Universal Studios picks site for South Korean theme park

Universal Studios picks site for $3.1 billion South Korean theme park

Universal Parks & Resorts and South Korea's Gyeonggi province said they have agreed on plans for a $3.1 billion theme park to be built south of Seoul.

The park, to be built in the city of Hwaseong, is set to open in 2012 and will lead to the creation of over 58,000 new jobs, said a press release provided by Universal Parks & Resorts, the operator of Universal Studios theme parks, and Gyeonggi province. The release said the two sides would sign a formal agreement later.

Universal Parks & Resorts, a division of General Electric Co.'s NBC Universal, operates parks in Orlando, Florida, and Hollywood, California, in the United States, as well as in Osaka, Japan.

The parks include attractions based on Universal films including "E.T. The Extra-Terrestrial" and "King Kong," as well as movies made by other studios such as "Spiderman" and "Shrek."

Universal, which first announced plans for a park in South Korea in May, is cooperating with South Korean partners including Posco Engineering & Construction Co., a unit of steelmaker Posco.

Universal Parks & Resorts is also developing Universal Studios parks in Singapore and Dubai.

The location, about 19 miles south of Seoul and also close to its main international airport in Incheon, will be conducive to attracting both South Korean visitors as well as those from nearby China, the release said.Plans are for the facility to also include a convention center, hotels golf courses and an outlet mall, the release said. ◦

Universal Studios picks site for South Korean theme park

North Korea: Capitalist sprouts in unfertile soil

SOME members of North Korea's elite have long drunk the world's most expensive cognac and nibbled caviar. Others in Pyongyang, capital of the world's last Stalinist regime, drive luxury imported cars. Fairness and equality are proudly touted as the hallmarks of North Korea's self-reliant brand of socialism. But with more cash circulating under the country's economic reforms and goods more plentiful, Pyongyang residents are fast becoming consumers. Remarkably, some are also becoming investors in the property market—despite the government's theoretical monopoly on the allocation of housing.

Inspired by neighbouring China, North Korea initiated economic reforms in 2002. Most wage and price controls were dropped and the market was opened to some private commerce. After five years of reform, the new wealth has gravitated mainly to the city's privileged class.
One recent trend is for residents to trade up to bigger, newly built apartments. Under the country's Land Law, passed in 1977, all land belongs to the country and co-operatives, and cannot be bought, sold or even occupied. Yet a North Korean student who studied in China says businessmen are satisfying the demand for up-market housing by obtaining land rights from the local authorities and financing construction with capital from their customers. Chinese experts on North Korea say that the government itself has actually played an active role. Some of its agencies have financed the redevelopment of their properties with capital from their staff. They have then turned a profit by selling the new apartments through the government's housing department.

The student says each apartment covers about 150 square metres (1,600 square feet) and costs as much as $40,000 in the popular Moranbong and Central districts of Pyongyang. Construction is now under way at six or seven sites in the capital's residential areas. The building methods used are outdated, dominated by handmade concrete bricks. A five-storey building can take six months to complete. Because the construction is illegal there are fears that some of the newly built blocks might lose their permits or be confiscated even if they have already been paid for.
Officially, each citizen is entitled to receive 14 square metres of living space. But occupation, rank and “contribution” to the country can make a big difference. A “hero mother” who gives birth to triplets would receive a 200-square-metre home. One 28-year-old woman, who works as a tour guide, boasts of living in the Moranbong district in a 170-square-metre apartment with four bedrooms and two bathrooms, thanks to her father's senior government position. Only married couples are eligible for an apartment from the government, but the guide, who says she is single, claims to be wangling one for herself.

The government probably tolerates privately financed buildings because it is strapped for cash and cannot afford to build housing for its citizens. Many uncompleted, suspended building projects dot Pyongyang's skyline. Cranes gather rust, still perched on top of the buildings. North Koreans hope that foreign capital will help finish the buildings. According to Tigereye62.com, a website covering business in North Korea that is based in China's border city of Dandong, the government is soliciting $50m-60m for Pyongyang's historic Taedong-gang Hotel. The building, where “Dear Leader” Kim Jong Il spent many years with his father, Kim Il Sung, burned down four years ago. The government is also hoping foreign investors will stump up $30m-45m for the partly completed Ryugong Hotel, which was designed to be Asia's tallest, with 105 floors. Construction has been stalled since 1992 because of a lack of funds.

The building mini-boom is good for the tiny cognac-sipping elite. But its members must worry about how the poverty-stricken majority, reared on promises of equality, will react to the sight of their new homes and growing prosperity. ◦

North Korea: Capitalist sprouts in unfertile soil

Chinese imports of TVs, videos unveiling world to N. Koreans

By Blaine Harden
The Washington Post

SEOUL, South Korea — Cheap Chinese TV sets and video players, together with pirated videotapes and DVDs, are lifting the lid on information reaching the North Korean people, according to defectors and experts on Kim Jong-Il's dictatorship.

The unsealing process — underway for nearly a decade and accelerating this year — coincides with the crumbling of North Korea's centralized economy and the rise of street markets.
In those markets, doing business daily nearly everywhere in the North, are cut-rate electronics and knockoff videos that have acquainted a sizable number of North Koreans with the wealth and razzmatazz of the capitalist world.

Watching South Korean soap operas and Hollywood movies inside North Korea, defectors say, is scary, exhilarating and depressing.

"We closed the drapes and turned the volume down low whenever we watched the James Bond videos," said a North Korean woman, who two years ago fled her fishing town in a boat with her husband and son. "Those movies were how I started to learn what is going on in the world, how people learned the government of Kim Jong-Il is not really for their own good."

The woman, 40, who now lives in a Seoul suburb and did not want her name published because her parents are still in the North, said Chinese consumer electronics began to trickle into her coastal region in the mid-1990s, when massive crop failures and widespread famine forced the government to tolerate private trading.

By 2002, when Kim officially approved limited market reforms, she said, she and her neighbors could sell fish for cash. She used that cash to buy, among other manufactured goods from China, a color television and a videotape player.

In addition to Bond movies, she said, she learned about the world beyond North Korea from Hong Kong gangster films and from South Korean television, which she could receive on her Chinese-made TV.

Her son, now 17, said his understanding of the United States — where he hopes one day to live — was formed by watching old videos of "Charlie's Angels." ◦

Chinese imports of TVs, videos unveiling world to N. Koreans

Why Korea has a Bright Future

by Jeremy Siegel, Ph.D.

My 14-hour Korean Air flight on a non-stop Boeing 747 airliner from New York to Seoul took the polar route over Siberia and China right towards the South Korean capital. But when the plane approached North Korea, it turned sharply east to the Yellow Sea and then hugged the coast before veering west to land at Incheon, the sparkling new airport completed in 2001, a year before Korea hosted the World Cup.

The detour is mandated by North Korea which does not allow South Korean aircraft over their airspace, a restriction that adds nearly an hour to the flight. The north-south division has been a central feature of Korea over the past half century, influencing its politics and economics. But the country is now looking forward, seeking its place in Asia’s future amid the growing economic power of China.

I was invited to Seoul by Mr. Park Hyeon-Joo, Founder and Chairman of the Mirae Asset Group, one of Korea’s fastest growing financial companies. The firm was one of the sponsors of a conference honoring the 20th anniversary of the National Pension Service, Korea’s social security system. Korea, in contrast to the US, invests some of its massive $250 billion trust fund in equities and was considering the advantages of an even higher allocation.

An Asian Economic Success
South Korea is enormously successful. Its per capita income is more than 60% of that of the US, up from only 8% in the early 1960s. Seoul is the second most populated metropolitan area in the world (behind Tokyo), with over 22,000,000 residents. It is a modern Asian metropolis with little sign of poverty.

The country has come a long way from the 1998 Asian crisis that spread from South Asia to Korea. At the height of the crisis, the South Korea’s market index, the KOSPI, fell 74% from 1150 to 277. But lately the market has been surging and in October the index surpassed 2000 and Korean stocks now have a market value over $1 trillion.

Despite the recent bull market, the valuation of Korea’s stock market is still quite compelling. The KOSPI index is selling at only 15.5 times this year’s earnings, a valuation that compares favorably with 19 time earnings in Indonesia, 24 in India, and the 50s for the booming Chinese stock market.

Investors looking to invest in the country can buy the iShares MSCI South Korea Index ETF (EWY), which trades on the New York Stock Exchange.

The Korean won is also strong, rising from 2000 to the dollar at the height of the crisis to 900 today, about the same rate it was before the Asian turmoil began. In dollar terms, the Korean stock market has increased more than ten-fold over the past decade.

But despite this recovery, the country is at a crossroads. It is aging more rapidly than the US, and its fertility rate of 1.2 rivals Japan as one of the lowest in the world. Geopolitical risks abound as the division between the North and the South hangs over the country.

Koreans constantly debate the pros and cons of an eventual merger with the North. They are acutely aware of the cost that West Germany incurred in the absorption of East Germany. They rightfully argue that if the South absorbed the North, the cost to South Korea would be greater since North Korea is so much poorer than East Germany was when the Berlin Wall fell. Yet many feel that eventually the two countries will be united.

But there are more immediate challenges. Korea’s manufacturing is being squeezed by cheap labor from China and its electronics giant, Samsung, has been floundering of late. Increased competition is everywhere. For example, the Koreans once dominated the computer game market in China, but are now feeling stiff competition from the Chinese themselves.

Blueprint for the Future
Mr. Park, the far-sighted chairman of Mirae Asset Management, believes that Seoul can make its mark in financial services and become the financial center of East Asia. The financial industry is growing and clearly has an important place in Korea’s future. But to insure future growth Seoul would have to reduce regulation and foster an innovative and dynamic image. Today there are far too many restrictions on short selling, hedge funds, and its financial institutions are small by today’s international standards.

Yet Korea has some decided advantages. Its people are highly educated and the country sends more students to the US than any other Asian nation, including China and India. Recent political trends have turned more conservative and economic growth is being giving top priority. The five year rule of Roh Moo-hyun, a populist who promised to redress the inequalities of wealth and break up monopolies, has not been successful. As a result, Lee Myung-bak, the former Hyundai executive and mayor of Seoul, enjoys a strong lead in the polls for the upcoming presidential election.

A pro-business government is important, but Korea must do more. To achieve economic success, Seoul must retain its foreign-educated students and entice others to make their mark in Korea. Mr. Park’s presentation at the conference emphasized the importance of being a magnet for top talent. His slides showed the vibrant and colorful skyline of Pudong area of Shanghai and compared it to the clean, white, but uninteresting skyline of Seoul.

