http://www.koreaherald.co.kr/NEWKHSITE/data/html_dir/2010/01/01/201001010064.asp ◦
Thursday, December 31, 2009
Tuesday, December 29, 2009
Friday, December 25, 2009
Monday, December 07, 2009
Do the Chaebol Choke Off Innovation?
South Korea's giant family-based conglomerates are thriving, but they may be crushing small companies
By Moon Ihlwan
Song Kyu Heon harbors no illusions about the strength of the chaebol, the family-controlled conglomerates that dominate South Korea's economy. Nonetheless, as chief executive of tech services company Openbase, Song was confident he could beat chaebol -backed rivals to win a multimillion-dollar deal to upgrade the computer systems at a Korean bank. His client roster, after all, includes Citibank (C), LG, heavy equipment maker Doosan, and dozens of other high-profile companies and government ministries. As a longtime contractor with the bank in question, Openbase knew its systems well, and a team of 20 engineers had been preparing a bid for a year. But in October, Song lost the deal to an affiliate of a top chaebol. "There's no such thing as a level playing field here," Song says in his fifth-floor corner office overlooking Tehran-ro, a street that's sometimes called Korea's Silicon Valley.
Song's tale is typical of small and midsize companies in South Korea. While the chaebol unquestionably have fueled the country's growth in recent decades, they're so powerful that they may be hampering innovation and threatening Korea's continued economic success. "With the chaebol's deepening influence hurting fair competition with suppliers and startups, the country risks losing its economic dynamism," worries economist Kim Sang Jo of the Economic Reform Research Institute, an independent policy group.
A DIVERGING ECONOMY
In spite of the worldwide financial crisis, Samsung, Hyundai, LG, and other chaebol have recently reported impressive jumps in sales and profits. But not much of that prosperity has trickled down. While the big companies expand, "the rest of the Korean economy is still struggling," says Maarten Kelder, head of Asia-Pacific at consulting firm Monitor Group.
Korea's reliance on the chaebol is deepening. The top 10 exporters represented 43% of shipments abroad last year, up from 31% in 2001, according to the Korea Development Institute, a state-funded think tank. And the 50 largest companies—most of them chaebol affiliates—accounted for 38% of the country's total output in 2005, up from 30% a decade and a half earlier, the KDI reports. "The chaebol model has served well as a stepping-stone for growth so far, but it is likely to be a stumbling block in the future," says Lee Kye Ahn, a former CEO at Hyundai Motor and now a prominent member of the opposition Democratic Party.
In tech services, for instance, most big conglomerates have subsidiaries that take care of their sister companies. With guaranteed profits from those contracts, these players can afford to undercut the likes of Openbase when competing for work with outside clients. "If not for the huge advantages and influence of the chaebol, Openbase could be a major player," says Baek Seung Gon, vice-president of eBest, a small tech-services player.
"DANGEROUSLY POWERFUL"
The list of the leading IT services companies in South Korea offers ample evidence of chaebol strength. Among the top 10 players, only No. 5, a subsidiary of state utility Korea Electric Power, isn't affiliated with a chaebol. It's the same story in advertising and logistics, with chaebol affiliates dominating the top 10 in both industries. "The chaebol have become so dangerously powerful that you must put a bridle on them," says Lee Dong Gull, a former financial regulatory official who now teaches economics at South Korea's Hallym University.
The reach of the chaebol is such that smaller rivals often work for them as suppliers, so those companies are afraid to speak up. More than a half-dozen executives declined to talk on the record about their relations with the chaebol. And those who agreed to speak were reluctant to give much detail. Openbase, for instance, works as a subcontractor for chaebol tech-services players, so CEO Song is unwilling to name either the bank with which he was trying to get a contract or the rival that beat him.
Other small Korean companies fret about the power of the chaebol. A supplier of interior parts for Hyundai Motor, for instance, says that while the automaker is reporting record earnings, he is barely breaking even. "During fat years the big guys [hog] all the profits," says the supplier's general manager, who asked that his name not be used for fear of retaliation from Hyundai. "They let us get by but never allow us to have a big enough margin to invest in research." Hyundai counters that it treats its suppliers fairly.
Another problem is that the best and brightest university grads want to work for the chaebol—starving startups of talent. Less than 10% of the 4,000 students who graduated this year from Yonsei University in Seoul, for instance, got jobs at small companies. And officials at Yonsei, one of Korea's top three schools, say most of that 10% would have preferred jobs at the chaebol. "I've never thought of seeking a job elsewhere," says Kang Hye Jeong, a 27-year-old marketer at Samsung's handset unit, who says she has visited more than 20 countries in her four years at the electronics giant. "You couldn't expect such global experience at a smaller company."
Given the difficulty of standing up to the chaebol, financing is tough for startups. Brokerage Korea Investment & Securities recently failed to raise a $90 million fund for tech startups, and the main index of Kosdaq, the South Korean equivalent of Nasdaq, has fallen 84% since its peak in March 2000, while the benchmark Kospi index of larger companies has risen 68%.
Korean policymakers acknowledge the need to help the small fry compete with the giants on a more equal footing. Seoul in August earmarked $7.5 billion to finance joint research between universities and smaller companies in new growth areas such as renewable energy. "The policy focus for future growth will be on encouraging competition by liberalizing markets and helping smaller firms create intellectual property," says Noh Dae Lae, deputy minister at the Ministry of Strategy & Finance.
Ultimately, the chaebol may benefit from such initiatives. If the giants squeeze small suppliers so hard that they can't invest in innovation, the chaebol will hurt their own competitiveness, so programs that strengthen smaller companies will likely help South Korea's conglomerates, says Lim Kyung Mook, a researcher at the Korea Development Institute. "The important task is to begin attracting talent and funds to startups," Lim says. "We need a better balance between the conglomerates and smaller companies, a business environment where startups can grow big enough to compete with the big guys."
http://www.businessweek.com/magazine/content/09_50/b4159058699422.htm ◦
Wednesday, November 25, 2009
Innovation Goes Downtown
Seoul's Digital Media City expects 2,000 companies by 2015
http://www.businessweek.com/magazine/content/09_48/b4157050810294.htm
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Monday, November 02, 2009
Monday, October 19, 2009
Korean First Lady Promotes Korean Food
South Korea's first lady Kim Yoon-ok promoted her country's traditional cuisine, or "hansik," in a special interview broadcast worldwide Monday by U.S. cable news network CNN.
The interview, recorded at the presidential office of Cheong Wa Dae Friday, was the first part of a special series by CNN, "Eye on South Korea."
During the interview, Kim was seen preparing the popular Korean dish "japchae," seasoned vermicelli served with meat and vegetables.
"The taste of Korean food comes from the effort that goes into it and the flavor created by hand," Kim was quoted as saying by Yonhap News Agency. "We believe affection originates from mother's hands when she's cooking."
The interview was Kim's first appearance on a foreign television network since her husband Lee Myung-bak took office early last year.
Kim said cooking for her husband and promoting Korean food as an international cuisine was part of her efforts to assist the president, who "does a lot of work outside the country."
Her work also includes sending food to countries suffering from shortages, as well as introducing easy-to-make recipes, as a way of repaying the international support her country received when it was poor, she said.
