. Today, it is not hard to find global champions in each sector among Korea's publicly listed companies. At the inception of the current crisis, market observers took an overly negative view on Korea's export-dependent economy because of falling demand from developed markets. However, Korea seems to have fared better than its peers thanks to its more diversified export businesses and sizable domestic economy.
A common misperception regarding Korea is that the country will be squeezed between a more-developed Japan and a faster-growing China—this is often referred to as the "nutcracker" or "sandwich" theory. In reality, Japan has provided great role models for Korean companies—Korean companies have been adopting high-end technology from their Japanese counterparts while also gaining on them by leveraging a second-mover advantage.
Korean companies and individuals alike have been looking for opportunities in China. Korean companies from a wide variety of industries have been entering China not just seeking lower wages, but also taking advantage of the country's significant market potential. While Korean exports to the Western world have been confined to IT and industrial products, the country's exports to China have been more diversified to include consumer goods and services such as cosmetics and food; Korean exporters have also been able to leverage their strong brands and cultural proximity. From this perspective, a number of Korean companies offer solid investment cases as their businesses are enjoying growth in China but are traded at much lower multiples than their Chinese peers.
Corporate governance, though improving, has been a challenge for investors in Korea. However, governance in Korea presents different issues than in the U.S. where problems have largely been derived from a conflict of interest between management and shareholders. In Korea, a company's founders typically control a large portion of the firm—as much as 30% to 50%. Therefore, issues regarding executive compensation and stock options are rare. Rather, Korea's governance challenges tend to arise from conflicts between a company's majority and minority shareholders. Low dividend yields and capital allocation issues are evidence of these conflicts. Given their high equity ownership, Korean management tends to be incentivized to invest for the company's long-term vision rather than with a focus on returning cash from operations to shareholders. Some insightful management teams have been successful in long-term wealth creation while others have not. In recent years, there have been significant improvements in the shareholder returns generated by companies that transformed into holding company structures. By transforming into a holding company, a company was separated into an operating business and an investing business. As a result, investors were given the option to own the operating business, which is required to increase shareholder return so that its majority shareholder can invest for future growth. Like in all markets, distinguishing management teams that can create value from those that will destroy it has been one of the most important criteria for achieving investment success in Korea.
Another significant challenge for Korea stems from the country's socio-demographic makeup. As the Korean economy advanced, the country's rigid labor market created a large pool of temporary workers. "Regular" workers are well protected by stringent labor laws, and the population of "temporary" workers—created to sidestep labor regulations during the Asian crisis—has grown rapidly among Korea's younger generation and women. As a result, the younger generation has been delaying marriage and starting families, causing Korea to have one of the most rapidly aging populations in the world. This brings new challenges, particularly in the development of pension systems and health care plans, but these challenges will also provide business growth for health care providers, insurance companies, asset managers and medical supply firms.
By any measure, Korea is far from perfect. However, recent history suggests that Korea has been largely successful in curing its own problems—and exceeding expectations in the process. More importantly, given that the nation still has room for improvement means it offers investors an opportunity for upside potential. Universally, a highly motivated people with a strong work ethic, ongoing investment in human capital, seasoned regulators, and continuous reform stand to make a sustainable investment case—we believe this is the case in Korea.
This month Asia Insight focuses on Korea and features a conversation with the following members of the Matthews investment team:
Robert Horrocks, PhD, Chief Investment Officer
Michael Oh, Matthews Korea and Matthews Asian Technology Funds
Michael Han, CFA, Matthews Korea Fund
The information below does not constitute a recommendation to invest in any sectors mentioned.
Q: What industries do you think stand to benefit from the changes taking place in Korea?
A: Michael Oh
The industries that come to mind as people get wealthier in Korea are related to "protection," specifically insurance, wealth management and home security. Also, I think the corporate pension fund market is going to be a beneficiary and will grow in the future which is one reason why we are positive on brokerage and insurance companies.
A: Robert Horrocks:
I think companies in the wealth management area will change remarkably in how they communicate with their clients. At the moment, in Korea—not unlike any other country in Asia—people make their own investment decisions. They buy mutual funds through brokers or banks who act like brokers, paying big fees up front because the sellers act as an access point. Currently brokers are not particularly providing advice and this is an area where we anticipate growth—in the advisor type market.
