Thursday, December 30, 2010

South Korea Unveils World’s First Commerical Electric Bus

Wednesday, December 29, 2010

South Koreans worry too much about a free-trade deal

America's FTA with South Korea

ON THE 38th parallel, a country that aims to be one of the world’s most open trading nations sits next to one of the most closed. That North Korea has deadly warheads aimed at Seoul means South Korea needs friends. But since the South gave in to American pressure to amend a free-trade agreement on December 3rd, many of its citizens have accused it of paying a high price for that friendship. Opponents of its president, Lee Myung-bak, playing on the mood of the moment, have likened the deal to being hit by North Korean artillery fire.

The government in Seoul insists that its desire for American support in dealing with North Korea never entered the free-trade equation. But whereas Barack Obama has used the agreement to burnish his pro-business credentials and win favour with some of his political opponents, in South Korea few are happy. In the National Assembly on December 7th both the ruling and opposition parties demanded an apology from the trade minister for breaking a promise not to tamper with the 2007 agreement, which has yet to be approved by either country’s legislature.

Choi Seok-young, the chief trade negotiator, admits the South Koreans reluctantly gave in to American demands but insists they got concessions. He expects a big political battle to have the updated agreement ratified. The Obama administration boasts that by postponing the elimination of American tariffs on South Korean cars and trucks, and winning concessions on safety and environmental issues, it has helped American carmakers. It also won the right to protect America’s carworkers from “harmful surges” of South Korean imports. South Korea’s main payoff was a miserly two-year extension of tariffs against imports of American pork. To the chagrin of some prominent Democrats in America, it also managed to stave off further pressure to reopen its market to American beef.

The tariff scorecard is only part of the story. South Korea exports far more cars to America than vice versa (see chart). Even Ford, the biggest-selling American carmaker in South Korea, barely sells enough in a month to fill a multi-storey car park.

Cheong In-kyo of South Korea’s Inha University says his country could still benefit immensely from the agreement. He says the amendments were necessary in order to ensure the deal’s passage by Congress. What’s more, he argues, the agreement will benefit South Korea by bringing competition into heavily regulated and inefficient service industries.

South Koreans may groan, but their trade negotiators are held in awe by their counterparts in countries like Japan, whose car industry competes fiercely with South Korean brands. Now that South Korea has an agreement with America to go alongside an earlier agreement with the European Union, it hopes to gain almost unrivalled access to the world’s two biggest markets. If that makes the South feel any more comfortable about the North, so much the better. ◦

Risking life and limb for hot pizza in South Korea,0,6982566.story

South Korea's motorcycle deliverymen speed, run red lights and drive on the sidewalks to make it. Now an increase in accidents is leading the nation to rethink the need for such quick arrivals.

By John M. Glionna, Los Angeles Times
December 29, 2010

They're on the streets at all hours, the motorcycle deliverymen slicing through traffic in their race against the clock, defying both the law and common sense to get their cargo delivered on time.

Run a few red lights? Pull a last-second dash across six lanes of traffic? No problem. And if the zigzag through gridlock fails, there's always the sidewalk; pedestrians know to stay out of the way.

"It's not that I want to deliberately disobey traffic laws, but when you have customers breathing down your neck, it's really hard not to," deliveryman Bang Chang-min said. "When I'm on a bike, I'm under so much pressure that I feel I transform into somebody else."

But the recent death of a pizza deliveryman may cause South Koreans to rethink their obsession with zippy fast-food conveyance. On Tuesday, government officials announced a new educational campaign to encourage consumers to think safety over speed.

In the last five years, 4,098 vehicular accidents nationwide involved motorcycle deliverymen, a subculture dominated by teenagers looking for part-time work, according to government statistics.

Activists blame a deadly mix of youthful recklessness and a corporate system that demands that drivers take chances. And such accidents are on the rise: Last year saw 1,395 accidents involving deliverymen. Although there are no statistics on related fatalities, unions estimate that such deaths have reached double digits for the last decade.

In South Korea, all kinds of food are advertised with quick home delivery, varying from burgers and fried chicken and items bought at mom-and-pop groceries. The result is often road chaos. Deliverymen dash about the city with boxes strapped to the backs of their motorcycles. Some drive one-handed so they can carry more orders.

Delivery jobs are stressful and the turnover rate is high. With some pizza companies, drivers must absorb the loss if they arrive late and the food becomes free. Others pay drivers, most of whom make less than $5 an hour, an incentive of 40 cents for on-time arrivals. Some even display a ticking clock on their websites when an online order is completed.

Activists say that speed kills.

"The clock starts as soon as the order is taken, putting immense pressure on these young men," said Kim Young-kyung, president of the Youth Community Union. "Companies train new employees to use every available method regardless of the law. The bottom line is to get there on time."

Pressure put on firms has produced little results.

"Companies tell government investigators that young men like to ride their motorcycles fast, so there's little they can do," Kim said. "These kids are often too young to think on their own. But instead of emphasizing safety, the bosses exploit them."

Last week, a 24-year-old Pizza Hut deliveryman was killed when he was hit by a taxi that had run a red light. On the same day, an 18-year-old driver for another firm was injured in a collision with a bus, officials say.

Protesters recently rallied outside the Employment and Labor Ministry, holding up placards, one of which read, "The 30-minute delivery system kills people."

In its announcement, the ministry said it would launch a TV, radio and subway advertising campaign, along with the dispersal of leaflets at fast food outlets, emphasizing the high accident and injury rate among motorcycle deliverymen.

Activists say companies have a long way to go to ensure the safety of deliverymen. One hamburger chain, for example, requires drivers to wear helmets without chin guards because they fear the fuller head gear looks menacing to customers. Drivers have since endured facial injuries in road accidents, Kim said.

Bang said he has worked for two firms, each with the same rules.

"Both said safety was a priority," he said, "but the aim is to get to the destination as fast as possible." ◦

Monday, December 27, 2010

How Korea was Caffeinated

To learn the story behind Korea’s fixation on the coffee bean, you have to travel from the streets of Seattle to the slopes of North Korea’s Mt. Baekdu.

Words by Andray Abrahamian

Green coffee beans sit in a large bag, waiting to be micro-roasted in the machine just next to a barista, who is absorbed frothing milk for a cappuccino. The beans will soon be dark, rich and above all, fresh. Is this a scene from Milan? Brooklyn? Melbourne? No.
It’s from Yanji.

Where? Yanji is a small city just north of the DPRK and only two hours from the Russian border. Shoddy buildings, traffic flows, buildings, rubble and rabble combined with Hangul on all the signage make it seem like you’ve stepped into 1970’s Seoul. What is a microroastery doing here, 26 hours train ride from Beijing? Simply: South Koreans come here on the way to hike Mt. Baekdu, and South Koreans have become the coffee connoisseurs of Asia.

In every major city in South Korea, in-house roasted beans, extensively trained baristas and expensive imported Italian machines deliver coffee to an increasingly sophisticated set of consumers. Baristas usually display their qualifications behind the bar, especially if they’ve placed in one of the many barista competitions around the country.

It wasn’t always like this. It was more like this:
You deposit a bit of pocket change and push a button. A paper cup rattles into the cavity, various powders get excreted into it, dowsed with piping hot water and presto! Not 10 seconds after your coins plopped into the machine, you’re holding a small cup of “coffee.” Really, it’s just a few freeze-dried granules of the lowest-possible-grade coffee beans, a bunch of sugar and whitener, which includes stuff like sodium caseinate, diglycerides and a host of other chemicals that sound like baddies from Dr. Who.

For a generation, slurping one of these abominations to stay awake at one’s desk or to taste something sweet after a belly full of salt and spice was coffee for Koreans. Even at dabang—pseudo-traditional Korean cafes you can still spot from time to time—only instant coffee was to be found.

How did this grim situation change? One word, four syllables: Starbucks. Say what you will about the chain: that it’s fast-foodized coffee; that it contributes to a generic urban landscape; that it has sacrificed quality for market share; that it’s overpriced; that the pastries are packed with preservatives; that the founder is responsible for the underhanded destruction of the Seattle Supersonics. Yes. Say all those things.

But what Starbucks has done all over the world is introduce people to coffee as a luxury good. Especially in Asia, going to Starbucks has become a social signifier: “I’m a sophisticated, modern consumer.” In Korea, this gave rise to a specific brand of poseurs: dwoenjangnyeo (된장녀), young women who eat a cheap triangle kimbap for lunch so they can spend their meal allowance at Starbucks, being seen all afternoon.

Starbucks opened their first Korean branch in 1999, had over a hundred outlets by 2004 and are planning to hit 360 nationwide in the coming months. In Korea, they have the only Starbucks with no English sign (스타벅스 커피 in Insadong) and for a time the largest Starbucks in the world, a five-story monster in Myeongdong that has since changed hands. They are the biggest player in a market dominated by several chains, both foreign (like Coffee and Tea Leaf) and local (like Caffe Bene). Thanks to them, words like “barista,” “macchiato” and “double shot” are now part of the Korean language’s extensive list of loan words.

As more Koreans travel abroad and learn to appreciate foreign cuisine in general, the education provided by chain coffee shops has helped local coffee nerds find a market for their passion. Independent cafés started opening up in the 2000s and now are easy to find in any downtown or university neighborhood. Usually very comfy, these indies also have a unique sense of style: hand-drawn art, local music and patterns of patronage and service make Korean cafés distinctive.

Many cafés are table service affairs. You order at the counter, but the coffee is brought out to you, often with pictures – “latte art”—sketched in the milk. Almost all baristas have undergone training for this. Attention to detail at independent coffeehouses tends to be very high. Menus are often more extensive than in the United States, with rarely seen Italian derivatives of espresso such as longo (a shorter, stronger pull of espresso) and shakerato (espresso shaken over ice, like a martini) alongside local favorites such as green tea latte or sweet potato latte (better than it sounds).