"That is why now I would like to help other countries," she said.
http://www.koreatimes.co.kr/www/news/nation/2009/10/113_53774.html
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Monday, October 05, 2009
Thursday, October 01, 2009
Sunday, September 13, 2009
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Monday, September 07, 2009
This blog (www.koreality.com) wins award from KTO
Congratulations, your blog has been selected as one of the Top 100 Blogs in the "Blog Korea! Visit Korea" competition, which was held by the Korea Tourism Organization.
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Friday, September 04, 2009
Hyundai, Kia take on carmaking giants
Clunkers program helps fuel surge
BY TIM HIGGINS
FREE PRESS BUSINESS WRITER
Buoyed by improved quality, sharp marketing, impressive styling and strong sales, Hyundai Motor Co., along with its affiliate Kia Motors Corp., is now positioned to go head-to-head with the world's largest automakers.
Fueled in part by the cash-for-clunkers program, sales for Hyundai and Kia skyrocketed 47% and 60%, respectively, in August, compared with the same period a year ago. It was a standout performance.
"This is potentially a game-changing year for the brand," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.
The Korean group's performance has been so strong that it is nipping at Chrysler's heels, threatening its U.S. market share.
Hyundai and Kia together grabbed an 8% share of the U.S. market in August, beating Chrysler's 7% market share.
Jeremy Anwyl, CEO of Edmunds.com, called 2009 a pivotal year for Hyundai.
"The economy gave them a shot, and they certainly took advantage of it with creative marketing," he said. "If the vehicles deliver, then some of these market-share shifts will not be just temporary, but they could be more permanent."
Hyundai, Kia surge in soft economy
Hyundai Motor America and its affiliate Kia Motors together outsold Chrysler in August, an impressive feat for the South Korean group that has been skillful in taking advantage of a downtrodden economy to get a better foothold in the U.S. market.
Sales jumped 47% for Hyundai and 60% for Kia in August compared with a year ago, a gain partly driven by the U.S. government's cash-for-clunkers program.
Combined, the Korean group sold 100,665 vehicles last month.
"They've been revving at 900 r.p.m.s," Erich Merkle, industry analyst with Autoconomy.Com, said of Hyundai.
The Hyundai Elantra ranked No. 5 in the list of top sellers under the clunkers program.
"Consumers are looking for bargains and Hyundai is offering bargains," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.
But Hyundai's success story began long before August.
The Korean automaker has been laying the foundation for bigger success since the late 1980s when it arrived in the United States with a small car that was plagued with quality problems.
About a decade ago, the company launched a 10-year, 100,000-mile warranty program and set out to build a reputation for quality.
In recent years, Hyundai has scored high with Consumer Reports and J.D. Power and Associates for quality. The new Hyundai Genesis midsize sedan won 20 major industry awards.
"We've been working so hard on quality, recognizing that we really need to overachieve because of how the brand started in the U.S.," said John Krafcik, president and CEO, Hyundai Motor America.
That message is resonating now as car shoppers look for low-cost cars. The bad economy is encouraging some new customers to take a chance on Hyundai, experts said.
The average transaction price of a Hyundai vehicle purchased this year is $21,326, with a comparable $20,455 spent on a Kia, according to Edmunds.com. The industry average is $28,174.
"They're more likely to give Hyundai a shot than they would under normal circumstances," Jeremy Anwyl, CEO of Edmunds.com, said. "If Hyundai delivers, they've now gone into the next level. ... The risk of quality is no longer an issue."
Beyond improved quality, Merkle said Hyundai's product cadence and greater emphasis on emotionally appealing design is helping its efforts.
"If you can get the quality there and have vehicles that have a strong, emotional appeal from a styling perspective, you can win at this game," Merkle said.
More growth expected
A study by Banc of America Securities-Merrill Lynch this summer projected Hyundai and Kia will see even more market share growth in the next four years, largely because the group is slated to have a much larger product replacement schedule than the industry average.
Hyundai and Kia's average replacement rate over the next four years is predicted to be 27%, "well ahead of the industry average of 18%," according to the report by analyst John Murphy.
"We expect Hyundai and Kia to gain significant market share, about 3.5% over the next four years," the report said.
Half of Hyundai's vehicles are assembled at its assembly plant in Alabama, Krafcik said. Kia is to begin production at a new assembly plant in Georgia later this year.
Hyundai plans to launch seven new products over the next 24 months, Krafcik said.
So far this year, Hyundai's sales are down only 0.7% compared with last year and Kia's sales are up 3%.
For the year through August, the Korean group has a 7.5% combined market share while Chrysler is at 9.2% -- down from 11% during the same period last year, according to Autodata Corp.
Krafcik noted that a few years ago, Hyundai was on about 10% of shoppers' consideration lists. That has risen to about 30%.
He expects Hyundai U.S. sales to end the year at least on par with last year -- if not be better. That's impressive considering industry U.S. sales are down 32.1% so far this year.
According to Edmunds, 19.4% of buyers that switched from a previous brand to Hyundai in August came from Chrysler-Dodge-Jeep brands. About 23% came from Ford. A little more than 12% came from Chevrolet and 3% from Toyota.
2009 started well
The first indication that 2009 could be a good year for Hyundai came during the Detroit auto show when the Hyundai Genesis won North American Car of the Year.
Buzz grew as it advertised heavily during the Super Bowl and Academy Awards -- traditional venues for GM, which had to pull out to save money.
One commercial showed angry executives at Lexus and BMW yelling the name of "Hyundai!"
An announcer follows by saying: "Win one little award and suddenly everyone gets your name right. It's Hyundai, like Sunday."
At the same time, Hyundai launched a powerful marketing campaign that promised to allow customers to return their new cars if they lost their jobs.
Hyundai followed up with other smart marketing efforts, such as launching a clunkers-incentive program before the government's program was official and a gas-guarantee program.
"They've really been on the cutting edge with these new marketing programs at a time when consumers were looking for something fresh and new," said Schuster of J.D. Power.
http://www.freep.com/article/20090903/BUSINESS01/909030502/1210/BUSINESS/Hyundai--Kia-take-on-carmaking-giants&template=fullarticle ◦
BY TIM HIGGINS
FREE PRESS BUSINESS WRITER
Buoyed by improved quality, sharp marketing, impressive styling and strong sales, Hyundai Motor Co., along with its affiliate Kia Motors Corp., is now positioned to go head-to-head with the world's largest automakers.
Fueled in part by the cash-for-clunkers program, sales for Hyundai and Kia skyrocketed 47% and 60%, respectively, in August, compared with the same period a year ago. It was a standout performance.
"This is potentially a game-changing year for the brand," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.
The Korean group's performance has been so strong that it is nipping at Chrysler's heels, threatening its U.S. market share.
Hyundai and Kia together grabbed an 8% share of the U.S. market in August, beating Chrysler's 7% market share.
Jeremy Anwyl, CEO of Edmunds.com, called 2009 a pivotal year for Hyundai.
"The economy gave them a shot, and they certainly took advantage of it with creative marketing," he said. "If the vehicles deliver, then some of these market-share shifts will not be just temporary, but they could be more permanent."
Hyundai, Kia surge in soft economy
Hyundai Motor America and its affiliate Kia Motors together outsold Chrysler in August, an impressive feat for the South Korean group that has been skillful in taking advantage of a downtrodden economy to get a better foothold in the U.S. market.
