Women in South Korea - Cracks in the Glass Ceiling

South Koreans are a bit conflicted about career women. Gender wasn't much of an issue in the selection of a female astronaut to fly this month on the country's first space mission. But when women are seeking workaday corporate jobs, some South Korean men still resist change. Outer space is one thing, but a woman in the next cubicle is something else.

For years, most educated women in South Korea who wanted to work could follow but one career path, which began and ended with teaching. The situation started to change after the 1998 Asian financial crisis. Thousands of men lost their jobs or took salary cuts, and their wives had to pick up the slack by starting businesses in their homes or seeking part-time work. A couple of years later, the government banned gender discrimination in the workplace and required businesses with more than 500 employees to set up child-care facilities. It also created a Gender Equality Ministry.

These days the government hires thousands of women (42% of its new employees last year), many for senior positions in the judiciary, international trade administration, and foreign service. Startups and foreign companies also employ (and promote) increasing numbers of Korean women.

ONE OF THE GUYS
But at the top 400 companies, many of which are family-run conglomerates, it's hard for women to reach the upper ranks. In all, about 8% of working women hold managerial positions. (In the U.S. nearly 51% do.) "We have a long way to go," says Cho Jin Woo, director of the Gender Equality Ministry.

South Koreans are grappling with traditional attitudes about women, a hierarchical business culture, and the need to open up the workplace to compete globally. A senior manager at SK Holdings, which controls the giant mobile phone carrier SK Telecom (SKM), says he avoids hiring women because he believes they lack tenacity. When deadlines are tight, he says, "you need people prepared to put in long hours at the office." Park Myung Soon, a 39-year-old woman who is in charge of business development at the carrier, says, "Many men are preoccupied with the notion that women are a different species." To get ahead, Park says she had to achieve 120% of what her male colleagues did—as well as play basketball and drink with them after work. "Luckily, I like sports, and I like to drink," she says.

When Choi Dong Hee joined SK's research arm in 2005, she was the only woman there and had no major assignment until she created one. After conducting a yearlong study, Choi, 30, proposed changing the company's policy to allow subscribers to use any wireless portal. Her managers ignored her. She persisted. Finally, they agreed to let her brief the division head, who agreed to let her make her case to the company chairman. Choi worked on the presentation for three weeks straight, sometimes alone in the office overnight (to her boss's horror). In the end, the company did adopt the open policy she advocated. Now her managers are quick to say that women's perspectives can help SK better serve its customers.

Sonia Kim, who is in charge of TV marketing at Samsung Electronics, says her male colleagues rarely argue with the boss, even if they think he's wrong. Kim, though, persuaded her manager to let her develop a promotional campaign rather than rely on an ad agency she thought had lost its creative edge. Kim also says some of the men used to overturn decisions made during the day while out drinking after hours. Since she and other women at Samsung complained, Kim says, the practice has mostly stopped.

http://www.businessweek.com/magazine/content/08_16/b4080058309099.htm

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Women in South Korea - Cracks in the Glass Ceiling

Elite Korean Schools, Forging Ivy League Skills

It is 10:30 p.m. and students at the elite Daewon prep school here are cramming in a study hall that ends a 15-hour school day. A window is propped open so the evening chill can keep them awake. One teenager studies standing upright at his desk to keep from dozing.

Kim Hyun-kyung, who has accumulated nearly perfect scores on her SATs, is multitasking to prepare for physics, chemistry and history exams.

“I can’t let myself waste even a second,” said Ms. Kim, who dreams of attending Harvard, Yale or another brand-name American college. And she has a good shot. This spring, as in previous years, all but a few of the 133 graduates from Daewon Foreign Language High School who applied to selective American universities won admission.

It is a success rate that American parents may well envy, especially now, as many students are swallowing rejection from favorite universities at the close of an insanely selective college application season.

“Going to U.S. universities has become like a huge fad in Korean society, and the Ivy League names — Harvard, Yale, Princeton — have really struck a nerve,” said Victoria Kim, who attended Daewon and graduated from Harvard last June.

Daewon has one major Korean rival, the Minjok Leadership Academy, three hours’ drive east of Seoul, which also has a spectacular record of admission to Ivy League colleges.

How do they do it? Their formula is relatively simple. They take South Korea’s top-scoring middle school students, put those who aspire to an American university in English-language classes, taught by Korean and highly paid American and other foreign teachers, emphasize composition and other skills crucial to success on the SATs and college admissions essays, and — especially this — urge them on to unceasing study.

Both schools seem to be rethinking their grueling regimen, at least a bit. Minjok, a boarding school, has turned off dormitory surveillance cameras previously used to ensure that students did not doze in late-night study sessions. Daewon is ending its school day earlier for freshmen. Its founder, Lee Won-hee, worried in an interview that while Daewon was turning out high-scoring students, it might be falling short in educating them as responsible citizens.

“American schools may do a better job at that,” Dr. Lee said.

Still, the schools are highly rigorous. Both supplement South Korea’s required, lecture-based national curriculum with Western-style discussion classes. Their academic year is more than a month longer than at American high schools. Daewon, which costs about $5,000 per year to attend, requires two foreign languages besides English. Minjok, where tuition, board and other expenses top $15,000, offers Advanced Placement courses and research projects.

And, oh yes. Both schools suppress teenage romance as a waste of time.

“What are you doing holding hands?” a Daewon administrator scolded an adolescent couple recently, according to his aides. “You should be studying!”

Students do not seem to complain. Park Yeshong, one of Kim Hyun-kyung’s classmates, said attractions tended to fade during hundreds of hours of close-quarters study. “We know each other too well to fall in love,” she said. Many American educators would kill to have such disciplined pupils.

Both schools reserve admission for highly motivated students; the application process resembles that at many American colleges, where students are judged on their grade-point averages, as well as their performance on special tests and in interviews.

“Even my worst students are great,” said Joseph Foster, a Williams College graduate who teaches writing at Daewon. “They’re professionals; if I teach them, they’ll learn it. I get e-mails at 2 a.m. I’ll respond and go to bed. When I get up, I’ll find a follow-up question mailed at 5 a.m.”

South Korea is not the only country sending more students to the United States, but it seems to be a special case. Some 103,000 Korean students study at American schools of all levels, more than from any other country, according to American government statistics. In higher education, only India and China, with populations more than 20 times that of South Korea’s, send more students.

“Preparing to get to the best American universities has become something of a national obsession in Korea,” said Alexander Vershbow, the American ambassador to South Korea.

Korean applications to Harvard alone have tripled, to 213 this spring, up from 66 in 2003, said William R. Fitzsimmons, Harvard’s dean of admissions. Harvard has 37 Korean undergraduates, more than from any foreign country except Canada and Britain. Harvard, Yale and Princeton have a total of 103 Korean undergraduates; 34 graduated from Daewon or Minjok.

This year, Daewon and Minjok graduates are heading to universities like Stanford, Chicago, Duke and seven of the eight Ivy League universities — but not to Harvard. Instead, Harvard accepted four Korean students from three other prep schools.

“That was certainly not any statement” about the Daewon and Minjok schools, Mr. Fitzsimmons said. “We’re alert to getting kids from schools where we haven’t had them before, but we’d never reject an applicant simply because he or she came from a school with a history of sending students to Harvard.”

South Korea’s academic year starts in March, so the 2008 class of Daewon’s Global Leadership Program, which prepares students for study at foreign universities, graduated in February.

One graduate was Kim Soo-yeon, 19, who was accepted by Princeton this month. Daewon parents tend to be wealthy doctors, lawyers or university professors. Ms. Kim’s father is a top official in the Korean Olympic Committee.

Ms. Kim developed fierce study habits early, watching her mother scold her older sister for receiving any score less than 100 on tests. Even a 98 or a 99 brought a tongue-lashing.

“Most Korean mothers want their children to get 100 on all the tests in all the subjects,” Ms. Kim’s mother said.

Ms. Kim’s highest aspiration was to attend a top Korean university, until she read a book by a Korean student at Harvard about American universities. Immediately she put up a sign in her bedroom: “I’m going to an Ivy League!”

Even while at Daewon, Ms. Kim, like thousands of Korean students, took weekend classes in English, physics and other subjects at private academies, raising her SAT scores by hundreds of points. “I just love to do well on the tests,” she said.

As bright as she is, she was just one great student among many, said Eric Cho, Daewon’s college counselor. Sitting at his computer terminal at the school, perched on a craggy eastern hilltop overlooking the Seoul skyline, Mr. Cho scrolled through the class of 2008’s academic records.
Their average combined SAT score was 2203 out of 2400. By comparison, the average combined score at Phillips Exeter, the New Hampshire boarding school, is 2085. Sixty-seven Daewon graduates had perfect 800 math scores.

Kim Hyun-kyung, 17, scored perfect 800s on the SAT verbal and math tests, and 790 in writing. She is scheduled to take nine Advanced Placement tests next month, in calculus, physics, chemistry, European history and five other subjects. One challenge: she has taken none of these courses. Instead, she is teaching herself in between classes at Daewon, buying and devouring textbooks.