With perhaps a stereotypical penchant for exam-taking, most Korean baristas study formally for anywhere from three months to two years. They receive certification and are thus very knowledgeable and dedicated to their craft. Cafés stay open until late, making them hotspots for couples on dates and groups of friends who want to hang out but not drink booze. Unlike the west, coffee is not yet needed to start the day. Outside of the chain cafés, it’s unusual to find a place pulling shots before 11 am.

Though it may sound bolder than a blue mountain hand-drip, I’m prepared to say that the average cup of coffee at a Korean café is of better quality than in the United States. The speed at which this has become the case is staggering; five or six years ago, a good cup of coffee was about as rare as a DMZ tiger. Today, pastries and cakes sometimes lag behind due to a lack of artisanal bakeries, but this too is gradually improving.

Korea has taken coffeehouse culture from Europe, via America and made it its own. If this is a form of cultural imperialism, you don’t hear many traditionalists complaining, though this is probably because they’re addicted to caffeine. To get their fix, they can visit quality, independent cafes in almost every Korean city. For Seoulites, flip the page for a list of ten true gems just waiting for you to discover.

Emperor Gojong: Coffee Lover
The first Korean coffee connoisseur came long before the Starbucks invasion, around the time of the more insidious Japanese takeover of Korea.

Japanese expansionists were putting the Joseon Dynasty under tremendous pressure at the end of the 19th century. In 1895, they judged Empress Myeongseong to be an obstacle to their political ambitions and had her assassinated. Fearing a coup d’état or worse, her husband Emperor Gojong took his court and fled from the palace to the Russian Legation early the next year.

There, he was introduced to a heavily sugared style of coffee, which he grew to love and drink regularly. He governed the country and served coffee as he gave audiences to various officials and envoys. Sadly, coffee culture didn’t take off at that time, but to be fair, Koreans had slightly more important things to worry about. ◦

Friday, December 24, 2010

China’s North Korea Shift Helps U.S. Relations

WASHINGTON — Few debates have strained relations between the United States and China more this year than how to handle an unruly North Korea. But after a tense week, when the threat of war hung over the Korean Peninsula, the Obama administration and Beijing seem finally to be on the same page.

Administration officials said the Chinese government had embraced an American plan to press the North to reconcile with the South after its deadly attacks on a South Korean island and a warship. The United States believes the Chinese also worked successfully to curb North Korea’s belligerent behavior.

China’s pressure, several senior officials said this week, might help explain why North Korea did not respond militarily to live-fire drills conducted this week by the South Korean military, when a previous drill drew an artillery barrage from the North that killed two South Korean civilians and two soldiers.

As evidence of the policy shift, officials pointed to recent remarks by China’s foreign minister, Yang Jiechi, in which he urged the North and South “to carry out dialogue and contact.” Previously, Beijing’s response had been to propose an emergency meeting of the six-party group that negotiates with North Korea over its nuclear program, a step the United States opposed as rewarding the North’s aggression.

China and the United States still have major differences on issues ranging from currency policy to climate change. And just last Sunday, skeptics pointed out, Beijing blocked a statement in the United Nations Security Council that would have explicitly condemned North Korea for the artillery attack.

Still, the agreement on how to deal with North Korea removes a substantial irritant in the Beijing-Washington relationship four weeks before President Hu Jintao of China makes a state visit to Washington. It also creates a glimmer of hope, officials said, that the United States can resume a dialogue with North Korea, whose hostile behavior has raised tensions to the highest level since the Korean War.

“The silver lining of last weekend is that the Chinese, for the first time, were worried that things were spinning out of control,” said Victor Cha, a Korea expert at the Center for Strategic and International Studies who worked in the George W. Bush administration. “It moved the Chinese more in the direction we wanted them to move.”

The Obama administration claims some credit, too, noting that the change came on the heels of a visit to Beijing by American officials, led by Deputy Secretary of State James B. Steinberg. A week before that, President Obama called Mr. Hu and bluntly urged him to put a tighter leash on the North Korean leader, Kim Jong-il.

China swiftly dispatched a senior diplomat to Pyongyang, the North Korean capital, and officials said he conveyed a strong message about “the unacceptability of attacks and killings of South Koreans,” said a senior American official, who spoke on condition of anonymity in order to discuss sensitive diplomatic matters.

“The idea that there could be these one-off provocations without expectation of a military response, as the North had behaved in the past, the Chinese now understand that this is no longer the reality, no longer acceptable,” he said.

China’s push for a rapprochement between the North and South is even more significant, another official said, because it unifies the five parties that deal with Pyongyang: the United States, China, Russia, Japan and South Korea. China’s reluctance to press North Korea was sending Pyongyang a mixed message, he said, especially since China is the North’s most influential ally.

Russia’s role has also been important, officials said. The Russian foreign minister, Sergey V. Lavrov, spoke out against the North Korean artillery shelling. And the comments by Mr. Yang, China’s foreign minister, about the need for North-South engagement came in a phone conversation with Mr. Lavrov that was released by the Chinese Foreign Ministry.

North Korea signaled that it was open to such an engagement in meetings with Gov. Bill Richardson of New Mexico, who made an unofficial visit to Pyongyang last weekend. Mr. Richardson said the North was willing to ship spent fuel rods to South Korea — a move that could effectively end its production of plutonium, from which it has manufactured several nuclear bombs.

Administration officials played down Mr. Richardson’s trip, saying he was carrying no proposals from the United States. Shipping fuel rods to South Korea is not a new idea, one official noted, and the South Korean president, Lee Myung-bak, seems in no mood to accept it. North Korea has also done little to alleviate concerns about its recently disclosed uranium-enrichment facility, aside from its offer to Mr. Richardson to allow nuclear inspectors back into the country.

Nevertheless, Mr. Steinberg and Jeffrey A. Bader, a top White House adviser on Asia, are likely to visit Seoul soon to explore whether the temporary lull in North Korea’s aggression creates an opening for diplomacy.

If the North makes amends for the shelling last month of Yeonpyeong Island and the torpedoing of the South Korea warship, the Cheonan, which killed 46 sailors, officials said it could open the door to contacts between the United States and North Korea. But they were vague about what kind of gesture would be sufficient.

“The South needs to have satisfaction that their concerns over these acts have been addressed,” an official said. “The North cannot go around the South; they cannot sidestep the South.”

By going ahead with military drills in the face of North Korea’s threats, analysts said Mr. Lee might have bought himself some room to negotiate. But, they added, outsiders should not read too much into the North’s decision to hold its fire; the government’s motives were, as ever, cloaked in mystery. ◦

Sunday, December 12, 2010

How the U.S. Unfroze a Trade Deal with South Korea

Ford's Mulally was consulted nearly every step of the way
By Hans Nichols and Mark Drajem

It wasn't exactly Bretton Woods, the bucolic New Hampshire location where nations met in 1944 to establish a new financial world order. This time the scene was a Sheraton hotel in Columbia, Md., and a manmade lake. Such was the backdrop for the U.S.-South Korea trade deal, whose final details came together on Dec. 2 after the top two negotiators took an hour-long stroll in frigid temperatures alongside the nearby lake.

The day before, President Barack Obama, on the eve of a secret trip to visit the troops in Afghanistan, was in frequent touch with negotiators, say White House aides who spoke on background so they could talk candidly about negotiations with foreign leaders. Obama had been hearing all year that a testy relationship with business was preventing him from realizing his goal of doubling American exports in five years to create jobs and spur economic growth. A reworked free-trade agreement with Korea, initially negotiated by President George W. Bush, could be the first step toward healing that rift.

Ford Chief Executive Officer Alan R. Mulally, representing the U.S. auto industry and the auto company with the most at stake, was consulted nearly every step of the way, Administration officials say. As the talks hit a roadblock, he was asked to attend a Dec. 1 meeting in Treasury Secretary Timothy R. Geithner's office. The White House wanted his support, along with that of Bob King, the United Automobile Workers president, and the top Democrat and Republican on the House Ways and Means Committee, Sander M. Levin and David Camp, both from Michigan.

The backing of executives, union leaders, and lawmakers raises the odds of winning passage of the deal in Congress next year. And Obama wants the Korea pact to serve as a new model for trade talks, says Michael Froman, the Deputy National Security Adviser and one of the lead Columbia negotiators. Obama sought "to forge a new coalition of support for trade and then sold it personally" to South Korean President Lee Myung Bak, says Froman. "The Korea deal is important," U.S. Trade Representative Ron Kirk says, "but the importance of concluding it goes beyond Korea."

The Administration is now working on reducing nontariff trade barriers, such as arbitrary license plate size requirements, with other trade partners. It's also discussing reducing similar nontariff barriers, such as onerous safety standards, with Mexico and the European Union. Trade talks with Panama and Colombia are pending, and there may be new ones with Vietnam and Malaysia. Obama hopes a widely supported trade deal with South Korea will soften opposition to future deals, the officials say.

The pact, which the White House says will increase trade with Korea, now $68 billion a year, by some $11 billion, almost died when Obama and Lee failed to agree at the November Group of 20 summit in Seoul, mostly over differences on auto tariffs. "It was a courageous move in Seoul to walk away," says Ziad Ojakli, a Ford lobbyist. "A bad Korea auto template would have been there for the Indians, the Chinese, and others."