Sales jumped 47% for Hyundai and 60% for Kia in August compared with a year ago, a gain partly driven by the U.S. government's cash-for-clunkers program.
Combined, the Korean group sold 100,665 vehicles last month.
"They've been revving at 900 r.p.m.s," Erich Merkle, industry analyst with Autoconomy.Com, said of Hyundai.
The Hyundai Elantra ranked No. 5 in the list of top sellers under the clunkers program.
"Consumers are looking for bargains and Hyundai is offering bargains," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.
But Hyundai's success story began long before August.
The Korean automaker has been laying the foundation for bigger success since the late 1980s when it arrived in the United States with a small car that was plagued with quality problems.
About a decade ago, the company launched a 10-year, 100,000-mile warranty program and set out to build a reputation for quality.
In recent years, Hyundai has scored high with Consumer Reports and J.D. Power and Associates for quality. The new Hyundai Genesis midsize sedan won 20 major industry awards.
"We've been working so hard on quality, recognizing that we really need to overachieve because of how the brand started in the U.S.," said John Krafcik, president and CEO, Hyundai Motor America.
That message is resonating now as car shoppers look for low-cost cars. The bad economy is encouraging some new customers to take a chance on Hyundai, experts said.
The average transaction price of a Hyundai vehicle purchased this year is $21,326, with a comparable $20,455 spent on a Kia, according to Edmunds.com. The industry average is $28,174.
"They're more likely to give Hyundai a shot than they would under normal circumstances," Jeremy Anwyl, CEO of Edmunds.com, said. "If Hyundai delivers, they've now gone into the next level. ... The risk of quality is no longer an issue."
Beyond improved quality, Merkle said Hyundai's product cadence and greater emphasis on emotionally appealing design is helping its efforts.
"If you can get the quality there and have vehicles that have a strong, emotional appeal from a styling perspective, you can win at this game," Merkle said.
More growth expected
A study by Banc of America Securities-Merrill Lynch this summer projected Hyundai and Kia will see even more market share growth in the next four years, largely because the group is slated to have a much larger product replacement schedule than the industry average.
Hyundai and Kia's average replacement rate over the next four years is predicted to be 27%, "well ahead of the industry average of 18%," according to the report by analyst John Murphy.
"We expect Hyundai and Kia to gain significant market share, about 3.5% over the next four years," the report said.
Half of Hyundai's vehicles are assembled at its assembly plant in Alabama, Krafcik said. Kia is to begin production at a new assembly plant in Georgia later this year.
Hyundai plans to launch seven new products over the next 24 months, Krafcik said.
So far this year, Hyundai's sales are down only 0.7% compared with last year and Kia's sales are up 3%.
For the year through August, the Korean group has a 7.5% combined market share while Chrysler is at 9.2% -- down from 11% during the same period last year, according to Autodata Corp.
Krafcik noted that a few years ago, Hyundai was on about 10% of shoppers' consideration lists. That has risen to about 30%.
He expects Hyundai U.S. sales to end the year at least on par with last year -- if not be better. That's impressive considering industry U.S. sales are down 32.1% so far this year.
According to Edmunds, 19.4% of buyers that switched from a previous brand to Hyundai in August came from Chrysler-Dodge-Jeep brands. About 23% came from Ford. A little more than 12% came from Chevrolet and 3% from Toyota.
2009 started well
The first indication that 2009 could be a good year for Hyundai came during the Detroit auto show when the Hyundai Genesis won North American Car of the Year.
Buzz grew as it advertised heavily during the Super Bowl and Academy Awards -- traditional venues for GM, which had to pull out to save money.
One commercial showed angry executives at Lexus and BMW yelling the name of "Hyundai!"
An announcer follows by saying: "Win one little award and suddenly everyone gets your name right. It's Hyundai, like Sunday."
At the same time, Hyundai launched a powerful marketing campaign that promised to allow customers to return their new cars if they lost their jobs.
Hyundai followed up with other smart marketing efforts, such as launching a clunkers-incentive program before the government's program was official and a gas-guarantee program.
"They've really been on the cutting edge with these new marketing programs at a time when consumers were looking for something fresh and new," said Schuster of J.D. Power.
http://www.freep.com/article/20090903/BUSINESS01/909030502/1210/BUSINESS/Hyundai--Kia-take-on-carmaking-giants&template=fullarticle ◦
f(x) - new girl band debuts in Korea
Sexy and hot, the latest girl group from entertainment and media goliath S.M. Entertainment turned up the heat at their showcase on Wednesday at the Fashion Center's Event Hall in Daechi-dong, southern Seoul.
Unlike their predecessors - the near-iconic Girls' Generation - the new girls-in-town do not boast a powder-puff pink sound. For an idea of the kind of vibe this five-girl band packs, think the Pussycat Dolls or Danity Kane.
With the dance moves to match their amped-up and hard-hitting sound, Krystal, Sulli, Luna, Amber and Victoria hit the stage, writhing and wriggling in slinky black outfits. When they donned black chapeaus and did a number to Sam Sparro's sensual "Black and Gold" the whole performance took on a slightly burlesque tilt.
Tall, willowy and doll-faced, the latest addition to S.M.'s burgeoning group of talent shows promise. Two members, in particular, stood out from the group during Wednesday's showcase.
Amber - picked up by S.M. in Orange County - drew cheers with her fly dance moves and smooth rap skills. Displaying rhythm, flow and speed, the Chinese-American tomboy performed a bit of Fort Minor's "Believe Me" and then showcased her ability to deftly splice her rap into the chorus to the group's debut single, "LA chA TA."
Her low and brandied vocals, slick razor-edged bob and hip wardrobe are sure to attract boys who want to dress like her and girls who are going to crush on her.
When asked how she first started rapping, the 16-year-old girl group member, an admirer of rap artist Nas, answered: "Rap was originally a hobby of mine."
Fellow member Victoria also stood out during the showcase. Hailing from one of Beijing's leading dance academies, the lithe Chinese native graced the stage with her acrobatic skills and stellar moves.
The eldest of the group, the 22-year-old performer assumed responsibility as the head of f(x), declaring: "I want to be a hard-working leader."
A member of the press asked her if the new Asian pop dance group had plans to go abroad, to which Victoria answered that the group is slated to perform throughout Asia.
Korean members Krystal, Sulli and Luna - aged 14, 15 and 16, respectively - also showcased their talents on Wednesday. Luna wowed with her powerful vocals, while Krystal and Sulli moved to a mix of Joe, Marques Houston and T-Pain.
The audience was treated to the first performance of the group's never-before-released single "Mr. Boogie" followed by a performance of their newly-minted "LA chA TA."
Fast-paced, backed by an electronic backbeat and sensual, both singles seemed highly club-appropriate, taking away any notions that S.M.'s latest addition would inherit its girl group predecessor's sugary sound.
It is hard to tell, at this point, as to who f(x)'s target audience is. Yet it seems to be picking up on a trend towards a slightly sexier, edgier and more electronic sound, as evidenced by hit girl group songs like Brown Eyed Girls' "Abracadabra" and 2NE1's "Fire."