He is right: Seoul, like other Asian capitals, must compete with Hong Kong, Singapore, Shanghai, and others cities to attract the best people. We Americans should also not become complacent, as many rightfully claim that the world’s financial center is moving from New York to London and the Far East. All cities now compete in the global marketplace.

Korea’s greatest resource is its people as it has a highly educated and motivated workforce. The country rose from poverty to become one of the richest nations in Asia in a few short decades. As long as it stays focused on the future, I see no reasons why Korea cannot continue to be a leader in Asia. ◦

Why Korea has a Bright Future

Status of U.S. Military Bases in Korea

The transfer of U.S. military bases to the South Koreans is on track and going smoothly, U.S. officials said as Defense Secretary Robert Gates and his top military leaders gathered Tuesday for two days of meetings with their Seoul counterparts here.

So far, 23 of the U.S. camps — vestiges of the 1950-53 Korean War — have been transferred as part of a broader plan to have Seoul assume more responsibility for its own defenses and take over its own wartime command by 2012.

While some South Koreans, including a few protesters who met Gates upon his arrival, would like to see the transfer sooner, both sides have agreed that it would take until 2012 to get all of the needed equipment and training in place.

Senior U.S. defense officials traveling with Gates said this week that the South is not yet prepared for the transfer, but is on pace to be ready by 2012.

Still, just 50 kilometers north of here, the guarded, barbed-wire fence — the DMZ — still divides the country from its northern neighbor. Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, visited the border Monday, after he arrived for the defense meetings.

The developments in the North are also a likely topic for the defense officials.

Just this week, north of that DMZ, North Korea began its long-demanded work to disable its nuclear facility at Yongbyon. The move is a result of the six-nation talks, and would be the most significant step the communist country has taken to scale back its nuclear program.

North Korea conducted its first nuclear test in October of last year.

The North has promised to disable the reactor at Yongbyon by the end of the year in exchange for energy aid and other political concessions from the other five nations: the U.S., China, Japan, South Korea and Russia. One of those concessions that has sparked some debate is the possibility that North Korea could eventually be taken off the U.S. list of states that sponsor terrorism.

Removal from the list has long been a goal of Pyongyang, but the North would have to meet requirements stipulated under U.S. law.

Gates said Tuesday that the meetings in Seoul will largely focus on the progress of the military transition here from U.S. to South Korea.

About 29,000 U.S. troops are still deployed in the South as a legacy of the Korean War, which ended in a cease-fire that has never been replaced by a peace treaty. Under the current military arrangements, the U.S. commander, currently U.S. Army Gen. B.B. Bell, would lead all allied forces under a joint command in the event of a renewed conflict.

Another likely topic for the defense officials is the continued deployment of South Korean troops in Iraq. There is a plan to cut the current number — 1,200 — in half and extend the deployment for another year. South Korean President Roh Moo-hyun has said the extension would boost his country's alliance with the U.S., but others in the country are opposed.

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Status of U.S. Military Bases in Korea

A generation of South Koreans ready to abandon their dreams

Like many Koreans of his generation, Lee Dong-sup, who is now in his 50s, grew up as a devastatingly poor country boy in post-war Korea and literally crawled his way to success. “The walk to my elementary school was more like an expedition,” Lee said. “The round trip took four hours because we couldn’t afford the bus ticket.

“My textbooks smelled like kimchi most of the time because we didn’t have Tupperware back then. We carried our kimchi and rice in cheap tins and the juice always leaked. Oh, how I would dream about having a fried egg every night before going to bed,” he said, chuckling.

The country boy, however, dreamed of more than just eggs. He wanted to see the world and make something of himself. He moved to Seoul and enrolled in the economics department of a leading university. He then worked for a conglomerate for some 20 years, while making a comfortable living for his family. Then came the financial crisis and Lee got laid off from his job in 1998 when he was in his mid-40s. He has been starting small businesses ever since, but none of them provided the secure income of his pre-crisis salary.

“It’s O.K. though,” Lee said. “I’m doing well. At least I know that I’ll never be as poor as I was in my childhood.”

For his son, Lee Sun-jae, in his late 20s, the rags-to- riches success story of his father seems like a distant fairy tale. He is not interested in conglomerate riches or entrepreneurial gambles. He thirsts for security, the kind of rock-solid guarantee of employment that his father never attained. Thus, after graduating from university two years ago, he joined thousands of other anxious Koreans in studying for the civil service examination.

“I have to admit I was quite shaken up when my father lost his conglomerate job overnight,” he said.

“He worked so hard for that company. When I was little, I would whine because he was always working. I couldn’t believe how the company, which my father devoted his youth to, could be so cruel as to fire him without a second glance,” he said.

Lee Sun-jae isn’t the only young person in Korea who hungers for the lifelong job security of a civil service position. This year’s data from the National Statistical Office shows that 36.9 percent (196,000) of job-seekers aged 15 to 29, are studying for the seventh or ninth grade civil service examination. This makes government service the preferred career by a huge margin. A distant third, at 16.5 percent, is trying out for a public corporation. Youth unemployment is now at its highest level since the late 1990s. As of last year unemployment among those aged 15 to 29 was 7.6 percent ― double the rate for the rest of the working population. Fighting against these adverse social circumstances, Korea’s youths are being anything but reckless.

“After the monetary crisis, the concept of having a job for life, of devoting yourself to one company, no longer exists,” said Lee Gwang-suk, head of Incruit, a popular employment portal site. “With the country’s shaky economy and youth unemployment, young people want to be civil servants and have the guarantee of a job until they retire.”

Job loyalty has also become less of an issue for job hunters. The days when people committed themselves to a single company, paying their dues and in return, getting a kind of second family are over. It’s hard to believe that Samsung Electronics ran a campaign back in 1991 with the catchline “Coffee break at 3 a.m.” in which employees prided themselves on their long working hours. National Statistical Office numbers show those aged 15 to 29 spent an average of 21 months in their first job. Only 18 percent of them stayed at the same job for over three years. In a book released this August titled “880,000-won Generation,” Park Gwon-il talks about the structural imbalances that have caused this phenomenon. “In Korean society today, the self-made man can’t exist.” he said. “There is an imbalance between different generations. While many of the parents of people who are in their 20s today are self-made men, that generation made a social structure which can’t digest them anymore. As Korean society has stabilized, there are fewer opportunities for someone to recreate their life and become a success on the basis of sheer willpower.”

Not only is there less room for success, but for Jeon Hong-ju, 31, this structural imbalance has made him give up the thought of pursuing his life’s passion. Upon graduating, Jeon began work as a marketing manager for Ales Music, a small independent music label. In his home there are thousands of music CDs. “Although the pay wasn’t very good, I loved working there,” he said. After almost two years at the label, Jeon quit. “The company was struggling to stay afloat. I couldn’t take it anymore. I was anxious about turning 30 and not having a secure job.”

Last year, he took the ninth grade level civil service examination and passed. He now works in a district office in Incheon. “I’m good at adjusting, so this job is fine,” he said with a faint laugh.

“It’s a nine-to-six job. I don’t get paid much but at least I’m not worried about where my next paycheck will come from.”

The situation has been under scrutiny by politicians and the media. Young people who opt for the security of a civil service job are called gongsijok, or members of the public servants’ clan. Presidential candidate Lee Myung-bak made a statement at a forum last month about the disillusioned youth of Korea. “The fact that young Koreans prefer the security of a civil service job proves how generally insecure our economy is. However, I wish they wouldn’t give up their dreams so easily and not be so afraid of risk or change.”

Jeon thinks these kinds of public statements are irresponsible. “For the past decade, the infrastructure has been getting worse and worse,” he said. “Korea before and after the IMF crisis are two different countries. Although we are better fed, we are more worldly and weary. Naturally we are concerned about having a roof over our heads and a decent meal when we are 60 or 70 years old. So what’s wrong with that?”

Jeon’s statement might sound cynical but recent statistics are far from the “dare to dream” scenario which the media, especially the conservative print media, try to create for Korea’s youth. In a recent survey of 1,082 job hunters in their 20s conducted by Job Korea, a large employment portal site, 47.3 percent said that they have contemplated suicide because of the stress of finding a job. Last week, a 25-year-old female, who graduated from a prestigious university in Seoul in 2006, committed suicide after failing the entrance exam for the pharmaceutical department at another university. She left a note saying, “I should have just studied for the civil service examination.” The police officer responsible for the case commented, “She wanted to go to the pharmaceutical department because it was hard for her to get a job after graduating from the humanities department.”

Jeon has also thought about transferring to another department which has a higher percentage of employment among graduates. “I am a social science major so there is a limit to what I can apply for,” he said as he laughed. “I couldn’t apply, for example, to the marketing department at a big conglomerate. I seriously thought of trying to get into the kimchi department of some university, so at least I would have a skill.”

As Lee Dong-sup watches his son study hard for the upcoming civil service examination, he feels guilty. “He used to be very good at art. I feel so guilty that my generation couldn’t provide a better environment for my son and his friends. And here I am, telling stories about my childhood hardships,” he said.

Lee’s son sees it differently, “There is this great quote from ‘Death of a Salesman,’” he said. “Biff Loman addresses Willy, his father, saying that the things he loves in this world, the work, food and the time to sit and smoke are waiting for him the minute he says he knows who he is. And he questions why the hell he is trying to become what he doesn’t want to be. When I was younger and saw my father working till 2 a.m., I wanted to tell my father that. Maybe I’m just as disillusioned as he is but I am not going to go to a company and struggle and just end up getting laid off,” he said.

http://joongangdaily.joins.com/article/view.asp?aid=2881886

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A generation of South Koreans ready to abandon their dreams

North Korea's Warming Trend

Few countries are more troubled than North Korea. After decades of economic isolation, one-party rule, and natural disasters such as floods this spring, it's little surprise that the economy today is no bigger than it was 20 years ago. In 2006 gross domestic product shrank by 1.1%, and it's likely to remain flat this year.

What may be more surprising is that the North appears to be on the brink of a turnaround. Although any improvement in living standards will certainly be modest, the Oct. 2-4 summit between South Korean President Roh Moo Hyun and the North's "Dear Leader," Kim Jong Il, may lead to better relations with the West. Coupled with an international agreement on Oct. 3 to begin dismantling Pyongyang's nuclear facilities, the talks have accelerated foreign interest in the North's plentiful and inexpensive workers. If North Korea opens up, "it will become one of the best investment destinations in Asia," predicts Jang Hwan Bin, senior vice-president at Hyundai Asan, which runs a resort at Mt. Kumgang in the North.