So she is busy. She rises at 6 a.m. and heads for her school bus at 6:50. Arriving at Daewon, she grabs a broom to help classmates clean her classroom. Between 8 and noon, she hears Korean instructors teach supply and demand in economics, Korean soils in geography and classical poets in Korean literature.

At lunch she joins other raucous students, all, like her, wearing blue blazers, in a chow line serving beans and rice, fried dumpling and pickled turnip, which she eats with girlfriends. Boys, who sit elsewhere, wolf their food and race to a dirt lot for a 10-minute pickup soccer game before afternoon classes.

Kim Hyun-kyung joins other girls at a hallway sink to brush her teeth before reporting to French literature, French culture and English grammar classes, taught by Korean instructors. At 3:20, her English language classes begin. This day, they include English literature, taught by Mani Tadayon, a polyglot graduate of the University of California at Berkeley who was born in Iran, and government and politics, taught by Hugh Quigley, a former Wall Street lawyer.

Evening study hall begins at 7:45. She piles up textbooks on an adjoining desk, where they glare at her like a to-do list. Classmates sling backpacks over seats, prop a window open and start cramming. Three hours later, the floor is littered with empty juice cartons and water bottles.

One girl has nodded out, head on desk. At 10:50 a tone sounds, and Ms. Kim heads for a bus that will wend its way through Seoul’s towering high-rise canyons to her home, south of the Han River.

“I feel proud that I’ve endured another day,” she said.

The schedule at the Minjok academy, on a rural campus of tile-roofed buildings in forested hills, appears even more daunting. Students rise at 6 for martial arts, and thereafter, wearing full-sleeved, gray-and-black robes, plunge into a day of relentless study that ends just before midnight, when they may sleep.

But most keep cramming until 2 a.m., when dorm lights are switched off, said Gang Min-ho, a senior. Even then some students turn on lanterns and keep going, Mr. Gang said. “Basically we lead very tired lives,” he said.

Students sometimes report for classes so exhausted that Alexander Ganse, a German who teaches European history, said he asked, “Did you go to bed at all last night?”

“But we’re not only nerds!” interrupted Choi Jung-yun, who grew up in San Diego. Minjok students play sports, take part in many clubs and even have a rock band, she said. Ambassador Vershbow, who plays the drums, confirmed that with photographs that showed him jamming with Minjok’s rockers during a visit to the school last year.

There are other hints of slackening. A banner once hung on a Minjok building. “This school is a paradise for those who want to study and a hell for those who do not,” it read. But it was taken down after faculty members deemed it too harsh, said Son Eun-ju, director of counseling.

http://www.nytimes.com/2008/04/27/world/asia/27seoul.html?ex=1209960000&en=f9ba883576c35596&ei=5070&emc=eta1 ◦

Elite Korean Schools, Forging Ivy League Skills

Shelving the free-trade pact with South Korea would be a mistake

Opponents of a U.S.-South Korean free-trade agreement should be careful what they ask for. They've been demanding that South Korea first re-open its market to U.S. beef.

Last week officials from the two countries reached a deal that would do just that. Now, the naysayers have run out of plausible excuses to block the agreement.

With its rapidly developing economy and increasingly prosperous 48 million consumers, South Korea has become a lucrative market for exporters and investors. Its free-trade agreement with the United States would give U.S. firms and farmers the same kind of open access to that market that their South Korean counterparts already enjoy in the U.S. market, but the pact requires congressional approval to take effect.

Florida sent $328 million in exports to South Korea in 2006, with computers and electronics, machinery and transportation equipment the top categories. History shows a free-trade agreement would raise the totals, creating more jobs for Floridians. The state's exports to Canada, Mexico, Chile and Jordan all shot up after agreements with those countries.

This month's deal on beef would fully open South Korea's market to American producers for the first time since 2003, when a case of mad-cow disease was found in the United States. Before the closure, South Korea was the third-biggest export market for U.S. beef.

Now that the beef argument has been slaughtered, some opponents of the trade agreement are citing South Korea's limits on imports of U.S. autos. But that's a good reason to back, not buck, the agreement; it commits South Korea to lowering barriers to U.S. cars and trucks.

More general contentions about the agreement's threat to U.S. manufacturing also don't hold up. One in five U.S. jobs in that sector is linked to exports. Opening more markets abroad would help, not hurt, especially when a lower dollar makes U.S. goods more competitive. The first U.S. trade pact with a major Asian economy also would let U.S. companies better compete with Chinese, Japanese and European rivals doing business in the region.

Nearly a year ago, the Bush administration made a deal with Democratic leaders in Congress to ease the way for passing the South Korea agreement and three others by incorporating stronger labor and environmental protections. Just one of the agreements, with Peru, has been approved since.

This month House Speaker Nancy Pelosi pulled a parliamentary maneuver to shelve a free-trade agreement with Colombia. Now critics of the South Korea pact are moving the goal posts for its approval. This might seem like good politics in an election year -- Republican presidential candidate John McCain is a free-trade advocate -- but it's truly bad policy.

http://www.orlandosentinel.com/news/opinion/orl-ed25108apr25,0,862204.story ◦

Shelving the free-trade pact with South Korea would be a mistake

South Korea trains cloned drug-sniffing dogs

The country that created the world's first cloned canine plans to put duplicated dogs on patrol to sniff out drugs and explosives.

The Korean Customs Service unveiled Thursday seven cloned Labrador retrievers being trained near Incheon International Airport, west of Seoul. The dogs were born five to six months ago after being separately cloned from a skilled drug-sniffing canine in active service.

Due to the difficulties in finding dogs who are up to snuff for the critical jobs, officials said using clones could help reduce costs.

The cloning work was conducted by a team of Seoul National University scientists who in 2005 successfully created the world's first known dog clone, an Afghan hound named Snuppy.

The team is led by Professor Lee Byeong-chun, who was a key aide to disgraced scientist Hwang Woo-suk. Hwang's purported breakthroughs in stem cell research were revealed as false, but independent tests proved the team's dog cloning was genuine.

The seven new cloned male dogs are all healthy, though one was sent to a university laboratory a few days ago for a minor foot injury it received during training, according to training center head Lim Jae-ryoung. For now, the dogs all share the same name: "Toppy" — a combination of the words "tomorrow" and "puppy."

"They have a superior nature. They are active and excel in accepting the training," said Kim Nak-seung, a trainer at the Customs Service-affiliated dog training center.

In February, all seven dogs passed a behavior test aimed at finding whether they are genetically qualified to work as sniffing dogs. Only 10 percent to 15 percent of naturally born dogs typically pass the test.

If the cloned dogs succeed in other tests for physical strength, concentration and sniffing ability, they will be put to work by July next year at airports and harbors across South Korea, according to the training center.

The agency says the cloned dogs could also save money.

"We came up with the idea of dog cloning after thinking about how we can possess a superior breed at a cheaper cost," said agency head Hur Yong-suk.

Normally, only about three out every 10 naturally born dogs it trains — at a cost of about $40,140 each — ends up qualifying for the job.

Lee of Seoul National University said it cost approximately $100,000 to $150,000 to clone each of the seven golden Labrador retrievers.

He said the seven are the world's first cloned drug-sniffing dogs.

The university team did not ask for payment from the customs authorities because it created the clones for academic purposes with government funds, Lee said.

He said his team has so far cloned 20 dogs and five wolves.

On Thursday the dogs frolicked with trainer Kim, running together and chasing a red rubber ball he threw across a playground — a part of training aimed at bolstering their stamina.

"If I look at them very carefully, there are now some small differences in their facial features," said Kim, who has been training the dogs since they were born. "But it's still hard to tell."

http://news.yahoo.com/s/ap/20080424/ap_on_re_as/skorea_cloned_dogs_2 ◦

South Korea trains cloned drug-sniffing dogs

South Korea's First Astronaut Returns

South Korea's first astronaut Yi So-yeon looks on during a news conference in Star City, outside Moscow,Monday, April 21, 2008. A Russian space capsule touched down in Kazakhstan on Saturday after hurtling through Earth's atmosphere in a steeper-than-normal descent, subjecting the three-nation-crew to severe G-forces and landing hundreds of kilometers (miles) off target. Saturday's mission saw the return to Earth of South Korea's first astronaut, Yi So-yeon. She spent 10 days in space before joining U.S. astronaut Peggy Whitson and Russian flight engineer Yuri Malenchenko in the 3 1/2-hour, bone-jarring descent from the international space station.

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South Korea's First Astronaut Returns

Bush hosts South Korean president at Camp David

President Bush and South Korean President Lee Myung-bak opened two days of talks on Friday focusing on North Korea's unfulfilled pledge to disclose its nuclear activities and a U.S. free-trade deal with South Korea that faces an uphill battle in Congress.

Bush hopes to strengthen sometimes-shaky U.S.-South Korea ties under Lee, a pro-American conservative who took office in late February and made the United States his first overseas trip. Their get-to-know-you meeting took on renewed importance when South Korea announced Friday that it would lift its ban on U.S. beef imports.

The dinner menu at the secluded presidential retreat in Maryland? Texas black Angus beef tenderloin.