South Korean and American negotiators, sequestered for two days at the Sheraton Columbia Town Center Hotel in suburban Maryland, about an hour's drive from the White House, were again at an impasse on Dec. 1. The hang-up: how quickly to phase out a 2.5 percent tariff on imported Korean autos. The tariffs make Korean cars more expensive in the U.S., giving Ford a leg up with price-conscious consumers. The U.S. tariffs, however, are far lower than the 8 percent levy Korea imposes on American cars. Ford initially wanted the tariffs for 10 more years and had already come down to seven years. Seoul wanted three or four.

Mulally joined Geithner and National Economic Council Director Lawrence Summers at Treasury. Froman, on a speakerphone from Columbia, reported that the talks were foundering. The officials asked Mulally if he could abide a five-year tariff phaseout. He said he'd have to discuss it with the UAW and Michigan lawmakers. That evening, Obama summoned Froman and Kirk to the White House for consultation. They brought some good news: Mulally, the UAW, and Michigan lawmakers had signed off on the five-year deal.

At 10:30 that night, Obama called Lee with a framework for an agreement, including the five-year language. In an hour-long conversation, their second since a North Korea artillery barrage killed four South Koreans on Nov. 23, Obama stressed the importance of a trade pact to the two countries' strategic relationship. Lee was noncommittal, though he wanted the Maryland negotiations to continue.

On the morning of Dec. 2, with the talks still stalled, Froman suggested a walk with his counterpart, Trade Minister Kim Jong Hoon, who had been ducking outside to smoke. Froman and Kim strolled alongside the nearby lake, which was in the process of being dredged. Froman warned that failure would be a missed opportunity for Seoul to improve ties with Washington, the officials say. Kim relented, as long as Korea could prolong tariffs on U.S. exports of pork products to his country from 2014 to 2016. He also wanted a more generous allocation of temporary work visas. After midnight, Froman e-mailed Air Force One, en route to Afghanistan, that they had a deal.

The accord allows the U.S. to end its 2.5 percent auto tariff in five years. South Korea will cut its 8 percent tariff on U.S. automobile imports to 4 percent immediately instead of eliminating it, a White House fact sheet says. Ford and other U.S. automakers can send 25,000 cars that meet U.S. safety standards annually to South Korea, even if they do not meet Korean standards.

Not everyone is pleased. Senate Finance Committee Chairman Max Baucus, a Montana Democrat who had demanded that South Korea drop restrictions on U.S. beef imports from cattle older than 30 months, said he was unhappy with the agreement. American beef producers will gain an advantage over Australia under a 15-year phaseout of a 40 percent tariff.

The South Korea deal has brought Obama some rare praise from the U.S. Chamber of Commerce, which fought the President's agenda on health care and financial regulation. "The Administration has done its part," U.S. Chamber of Commerce President Thomas Donohue said in a statement. Now, he said, the Chamber will help round up votes.

The bottom line: Obama hopes a South Korean trade deal will improve ties with American business and pave the way for more accords with other nations. ◦

Korean not allowed to be spoken at language cafe

When ifriends opened in a former bar in Shinchon, customers could have taken it for just another coffee place that this college area in Seoul is saturated with.

As it hits two o’clock, groups of fours and fives populate a dozen tables to practice foreign languages in a relaxed environment.

Girls looking for jobs with airlines conduct mock interviews in English. Office workers seeking to enhance conversational Chinese chat for hours in Mandarin. Most common of all, college kids looking to raise their English proficiency test marks brush up their comprehension with hand-out materials prepared by the group leader.

There is one condition ― no Korean inside the cafe.

Since opening in 2008, ifriends has blossomed into a cafe, a banquet hall, a classroom and most of all, a foreign language immersion center.

The goal, says co-owner Sohn Ju-youn, is to offer a comfortable place to chat in foreign languages.

“People feel uncomfortable practicing their English in other cafes when there are so many of us who want to speak English, Japanese, Chinese, Spanish, you name it, to get jobs and perform better at work,” the former office worker said.

“A lot of the first comers become regular members once they are placed into a particular group. They come here to talk, so people socialize easily and hang out for drinks afterwards.”

Crowds help themselves to unlimited amounts of coffee and tea from an espresso bar for an entrance fee of 5,000 won ($4.40). The cafe does not charge customers for organizing study groups or conversational sessions where a native speaker is hired to lead the group.

“On Wednesdays we have a job hunting group where members share recruitment information and practice answering interview questions in English. It feels great when some of them come back for a party after they get an offer,” Sohn said.

The study groups, running seven days a week, ranges from TOEIC-speaking, translation sessions to advanced Japanese. The cafe gives small incentives to leaders who volunteer to head their group.

Moon Hyung-chul, 27, says his participation in the job hunting group for the past three months helped him to ace a corporate job interview where he received an offer.

“I did my undergraduate (degree) at an Australian university so I was quite confident with English to start with. But discussing current affairs with people like me on a regular basis polished my speaking,” Moon said. ◦

Sunday, December 05, 2010

The Miracle Is Over in South Korea. Now What?

South Korea boomed by turning a rural economy into an industrial power. To keep growing, it's going to have to make some fundamental—and difficult—changes


As it welcomes the leaders of the 20 richest nations this week, South Korea is coming to grips with an uncomfortable truth: The stunningly successful economic strategy that put it in position to host such a meeting is nearing the end of its useful life. And replacing it won't be easy.

Fifty years ago, seemingly trapped in poverty and hunger, South Korea began a rapid rise into affluence while also staring down its neighbor, North Korea, which had invaded it just 10 years earlier and continues to threaten it today. South Korea is now the 15th-biggest economy in the world, home of globally recognized companies like Samsung and Hyundai and a model for developing nations.

But the economic strategy that worked so well for so long has run its course. South Korea has essentially reached the level of wealth that it can attain by relying on exports to turn a rural economy into an industrial one. More of its economic output—43%—comes from exporting goods than in any other advanced nation.

"The country is at an inflection point," South Korean Finance Minister Yoon Jeung-hyun said in a speech in July. "Apparently, there is a limit for export industries to create new jobs and added value."

The question South Korea faces now is both simple and difficult: Can it make the necessary changes—economic, political and cultural—that will let it continue its upward path?

To keep growing, economists here and abroad believe, the country will have to make fundamental changes to its hierarchical, male-dominated society—not only bringing more women into the workplace, but also encouraging innovation and entrepreneurship, promoting by merit rather than seniority and opening the door to immigrants.

It will have to reduce the government's pervasive involvement in the economy, a vestige of a time when powerful presidents and cabinet ministers made hard choices about what to do with scarce capital. And it will have to loosen the country's adherence to Confucian-based hierarchies, following the path taken by such neighbors as Japan, China, Hong Kong and Singapore.

In an interview on Friday, South Korean President Lee Myung-bak described the situation in broad terms. "There is a lot of work to do in reforming many of the social institutions or the norms and the practices and traditions we've had in this country for many, many years," Mr. Lee said. "Some of them have been an obstacle to us becoming a more advanced country. There is a need now for us to try to change."

How South Korea confronts its challenges will be watched by dozens of poorer countries that have emulated the country's successful export-led development model, and by middle-income countries, including Taiwan, Saudi Arabia, Israel and Portugal, which are also hitting plateaus in growth and future potential.

Rise and Stall
South Korea's fast rise began in the 1960s under military dictator Park Chung-hee, who directed scarce capital and resources into many of the same industries that made Japan a powerhouse—textiles, steel, autos and electronics. South Koreans rebelled against authoritarian rule in the 1980s and established a constitutional democracy in 1987, but the economy continued to grow rapidly.

South Korea's per-capita income reached $20,000 in 2007, and while the Asian financial crisis in 1997 and 1998 dealt a blow to the country's traditions of lifetime employment and forced its companies to focus more on profits than growth for growth's sake, the disruption to the country's upward trajectory was brief.

Under the surface of that rising prosperity, however, the seeds of trouble were starting to grow.

South Korea's economic growth averaged 4.3% a year over the past decade, down from 6.2% in the 1990s. The country this year will grow around 6%, better than most advanced countries, but that's coming after two years of marginal performance. Economists' forecasts for next year range from 3% to 4.5%.

What's more, the country's growth potential has dropped further in the past 15 years than any other developed country, according to the South Korea Chamber of Commerce and Industry. Its recent study showed South Korea's growth potential—the maximum possible output when all production factors like labor and capital are used—is now about 4% annually and will likely shrink to between 2% and 3% in the next 10 years.

All this is happening in South Korea at a much lower income level than when it happened in Japan, whose development model, laws and culture South Korea mirrors to a great degree. In the late 1980s, when Japan's growth potential fell to 3% to 4%, its per-capita income exceeded $30,000. South Korea's now hovers around $20,000.

Fewer People, More Skills
Part of the reason for the economic stall is demographic: The country simply doesn't have enough people to drive into jobs to fuel growth. At just 1.15 babies per woman, South Korea's birthrate is the lowest of all developed countries. The number of people in the 25-49 age group has already peaked, and around 2017 to 2019 the overall working-age population will begin to contract.

In addition, South Koreans have reached a point where so many people have become educated that fewer apply for lower-paid, lower-skilled jobs. That's left the nation's farms and manufacturers scrambling for labor, at the same time many college graduates spend their 20s waiting for opportunities in large companies and the government.

Park Ju-eun, a student at Hongik University in Seoul, decided to delay graduation for a year after encountering a difficult job market. "These days, no one graduates as scheduled," she says. "Students put off graduation to have a better chance to get hired."

Ms. Park, who is 24 years old and a management major, applied for jobs at 15 companies, but she wasn't invited to interview at any. She'll get her degree next year and, if she still can't get a job, will study foreign languages and take certification tests to build up her credentials.

The model now for South Korea, economists say, should be countries in Europe and North America that developed robust service industries, which absorb highly skilled workers and complement existing manufacturing competence, and embrace more diverse working environments that stimulate invention and creativity.