While it's hard to say whether life is really getting better in remote rural North Korea, Pyongyang and nearby areas appeared relatively prosperous on a recent visit. Despite the spring floods, the harvest seems bountiful, with rooftops in the countryside covered with yellow ears of corn drying in the sun. In the cities, loosely regulated private markets are springing up, offering everything from shoes and shampoo to televisions and DVDs.

The Chinese are a big part of the shift. Trade between the two countries is expected to hit $1.7 billion this year, and mainlanders now make up the majority of foreign businesspeople in North Korea. In recent years they have invested more than $45 million—serious money in the North— in retail, food, manufacturing, mining, and more. "Labor in North Korea is very cheap, so it's attractive to investors," says Han Lixin, a native of Dandong, a Chinese city just across the Yalu River from North Korea. Han runs a Web site promoting investment in the North and has signed up 300 Chinese companies as members.

It's not just Chinese businesses that are discovering the North. Visitors from China make up the bulk of tourists in North Korea, and they're almost everywhere: gawking at the towering monument to "Great Leader" Kim Il Sung, listening to students recite revolutionary paeans at the Children's Palace, and playing the tables at the casino in the basement of Pyongyang's Yanggakdo Hotel. "The economy, of course, is not so good, but this country is very interesting," says a smiling thirtysomething Chinese businessman.

South Korea is doing its part, too. Roh agreed to bankroll billions of dollars in infrastructure upgrades in the North. Among the first projects will be a rail link to the North Korean city of Kaesong, a special economic zone where South Koreans now employ 16,000 Northerners making goods ranging from skirts to wristwatches. A second such zone is in the works, and South Korea's Daewoo Shipbuilding & Marine Engineering may invest as much as $150 million in a shipyard in the North. Says Choi Soo Young, an economist at Seoul's Korea Institute for National Unification: "China and South Korea will provide breathing room as Pyongyang tries to dig out of its economic mess." ◦

North Korea's Warming Trend

What's Propelling Korea's Growth?

Investors in South Korea's two best-known blue chips have scant reason for cheer these days. The leading icon of Korean corporate success, Samsung Electronics, appears headed for a third straight year of falling profits as a result of the crash in memory-chip prices. And growth at Hyundai Motor Co. has stalled as Korea's surging currency has erased most of the automaker's cost advantage vis-à-vis its Japanese rivals.

Time to bail out of the Korean stock market? Investors don't seem to think so. The Seoul exchange's benchmark KOSPI index has surged 34% so far this year despite the U.S. credit crunch. The chief attraction: Korea's steel mills, shipbuilders, petrochemical operations, and other smokestack industries. Shares of petrochemical producer LG Chem Ltd. and steelmaker Posco have more than doubled. And Hyundai Heavy Industries Co. (the world's largest shipbuilder, which split from Hyundai Motor Co in 2002) has tripled. Samsung's shares, meanwhile, are down by 13% this year and Hyundai Motor's are up just 5%. "Forget about the Digital Era and fancy marketing," says Park Kyung Min, chief executive at Seoul-based fund manager Hangaram Investment Management. "It's all China and emerging markets."

In the late '90s, Korea's old industrial sector seemed like deadweight when compared with the country's booming technology companies. Its foundries and petrochemical operations epitomized the debt-fueled expansion that wounded Korea in the 1997 Asian foreign exchange crisis. No other country poured as much money into production facilities, and many basic industries became hopelessly oversupplied. Korea in 1998 had nearly 50 million tons of steel production capacity, about double domestic demand. Two sprawling new Korean ethylene plants added to a global capacity glut. And all of Korea's major shipyards built new dry docks even as rivals fretted about oversupply.

These days, though, all that investment is looking mighty smart. With emerging economies booming, the gluts have changed into shortages, and Korea has ready capacity to crank out steel, container ships, and the plastics needed for everything from MP3 players to car bumpers. Shipbuilders Hyundai Heavy, Samsung Heavy Industries (SHI), and Daewoo Shipbuilding & Marine Engineering all now have nearly four years of order backlogs as shippers cater to ballooning trade between China and the rest of the world. And in the first eight months of this year, exports of steel leapt by 26%, ships and heavy machinery such as bulldozers by 25%, and petrochemicals by 22%. "China certainly was a factor in freeing us from debt and starting a virtuous circle of profits and growth," says Kim Tae Han, strategy chief at Samsung Total Petrochemicals Co., an affiliate of Samsung Group now half-owned by French oil giant Total (TOT). Its profit in the first half of 2007 climbed 16%, to $250 million, on sales of $1.8 billion, up 3.3% from a year earlier. Since 1999, the company's exports—mostly to China—have jumped by 240%, to $2.3 billion last year.

That's not to say Korea felt no pain in the intervening years. Companies that were leveraged to the hilt folded or were sold. Hyundai Petrochemical Co., which found itself $2.9 billion in debt after building a new ethylene plant, went into receivership in 2001, while Hanbo Steel went bankrupt in 1997 after racking up $4.4 billion in debt. Yet many factories that failed were so high-tech that no one dared scrap them. Hanbo, for instance, was bought by the company now known as Hyundai Steel in 2004 for $750 million—one of three failing mills Hyundai has taken over since 2000. "The financial crisis was a huge opportunity for us to buy modern facilities on the cheap," says Kim Sang Gyu, business strategy chief at Hyundai Steel, an affiliate of the automaker and now Korea's second-largest steel producer. Sales jumped 38% in the first half, to $4 billion, while exports soared 47%, to $950 million.

With China and the Middle East building basic industries like crazy, Koreans know the current boom won't last forever. But for now, they're happy to fall back on their smokestack companies while the erstwhile stars ride out the turmoil in the U.S. and the developed world. Says economist Lim Kyung Mook at Korea Development Institute, a government-funded think tank: "The economy is much more balanced and healthier now." ◦

What's Propelling Korea's Growth?

Koreas look down tricky road to peace

By Charles J. Hanley

On a July morning a lifetime ago, two generals, one in American khaki, the other in North Korean drab, strode into a makeshift building in a no-man's-land, took their seats at separate tables and signed the papers put before them. They left after just 12 minutes, without a handshake, without a word.

The papers said it all: The warring armies would cease fire that night "in the interest of stopping the Korean conflict, with its great toil of suffering and bloodshed."

The armistice agreement signed in 1953 at Panmunjom, Korea, did stop the fighting, but it didn't start the peace. Now the last generations to remember the "great toil" may see their war truly come to an end, if the two Koreas achieve the peace settlement proposed last week by their leaders.

The vision of two nations at peace — with normal trade, comings and goings, diplomatic ties — falls short of reunification, Koreans' vision of two nations made one. And ending a 54-year-old war-on-hold will mean negotiating through a diplomatic and political thicket grown denser by the decade, and remaking the face of a fortress peninsula.

But a peace treaty is a necessary step toward finally moving beyond the all-devouring 1950-53 war, a conflict that left the two Koreas a wasteland of bombed-out towns and cities, downed bridges, severed rail lines, flattened factories and schools, with millions of homeless, destitute people. Possibly 4 million people perished in the war, scholars estimate. The U.S. military suffered more than 33,000 battle deaths.

In subsequent decades of dictatorship, and then 20 years of democracy, capitalist South Korea rebuilt itself as an economic powerhouse. The northern Democratic People's Republic, meanwhile, became an ever more tightly controlled, impoverished, at times famine-afflicted one-party state.

Through it all, the armistice has largely held, and held within it the seeds of diplomatic trouble, of unanswered questions.

Does peace demand a separate treaty between North and South Korea, along with a broader agreement incorporating their two main wartime allies, China and the United States? What about the 15 other belligerents, nations from Belgium to the Philippines that sent small fighting units to Korea at U.S. behest?

Add this complication: South Korea never signed the armistice, since its then-President Syngman Rhee had hoped to fight on. The northerners consequently maintained they would make peace only with America. Washington, for its part, long contended it, too, hadn't signed the cease-fire — that its generals represented the U.N. command of 17 fighting nations, not the U.S. government.

Korea scholar Selig S. Harrison said such tricky issues were "kicked down the road for later diplomacy" in last week's vague statements at the Pyongyang meeting between South Korean President Roh Moo-hyun and North Korean leader Kim Jong Il.

"The United States has not ever formally said we would be a signatory to a peace treaty," noted Harrison, of Washington's Center for International Policy. But, he said, "It's clear China has to be a signatory, and it's clear the U.S. has to be a signatory for North Korea to go along with this whole process."

The prospect of peace talks raises other, ground-level questions, on a peninsula weighed down by 2 million troops facing each other across a hair-trigger front line, the 2.5-mile-wide demilitarized zone, or DMZ.

A major reduction and redeployment of armed forces would be expected to accompany a peace treaty, and that would be a costly operation. "With huge armies confronting each other, the logistics of actually ending the armistice are very difficult," said Korean War historian Bruce Cumings, a University of Chicago Asian specialist.

And what about the remaining front-line U.S. force in South Korea, 28,000 troops? The bitter legacy of hot and cold wars suggests the North Koreans would demand a U.S. withdrawal as part of any peace. But Cumings cautions against such assumptions.

"The North Koreans told (former South Korean President) Kim Dae-jung and Noh privately they would live with a situation where U.S. troops remain south of the DMZ," Cumings said. The reason: The U.S. would offer a "balance" to the historic Chinese and Japanese influence over Korea.

What's more certain is that peace won't be possible unless North Korea dismantles its nuclear weapons program. That goal looked closer last week with announcement of a major agreement in six-nation disarmament talks.

Much less certain is when Korea, divided by U.S.-Soviet fiat in 1945, might become one nation again.

Pyongyang's Communist leaders resist relinquishing their repressive power, and China is assumed to prefer keeping the communist buffer on its northeast. In 2000, in his opening to the north, former South Korean President Kim de-emphasized talk of one nation, in favor of "confederation."

And at last week's summit, "it's very significant they didn't play up the issue of reunification," Harrison said.

"Reunification is probably another 20 to 25 years away," added Cumings.

Both veteran analysts focused instead on what Cumings called the "unanticipated" substance of north-south economic deals announced last week: a joint fishing zone; a new joint industrial park in the north; joint shipbuilding; an agreement to ship southern rail freight through North Korea to China.