The name of the group, in particular, seems to bear some scientific futuristic significance. A play on the mathematical notation for function, "f" signifies "flower" and "x" represents the female's double X chromosome.
While the band is brand new, several of its members have appeared on both the small and the big screen. Krystal - younger sister to Girls' Generation member Jessica - starred in boy band SHINee's music video "Juliette" prior to her debut. Sulli racked up acting experience in two SBS dramas and several films, while leader Victoria starred opposite Korean pop star Rain in a Samsung Anycall commercial that aired in China.
Their new single "LA chA TA" was released online on Tuesday. The band is slated to make their television debut on MBC on Saturday.
http://www.koreaherald.co.kr/NEWKHSITE/data/html_dir/2009/09/04/200909040050.asp ◦
Sunday, August 30, 2009
Saturday, August 22, 2009
Seoul: World's Most Wired Megacity Gets More So
By Stephen Kim and Bill Powell
In the sprawling, densely populated capital city of South Korea, Lee Hye-young and her husband Kim Soon-kyo are nothing if not typical citizens. Which is to say, even the most mundane, everyday aspects of their lives are carried out at technology's leading edge.
Consider their respective commutes to work early one recent morning. Lee clambers onto a city bus, headed to her office job in the southern part of the city. She pays using her radio-frequency-identification (RFID) card — it has a computer chip in it — part of a transit program conceived and implemented by the city government. The card is smart enough to calculate the distance she travels on any form of public transit, which determines the fare. She can then use the same card to pay for the taxi she hails to finish her journey to work. Sometimes her husband, the deputy marketing manager at a small chemical company, drives her to work. But not today. A few months ago, he applied online to join a program offered by the city that promises insurance discounts, reduced-cost parking and a tax break if he leaves his car home one business day a week. The city sent him an RFID tag, which he attaches to the windshield so the city can monitor compliance. It took him just minutes to fill out the application on his home computer, and now, he says, he saves the equivalent of $50 a month. From the city's standpoint, the estimated 10,000 fewer cars on the road each day means less congestion and less air pollution in one of the busiest cities in East Asia.
For a decade, Seoul has had the justifiable reputation of being one of the most wired cities in the world. After the Asian financial crisis devastated the South Korean economy in 1997, the Seoul city government, the national government and the private sector all made a concerted effort to move the country's economy from one reliant on heavy industry to one that included information technology — a shift that by most measures has been a resounding success. Today, according to data compiled by Strategy Analytics, a U.S.-based technology market-research firm, an astonishing 95% of households in South Korea have a broadband connection. (Tiny Singapore is second, at 88%, and the U.S. comes in at No. 20, with just 60% hooked to broadband.) The entire city of Seoul, whose metro-area population is more than 20 million, is already one giant hot spot, with wireless access available from virtually anywhere within city limits for a small fee.
That level of connectedness, either via high-speed cable or through the ether, has not only transformed South Korea's economy; it has changed forever the way this massive city is governed, how individuals receive services and interact with city hall and how prospective contractors solicit business with the city.
Start with clean government. All city contracts are now put out to bid online, and all bids are posted. That transparency, Seoul Mayor Oh Se-hoon tells TIME, has reduced corruption in the city significantly in the past 10 years. "Since all information is disclosed real time over the Internet, influence-peddling over the bargaining of government permits becomes impossible," he says. "The online system tracks the flow of approval routes and leaves behind evidence in real time. If a manager holds on to an application for too long, he becomes a suspect. So administration becomes faster and uncorrupt." And while every big-city mayor may boast that his government is less corrupt than the last guy's — and corporate corruption has been an acknowledged problem in South Korea — Seoul has been named the world's most "advanced and efficient e-government" for several years by a U.N.-sponsored e-government-evaluation agency.
The city services accessible via Internet technology are already vast and growing rapidly. When Lee was returning home from work one day, she needed to pick up a copy of her social-security certificate. She did so at a subway station near her office, using a fingerprint-recognition kiosk: she placed her thumb on the machine, it read her print, and out popped a copy of the document. If she had so desired, she could have also printed real estate and vehicle registrations. It goes without saying that Lee pays her city taxes and utility bills online — or with her mobile phone's browser — and recently she dialed 120 to find out why the electric company had overcharged her. She was calling the Dasan Call Center, a 24/7 government agency that fields all questions regarding city services. A service rep did a quick check, confirmed the error and made sure her bill for the next month would reflect the correction.
Seoul has even greater e-ambitions. It has begun to implement a project called Ubiquitous Seoul — or U-city — which will extend the city's technological reach. Seoul's nearly 4-mile-long (6 km) Cheonggye Stream walkway, which runs through the high-rises of downtown Seoul, is the site of a U-city pilot project. Via their phones and laptops or on touchscreens located in parks and public plazas, citizens can check air-quality or traffic conditions or even reserve a soccer field in a public park. The city also sends out customized text messages. The city's chief information officer, Song Jung-hee, says those with respiratory problems can get ozone and air-pollution alerts, and commuters can get information about which route is the most congested at any given time. The city calls these real-time, location-based services.
Earlier this year, the city rolled out U–safety zones for children, a program using security cameras, a geographic-information-system platform and parents' cell-phone numbers. Participating families equip their kids with a U-tag — an electronic signature applied to a coat or backpack that allows a child to be tracked at all times. If the child leaves a designated ubiquitous-sensor zone near a school or playground, an alarm is automatically triggered alerting parents and the police. The child is then located via his or her mobile phone. The city plans to increase such zones rapidly. To some Americans, the Big Brother–ish qualities of the U-city push can be a tad unnerving. But Seoul officials point out that the U-safety-zone project is entirely voluntary, and the technologically sophisticated citizens seem to have few objections.
Seoul over the past decade has become a hotbed of early adopters, and global powerhouses from Microsoft to Cisco Systems to Nokia use it as a laboratory. The level of connectivity provided by the city's electronic infrastructure means "ubiquitous life" has become an inescapable catchphrase in Seoul. "Almost all new apartment complexes now advertise home networks and ubiquitous-life features," says Lim Jin-hwan, vice president for solution sales at Samsung Electronics. In a nutshell, that means every electronic device in the home can be controlled from a central keypad or a cell phone. Biorecognition lock systems open apartment doors, and soon, Lim says, facial-recognition systems will be introduced.
As megacities continue to grow and become more complex, it's likely that many will have to get wired just to stay manageable. Seoul took the considerable risk of being out front, but it has demonstrated the potential payback when the city government, and not just the citizens, is one of the early adopters.
http://www.time.com/time/magazine/article/0,9171,1916302,00.html
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In the sprawling, densely populated capital city of South Korea, Lee Hye-young and her husband Kim Soon-kyo are nothing if not typical citizens. Which is to say, even the most mundane, everyday aspects of their lives are carried out at technology's leading edge.
Consider their respective commutes to work early one recent morning. Lee clambers onto a city bus, headed to her office job in the southern part of the city. She pays using her radio-frequency-identification (RFID) card — it has a computer chip in it — part of a transit program conceived and implemented by the city government. The card is smart enough to calculate the distance she travels on any form of public transit, which determines the fare. She can then use the same card to pay for the taxi she hails to finish her journey to work. Sometimes her husband, the deputy marketing manager at a small chemical company, drives her to work. But not today. A few months ago, he applied online to join a program offered by the city that promises insurance discounts, reduced-cost parking and a tax break if he leaves his car home one business day a week. The city sent him an RFID tag, which he attaches to the windshield so the city can monitor compliance. It took him just minutes to fill out the application on his home computer, and now, he says, he saves the equivalent of $50 a month. From the city's standpoint, the estimated 10,000 fewer cars on the road each day means less congestion and less air pollution in one of the busiest cities in East Asia.
