Thoughts on Korean Business by Don Southerton

As of end of June 2004, one out of five workers at South Korea's top 30 listed companies were women. This shows that more women are finding jobs at top companies in Korea that have traditionally been dominated by men. Why the change? In Korea, lower average salaries and a perception that women offer skills including a greater attention to detail are some of the reasons why female employees are favored over male counterparts. During the first half of this year, the number of female employees rose 6.2 percent from the same period last year, to total 79,000 out of 404,000 employees. The figure is almost twice as large as the increase seen in the number of male employees. According to Korea Stock Exchange and the regulatory Financial Supervisory Service, women now account for 19 percent of the total number of employees at South Korea's largest companies, a ratio that's been growing over the past years. According to the Korean newspaper Chosun Ilbo, women receive ...

Hyundai Automotive Group Chairman Chung Mong-koo and Jia Quinglin, chairman of the Chinese People’s Political Consultative Conference, met Sunday and discussed cooperative efforts to develop the two nations’ automotive industries. According to Korea Times Hyundai leader Chung noted Hyundai Automotive Group’s Chinese subsidiaries and joint ventures would play a core role in the group’s global strategy. Chung spoke before a meeting between 150 company executives and 150 businessmen and government officials from China at the Hotel Hyundai in Kyongju located on the Korean peninsula’s southwestern province. Chairman Chung said Hyundai Motor and Kia Motors would be capable of rolling out 1 million vehicles a year from 2008. He added the Hyundai Automotive Group would endeavor to become the most loved carmaker in China and contribute to the Chinese auto industry and economy. Jia Quinglin, who has been working closely with Chung, said he hopes Hyundai will become a role model showing...

Korea’s ambassador to the United States, Han Sung-joo said Saturday in a conference in New Jersey that because South Korea, the United States, Russia, and China were working hard, it was highly likely that the fourth round of six-party talks would be held in September as the fruit of multilateral efforts. Han noted that no one could know whether substantive progress would be made at the talks. The ambassador a UC Berkeley Ph.D. said North Korea believes that the redeployment of U.S. forces in Korea might be in preparation to attack North Korea. In an article in Choson Ilbo, Han said it was hard to tell whether North Korea actually felt threatened by the U.S. or whether it was simply stalling ahead of the U.S. presidential election, but it was true that the preparations for the fourth round of talks have been difficult. Han remarked that while one could possibly see that the offer made by the U.S. during the third round of six-party talks was the most concrete one it has made tha...

Chosun Ilbo Article August 26, 2004 The LG Group will newly employ a total of 11,800 research and development workers by 2007. In order to secure talented employees, all the group’s officers and workers will serve as headhunters and chief executive officers (CEO) will hunt directly for competent technological workers. The group’s 50 CEOs, including chairman Koo Bon-moo, disclosed their plan to secure talented employees during a strategy meeting held at LG Academy on Thursday. Six affiliate companies like LG Electronics and LG Chem. will hire 11,800 R&D workers by 2007. In order to gain a competitive advantage in future strategic fields like the production of display panels and wireless devices, five electronics-related affiliates such as LG Electronics, LG Philips LCD, LG Innotek and LG Micron, will increase the number of R&D employees from the current 14,000 to 24,000 people by 2007. In order to consolidate information and electronic material businesses like rechargeab...

According to a Korean Herald article Hyundai Motor Company is intensifying its efforts to develop fuel-efficient hybrid cars that run on a combination of gasoline and electricity. Hyundai officials said the introduction of hybrid cars should come around 2007 or earlier. Kia Motors Corp., the nation's No. 2 carmaker, is also sharing hybrid research and technology facilities with Hyundai Motor. Hyundai plans to give about 50 hybrid Click minicars to the government for test-driving by the end of this year. The Hyundai hybrid project is quickly gaining momentum with the latest national campaign to tackle rising Korean oil prices. In fact, the Korean government announced that it would offer tax breaks on hybrid vehicles beginning in 2008. South Korea will also require that state agencies buy the more efficient cars. Hyundai is considering introducing several hybrid models. The hybrids are expected to be priced at about $4000 more than gasoline cars. Hybrids are already ...

According to Chosun Il Bo male middle-ranking managerial officials in their 40s with college graduate-level educations or better are the biggest sexual harassment offenders. More than 30 percent of sexual harassment cases take place when co-workers dine together, and physical sexual harassment cases (56.2 percent) surpass verbal sexual harassment ones (36.3 percent). The analysis of sexual harassment was the first of its kind in Korea. The Gender Discrimination Improvement Committee under the Ministry of Gender Equality released statistical data Wednesday to mark the 5th year of the enactment of the law on the prohibition and compensation of gender discrimination, which defines sexual harassment as a type of gender discrimination. According to the Ministry of Gender Equality, a total of 995 gender discrimination cases have been reported for the past five years. Of them, sexual harassment cases accounted for 51.5 percent and other types of gender discrimination cases represented 4...