Those are the deals that build trust and may help change Korea after a half-century of no war, no peace.

"North Korea and South Korea are rapidly moving toward reconciliation," Harrison said. ◦

Koreas look down tricky road to peace

Summit between North and South Korea

GLIDING across the border in a 30-limousine convoy, Roh Moo-hyun, South Korea's president, will on October 2nd visit Pyongyang and meet North Korea's capo, Kim Jong Il, for three days of talks. It is only the second summit between the two sides since their estrangement in a civil war over half a century ago.

The first, seven years ago, was between Mr Kim and Mr Roh's predecessor, Kim Dae-jung, who launched a “sunshine policy” towards the North. The meeting generated euphoria among South Koreans and won their president a Nobel peace prize, but produced little else. Kim Jong Il never came to Seoul, as he promised he would. Relations deteriorated between North Korea and the United States, South Korea's protector. And last year the North tested a nuclear bomb, to the region's dismay. As for the summit itself, it later transpired it was bought with cash passed under the table to the Dear Leader.

Mr Roh knows things have changed. The national mood towards reconciliation is subdued, even sceptical. Lacking Kim Dae-jung's charisma, his own political authority is at rock-bottom, after an ineffective presidency; he stands down at the end of the year. The only constant is that the summit's agenda is whatever Mr Kim decides it will be, and that he is not letting on: so, as one of Mr Roh's advisers delicately puts it, the summit is “open-ended”.

While dampening expectations, Mr Roh clearly hopes for a breakthrough in one or more of three areas: in reducing tensions and furthering peace on the Korean peninsula; deeper economic co-operation with the benighted North; and reconciliation of the many thorny issues—such as the tens of thousands of families separated since the Korean war—that might bring the distant goal of unification a tad closer. Above anything, Mr Roh appears to want to come home waving a scrap of paper with “peace” written on it.

Hawks, particularly in America, say that Mr Roh's ambitions risk running ahead of the “six-party” process in which America, China, Japan, Russia and South Korea are hoping to get North Korea to abandon its nuclear ambitions. Too much offered by the South might lead the North to hope for aid without scrapping its nuclear programmes. It is not certain that Mr Roh will even bring up the nuclear issue with Mr Kim. Meanwhile, say some of Mr Roh's critics, peace with the North is a matter for all the former combatants of the Korean war, China and America included.

Mr Roh's men deny there is any risk. The president's hopes for economic co-operation and reconciliation are being entertained only because of progress on denuclearisation, they say; in July, North Korea closed its Soviet-era reactor at Yongbyon and has since promised to declare and disable all its programmes by the end of the year. They argue that it will do the liberal Mr Roh no favours if he returns with a deal that is unacceptable to his successor as president (the clear favourite is Lee Myung-bak, whose right-wing Grand National Party has a harder line towards North Korea). As for economic co-operation, says a close adviser, it has been far too one-sided to date, with North Korea simply taking South Korean money, fuel-oil and rice, much of which finds its way to the armed forces. From now on, the South expects much more—starting with the chance to invest in the North's rich mineral resources and cheap labour. To press home the point, two-dozen business executives will accompany Mr Roh.

Some expect the North to go surprisingly far. Chung-in Moon of Yonsei University, an architect of the “sunshine policy”, argues that decrepit North Korea is on the brink of opening up just as China did three decades ago, because Kim Jong Il recognises that his legitimacy now rests on future prosperity.

But outside help is hard to imagine without progress on the nuclear issue. The United States classes North Korea as an enemy; it also brands the country as a state sponsor of terrorism. Both hobble North Korea's ability to trade. America offers to lift these curses in return for a real disablement of North Korea's nuclear capabilities.

On September 27th the six-party talks reconvened in Beijing. Their outlook was clouded by a mysterious recent Israeli air strike at a Syrian target that some claimed was a North Korea-assisted nuclear facility. North Korea vigorously denies this and American diplomats say they have seen no intelligence confirming it. Negotiators, wanting nothing to distract North Korea from a timetable for denuclearisation, are inclined to gloss over the matter. For the timetable, as it is, involves some quite devilish details.

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Summit between North and South Korea

Former ambassadors endorse FTA with South Korea

orlandosentinel.com/services/newspaper/printedition/monday/opinion/orl-korea1307aug13,0,342690.story

Envoys: Approve free trade with S. Korea
Accord signals U.S. commitment to Asia

James R. Lilley, Donald Gregg, James T. Laney, Stephen W. Bosworth and Thomas C. Hubbard

August 13, 2007

On June 30, U.S. and Korean representatives signed the most significant free-trade agreement since NAFTA -- the U.S.-Korea FTA, known as KORUS. As former ambassadors to the Republic of Korea, we know that KORUS will not only bolster bilateral trade and investment ties but also reinforce our countries' important political and security partnership at a time of dramatic change in Asia.

In dollar terms, the scale of this agreement is enormous. With two-way trade totaling $78 billion last year, Korea is our seventh-largest trading partner. KORUS will effectively become the third-largest free trade area in the world -- exceeded only by the European Union and NAFTA -- and set new standards for bilateral trade agreements. Nearly 95 percent of bilateral trade in manufactured products will become duty free in three years as will two-thirds of U.S. agricultural exports.

Whereas the United States has been one of the world's most open markets, Korea has until recently been one of the most closed in the industrialized world. American exporters of industrial and farm products who have long struggled to compete in Korea, therefore, have much to gain from the elimination of Korea's relatively high tariffs and complex non-tariff barriers.

The agreement also gives important new rights and protections to U.S. investors and service industries. KORUS provides U.S. financial service companies the right to full ownership of banks, insurance companies and other financial businesses in Korea and establishes rules that will allow them to compete effectively. It also provides increased access to U.S. express service companies and expands opportunities for U.S. studios to sell television programs and films to Korea.

The political and strategic arguments for this agreement are equally compelling.

Now the world's 12th-largest economy, the Republic of Korea is a vibrant democracy whose standards in the areas of labor and environmental protection are equal to our own. Korea has provided valuable economic and military support in Vietnam, the Middle East and Afghanistan.

The trade agreement will complement our military alliance, which continues to deter North Korean aggression as we seek to deal with its nuclear-weapons program and build a broader peace on the divided Peninsula. More broadly, KORUS will underscore our nation's commitment to preserve our leadership in the Asia-Pacific region, the world's most dynamic center of economic activity.

The economies of East Asia are rapidly integrating, with such countries as China, Japan, Korea and India now trading with each other more than they are with the rest of the world. Moreover, they are actively pursuing bilateral and regional free-trade arrangements that could leave the U.S. on the outside if we do not remain engaged. The agreement with Korea will help ensure that the U.S. remains an insider as Asian economies continue to grow and join forces. U.S. exporters, service providers and investors will have preferential access to Korea's market and an important base for business with the rest of the region. At the same time, Korea's preferential access to the U.S. market could be a powerful incentive for others in the region, such as Japan, to open their markets to the United States with free-trade agreements as comprehensive as KORUS.

For all of these reasons, we urge Congress to act quickly to approve this agreement when it is ready for submission this fall. We are well aware that certain American industries feel they are not getting all that they desire in terms of KORUS benefits.

However, the overall U.S. economy will benefit hugely from KORUS, and we urge all Americans to support this agreement and not let the pursuit of elusive perfection become the enemy of the good.

For more than 50 years, the United States' political and economic commitment to Asia has contributed to the region's stability and prosperity. Nowhere has our engagement been more positive than with the Republic of Korea, which with our help rose from the ruins of the Korean War to become a vibrant democracy and one of the largest economies in the world. The accord with Korea will strengthen America's relationship with a longtime ally and enhance our presence and influence in the region. We are convinced that America, for its own sake, must remain a leader in Asia. Ratification of this agreement is one way of ensuring that our engagement with the world's fastest-growing region will support our fundamental security and economic interests into the future.

James R. Lilley was U.S. ambassador to Korea from 1986-1989. Donald Gregg was ambassador to Korea from 1989-1993. James T. Laney was ambassador to Korea from 1993-1997. Stephen W. Bosworth was ambassador to Korea, from 1997-2001. Thomas C. Hubbard was ambassador to Korea from 2001-2004. They wrote this commentary for the Orlando Sentinel. ◦

Former ambassadors endorse FTA with South Korea

South Korea's financial markets

For those South Koreans who want to transform their sometimes insular country into an Asian financial hub, July 3rd was a momentous day. South Korea passed its own version of Britain's “big bang”, the 1986 deregulation that enabled London to become a global financial centre. In South Korea the legislation will remove bureaucratic barriers in its securities industry and help brokers, banks and possibly insurers to consolidate.

For those foreign bankers who wonder why anyone bothers to get off a plane in Seoul, a decision by a tax appeals court on July 5th sent just the opposite message. Lone Star Funds, a Texas-based buy-out firm, lost an appeal on a $110m assessment stemming from the lucrative sale of an office block held in what had been thought to be a tax-exempt subsidiary. The ruling refocused attention on what, for both Lone Star and South Korea, has been a public-relations disaster.

Back in 2003, when South Korea was stuck in a protracted slump, Lone Star was something of a hero. It came in when other investors would not and made investments that included taking control of a big bank. It seemed a shrewd bet. In the subsequent recovery, the returns were spectacular—too much so for some South Koreans, who believe that Lone Star got too sweet a deal. Well-publicised prosecutions followed a public outcry. Lone Star is now involved in two big trials and a number of smaller actions, all suggesting it manipulated figures in order to buy companies on the cheap or to avoid paying taxes. It is fighting the charges.

Lengthy lawsuits are not the only factors discouraging investment in South Korea. Foreign-exchange controls make it hard to repatriate profits. The local currency, the won, is not much use in global markets. Regulatory filings must be done in Korean. No foreign company has so far listed on Seoul's stock exchange. Legal barriers limit, or exclude, foreign law firms and accountants. Foreign hedge funds and private-equity firms have, with few exceptions, passed judgment with their feet and stayed away.

Most of the big financial institutions are present, but labour negotiations can be so wretched that many bankers consider the country toxic. Even lenient banks are not let off. Standard Chartered is viewed by competitors as a particularly accommodating employer in South Korea. But a union has festooned the lobby of its Seoul headquarters with hostile billboards.

And yet South Korea's good intentions should not be written off. Its advocates start by spreading a map. The country lies between Japan and China and has a good airport. Its people are well educated; many study abroad. Communications are excellent. In just a few years, Seoul has lost its gritty-city image and the country's television shows, movies and fashion have become hits throughout Asia. For an expatriate banker, it need not be a backwater. South Korea's stockmarket is hitting records, its banks are healthy, foreign-exchange reserves are strong and savings are growing.