For a decade, Seoul has had the justifiable reputation of being one of the most wired cities in the world. After the Asian financial crisis devastated the South Korean economy in 1997, the Seoul city government, the national government and the private sector all made a concerted effort to move the country's economy from one reliant on heavy industry to one that included information technology — a shift that by most measures has been a resounding success. Today, according to data compiled by Strategy Analytics, a U.S.-based technology market-research firm, an astonishing 95% of households in South Korea have a broadband connection. (Tiny Singapore is second, at 88%, and the U.S. comes in at No. 20, with just 60% hooked to broadband.) The entire city of Seoul, whose metro-area population is more than 20 million, is already one giant hot spot, with wireless access available from virtually anywhere within city limits for a small fee.
That level of connectedness, either via high-speed cable or through the ether, has not only transformed South Korea's economy; it has changed forever the way this massive city is governed, how individuals receive services and interact with city hall and how prospective contractors solicit business with the city.
Start with clean government. All city contracts are now put out to bid online, and all bids are posted. That transparency, Seoul Mayor Oh Se-hoon tells TIME, has reduced corruption in the city significantly in the past 10 years. "Since all information is disclosed real time over the Internet, influence-peddling over the bargaining of government permits becomes impossible," he says. "The online system tracks the flow of approval routes and leaves behind evidence in real time. If a manager holds on to an application for too long, he becomes a suspect. So administration becomes faster and uncorrupt." And while every big-city mayor may boast that his government is less corrupt than the last guy's — and corporate corruption has been an acknowledged problem in South Korea — Seoul has been named the world's most "advanced and efficient e-government" for several years by a U.N.-sponsored e-government-evaluation agency.
The city services accessible via Internet technology are already vast and growing rapidly. When Lee was returning home from work one day, she needed to pick up a copy of her social-security certificate. She did so at a subway station near her office, using a fingerprint-recognition kiosk: she placed her thumb on the machine, it read her print, and out popped a copy of the document. If she had so desired, she could have also printed real estate and vehicle registrations. It goes without saying that Lee pays her city taxes and utility bills online — or with her mobile phone's browser — and recently she dialed 120 to find out why the electric company had overcharged her. She was calling the Dasan Call Center, a 24/7 government agency that fields all questions regarding city services. A service rep did a quick check, confirmed the error and made sure her bill for the next month would reflect the correction.
Seoul has even greater e-ambitions. It has begun to implement a project called Ubiquitous Seoul — or U-city — which will extend the city's technological reach. Seoul's nearly 4-mile-long (6 km) Cheonggye Stream walkway, which runs through the high-rises of downtown Seoul, is the site of a U-city pilot project. Via their phones and laptops or on touchscreens located in parks and public plazas, citizens can check air-quality or traffic conditions or even reserve a soccer field in a public park. The city also sends out customized text messages. The city's chief information officer, Song Jung-hee, says those with respiratory problems can get ozone and air-pollution alerts, and commuters can get information about which route is the most congested at any given time. The city calls these real-time, location-based services.
Earlier this year, the city rolled out U–safety zones for children, a program using security cameras, a geographic-information-system platform and parents' cell-phone numbers. Participating families equip their kids with a U-tag — an electronic signature applied to a coat or backpack that allows a child to be tracked at all times. If the child leaves a designated ubiquitous-sensor zone near a school or playground, an alarm is automatically triggered alerting parents and the police. The child is then located via his or her mobile phone. The city plans to increase such zones rapidly. To some Americans, the Big Brother–ish qualities of the U-city push can be a tad unnerving. But Seoul officials point out that the U-safety-zone project is entirely voluntary, and the technologically sophisticated citizens seem to have few objections.
Seoul over the past decade has become a hotbed of early adopters, and global powerhouses from Microsoft to Cisco Systems to Nokia use it as a laboratory. The level of connectivity provided by the city's electronic infrastructure means "ubiquitous life" has become an inescapable catchphrase in Seoul. "Almost all new apartment complexes now advertise home networks and ubiquitous-life features," says Lim Jin-hwan, vice president for solution sales at Samsung Electronics. In a nutshell, that means every electronic device in the home can be controlled from a central keypad or a cell phone. Biorecognition lock systems open apartment doors, and soon, Lim says, facial-recognition systems will be introduced.
As megacities continue to grow and become more complex, it's likely that many will have to get wired just to stay manageable. Seoul took the considerable risk of being out front, but it has demonstrated the potential payback when the city government, and not just the citizens, is one of the early adopters.
http://www.time.com/time/magazine/article/0,9171,1916302,00.html
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Wednesday, August 19, 2009
A Visit to Ga Ro Soo Gil in Seoul
Out and About Seoul, South Korea
By Jennifer Kim
By Jennifer Kim
The last time I was in Seoul, South Korea, I barely reached my mother’s shoulders. This time around, I was the one looking after her, and being asked if we were sisters. Needless to say, returning to Seoul as an adult — especially as a jewelry market editor — allowed me to appreciate the city in a new light.
One of my favorite finds was Ah-Won Crafts in In Sa Dong, an area of many interesting alleyways filled with antique shops, handmade arts and crafts, and a slew of charming cafes and restaurants. Ah-Won is the Zen-like boutique of an amazing artisan who works mostly with metal. She creates one-of-a-kind pieces, including simple brushed-silver pendants and rings, intricate floral brooches topped with coral and amber, and a collection of dinnerware and flatware.
Another great discovery was in Ga Ro Soo Gil, a tree-lined street of boutiques and cafes in the Apkugeong area. Dami is a literal jewel box of a shop, about half the size of a Manhattan subway car. It’s filled to the ceiling with every sort of intricate bauble you can imagine: semiprecious cocktail rings, multihued hoop earrings and grosgrain ribbon barrettes in every color
Of course, Seoul also has plenty of Chanel, Dior and Gucci, but I found the street markets in downtown Seoul more interesting. They’re a loud, crowded jumble of carts selling an endlessly random assortment of socks, toys, clothing, stationery, candy and on and on. They’re also a great place to try Korean street food, and if you’re feeling adventurous, you can graze on some dried squid legs with red pepper paste, potato sticks (like extra-fine French fries), roasted ginko nuts and steamed corn.
When I’d had my fill of Korean food, some friends took me to a very trendy Japanese fusion spot in Ga Ro Soo Gil called Hattori Kitchen. It’s a dim little izakaya place with a counter and eight bar stools. (If they’re all taken, better luck next time.) It serves just a few dishes every night — the thing to do is ask the owner, Ji Young Sohn, to pick for you. She’s a quirky and energetic young woman who dances behind the counter, cooking up plates of noodles in between texting her friends and fiddling with the stereo.