South Korea was the third largest foreign market for U.S. beef before it banned imports in December 2003 over the possibility of mad cow disease. Its decision to end the ban removed a major roadblock to getting Congress to pass the free-trade pact, which Bush wants lawmakers to ratify before he leaves office. But even with the beef spat resolved, opposition from Democrats and automakers and a narrowing legislative calendar could push the issue into the next administration.

On North Korea, Bush is embracing Lee's get-tough rhetoric against its communist neighbor. But the talks between North Korea and the U.S., China, Russia, South Korea and Japan are at an impasse over how the North should make good on its pledge to declare its nuclear and proliferation activities.

Lee is the first South Korean president to be invited to Camp David, and the visit, under picture-perfect blue skies, was evidence of Bush's hope that U.S.-Korean relations will get even stronger under the new leader. Bush and first lady Laura Bush greeted Lee and his wife, Kim Yoon-ok, as they got off a helicopter that ferried them from Washington to the compound.

Bush started to climb into the driver's seat of one of the golf carts that are used to get around Camp David, then asked Lee if he wanted to drive.

"Yeah. Can I drive?" Lee asked, then moved quickly to the driver's side.

"I drive," Lee exclaimed, grabbing the steering wheel with one hand and waving with the other.

As the two drove past the media, Bush joked: "He's afraid of my driving."

The two leaders were to have talks Friday night and then more meetings on Saturday along with a brief press conference. They are expected to herald the beef deal, the culmination of lengthy negotiations.

The South Korean Agriculture Ministry said it will allow U.S. beef imports from cattle younger than 30 months. Younger cows are believed to be less at risk for mad cow disease. South Korea said it would allow beef from older cattle after the U.S. strengthens controls on feed to reduce chances of infection.

But even with that progress, the trade deal could face trouble as U.S. lawmakers, including Democratic presidential candidates Hillary Rodham Clinton and Barack Obama, voice increasingly anti-free trade sentiments.

On Friday, Lee met with Secretary of State Condoleezza Rice and with U.S. trade envoy Susan Schwab, who said the resumption of beef sales means that "safe, affordable, high-quality American beef will soon be back on Korean tables."

But Sen. Max Baucus, D-Mont., chairman the Senate Finance Committee, said he will block consideration of the trade agreement until all cuts of U.S. beef from cattle of all ages are on Korean store shelves.

"Korea must provide full market access for all U.S. beef, and I believe this deal can get us there if the Korean government follows through," Baucus said. "I will closely monitor the implementation of this new import protocol, and I expect great results."

Lee, a former construction chief executive nicknamed "The Bulldozer" for his determination to get things done, has ended a decade of liberal rule in which South Korea sought to embrace the North and refrained from criticism. The relief in Washington has been evident in the Bush administration's praise of Lee's insistence that the North follow through on nuclear pledges before receiving aid from its southern rival.

Bush's meetings with Lee's predecessor, Roh Moo-hyun — elected on an anti-America platform — were often notable for their awkwardness, fueling the perception that the leaders did not like each other. Roh favored a "sunshine" policy that provided aid without demanding concessions from North Korea.

Lee's position on North Korea may turn out to be even tougher than Bush's because the United States is pressing hard for an agreement. Nuclear talks are stalled over whether the North will hand over a promised full declaration of its nuclear programs in return for concessions. The Bush administration apparently has decided that the declaration's exact contents are less important than an assurance that the nuclear negotiators can check up on Kim Jong Il's government to make sure it has told the truth.

http://news.yahoo.com/s/ap/20080419/ap_on_go_pr_wh/us_skorea;_ylt=AhDtdQ.R0L0RLOxwgb91Z0yyFz4D ◦

Bush hosts South Korean president at Camp David

Beef deal buoys US-SK April summit

Buoyed by Seoul's decision to resume US beef imports, President George W. Bush and South Korea's leader Lee Myung-bak hold talks Friday on pushing ahead with a huge free trade deal and fortifying their half-century security alliance.

The meeting will also focus on a multilateral bid to end North Korea's nuclear weapons drive, as the Bush administration appears to be bending backwards to forge an agreement with the hardline communist state.

Eager to have the free trade and nuclear deals implemented before he leaves the White House in January 2009, Bush will welcome Lee at Camp David for the two-day talks, that are to include their economic and defense teams.

Lee is the first South Korean leader to be invited to the rustic presidential retreat.
Although the two have not met before, they share a business background, conservative free market principles and strong Christian values.

Ties between the allies have warmed since Lee took over the helm of the world's 10th biggest economy hardly two months ago.

Relations had deteriorated under Lee's predecessors Roh Moo-Hyun and Kim Dae-jung, both of whose unconditional support for North Korea had raised suspicions in the United States, which has 28,000 troops stationed in South Korea.

On the eve of the Bush-Lee talks, South Korea announced it has agreed to give US beef greater access to its market, giving a fillip to a free trade agreement signed about a year ago but unratified by their legislatures.

Washington wanted full access to the beef market for any ratification.

South Korea banned import of US beef in 2003 due to mad cow fears. It eased the ban in 2006 but effectively halted all imports last October.

"Both sides reached an agreement on gradual expansion of US beef imports," South Korea's Assistant Agriculture Minister Min Dong-Seok said in Seoul.

But US Trade Representative Susan Schwab said in Washington the agreement represented reopening the Korean market "to all US beef and beef products, from cattle of all ages."

She said "the major obstacle" to Congressional consideration of the FTA "is removed.

"The Administration will now work in earnest with Congress and the US agriculture, manufacturing, and services sectors to pass the FTA," Schwab said.

The agreement is the most commercially significant US trade deal in 15 years. The Democratic-led US Congress has been wary of trade deals negotiated by the Bush administration.

At a dinner late Thursday with business leaders, Lee was served US beef from farm-rich Montana.

"The ratification of the South Korea-US free trade agreement constitutes an essential part" of transnational community building, he said.

It would usher in a new era in bilateral security relations, "anchoring the military alliance on a firm social and economic basis," he said.

If ratified, the FTA will add about 20 billion dollars a year to trade between the two nations, said Dennis Wilder, the White House national security director for Asian affairs.

In a bid to mend fences with North Korea, Lee proposed Thursday the creation of the first liaison offices in the capitals of the two Koreas, which are still technically in a state of war after their 1950-1953 bloody clashes.

The offices in Seoul and Pyongyang would act as a permanent communication link, he told The Washington Post newspaper in an interview.

Lee has promised a firmer line on North Korea, linking aid to nuclear disarmament in a move that has angered the hardline communist state.

A furious Pyongyang has threatened to turn its neighbor into "ashes" after kicking South Korean officials out of a joint industrial complex in the North's border city of Kaesong.

Bush and Lee would discuss the latest efforts being made to prod North Korea to disband its nuclear weapons program under an aid-for-denuclearization pact adopted by the United States, China, the two Koreas, Japan and Russia.

In a turnaround Thursday, US Secretary of State Condoleezza Rice hinted that US sanctions against North Korea could be removed even before its nuclear programs or proliferation activities were verified independently.

"Verification can take some time," she told reporters.

North Korea has been pushing the United States to remove it from the blacklist of state sponsors of terrorism.

http://news.yahoo.com/s/afp/20080418/wl_asia_afp/usskoreankoreanuclearweaponstrade;_ylt=Au0Y4W3o5FUp.iCO7otGpCoBxg8F ◦

Beef deal buoys US-SK April summit

President Lee at the United Nations

Lee Myung bak, left, President of the Republic of Korea, meets Ban Ki-moon, United Nations Secretary-General, at the United Nations in New York, Wednesday April 16, 2008.

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President Lee at the United Nations

Predident Lee rings the opening bell at the NYSE

South Korean President Lee Myung-bak is joined by New York Stock Exchange CEO Duncan Niederauer as he rings the opening bell at the New York Stock Exchange, Wednesday, April 16, 2008 in New York.

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Predident Lee rings the opening bell at the NYSE

Rocketman vs. the Bulldozer

JUST a few weeks ago, when the New York Philharmonic performed in Pyongyang, Kim Jong Il's North Korea seemed to want to present a friendly face to the world. Its scowl is back, with a vengeance. On March 27th it expelled all South Korean officials from an inter-Korean industrial complex just north of the shared border. The next day its navy fired elderly ship-based missiles into the sea. This week the government said it needs its “nuclear deterrent” to ensure its survival, and labelled South Korea's president, Lee Myung-bak, a “traitor”, not to mention an “anti-North confrontation advocator”. North-South relations seem in a tailspin.

North Korea has been working itself up to this hissy fit since the inauguration of the conservative Mr Lee, nicknamed “the Bulldozer”, in February. Mr Lee has linked further economic co-operation with North Korea to its keeping its promise to declare all its nuclear programmes to America's satisfaction. North Korea bristles at this.

South Korea's Chosun newspaper has reported that North Korea's MiG fighters have on at least ten occasions since February crossed South Korea's “tactical action line”, some 20km (12 miles) north of the border, after which they can be over Seoul in minutes. Chosun also reported that mechanised North Korean army units have been moving towards the border.

