Monday, February 02, 2009

Beauty finds a way to buck the recession in South Korea

In tough times people resort to small luxuries to compensate for letting go of big-budget plans or hobbies like traveling.

For example, two of the country's popular cosmetic brands, Amore Pacific and LG Household & Health Care, said recently that their third quarter sales rose 15.6 percent and 29.8 percent, respectively, from a year earlier.

However, it does not hurt to be thrifty in these times, especially if the quality of a product is guaranteed. Such consumer mentality explains the success of a growing number of cosmetic brands that are selling exclusively on home shopping channels. Some of them are selling like hotcakes because, even though they are cheaper at about 100,000 won a kit, their quality is also ensured by those who make them.

Most of these brands are collaborations between top-notch make-up artists and leading local mid-sized manufacturers, including Aekyung Industries Inc. and Enprani Corporation.

One such successful TV home shopping cosmetic brand is LUNA, created by a partnership between top make-up artist Cho Sung-ah and Aekyung Industries Inc., a well-known home, health and beauty goods production company. LUNA, launched in 2006, is also the first to tap that particular market.

"LUNA was top-ranked in sales among all products sold on GS Homeshopping during the last year. We sold more than 400,000 cosmetic sets," said a spokesperson for GS Homeshopping.

SEP (Simple, Easy and Perfect) joined the market early last year, but is quickly catching up with LUNA. SEP was established by leading make-up artist duo Son Dae-sik and Park Tae-yoon with cosmetics company Enprani Corp.

"Through combining the experience of Son and Park and Enprani's expertise in cosmetics production, we have created a nice teamwork which is appealing to women in their 20s," said an Enprani spokesperson.

Both LUNA and SEP emphasize their convenience and simplicity. Besides the instructions that are enclosed in their products, which often come in complete sets, consumers can catch demonstrations by the make-up artists themselves on TV.

Instead of just selling the products to the consumers, the artists aim at enabling ordinary women to do their make-up well and fast, the Aekyung official said.

"Basically, a set enables beginners like me to finish make-up by just following the guidelines. The kit has everything I need," said Lee Na-yeon, a 24-year-old student.

These brands have also been timely in presenting seasonally suitable products while challenging standard cosmetic products by coming up with unique items.

Under the concept of "Noble Make-up," a trend young Korean women are avidly following nowadays, Son and Park duo have recently presented a cosmetics kit that includes mineral loose powder foundation. CJ Homeshopping sold over 70,000 of them translating into over 7 billion won in sales.

LUNA also has been constantly renewing its line-up of products according to different themes, such as "Baby-face" "Small face" and "Three-dimensional."

"The kit keeps evolving as time passes, adapting to the consumers' needs," said Yoo Hye-mi, 27.

Some items from LUNA have received wild responses from buyers for their creativity. They include "Brush Foundation," a foundation that has a brush attached to it and "Cheek & Eye Print," a stamp-like blush and eye-shadow shaped like those of the cheek and the eye.

LICHT, created by model/actress Byun Jung-soo and KAREN, launched by popular make-up artist Kim Sun-jin, were also introduced on CJ Homeshopping last year and have been enjoying robust sales.

http://www.koreaherald.co.kr/NEWKHSITE/data/html_dir/2009/02/03/200902030063.asp

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Korean Economic Statistics (Jan 2009)


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Sunday, February 01, 2009

Drifting the Hyundai Genesis - 2009 Super Bowl Shoot


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Wednesday, January 28, 2009

"Touch the Future" ad from Invest Korea



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Data points to bigger economic crash in South Korea than 1997

Korea's latest economic indicators are plummeting faster than they did during the 1997-98 Asian financial crisis, raising alarm that the current economic downturn could be worse, government data showed yesterday.

After the September debacle on Wall Street, the global financial crisis put Korea's output, exports and consumption into a downward spiral in November, and sapped jobs in December, according to data from the Ministry of Strategy and Finance, the National Statistical Office and the Bank of Korea.