Everyone’s favorite dish appeared to be udon salad, cold udon served with iceberg lettuce, slivers of carrots and cucumbers in a sauce she dare not describe. As good as it was, my fondest memory was finishing off a bottle of Korean rice whiskey called So-Ju with my friends, then practically dancing our way home.
http://themoment.blogs.nytimes.com/2009/08/18/out-and-about-seoul-south-korea/
Tuesday, August 18, 2009
Monday, August 17, 2009
After beating Tiger, life will for Y.E. Yang
Whenever Y.E. Yang was in a tournament with Tiger Woods, he would sit in the clubhouse and think about playing against the world's most famous athlete.
He'd visualize different scenarios, come up with strategies.
He'd visualize different scenarios, come up with strategies.
Deep down, he had a secret that he shared with no one: Yang would imagine beating Woods.
"The good players, the great names that you've mentioned, when they tee off with Tiger, their competitive juices sort of flow out and they go head to head and try to win," Yang said through an interpreter. "For me, I don't consider myself as a great golfer. I'm still more of the lower-than-average PGA Tour players."
Not anymore. In a matter of four hours Sunday, Yang's life — and that of every aspiring golfer around the world, but particularly in Asia — changed forever.
Not only did the 37-year-old South Korean become the first Asian player to win one of golf's majors — the PGA Championship — he took down none other than the sport's No. 1 guy to do it. Phil Mickelson, David Duval, Ernie Els, Sergio Garcia — they all tried and failed.
Not Yang, who was poised, unflappable and determined throughout.
Not bad for someone who took up golf at 19 simply as a way to pay bills and ended up finding the job of his dreams.
"Honestly, I'm not prepared, I think," he said. "It's going to be a bit tough, sure, I know that. It's going to be fun, too. But honestly, I've never been in this spot, so I really can't assess it. This is my first time. I'm just going to try to go and improvise."
Pretty good plan, considering that's what got him here.
Yang — his full name is Yong Eun Yang — grew up on an island called Jeju, about an hour by plane from Seoul. His father is a farmer and his older brother is in the agricultural business, too. Yang wanted to be a bodybuilder, and dreamed of someday owning his own gym.
But when he was about 17 or 18, he blew out his knee. He was, he said, "like anybody else in the world, an average Joe."
Then a friend suggested he go work at the local driving range. It paid minimum wage, but Yang could eat and sleep there.
"The driving range was no longer than the tent we are in right now, probably about 60 yards, tops," he said, while speaking in the interview room. "The first grip I ever had was a baseball grip, and I was just whacking it into the net. It just felt fun."
The more he played, the more he fell in love with the game. He practiced for three months before he played his first round, and shot 101. It was three years before he broke par.
There have been a few successful Asian golfers over the years — Japan's Isao Aoki finished second to Jack Nicklaus at the 1980 U.S. Open — but Korea has been late to the game. Yang didn't even have a coach when he first started playing, teaching himself by watching tournaments on TV — his early idols were Nick Faldo and Nicklaus — and watching videotapes. He thought maybe he'd be a club pro or teach at a driving range.
But the more he learned about golf, the more his horizons expanded. He started playing tournaments in Korea, then moved to the Japan Golf Tour. He's played on the PGA Tour the last three years, going through qualifying school in 2007 and 2008 before winning at the Honda Classic earlier this year.
"My life has been sort of very slow, actually," said Yang, the only member of his family who lives outside of Jeju. "And I've always tried to take it a step at a time. I didn't really look and envision myself 10 years, two decades away."
Which is why, though he knows its significance, he can't yet fathom what his victory at Hazeltine National will mean to South Koreans and Asian players and fans, in general.
Golf is hugely popular in Asia, the game's fastest-growing market. But while it has produced some stars — 17-year-old Ryo Ishikawa of Japan carries a head cover that looks like a Cabbage Patch Kid doll of himself, complete with spiky hair, sunglasses and visor — the game is still a work in progress.
The men's game, at least.
Since Se Ri Pak won the LPGA Championship and U.S. Women's Open as a rookie in 1998, seven Korean players have combined to win 11 majors on the LPGA Tour. Yet Yang and K.J. Choi are the only PGA Tour players who learned the game in South Korea before coming to America.
China has no players on the PGA Tour. Jeev Milkha Singh, who finished tied for 67th on Sunday, is the first Indian golfer to play at the Masters and qualify for the U.S. Open.
"Golf in Asia has been growing steadily, so to have the guy who finally found a way to beat Tiger on Sunday is so big for the region," said Geoff Ogilvy, an Australian. "It's hard for us here in the U.S. to imagine the impact this will have."
Added PGA of America CEO Joe Steranka, "Earlier this week, I said the addition of golf to the Olympics is the single biggest thing to accelerate the growth of the game. I stand corrected. ... There are now going to be other Asian nations saying, `OK, how are we going to prepare our players to go play on the international stage?'"
Knowing one of their own has broken into golf's mainstream by winning a major is sure to inspire and motivate young players throughout Asia. Indeed, in South Korea, golf fans woke up at 4 a.m. for the final round, some rushing over to a sports club in the Seoul suburb of Bundang when it opened two hours later.
"Seeing Yang ranked 110th in the world win against Tiger Woods, the best player in the world, I felt so proud to be a Korean today," Kim Soo-mi said as dozens of golfers practiced at an indoor driving range.
That's a heavy burden to put on Yang. Based on his performance Sunday, he'll be able to handle it.
He admitted he was nervous before playing Woods, and didn't sleep very well Saturday night. Once he stepped on the first tee, though, the nerves disappeared.
After all, he said, it wasn't as if they were in a UFC fight and Woods was going to bite him.
He was aggressive all day, making the two biggest shots — his chip on 14 and his approach on 18 — when he needed to. He was calm, never once getting caught up in the circus that is Tiger Woods in the last group on the final day of a major. Dozens of cameras track Woods' every move, the galleries are massive and golf etiquette is the last thing fans are worried about as they rush to see the next shot. Yang even had some fun with it, smiling and waving at a TV camera as he crossed the bridge at the turn, and giving a Woods-like fist pump when he made that spectacular chip on 14.
And when it was all over, hoisted his golf bag over his head — shades of the bodybuilder he once wanted to be.
"I guess the fearlessness comes from the fact that I know I'm doing my dream job," Yang said. "Every day I'm living my dream."
http://news.yahoo.com/s/ap/20090817/ap_on_sp_go_ne/glf_pga_championship_yang_s_dream_6
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"The good players, the great names that you've mentioned, when they tee off with Tiger, their competitive juices sort of flow out and they go head to head and try to win," Yang said through an interpreter. "For me, I don't consider myself as a great golfer. I'm still more of the lower-than-average PGA Tour players."
Not anymore. In a matter of four hours Sunday, Yang's life — and that of every aspiring golfer around the world, but particularly in Asia — changed forever.
Not only did the 37-year-old South Korean become the first Asian player to win one of golf's majors — the PGA Championship — he took down none other than the sport's No. 1 guy to do it. Phil Mickelson, David Duval, Ernie Els, Sergio Garcia — they all tried and failed.
Not Yang, who was poised, unflappable and determined throughout.
Not bad for someone who took up golf at 19 simply as a way to pay bills and ended up finding the job of his dreams.