South Korea's response to the military provocations has been muted. The foreign ministry described the missile tests as “routine military exercises”. Some in Seoul link North Korea's belligerence to parliamentary elections in the South on April 9th. The North may hope voters will reject Mr Lee's Grand National Party (GNP). It also hopes that by stoking security fears in South Korea it can drive a wedge between it and its American ally. Those fears might encourage Mr Lee to soften his stance in order to avoid worsening tension and risk damaging South Korea's investment climate. Mr Lee was elected on the promise of revitalising the economy.

Mr Lee's critics believe a South Korean government has no option but to co-operate with the North, especially on humanitarian matters such as family reunions or food supplies for malnourished North Koreans. They say Mr Lee is in thrall to GNP hardliners. These are mostly older politicians who scorn the “sunshine policy” towards the North of former presidents Kim Dae-jung and Roh Moo-hyun. A decade of sunshine, they grumble, has cost a fortune in economic assistance to an evil neighbour, without enhancing national security: witness North Korea's successful nuclear test in October 2006.

Still, every South Korean president has to profess support for closer integration and eventual reunification with North Korea. Mr Lee has promised massive economic assistance and investment if the North gives up its nuclear programme.

That does not seem very likely in the near term. Progress on the six-party deal supposed to lead to the North's denuclearisation has stalled. Few in Seoul hold out hope that North Korea will make a proper declaration of its nuclear programmes, including its secret uranium-enrichment activities. It was supposed to deliver this by the end of 2007. On April 2nd Christopher Hill, the American negotiator on the issue, said in Seoul that he was “very concerned” by the lack of progress.

The opening of diplomatic relations between America and the North looks increasingly unlikely. Nor does the Bush administration seem willing to remove the North from the list of nations that sponsor terrorism. For its part, Kim Jong Il's regime seems to be biding its time until it can deal with a new American president.

As inter-Korean relations deteriorate, so do prospects for investment by South Korean firms in the North. Optimists had hoped that this might help open the country and hasten political change. But South Korean shipbuilders, for example, who had been exploring setting up shipyards in the North, have shelved such plans.

In the meantime many in South Korea expect mounting tension on the border. North Korea is expected to conduct further provocative military exercises near the demilitarised zone and the maritime “northern limit line”, which it wants moved further south. Some in Seoul predict naval clashes. One gloomy North Korea expert who has Mr Lee's ear expects North Korea to restart its nuclear-weapons programme and perhaps conduct another test this year. Even if he is wrong about that, few dispute his view that “a very tough time” looms on the peninsula.

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Rocketman vs. the Bulldozer

10 Major Trends in Korea for 2008

http://www.ikjournal.com/
Samsung Economic Research Institute
Han Chang-Soo

In 2008, under a change in national leadership, Korea is expected to embark on major transitions in almost every sector, from politics to the economy and society. The victory of the conservative Grand National Party (GNP) in the December presidential election means a more pro-business administration for the first time in ten years. The overarching economic principle of the new administration will be "growth" rather than "equality and income distribution" as witnessed in recent years.

The administration hopes to maximize the economy's growth potential and job creation by stimulating corporate investment and market competition. However, political resistance to policy changes on top of ongoing social needs and demands will present a challenge in navigating a change in course.

Trend #1: Shifts in Economic Policy Line: Pro-Growth

Stressing pragmatism, President-elect Lee Myung-Bak wants to shift the economic focus back to growth. It is his goal to advance Korea to leading country status by building on the results of industrialization (in the 1970s) and democratization (in the late 1990s), and fortifying growth engines. "It is now time for Korea to become an advanced nation following its establishment (in 1948), industrialization and democratization. ...I am determined to create new development engines based on creativity," said Lee said in his victory speech.

Lee's administration will break away with the equality- and distribution-centered policy line of the last ten years under the liberal governments and try to "realize welfare through growth." Previous administrations attempted to enhance economic efficiency by implementing structural reforms and by introducing global standards over the past decade, but ended up undermining the Korean economy's vitality and native strengths: brisk corporate investment coupled with diligence a challenging spirit, all of which had driven national economic growth. As a result, the average annual economic growth rate fell from 7.7 percent in the 1980s to 6.3 percent in the 1990s and to 4.4 percent between 1997 and 2007.

The new administration plans to implement a market-orientated policy line to achieve its top economic priorities: higher growth and more jobs. Lee's "747 Public Pledge" during his election campaign calls for an annual average of 7.0 percent economic growth, US$40,000 of per-capita income, and Korea becoming one of the world's top seven economies. Along the way, it is envisioned that three million new jobs will be created during his five-year term.

To this end, his administration will choose pragmatic policy designed to invigorate market functions. It is highly likely that it will strive to recognize certain companies as core growth engines and improve corporate investment through deregulation. Prime targets for deregulation are the limits on the shareholdings of large conglomerates in their subsidiary companies, rules governing merger and acquisition (M&A) and the separation between the financial sector and non-financial actors (i.e., the regulation prohibiting an industrial company from owning a commercial bank).

Trend #2: Job Creation through Support for SMEs

Stronger competitiveness through supporting small and medium-sized enterprises (SMEs) and job creation will be the new administration's bywords. It aims to generate 500,000 jobs by fostering 50,000 innovative SMEs over the next five years. According to the government, innovative SMEs are:

* Venture companies

* The so-called "Innobiz" type of company, that is, government-designated SMEs that have operated for over three years, demonstrated technological prowess and growth potential

* SMEs that have proven themselves to be managerially innovative

Their potential of these two latter types of company to hire workers is estimated to be 2.6 times greater than ordinary SMEs.

SME competitiveness was also a key concern of previous administrations since they account for 88.1 percent (as of 2005) of total employment, according to the Korea Federation of Small and Medium Business.

The "People's Government" under the Kim Dae-Jung administration focused on nurturing venture companies in order to overcome the 1997 financial crisis, while the outgoing "Participatory Government" under President Roh Moo-Hyun introduced its "Comprehensive Measures [relating to technology, workforce, capital and markets] to Strengthen the Competitiveness of SMEs" in 2004, which contrasted with traditional protective policies toward the sector.

The new administration will promote a more advanced "growth stage-based strategy for fostering SMEs" than that of the Participatory government, which tried to nurture such companies simply by providing financial support. Specifically, the new administration will pursue concrete measures tailored to each type of innovative SME. Venture companies will be fostered with a focus on foundation; Innobiz SMEs will be nurtured in such a way to achieve higher growth; and the progress of managerially innovative SMEs will be bolstered through marketing and organizational innovation.

Trend #3: Prolonged Volatility in Financial Markets

The United States and Korean housing markets will weigh heavily on financial markets. In the U.S., the turmoil triggered by the subprime mortgage debacle will last through 2008 as a record number of homeowners face the end of their low introductory lending-rate period and a reset to a higher rate.

This could create a giant wave of foreclosures and crimp vital consumer spending in the U.S. economy. On a bigger scale, banks, forced into huge write-downs because of toxic securitized mortgages, are limiting commercial lending and non-financial concerns are feeling the effects of the housing industry recession on their own earnings.

The turbulence will raise one of the major questions of 2008: will the slowing U.S. economy fall into a recession and, if so, how will the global economy be affected? Jittery investors have been quick to exit stock markets, fearing a global slowdown. Therefore, the volatility of the U.S. stock market (and consequently the Korean stock market) is expected to continue at least several more months.

For example, following the second round of subprime mortgage woes in August 2007, foreigners sold securities on Korean bourses worth 21.9 trillion won in net terms, i.e., 80.5 percent of the securities that were net sold on an annual average in 2007. If the housing slump in Korea continues with an increasing number of unsold new houses and the recent liquidity squeeze persists, more and more nonperforming loans related to real estate are likely. Project financing (PF) loans offered by saving banks may be a case in point. The proportion of saving banks-issued PF loans jumped from 5.7 percent in June 2006 to 14.0 percent in March 2007 and has since remained at the same high level. Should interest rates keep rising and the housing market stays weak, even home-equity loans (largely with adjustable interest rates) are feared to go sour. The value of home-equity loans stood at 283.6 trillion won as of the end of September 2007, 94 percent of which were of the adjustable-rate variety. A one-percentage point increase in interest rates on home-equity loans is anticipated to add 550,000 won annually to the amount each borrower must repay.

Trend #4: Start of a "Big Bang" in the Financial Industry

The introduction of the Capital Market Consolidation Law (due to take effect in February 2009) promises to bring fundamental changes to the financial industry. Securities firms will be permitted to deal with all financial businesses except for banking and insurance businesses. An assortment of financial products will be based on the principle of "negative-listing" (meaning everything will be allowed unless prohibited specifically in the law), bringing down barriers between financial businesses and ushering in unlimited competition across virtually all types of institution within the sector.

Therefore, securities firms looking to expand the scope of their opportunities will likely seek to bulk their capital size through merger and acquisition or by acquiring asset management companies. In terms of the total assets, Korea's top three securities firms currently account for only one one-hundredth of the top three global investment banks. However, after the anticipated wave of such M&As, the domestic securities business will likely augment its weight relative to the financial industry as a whole.

Banks and insurance providers, as well, will make every effort to improve their competitiveness in the run up to the Capital Market Consolidation Law taking effect. It is envisioned that financial holding companies, mostly set up by commercial banks, will acquire or establish securities firms. Those already in possession of securities firms will enlarge departments related to investment banking and recruit more professionals.