The data showed that production in the mining and manufacturing industries contracted 14.1 percent in November from a year ago, the worst since the government began compiling such data in 1970. The indicator first swung into the red in October with a 2.3 percent contraction.
The decline of the two monthly figures was steeper than a 0.4 percent contraction in December 1997 and a 7.7 percent contraction in January 1998.

Industry watchers attribute the quick contraction to worse-than-expected exports.
Exports, the main pillar of the Korean economy, dropped 19.5 percent in November and further plummeted an estimated 30 percent in the first 20 days of January.

According to the Korea Customs Service, local firms shipped an estimated $12.47 billion worth of goods during the first 20 days of this month, compared with $17.54 billion a year earlier.
Factories operated at just 68 percent of their capacity in November, compared with 80.6 percent a year ago, government data showed. It was the lowest level since 65.7 percent in August 1998.

As production of consumer goods decreased, consumption fell to the worst level in more than a decade. The November sales of consumer goods shrank 5.9 percent, the lowest since minus 7.3 percent in December 1998.

The weak exports and domestic demand created in a vicious circle, leading to output cuts and restructuring.

The economy lost 12,000 jobs in December from a year earlier, the first such decline in five years. The employment rate for those in their 20s stood at 57.8 percent in December, the lowest since May 1999, according to the NSO.

No bright spots in almost all economic indicators led the nation to suffer the worst fourth quarter GDP contraction in 11 years. The economy shrank 3.4 percent in the October-December period from a year earlier.

Many firms are forecast to suffer downgrades in their credit ratings, other industry data showed.

According to the credit rating agency Korea Investors Service, 283 Korean firms' annual rating drift rates, or upgrade rates minus downgrade rates divided by the total, swung into the red last year for the first time since minus 51.92 percent recorded in 1998.

The upward trend in credit ratings of Korean firms, which has been continuing since 1999, is now over due to increased credit risks from the last year's financial market distress, credit crunch and the deterioration in the real estate industry, a KIS official said.

Consequently, more than 20 percent of 481 corporate bonds as of Monday last week received BB or lower ratings, because the redemption of those bonds were deemed as somewhat speculative to be guaranteed in the long term, KIS said.

Ssangyong Motors and C&Heavy Industries have been excluded from the ratings evaluation since the two were rated D, or in default. Ssangyong, the Korean unit of Sanghai Automotive Industry Corp. of China has asked court receivership and creditor banks decided to cut off rescue loans to C& Heavy earlier this month. ◦
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Tuesday, January 27, 2009

Woman to appear on South Korean banknote for first time


A woman will appear on South Korean banknotes for the first time, with the issuance of a new 50,000-won ($36) bill, the central bank announced Tuesday.

The front of the bill — South Korea's largest-denominated note — will show artwork by and a portrait of Shin Saim-dang, a well-known artist who died in 1551. Shin was the mother of Yi I, a famous Confucian scholar, and is popularly referred to as a symbol of a "wise mother and good wife."

Some of Shin's artwork already appears on the back of the 5,000-won note; the front of the bill is adorned with a portrait of Yi, known by his pen name Yulgok.

Shin was one of the most respected female figures in Korea's Joseon Dynasty, which ruled from 1392 to 1910.

An official with the Bank of Korea said the choice of Shin was significant because it marks the first time a woman will be featured on the banknotes of South Korea, a traditionally male-dominated society.

The new note has strengthened anti-forgery technologies and will debut before June, said the official who asked not to be named as he was not authorized to speak to media.

The note will be the country's highest-denominated bill followed by the 10,000 won.

The bank decided last week not to issue a 100,000-won (about $70) bill at the government's request.

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Wednesday, January 21, 2009

Taming Korea's Wild Wild Web

In a society where over 97% of households have high-speed broadband access, the Internet has the power to make or break the careers of South Korean politicians and entertainers and to publicize the private lives of common individuals. Live Web-casts of political rallies and street protests, like those this summer against U.S. beef imports, are common. And “netizens” are vigilant in their monitoring of politicians and the press.