"Honestly, I'm not prepared, I think," he said. "It's going to be a bit tough, sure, I know that. It's going to be fun, too. But honestly, I've never been in this spot, so I really can't assess it. This is my first time. I'm just going to try to go and improvise."
Pretty good plan, considering that's what got him here.
Yang — his full name is Yong Eun Yang — grew up on an island called Jeju, about an hour by plane from Seoul. His father is a farmer and his older brother is in the agricultural business, too. Yang wanted to be a bodybuilder, and dreamed of someday owning his own gym.
But when he was about 17 or 18, he blew out his knee. He was, he said, "like anybody else in the world, an average Joe."
Then a friend suggested he go work at the local driving range. It paid minimum wage, but Yang could eat and sleep there.
"The driving range was no longer than the tent we are in right now, probably about 60 yards, tops," he said, while speaking in the interview room. "The first grip I ever had was a baseball grip, and I was just whacking it into the net. It just felt fun."
The more he played, the more he fell in love with the game. He practiced for three months before he played his first round, and shot 101. It was three years before he broke par.
There have been a few successful Asian golfers over the years — Japan's Isao Aoki finished second to Jack Nicklaus at the 1980 U.S. Open — but Korea has been late to the game. Yang didn't even have a coach when he first started playing, teaching himself by watching tournaments on TV — his early idols were Nick Faldo and Nicklaus — and watching videotapes. He thought maybe he'd be a club pro or teach at a driving range.
But the more he learned about golf, the more his horizons expanded. He started playing tournaments in Korea, then moved to the Japan Golf Tour. He's played on the PGA Tour the last three years, going through qualifying school in 2007 and 2008 before winning at the Honda Classic earlier this year.
"My life has been sort of very slow, actually," said Yang, the only member of his family who lives outside of Jeju. "And I've always tried to take it a step at a time. I didn't really look and envision myself 10 years, two decades away."
Which is why, though he knows its significance, he can't yet fathom what his victory at Hazeltine National will mean to South Koreans and Asian players and fans, in general.
Golf is hugely popular in Asia, the game's fastest-growing market. But while it has produced some stars — 17-year-old Ryo Ishikawa of Japan carries a head cover that looks like a Cabbage Patch Kid doll of himself, complete with spiky hair, sunglasses and visor — the game is still a work in progress.
The men's game, at least.
Since Se Ri Pak won the LPGA Championship and U.S. Women's Open as a rookie in 1998, seven Korean players have combined to win 11 majors on the LPGA Tour. Yet Yang and K.J. Choi are the only PGA Tour players who learned the game in South Korea before coming to America.
China has no players on the PGA Tour. Jeev Milkha Singh, who finished tied for 67th on Sunday, is the first Indian golfer to play at the Masters and qualify for the U.S. Open.
"Golf in Asia has been growing steadily, so to have the guy who finally found a way to beat Tiger on Sunday is so big for the region," said Geoff Ogilvy, an Australian. "It's hard for us here in the U.S. to imagine the impact this will have."
Added PGA of America CEO Joe Steranka, "Earlier this week, I said the addition of golf to the Olympics is the single biggest thing to accelerate the growth of the game. I stand corrected. ... There are now going to be other Asian nations saying, `OK, how are we going to prepare our players to go play on the international stage?'"
Knowing one of their own has broken into golf's mainstream by winning a major is sure to inspire and motivate young players throughout Asia. Indeed, in South Korea, golf fans woke up at 4 a.m. for the final round, some rushing over to a sports club in the Seoul suburb of Bundang when it opened two hours later.
"Seeing Yang ranked 110th in the world win against Tiger Woods, the best player in the world, I felt so proud to be a Korean today," Kim Soo-mi said as dozens of golfers practiced at an indoor driving range.
That's a heavy burden to put on Yang. Based on his performance Sunday, he'll be able to handle it.
He admitted he was nervous before playing Woods, and didn't sleep very well Saturday night. Once he stepped on the first tee, though, the nerves disappeared.
After all, he said, it wasn't as if they were in a UFC fight and Woods was going to bite him.
He was aggressive all day, making the two biggest shots — his chip on 14 and his approach on 18 — when he needed to. He was calm, never once getting caught up in the circus that is Tiger Woods in the last group on the final day of a major. Dozens of cameras track Woods' every move, the galleries are massive and golf etiquette is the last thing fans are worried about as they rush to see the next shot. Yang even had some fun with it, smiling and waving at a TV camera as he crossed the bridge at the turn, and giving a Woods-like fist pump when he made that spectacular chip on 14.
And when it was all over, hoisted his golf bag over his head — shades of the bodybuilder he once wanted to be.
"I guess the fearlessness comes from the fact that I know I'm doing my dream job," Yang said. "Every day I'm living my dream."
http://news.yahoo.com/s/ap/20090817/ap_on_sp_go_ne/glf_pga_championship_yang_s_dream_6
Saturday, July 25, 2009
Daewoo: General Motor's Korea Problem
The automaker's Korean subsidiary, GM Daewoo, is losing money and facing a liquidity crisis. But it's too important to GM's future to jettison
By Moon Ihlwan
Seoul - Even as Asia remains a bright spot for General Motors (GM), its Korean subsidiary looks more like the hapless parent company than GM's fast-growing Chinese operations. GM Daewoo Auto & Technology lost $702 million in 2008, and this year its sales are off by nearly half, to 261,000 vehicles in the first six months. Now the Korean unit says it's on the cusp of a critical liquidity crunch. "Things look ugly at GM Daewoo," says Stephen Ahn, head of research at brokerage LIG Investment & Securities in Seoul.
GM Daewoo's woes stem largely from its close ties to the rest of the global auto giant. The unit made about 900,000 cars and shipped kits for an additional 1 million vehicles for assembly at factories in other countries last year, accounting for about a quarter of all GM auto sales worldwide. But some 90% of those cars are branded as Chevrolets, Buicks, and other GM nameplates that have seen sales plummet.
Given the losses, why doesn't Detroit just jettison GM Daewoo? It's too important to GM's future. The unit is a key developer of small cars for GM's global lineup; it's a vital source for engineering and parts for the China operation; and it makes a new Chevy compact due to face off with the Toyota (TMC) Corolla and the Honda (HMC) Civic. "GM Daewoo will play a more important role in the New GM's global business strategy," says Michael A. Grimaldi, president of the Korean operation.
That has left GM Daewoo scrambling to strengthen its finances. In December it had total debts of $6.8 billion. Since February, when it exhausted $2 billion in credit lines, the carmaker has sought new loans from the Korea Development Bank. The government-run lender arranged GM's takeover of bankrupt Daewoo Motor in 2002 and still holds a 28% stake. In May the KDB let GM Daewoo defer $500 million in payments. Before handing over more cash, the bank wants GM to commit to maintaining a big presence in Korea. The two sides are negotiating conditions for fresh loans, but both say they have yet to reach any resolution.
FADING ADVANTAGE
Seoul wants a guarantee because it's worried about Korea's position in the auto world. The country now offers a good compromise between high-cost, high-quality Japan and low-cost China, whose automakers have a reputation for building shoddy vehicles. But that advantage "could end in just a few years as China catches up," frets Lee Hang Koo, an analyst at the Korea Institute for Industrial Economics & Trade, a government-funded think tank.