Through the Ministry of Finance and Economy (MOFE), the government is also exploring ways to encourage M&A among financial institutions so that they can grow in size and cover operations of a broader scope. For instance, the ministry will provide tax incentives by, say, reducing the tax burden associated with M&As, lift regulations on private equity funds and allow hedge funds to merge with and acquire domestic or foreign financial institutions.

Trend #5: Full-Blown Convergence between Broadcasting and Communications and between Wired and Wireless Communications

SK Telecom's acquisition of Hanaro Telecom (wired telecom provider) from the AIG/Newbridge consortium announced in December 2007 is leading the Korean telecommunication market into a new competitive phase. KT (wired telecom provider) is considering merging with its wireless telecom subsidiary KTF while LG Dacom (wired telecom provider) plans to list its subsidiary LG Powercomm (and Internet service provider) on the Korea Stock Exchange and subsequently merge with it. The government has also developed policy measures to facilitate convergence between broadcasting and communications and between wired and wireless communications by consolidating the number of designated business lines and streamlining regulatory organizations.

For example, the number of business lines was reduced in December 2007 from the previous eight, which included local/long-distance/international calls, Internet access, VoIP (voice over Internet protocol) and telex, down to three, namely transmission, frequency provision and the leasing service of telecommunications circuit facilities

Meanwhile, separate regulatory organizations responsible for communications and broadcasting were integrated into the Committee to Promote Broadcasting/Communications Convergence under the Office of Prime Minister in July 2006. An integrated regulatory organization to govern this matter is expected to emerge later.

As a result of such convergence, the communications industry will develop a new competitive structure. The industry at present is primarily driven by competition among the top three wireless telecom service providers and the top three wired service providers. However, on the assumption that KT and SKT will maintain the dominant positions in the markets for wired and wireless communication services, respectively, the industry will be led by the top two comprehensive (wired plus wireless) service providers (KT and SKT) followed by one smaller provider (LG).

Trend #6: Hypercompetition Boundary Collapse among Markets and Industries

Competition in the future will not be affected by conventional barriers among industries, technologies, distribution and markets. As consumer needs become more complicated and technological barriers lower, some "gray market" companies will emerge. That is, new types of enterprises that are not illegal, but rather defy conventional competition rules and existing market demarcation.

For example, distributors may vie more intensely to secure new distribution channels. Also, in the electronics market, originally separate markets may overlap with one another as digital convergence products are developed. In fact, this phenomenon is already evident. Designer clothes, which were once only handled by specialty stores, are now sold by discount outlets or overseas purchase agents at reasonable prices. Also, the fast growth of satellite-based automobile navigation has prompted multimedia companies to combine their products with global positioning capabilities in order to gain a beachhead in this burgeoning market.

Trend #7: Multicultural and Globalized Families and Society

Korea is expected to welcome progressively more foreigners and foreign cultures. An increasing inflow of foreign workers and immigrants by international marriage brought the number of foreigners residing in Korea above the one-million mark as of August 2007. Over 50 foreign communities across the country exert multicultural influence on Korean society.

The Internet and cable TV facilitate the inflow of foreign cultural content and members of the younger generation increasingly go abroad and to experience other cultures. U.S. and Japanese dramas claim huge, enthusiastic audiences, resulting in the creation of some 1,400 Internet clubs that further increase the viewership of the shows. Moreover, domestic TV shows help familiarize Koreans with foreign culture by increasingly featuring more foreigners and by covering diverse themes. This has even given birth to a new term, "media nomadism," which refers to the phenomenon whereby the media does not stick to conventional forms or traditions, but rather encompasses a variety of cultures.

Trend #8: Shifts in Education Policy Direction Valuing Excellence over Equality

The incoming government plans to trim the size and power of the Ministry of Education and Human Resource Development and merge it with the science and technology ministry. The current egalitarianism-based education policy will be scrapped. Local governments and universities will be given greater autonomy and parents and students will have more options.

More than one hundred new independent private high schools are to be established to encourage competition for higher quality education and dampen the urge to enroll in after-school private academies. Such private high schools do not depend on state subsidies and therefore operate with full autonomy.

On the contentious issue of university admissions policy, universities will likely have more leeway in deciding on how to use the grading system in scoring the national academic achievement examination for university entrance, and how much high school records should be reflected in the admissions system.

In addition, the new administration will establish college systems that will make domestic colleges or universities internationally competitive in research capability. It will lay the groundwork for global research-centered universities by giving financial support toward research according to the research competitiveness of applicant universities. It will consolidate various and scattered R&D related policies of the Ministry of Science and Technology and the Ministry of Education and Human Resources Development and thus enhance the efficiency of R&D budget execution.

Trend #9: National Assembly Elections and Shifts in the Political Landscape

The 18th elections for the National Assembly scheduled for April 9th 2008 are likely to revolve around two key issues: on the one hand, the need of the GNP, the new ruling party, to secure more than half the seats within the legislature; and on the other hand, the need by the opposition to check the power of the same ruling party. At present, the GNP is expected to win a significant number of seats, but perhaps not as many as party leaders hope if voters think more checks and balances are needed in the National Assembly. Any early errors by the new administration, lackluster GNP candidates or doubts about the Lee administration's ability may result in a more mixed political landscape.

Voters in the Seoul metropolitan area will play a decisive role in the elections and consequently in the rearrangement of regionalism in politics. After the local elections of 2006, economic concerns, not regionalism, became the overriding voter concern, ultimately leading to the return of the conservative GNP to power. Unless major changes occur, a new political landscape may emerge characterized by a huge ruling party supported by voters in the Seoul metropolitan area and the Gyeongsang Provinces, plus several smaller parties that draw support from the Jeolla or Chungcheong provinces.

Trend #10: More Moderate Pace of Improvement in the Inter-Korean Relationship

Given the uncertainty about whether North Korea will proceed with its promised denuclearization, the new administration is very likely to insist on this issue as the top priority for better inter-Korean relations. It will focus on "mutual engagement" rather than "unilateral engagement." Thus, any further assistance to the North will be expected to hinge on the North's dismantling of its nuclear program. However, it will likely adopt a flexible support policy toward the North even before denuclearization occurs should there be concrete signs the country is progressing in this direction.

North Korea is currently in denial about its uranium enrichment program and is expected to declare a plutonium stock of less than the internationally suspected 50 kilograms. Even if the North makes an exact declaration about the state of its nuclear program, it is highly unlikely that negotiations on nuclear dismantlement in the second half of 2008 will proceed smoothly. However, considering that the North needs to leave room for negotiations with the next U.S. administration, which will commence in January 2009, it will likely refrain from extreme action such as a second nuclear test. ◦

10 Major Trends in Korea for 2008

Korean Management Practices at Hyundai USA

BusinessWeek
by David Welch, David Kiley and Moon Ihlwan
http://www.businessweek.com/magazine/content/08_11/b4075048450463.htm

The Korean carmaker and its Kia subsidiary are trying to move upscale in the U.S.—but culture clashes, management turmoil, and strategic discord are making for a bumpy ride.

On the morning of Monday, Feb. 4, about 20 of the top executives at the Irvine (Calif.) headquarters of Kia Motors America left their warm offices to stand outside in near-freezing cold. They were awaiting the arrival of Byung Mo Ahn, the president of Kia Motors. The group organized itself into a receiving line and stayed in formation for more than 15 minutes until Ahn arrived in a chauffeur-driven Kia Amanti sedan.

Although some of the executives were shivering, it would have been bad form to return inside: Standing to greet top brass is customary at Hyundai Motor, Kia's Korean parent. After spending a full week in Irvine, Ahn performed another ritual that has become common at the company: sacking the American leadership team. On Feb. 8 he axed Len Hunt, president and CEO of Kia Motors America, and Ian Beavis, marketing vice-president.

It marked the fourth shakeup in three years for Kia's American operation. The U.S. unit of Hyundai, meanwhile, has churned through four top executives in five years. Many of the departures have come at awkward times. Hunt and Beavis got the news at the airport as they were about to fly from Irvine to an annual dealer meeting in San Francisco. According to several sources, Hunt's predecessor, Peter Butterfield, was dismissed during a dinner meeting with dealers at the Bellagio Hotel in Las Vegas—between the entrée and dessert. The companies declined to comment on any of these executive departures.

The management shakeups at the American divisions of Hyundai and Kia—two once-separate manufacturers that are now essentially run as one company—come at a critical period. Both brands, which were originally marketed to American consumers as utilitarian econoboxes, are trying to move upscale and sell sedans that can compete with Cadillac and BMW. They are also banking on rapid growth in the U.S. Next year, for example, Kia is opening a plant in Georgia that was built on the optimistic assumption that the company could sell at least 370,000 cars in the U.S. annually. But sales momentum has been slowing. Kia sold 305,000 cars in America in 2007, 13% shy of its target of 350,000. Given their aggressive growth plans, both Hyundai and Kia "need North American auto expertise," says James N. Hall, president of 2953 Analytics, an auto industry consultancy near Detroit.

