South Korean Consumers: Patriotism or Prices

http://www.economist.com/news/business/21639579-locals-fed-up-paying-over-odds-are-shopping-abroad-won-over

WHEN South Korean celebrities, eager to prove their patriotism, swapped their German BMW cars for home-grown Hyundais on television, during the Asian financial crisis in 1998, they rallied the whole nation behind domestic products. To wean South Koreans off their Coke and Pepsi, a local firm launched “815 cola”, commemorating Korean liberation from Japan on August 15th 1945. American trainers were out, and hitherto uncool local brands were in. Hyundai’s financial arm created a “Buy Korea” fund, to get South Koreans to invest in local companies; and in its first three months it attracted more than 12 trillion won (then $10 billion).

However, such appeals to patriotism seem to have run their course, and South Koreans have rediscovered their fascination for all things foreign. What has prompted them to rethink is a growing awareness of how much more they pay for things than foreigners do—and not just because of high tariffs—and how easy it has become to import cheap stuff.

Take cars, for example: in September MotorGraph, a local trade magazine, conducted a poll of 1,800 South Koreans asking them why they hated Hyundai and its sister company, Kia. Almost half said they felt discriminated against in their home market. The Fair Trade Commission, a watchdog, is investigating a complaint from a parliamentarian that Hyundai is selling its new Genesis luxury saloon at a 13m-won markup at home compared with some export markets.

In 2013 Consumers Korea, a lobby group, surveyed how much 60 products cost in each of 15 rich countries. For more than half of them South Korea was in the top five priciest places. It was the third most expensive for Heineken beer, and the fifth for Chanel perfume. But most tellingly, all three South Korean products in the sample were more expensive in their home country than anywhere else.

South Koreans have been paying over the odds, especially for local goods, for decades. In the 1960s Park Chung-hee, a military strongman who oversaw an industrial boom, encouraged the overpricing of local products to subsidise exports, partly by sealing off the country to foreign brands. Even into the 1990s, buying Thai-made kitchenware or stationery from Japan (whose cultural products were banned in South Korea until 1998) was still considered a national betrayal.

Among the first signs that patriotic propaganda was losing its effectiveness came in 2009, when Apple launched the iPhone in South Korea. Samsung fought back by promoting its Omnia 2 mobile as “the pride of South Korea” and local media weighed in with negative reviews of its American rival. Yet Apple went on to seize a quarter of the country’s smartphone sales in one year. More recently, a petition by local grocers last March, calling for a boycott of popular Japanese-branded products, such as beer and cigarettes, flopped.

In the past three years South Korea has implemented a series of trade-liberalisation deals with 50-odd other countries (including the European Union’s member states). As a result of these, Koreans now have more choices than ever. In 2014, for the first time in many years, the value of imported European cars is thought to have exceeded the South Korean carmakers’ combined export earnings. One in ten locals now owns a foreign car, up from about one in 100 a decade ago. 

Remarkably for a nation where anti-Japan sentiment runs high, Toyota’s Camry saloon won the 

2013 Korea Car of the Year Award.

South Koreans have discovered that they can save a fortune by shopping on foreign websites. They are clicking away merrily on Amazon and a Chinese counterpart, Taobao, buying clothes, toys and electronic gadgets, including “Made in Korea” ones. The value of direct buying from overseas doubled to 1.1 trillion won between 2011 and 2013. In 2014 the government doubled the maximum value of goods that can be shipped tax-free into the country from America, to $200, giving direct foreign purchasing a further boost.

The government has recognised that exclusive distribution deals, in which a small number of retailers control all sales of a branded product within the country, are also inflating the prices of some foreign-made goods in local shops. To try to bring down the cost of living, it has simplified online payments and introduced a system in which the customs service authenticates copies of those products imported by other distributors, undermining the exclusivity agreements. That again is increasing the pressure on locally made goods and local retailers.

With more on offer, South Koreans now shop chiefly for value: they are picky, discerning and resent being duped, says Han Sanglin, a business professor at Hanyang University in Seoul. And they are not shy about expressing their views. A group of students recently rode a makeshift raft held afloat only with packets of Korean-branded crisps, in protest at their meagre contents. They derided the puffed-up, near-empty packs as “nitrogen snacks”.

South Korean firms argue that the products they sell to locals are often more sophisticated versions of those they export; and that their prices include delivery, installation and long warranties. But they are having to work harder to stop customers deserting them. Lotte, a big local retailer, will this year start opening a new type of outlet that sells foreign clothes at prices comparable with online shops’.

Having had an easy time in their home market for so long, many South Korean firms must now learn to be competitive. Jun Shin of the Seoul office of McKinsey, a consulting firm, says the country’s successful cosmetics firms are good role models: they have long offered high-quality products at modest prices, and as a result they have managed to keep their foreign rivals at bay.