But there is a downside. Internet bullying is a major problem. In 2005, netizens so harassed a girl who had not cleaned up after her dog that one newspaper called it “a kind of nationwide cyber lynching.” Today, many Koreans believe that Internet bullying caused the recent suicide of the famous actress, Choe Jin Sil. Korea’s ruling Grand National Party has seized the moment to push for stronger regulation and hopes to pass new legislation to increase Internet regulation by the end of the year.

The proposed legislation 1) requires real-name identification system for all who post comments online; 2) mandates portals to delete “malicious entries” within 24 hours of receiving complaints; 3) requires sites with more than 100,000 visitors, rather than the current 300,000, to verify user identities. Violators—both providers and consumers—can face jail time and/or substantive monetary fines. And the national police has been deployed to “hunt, arrest, and punish” individuals who upload falsities and pernicious rumors.

Advocates believe eliminating anonymity will discourage cyber-bullying and cyber-terrorism, while critics argue that the legislation threatens freedom of speech and privacy.

Many also accuse President Lee Myungbak and his party of seeking to control the Internet to suppress public opposition to his policies, such as the resumption of beef imports from the U.S. and the free trade agreement negotiated with the Bush administration.

But Mr. Lee’s administration is not the first to push for Internet controls. Government efforts began under his predecessor, Roh Moo Hyun, the “progressive” whose election victory in 2002 was due in part to Internet mobilization of supporters. In 2005, both the ruling Uri Party and the opposition GNP supported the first attempt by the Ministry of Information and Culture (MIC) to require real names and resident registration numbers (akin to the Social Security number in the U.S.) for online postings. And Yahoo Korea, Naver, and Daum—the major online outlets—found that a majority of those polled also supported the real name system. The government and people were responding to the proliferation of cyber crimes. And in the fall of 2007, MIC made plans to permit the use of registered mobile-phone numbers or personal identification numbers (PINs) rather than the resident registration number in order to protect Internet users from cyber scams and the “leakage” of personal information.

Certainly, Internet culture in Korea is like the Wild Wild West, chaotic, and something of a free-for-all. It is an extension of “street politics” that has characterized Korean politics for decades. From the 1960s to the 1980s, people spilled out onto the streets to fight for democracy, and the habit of hurling political grievances, opinions and insults in public has continued since democratization. Not only common citizens but elected officials also regularly bombard streets and cyberspace to push their positions and oppose others’. Some Korean legislators have become notorious for using their own Web sites to skewer one another.

Regardless of good intentions to reduce or prevent Internet abuse, the Lee government’s current plans to contain the Internet by making online expression potentially criminal and punitive do not make sense in a modern democracy. Add to that the fact that no government can really control cyberspace. There is already a history of government control over political expression through the Internet. During the closing months of the last presidential campaign, the National Election commission had prohibited online postings that criticized the candidates. The penalty, if found guilty, was up to three years in prison or a 30 million won fine ($33,000). Many in Korea believed that the regulation had suppressed “Internet democracy,” especially in a society where online news access has overtaken traditional print media.

Improving laws on slander, libel and harassment, rather than tightening government control of the Internet, may be a more sensible way to hold online abusers accountable. But civic education, from elementary school on up, about personal responsibility in all areas of public life, not just the Internet, is urgently needed. In Korea (and elsewhere), many Internet users just scream at or condemn others. But blurting out words does not equal democratic participation. Democratic life requires learning how to deliberate on one’s own and with others by consuming and creating information with discipline and discernment. Fostering the deliberative process and constructive debate can make a big difference between democracy and chaos.

http://www.feer.com/politics/2008/november/Taming-Koreas-Wild-Wild-Web

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Tuesday, January 20, 2009

South Korean convicted of marital rape commits suicide

A man who last week became the first person convicted of marital rape in South Korea was found dead in an apparent suicide, police said.

The 42-year-old man was found hanged Tuesday at his home in the southern city of Busan, police officer Kim Jong-moon said.

An initial forensic examination shows that the man, identified only by his surname Lim, killed himself, though no suicide note was found, the officer said.