More importantly, attitudes are improving. Restrictions on foreign lawyers and accountants are being relaxed; a free-trade agreement has been struck with America. A non-American banker says he was stunned to read the fine print of the deal and to see how much it helped his own business. At the moment, South Korea's financial ambitions seem quixotic, but no Asian market can boast of superlative disclosure and transparency. An opportunity exists for any country that gets it right.

http://www.economist.com/printedition/index.cfm?d=20070714 ◦

South Korea's financial markets

Congress: Ratify the free trade agreement with Korea

It seems that almost every discussion about international trade is focused on the U.S. relationship with China. Our enormous and growing trade deficit with China, coupled with recent scares about the safety of products made there, confirms the importance of this relationship.

Getting much less press is the Free Trade Agreement (FTA) between the United States and South Korea, recently signed by both Presidents and awaiting Congressional approval. Perhaps because the U.S.-South Korean trade relationship is so positive for the people in both countries, we read and hear much less about it.

South Korea is no China, but the numbers speak for themselves. South Korea is the world's tenth-largest economy. Bilateral trade between the United States and South Korea reached US$78 billion in 2006. South Korea is the United States' seventh-largest trading partner, seventh-largest export market, and sixth-largest market for agricultural goods. The United States is South Korea's second-largest trading partner and its largest source of foreign direct investment.

And the numbers are going in the right direction. South Korea today is on track to hit US$20,000 in per capita GDP by 2010. It hosted the 1988 Summer Olympic Games and co-hosted the 2002 World Cup. South Korean women dominate the Ladies Professional Golf Association and South Korean men are striking out hitters in Major League Baseball. South Korean firms have built the three tallest skyscrapers in the world, and South Korea can boast of 41 companies in the Forbes 2000. Among the almost 100 countries that became independent following World War II, none of them can come close to this list of achievements. It’s not called the “Korean economic miracle” for nothing.

But what’s in it for us?
The U.S.-South Korea FTA will promote new opportunities for U.S. businesses, investors, farmers, and consumers in the dynamic South Korean market, and further expand and strengthen this important economic relationship. It will also reinforce the strategic security partnership between our two countries and would likely serve to promote further liberalization efforts regionally and globally.

Sound too good to be true? Let’s look at the data. Last year, U.S. agricultural exports to South Korea totaled US$2.85 billion, making it the sixth largest agricultural market for crops grown by American farmers here at home, including Florida. Under this FTA, about two-thirds of the food that South Korea is importing from the United States will become duty-free, lowering the price to South Korean consumers and thus likely increasing demand.

For non-agricultural goods, the United States currently faces an average tariff rate of 7% when trying to compete in South Korea. This FTA will slash these rates and level the playing field for U.S. exporters. According to the U.S. Chamber of Commerce, studies show that U.S. exports to Korea could grow 50% under this FTA.

South Korea now has a US$1 trillion economy and almost 50 million potential consumers willing and able to buy U.S. good and services. That is why the U.S. Chamber of Commerce in Korea supports this FTA and predicts it will:

· expand the already robust trade between the two countries;
· lock in governmental reforms, providing a level playing field in each others markets and increase the competitiveness of industries in both countries;
· further strengthen the relationship between the two countries as we work together to protect peace and prosperity in Northeast Asia;
· ensure that the United States remains an integral part of Asia’s economic integration.

China is the most important country in Asia, and that is unlikely to change anytime soon. The United States knows this. Korea knows this. The Chinese certainly know this. But also unlikely to change anytime soon is Korea’s position as the fourth largest economy in Asia (after China, Japan, and India on a purchasing power parity basis).

The science fiction author Philip K. Dick famously said, “Reality is that which, when you stop believing in it, doesn't go away.” The reality today is America needs to keep all its remaining friends in the world. An FTA with an old friend like South Korea is the right thing for both sides. Hopefully our Congress will agree. ◦

Congress: Ratify the free trade agreement with Korea

Pyongyangology

WHAT does the world really know about the regime of Kim Jong Il, which appears ready to yield to foreign pressure and bribes to close down the reactor at Yongbyon that has provided enough material for a handful of nuclear devices? The answer, despite defectors' tales and the best efforts of Western intelligence agencies, diplomats and academics, is still: much less than the known unknowns. That Mr Kim runs a vile regime is not in doubt, with North Korea's 20m-odd people the victims of backwardness, malnutrition and political repression. Yet so secretly does it conduct its affairs that speculation is easier than analysis.

Some known knowns. Since the mid-1990s North Korea's unique brand of Stalinism—even more horrifying than those tried elsewhere—has entered a process of slow disintegration. Famine during the 1990s is reckoned to have killed perhaps a tenth of the population. Only with difficulty can survivors still believe in the long-promised socialist paradise, or find fresh reservoirs of gratitude for Mr Kim.

Foreigners living in Pyongyang report a change in attitudes. Once in awe of authority, people now defy it. They break petty rules: sitting on the moving rail of the escalator; smoking beneath no-smoking signs; and blocking traffic by selling furniture in the streets, to the frustration of the white-gloved traffic ladies. More seditious still, people are breaking the seal on their radios that keeps them tuned only to the state frequency.

Another measure of changing attitudes: in bus queues or at sweet-potato stands, people are readier to chat to foreigners than they were just a few years ago. Signs of petty capitalism and informal markets, once unheard of, are everywhere. Crime is on the rise too, and where there are black markets, mafia-type protection rackets probably follow. Chinese lorry-drivers complain of highway banditry, as gangs jump on to the back of slow-moving lorries and pull off goods.

Despite Stalinism's decay, Andrei Lankov of South Korea's Kookmin University suggests that the regime, which during the famine may have faced collapse or military rebellion, now actually feels more sure of itself. It has restricted the operations of foreign aid organisations. And it has largely recentralised the distribution of food and other essentials, after the system broke down during the famine. So all the rewards in the form of cash and commodities that North Korea expects to reap from its nuclear diplomacy could easily be used to reinforce the command economy, and buy loyalty.

In recent months a crackdown has taken place along the porous border with China. The law is once again being rigorously applied to North Koreans caught crossing illegally. The punishment is five years in prison camp. There is little sign that the gulag is any less brutal: a report by Christian Solidarity Worldwide, a human-rights group, pieced together what is known from defectors' accounts and satellite imagery. It put the prison population at 200,000, with 500,000-1m having died there over the years.

As for the elite, what little is known suggests a regime riven by bickering. It appears to have problems filling government posts: the job of foreign minister has been open for months. In April the prime minister was replaced by Kim Yong Il, who analysts suspect may be more hardline. Political advisers from the army seem again to have growing influence. For a while after the six-nation agreement in February on North Korea's denuclearisation, the usual officials in military uniform suddenly stopped accompanying Mr Kim in public; Mr Kim also visited relatively few military sites compared with civilian ones. The uniforms are now back.
In May Mr Kim himself stopped appearing in public, prompting speculation about his health, with rumours of diabetes and heart problems. His health is perhaps the regime's most closely guarded secret, so all this is pure conjecture. But it is known that he is 66 and was once a heavy smoker and drinker.

If Mr Kim was frail, he has bounced back, appearing this week with China's foreign minister. Still, inevitable gossip has been fanned about succession in this communist dynasty. Mr Kim's two younger sons, in their 20s, have started appearing in public with their father for the first time since their mother died in 2004. Mr Kim's eldest son (by an earlier mistress), Kim Jong Nam, 36, had been written off as a potential successor after the embarrassment of being caught entering Japan with a fake passport to visit Tokyo's Disneyland. He has recently been living in Macau, but this year popped back for his father's birthday. Some of the fuss that North Korea made in the six-party talks about funds frozen in a Macau bank may have been for his benefit.

South Korean analysts, in particular, predict a collective leadership after Mr Kim's death, and the regime's indefinite continuation. But an orderly succession cannot be taken for granted. And if the regime were suddenly to collapse, one cast-iron certainty is that the countries that would have to deal with the mess—chiefly South Korea, the United States and China—are wholly ill-prepared.

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Pyongyangology

Korean men still lag behind female golfers

orlandosentinel.com/sports/golf/orl-andrew1107jul11,0,5905170.column

OrlandoSentinel.com
Korean men still lag behind female golfers
Andrew Carter
July 11, 2007

The revolution began, best anyone can remember, late on a summer night some eight years ago. It was actually early morning by then, local Korean time, when a 20-year-old Korean named Se Ri Pak won the 1998 U.S. Women's Open in Kohler, Wis.

From half the world away, in Pak's homeland, little girls sat in front of televisions, ignoring the need for sleep in the wee hours and dreamt of what it might be like to be Pak. And Korean fathers, too, looked upon their daughters and wondered if they might possess an untapped golf gene."

I picked up a golf club because of her," said In-Bee Park, a Korean who was 10 years old when she stayed up all hours that summer night in '98. "The year she won [the Women's Open], that's when I started playing golf."Park, a rookie on the LPGA Tour, finished tied for fourth a couple of weeks ago in the most recent Women's Open. Years ago, she was one of countless Korean girls whom Pak inspired to play golf, and Park is now one of 45 Korean-born women on the LPGA Tour.

It's no secret, of course, that Pak's influence on the LPGA Tour has been monumental. There are 42 more Korean-born players on the women's tour than there were during her rookie season in '98. Pak, only 29, qualified earlier this season for the LPGA Tour Hall of Fame, and her accomplishments have made the ever-growing Korean presence on the women's tour easy to explain.

What's far more difficult to explain, though, is the absence of a similar Korean presence on the PGA Tour. K.J. Choi, the first Korean-born golfer to compete on the men's tour, walked off No. 18 on Sunday at Congressional Country Club in Maryland, and for the second time in six weeks, he was a champion. He won the Memorial Tournament in early June.

After another victory ended on Sunday, someone asked him whether he was "bigger" in his homeland than Pak. And to that, Choi said, "I think we're both, Se Ri and I, walking a similar path right now. You can't really compare the two of us -- who is better, who is more popular. You can't really say that."

I think what she has done on the LPGA Tour is tremendous. . . . She was a pioneer on the LPGA Tour."She was, indeed. But why has Pak's deep and wide mark on golf failed to leave an imprint on the men's game? Why are there so many Koreans on the LPGA Tour and so few on the PGA Tour?