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South Korean Consumers: Patriotism or Prices

Why South Korea is so distinctively Christian

http://www.economist.com/blogs/economist-explains/2014/08/economist-explains-6

SOUTH KOREA, a dynamo of growth, is also afire with faith. This week Pope Francis will spend five days there, for Asian Youth Day and to beatify 124 early martyrs. About 5.4m of South Korea’s 50m people are Roman Catholics. Perhaps 9m more are Protestants, of many stripes. Yoido Full Gospel Church’s 1m members form the largest Pentecostal congregation on Earth. Belief’s farther shores include the Unification Church, soon to mark the anniversary of its founder Sun-myung Moon’s "ascension". The late Yoo Byung-eun, the shifty and versatile tycoon behind the ferry Sewol which sank in April, killing 304 mostly teenage passengers, had also founded his own sect (and the website God.com, now in other hands); its followers hid him during Korea’s largest-ever police man-hunt.

All this is particularly striking, because Asia is mostly stony ground for Christianity. Spanish rule left the Philippines strongly Catholic, but Korea is less simple. In the 18th century curious intellectuals encountered Catholicism in Beijing and smuggled it home. Confucian monarchs, brooking no rival allegiance, executed most early converts: hence all those martyrs, ranking Korea fourth globally for quantity of saints. Protestantism came later and fared better. By the 1880s Korea was opening up, and the mainly American missionaries made two astute moves: opening the first modern schools, which admitted girls; and translating the Bible into the vernacular Hangul Korean alphabet, then viewed as infra dig, rather than the Chinese characters favoured by literati.

The seeds thus sown incubated under Japan’s rule (1910-45), and have sprouted wildly since. The trauma of Japanese conquest eroded faith in Confucian or Buddhist traditions: Koreans could relate to Israel’s sufferings in the Old Testament (no Chosen jokes, please). Yet by 1945 only 2% of Koreans were Christian. The recent explosive growth accompanied that of the economy. Cue Weber’s Protestant ethic: for the conservative majority, worldly success connotes God’s blessing. But Korea also bred its own liberation theology (minjung), lauding the poor and oppressed. Rapid social change often produces spiritual ferment and entrepreneurs like Moon and Yoo: saviours for some, to others charlatans. Prophet and profit can blur: both men did time for fraud. Even Yoido’s founder, David Cho, was convicted in February of embezzling $12m. But these are rare outliers.

Today 23% of South Koreans are Buddhist and 46% profess no belief. Does this represent scope for Christianity's growth, or incipient secularisation? In 2012 only 52% claimed to be religious, down from 56% in 2005. But the world is now their oyster: only America sends more missionaries. Korean Christians have been seized in Afghanistan, beheaded in Iraq and stopped by their embassy from hymn-singing in Yemen. Many work undercover in China. Some, riskily, help North Koreans to flee: as many as 1,000 have reportedly had their Chinese visas cancelled. Others have a grander ambition, to spread Christianity in the North. In Japanese days Pyongyang was a Protestant hotbed, and now some are back, running the private Pyongyang University of Science and Technology, which since 2010 has been educating North Korea’s future elite; strictly no preaching. Given Korean Christians’ energy and tenacity, it is a sure prophecy that one day the Pyongyang skyline will be as studded with neon crosses as Seoul’s. ◦

Why South Korea is so distinctively Christian

Why so many Koreans are called Kim

http://www.economist.com/blogs/economist-explains/2014/09/economist-explains-5

A SOUTH KOREAN saying claims that a stone thrown from the top of Mount Namsan, in the centre of the capital Seoul, is bound to hit a person with the surname Kim or Lee. One in every five South Koreans is a Kim—in a population of just over 50m. And from the current president, Park Geun-hye, to rapper PSY (born Park Jae-sang), almost one in ten is a Park. Taken together, these three surnames account for almost half of those in use in South Korea today. Neighbouring China has around 100 surnames in common usage; Japan may have as many as 280,000 distinct family names. Why is there so little diversity in Korean surnames?

Korea’s long feudal tradition offers part of the answer. As in many other parts of the world, surnames were a rarity until the late Joseon dynasty (1392-1910). They remained the privilege of royals and a few aristocrats (yangban) only. Slaves and outcasts such as butchers, shamans and prostitutes, but also artisans, traders and monks, did not have the luxury of a family name. As the local gentry grew in importance, however, Wang Geon, the founding king of the Goryeo dynasty (918–1392), tried to mollify it by granting surnames as a way to distinguish faithful subjects and government officials.

The gwageo, a civil-service examination that became an avenue for social advancement and royal preferment, required all those who sat it to register a surname. Thus elite households adopted one. It became increasingly common for successful merchants too to take on a last name. They could purchase an elite genealogy by physically buying a genealogical book (jokbo)—perhaps that of a bankrupt yangban—and using his surname. By the late 18th century, forgery of such records was rampant. Many families fiddled with theirs: when, for example, a bloodline came to an end, a non-relative could be written into a genealogical book in return for payment. The stranger, in turn, acquired a noble surname.