To get there, South Korea will need to reshape its economy to be driven from the bottom up, rather than the top down, and confront the cultural traditions that are creating work barriers for women and immigrants.

"Korea has to decide whether it will reconstitute itself and stay in the limelight or get ready for a Japan-style sunset," says Jasper Kim, a law professor at Ewha University in Seoul.

A Heavy Hand
No. 1 on the government's to-do list: Stop micromanaging the economy. Such involvement made sense in a country rising from nothing with limited capital and a low level of education. But South Korea is no longer such a place, and the government's hand is widely seen as stifling competition and growth.

Regulations, for instance, say that a company that brews beer in South Korea must be able to produce at least 3.8 million bottles a year, preventing start-up companies from trying to take on the country's two established beer makers. In another area, after an outcry last year over the salaries paid to workers at Korea's privately owned stock exchange, the government took it over and slashed pay.

Government officials acknowledge the problem. But they haven't been able to fix it.

In 2007, South Korea's president, Mr. Lee, campaigned on a promise of economic growth he pitched as the "747" plan—7% annual growth, $40,000 per capita income and the world's seventh-largest economy by 2018. A key element: government downsizing.

Mr. Lee initially set out to privatize about 40 of the country's 400 or so government corporations in hopes of spurring profit-motivated work. By early this year, officials had moved on just one sale—a minority stake in the company that runs the international airport in suburban Seoul. Then, in September, they even stopped that sale in response to political critics.

A similar resistance has arisen when it comes to the government's monopoly of the rates and sale of television advertising. Two years ago, the nation's constitutional court ordered an end to that control, saying it was an illegal monopoly.

The result was that even more government agencies jumped in, wanting to sell advertising or have the power to decide who will. Meanwhile, with government-set TV rates acting as a ceiling to most other advertising, South Korea's media industry accounts for less than 1% of gross domestic product, compared with more than 2% in Japan and 3% in the U.S.

Most visibly, capital-intensive construction projects remain a major tool of influence for South Korea's political leaders, a force that sways both the costs of private development and the land available for projects. Mr. Lee's own megaproject is a $14 billion dredging of four rivers.

This summer, Mr. Lee and his deputies tried to change plans for a $20 billion city that lawmakers had designated as a new home for half of the national government, arguing that the project should be driven by the needs of the private sector. But he lost the battle in parliament. Mr. Lee's second-in-command, Prime Minister Chung Un-chan, an economist who questioned the viability of a government-centric city, resigned over the matter in July. "I felt guilty for failing to prevent the expected waste," he said.

Part of the reason the government's heavy-handed role in the economy is accepted is because it's in line with Korean society's Confucian-rooted belief in the power of hierarchies. That same belief spills over to everyday work. South Koreans routinely defer to people older than themselves, a habit that preserves order but chills interaction and suppresses new ideas.

And the hierarchical tradition is further complicated by the power it assigns to men over women. Until the 1990s, Korean textbooks preached that women should stay at home. Even now, women are routinely encouraged to quit work when they become pregnant. And it was only this April that a judge for the first time held a South Korean company liable in a sexual-harassment case involving a male boss and female subordinate.

Today, only 53% of Korean women work, below the 57% average of all developed countries, a problem that will loom even larger when the labor force starts to contract later in the decade. The average salary for a South Korean woman is about $16,931, just over half the $32,668 average for men, the biggest wage gap among developed countries.

And for the women who do work, opportunities for advancement are stifled by the outsize role that a late-night, male-centric drinking culture plays in business life. In its most extreme form, after-hours socializing takes place in so-called room salons where young female hostesses pour drinks and converse with groups of men, an atmosphere that excludes their female colleagues from opportunities for business deals and networking.

The Unwelcome Mat
The fastest spur to growth would be to welcome more foreign workers and immigrants to the country. South Korea has 557,000 foreign workers, about 2% of its work force of 23 million. That's higher than in Japan, where the number is less than 1%, but well below the 10% of the U.S.

But foreigners can stay only five years at Korean-owned companies, according to work laws. Permanent immigration is extremely rare, though it has grown in recent years for a special category of immigrant: women from other countries, mainly in southeast Asia, who marry the single farmers left in rural areas after young Korean women moved to cities.

Min San-gi, who owns a car-parts company in the city of Suwon, is limited to just 10 foreigners in his factory of approximately 50. His foreign workers will stay the five years with him, but his Korean workers tend to go quickly, sometimes after just a few months or a year. Despite relatively low pay, Mr. Min treats his foreign workers well, and even won an award from a Catholic charity group for his work with immigrants.

Meanwhile, as with other small employers, Mr. Min's company experiences a high turnover rate among his Korean workers who, as part of a dwindling pool willing to do factory work, are seeing more opportunities.

As a result, Mr. Min has essentially allowed his company's growth to be centered elsewhere: Three years ago, he opened a larger factory in Vietnam, where he's had no problems finding a stable work force. "I feel it's a kind of shame to have left Korea," he says.

What It Will Take
Confronting the problems today is more difficult than mustering the will to rise up from poverty was in the 1960s, says Huh Chan-guk, an economics professor at Chungnam University in Daejeon. "We don't have that consistent meeting of the minds with staying power compared to the magnitude of the problems," Dr. Huh says.

For economists specializing in South Korea, the country's growth dilemma has become grist for theorizing; several investment banks recently issued formulas for jump-starting its medium-term and long-term growth.

A study by Danny Leipziger, a professor at George Washington University and a former World Bank vice president, showed that, with enough productivity improvements and greater employment of women and the elderly, South Korea could reach even the 7% growth target Mr. Lee touted in his presidential campaign.

"The future isn't written in stone," Dr. Leipziger says. ◦

Wednesday, December 01, 2010

Book review: The New Korea

When a country can will and work itself out of post-war poverty to become the world’s 15th largest economy, re-invent its closed-door chaebols (conglomerates) to breed competitive multi-national corporations and have its national car brand go from laughing stock to win the coveted 2009 “North American Car of the Year” award, it is time to sit up and notice.

In their book, The New Korea: An Inside Look at South Korea’s Economic Rise, former journalists Myung Oak Kim and Sam Jaffe examined the nuts and bolts of a nation way advanced in technology adoption, strong in its determination to succeed, yet also fiercely nationalistic and wary of Western influences.

What has transpired is a five-part look into the country’s history, economics, trade, industries, society and the parts they play in Korea’s future. Crisp summaries of broad trends are interjected with anecdotal accounts of historical trail-blazers, life stories of ordinary Koreans and its immigrant population, which adds an interesting and personal touch to what might otherwise have been a staid analysis of the global economic powerhouse.

New Koreagives a broad understanding of what the authors call a “prosperous yet often perplexing nation”, exploring questions like: Can Korea compete with low-wage countries like China and India? Will it go on the path of safe, zero economic growth like Japan? Will its closed social structures and government involvement in every technological development hamper its progress towards dynamic growth?

Sharing a painful history

The key to a country’s present is to understand its past. “History is as much a part of the present as it was of the past,” wrote the husband and wife team of Jaffe and Myung. “History, to a Korean, is not what happened. It is who you are, and what you do, why you do it.”

A large part of who Koreans are is defined by a “pain sharing” spirit, which, despite its negative feel, has proven to be an asset. This collective mindset led the people to donate their gold to help pay foreign debt in the 1997 Asian Financial Crisis, and also, to respond to the call for wage freezes, concessions and job-sharing measures in the recent global economic downturn of 2008. They would even roll up their sleeves and turn up in droves to clear up an oil spill voluntarily.

On the other hand, two thousand years of hostilities between the former Silla, Baekje and Goguryeo kingdoms that made up the Korean peninsula has resulted in social prejudice that still exist amongst people in these provinces today. More recently, the Korean War (1950-1953) which killed millions and left many more displaced, has created the deep rift between the capitalist South and the communist North that shows no signs of ending. Germany, the most prominent divided country as a result of the Cold War, in contrast, is celebrating its 20th anniversary of reunification this year.

This divide hovers overhead the Korean peninsula like a dark cloud till today. According to the authors, “All of them have scars that they have passed on to their children and grandchildren.” However, if there is something that the North and South have in common, it is pride in their history of self-reliance that has come about following repeated invasions from the Chinese, Japanese and Mongolian forces throughout history – attempts that can perhaps explain why the country resists opening itself up to foreign influences and elements.

Uzbek bar girls, Nigerian dockworkers

But the homogenous face of Korean society is changing. The authors observe that while foreigners used to come to Korea as “tourists or conquerors”, they are now coming in droves from around the world, seeking job opportunities. Foreign-born residents now number more than one million and account for more than 2% of the country’s population. They range from the Western English teachers to Chinese- and Japanese-Koreans who come for marriage or jobs. Then there are the labourers like “Filipino factory workers, Uzbek bar girls and Nigerian dockworkers”, that work in “3D jobs” or work perceived by the locals to be “dirty, dangerous and demeaning”.

The foreign influx is an upward trend, said the authors. “The flow of foreigners into the country is expected to increase as the country ages and the native workforce shrinks.” Even the chaebols – life-long employers (just like companies in Japan) – are looking outside the country for their top executives. LG Electronics, for example, has recruited several into its top executive ranks; Samsung, the largest chaebol, also went on a “foreign hiring spree” for its executives in 2008.

Gender imbalance adds to the equation. Korean men look to Vietnam and China to find brides as many young women move from farms to cities for a better life; and in the cities, fewer women are marrying.

While Korea seems to be adopting a more open attitude these days, practical inconveniences for the foreigner still abounds. Foreigners in Korea are issued identity cards with five or six digit numbers, whereas locals hold cards with 13 digits. As a result, foreigners’ cards cannot be used for some online transactions.