The KDB is also seeking collateral such as more shares in GM Daewoo—something GM had resisted but is now considering. Another debt-stricken Korean carmaker, Ssangyong Motor (controlled by China's Shanghai Automotive Industry Corp.), sought receivership in February after the KDB refused to shore it up. Bailing out GM Daewoo and getting nothing in return could raise cries of unequal treatment.
Still, given the importance of GM Daewoo to both GM and the Korean economy, some kind of deal is likely. GM needs the Koreans' design chops, and Seoul doesn't want to lose the tens of thousands of jobs provided by the company and its hundreds of suppliers. "Something will be worked out eventually," says Suh Sung Moon, auto analyst at brokerage Korea Investment & Securities in Seoul. "Neither the U.S. nor Korea can afford to let it go."
http://www.businessweek.com/magazine/content/09_30/b4140029463496.htm ◦
By Moon Ihlwan
Seoul - Even as Asia remains a bright spot for General Motors (GM), its Korean subsidiary looks more like the hapless parent company than GM's fast-growing Chinese operations. GM Daewoo Auto & Technology lost $702 million in 2008, and this year its sales are off by nearly half, to 261,000 vehicles in the first six months. Now the Korean unit says it's on the cusp of a critical liquidity crunch. "Things look ugly at GM Daewoo," says Stephen Ahn, head of research at brokerage LIG Investment & Securities in Seoul.
GM Daewoo's woes stem largely from its close ties to the rest of the global auto giant. The unit made about 900,000 cars and shipped kits for an additional 1 million vehicles for assembly at factories in other countries last year, accounting for about a quarter of all GM auto sales worldwide. But some 90% of those cars are branded as Chevrolets, Buicks, and other GM nameplates that have seen sales plummet.
Given the losses, why doesn't Detroit just jettison GM Daewoo? It's too important to GM's future. The unit is a key developer of small cars for GM's global lineup; it's a vital source for engineering and parts for the China operation; and it makes a new Chevy compact due to face off with the Toyota (TMC) Corolla and the Honda (HMC) Civic. "GM Daewoo will play a more important role in the New GM's global business strategy," says Michael A. Grimaldi, president of the Korean operation.
That has left GM Daewoo scrambling to strengthen its finances. In December it had total debts of $6.8 billion. Since February, when it exhausted $2 billion in credit lines, the carmaker has sought new loans from the Korea Development Bank. The government-run lender arranged GM's takeover of bankrupt Daewoo Motor in 2002 and still holds a 28% stake. In May the KDB let GM Daewoo defer $500 million in payments. Before handing over more cash, the bank wants GM to commit to maintaining a big presence in Korea. The two sides are negotiating conditions for fresh loans, but both say they have yet to reach any resolution.
FADING ADVANTAGE
Seoul wants a guarantee because it's worried about Korea's position in the auto world. The country now offers a good compromise between high-cost, high-quality Japan and low-cost China, whose automakers have a reputation for building shoddy vehicles. But that advantage "could end in just a few years as China catches up," frets Lee Hang Koo, an analyst at the Korea Institute for Industrial Economics & Trade, a government-funded think tank.
The KDB is also seeking collateral such as more shares in GM Daewoo—something GM had resisted but is now considering. Another debt-stricken Korean carmaker, Ssangyong Motor (controlled by China's Shanghai Automotive Industry Corp.), sought receivership in February after the KDB refused to shore it up. Bailing out GM Daewoo and getting nothing in return could raise cries of unequal treatment.
Still, given the importance of GM Daewoo to both GM and the Korean economy, some kind of deal is likely. GM needs the Koreans' design chops, and Seoul doesn't want to lose the tens of thousands of jobs provided by the company and its hundreds of suppliers. "Something will be worked out eventually," says Suh Sung Moon, auto analyst at brokerage Korea Investment & Securities in Seoul. "Neither the U.S. nor Korea can afford to let it go."
http://www.businessweek.com/magazine/content/09_30/b4140029463496.htm ◦
Friday, July 24, 2009
South Korea's economy surges to highest growth in 5 1/2 years in second quarter
Government pump-priming and easy credit jolted South Korea's economy to its fastest growth in nearly six years in the second quarter, adding to evidence Asia is rebounding from the global slump.The region's fourth-largest economy expanded 2.3 percent in the three months ended June 30, the Bank of Korea said Friday, as record low interest rates and government stimulus spending insulated it from the global downturn. Exports also contributed to the growth, which was the fastest in 5½ years.
South Korea joins Singapore and China among the Asian nations that have released stronger growth figures in recent weeks. Adding to the case for economic revival, the Asian Development Bank this week said East Asia could experience a "V'' shaped recovery in the next year.
David Cohen, director of Asian forecasting for Action Economics in Singapore, said "things are turning around."
Japan, the world's second-largest economy, is expected to report its first growth in five quarters next month, he said, though it remains unclear how strong the region's recovery will be.
Kang Chang-ku, an economist at the South Korean central bank, said the last time GDP grew more was in the fourth quarter of 2003 when it expanded 2.6 percent. The second quarter figures are preliminary and may be revised.
The expansion marked the second straight quarter of growth for Asia's fourth-largest economy after a contraction in the last quarter of 2008. It eked out a 0.1 percent gain in the first quarter after a contraction of 5.1 percent in the previous quarter.
China's economy, the world's third largest, grew 7.9 percent in the second quarter from a year earlier, accelerating from an expansion of 6.1 percent in the first. Singapore, meanwhile, grew for the first time in a year, its economy surging an annualized 20 percent in the second quarter.
Kwon Goohoon, economist at Goldman Sachs in Seoul, said South Korea's second-quarter figure equates to annualized growth of 9.5 percent. The Bank of Korea does not provide an annualized number.
Kwon said in a note that growth was "driven by a good mix of strong fiscal stimulus, a weak KRW (Korean won) and monetary easing."
He expressed doubt, however, that such a strong performance would be repeated the rest of the year as fiscal stimulus wanes and credit expansion slows.
In response to the global financial crisis last year and ensuing economic slowdown, the South Korean government increased spending to spur growth. The Bank of Korea, meanwhile, aggressively cut its key interest rate to a record low 2 percent, where it has stayed for five months.
The central bank said Friday that manufacturing and exports helped spur growth. Manufacturing expanded 8.2 percent in the second quarter while exports grew 14.7 percent.
South Korean exports, which slumped from late last year as consumers overseas cut spending amid the global downturn, have shown signs of improvement in recent months. The country's trade surplus has been hitting record highs.
But the result was not all good news and showed how far the economy has fallen. When compared with the same period last year, GDP, or gross domestic product, shrank 2.5 percent. That marked the third straight quarter of year-on-year contraction.
The last time that happened was in 1998, when GDP shrank from the previous year in all four quarters, said Kang, the central bank economist.
Indeed, economists are widely predicting South Korea's economy will contract in 2009 for the first time since shrinking 6.9 in 1998.
Still, the outlook is better than it was earlier this year.
Kwon said Goldman Sachs recently revised its forecast, predicting a contraction of 1.7 percent in 2009 instead of the earlier expectation of a 3 percent shrinkage, given the strong stimulus impact in the first half and prospects for a recovery in exports in the final six months of the year.
http://www.fox43.com/business/sns-ap-as-skorea-economy,0,4755584.story
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