As family names such as Lee and Kim were among those used by royalty in ancient Korea, they were preferred by provincial elites and, later, commoners when plumping for a last name. This small pool of names originated from China, adopted by the Korean court and its nobility in the 7th century in emulation of noble-sounding Chinese surnames. (Many Korean surnames are formed from a single Chinese character.) So, to distinguish one’s lineage from those of others with the same surname, the place of origin of a given clan (bongwan) was often tagged onto the name. Kims have around 300 distinct regional origins, such as the Gyeongju Kim and Gimhae Kim clans (though the origin often goes unidentified except on official documents). The limited pot of names meant that no one was quite sure who was a blood relation; so, in the late Joseon period, the king enforced a ban on marriages between people with identical bongwan (a restriction that was only lifted in 1997). In 1894 the abolition of Korea’s class-based system allowed commoners to adopt a surname too: those on lower social rungs often adopted the name of their master or landlord, or simply took one in common usage. In 1909 a new census-registration law was passed, requiring all Koreans to register a surname.

Today clan origins, once deemed an important marker of a person’s heritage and status, no longer bear the same relevance to Koreans. Yet the number of new Park, Kim and Lee clans is in fact growing: more foreign nationals, including Chinese, Vietnamese and Filipinos, are becoming naturalised Korean citizens, and their most popular picks for a local surname are Kim, Lee, Park and Choi, according to government figures; registering, for example, the Mongol Kim clan, or the Taeguk (of Thailand) Park clan. The popularity of these three names looks set to continue.
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Why so many Koreans are called Kim

As succession looms at Samsung, much has to change

http://www.economist.com/news/business/21620195-succession-looms-korean-conglomerate-much-has-change-waiting-wings

Samsung

Waiting in the wings

As succession looms at the Korean conglomerate, much has to change

Sep 27th 2014 | SEOUL | From the print edition

“CHANGE everything except your wife and children.” Thus spoke Lee Kun-hee, the boss of Samsung, two decades ago at an emergency meeting with his senior managers. He wanted the conglomerate (whose name means “Three Stars”, implying that it would be huge and eternal) to stop churning out vast quantities of cheap products and focus on quality, to become one of the world’s leading firms.

Mr Lee (pictured, left) accomplished his mission, probably beyond his wildest dreams. Today the Samsung group, whose 74 companies have estimated annual revenues of more than 400 trillion won ($387 billion) and 369,000 employees, is into everything from washing-machines and holiday resorts to container ships and life insurance. But it is the group’s predominant electronics division that has made its patriarch particularly proud: Samsung has overtaken its Japanese rivals to become the world leader in this industry by revenues, outselling everyone in memory chips, flat-panel televisions and smartphones.

Now Samsung is again at a point in its 76-year history at which much has to change. This will be underlined if, as expected, Samsung Electronics issues a fresh profit warning shortly. The company is not facing existential threats. But the world around it is in flux, and Samsung has to adapt—from top to bottom.

Start at the top. In May Mr Lee, 72 years old, suffered a heart attack. He is still in hospital. Nobody expects him to return as he did in 2010, when he came back after avoiding prison for embezzlement and tax evasion. (He got off with a suspended sentence of three years and was later pardoned so he could remain a member of the International Olympic Committee.)

Mr Lee’s only son, Lee Jae-yong (pictured, right), looks certain to take control of Samsung’s main businesses, and his two daughters will run some smaller ones. The younger Mr Lee, now 46, joined Samsung Electronics in 2001 and ten years later had the title of vice-chairman. Other than a few bare biographical facts, little is known about him. “He is unproven as a manager,” says Chang Sea-jin, a business-school professor and author of “Sony vs Samsung”, a book about the two Asian tech giants. Despite Samsung’s best PR efforts, most Koreans still associate him with eSamsung, a disastrous internet venture.

Those who have met him call him approachable and unassuming—quite unlike his father, who is known for an imperial management style. When the elder Mr Lee visited factories, the red carpet was rolled out and employees were not allowed to look down on him from the windows. In 1995 he had thousands of faulty mobile phones and other devices burned and bulldozed in front of weeping employees.

His son’s more restrained personality may be just what Samsung Electronics, in particular, now needs. To thrive it must attract flighty technical talent and get along with partners. Sent to Silicon Valley to negotiate with Apple, a big customer for Samsung’s chips (and a rival in smartphones), young Mr Lee apparently managed to get along with the often prickly Steve Jobs. He was the only Samsung executive to be invited to Jobs’s memorial service.

The succession is unlikely to happen before another badly needed change is well under way: reforming the group’s Byzantine corporate structure. For example, the group’s holding company, which has just changed its name from Samsung Everland to Cheil Industries, owns 19.3% of Samsung Life, which owns 34.4% of Samsung Card, which owns 5% of Cheil. (See the illustration below for a simplified depiction.)

This corporate hairball has let the Lees exert control over the group with a stake of less than 2%. But for various reasons they are now likely to simplify it, explains Shaun Cochran, a longtime Samsung-watcher at CLSA, a broker. One is that the rules against such circular shareholding structures are being tightened. But the most immediate consideration is the imminent succession—and the resulting inheritance tax. The family will have to pay about six trillion won, according to some estimates, and needs to raise cash.