The problem is that the companies keep booting out American talent. And many of the American executives who do stay find parent Hyundai Motor's corporate culture to be suffocating. According to several current and former managers, Hyundai Chairman Chung Mong Koo, Kia's Ahn, and other top executives run the companies in a far more authoritarian style than do most American CEOs. The critics say his team micromanages details, rarely listens to advice from local managers, and displays little tolerance for disagreement. "It's a very feudal approach to management," says Bob Martin, a former sales executive who left Hyundai in 2005 to become a consultant at CarLab, a Santa Ana (Calif.) consulting firm. "There's a king, he rules, and everyone curries his favor. It's very militaristic."

"PUSHING ALL THE TIME"
While Chung's top-down management style might rub some Americans the wrong way, his long-term track record in the U.S. is impressive. Under his leadership, Hyundai has nearly doubled sales in the country since 2000, to 467,000 cars last year. Kia has posted almost identical growth.

Chung, who was convicted of embezzlement in Korea last year but had his prison sentence suspended, has won praise for creating a highly disciplined company. When quality complaints started to plague Hyundai during the 1990s, he ordered engineers to attack the problem. By 2004, Hyundai had soared up the rankings in quality surveys. Unlike Detroit's Big Three, Hyundai and Kia have fewer management layers to hold up decisions. "I can see where Americans would feel uncomfortable," says Alice Amsden, a professor of political economy at the Massachusetts Institute of Technology who has written books about Korea and other developing Asian economies. "American management is used to a different style. But Hyundai deserves a lot of credit."

Both Hyundai and Kia, speaking through representatives at their American units, said that all of the American managers who have left the companies in recent years were treated fairly. Even some of the executives who have departed praise the companies' management culture. "Being aggressive doesn't make them bad," says Robert Cosmai, who was CEO of Hyundai's American unit for two years before getting fired in January, 2006.

Boldness is part of Hyundai Motor's DNA. Like many of Korea's early corporate patriarchs, founder Chung Ju Yung had a simple strategy: Build factories first, worry about sales later. Starting with a small construction company in 1947, he moved into autos, shipbuilding, and other industries. Hyundai became one of the most successful Korean chaebols, family-controlled conglomerates with close ties to the government. But it was broken up into several pieces in the late 1990s in the wake of the Asian financial crisis. Last year, the global revenues of Hyundai and Kia grew 7%, to $63.5billion.

Chung Ju Yung's heirs continue to run Hyundai Motor, and his business philosophy still prevails. In America, the two companies often establish sales targets based on what their auto plants can produce—a persistent source of tension with local managers. Several past executives say that Hyundai and Kia have set unhealthily aggressive sales goals that are causing inventory to pile up. Hyundai has about 32,000 Sonata sedans parked in lots around its Montgomery (Ala.) plant with no orders from dealers. "The production-oriented style of pushing all the time won't work anymore," says Kim Ki Chan, professor of auto economics at Catholic University of Korea.

One consequence of this philosophy is that both Hyundai and Kia have been forced to sell more cars to rental fleets—a practice that tends to make brands lose cachet with buyers. But consumer psychology is something that Hyundai Motor has never mastered, says consultant Hall. At bottom, it has always had the mindset of a manufacturer, not a marketer. Many of the products made by Chung Ju Yung's original conglomerate, such as locomotive engines and tanks, were sold to business. Hyundai Motor's leadership team "lacks marketing savvy," says Yoo Young Kwon, a Seoul-based auto analyst at Prudential Investment & Securities (PRU). "What they need in the U.S. is to let American executives implement marketing strategy in a sustainable way."

But handing over the reins to American marketers is not something that seems to come naturally to Hyundai Motor. After walking through the receiving line on that Monday morning in February, Kia CEO Ahn spent the day criticizing the company's advertising. The brand has marketed itself as sporty and fun as opposed to the more serious Hyundai. In one of the meetings, Ahn said he hated an ad depicting a Kia dealer doing an impression of the film Flashdance, dancing wildly as the jingle "He's a maniac, maniac, and he's selling like he's never sold before" plays. Ahn halted the spots and said Kia's message should lose the campy humor.

HEAVY HANDLERS
Four days later, Kia America CEO Hunt and marketing vice-president Beavis lost their jobs. The firings came as a surprise to the Kia dealers gathered in San Franciso's Moscone Center. Some say they're worried that the brand's marketing message will become diffuse. "It doesn't inspire a lot of confidence," says Ed Tonkin, a Portland (Ore.) Kia dealer who opened one of the brand's original U.S. stores. "The danger is that every time you get a new person, they will go with different marketing and advertising."

Since the meeting, Ahn has taken over Hunt's old office and expanded it. He has tried to mollify dealers with offers of increased corporate support. Kia and Hyundai are also making a greater effort to improve the morale of disgruntled American executives. Kia spokesman Alex Fedorak says many of them get training from a Korean culture coach.

Cross-cultural outreach is long overdue. Several Americans expressed resentment at the so-called coordinators, the Korean overseers whose job it is to keep an eye on American managers. Culled from the ranks of up-and-coming stars in Seoul, they sit alongside American managers, monitoring decision-making and results. Both Hyundai and Kia have about a dozen coordinators. They must agree to major decisions—and sometimes smaller ones, such as whether to award vacations to dealers who hit sales goals. Japanese automakers also have coordinators in their U.S. operations, but they play more of an advisory role while the American executives have free reign to make major decisions.

Mark Barnes, chief operating officer at Volkswagen Group of America (VLKAY), who worked as a sales executive at Hyundai Motor America until 2006, says the coordinators applied pressure to achieve targets. "If you were subpar, they would ask what you're going to do to get your numbers up," Barnes says. During some conference calls, he adds, the coordinators would speak Korean to managers in Seoul, all but shutting out the Americans.

Kia spokesman Fedorak says the coordinators serve a valuable purpose: bringing the corporate vision from Seoul to America, then relaying the needs of the local market back to headquarters. Since few American employees speak Korean, the coordinators also act as translators. While acknowledging that Kia has a Confucian-influenced corporate culture in which "father knows best," he said this was not the main source of conflict with American executives. Instead, he attributed the tension to Korean managers' greater comfort with "stretch goals."

At the moment, the stretch goal that is stressing out American executives at Hyundai Motor is the company's insistence on trying to move into the low end of the luxury business. For years, executives in the U.S. have been telling their counterparts in Seoul that the two brands are not strong enough to sell for much above the price range of $12,000 to $25,000. But their warnings have been ignored. Chung believes that going upscale is essential for Hyundai and Kia. The weak dollar has hurt profits, and concessions made to the Korean unions are eroding the company's cost advantage. So both Hyundai and Kia have launched a slate of vehicles priced near or above $30,000. In 2005, for example, Kia released the Amanti (Ahn's limo) with a mandate to sell 20,000 a year.

The company didn't come close to hitting that number, selling just 5,500 of the sedans, priced between $25,000 and $30,000, last year. Still, nobody expects Chung to heed the advice of some American managers and pull back. "The top-down management style hasn't changed at Hyundai," says Lee Hang Koo, auto industry specialist at the Korea Institute for Industrial Economics & Trade. "This is bound to lead to cultural clashes with Americans. We've seen management churn in the past, and there's no reason to believe it will stop." ◦

Korean Management Practices at Hyundai USA

New South Korean President is Struggling Early

Just sworn in, Lee Myung-bak already seems out in the cold

His thunder stolen internationally by the arrival of the New York Philharmonic in Pyongyang, Lee Myung-bak was sworn in as South Korea's 17th president on February 25th. In freezing weather in Seoul, Mr Lee pleaded for support. The audience, mostly from his Grand National Party (GNP), dutifully applauded—but with little enthusiasm. The president, elected last December, has made a poor start to his five-year term.

Mr Lee, cleared this month of any wrongdoing in a failed investment scheme, nevertheless faces public suspicion over the past business dealings that made him a multimillionaire. And some of his nominees for cabinet posts are already under clouds. Three of his ministerial choices—for sex equality, “unification” (ie, dealings with North Korea) and the environment—have resigned over criticism of their property dealings. This is a highly sensitive issue in Seoul, where many cannot afford to buy their own homes. Some of his nominees' children are foreign citizens. One was thus able to dodge the mandatory military service. This has raised hackles. Most South Koreans cannot afford to send their children abroad to acquire foreign passports.

Most economists think Mr Lee's bold promise of 7% annual growth is optimistic. His plan to build a canal system on the peninsula has united a coalition of civic and political groups in opposition. And his call for a “pragmatic not ideological'' relationship with North Korea has perturbed American leaders. In addition, Mr Lee has had to scale back his plans to trim the bureaucracy. Instead of 13 government ministries there will be 15, down from 18 under his predecessor, Roh Moo-hyun.

The president's difficulties are compounded by his shallow political base. In a pun on the name of a famous actress, South Koreans call it “Ko So Young”. “Ko” refers to his alma mater, Korea University, which has supplied him with prospective ministers and aides; “So” to the church he attends; and “Young” to the south-east of the Korean peninsula, which voted for him in huge numbers largely because Mr Roh is widely loathed in the region.