Actually, Korea has done more than most to spur its pension fund and encourage it to look outside just holding fixed income and government securities and to try to get involved in equities and higher risk type of securities. Aside from what this does for companies and for Korean citizens, it also has an impact on the markets—it means markets should remain quite liquid and it may also act to dampen volatility.
A: Michael Oh
What Robert just mentioned has been one of the biggest missing pieces in Korea for many years. We're now seeing more long-term domestic institutional investors that are seeking returns in the equities market. This is a positive development that will improve the experience for all long-term investors in the Korean market.
Q: How has Korea's bond market developed?
A: Robert Horrocks:
Again, Korea has tried more than most Asian countries to spur the development of its corporate bond market. It was a particular policy focus after the Asian financial crisis in 1997–98, to try to develop the market and lessen the dependence of companies on banks for financing. There has been some success—the corporate bond market is bigger and better than what it was. It had some success for a few years after the Asian financial crisis but bank loans have continued to be an important part of the financial structure of Korean companies. It's an area in which Asia hasn't been particularly successful in the past. Yes, Asia has been successful in decreasing its reliance on debt since the last crisis, but the composition of the debt has remained largely unchanged. It will benefit all companies with long-term assets to be able to finance with long-term capital rather than short-term bank loans. Swapping out of short-term bank loans to longer-term corporate bonds could be an incredibly important development.
A: Michael Han
Recently, Korean companies have been able to pay back short-term borrowings from banks by issuing longer-term (3–5 year) bonds. Some companies we visited a few months ago were refinancing their bank borrowing with 3–5 year bonds to lock in their financing cost at current low interest rates. Low interest rates coupled with growing liquidity from a renewed risk appetite, the first half of this year was great time to issue bonds. In fact, bond issuance in the first quarter increased 75% over a year ago. It remains to be seen whether this is a tactical or a strategic change in the way Korean corporates finance long-term assets. It appears companies still value long-term relationships with banks and the flexibility in loan terms over issuing bonds.
Q: What is happening with Korea's currency?
A: Michael Han
The currency volatility in Korea stems from the fact that long-term funding in U.S. dollars is limited. One of the reasons the Korean won depreciated so much last year was because Korean banks did not have access to the long-term U.S. dollar credit market and Korea's exporters needed this long-term hedge.
A: Michael Oh
Korea's currency crisis wasn't about the strength of its companies or the competitiveness of the economy but rather, it was a liquidity issue. This is evidenced by the fact that Korea is currently recording one of its biggest trade surpluses in history. This demonstrates that Korean companies are quite competitive, even at the current currency level. Korea is not at equilibrium right now, the currency is still weak because of the liquidity issue.
Q: What are your thoughts on North Korea?
A: Michael Han
I think people tend to overestimate North Korea's power. For example, look at North Korea's "economic" power: their GDP is about 5% of South Korea's and their military spending represents 20% of South Korea's. I don't think North Korea will be a meaningful threat to the region—unless they change philosophically and turn into terrorists.
A: Robert Horrocks
The perception about North Korea always surrounds the problems it can create, but the potential upside is never mentioned. I think people underestimate the possibility of reunification and what that means for South Korea. It would give South Korea a vast amount of cheap labor. Korea's textile industry stands to benefit from having access to that kind of low cost labor.
Q: How does Korea compare to Japan?
A: Michael Oh
First, I think Koreans have learned a lot from Japanese companies—they had a good benchmark to follow particularly in the area of technology. Korean companies in general have followed Japan's technological development path very successfully and have actually gained market share over the last few years. Where Japanese companies have been slow to restructure, Korean companies have been able to fill in the gap. I think companies in Korea make decisions faster and have stronger balance sheets. We have seen this in the past six months as Korean companies were able to invest more aggressively, execute more progressive marketing plans and gain market share. However, having said all this, Japanese companies still have some of the best technologies in the world, if not the best, and Korean companies still have a lot to learn from them.
Wednesday, July 15, 2009
Sunday, July 12, 2009
Saturday, July 11, 2009
By Rhonda Glenn, USGA
The 1998 battle seems a long time ago, but it remains fresh in the minds of those who saw it and its repercussions are still being felt in a big way.