This also goes a long way towards explaining why Samsung denies any talk of a restructuring: the more it seems a sure thing, the higher the share price and thus the tax bill. Because of the complex ownership structures, some listed companies within the group trade at a discount. When news broke of the older Mr Lee’s heart attack, the shares of Samsung Electronics went up—mainly because a restructuring was seen as more likely.

Denials notwithstanding, the restructuring has clearly begun. Earlier this month Samsung Heavy Industries and Samsung Engineering announced plans to merge. This will be followed by the IPOs of Samsung SDS, a provider of IT services, perhaps as early as November, and of Cheil, which is expected early next year.

The flotation of Cheil is key, argues Mr Cochran. Unlike other group companies it is controlled directly by the Lee children and a family foundation. The listings will not only raise cash, but also make it easier to put values on the group’s cross-shareholdings. So it will be easier to unpick these without attracting lawsuits.

The sooner all this happens, the better: the restructuring is distracting executives from running their businesses. One, in particular, needs attention: smartphones. Not only has it been directly responsible for a big chunk of the profits at Samsung Electronics, and thus the group; it is also the biggest customer for other parts of the business, such as making chips and displays.

Samsung Electronics came from nowhere in the space of a few years, to grab one-third of the market for smartphones in 2012. It did so mainly by being among the first to bet on Android, Google’s popular mobile operating system, and by offering iPhone-like handsets at lower prices than Apple. Yet since then, problems have been piling up, and Samsung’s market share has now slipped to 25%, reckons IDC, a market-research firm. The Galaxy 5S, which Samsung introduced in January, was derided for its cheap plastic casing.

Low-cost makers from China, such as Xiaomi and Huawei, and new European brands such as Wiko and Archos, are attacking Samsung’s market from below. From above, Apple has regained share, and looks set to keep doing so after its recent launch of a “phablet”, a phone with a large screen—a category where Samsung still had an advantage. What is more, the smartphone market is maturing; indeed, in Britain it is already shrinking.

If fighting back were simply a question of making better hardware, Samsung would be safe. This is what it knows best, says Ben Wood of CCS Insight, another market researcher. Since it launched Galaxy Gear, a smart watch, a year ago, it has followed up with five further models. “Samsung is prototyping in public,” says Mr Wood. But smart watches also show why Samsung is in trouble. The Apple Watch, launched at the same time as the bigger iPhone, may look a lot like the Galaxy Gear, but it comes embedded in an ecosystem of software and services, such as a new touchless payment system and sophisticated health-monitoring apps.

Samsung will have a hard time matching such an ecosystem. It does not control Android, and an effort to establish its own mobile operating system, Tizen, seems to have been put on the back burner. Being structurally a hardware company, and one with a conformist Confucian culture, Samsung would surprise many if it suddenly came up with great apps and services.

So, the firm’s best chance is to stick with gadgets, and to try to create ones that consumers love so much that they fly off the shelves, argues Francisco Jeronimo of IDC. But it has to act fast. The fates of Nokia and BlackBerry (which made another attempt at a comeback on September 24th by launching a new smartphone, the Passport) show how quickly fortunes can reverse. And Apple sold 10m of its new iPhones, including an updated smaller model, in three days—a number that the Galaxy 5S only reached after 25 days.

In all, the younger Mr Lee has his work cut out for him. Samsung-watchers wonder if he has it in him, but when he takes over he may have to make a “change everything” speech of his own.

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As succession looms at Samsung, much has to change

Korean men are marrying foreigners more from choice than necessity

http://www.economist.com/news/asia/21602761-korean-men-are-marrying-foreigners-more-choice-necessity-farmed-out

IN THE mid-1990s posters plastered on the subway in Seoul, South Korea’s capital, exhorted local girls to marry farmers. Young women had left their villages in droves since the 1960s for a better life in the booming city. Sons, however, stayed behind to tend family farms and fisheries.

The campaign was futile. Last year over a fifth of South Korean farmers and fishermen who tied the knot did so with a foreigner. The province of South Jeolla has the highest concentration of international marriages in the country—half of those getting married at the peak a decade ago. In those days, the business of broking unions with Chinese or South-East Asian women boomed, with matches made in the space of a few days. Not long ago placards in the provinces sang the praises of Vietnamese wives “who never run away”. Now, on the Seoul subway, banners encourage acceptance of multicultural families.

They are expected to exceed 1.5m by 2020, in a population of 50m. That is remarkable for a country that has long prided itself on its ethnic uniformity. But a preference for sons has led to a serious imbalance of the sexes. In 2010 half of all middle-aged men in South Korea were single, a fivefold increase since 1995. The birth rate has fallen to 1.3 children per woman of childbearing age, down from six in 1960. It is one of the lowest fertility rates in the world. Without immigration, the country’s labour force will shrink drastically.