Even within the GNP, Mr Lee has few allies. Party heavyweights have long viewed him as an upstart without their own conservative convictions. Mr Lee is indeed a pragmatist. His landslide victory in December owed much to his success during his time as Seoul's mayor in solving practical problems, such as his reorganisation of the capital's traffic system.

Park Geun-hye, whom Mr Lee defeated to become the GNP's presidential candidate thanks to its system of open primaries, still commands more support within the party. She is engaged in a fierce struggle with him to have her nominees chosen as the GNP candidates at April's legislative elections. If she wins, or the GNP loses the election, the new president's legislative programme could be stymied.

Mr Lee is a somewhat remote and cold figure. He now needs to make himself popular. But both the economic and political climates on the peninsula seem to be worsening. Even when the snow that blanketed Seoul within hours of his taking the oath of office thaws, South Koreans may not warm to him.

◦

New South Korean President is Struggling Early

SKT and Citibank Partner to Offer new Mobile Banking Applications

SK Telecom said Thursday that it will set up a joint venture with Citigroup to sell mobile banking (m-banking) and payment solutions in North America and Asia.

The two firms will invest $8 million each to launch Mobile Money Venture, which will be based in San Francisco. The joint venture plans to provide various mobile money transaction services, such as SK Telecom's Moneta service in Korea, from the second half of this year in major American cities and Hong Kong.

"We are exploring a new mobile era with Citi, a global financial services provider,'' said So Jin-woo, president of Global Biz Company, SK Telecom. "With our expertise in telecom and mobile finance, SK Telecom is proud to provide our advanced technology to customers worldwide and deliver the next-generation mobile banking technology.''

SK Telecom will be developing the mobile banking software and hardware systems for Citibank customers in Hong Kong and major cities in the United States first. "This is not an exclusive deal, so we will be able to sell the platform to other banks and mobile carriers in other countries later on,'' said SK Telecom spokeswoman Cindy Kang.

After testing the mobile banking system, the firm will then move onto mobile payment and electronic coupon services, Kang said. The joint venture will be run by Steven Kietz, who oversaw e-commerce and direct banking initiatives at Citi.Mobile commerce is gaining popularity all over the world, especially in the Asian region. Most services enables customers to check their balance, pay taxes and utility bills and transfer money by accessing the banks' online service.

More complicated ones such as SK Telecom's Moneta provides a system where people can pay at shops, restaurants, on buses and subways by swiping their mobile phone. Often called the "electronic wallet,'' such a phone payment system uses a chip, which is inserted in the handset and electronic readers.

Three Korean mobile firms ― SK Telecom, KTF and LG Telecom ― and a number of commercial banks have been actively developing the mobile commerce services, hoping phones will someday replace wallets and ATM machines. But competition between mobile operators and banks for the initiative of the business has caused delays in the deployment of the services, said SK Telecom's Kang, adding that the SK Telecom-Citi venture will not have such problems.

http://www.investkorea.org/InvestKoreaWar/work/ik/eng/nr/nr_01_read.jsp?no=608300001&l_unit=90202&bno=803070010&page=1&sort_num=3765 ◦

SKT and Citibank Partner to Offer new Mobile Banking Applications

South Korea's First Astronaut

An artificial intelligence expert lost the chance to be South Korea's first citizen in space after reading and removing manuals from Russia's cosmonaut training center without authorization, the government said Monday.

Instead, a female bioengineer will conduct scientific experiments on a Russian voyage to the International Space Station next month, the South Korean Ministry of Education, Science and Technology said.

Russia's Federal Space Agency asked for the change last month, saying Ko San - the original choice - repeatedly violated regulations at the training center near Moscow, Lee Sang-mok, a senior ministry official, told a news conference.
He was replaced by Yi So-yeon, a 29-year-old with a doctorate in bioengineering who had been South Korea's second choice for the mission.

Russian authorities said Ko took his training manual out of the center without permission and sent it to his home in South Korea in September, Lee said. Ko later returned the manual, explaining he accidentally sent it home together with other personal belongings, Lee added.
In February, Ko again broke the rules by getting what was believed to be a manual used by space pilots from the center through a Russian colleague - material he was not supposed to read, Lee said. Ko had signed the center's instructions on the rules.

"The Russian space agency has stressed that a minor mistake and disobedience can cause serious consequences," Lee told reporters.

Lee said he believed the materials in question were not classified.

The state-run Korea Aerospace Research Institute - which employs Ko - has rebuked him, both verbally and in writing, Lee said.

The institute offered an apology to Russia both times, he said. The institute has no plan to take further disciplinary measures.

Anatoly Perminov, chief of the space agency, said in a statement on its Web site Monday that the change was because Ko "violated the code of conduct for cosmonauts," adding that the substitution would cause no complications for the mission.

Yi is scheduled to work aboard the space station for about 10 days with five other cosmonauts, including an American woman, according to Lee's ministry.

The Soyuz spacecraft is scheduled to lift off from a space center in Baikonur, Kazakhstan, on April 8, the statement said.

Ko, 31, will remain at the training center in Star City near Moscow and train with Yi, Lee said.
The mission will make South Korea the world's 36th country to send an astronaut into space, said ministry official Kim Ki-seok.

South Korea plans to complete its first space center by the end of next year as part of a program to lay the technological and scientific groundwork for space exploration in coming decades.
Since 1992, South Korea has had 11 satellites launched, mostly for space and ocean observation and communications. ◦

South Korea's First Astronaut

The Seoul of World Design

The Korean capital, soon to host the Design Olympiad, is funding projects to promote style in Korean brands—and help keep growth on track

Korea's economy has long been one of Asia's success stories, but pessimists fret for the future as Korea is sandwiched between fast-growing China and longtime rival Japan. Could a government-backed plan to raise Seoul's standing as a city focused on design help keep its growth on track?

Seoul Mayor Oh Se Hoon certainly thinks so. Oh, leader of a city home to nearly a quarter of the country's population of 48 million, is convinced Korea can stand out from its larger neighbors by establishing the capital as a international design center.

The 47-year-old mayor says thinking about design will have numerous benefits. At an individual level he believes cultural benefits can enrich the daily lives of work-obsessed Koreans. Just as important, a renewed creativity can help the economy.

"Design is everything," declares Oh.

The hyperbole isn't pure talk. Since taking office in July, 2006, Oh has set about turning Seoul into a global design hub with a slew of initiatives. He quickly established a new design division headed by a vice-mayor and initiated design competitions aimed at improving the city's looks. He has also begun offering training and seminar courses for young designers. The effort will kick into high gear in October when the city hosts the first Seoul Design Olympiad. It has also commissioned international "starchitect" Zaha Hadid to design the $98 million Dongdaemun Design Park.

Seoul Named 2010 World Design Capital
Oh's ambition got a huge boost last October when the city was designated as the World Design Capital in 2010. The title is bestowed biennially by the International Council of Societies of Industrial Design (ICSID), which represents some 150,000 designers from scores of countries.
These combined efforts, Oh reckons, will help increase the size of Korea's design market—measured by the total of revenues by design houses and investments in design by ordinary companies—to $15 billion in less than 10 years, from $7.4 billion last year. "In coming years we'll see aspects of design in our everyday life," predicts Lee Kun Pyo, president of Korea Society of Design Science and an acolyte of Oh.

Understandably, some find the challenge daunting. After all, Seoul isn't alone in seeking to boost its global standing through design. Hong Kong, Shanghai, Tokyo, and Yokohama all hold ambitions to be design centers. Then there's global competition from cities like London, Paris, Milan and New York, with many decades as leading arbiters of design. Yet Oh and design industry leaders insist there's big potential in Korea. For one, Seoul beat some 20 rivals, including Singapore and Dubai, to be named ICSID's first World Design Capital to be chosen through competition. (Torino, the first city to win the award, was named as pilot.)

Better Design Boosting Korean Blue Chips
Perhaps more important, Korean companies have also made great strides in recent years in improving brands through design. Companies like Samsung Electronics, LG Electronics, and SK Telecom (SKM) boast leading designers in the fields of digital displays, handsets, and mobile products and services, garnering international design awards along the way.

The fruits of their efforts are reflected in the improved global standing of Korea's blue chips. Last year Samsung overtook Motorola (MOT) to become the world's second-largest cell-phone maker (BusinessWeek.com, 12/16/07) after Nokia (NOK).

Samsung also beat all Japanese rivals to become the No. 1 flat-TV brand, and LG consolidated its position as No. 5 in handsets and No. 4 in flat TVs last year. "In the TV market, design will be a critical differentiator," Simon Kang, president in charge of LG's digital display unit told BusinessWeek earlier this year.

Promise from the Next Generation
The argument is straightforward: In a world awash with digital and high-definition TVs boasting super picture quality, it takes more than technological superiority to win business. Consumers may consider the purchase of a flat-screen TV as much for its look as a piece of furniture as for its technogical capabilities (BusinessWeek.com, 1/16/08).