Eleven years ago this month, Korea’s Se Ri Pak, a poised professional, battled the pride of Timonium, Md., Jenny Chuasiriporn, a young amateur, for the U.S. Women's Open championship at Blackwolf Run, in Kohler, Wis.
The two met in a playoff. Head to head. Eighteen holes that became 20. Winner take all.
Chuasiriporn clinched her spot with a twisting 40-foot birdie putt that magically found the hole on the 72nd green. When the ball dropped, her eyes widened and she slapped her hand over her mouth.
Spectators, among them former U.S. President George H.W. Bush, went wild.
Moments later, Pak nearly pulled her tee shot into a water hazard on the same finishing hole. But Pak hit an expert iron shot and salvaged a matching 72-hole score of 290.
The next day, the two dueled in an 18-hole playoff that was extended to 20 holes before Pak gained the edge with a 15-footer for a birdie and the win.
It’s hard to overestimate just how important Pak’s victory was to the Korean fans.
Only the two competitors – Pak and Chuasiriporn – can know what their playoff was really like, but the 8,000 fans who came to watch that day raised the week’s total attendance to a record 123,000.
More important, however, all of Korea was watching, glued to their television screens in the early morning hours. And with them thousands of little girls, who began to idolize Pak.
Today, many of those little girls have grown up, and there are 36 Korean women playing in the 2009 U.S. Women’s Open at Saucon Valley Country Club. A handful are older than the age of 26, but most are in their late teens and early 20s, inspired by Pak's dramatic playoff victory.
Jiyai Shin, 21, is a winner on the LPGA tour and she was one of those little girls who watched Pak win the 1998 Women’s Open.
“It's amazing for me, because before Se Ri Pak won, I never know the sport of golf, and then Se Ri Pak won,” said Shin. “I watch it on TV. Oh, it looks like very interesting game. So after Se Ri Pak won, my friends, Inbee Park, many players started golf. She's our idol, actually.”
Park, 20, is the defending Women’s Open champion and when she won last year she became the youngest winner in history, just as Pak was in 1998. Park was mesmerized by Pak’s 1998 victory.
“I was very much inspired by Se Ri Pak,” said Park. “At that time, not just me, but a lot of young girls like me picked up golf and wanted to be like her. It was very early in the morning. I was half asleep.
“There were replays, a thousand times after that,” Park said. “I was able to watch it quite a few times. I liked what she did for the people in Korea. They were all happy with her and I think that’s what really inspired me. My dad…had been begging me to play golf two years before she won…After I watched that, it looked like very, very much fun and I really wanted to do it.”
Sometimes Pak is paired with her fellow countrywomen, occasions that mean so much to the young players.
“I’ve played a couple of times with her,” said Park of her rounds with her heroine. “It felt a little bit weird, because I never thought that I would actually be able to play with her in such a short period of time and be at the same level of competition. So, I felt very honored and I was very proud of myself that I actually made it all the way here.”
“The first couple of years it was a little bit of pressure,” Pak said, referring to the Korean youth movement on the LPGA. “If I was the one leading I needed to show them the right way to go. For some reason that’s kind of hard for me, but now it’s fun to watch them. They give me the energy because I’m still here practicing, playing, and when they see me they remember the long ago time that I was their age. Now it’s a fun time to hang out with them and I’m kind of friends with them.”
Now 31, Pak remains a contender on the LPGA tour. She finished second in the State Farm Classic a few weeks ago. She still bombs it out there and was 15th in driving distance this week, averaging slightly more than 260 yards off the tee. She was 5 over par after a first-round 76 at Saucon Valley, but struggled in the second round and seemed destined to miss the cut at 76-77-153.
But Pak is also thinking about her future, and beginning to make plans for life after competitive golf. In a year or so she plans to start her own golf academy in Korea. She wants to help young players such as Park and Shin, the players she inspired not so very long ago.
It’s a dream Pak has, but many of her dreams have already come true, as have the dreams of the hundreds of little girls who watched her win.
Rhonda Glenn is a manager of communications for the USGA. E-mail her with questions or comments at email@example.com ◦
Friday, July 10, 2009
Peter Clarke EE Times Europe
The world's first RFID-based scheme for single-journey reusable ticketing in mass transportation has recently gone live in Seoul, South Korea, and is expected to save some 3 billion won (about $2.4 million) per year. The system is based on RFID technology from STMicroelectronics.