The government is the biggest enthusiast for a multi-ethnic country. Its budget for multicultural families has shot up 24-fold since 2007, to 107 billion won ($105m). Some 200 support centres offer interpreting services, language classes, child care and counselling. School textbooks now include a section on mixed-race families. And in 2012 mixed-race Koreans could join the army for the first time. When four Mongolians working illegally in South Korea pulled a dozen Korean colleagues from a fire in 2007, locals urged the government to grant them residency (it did).

Still, assimilation remains elusive. Four in ten mixed-race marriages break down in the first five years, according to a survey by the Korean Women’s Development Institute, a think-tank. In 2009 almost a fifth of children from mixed-race households who should have been in school were not. Many mothers have limited Korean. And discrimination lurks.

The government is now tightening up the marriage rules. Last month two new requirements came into force: a foreign bride must speak Korean, and a Korean groom must support her financially. Koreans are now limited to a single marriage-visa request every five years.

Critics say making marriage more difficult will only serve to speed up the greying of the workforce. The pool of eligible women will shrink, says Lee In-su, a marriage broker in Daegu in the south-east. Most foreign brides come from rural areas lacking language schools. Meanwhile, competition for brides from China, where men also outnumber women, is fierce.

In fact, the number of Korean men taking foreign brides is dropping, from 31,000 a year in 2005 to 18,000 last year. And nine-tenths of matches are now urban, says Mr Lee. Vietnamese girls no longer want to languish in the Korean countryside, says Kim Young-shin of the Korea-Vietnam Cultural Centre in Hanoi, Vietnam’s capital. They like watching Korean dramas and listening to K-pop—urban pursuits.

As for Korean clients, says Lee Chang-min, a broker in Seoul, they are increasingly better educated and better-off; some are among the country’s top earners. Many are simply on lower rungs of the eligibility ladder in a culture captivated by credentials, whether in looks, age or family connections.

Others, Mr Lee says, are wary of the stereotype of the doenjangnyeo (a disparaging term for a class of Korean women seen as latte-loving gold-diggers). They prefer a wife who can assume a more traditional role than one many Korean women are nowadays willing to play. These men, the brokers lament, are now more likely to be introduced to their foreign wives through friends than through brokers. Perhaps a modest win for melting-pot Korea after all. ◦

Korean men are marrying foreigners more from choice than necessity

Seoul’s Tech Startups Look Overseas

http://origin-www.businessweek.com/articles/2013-11-04/seoul-s-tech-startups-look-overseas

South Korea’s dominant chaebols—giant family-run conglomerates that include Samsung (005930:KS), LG (066570:KS), and Hyundai (005380:KS)—generate more than 80 percent of the country’s exports and hire four in five of its graduating college seniors. Chaebols helped to drive South Korea’s transformation quickly and efficiently from agrarian poverty to the world’s 15th-largest economy in a few short decades. Now, though, a growing sense in Seoul is that the old model has lost its sheen. GDP growth slowed to 2 percent in 2012, and unemployment is now rising, especially among recent college graduates.

No one is suggesting that the chaebols’ influence will be eclipsed soon, but “policy leaders realize there needs to be a more diverse economy,” as Tom Coyner, of Soft Landing Consulting in Seoul, puts it. Shortly after taking office in February, South Korean President Park Geun-hye launched the new Ministry of Science, Information-Communication Technology, and Future Planning, which is charged with jumpstarting creative industries and assisting small businesses.

As home to the world’s fastest Internet download speeds, South Korea might seem a natural place for tech startups to thrive. Indeed, Seoul has a nascent startup scene, which benefits from exposure to the country’s tastemaking media and entertainment industries. Korean soap operas play on TV sets inside Chinese apartment blocks and Mongolian yurts, and satirical K-Pop star Psy’s Gangnam Style video became an international YouTube (GOOG) sensation last year.

“Korea is big enough for a local market, but its size also forces you to think beyond,” says David Lee, the 33-year-old founder of Seoul’s Shakr Media, which runs video site shakr.com. He says that many Korean startups, like the country’s media companies, cater first to a domestic market. But because South Korea has just 50 million people, startups concerned about long-term growth need to think internationally from the get-go.

On shakr.com, developers can upload video templates for everything from weddings and children’s birthdays to real-estate sales. A user can insert personal photos into the template and download a low-res video for free or pay about $40 for an HD version. Since the website was launched on May 1, about 40 percent have chosen to pay for the higher-quality version. To date, Shakr has received about $2.4 million in seed funding from domestic and international investors, including Silicon Valley venture firm 500 Startups. Much of Lee’s growth plan centers around real-estate video templates for the U.S. market.