Foreigners also have to wait at least three months to open a bank account and then another three to use an Automated Teller Machine. Even mobile phones are restricted to one per foreigner. One telephone company even goes as far as to not allow foreigners to sign up for its mobile phone service. “So, while the government advocates a welcoming attitude towards foreigners, more work needs to be done to make that attitude reach down to the level of everyday matters,” the authors wrote.

Steel mills and Ponies

The Korean story is incomplete without remarkable accounts of how its domestic enterprises had been built as well as the feats of engineering and infrastructural projects. When General Park Chung Hee was elected Korea’s president in 1963, he had a dream: Build the steel industry then the road system, then the cars. Naysayers back then said Korea would never be more than a farming economy. They were, of course, proven wrong – many times over.

Park Tae-Joon, an army contemporary of President Park, who had no experience or expertise in steelmaking, took on the challenge and built Korea’s first steel-producing company. In 1973, the first steel sheets rolled out from the furnaces of the Pohang Iron and Steel Company (POSCO). Park and his employees “learned it all from others, while making many visits to Japanese steel plants, which at that time were considered among the world’s best”. By 1992, its factories produced almost 21 million tonnes of crude steel yearly. The company was listed on the New York Stock Exchange two years later. “The company’s plants are considered among the most efficient and modern in the world and can produce steel at US$100 less per tonne than the largest US steel firms,” the authors noted.

Next was the Kyungbu Expressway that runs from Busan to Seoul. Farmer-turned-auto mechanic Chung Ju-Yung’s construction company, Hyundai, won the government contract at a ridiculously low bid of US$649 million (others placed bids as high as US$1.4 billion). More amazingly, Hyundai finished building the tunnel and Highway 1 within two years and four months. And so, the dream was soon to be complete.

Wanting to move beyond being a subcontractor for American car brands, Chung and President Park set their sights on building a real Korean car company. Chung took the hard route, building the company from scratch – with designers from Italy, and a British car executive overseeing the factory’s construction. The “Pony”, became the first Hyundai car to roll off the assembly line in 1976, and this compact family vehicle soon became “the most common car on the Kyungbu Expressway”.

From then on, there was no stopping Chung. He exported the Pony to 30 countries simultaneously (again defying recommendations by his advisers) and launched a “Cars That Make Sense” marketing campaign in North America in 1986. By the following year, some 300,000 cars had been sold in the US, Canada and Mexico. In 2009, Hyundai won the coveted North American Car of the Year award with its Hyundai Genesis, a relative cheap US$40,000 entrant in the lucrative luxury car market.

Soon after, other brand success stories followed. LG, the former Lucky-Goldstar, transformed itself from a manufacturer of unknown cheap commodity goods into “one of the world’s most valuable brands”, surpassing, in 2008, Sony Ericsson (a Japan-Swedish joint venture) as the fourth-largest mobile phone maker in the world. Samsung, a mere “parts supplier” in the electronics industry until as recent as the 1980s, has become the South Korean giant in areas like mobile phones, consumer electronics and semiconductors. The Samsung Group, which is also in construction, ship-building and other key industries, accounts for around 20% of the country’s exports.

Korea, declared Myung and Jaffe, is now recognised as the industrial giant that it had “somehow willed itself to become”, earning its place as one of the four Asian economic “tigers” alongside Hong Kong, Taiwan and Singapore.

Towards Korea 3.0

As the country move towards a new era from its Asian tiger years, some questions are raised: will it continue to stay hungry for progress, wean itself off its high dependence on fossil fuels, improve on its weak environmental record, open up its closed social systems and navigate the choppy waters of volatile relations with the North?

If it can, then it is the authors’ view that the nation can stand alongside the most advanced countries in the world. And rightly so, as it has repeatedly proven that it can compete with the best and the brightest through “sheer will power, hard work, and an emphasis on education and setting ambitious goals.”

What remains is for the former Hermit Kingdom to crawl out of its shell and share its story more effectively with outsiders. “The tools that made Korea 2.0 successful will not necessarily work for Korea 3.0,” Myung and Jaffe concluded. “A centrally planned economy is not the answer to future growth, and neither is a rigid networking and communication system. It is time to shed the Hermit Kingdom label once and for all, and to show the world all that Korea has to offer.” ◦

Saturday, November 27, 2010

How do you solve a problem like Korea?

If ever a ruling elite seemed to justify the Bush-era doctrine of “pre-emption”, it is the Kim dynasty in North Korea. No government anywhere subjects its own people to such a barbarous regime of fear, repression and hunger. And the Kims are complicit in international outrages ranging from murderous terrorism and nuclear proliferation to drug-smuggling and currency-counterfeiting. The present dictator, Kim Jong Il, is apparently not long for this world, and seems to be boosting his 27-year-old son and anointed successor as a victorious warrior. When the elder Kim was himself dauphin, in the 1980s, he earned his spurs through international terrorism.

This week the North waged war for the second time this year with South Korea when it shelled a South Korean island near the disputed maritime boundary, killing two soldiers and two civilians, injuring others and burning a score of houses. In March, when one of its torpedoes sank the Cheonan, a naval vessel, killing 46, North Korea could, albeit implausibly, deny culpability. This time, though the North describes its aggression as retaliation (for a harmless South Korean military exercise), there is no gainsaying its responsibility for one of the most serious incidents since the end of the Korean war in 1953. To add to this dismal catalogue, the latest onslaught came just three days after the revelation that, in defiance of international efforts to curb its nuclear programme, North Korea has developed a sophisticated facility for enriching uranium. That gives it a further potential source of material for bombmaking.

The starting-point for answering the North’s aggression has to be that, in the most basic sense, the Kims will almost certainly get away with only a symbolic return of fire. It is entirely wrong for North Korea to act as it does. But punitive military reprisals against the North risk a spiral of escalation and catastrophic war. Deterrence works badly against a dictator who blithely imposes famine and gulags on his people during peacetime. Even if there are doubts about the efficacy of its tiny nuclear arsenal, North Korea has enough men under arms, and enough conventional ammunition within range of Seoul—just 35 miles (60km) from the frontier—to make war seem very much a last resort.

If war and the threat of war are hardly even options, what can the world do? The best card in a bad hand is to heal the divisions among other countries about how to handle North Korea. That means, in particular, making China see that a tinderbox it has long regarded as a strategic asset has become an appalling liability. China also struggles to control North Korea. But a united front would change the environment that encourages the rogue state’s bad behaviour.

China cannot be blind to the Kims’ bungling and bellicosity, nor welcome their nuclear ambitions. But it has had two worse fears. One is of a rekindled war on the peninsula, which would damage China. The other is of North Korean collapse, with millions of desperate refugees pouring into China and South Korea or even American troops on China’s border. It is as a bulwark against this “instability” that China cossets the Kims. It refused to condemn them even for the sinking of the Cheonan, and this week issued blandly even-handed calls for restraint. It apparently believes that if their only ally abandons them, the Kims might do something really rash.

But they already have. Whatever it says publicly, China must surely see that this regime flirts with war as an instrument of diplomacy and that its desire to shock the world into negotiating with it requires ever greater outrages. Ultimately, this pattern of behaviour threatens the very stability China craves. China’s alliance with North Korea thus undermines not just its image as a global power but also its own interests.

So how to nudge China in the right direction? One possibility is the revival of the six-party forum, chaired by China and involving Japan and Russia. Talks stalled after North Korea forged ahead with its nuclear programme. The Kims would regard a revival as a victory. But talks will eventually have to resume if North Korea’s nuclear ambitions are to be negotiated down. If they also help persuade China to rein in North Korea, that would be a double benefit. ◦

Saturday, November 20, 2010

North Korea's succession

When North Korea’s leader, Kim Jong Il, and his son and newly anointed heir, Kim Jong Un, stepped onto a balcony to watch a display of dancing and fireworks on October 10th, the audience in the square below applauded politely. But as loudspeakers blared recorded cries of “long life, long life”, many did not join in. The Kim dynasty has fixed its succession but its propaganda grip is weakening.

The authorities, normally reluctant to let foreign journalists explore the grimness of what they call “beautiful and modern” Pyongyang, were so excited by Kim Jong Un’s coming out as leader-in-waiting that they let down their guard. More than 70 journalists were suddenly given visas to attend a series of events on October 9th and 10th that afforded the outside world a first glimpse of the man now to be known as the “young general”. They also had rare access to an austere city many of whose citizens suffered hunger earlier this year after a shock currency revaluation in November. The leadership’s attempts to convince them that theirs is a “people’s paradise” are likely to fall on many deaf ears.

Kim Jong Un’s appearances, after more than a year of speculation abroad about his being groomed to take over from his ailing father, were choreographed for maximum political effect. North Koreans saw his face for the first time in a photograph published by the state media on September 30th. This followed his elevation earlier in the week to the rank of general and vice-chairman of the ruling party’s military commission (though not yet to the National Defence Commission, which wields supreme power). Mr Kim, who is in his late 20s, has little, if any, military experience.

A few outings in early October with his father—to an artillery drill, a concert and on an inspection tour of a theatre—were enough to prepare Mr Kim for much bigger audiences and for the world’s media. Foreign journalists saw him for the first time on October 9th at a mass gymnastic performance in a Pyongyang stadium. The next day, he and his father took centre stage at a huge military parade through the city that was broadcast live to the nation. The symbolism was striking: father standing next to son, separated by a couple of paces, on a balcony. Below them a huge gold-framed portrait of a grinning Kim Il Sung, Kim Jong Il’s late father and founder of the dynasty, completed the trinity. The portly, podgy-faced Kim Jong Un, wearing a dark Mao suit, looked the spitting image of his grandfather at a similar age.