His death came four days after he was sentenced to a suspended 30-month prison term for raping his 25-year-old Filipino wife at knifepoint.

The case marked the first time a man in traditionally male-dominated South Korea has been convicted of marital rape.

Lim had strongly complained about his conviction, claiming the rape occurred "accidentally" while the couple fought and that their relationship was not good because she was negligent about housekeeping, news reports said.

Reports said the couple met through a marriage broker in 2006.

http://news.yahoo.com/s/ap/20090121/ap_on_re_as/as_skorea_marital_rape_2

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Friday, January 16, 2009

WiBro Turns Into White Elephant

Korea's hope of creating a legacy in wireless technology may come true but for all the wrong reasons.

It wasn't long ago when government officials were convinced that the market was ready for a new kind of wireless network, which they dubbed WiBro, designed to provide high-speed data services to handsets, computers, homes and offices.

Now, just two-and-a-half years into deployment, WiBro, which is short for "wireless broadband,'' is looking more and more like a monumental letdown everyday.

Desperate to save the WiBro, policymakers recently enabled operators to provide voice over Internet Protocol (VoIP) services on their networks and pressed them to increase investment.

The problem with the plan is that these are the same companies that are backing alternative mobile-phone services that so far have successfully fended off WiBro's challenge with ease.

"We have no intention of allowing WiBro to fade out when we believe the technology has great potential,'' said Shin Yong-sub, an official of the Korea Communications Commission (KCC), the country's broadcasting and telecommunications regulator.

"If the home-made WiBro goes international, it will bring new opportunities for Korean high-tech firms in royalty payments and equipment sales, and for this to happen, the local market for the service needs to get bigger. Allowing voice is a good way to achieve that and we need operators to renew their commitment and invest more aggressively,'' he said.

WiBro is designed as a predecessor to mobile WiMAX, which is competing with Long Term Evolution (LTE) technology in the fourth-generation (4G) telecommunications race.

The government has been promoting WiBro aggressively in hopes of allowing local companies to drive the standard and capture the benefits of homegrown intellectual property.

However, in a country that boasts one of the most advanced wireless networks in the world, WiBro looks like a solution without a problem. WiBro's struggles are not just a concern for its operators, but for high-tech giants Intel and Samsung Electronics, who are the biggest backers of WiMAX and had hoped WiBro would provide a convincing reference case against LTE in the standards race.

Now, WiBro seems to be mentioned more by LTE supporters, including Ericsson Vice President Jonas Lundstedt, who, in a recent news conference in Seoul, claimed that the experience in Korea indicates that mobile WiMAX is lagging by years.

KT, the country's biggest telephone company and Internet provider, has just 180,000 customers for its WiBro services, while wireless leader, SK Telecom, which had to be dragged into the market by heavy-handed government policies, gathered 11,000 customers through a half-hearted effort.

Around the time of WiBro's commercial launch in June 2006, the state-run Korea Information Society Development Institute (KISDI) predicted the market for the technology would grow to 12.5 trillion won (about $9.2 billion) by 2012.

KCC now says the goal is to reach 330 billion won by then.

Considering that KT and SK Telecom used 790 and 600 billion won, respectively, to build their WiBro networks and each needs to spend between 200 and 400 billion won more to expand coverage, a 300 billion won-plus market after seven years hardly qualifies as a consolation prize.

KCC officials are betting heavily that VoIP could inject new life into WiBro, which appears particularly vulnerable. Jo Young-hoon, a KCC official, says that VoIP WiBro could provide customers with mobile services that are about 30 percent cheaper than current ones.

"We expect commercial services to start in December this year, when consumers will be able to use dual-band, dual-mode handsets that switch between WiBro and existing mobile-phone networks,'' he said.

The WiBro handsets will be given numbers that start with the 010 prefix, used by all three of the country's mobile-phone carriers ― SK Telecom, KTF and LG Telecom.

SK Telecom, which controls more than 50 percent of wireless customers and currently enjoys leadership in the third-generation (3G) market, doesn't like the scenario one bit.