Among the 45 Koreans on the LPGA Tour this season are 14 rookies. The total number of Koreans has risen steadily since Pak's American breakthrough almost a decade ago.Yet Korean representation on the PGA Tour has remained stagnant since Choi's rookie season in 2000, and he has but only three fellow countrymen on tour now.

Michael Yim, Choi's agent, tried to explain on Tuesday why the numbers are the way they are."There are many differences," he said, speaking of the men's and women's game. "You can't really pinpoint the one specific reason."

Then Yim, who is Korean himself, listed his theories -- how Korean women face an easier road to qualify for the LPGA Tour than men do when trying to reach the PGA Tour. How Korean men must serve in the military, which Choi did after he graduated high school. Yim said Korean families -- though fast becoming more westernized -- still are old-fashioned and rely on men to be primary providers, and that women are able to take more chances with their futures."

When [men] try to make the move from Korea to the U.S., it's not only them that they have to worry about," Yim said. "They have to worry about bringing the whole family over -- and what if you don't make it?"Just the fact that you have to worry about the whole family acts as a deterrent."

And there's another reason, too, maybe most obvious, for the wide gap in gender representation: physique."When you look at it from a physical point of view -- the western guys are a lot more physically developed, and they have a physical advantage over Asian guys," Yim said. "Whereas with the women, the physical side doesn't really [matter] as much."

It's not to say, of course, that Koreans on the LPGA Tour aren't without unique challenges, perhaps none more daunting than adapting to American culture.

"You have to quit all the Korean stuff," Park said. "Korean [TV], Korean movies. When I first came to America, I had to quit all those Korean things."

As he was making his way through another victory on Sunday, one of Choi's fans held up a sign that made reference to his nickname, which is "Tank."

"Move forward just like a tank," he said later. "Just progress. It's how I felt when I first came over to the U.S. starting out . . . There were a lot of hurdles for me to overcome."And so far, at least in the men's game, he's one of the few Koreans who have had to endure. For a while, Pak began a revolution in women's golf. The men's game still is awaiting when a similar one might come, if ever.

◦

Korean men still lag behind female golfers

Korea's New School of Thought on Education

http://www.businessweek.com/print/magazine/content/07_27/b4041054.htm?chan=gl

Korea's New School Of Thought
As growth cools, the nation looks for an education model that spurs innovation

It's 10 a.m. on a school day, and seventh grader Ku Do Hyun is reading an English translation of Aesops classic fable The Goat and the Goatherd. Ku is a student at the Peace Flower School, a private boarding school in Jecheon, a town in the mountains of central Korea. The place is decidedly laid-backno uniforms, no jarring bells heralding the beginning of class, and no late-night cramming. For an exercise in holistic learning called Tongjon, Ku decided to study goats—an endeavor that involved biology, reading assignments, star-gazing at the constellation Capricorn, and a field trip to a local farm to observe the animals. "I'm happy here because I do what I want to do," says the lanky 12-year-old.

At about the same time, 110 miles away in the port city of Incheon, 13-year-old Moon Sang Hyun is committing to memory the formula for a metal alloy and the date of a 14th century Korean coup. If the eighth grader cant recite what he learned in his last algebra class, hell be caned by his teacher as his 40 classmates look on. School lets out at 3 p.m., but the uniformed Moon barely has time for a quick dinner before hopping the bus to a private cram school, where for five hours hell be force-fed English grammar, chemistry, and a host of other subjects. "I'm lucky to go home before midnight, he says with a shrug. "Some of my friends study till 1 or 2 in the morning."

Two students, two very different schools. And those varying approaches to learning are the focus of a debate in South Korea about which better serves todays knowledge-driven economy. Rote learning and cramming, however inhumane, are credited with transforming a poor, mostly agrarian nation into a manufacturing powerhouse in the space of just three decades. The country of 48 million now ranks 11th among the worlds economies and is a top exporter of everything from steel and ships to cell phones and computer chips. It spends 7.5% of its gross domestic product on education, a bigger share than any other industrialized country, and that figure doesnt even include the $38 billion a year Korean parents shell out for after-school cram sessions.

But as growth has cooled to 5% annually over the past decade, from an average rate of nearly 8% during the prior 30 years, some experts are griping that Koreas educational system no longer makes the grade. Everyone from policy wonks to executives at Samsung Group and other top Korean companies complains that the system discourages creative thinking and stifles innovation. "Schools castrate the innate desire of students to satisfy intellectual curiosity," laments Yi Jong Tae, head of the private think tank Korean Education Research Institute. Says Chung Un Chan, economics professor at Seoul National University: "The key to resolving our economic problems lies in a radical reform of our education."

In the meantime, Korea risks losing some of its best and brightest. The number of the country's students enrolled in foreign schools and universities rose to 214,000 in 2005, from 109,000 in 1998, the Korea National Statistical Office says. "Frustrated Koreans are voting with their feet against the educational system," says Hongik University economist Jun Sung In. Their top destination is the U.S.: In the 2005-06 academic year, 58,847 Koreans attended American universities, according to New Yorks Institute of International Education. That's up 10.3% from the previous year. Only India and Chinawith populations at least 20 times greater than Korea's send more students to the U.S.The danger is that many will leave for good. "If I went back to Korea, it would be like starting all over," says Yang Soo In, a 32-year-old Korean who received a masters degree from Columbia Universitys graduate school of architecture in 2005 and decided not to return home. "I've already established good contacts and a network of people here."

Nearly half of all Koreans who earned PhDs in science and technology from U.S. institutions between 2000 and 2003 remained in the U.S., up from 20% in 1992-95, reports the Hyundai Research Institute, a think tank in Seoul. "Brain drain is accelerating as our educational system can't keep up with changes in the business environment," says Yu Byoung Gyu, a senior research fellow at the institute.The swelling discontent has touched off a political debate. In May, Lee Ju Ho, a lawmaker from a leading opposition party, introduced legislation calling for a presidential commission to overhaul the school system. "The first step must be the end of government control over curriculum," says Lee. "The Ministry of Education and Human Resources must be disbanded in favor of a much slimmed-down department focused on lifetime learning."

Dissatisfied families are searching for their own solutions. "Parents got fed up with the official system," says Hyun Byung Ho, publisher of an education magazine called Mindle. Around 4,000 students are enrolled in about 70 alternative schools such as Peace Flower. The first Peace Flower opened near Seoul in 2003; today the group runs four schools with a total of 205 students. "We simply couldnt let our children fall victim to the regimentation of the state schools, says Kim Kyeong Sik, a college instructor and father of two boys, who was one of the schools founders. I hope our school will serve as a stepping stone toward major educational reform in our country. ◦

Korea's New School of Thought on Education

A Capitalist Toehold in North Korea

Despite U.S. tariffs, more South Korean businesses are setting up shop in the North

From afar, the North Korean special economic zone of Kaesong looks like a Cold War relic. Getting there from Seoul takes you down a highway with tank traps set into the pavement, past checkpoints manned by machine-gun-toting guards, and through the demilitarized zone in a corridor flanked by barbed-wire-topped fences. Finally, you reach the barren boulevards and hulking buildings of the zone itself.

But take a closer look and you'll find the place is humming. The 23 South Korean companies operating there employ some 15,000 North Korean workers—double the number of just a year ago. In March, Kaesong's factories churned out $13 million worth of goods, up from $200,000 in January, 2005. An additional 47 South Korean companies are preparing to set up shop there, while Seoul in June is expected to give as many as 300 more the all-clear to move in. Within three years, Kaesong could employ as many as 100,000 workers. "Our Kaesong plant is more efficient and competitive than any factory in China, Vietnam, or anywhere in the world," says Park Sung Chul, chief executive of apparel maker Shinwon, which employs 900 workers in the zone who churn out 60,000 shirts, skirts, and other garments per month.

There's one place, though, where the competitiveness of Kaesong's factories doesn't count for much: Washington. Hardliners take a dim view of the project, arguing that the hard currency it generates for Pyongyang only perpetuates the rogue regime of dictator Kim Jong Il. U.S.-led pressure on Pyongyang to give up its nuclear arms program forced Seoul to slow its investment in Kaesong. That resulted in a two-year delay in the project, conceived during a thaw in North-South relations in 1998 and finally opened in 2004. Under the Trading with the Enemy Act, North Korean exports to the U.S.—including those from Kaesong—are severly restricted. They face tariffs of up to 90%, while most goods from South Korea will be eligible for duty-free entry once a free-trade agreement reached in April is ratified. "If we could start shipments [to the U.S.], the operation here would increase tenfold," says Park, whose company makes more than 40% of its $372 million in annual sales to U.S. customers such as Wal-Mart (WMT ), Gap (GPS ), and Target (TGT ).

Washington's opposition could be a big problem since Seoul has a lot riding on Kaesong's success. The South hopes the zone will give it an economic boost as the country finds itself squeezed between high-tech Japan and low-cost China. The park's North Korean workers—mostly women who are prescreened by bureaucrats in Pyongyang and bused in daily from neighboring towns—earn $57.50 a month regardless of their job or experience. That's roughly a third of what a Chinese factory worker makes, and it hasn't increased since Kaesong opened for business.

INTEGRATION
There's more than simple economics to the South's interest in Kaesong. Seoul sees the industrial park as a first step toward integration of the Korean peninsula. Powered by Kaesong, two-way trade between North and South Korea jumped 43%, to $350 million, in the first four months of this year. The South has already poured some $230 million into the project and expects to invest several times that over the next decade. If things pan out, within 10 years Kaesong will develop into an economic showcase with more than 500,000 North Koreans working in a bustling boom town—helping to spur reforms in the North. "There will be lots of hurdles," says Lee Young Hoon, an economist at the Bank of Korea, the South's central bank. "But given the economic benefits, the Kaesong project has great potential for coaxing Pyongyang out of its shell."


http://www.businessweek.com/magazine/content/07_24/b4038061.htm

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A Capitalist Toehold in North Korea

Would Einstein Buy a Hyundai? (TV commercial)

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Would Einstein Buy a Hyundai? (TV commercial)

U.S. and South Korea Reach Landmark Trade Deal

April 2, 2007

The United States and South Korea today struck a landmark bilateral free trade agreement, the United States’ biggest since the North American Free Trade Agreement in 1994 with Canada and Mexico, and its first with a major Asian economy.

Studies have estimated that the free trade pact could add $20 billion to bilateral trade between the two countries, estimated last year at $78 billion.