“It’s probably the best strategy to go international as soon as possible, without becoming dependent on the domestic market and inevitably bumping up against, or being subsumed by, the chaebols,” says Coyner, the consultant. He has seen many promising Korean startups sign lucrative but demanding contracts with chaebols, overextend themselves and lose focus, then have to cut back or go bankrupt. “There are plenty of good engineers and ideas in Korea. The problem is how to scale up without being absorbed.” ◦

Seoul’s Tech Startups Look Overseas

Parallel Worlds: North and South Korea

http://www.economist.com/news/special-report/21588197-38th-parallel-separating-north-and-south-koreas-most-important-dividing-line

The 38th parallel, separating north and south, is Korea’s most important dividing line. But it is only one of many, says Simon Cox

ON A RESTLESS night in April 1970, Lee Jae-geun, one of 27 South Korean fishermen aboard a trawler in the Yellow Sea, awoke from a nightmare. He had dreamt that Korea was struck by three titanic waves, each stronger than the last. The final wave swept aside mountains, deluged the country and left the land divided. It was, he thought, a bad omen.

And so it proved. A few nights later a North Korean patrol intercepted his trawler about 50 miles south of the Northern Limit Line, a disputed maritime border between the two Koreas. Armed patrolmen boarded the trawler and abducted its crew. Most of them were repatriated later that year, but the North Koreans had grander designs for Mr Lee, hoping to train him as a spy. It was three decades before he escaped.

The division between north and south remains Korea’s enduring tragedy. It was imposed in 1945 by the Allied powers that liberated the country from 35 years of cruel Japanese rule. In 1950 it was almost erased by a wave of North Korean troops that swept down the peninsula under the command of Kim Il Sung, a Soviet-backed ruler who outlasted the Soviet Union itself. Another wave of troops, mostly American but fighting under the United Nations banner, then reversed the North Korean tide. Eventually the UN forces succumbed to a third wave of Chinese troops which drove them back to the 38th parallel, a latitudinal reference line that still divides the two Koreas. Everybody ended up roughly where they had started.

On land the dividing line is painstakingly demarcated and heavily fortified. But at sea the border is both physically and legally indistinct, dogged by disputes, incursions and abductions. The South Korean government knows of over 500 of its citizens abducted since 1955 who are still missing.
Mr Lee is no longer one of them, but the country to which he escaped is not the one he left behind decades ago. Its economy, politics and culture have all changed beyond recognition. As a teenager Mr Lee had served as an errand boy for Seoul’s police and knew every nook and cranny of the city.

But in the vast metropolis he returned to 30 years later, he “couldn’t tell left from right”, he says.
When he was abducted, South Korea’s income per person was about $2,000 a year (at purchasing-power parity), roughly equal to North Korea’s at the time. As a fisherman, Mr Lee counted as comfortably middle-class. By the time he returned in 2000, South Korea’s income per person had grown almost tenfold (see chart). In 2010 the country became one of only 15 in the world with a GDP of over $1 trillion.

Two years after Mr Lee’s capture, Hyundai began work on a shipyard in Ulsan, Mr Lee’s southern home town. The yard is now the biggest in the world. Its red Goliath cranes hoist walls of steel measuring 20m by 40m in nine dry docks, making vast container ships and sophisticated drilling vessels for customers from 48 countries. Internationally competitive industries like these have helped make South Korea the world’s seventh-biggest exporter of goods.

And not only goods. Instead of the waves that haunted Mr Lee’s dreams, a Korean wave of films, music and soap operas has inundated Asia and begun to spread beyond. South Korea, so long subject to foreign influence, is now influencing others. One of its diplomats heads the United Nations. Lady Gaga wears its fashions. The South Korean rapper Psy created the most-watched YouTube clip ever. Even in Pyongyang, North Korea’s capital, South Korean music and drama circulates widely, if furtively, on memory sticks and DVDs. Youngsters are wearing their hair styled like their Southern cousins.

Back in 1970 South Korea was ruled by Park Chung-hee, whose daughter, Park Geun-hye, now holds the presidency. But in the intervening years the polity she heads has travelled almost as far as the economy. Her father came to power in a coup in 1961, then in 1972 dissolved the National Assembly and introduced a newly authoritarian constitution. His daughter, by contrast, won the presidency last December in a free and fair election, South Korea’s sixth since 1987. She racked up the highest share of the vote since her father’s victory in 1971.

 

Poignant reminder

If South Koreans want to remind themselves of the progress they have enjoyed, they need only look north, where men on average measure up to 8cm less and die 12 years sooner. North Korea’s Kim dynasty is now in its third generation, with power passing in 2011 to Kim Jong Un, who may not yet be 30 (no one is quite sure) but models his gestures and embraces on those of his grandfather, Kim Il Sung. The country’s output of cereals, which collapsed in the mid-1990s, has only just regained the level it reached in 1982. A visiting NGO hoping to improve yields on a collective farm had to dust off agricultural techniques that had not been used in the south for decades. To help its electrical equipment cope with the north’s wild swings in current, it had to order a voltage stabiliser not seen in the south since the 1980s.

In escaping to the south, Mr Lee achieved a personal reunification that still eludes his country as a whole. But he did not find it easy. In the north he had been a mechanic, making ships’ engines, but when he looked for similar work in the south he found that it was now done by machines. Still, his predicament is shared by many older South Koreans who have not managed to keep up with a now much more sophisticated economy.