After the troops, tanks and missiles had thundered past, the audience waved and cheered with seeming enthusiasm when Kim Jong Il waved at them from the balcony. But at the fireworks and dancing display that evening at the same venue—Kim Il Sung Square—the response was less rousing. A few of the thousands of performers wept (as had a couple of female paratroopers as they passed the balcony during the earlier parade). But little fervour was otherwise in evidence.

The grooming of Kim the younger is only just beginning. His voice has yet to be heard in public (Kim Jong Il’s only got an airing 12 years after he emerged as his father’s successor). But he is likely to get an accelerated initiation. The appearances in Pyongyang seemed partly designed to show that Kim Jong Il, who is 69, remains very much in charge. But the North Korean media did not show what Western hacks clearly saw: the leader holding onto the balcony for support as he walked, left leg clearly limping. After a stroke in 2008, he is believed not to be well.

Another message the authorities apparently hoped to send was that Kim Jong Un will have others to guide him. Military expertise will be provided by Ri Yong Ho, North Korea’s chief of staff, who for much of the parade stood between the two Kims. Kim Jong Il’s brother-in-law, Chang Sung Taek, and sister Kim Kyong Hui will also be crucial figures. The state media said they had joined Kim Jong Un on his recent excursions. The conspicuous presence of a senior member of China’s ruling Politburo, Zhou Yongkang, at the October 10th events was designed to show Chinese support for these arrangements. Kim Jong Il encouraged him to wave from the balcony.

The public will be harder to convince. The parade and dancing were extravagances (staged to coincide with the ruling Korean Workers’ Party’s 65th birthday) that contrasted sharply with daily life in the city. There are a few more cars on the streets these days, many of them Chinese-made. But these are for the elite (perhaps as gifts bestowed by influence-seeking Chinese). There are also a few bicycles (for men only: Kim Jong Il apparently disapproves of women on bikes). But most take rickety public transport or walk.

There is no sign of the “radical improvement” in North Korean living standards that officials once talked of achieving this year. Neon lights blazed in a few places during the journalists’ visit, but foreign residents say that the city is normally dark at night. Power is so intermittent that policewomen (invariably young and pretty) still direct traffic at intersections with traffic lights, which are a very recent innovation in Pyongyang.

An unsupervised visit to a department store (a rare treat for normally chaperoned foreign journalists) revealed Pyongyang’s dearth of consumer culture. In half an hour, your correspondent saw only a trickle of customers and just four items being sold: a pencil, a wind-up plastic frog, a quilt and a golden statuette of a soldier. On the fourth floor a member of staff adjusted a red curtain at a marble shrine to Kim Il Sung. Others watched television, amid swathes of unused floor space.

At a nearby shop, several people milled around a counter selling DVDs—a hint that DVD players are becoming household items. Foreign residents say DVDs from South Korea are helping to spread knowledge of the South’s far greater affluence. Several people also sported mobile telephones. Pyongyang is said to have gained some 200,000 subscribers since the mobile service was introduced a couple of years ago. Most are permitted only to call other North Koreans, not people abroad or even foreign residents.

The city seems to have largely recovered from last November’s revaluation of the won, which permitted only limited amounts of old bills to be exchanged for new ones. From January until mid-February, when the authorities relented and re-allowed transactions in hard currency, commerce almost ground to a halt. It became nearly impossible to buy food except at great expense on the black market. Inflation soared. “When in Rome, do as the Romanians do,” one official assigned to mind foreign journalists kept telling them, oddly. The Kims, mindful of the grisly end of Romania’s Nicolae Ceausescu in 1989, will try to ensure that disgruntled North Koreans do no such thing. ◦

Thursday, November 04, 2010

Gender arbitrage in South Korea

If South Korean firms won’t make use of female talent, foreigners will

Another joyful day at the office.“DO YOU know you have to give everything to become a TV announcer?” These words cost Kang Yong-seok, a member of South Korea’s parliament, his membership of the ruling Grand National Party in July. His insinuation that a woman must sleep her way to the top to work in television embarrassed his colleagues and set off a national debate about sexism.

Working women in South Korea earn 63% of what men do. Not all of this is the result of discrimination, but some must be. South Korean women face social pressure to quit when they have children, making it hard to stay on the career fast track. Many large companies have no women at all in senior jobs.

This creates an obvious opportunity. If female talent is undervalued, it should be plentiful and relatively cheap. Firms that hire more women should reap a competitive advantage. And indeed, there is evidence that one type of employer is doing just that.

Jordan Siegel of Harvard Business School reports that foreign multinationals are recruiting large numbers of educated Korean women. In South Korea, lifting the proportion of a firm’s managers who are female by ten percentage points raises its return on assets by one percentage point, Mr Siegel estimates.

South Korea is the ideal environment for gender arbitrage. The workplace may be sexist, but the education system is extremely meritocratic. Lots of brainy female graduates enter the job market each year. In time their careers are eclipsed by those of men of no greater ability. This makes them poachable. Goldman Sachs, an American investment bank, has more women than men in its office in Seoul.

Only 60% of female South Korean graduates aged between 25 and 64 are in work—making educated South Korean women the most underemployed in OECD countries. That may change, however. Marriage and fertility rates have plunged. There were 10.6 marriages per 1,000 people in 1980, but only 6.2 last year. South Korean women have an average of only 1.15 children, one of the lowest rates anywhere. That has troubling implications for the country, but should help women in the workplace. Firms will have to use all the talent they can find. If they don’t, their rivals will. ◦

Sunday, October 31, 2010

The Global Surge in Currency Reserves


Wednesday, October 27, 2010

Gangnam, South Korea

Gangnam is an administerial district in southern Seoul but actually involves a much more complex social connotation here in Korea.

Gangnam, as opposed to Gangbuk, or north of the Han River, usually refers to three relatively affluent districts: Gangnam-gu, Seocho-gu and Songpa-gu.

The area may mostly be represented by two major keywords: wealth (especially in the real estate section) and education.

The northern districts in Seoul, such as Jongno, had traditionally been the key area of the 600-year-old capital city. The now-prestigious Gangnam land was largely neglected as an agricultural outskirt area until the mid-1960s.

However, since the Busan-Seoul highway and the Gangnam Boulevard were built in the 1960s, the former suburban wasteland became an icon of real estate speculation.

Also, Tehran Boulevard, the major eight-lane road linking Seocho-dong and Samsung-dong, rose as a symbol of business success in the 1980s.

As of the end of 2009, the average market price of Gangnam real estate has multiplied by 500,000 times over the past 50 years, according to Seoul City data.

Its ever-soaring price flinched last year, for the first time since the financial crisis back of 1997, according to Seoul City statistics.

The sudden influx of money also gave birth to the first generation of real estate goldminers, who later bequeathed their wealth to their children, creating a new upper class.

Gangnam’s social connotation as the city’s prestigious core was further reinforced in 2000 when the multipurpose residential building Tower Palace was built in Dogok-dong, Gangnam-gu.

“The initial sense of prestige may have diminished over the years but its residents still usually specify their address instead of describing it as just Gangnam,” said a real estate agent in the area.

“Though its social significance has diminished over the years, Tower Palace still stands as an icon of the so-called Gangnam wealth, often referred to as the Korean Manhattan.”

These economic connotations also led to political influence in the corresponding districts.

In the June local elections, the re-elected Seoul Mayor Oh Se-hoon, who fought a hard battle against his liberal rival Han Myeong-sook, caught up as votes from the Gangnam districts were disclosed late in the night.

His opponents criticized Oh as the “Gangnam mayor,” alluding to his siding with the affluent citizens of the city.

The people of Gangnam are also renowned for their education fever.

Among the 713 Seoul high school students who made it to Seoul National University this year, 292 or 41 percent were from the three Gangnam districts.

Also, the top school districts are there, together with the busiest hagwon streets.

Mothers quite often give up on their career despite their high level of education in order to become a full-time parent, dedicating themselves to the academic management of their children.
Such mothers have been nicknamed “Gangnam ajummas,” largely associated with real estate speculation and overeagerness for their children’s education.

Despite the government’s efforts to curb private education, the education rush persists, much of it taking place at great cost.

With the Gangnam area, especially Gangnam-gu, in spotlight in connection with the G20 summit, many once again reflect on the social and economic significance of “Gangnam” in Korean society.

“Gangnam is very often censured for its exclusive wealth and the resulting prejudices but now hopes to acquire a new reputation as a hot spot representing Seoul,” said an official of the Gangnam District Office. ◦

Saturday, October 02, 2010

U.S. car industry seeking inroads in South Korea

By Howard Schneider
Washington Post Staff Writer
Saturday, October 2, 2010

In the best of all worlds, a U.S. free-trade agreement with South Korea would fling open the doors of that country's million-vehicle-a-year auto market to U.S. models like the Ford Focus or Fiesta, the type of fuel-efficient small cars that Koreans prefer and are central to Ford's corporate strategy.

But in practice, there's no guarantee those extra vehicles would be made at U.S. plants by U.S. workers, rather than at Ford facilities in places such as Chennai, India, or Chongqing, China, where the automaker's footprint is growing.

Debate over the proposed trade treaty, which could be resolved this fall, has boiled down to a battle over automobiles - an industry that South Korea has nurtured into an export powerhouse and the United States is trying to rebuild after a traumatic restructuring and government bailouts. That fight is being waged with graphs and sales statistics - the skimpy penetration of imports into South Korea offered by U.S. companies as proof the country is protectionist, data showing a steady rise in sales of European luxury autos offered by South Korea as proof that it is not.

But there is a deeper reality that is rarely captured in the data, and it could blunt the impact on jobs of any deal the Obama administration is able to strike: the globalized nature of auto production.