The deal “will generate export opportunities for U.S. farmers, ranchers, manufacturers, and service suppliers, promote economic growth and the creation of better paying jobs in the United States,” President George W. Bush said in a letter notifying Congress of his intention to enter into the deal. If ratified, the agreement will immediately remove tariffs on more than 90 percent of all goods bilaterally traded, officials said.

Potential gains to the United States economy range from $17 billion to $43 billion, according to Usha Haley, director of the Global Business Center at the University of New Haven. South Korea’s exports to the United States are expected to rise in the first year by 12 percent, or by $5.4 billion.

The agreement “highlights the United States’ strong commitment to active engagement and partnership throughout Asia,” said Deputy U.S. Trade Representative Karan Bhatia.

The deal gives the United States badly needed support for its trade policy and South Korea a chance to boost its export-driven economy in return for opening up its market. It has long restricted access to such iconic American products as cars and beef.

The last-minute agreement marks a significant victory for the Bush administration, which sought a high-profile deal to add to a list of bilateral trade pacts with Panama, Peru and Colombia that it is struggling to sell to a Democrat-controlled Congress.

The increased relations between the United States and South Korean economies — the world’s biggest and eleventh-largest, respectively — provide the United States economy with an important stronghold in Asia to check the growing influence of China.

It could fuel a global race to forge bilateral trade pacts as an alternative to stalled multilateral talks under the World Trade Organization, economists said.

With pressure mounting from Congress, and Seoul’s streets reverberating with farmers’ protests in the early hours of Monday, negotiators haggled right up to the deadline set for resolution of the talks.

Students marched on the presidential palace in Seoul, chanting “No to FTA!” or “Feed mad cow beef to Bush!”

Once hailed for seeking a greater distance from Washington, President Roh Moo Hyun has now stood accused of turning his country into a “51st state of the United States of America.”

Breakthroughs came when negotiators exchanged compromises in politically sensitive issues. South Korea agreed to phase out its 40 percent tariffs on beef over 15 years.

It also indicated today that it would resume American beef imports, which have been banned for three years over mad cow disease, if the World Organization on Animal Health, or OIE, declares United States meat safe in a ruling expected in May.

Seoul will also remove an 8 percent duty on cars and revise its taxation system that American officials said discriminates against American cars with bigger engines and makes South Korea one of the world’s most protected auto markets.

In return, Washington agreed to South Korea’s wish to keep its heavily subsidized rice market out of any free trade deal, even though South Koreans were buying rice for four times the global price.

Washington will also remove 2.5 percent tariffs on cars with engine sizes of 3,000 cc or less — a key South Korean export item — and phase out 25 percent duty on trucks, as well as slashing tariffs on textiles.

Mr. Bush said the trade pact would strengthen ties between the United States and South Korean — an assessment shared by analysts who had repeatedly warned that the alliance, forged during the Korean War, was fraying during the terms of Mr. Bush and Mr. Roh in disputes over Communist North Korea.

“President Roh believes the free trade agreement with the United States will serve as a spring board for South Korea to become an advanced economy,” said Roh’s spokesman, Yoon Seung Yong.

Consumers of both countries are the biggest winners from the deal. Hyundai cars and Samsung flat-panel TV sets, as well as Korean-made hats and clothes, will become cheaper in the United States. American beef and oranges, as well as Ford cars and Toyota vehicles built in the United States, will be more affordable in South Korea.

TV networks can air more American movies and TV series, such as “CSI,” “Prison Break” or “Grey’s Anatomy,” which already command large followings here.

But the deal will cost South Korean farmers tens of thousands of jobs and up to 2 trillion won, or $2.1 billion, in lost revenue, as cheap American corn, soybeans and processed foods flood in, according to studies by South Korean economists.

Meanwhile, there is doubt American carmakers will win quick gains in South Korea, even after the deal is implemented. Many South Koreans still equate buying domestic vehicles to patriotism. High-end consumers prefer European models like Mercedes or BMWs to American cars.

The ambitious talks began in June last year. In their final round, the negotiators held eight days of marathon talks in Seoul, lasting through the night because Mr. Bush must notify Congress of his plan to sign a trade agreement 90 days before his special Trade Promotion Authority expires July 1.

Congress must ratify or reject a trade deal submitted under the special authority, but cannot amend it.

Originally, American officials said a deal had to be agreed by March 31, but later said the deadline was April 1. Shortly after midnight today, the White House released Mr. Bush’s letter to congressional leaders, dated April 1.

Washington seeks bilateral pacts in Asia to counter China’s move to expand its influence in the region through its own free trade agreements. Washington’s talks with Malaysia are stalling, while deals are unlikely with Japan, with its powerful farmers, or with China, with its huge state-owned industries.

The new deal will help narrow Washington’s large trade imbalance with South Korea, experts on both sides said. Only 5,000 American cars were sold here last year while South Korean carmakers sold 800,000 vehicles in the United States. The gap accounted for 80 percent of the estimated $13 billion United States trade deficit with South Korea last year.
United States officials hope that today’s deal will placate American cattle raisers, who were struggling to recapture their global beef market following an outbreak of mad cow disease in late 2003.

Before its import ban, South Korea used to be the world’s third-largest consumer of American beef, importing $800 million a year.

“A free trade agreement with the United States carries a huge potential for the South Korean economy,” said Huh Chan Guk, director of research at the private Korea Economic Research Institute in Seoul.

“Besides winning more access to the U.S. market, it will help upgrade the economy by exposing its inefficient sectors, like the service industry, to competition.”

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U.S. and South Korea Reach Landmark Trade Deal

Convergence is Coming

http://www.ikjournal.com/


Ten years ago the really hot products to have were a laptop computer hooked up to that new-fangled thing called the Internet, a mobile telephone, and a flat screen television, plus a VCR.

Who wudda thunk that in so short a space of time that the then-new technologies that powered these enchanting gadgets would intertwine and mutate to produce then-unimaginable services and products based upon digitalization of information, a process that seems to open an almost infinite realm of possibilities and whose import is only just becoming apparent.

Now though a spate of new services available in Korea, via Internet Protocol TV (IPTV), it's possible to download the last episode of Desperate Housewives that you missed last night and watch it on a computer screen or television.

Through Korean developed Digital Multimedia Broad- casting technology (DMB, see IK Journal, Cover Story March/April 2005), it's now possible to watch TV programming, via satellite or terrestrial transmissions, on a handheld device even while traveling at speed.

Others on the move can use a phone enabled with high-speed downlink packet access (HSDPA) to download massive amounts of high-quality multimedia including games, movies, music, and yes, the phone can also be used as a phone!

It may have seemed cool to talk on a mobile phone 10 years ago but Voice over Internet Protocol (VoIP) not only allows users to make significant economies in making long-distance or international calls but also permits video connection by personal computers, to the betterment of relations, either personal or commercial.

Logging onto the Internet with your first laptop back in `97 was a thrill, but such was the technology at that time that you had to stay in one place -- indoors at that and close to a telephone jack -- to access the wonders of the information highway. That was then but this is now and through Korean-developed wireless broadband (WiBro), access to the Internet is not only always on (remember dial-up?) but accessible anywhere even (like DMB) in moving vehicles.

Welcome to the new era of digital technology convergence, one that will render obsolescent services that not too long ago were lauded as cutting edge and one where Korea is staking out its leadership, partly on the back of its groundbreaking homegrown technologies, partly through the power of its digital information networks -- wired and wireless -- but most certainly because of the incredible level of broadband access that allows the markets for these new technologies to be driven.

Korea has one the world's highest broadband penetration rates at 25.3 per 100 persons at end-2005. This translates into 12.3 million households or 77 percent of the total among a population of 49 million that are connected to high-speed Broadband service, mostly of the ADSL type (Asymmetric Digital Subscriber Line) although faster and more capable systems are being installed at the time of writing (see below).


BLURRING WIRED/WIRELESS DISTINCTIONS
Already vested with one of the world's fastest Internet speeds of 1.5 to 2 megabytes per second (Mbps), the government is currently constructing the nationwide Broadband Convergence Network (BcN) that will allow the transmission of data and images at speeds of 50 Mbps to 100 Mbps.

Meanwhile, on the wireless network front WiMax (Worldwide Interoperability for Microwave Access) offers upload/download speeds of 70 Mbps, WiBro offers 50 Mbps and HSDPA 14.4 Mbps (with plans in the works to raise speeds to 28.6 Mbps).

As wireless speeds match those of the wired network, and the differences between them become less apparent, Koreans will have access to a seamless, ubiquitous information platform that can be tapped into by numerous types of devices and appliances.

It is by the five technologies and systems of IPTV, DMB, HSDPA, WiBro and VoIP referred to above that will leverage the capabilities of these networks, drive the trend to convergence and thereby generate new market opportunities.

Certainly the stakes are high. Initially estimating a commercialization date for IPTV in Korea of 2006, the Research on Asia (ROA) Group projected that the service would attract as many as 570,000 subscribers by the end of the year producing revenues of 160 billion won (approximately US$154 million), rising to three million subscribers by end of 2012 who would provide an income flow to service providers of 770 million won (US$827 million at current rates). ROA based its prediction on the likely modes of delivery of the service with its implications for quality and breadth of accessibility: the Broadband Convergence Network and the equally speedy (100 Mbps) Fiber to the Home (FTTH) network. Cognizant that ADSL just doesn't have the capability to handle the traffic content of IPTV, Korea's largest Internet service provider KT (Korea Telecom) has embarked upon an ambitious program to connect every household in the country with FTTH service at a cost of US$1 billion.

So how is the ROA projection panning out? Full commercialization of IPTV has been delayed over regulatory issues but KT and Hanaro Telecom have weighed into the market offering non-real-time video on demand (VOD) content as opposed to live broadcasting. With the limited service they are able to provide, Hanaro Telecom's HanaTV attracted 330,000 subscribers paying 10,000 won per month by mid-February since its launch in July, while another 30,000 had signed up for KT's MegapassTV, available to homes equipped with the carrier's 100-Mbps optical local area network (LAN) service, by the end of January. Good news travels fast since NHN, operator of the Naver Internet portal, the country's most popular, has announced that it, too, will enter the IPTV market.