The New Transportation system introduced a refillable traffic-card system called T-Money, alongside conventional paper tickets for cash-paying passengers. Now, to save the cost of providing more than 450 million printed paper tickets every year, estimated at 6.8 won each, the Seoul Subway is replacing its paper tickets with RFID smart cards called Single Journey Tickets.
Each ticket contains ST's SRT512 contactless memory chip, which has features that allow the cards to be returned and re-issued to new passengers. ST has worked with card issuer Korea Smart Card Co. Ltd. (KSCC) to optimize the SRT512 to support the subway's ticketing system.
The SRT512 is designed for short-range applications meeting ISO 14443-B that need re-usable tokens, such as access-control, event-ticketing and mass-transport ticketing. To operate effectively in these applications, the device features a built-in anti-collision mechanism to prevent conflicts with other nearby cards.
ST has also previously collaborated with KSCC in the introduction of the T-Money pre-paid transport card. Accepted in buses, subway and taxis, these cards can also be used as an e-purse enabling low-value payments in shops in Seoul. The T-Money pre-paid card is based on the ST19WR contactless smartcards and has been deployed in large volume for two years. ◦
Monday, July 06, 2009
The automaker's Korean subsidiary, GM Daewoo, is losing money and facing a liquidity crisis. But it's too important to GM's future to jettison
By Moon Ihlwan
Even as Asia asia remains a bright spot for General Motors, its Korean subsidiary looks more like the hapless parent company than GM's fast-growing Chinese operations. GM Daewoo Auto & Technology lost $702 million in 2008, and this year its sales are off by nearly half, to 261,000 vehicles in the first six months. Now the Korean unit says it's on the cusp of a critical liquidity crunch. "Things look ugly at GM Daewoo," says Stephen Ahn, head of research at brokerage LIG Investment & Securities in Seoul.
GM Daewoo's woes stem largely from its close ties to the rest of the global auto giant. The unit made about 900,000 cars and shipped kits for an additional 1 million vehicles for assembly at factories in other countries last year, accounting for about a quarter of all GM auto sales worldwide. But some 90% of those cars are branded as Chevrolets, Buicks, and other GM nameplates that have seen sales plummet.
Given the losses, why doesn't Detroit just jettison the unit? GM Daewoo is too important to the future of bankrupt GM. bankrupt gm The unit is a key developer of small cars for GM's global lineup, it's a vital source for engineering and parts for the China operation, and it makes a new Chevy compact that is set to face off with the Toyota Corolla and the Honda Civic. "GM Daewoo will play a more important role in the new GM's global business strategy," says Michael A. Grimaldi, president of the Korean operation.
Korean carmakers want to stay ahead of China
That has left GM Daewoo scrambling to strengthen its finances. In December it had total debts of $6.8 billion. Since February, when it exhausted $2 billion in credit lines, the carmaker has sought new loans from the Korea Development Bank. The government-run lender arranged GM's takeover of bankrupt Daewoo Motor in 2002 and still holds a 28% stake. In May the KDB let GM Daewoo defer $500 million in payments. Before handing over more cash, though, the bank wants GM to commit to maintaining a big presence in Korea—something GM can't easily do until Washington approves its restructuring plan.
Seoul wants a guarantee because it's worried about Korea's position in the auto world. The country now offers a good compromise between high-cost, high-quality Japanese automakers and the low-cost Chinese auto industry, chinese auto industry whose automakers have a reputation for building shoddy vehicles. But that advantage "could end in just a few years as China catches up," frets Lee Hang Koo, an analyst at the Korea Institute for Industrial Economics & Trade, a government-funded think tank.
The KDB is also seeking collateral, such as more shares in GM Daewoo. The KDB says GM has balked at that, though the automaker declines to comment. Another debt-stricken Korean carmaker, Ssangyong Motor (controlled by China's Shanghai Automotive Industry), sought court receivership in February after the KDB refused to shore it up. Bailing out GM Daewoo without getting something in return could raise cries of unequal treatment.