Not only has Ford, like other major auto companies, stationed its factories strategically around the world, but the largest U.S. car company, General Motors, has bowed out of the South Korea-U.S. trade debate altogether because it already has access to the market through its ownership of the South Korean automaker Daewoo. GM makes and sells more than 100,000 cars a year through Daewoo and exports hundreds of thousands more to Europe and elsewhere.

"Historically we have built where we sold," said Greg Martin, a GM spokesman. "We sell in Korea and we build in Korea."

Tens of thousands of Chevrolet-branded Aveos come back to the United States each year as imports. It's an odd footnote for GM, considering its largest stockholder - the federal government - is working to temper the country's mammoth trade deficit. GM says its production of Aveos will shift back to the United States soon.

"The net calculation of a Ford or a GM - how they react or expand or alter their production network - it is kind of hard to know," said Matthew J. Slaughter, a professor at the Tuck School of Business at Dartmouth University and a member of President George W. Bush's Council of Economic Advisers. "Free-trade agreements both create and destroy jobs. Exactly in which countries and in which industries is really hard to predict."

Deal made, not ratified

The South Korea agreement was negotiated by Bush but never ratified by Congress. President Obama, who has made its enactment a priority, wants to finalize possible changes with the South Korean government when he visits there in November and then seek congressional approval.

There are issues beyond automobiles on the table, including continued restrictions on U.S. beef exports to South Korea and some trade enforcement matters raised by labor and other groups leery of the trade pacts signed by the United States in the past two decades.

But the debate over cars is considered the key dispute. The agreement would have to clear the House Ways and Means Committee, and its chairman, Rep. Sander M. Levin (D-Mich.), whose district includes northern suburbs of Detroit, insists there be more tangible benefits for U.S. automakers.

South Korea sends more than 400,000 vehicles, mostly Hyundais and Kias, to the United States each year and makes about 200,000 others at U.S. plants. By contrast, the United States exported 5,878 vehicles to South Korea in 2009, according to data from the U.S. Commerce Department.

The U.S. auto market, of course, is roughly 10 times as large as South Korea's. But advocates for the U.S. auto industry say the figures are still disproportionate, and they argue that an array of South Korean policies, including an undervalued currency, give Korean automakers an unfair advantage.

With just seven weeks until Obama is to travel to South Korea, the top trade negotiators from the two countries have yet to meet, and people involved in the discussion say the United States still has not decided what changes it will request of the South Koreans.

Some in the broader business community worry the talks are bogging down over a single industry, putting what they feel are clear gains for the U.S. economy at risk. South Korea is dropping a long list of tariffs under the agreement, including stiff taxes on U.S. agricultural goods. Major U.S. financial, insurance and other firms say the access they expect to gain in South Korea's near-trillion-dollar economy will be a boon.

For the auto industry, the agreement would mean an elimination of tariffs. South Korea has an 8 percent tax on incoming automobiles, compared with the 2.5 percent levy imposed by the United States. The United States would also give up a 25 percent tax on pickup trucks over 10 years - a potential incentive for South Korean automakers to enter a market where Ford in particular has been successful.

Exports vs. imports

Ford officials say the stakes go beyond tariffs. The company says the issue is whether South Korea will meaningfully drop the types of preferential taxes, regulations and other market biases that have created what Ford lobbyist Stephen Biegun calls an "upside down" auto industry. Upward of 70 percent of the cars produced in South Korea are exported, far above the industry norm, he said. Meanwhile, imports account for less than 10 percent of local sales, compared with an average of 40 percent in other developed countries.

While Biegun acknowledged that some of South Korea's more overt forms of market bias have been dropped - owners of imported cars, for example, previously had to declare them on income tax returns, a sign of affluence more likely to trigger an audit - he said the country's meager level of imports proves the market is not truly open.

"We want an opportunity to sell more, and we want it front-loaded," Biegun said. Any benefit they get, we want it leveraged for them to open markets."

But understanding how liberalization by South Korea - and other U.S. trade partners - might translate into American jobs is difficult in an industry where brand names have little connection to country of origin, supply chains crisscross borders and joint international ventures are used to advance research and development.

Just as Chevrolet's Aveo is shipped to the United States from South Korea, Ford's Transit Connect cargo van, for instance, is imported into the United States from Istanbul. (The van is outfitted with passenger seats to skirt the 25 percent tax on trucks that has benefited U.S. truckmakers since the 1960s, and the seats are stripped once the vehicles enter the United States, according to a Wall Street Journal report.)

The North American Free Trade Agreement, meanwhile, has spread automaker supply chains and production throughout the United States, Canada and Mexico, making it difficult to tell how much U.S. content - and how many U.S. jobs - are represented in any given vehicle.

The few thousand cars Ford sells in South Korea - higher-end vehicles such as Tauruses, Mustangs and Explorers - are all manufactured at U.S. plants. In the future, Biegun said, Ford hopes to sell many more of its smaller, mass-market vehicles in South Korea.

It might make sense for Ford to produce the cars next door at the company's facility in Chongqing. But he said that plant is already at capacity.

"I don't know where we would source vehicles over time if it were truly open," he said. ◦

Sunday, September 26, 2010

Seoul Ascending (NY Times)

September 23, 2010

I’m standing with Cho Min-suk, one of Seoul’s foremost architects, atop one of his own skyscrapers, a luxury apartment complex called Boutique Monaco. And it’s only perhaps from here, on high, that one can grasp what is meant by “the Miracle on the Han,” as Seoul, South Korea, is sometimes known. A hundred years ago, the city had fewer than a million people. Today Seoul boasts 23 million, making it by some counts the second-largest metropolitan area in the world.

Cho, 43, whose firm, Mass Studies, focuses primarily on the problem of designing for overcrowded spaces, seems both intellectually thrilled and sociologically concerned by the rapidity of the city’s rise. Pointing to the south side of the Han River, now home to millions of people, he says, “Forty years ago, there was nothing there. Just rice paddies and villages. When I was born, I was practically a third world child. There was a sandy beach on the Han where we would swim. Seoul was flooded during monsoon season, with pigs floating around.”

If “the Miracle on the Han” is a tribute to the rise of South Korea (whose gross domestic product is now the 15th largest in the world), it is also a study in urban development gone awry. To survey Seoul from above, from the wan, smoggy sky to the grim, phalanx-like clusters of apartment towers down to the malls, streets and sidewalks, is to countenance a world of endless grays without respite. The creation of so much housing and functional infrastructure is no doubt a stunning technological accomplishment. But it also can feel suffocating, devoid of green, of spiritual egress, of uplift or creative expression of any sort. As Cho remarks, “It’s the complete failure of urbanism.”

In what might be described as a hundred Bilbaos a-blooming, Seoul’s government has made an inspired decision to commission a retooling of Seoul’s heart, soul and mind, to tear up large swaths of the city and replace them with the best in cutting-edge global design. Like a makeover patient in a salon chair, covered in eye patches, bits of tin foil and skin wraps, the city is a patchwork of mega-construction sites like Daniel Libeskind’s Yongsan International Business District, a 32-million-square-foot multiuse complex that will yield an entire district; a brand-new high-tech, eco-friendly City Hall; and the 30-year Hangang Renaissance Project, whose parks, cultural areas and artificial islands along the Han River banks will create public access to open space and nature where literally none existed. The flagship of Seoul’s design investment is Zaha Hadid’s Dongdaemun Design Plaza, a cluster of biomorphic forms surrounding the old city wall, featuring a museum, library and retail space as well as 323,000 square feet of green space.

It’s too early to say whether the transformation of Seoul, the world’s biggest producer of flat-screen televisions, hand-held devices and cellphones, will produce a sleek, self-possessed and highly livable 21st-century headquarters or an impressive but inorganic white elephant of top-down planning, à la Brasilia — or, as is more likely, something in between. So far, Seoul’s realignment has been impressive enough to garner the prestigious appellation of World Design Capital 2010, a designation conferred by the International Council of Societies of Industrial Design to the city that best exemplifies “design-led development.” The city’s pride in the award is made clear by the number of billboards and scaffoldings bearing the words “World Design Capital.”

While Korea’s future may look bright and shiny, the country has one of the world’s more wretched histories on file: 1,700 years of intense slavery, then repeated brutalizations, first by China; later, during the Japanese conquest from 1910 to the end of World War II; and most recently during the Korean War, when the peninsula served as a scrimmage field for Russian-American aggressions. The country’s entire history, for reasons ranging from necessity, pride, dictatorial government fiat and perhaps habit, seems an endless process of hasty repair and urgent self-transformation.

But statistics tell a story of a populace whose energies have been harvested at an unsustainable rate. Koreans work something like 2,300 hours per year — more than citizens of any other advanced nation. The country also has the highest suicide rate on the planet. Combine that with the tendency for newly wealthy citizens to demand their freedom and individual rights, and what does it add up to?

For me, it felt like the whole place was an adolescent about to turn 18. If the country was the homely nerd from high school, it seems about to become a supermodel. It wasn’t because the powers that be were imposing a sleek, high-tech aesthetic upon the citizens. It seemed more realistic that the culture and its people are just too warm, interesting and weird to keep themselves bottled up any longer.

One afternoon, I met up with the sculptor and artist Chun Sung-Myung and his friend Jae-ryung, an assistant film director. Chun had offered to give me a tour of the older part of town, north of the Han River. Here, the neighborhoods of Insa-dong and Samcheong-dong remain fetching examples of unreconstructed Seoul: pedestrian-oriented, quaint and as redolent of history as anything gets in the city. The larger streets are packed with shops and galleries, while the alleyways are sprinkled with tiny restaurants and houses with pint-size doorways.