South Korea does not make best use of these older workers, who constitute a growing proportion of the country’s population. It forces many of them to retire prematurely instead of retraining and re-educating them. By contrast, it overeducates its young, who toil away in expensive crammers and devote years to preparing for the university entrance exam. Families compete with each other in an educational arms race that is almost as ruinous as the military competition with the north. Extra qualifications are a ticket to the best jobs, and the best jobs are still concentrated in the government, the banks and the chaebol (the big family-owned conglomerates).

South Korea’s working-age generation faces a triple burden. It must take care of older people, who are growing in number, younger people, who are expensive to educate, and perhaps eventually North Koreans, who will have to be integrated into the economy if the two Koreas are ever reunified. Daunted by these burdens, many South Korean women are delaying childbirth and having fewer children. The country’s fertility rate has fallen further and faster than in almost any other country. Its population, which surpassed 50m last year, is projected to fall below that number again by 2045.

Young South Koreans feel little connection with those on the other side

Many young South Koreans are trying to forget their ties to the north. Their grandfathers and great-grandfathers were preoccupied with the communist enemy, their fear and loathing kept alive by heavy propaganda during the years of dictatorship. The generation born in the 1960s, known as the 386 generation in homage to the Intel 386 microchip, was equally focused on the north, arguing that anti-communist fervour was making reconciliation and reunification impossible. Today’s southern youngsters, by contrast, feel little connection with the people on the other side of the 38th parallel. They are secretly relieved that for now reunification seems only a distant possibility. They do not burn with hatred for the north, nor do they romanticise it, as some older leftists used to do. They simply want to ignore it. But the north does not allow itself to be ignored. ◦

Parallel Worlds: North and South Korea

Google Jousts With Wired South Korea Over Quirky Internet Rules

http://www.nytimes.com/2013/10/14/business/international/google-jousts-with-south-koreas-piecemeal-internet-rules.html?_r=0

SEOUL, South Korea — South Korea is one of the world’s most digitally advanced countries. It has ubiquitous broadband, running at speeds that many Americans can only envy. Its Internet is also one of the most quirky in the world.
      

A curfew restricts school-age children from playing online games at night; adults wanting to do so need to provide their resident registration numbers to prove that they are of age.

 

Until last year, commenters on the Web were legally required to use their real names. A simple Web search in Korean can be a fruitless experience, because the operators of many sites, including some government ministries, bar search engines from indexing their pages.

 

Travelers who want to go from Gimpo International Airport to the Gangnam neighborhood of Seoul cannot rely on Google Maps. Google Maps can provide directions only for public transport, not for driving, to any place in Korea. Anyone crazy enough to try the journey on bicycle or on foot, directions for which Google Maps provides elsewhere, will be similarly stymied.

 

The highly regulated Internet comes as a surprise to many people, Koreans included, because South Korea is a strong democracy with a vibrant economy seemingly ready for the digital information age.

 

South Koreans were early adopters of Internet games and smartphones. It has world-beating electronics companies like Samsung and LG. But here the Internet is just different.

 

The Korean government has its reasons, most of them well-intentioned. The curfew, for example, was put in place to deal with concerns over game addiction among teenagers.

 

South Korean security restrictions that were put in place after the Korean War limit Google’s maps, the company says. The export of map data is barred, ostensibly to prevent it from falling into the hands of South Korea’s foe to the north, across the world’s most heavily fortified border. Google and other foreign Internet companies say the rule also prevents them from providing online mapping services, like navigation, that travelers have come to rely on in much of the rest of the world.

 

The Korea Communications Standards Commission, a regulatory panel, blocks material on the Web that it deems objectionable. This can include pornography, the production of which is technically illegal in South Korea.

 

“It’s ironic, in a country that is widely recognized for its advanced digital infrastructure, that there are so many restrictions on the Internet in Korea,” said Kim Keechang, a law professor at Korea University who is writing a book on Internet regulation in South Korea.

 

Foreign Internet companies say the country’s rules prevent them from competing against domestic rivals because they cannot provide the same services they do elsewhere. South Korea is one of the few major markets where Google is not the leading search engine. A South Korean rival, Naver, has the most users.

 

But domestic criticism of the Korean approach to Internet regulation is growing. Civil liberties advocates successfully challenged the rule requiring users of Internet discussion groups to provide their real names, verified by a national identity registration system. A court last year struck down the measure, which was introduced in 2007 to try to curb online bullying after a rash of suicides.

Now the government of President Park Geun-hye is moving to ease some of the Internet regulations.

 

Ms. Park wants to encourage creativity in the South Korean high-technology industry, which is very good at developing hardware like smartphones and television sets but not as good at exporting software and services. Critics say the different rules that South Korean companies have to play by limit their ability to think in a worldly fashion.

 

In September, the government promised to ease the restrictions on online mapping services. The National Geographic Information Institute, part of the Ministry of Land, Infrastructure and Transport, said it would make an official English-language digital map available to Internet companies, beginning this month for companies based in South Korea. The ministry said the policy would help foreign Internet companies and to clear up uncertainties over Korean place names.