Still, given the importance of GM Daewoo to both GM and the Korean economy, some kind of deal is likely. GM needs the Koreans' design chops, and Seoul doesn't want to lose the tens of thousands of jobs provided by GM and its hundreds of suppliers. "Something will be worked out eventually," says Suh Sung Moon, an auto analyst at brokerage Korea Investment & Securities in Seoul. "Neither the U.S. nor Korea can afford to let it go."
Saturday, July 04, 2009
ON THE face of things, the restructuring of South Korea’s heavily indebted family-owned conglomerates (chaebol) is proceeding apace. On June 28th the eighth-biggest, Kumho Asiana, said it would sell its one-third stake in Daewoo Engineering & Construction, one of its biggest units. Past governments have coddled chaebol, but the current one says free-market principles should prevail. Regulators say that they have been urging banks to take a hard line with nine struggling chaebol, including Kumho Asiana.
In addition to Daewoo, Kumho Asiana owns Asiana, the country’s second-biggest airline, and petrochemical, tire, life-insurance, resort and transport businesses. As with other chaebol, descendants of the founder still control the business.
In 2008 it used its airline and Daewoo to become the biggest shareholder in South Korea’s biggest logistics company, Korea Express. That acquisition, along with the purchase of Daewoo in 2006, has left it with debt of 15 trillion won ($11.8 billion). Moreover, the 18 South Korean banks and other investors that had bought almost 40% of Daewoo alongside Kumho Asiana are likely to exercise an option in December to sell the conglomerate their shares at a price of 31,500 won—over three times the level of June 26th. So Kumho Asiana needs to find another 4 trillion won.
The likely buyer of Daewoo is the state-owned Korea Development Bank. It has said it will create a special private-equity vehicle to that end. Several weeks ago it offered to buy Kumho Asiana’s holding at a 30% premium to the market price. That would still leave Kumho Asiana about 1.7 trillion won short of its obligations under the put option, according to CLSA, a broker.
Korea Development Bank has also said that it will give Kumho Asiana the “right of first refusal” if it decides to sell the Daewoo stake. This idea has Seoul’s financiers fuming. They do not see why the bank should be doing Kumho Asiana any favours. In its current form, they argue, its offer to buy the shares amounts to a bail-out. They note that Korea Development Bank is also in negotiations to buy a unit of Dongbu group, another indebted chaebol. They worry that the lender will end up impeding genuine restructuring.
But for all its talk of free markets, the government does not want any big chaebol to go bust. It is haunted by memories of the Asian financial crisis of 1997-98, when high corporate debt helped to sap investor confidence and spark a run on the won.
The irony is that most South Korean firms are in much better shape these days. They have cut their debt dramatically since the crisis and keep far more cash on hand. In December 1997 the average debt-to-equity ratio of firms listed on Seoul’s stock exchange was 425%; in May this year it was 130%. Their cash reserves have risen from 10 trillion won in late 1999 to 78 trillion won at the beginning of this year. There are clearly plenty of South Koreans who have warmly embraced restructuring.
Thursday, July 02, 2009
Hailing from South Korea, the Wonder Girls kick off their American tour in the Northwest, opening for the Jonas Brothers in Portland and Seattle; the tour includes other dates along the West and East coasts, too.
Tuesday, June 30, 2009
Black is back.
Perhaps to match the gloomy economic outlook for the rest of the year, black dominated the catwalks at Seoul Fashion Week, which ended Thursday.
Despite the depressing lack of color, Korean designers still managed to introduce new styles and trends in their fall and winter collections.
Star power certainly helped attract crowds to the Seoul Trade Exhibition Center (SETEC), Daechi-dong, southern Seoul. "Boys Over Flowers" actors Kim Hyun-joong and Kim Jun, SS501 member Kim Hyung-jun and actress Kim Min-sun turned models on the runway.
Korean celebrities such as Yoon Eun-hye, Hwang-bo, Hwanhee, Ha Jung-woo, Kim Seung-soo and Girls Generation member Yoona attended some of the high-profile fashion shows over the eight-day event.
Tickets to the fashion shows sold like hotcakes. Organizers even had to turn away people at some shows because the halls were already packed.
As usual, the men's wear collections kicked off fashion week. Most of the designers were particularly inspired by the military look, while other designers sought to reinterpret the classic suit.