KCC officials recently "recommended'' SK Telecom executives consider allowing VoIP calls on its WiBro handsets, according to government sources, which has the company reacting as if it was robbed of its wallet.

"We would need to invest at least two trillion won more to complete a nationwide WiBro network, and the cheap calls on WiBro handsets will erode our profits by initiating fierce competition,'' said an SK Telecom spokesman.

The idea of allowing VoIP over the WiBro network was first initiated by KT, which looked ready to tap into the mobile telephony market to compensate for its declining fixed-line revenue.

However, with the company expecting to complete its merger with its mobile subsidiary, KTF, during the first-half of the year, KT is suddenly indifferent.

Although KT plans to introduce the services by the end of the year, its level of commitment remains to be seen, as company officials now claim that WiBro should complement existing mobile-phone services, not cannibalize the customer pool.

http://www.koreatimes.co.kr/www/news/tech/2009/01/133_37712.html

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The arrest of South Korea's financial blogger

FOR several months a blogger going by the name of Minerva, the Roman goddess of wisdom, has proved a severe irritant to South Korea’s government. He made several correct financial predictions, such as the Korean won’s sharp decline against the American dollar, and heaped scorn on President Lee Myung-bak and his finance minister, Kang Man-soo, for their handling of the economic crisis. This made him both a household name and a target for official persecution.

Indeed, since January 10th Minerva, who has been revealed to be an unemployed man, Park Dae-sung, has been in detention. Riot police raided his flat, finding the 31-year-old at his screen, surrounded by financial primers. He is under arrest on charges related to a posting on December 29th, asserting that in order to support the won the finance ministry had ordered financial institutions to stop buying American dollars. The ministry denies this, and prosecutors argue that the post contravened so-called “cyber-slander” legislation, and caused so much currency turmoil that the government had to spend the equivalent of $2 billion to support the won. Civic groups and opposition parties, infuriated by this apparent attack on free speech, have vowed to support him.

It is possible that Mr Park is just one of several Minervas. He denies writing a newspaper article published under his pseudonym. Others question whether a man with no formal economic training can grasp financial arcana (though many journalists claim to manage). But, however many Minervas there are, the government’s sledgehammer to the blogger’s nut does nothing to improve Mr Lee’s perceived lack of a common touch.

Mr Park seems to have fallen foul of both the two main causes of official paranoia: the internet and the financial crisis. It has been alarmed about online activism ever since this helped opposition forces organise protests that brought central Seoul to a halt last year. Over the financial crisis, the finance ministry has urged foreign journalists to “care about the Korean people’s psychology” and not use adjectives like “failing”, “desperate” or “jittery” to describe markets. After all, say officials, press and people must stand together “to tackle this giant monster”. As for the ministry’s denial, traders agree that it did not put out an emergency order, as Minerva claimed. But all of the big banks in the foreign-exchange market, they say, were called and urged to curb their dollar purchases.

http://www.economist.com/research/articlesBySubject/displayStory.cfm?story_id=12947490&subjectID=348963&fsrc=nwl
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Thursday, December 18, 2008

iPhone, BlackBerry to Make Debut in Korea

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

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

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

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

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

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

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Wednesday, December 17, 2008

South Korean actress found guilty of adultery

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

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

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

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

There was no immediate word on any plans for appeal.

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

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

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

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

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

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

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

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

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

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

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

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

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Friday, December 12, 2008

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

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

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

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

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

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

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

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

A letter about kimchi

(click to enlarge)

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Coming to a tiny screen near you

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

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

South Korean Won Closes at 10-Year Low Against Dollar



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Blog a Hotbed of Sex Trade


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

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Monday, October 27, 2008

South Korean captures Skate America women's title
















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

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

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

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The secret to happiness in Seoul



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Free economic zone in Songdo takes shape

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

An epidemic has taken over Korea.

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

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

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

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

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

That is enough people to fill a city.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

South Korea's Economy: Half Finished

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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South's Korea's Export Juggernaut

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Tuesday, October 14, 2008

Korean Star's Suicide Reignites Debate on Web Regulation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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