Korea also has a remarkably large number of wannabe designers. In Seoul alone about 11,000 students are majoring in design at 18 universities, while another 2,600 students in 51 graduate schools attended design programs in 2007. Recognizing this potential talent, Japanese auto companies, including Nissan (NSANY), have begun hiring young Korean designers. "When I first saw the sketches that Korean students were drawing, I was utterly shocked. Their design is very emotional and powerful," Shiro Nakamura, Nissan's chief creative officer, said last year.

The city government has set aside $180 million to finance projects ahead of Seoul becoming the first World Design Capital, part of which will go to sprucing up Seoul's streets, buildings, parks, and the Han River running through the city. Big business, sensing an opportunity, will lend a helping hand by dispatching senior designers to help out on projects. Cha Kang Heui, chief designer at LG's handset division, reckons the overall effect could echo the impact of the Seoul Olympics in 1988. "Just as the Olympics often serve as a coming-of-age party for a developing country, design could provide momentum for Seoul," he says.

All Eyes on Seoul This October
For Seoul mayor Oh, though, the highlight of the design drive will be the Design Olympiad in October. Oh plans to invite top designers from fashion, graphics, and other different design fields. He's counting on attracting 2 million people to the 21-day event featuring competitions, exhibitions, live performances, and light shows. If that doesn't whet the world's appetite for Korean design, perhaps nothing will. "I want people around the globe to say, 'If you want to check out the latest in design trends, go to Seoul,'" says Oh.

For more, see BusinessWeek's slide show.

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The Seoul of World Design

Rise in the Price of Gold is Bad Luck for Korea's Babies

Thirty-four years ago, each of the guests at Moon Sang Soo's first birthday party brought the customary baby present: a 24-karat gold ring.

When Moon was accepted to college, his parents had 20 of these rings, each weighing one don (3.75 grams, or an eighth of an ounce), melted down and recast as a miniature crown, which he now proudly displays in his living room.

But in December, at his own son's first birthday party, only half of Moon's 50 or so guests brought a ring. The others presented the baby with cash, slipping it into his parents' sleeves.

Gold is the traditional Korean gift to wish a baby good health and fortune in life, but with the world price of gold soaring to more than twice the level of just three years ago, that custom is breaking down. Guests at first birthday parties are resorting to alternatives. Some parents who do receive gold in their baby's name are even reselling it as soon as they can.

Gold has been a marker of many life passages in South Korea. Gifts of gold jewelry and watches used to be almost obligatory at weddings. Companies often awarded their employees with gold medals and gave them gold key chains when they retired. It was assumed that gold could be turned into cash in case of emergency.

As the country modernized, other items came into play as gifts. But the tradition of baby rings, valued not just for their monetary value but auspiciousness, has persisted. Most households have from 5 to 20 rings, or more, stashed away for each child, and resistance to selling them remains high.

"People gave us the rings to wish my children longevity," said Joo Sae Hoon, 37, a marketing director at an online bookstore who has two children, aged 7 and 11. "So I wouldn't feel comfortable cashing them in. Maybe I will have them made into necklaces when my children turn 20."

Attaining one's first birthday was a major cause for celebration when South Korea was poor and infant mortality rates were much higher. The gold rings were cherished as talismans safeguarding the children as they were growing up.

Moon said he preferred the gifts of gold to the cash at his son's birthday in December. The gold, he explained, was more likely to end up in his son's hands.

"It's less liquid than cash," he said. "So I can keep myself from spending it."

But the trend toward cash in place of rings seems likely to continue given rising gold prices, which in January surged past the 1980 record of $850 an ounce and are now hovering around $950. Rings that cost about 50,000 won, or $60 to $70, about three years ago have been priced at more than 100,000 won since the beginning of this year.

"A couple of months ago, I paid 95,000 won for a baby gold ring. I thought it was too expensive," said Lee Yon Jeong, a journalist.

Jewelers have been hit hard. According to the Korea Jewelry Association, sales of baby rings are down by half since the typical cost rose above 100,000 won.

"Customers keep coming in to buy baby rings," said Yoon Jae Hee, owner of Kobo Jewelry in central Seoul. "But once they find out that they cost 130,000 won, they hesitate."

"They might buy a ring half the standard size," he said. "Or they resort to cheaper accessories."
Gold jewelers have been trying to lure customers with lightweight baby necklaces or bracelets with bells - supposed to prevent a baby from going missing.

And several jewelers say that now more people are selling gold than buying it.

People have been bringing in graduation rings, lucky charms, key chains, mismatched earrings. A few have even started selling their baby's gold rings.

"The other day a woman pushing a child in a stroller sold us three," Yoon said. "As she did so, she murmured, 'Sorry, son.' "

He said he gave the woman 91,000 won for each ring.

Still, Cha Min Gyu, public relations manager of the Korea Jewelry Association, said he doubts the custom of giving babies gold rings will disappear completely.

"Families will never give up gold rings for their own precious children," Cha said. "In Korea, gold will always be a symbol of health, wealth and prosperity."

Judging by the current level of baby ring production, Cha said he believes that about 40 percent of guests are still bringing gold rings to first-birthday parties. "Otherwise the baby ring jewelers would be out of business by now," he said.

Moon, who received a crown made from his gold baby rings when he was accepted to college, says that once his own son reaches that point, he'll sell the 27 rings presented to his son in December to pay the first semester's tuition.

"For the rest of his higher education," Moon said, "he can support himself."

http://www.iht.com/articles/2008/02/28/asia/gold.php ◦

Rise in the Price of Gold is Bad Luck for Korea's Babies

Koreans stay at home and go to school

SEOUL: You can spend thousands of dollars and endless hours in crowded lecture halls to gain a South Korean real estate agent's certificate.

Or you could study for the license in the comfort of your own room with a broadband connection to a television for a fraction of the cost.

For companies selling interactive television over the Internet, soaring demand in Asia for high-quality education for children, as well as demand from people looking to change careers, offers a potentially lucrative market and the chance to lure customers away from cable television and the computer.

South Korea, where children spend hours studying in a gruelling battle to enter the top schools that can guarantee a job at the big conglomerates, is at the vanguard of educational television over the Internet in Asia.

Tuition is expensive, with spending on after-school tutoring estimated to be the equivalent of 2.6 percent of the country's gross domestic product.

Private tutors, who are highly sought after, can earn a salary similar to a banker's pay.

South Korean companies, like KT, which plan this year to upgrade their Internet-powered television services to full Internet protocol television, known as IPTV, are spearheading the move.

KT says online education for children ranks among the most successful programs on its "MegaTV" system, which also offers after-school tutoring and adult education courses.

"The response is strong for kids' programs in which they learn by playing games and solving puzzles using a remote control," said Yang Jae Geon, KT's director of media.

Young Choi, an analyst at Mirae Asset Securities in Seoul, said educational programs generated about 20 percent of IPTV revenue.

"Education is one area they can make users pay extra money," Young said. "The key is to increase the portion of paid programs."

Young said he expected IPTV use in South Korea to rise to five million subscribers by the end of 2009 from an estimated three million at the end of 2008. The overall market for IPTV could reach more than 55 million worldwide by the end of 2011, from an estimated 10 million last year, according to the research firm Ovum.

IPTV, with its immediacy, interactive features and easily navigable menus, bypasses the process of having to start up a computer and surf the Internet.

Across Asia, quality education is in constant demand and short supply. Students often fight for places at the best schools, workers pin their hopes on English skills to lift their careers and parents look for new ways to teach their youngsters.

"Game content and educational programs have big potential because both target a very important group of people - that's the young generation," said Rocky Li, marketing director at BesTV, the IPTV unit of Shanghai Media Group.

Most IPTV companies have focused on popular television shows and sports events for growth. In Europe, operators like BT in Britain gained market share by offering customers free access to digital terrestrial television. PCCW of Hong Kong has the exclusive right to broadcast popular English Premier League soccer.

But operators, many of which are fixed-line carriers muscling in on broadcasters' territory, hope that IPTV's interactive features give them an edge in the potentially lucrative teaching market.

On IPTV, lectures can be repeated at any time and they allow students to take quizzes or pose questions in real time.

In China, where history and geography programs are already offered, education is set to become the fastest-growing part of BesTV's business, Lee said, referring to the IPTV unit of Shanghai Media Group.

"In traditional TV, it's difficult to find these programs," Lee said, because of inconvenient times and limited slots. He expects overall IPTV users in China to reach two million by the end of 2008 from 600,000 now.

IPTV companies are also trying to add popular video games, from simple board games and racing to multiplayer online games, to attract computer users away from their computers.

But some analysts say a television in the living room is not the best platform for interactive programming.

"TV is something shared by the entire family," said Suran Seong, a senior analyst at Ovum. "Some parents are not comfortable with the idea of kids studying in front of a TV."

On the financial side, operators will also need to strike the right balance between subscription fees and payments to content holders.

"Big players will remain hesitant until IPTV starts to make money," said Lee Sun Kyoung, an analyst at Goodmorning Shinhan Securities. "Operators, on the other hand, are under pressure to keep fees low to expand the market."

http://www.iht.com/bin/printfriendly.php?id=10435696 ◦

Koreans stay at home and go to school

New York Philharmonic Plays Arirang in North Korea (Feb 2008)

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New York Philharmonic Plays Arirang in North Korea (Feb 2008)