 

The move comes amid a new flare-up in a longstanding dispute over a group of islets between South Korea and Japan known variously as the Dokdo in Korea, the Takeshima in Japan and the Liancourt Rocks in some other places. (The islands are either in the Sea of Japan or the East Sea, another naming dispute.)

 

For Google and other foreign companies, there is a hitch. They will be permitted to use the map as of next year, on a case-by-case basis. Now, Google adapts its English-language maps of South Korea from the government’s Korean-language maps. Google is permitted to provide directions using public transit systems like the Seoul subway, because train and bus routes and schedules are available through public records.

 

But Google says other map enhancements, like driving directions, traffic information,and indoor floor plans of airports, require the company to process the data at its servers outside South Korea. This would constitute an export of the map data, which has been forbidden until now.

 

Google says the policy change announced by the Ministry of Land does not go far enough. That is because the scale of the new official, English-language map is limited to 1:25,000, which Google says is insufficient to provide details that its Maps users take for granted elsewhere.

 

“Maps at the lower resolution don’t have accurate enough information to guide people and cars through intersections, sidewalks, bike lanes, pedestrian overpasses and many points of interest,” the company said in a statement.

 

Google maintains that the rules are unfair because domestic Internet companies like Naver are able to provide online navigation and other mapping services, even to users outside the country. That is because Naver’s servers are housed in South Korea. For many foreign visitors, though, Naver’s maps are of limited use: they are only in Korean.

 

“We just think any services should be carried out within the framework of the law,” Naver said. “The same laws should apply to all providers of Web map services, domestic or foreign.”

◦

Google Jousts With Wired South Korea Over Quirky Internet Rules

Perfecting the Face-Lift, Gangnam Style

http://mobile.businessweek.com/articles/2013-10-10/plastic-surgery-lifts-south-korean-tourism

Kylie Vu holds up her iPhone to display a photo of her favorite South Korean actress. “I want a chin like hers,” she tells a beauty consultant at the BK Plastic Surgery clinic in Seoul. Vu, 30, budgeted $10,000 for a chin implant and face-lift and traveled more than 1,600 miles from Vietnam, where she manages five kindergartens.

The number of tourists visiting South Korea for cosmetic surgery has increased more than fivefold since 2009, to 15,428 last year, according to the country’s health ministry. Like Vu, many make a beeline for the so-called beauty belt—hundreds of clinics clustered around subway stations in Gangnam, the upscale Seoul neighborhood made famous by Korean pop singer Psy, whose Gangnam Style music video has garnered more than 1.78 billion views on YouTube.

“I’ve had patients from China and Japan since the late 1990s,” says Kim Byung Gun, whose BK Plastic Surgery employs six surgeons, along with 30 interpreters speaking Japanese, Mandarin, Cantonese, Vietnamese, English, and other languages. “It’s grown more rapidly since, because of the staggering demand for plastic surgery among Koreans.” In a 2011 poll carried out by the Seoul city government, 32 percent of respondents said they’d be willing to go under the knife to improve their looks, up from 21.5 percent in 2009. A total of 649,938 cosmetic procedures were performed in South Korea in 2011, according to the International Society of Aesthetic Plastic Surgery, more than 13 procedures for every 1,000 people—the highest rate of any country in the world.

South Korea’s medical tourism industry logged revenue of 487 billion won ($453 million) in 2012, according to estimates from the Korea Tourism Organization. That’s triple the amount in 2009. The government promotes the industry abroad and has set a target of adding about 20,000 jobs over the next four years.

South Korean clinics provide an array of special services for visitors, such as hotel accommodations, airport pickups, and multilingual websites, e-mail, and video consultations. Plastic surgery trips cost an average of $14,000, including air fare and accommodations, according to Lee Joon, marketing director at Seoul TouchUp, a travel agency that books all-inclusive packages.

Growing interest in Korean pop culture is a major factor drawing medical tourists from Asia, even though surgeries often cost more than they do at home, says Kim of BK Plastic Surgery. Koreans typically request operations to Westernize their appearance; patients from other Asian countries want the features of Korean celebrities.

Gangnam, the destination for more than 20 percent of all medical tourists to South Korea, opened a visitor center in July to help visitors choose accredited hospitals. To improve safety and safeguard the industry’s reputation, the government has begun cracking down on hospitals that work with unregistered tourism agencies. The state-run Human Resources Development Service of Korea offers a qualification exam for medical tour operators. (Risks of traveling too soon after surgery include pulmonary embolisms and blood clots, according to the American Society of Plastic Surgeons.)

As she prepared for a makeover modeled on Kim Tae Hee, the South Korean actress who plays the lead in the popular TV drama Love Story in Harvard, Vu was already plotting a return trip to Seoul.

“South Korea’s plastic surgery is known to be the best in the world,” says the Vietnamese visitor, clutching an Hermès handbag. “I’ll probably be back in Korea in six months to get another face-lift.” ◦

Perfecting the Face-Lift, Gangnam Style