PREMIER LEAGUE FOR DMB?
What do IPTV subscribers currently get for their money? Besides retransmission of programming from on-air broadcasters KBS, MBC, SBS and EBS, MegapassTV users can have access to movies, music, and a number of interactive services that concern education, finance and a messaging service. While the DVD player has eclipsed the VCR, the movie downloads now possible through IPTV also call into question the convenience of such devices and threaten that venerable neighborhood institution, the video store. Along with real-time live broadcasting, IPTV is eventually expected to offer a broad range of home networking-type home automation and security services as well as securities dealing, banking and T-commerce, or television commerce, that is, shopping by TV via a suite of systems that includes interactive applications.

In a bid to overcome the regulatory obstacles to its introduction, the Ministry of Information committed itself in February to full commercialization of IPTV this year with enabling legislation promised for April.

As noted by Hanaro Telecom CEO, Park Byung-Moo, commercialized IPTV is the subject of eager anticipation by Korea's telecom players as it represents a broadcasting/telecom convergence business model through which to create new streams of revenue.

More developed as a market is Digital Multimedia Broadcasting. The subscriber-based satellite service (S-DMB) was introduced nationwide in May 2005 by SK Telecom subsidiary TU Media, and in the December of the year became available via terrestrial stations (T-DMB). Although this latter service has the advantage of being gratuitous it has restricted availability. S-DMB service offers 15 video channels, 19 audio channels, and three data channels, while its terrestial counterpart provides 11 TV channels, 25 radio, and eight data channels.

Like WiBro, DBM was developed by the Daejeon-based Electronics and Telecommunications Research Institute (ETRI) and debuted for the first time in Korea. Like IPTV, DMB is a new concept in multimedia transmission that converges telecommunications and broadcasting but with the major difference that reception is via mobile devices. It features crystal-clear reception and FM-quality sound even while traveling in a moving vehicle. Receivers are usually integrated into other systems such as laptop computers, mobile phones, portable media players (PMPs) personal digital assistants (PDAs) or in-car navigation systems.

So more than a year after the introduction of two rival DMB services -- S-DMB and T-DMB -- how have they fared? The fee-based satellite service run by TU Media is the clear winner. After investing heavily to eliminate reception "shadow" areas, the telecom giant watched its subscriber base climb toward the one-million mark in December 2005, and is garnering enough in the way of fees to invest back into quality programming and thereby further boost its popularity. In November, for example, TU Media revealed that it was in negotiations with the English Premier League to broadcast the league's matches on its S-DMB system this year.


TECHNOLOGY WITH A PEDIGREE
Terrestrial DMB, by contrast, has not yet succeeded in generating sufficient revenues through advertising, a situation compounded by the fact that the free service has wide shadow areas where it cannot be accessed. Therefore, the experience of TU Media points to a fee-based business model being that most likely to succeed with this particular technology.

If DMB is a form of convergence that elicits a passive response from its user (TV shows can only be watched), HSDPA might prompt a more interactive approach. Why, you might ask, is that guy with the mobile phone on the corner talking to himself, or more precisely, talking at his phone? Closer inspection will reveal that the telephone is far from conventional, featuring a split video screen with talking heads in each of its three segments. Hmmm.....mobile video conferencing in action!

High-Speed Downlink Packet (or Protocol) Access (HSDPA) is like a type of mobile broadband, but is, in fact, a 3.5G (three-and-a-half generation) mobile telephony protocol currently used by some 64 networks in 64 countries.

Like many high-technologies, HSDPA comes with a pedigree and one in which Korea has played a significant role. HSDPA is an advance on its predecessor, the 3G Wideband Code Division Multiple Access (W-CDMA), a CDMA channel, but one that is four times as broad as predecessor, CDMA proper. Second-generation CDMA, in turn, is a technology devised by Qualcomm of the United States, but one that was first commercialized in Korea by ETRI in 1996. The big improvement compared to WCDMA is download speed; HSDPA is as much as 10 times quicker than its predecessor. As such, downloading crisp-image movies, sophisticated multiplayer games and other massive files from the `Net is a cinch. As in the case of IPTV, the availability of such content via downloads brings into question the future of separate devices in the home on which to play them.

Given its history with the technology, Korea understandably became a leader in the building and operation of W-CDMA systems but this is now falling out of favor with carriers given the superior capabilities of HSDPA and its inherent potential for convergence and hence the provision of value added services. Korea Telecom and SK Telecom are building HSDPA networks across the country, with this latter carrier hoping to have the bulk of the population covered by installing service in 84 cities. In May last year, SK Telecom pipped KT to be the first to bring a commercial network into operation with Samsung simultaneously launching the world's first HSDPA handset, the W200. Major features of the phone that exemplify HSDPA's capability are video calls, Internet telephony (voice over Internet protocol, see below), ultra-high speed data transfer allowing the downloading of DVD-quality movies, a high-resolution (320x240 pixel) screen on which to view them, and an upload link allowing users to put their user-created contents (UCC) up on the Web. Did I mention global roaming? It is now possible to roam with the W200 in WCDMA-serviceed areas of Europe and Asia.


REPLICATING MOBILE INTERNET
Offering a download speed of 14.4 Mbps, KT launched its own HSDPA network the following July in 50 cities including Seoul with plans for a further 34 by year-end. Primary network supplier Korean/Canadian joint venture LG-Nortel supplied a 5.8-Mbps uplink packet while access to the network was provided initially by LG's SH-100 phone, with the promise of five more models to come.

The full effect of HSDPA, a form of wireless Internet that closely conveys the Web experience, will become fully apparent later this year when the two carriers complete their networks and full range of handheld terminals comes on the market. Telecom industry observers expected it to promote convergence through the greater availability of virtual communities such as Cyworld, on which 90 percent of Koreans in their twenties have a page, and music portals such as Jukeon.

SK Telecom CEO Kim Shin-Bae has pointed out that the convergence potential of HSDPA between digital cameras and mobile terminals such as laptops and PMPs is heightened by the use of a USB modem that can actually boost accessibility to the network. Moreover, he maintained the use of a Universal Subscriber Identity Module (USIM) would promote convergence in mobile banking and credit card services since a smart card bearing a single chip would allow transactions with numerous financial institutions.

If HSDPA comes close to replicating mobile Internet, WiBro is mobile Internet, offering flawless connection at speeds of up to 120 kilometers per hour. The two have different operating platforms and both can offer voice and videophone calls making them natural competitors, although WiBro has yet to offer these services.

WiBro was developed by ETRI in collaboration with Samsung as a Korean version of WiMax (Worldwide Interoperability for Microwave Access) to provide a broader range of function than represented by the mobile phone and a mobile version of broadband Internet. The Internet connectivity of WiBro depends on base stations operating at speeds of up to 50Mbps. Through a network of such stations covering parts of Seoul and surrounding cities, Korea Telecom and SK Telecom launched commercial WiBro services in mid-2006.


THE WIBRO NICHE
It may be early days for WiBro but subscriptions have failed to meet expectations and KT has halted its program of network expansion. It is deemed a superior 4G technology to the more popular 3.5G HSDPA as it offers speeds three times faster, but perhaps it is a question of it finding its niche. Premier telecom provider SK Telecom maintains that WiBro is meant to complement HSDPA rather than compete with it. For this reason, the company intends to make WiBro available only in densely populated university areas or business districts, while deeming HSDPA more suitable for national coverage.

The Korean Information Strategy Development Institute (KISDI), a government sponsored think tank, has recognized the potential for competition between HSDPA and WiBro but stresses that they are essentially suited to different markets. KISDI has argued that because WiBro is directly connected to the Internet provider (IP) backbone, it is better suited to handling large data transfers such video (and music)-on-demand, network gaming, game downloading, and e-mail. HSDPA, on the other hand is a more appropriate technology for the transfer of data of a more limited scale such as short messaging services (SMS), video telephony, and banking and securities transactions.

One impressive success of WiBro to date is its adoption by telephony operators Sprint of the United States and KDDI of Japan as their mobile Internet platform of choice in their respective countries. Perhaps success overseas for this stellar Korean technology will encourage its broader use at home.

VoIP (voice over Internet protocol) has the power to effect huge savings and directly create new markets to support the service. In all, it is big business, and domestic Korean companies have not been slow to recognize the potential offered by foreign providers. Kookmin Bank, Korea's largest, selected Nortel of Canada in 2002 to provide a single next-generation network (NGN) voice over IP (Internet protocol) and multimedia solution for its call centers in Seoul and Daejeon. The following year, Nortel found itself selected once more, this time by telephony and data communications company Dacom Corp. to provide a similar solution in a deal that included products from Nortel Networks Multimedia Communications.

The year 2006 was marked by renewed interest by overseas VoIP solutions providers in the Korean market.

U.S.-based Skype, the world's most popular VoIP provider and now acquired by eBay, launched services in Korea in February 2006 after being attracted by the potential of what the company described as the world's leading broadband infrastructure. In keeping with its usual practice, Skype makes no charge for PC-to-PC calls, but charges a small fee for international PC-to-phone calls.

IDEAL MARKET
The Korean market attracted another major player in the VoIP field when Broadsoft of the United States launched its mobile VoIP software platform Nov. 1st, claiming high-profile corporates Korea Telecom, Samsung Networks, SK Telink and Hanaro among its clientele.

"Korea leads the world in next-generation mobile communications services, such HSDPA, making it an ideal market for our Broadworks mobile PBX, mixed/mobile convergence solutions," said Ken Rokoff, vice president of business development and Asia/Pacific sales. (A PBX is a private branch exchange, a private telephone network used within an enterprise).

Meanwhile, the newly established Korea Cable Telecom -- a nationwide consortium of seven cable operators -- began VoIP services last August. The launch followed government approval of the consortium the previous March in order to create synergy between the broadcasting and telecom sectors, and to further the success of cable-based convergence services.

IDC Korea projects that the Korean VoIP service market will grow 54 percent annually, from US$250 million in 2006 to US$1 billion in 2009, and that IP convergence products will drive the VoIP device market to US$263.5 million by 2009.

The Internet Society (ISOC), a think tank comprised of professionals worldwide, observed the massive efficiencies of VoIP compared to traditional telephony systems in a 2006 paper. The society highlighted its relatively low cost of deployment in system terms, and stated that a country would be at a disadvantage if it did not embrace the protocol while warning of the impending obsolescence of circuit-switched networks.

Doubtless, Korea is in the process of embracing VoIP in a manner that may eventually result in a radical alteration in the nature of the telecommunications industry. Indeed, the impact of VoIP may well be taken as an example as to how technological convergence is bringing subtle but immense change for the Korean economy and society. Convergence is coming, and with it, new industries and lifestyles that are guaranteed to fuel the dynamism that is the essence of Korea. ◦

Convergence is Coming