Han Sung-hyuk, creative director for Cheil Industries' Mvio brand, presented a collection inspired by the fictional British detective Sherlock Holmes. Camel-colored jackets and coats were accented with herringbone and argyle prints, while pants were cropped at the ankle.
Ultra-stylish gangsters paraded down the runway for Kang Dong-jun's collection, inspired by the crime movie "Carlito's Way." Models were smoking, literally, as they puffed on cigars while wearing vests, boxy jackets, fedora hats, leather jackets and loose trousers.
Trench coats were all over the men's wear collections. Park Sung-chul showed double-breasted trench coats and cape jackets in khaki. Juun J. transformed the trench coat into military-style ponchos and rider jackets.
Classic suits were given a fresh spin, as seen with the slimmer silhouettes, structured jackets and fitted vests by Park Herin, and asymmetrical double lapels and relaxed silhouettes by Chang Kwang-hyo.
Elements of hip-hop, sports and street style came together at Kim Gyu-sik's "staring by Taste Maximum." In a surprise twist, Kim used androgynous-looking females to model well-cut denim jeans, tough-looking motorcycle jackets and layers of thick scarves.
Black remained the color of choice for most designers, but thankfully, black was complemented with shades of red, yellow, green, blue and white.
Most designers seemed to forego romantic and overtly luxurious designs, in favor of men's wear-inspired jackets and comfortable coats.
Comfortable style is what Imseonoc presented with her collection of flirty dresses, coats without closures and elastic waist pants. Voluminous silhouettes and toned down colors also characterized Song Jain's collection.
The military wear trend in the men's wear collection seemed to have crossed over to women's wear collections. Moon Young-hee tried to inject femininity in jackets and coats, resulting in pretty peplum jackets and stylish coats, made of silk, satin and wool.
Rising designer Ha Sang-beg presented futuristic military uniform-style jackets, coats and dresses with exaggerated details like pockets and epaulets. Yang Hee-min delivered a "decadent chic" collection, which included halter-neck jumpsuits, belted slim coats and jodhpurs.
Sweet and romantic looks were not totally gone for the fall/winter collections. Cho Sung-kyong's Latulle line did not disappoint with retro-romantic dresses, floral prints, cardigans and smoking jackets in luxurious silk, wool and fur.
Doii Lee's collection featured shiny metallic leggings, modern kimono-sleeve dresses and dazzling prints inspired by the Japanese fairy tale "Butterfly Girl."
For his "Troa by Han Song" collection, Han Song introduced mini dresses with floral prints, multi-colored rosette details and asymmetrical padded jackets and tight "leg-hugging pants."
While Son Jung-wan used mainly black and dark gray for her elegant and feminine collection, there were bursts of yellow, gold and blue to brighten it up. Models wore plush fur coats, vests and capes, as well as pleated dresses on the catwalk.
Fashion week would not be complete without shows featuring hanbok or Korean traditional dress. Top designer Lee Young-hee never fails to amaze everyone with her innovative hanbok designs. This season, she impressed with sculptural hanbok skirts, pleated dresses and skirts.
Hwang Jae-bock and Bec Jie introduced ultra-feminine evening dresses and wedding gowns that will be the dream of young brides everywhere.
However, not all of the shows were open to the public. Some designers, such as Andy & Debb, Choi Bum-suk and Jung Hee-jung, had small private presentations for professional local and foreign buyers.
Sunday, June 28, 2009
I’m here to see how they’re dealing with the GEC — that’s global economic crisis. Just fine, as it happens, but another alarming acronym has Korea-watchers a-twitter: ICBMs, the ones Kim Jong-il is pointing across the troubled peninsula and beyond, to Japan and the US. Desperate Kim behaves like a baby throwing toys out of his pram, and the rest of us placate him by throwing money — until the next tantrum, and the one after that. The threats are more serious this time but South Koreans seem to be reacting with admirable sanguinity. Stock and currency markets briefly tottered, commuters grabbed the news on smartphones en route to the office, but they woke the next day to discover that they were all still here, and capitalism proceeded apace.
As for the financial crisis, the Land of Morning Calm is reacting with, well, morning calm. ‘We wake up and get the bad news from New York and London but it’s OK, we had our big crisis in 1998,’ explains HSBC’s Changsoo Lee, ‘so we’ve been well prepared for this one.’ Indeed, remarkably for an export-driven economy — witness the Samsung and LG gadgets and Hyundai and Kia cars in almost everyone’s households everywhere — South Korea is yet to slip into recession, which is more than Japan, Singapore and Taiwan can boast.