Chun told me that long ago, the royal family used to pass frequently through these neighborhoods on their way to the palace. Locals, weary of dropping their loads and hugging the ground to bow before their betters, as dictated by custom, devised the diminutive alleyways so that the royal horses and carriages could no longer pass and disrupt them. The story seems to me to be an apt description of the relationship between Korea’s rulers and its subjects to this day.

“We don’t have a voice like you have in America,” Chun said, sitting down at Minto Communitas, a 24-hour coffee shop with blond wood tables and a Euro-leaning vibe. “We have a lot of people in such a small place, and we have to live together. If the factory is next door, making noise or pollution, you just have to learn to live with it.”

Since World War II, under the military dictatorship through 1980 and then through a democratically elected government, Korea’s politicians have exercised power through the chaebol system, a sort of benevolent oligarchy of corporate cronies — Samsung, Hyundai, Kia, Lotte, LG — who control the lion’s share of economic activity. Samsung, for example, with shipyards, cellphone businesses, electronic businesses, real estate and apartment towers, controls an estimated 20 percent of South Korea’s economic life. If the system lacks the level of transparency and democracy that might be demanded by Western polities, there can be no doubt that it has delivered a level of growth, security, prosperity and social harmony unknown to most of the world.

The price of such carefully guided progress has, for the most part, been the submission of individuality and creativity. “We’re like robots,” said Chun, whose recent artwork runs to sculptures based on his own childlike image, stuck in a silent, mythic process of endless self-mutilation and meditative self-observation. Koreans work, work some more and do not question their government. Conflict — within couples, within families, within society — is uncool. And yet signs are everywhere of a creativity and vibrancy bursting out between the seams of society. In the Minto coffee shop, one of thousands across a city that 15 years ago had almost none, young people gathered to socialize.

While their elders, raised in a third world country, dress in somewhat grim proletarian styles (derby caps, down vests), the younger people in this cafe were dressed in Uggs or Converse high-tops, skintight jeans and baseball caps. They work at Lotte World, the largest indoor amusement park, or at Spaghettia, an Italian restaurant chain: jobs that are more about having fun than rebuilding a country from the brink of starvation, as it was after the war with North Korea.

It’s not that life is less serious for the new generation of Koreans; the life trajectory of the older generation is no longer possible. Land prices have risen so fast that it’s now impossible for many young people in Seoul to move out from their parents’ homes to get married, start a family, live the middle-class dream.

After coffee, we spent some time looking for a road that no longer exists, and I heard Chun and Jae-ryung express a sentiment I would hear continually throughout my visit: “Oh, that building got torn down.” “Oh, I guess that building isn’t here anymore.” For dinner, they took me to Yang Ban Daek Restaurant, a down-home place in a private house for 26 years running — an eternity for modern South Korea. The interior is made mainly of cheap, yellowed linoleum, which I would discover is the litmus test for whether a place was New Seoul or Old Seoul.

“We’ve come so far,” Jae-ryung told me as the waitress set down some 20 small plates of banchan, or appetizers and side dishes, including glass noodles made from potato starch, oyster pancakes, a vegetable pancake, fried zucchini and kimchi. “We’ve jumped ahead so many steps in such a short time. There’s such a void between my mother and I. And in a larger way, because we’ve always had China or Japan or America telling us, ‘Go this way! Go that way!’ I’m not sure we really know what we are. You probably know what we are better than we do, in a way. It’s very hard for us to see it.”

The main dishes came, served in the middle of the table, to be shared — everything is communal here: fried corvine, baby octopus salad, tofu dishes, the tenderest abalone. Then came an obscene dish called sam hap, steamed pork belly with kimchi and fermented skate fish, with gnarly shanks of cartilage. I struggled between the stink of the skate and the toughness of the tendons. And as I digested, I thought that even if Korea does rebrand itself into a sleek capital of technology and design, the food will always serve as a hot line to the deeper soul of Korea: hearty, not so pretty, sometimes strange and almost always satisfying.

Jae-ryung’s openness and willingness to include me in a conversation about her country’s identity reminded me of something Cho, the architect, had told me. In Asia, he said, Koreans are often compared to Irish and Italians. They’re highly emotional, they like to drink, they like to read, they’re very vain, but they’re also very warm. Describing the volatility of his countrymen, Cho explained, “We have what is called a ‘steel pot mentality.’ We boil very quickly and cool very quickly!”

I was reminded of this with the cabdriver who insisted on trying my hand-rolled cigarette, nonchalant about my foreigner germs. I couldn’t think of another country where this might happen — certainly not Japan or Thailand. I thought of this, too, when watching couples in restaurants, cuddling and talking, in a way one also doesn’t see elsewhere in Asia. South Korean culture seemed centered around a kind of togetherness and intimacy that was quite appealing. Seoul seemed proof that Malthus was 180 degrees wrong, that overcrowding and prolonged suffering just make people nicer, warmer and more fun — if a little eccentric.

Who had told me that if I wanted to understand South Korea, I had to understand the opposition underlying the culture. “Austerity is what we like to present of ourselves — disciplinarian, Confucian Chinese-influenced, you know, that’s the cool side, the strict side, with the spartan apartments, which is all about stability and a ticket to middle class,” he said. “But then there’s the shamanistic side. You look at the urban environment, all these crazy signs and this crazy development — it’s more like Taoism. That’s the really lively side.”

One day, Jae-ryung and I took a walk into Euljiro, a neighborhood reminiscent of New York’s Canal Street 30 years ago: lots of trade-oriented shops specializing in sewing machines, digital lighting supplies, AC adapters and so on. A cacophony of advertisements climbed up the building sides four stories high. We ducked into a tiny alleyway, lined with grim-looking machine repair shops, to a door with a small, rusting sign. Jae-ryung was bringing me to see a fortuneteller, a man her mother and grandmother had consulted for decades. I was about to get a glimpse of the old, shamanistic, unreconstructed Korea.

The fortuneteller sat on the floor in a den surrounded by bookshelves overflowing with ancient, dusty consulting charts and books in Braille. The floor was covered in the now familiar yellow linoleum of Old Seoul. The fortuneteller, nearly deaf, nearly blind and wearing sunglasses, shouted as he asked me through clenched false teeth when my birthday was. I told him, and for 10 minutes he squinted into his charts, which he held with one hand, while making calculations on the other hand using an abacus-like device. Having divined my future, he barked out, “You spend too much! You earn little, and you spend too much!” He told me that if I got married in 2010 and let my wife handle the finances, I might have a chance in life. In fact, I would have a family that would last me until I die. He then cried out a final admonition: “You should have become a technician!”

After my encounter with the fortuneteller, I decided to go further into Korea’s shamanistic side, to dig deeper into the culture’s underbelly. I found myself in a five-story bathhouse in the famous foreigner zone in Itaewon, north of the Han. Formerly known as the red-light district, the area still has a couple of streets with transvestites and strip clubs, but it’s quickly becoming gentrified. For South Koreans, bathhouses function like public parks. There were dozens of nooks and side rooms for people to read manga, use the Internet, watch TV, eat and lounge by the hour. It wasn’t the decision to go to the bathhouse that was so exotic — it was the choice of having a full-body scrub. I’d been told it would be painful — “kind of like going to the car wash,” Cho had said. “They just strip you down and skin you. With some rubbery thing, some abrasive thing. You will feel brand-new, like brand-new baby.”

The bathhouse part was delightful. I had been warned that the older men might unabashedly check me out, having never seen a naked Westerner before. No big deal. Then a nearly naked man who looked like an Asian version of Howard Cosell started to scrub me as hard as he possibly could with something like Brillo pads. I kept grunting in pain, but Howard didn’t care. Thirty minutes and 16 dollars later, I was a broken man with weird little scabs all over my body. So much for brand-new baby.

No matter how excruciating the massage was, these old-school, pre-consumer culture pleasures endeared me to the city. My next thought, of course, was how much longer they might last. The city is going to keep changing — and very fast. Today, it’s nowhere near as “cool” as, say, Tokyo or London. And yet it’s impossible to escape the feeling that Seoul is the future. It throbs. As Chun called it, it’s “a 24-7 city,” open late, eager to do business, confident about what tomorrow may bring.

On my last day in Seoul, I had lunch with Kim Min-hee and her colleague, Kwon Mi-sun, two 30-something editors at a popular publishing company called KCC, the Korea Copyright Center.

We sat in a coffee shop in Hong Dae, the neighborhood surrounding Hongik University, a large art school. Kim looked out the window at all the kids and surprised me by saying she’s not sure she wants to have any of her own. “We’ve built this country up so much, and the world is so polluted. I just feel like I’d feel so guilty about leaving a kid on this planet, after what we and our parents have done.” She fake-shrugged, addressing her rhetorical progeny with a wince — “Sorry we polluted everything so much!”

For Kim and Kwon, Korea had reached the limits of traditionally defined “accomplishment.” It kind of seemed like a good idea to let the society relax, download a bit. Nearly everyone I met had a sibling who had or was about to tune out or drop out. Cho’s sister had moved out to the country to live on a farm. Chun and his girlfriend had moved an hour and a half outside Seoul to live in a big warehouse. Who needed the hustle and bustle anymore?

In the past, the most popular books sold by KCC were about success and self-help. South Koreans were never interested in reading about themselves. All they wanted were books from foreigners about how to get ahead and how to become better — at everything. Recently, however, people had become hungry for domestic authors, writing about Korean life, Korean society. Even more surprising, poetry books were becoming popular — with big print and meditative illustrations.

The recent global economic crash had simply sped along the process of disillusionment with growth, Kim said. Ever since the financial crisis, they said, South Koreans had begun seeing the limitations of a world defined entirely by fickle material success. “People in modern Korean life are just going and going and going,” she said. “They finally just want to be able to have a moment of peace!” ◦