More remarkably, if not a little disturbingly, Seoul’s bankers are now launching local versions of the very products that got the rest of us into this global financial kimchee: securitised mortgages. Kookmin Bank has just launched a $1 billion bond anchored by about 30,000 Korean mortgages. But far from the fully leveraged ‘Deadbeat Dad’ loans packaged into America’s subprime nightmare, few Korean homeowners owe more than 50 per cent of the value of their homes — I’m told the state doesn’t allow it, a regulation instituted after the 1998 crisis. The Kookmin facility was six times oversubscribed and 55 per cent of it was taken up by Asian investors; further evidence, if any were needed besides China’s massive continued flotation of the US economy, that the future indeed tilts eastwards.
A friend here told me that Seoul had become ‘very groovy’ in recent years. ‘Lots of jazz places and cool bars have sprung up,’ he reckons, so I asked a lass at the Shilla reception if she could recommend a club. She said there was a ‘soul club’ near the hotel, and it sounded promising. I was imagining finger-snapping Korean beatniks, local versions of Marvin Gaye and Gladys Knight. Maybe Stevie Wonder was in town. I set off hopefully, in cool metropolitan black, for a look-see, only to discover that far from being a grungy Motown of the East, the Seoul Club was a rather smart conservative businessmen’s domain, one of those cultural halfway houses that connect expatriate bankers with the local establishment over tennis and cigars.
The last time I was on this peninsula, I was the other side of the Demilitarized Zone. As we know from the grotesque treatment of American reporters Laura Ling and Euna Lee, recently sentenced to 12 years hard labour, journalists are mostly banned from the Stalinist-and-then-some north. But I once managed to bluff a week’s visa under the guise of being a ‘golf course developer’. Wacky, yes, but more inventive than the covers I’d employed for other countries that didn’t much like foreign hacks — such as Burma, which I’d entered as a ‘pasta salesman’. And it brought the bonus of enabling me to play North Korea’s only golf course, where I asked the manager if he’d ever had the honour of welcoming Dear Leader Kim Jong-il to his links. Oh yes indeed, the manager said, and what a golfer he was, going round in 34 with five holes-in-one and no hole worse than a birdie. That’s about 20 strokes under the world record for 18 holes. So the solution to North Korea’s economic woes isn’t to threaten nuclear mayhem but to launch the Dear Leader on the pro tour, where he’ll surely walk away with a fortune.
For all Seoul’s thrusting commerce and feisty independence, you need only turn on the telly to see who secures it all. North Korea’s belligerence reminds us that the Pentagon still has more than 20 bases in South Korea and 30,000 troops, many of them crammed into a redoubt called Camp Coiner that occupies 60 acres of prime central Seoul real estate. Coiner’s residents are entertained by the ‘Armed Forces Network’, which offers a bizarre and revealing way for the curious visitor to wile away a few hours. Actual news is disturbingly absent, and broadcasts are punctuated by public service announcements for US military personnel. ‘Pick Up After Your Dog’, ‘Learn Your Host Country Customs — They Will Make You Appreciated’ and ‘Try Something New, Eat Where the Locals Eat’. Illustrated by folksy little skits — one African-American grunt discards his Big Mac in favour of garlicky bulgogi — it’s all designed to win Korean hearts and minds, if the Middle American soldiers can drag themselves away from last night’s Letterman show and beat-’em-up Chuck Norris repeats.
Businessman D.H. Park isn’t too fussed about North Korean confrontation, or financial peril. He reckons the way out of the mess is for everyone to love each other. Park spent a decade in London as a City screen-jockey, ‘making the most incredible bonuses’. Then he returned to Seoul to set up a boutique private-equity fund, IWL Partners, in an office so chic it would impress the most jaded Wallpaper editor. IWL? Hmm, I’m wondering as I chat with him — the initials of his partners? ‘No,’ Park says proudly, ‘Invest With Love.’ And so far he has, showing 50 per cent year-on-year returns in his first three years. Crisis, what crisis? There’s little sign of one in Seoul.