Executives of businesses earned the highest salaries last year with an average $5,300 per month, about 3.7 times more than the average pay of the nation’s workers, according to the Work Information Center (WIC), an affiliate the state-run Human Resources Development Service of Korea. The center conducted a survey of 2003 employee earnings from September to December on 50,000 households. According to the WIC report, the nation has a total workforce of 22.45 million people, with the average monthly wage estimated at $1423. Company executives topped the list of income earners by taking home an average monthly pay of $5316 last year. Lawyers, the previous year's leader, dropped to second position with earnings of $4814, followed by dentists who earned an average of $4224. Women’s average monthly income was $1002, about 60 percent of men’s wage of $1676.

Korea ranked second after the United States in the number of credit cards issued per person. Korea Times cites data compiled by the Bank for International Settlements and the Bank of Korea. It’s reported that 1,959.7 credit cards were issued per 1,000 people in Korea in 2002, a figure slightly higher than 1,919.3 for Japan. Globally, the United States tops the list with 4,355.2 cards being issued to 1,000 people as of late 2002, with the numbers remaining more or less the same for 2003. Behind the U.S., South Korea and Japan were Canada with 1,653.4 and the United Kingdom with 1,065.8. On reason for the high number of issuance in Korea is the easier procedure for issuing credit card when compared to Europe. Unfortunately a consequence for the ease in obtaining credit cards had been the extremely high number of defaults in Korea. Koreans also have among the highest outstanding balances on their cards in the world.

South Korea’s men’s team won a victory in the group archery competition. Jang Yong-ho, Park Kyung-mo, and Im Dong-hyun had a confident win in the archery final at the Panathinaiko Stadium beating the Taiwanese team 251-244. This put Korea at the top in archery for the second consecutive time after the Sydney Olympics. The Koreans swept three gold medals out of four, including those won in the women’s individual and group competitions. Koreans excelling at archery should comes as no surprise. Korean traditional archery, kuk gung, dates back centuries. In fact, during the Choson Dynasty (1392-1910) it was the preferred sport of the ruling aristocratic yangban elite.

Kia Motors is building a second plant in China. Kia hopes to cash on the country's fast-growing vehicle market. The subsidiary of South Korea's largest vehicle maker, Hyundai Automotive Group, has an agreement with the city of Yancheng in Jiangsu province, committing itself to building a second vehicle plant there. With an annual production capacity of 300,000 units, the plant would be built next to the company's existing factory in Yancheng, which could produce up to 130,000 vehicles a year. The $645 million project will be completed in 2006. Globally the Hyundai-Kia Motors group seeks a production capacity of five million units by 2010. This would include three million units produced in its plants in South Korea. In China, Kia controls 50 per cent of a joint venture with Dongfeng Motors, one of China's largest vehicle makers based in Hubei province, which has a 25 per cent stake and Yueda Automobile Group, a smaller player from Jiangsu that also ow...

GM Daewoo Auto, Korea's third-largest carmaker, as parent General Motors is considering selling Daewoo cars under the Chevrolet nameplates in the region. GM Daewoo exports its cars under the Daewoo name to Europe and Southeast Asia. In other overseas markets, the carmaker has used General Motor's other brand names such as Chevrolet and Suzuki. The French newspaper Le Figaro said Wednesday that GM's management has already decided to switch to Chevrolet. Reuters reported on Tuesday that General Motors plans to build Chevrolet into a worldwide brand. The source said GM will confine the Daewoo brand to the domestic Korean market. According to the Korean Herald the recent reports have fueled concerns in Korea that General Motors may use the Korean affiliate only as a production base for exports.

The number of overseas affiliates established by Korean companies has increased sharply. For example, the total number of Korean overseas affiliates as of June 2004 approaches 20,000. This increasing trend of Korean overseas affiliates is expected to continue. This reflects the ongoing process of globalization in Korean companies, especially in top conglomores Samsung, Hyundai Automotive, and LG. One example of this is Hyundai AG's plants in India, China, Turkey, and the U.S. Geographically, Korea is concentrating the bulk of its overseas production plants in China, its the booming neighbor. China has emerged as the most attractive investment destination for Korean businesses since 2002. As of June 2004, the number of affiliates in China was 9,853, accounting for 49.5 percent of total Korean affiliates in the world. The accumulated amount of investment in China amounted to $10.09 billion, or 19.3 percent of the total investment. This is the second largest, following investment ...

In an earlier article, I noted Korea's top global corporations (Samsung, LG, and Hyundai) have embraced marketing the Athens’s Olympics. Millions around the world will watch the Athens’s Olympics. Television coverage rights are costly. NBC will spend over $793 million. Japan broadcasters will spend $155 million. Among the top global spenders is Korea where its Athens’s Olympic Korea Pool (AOKP) will spend over $15.5 The total revenue for televisions rights exceeds $ 1.5 billion.

SunAFood, one of Korea’s major local food service franchise companies, will tap the overseas market into either Japan or the United States. Despite the rush of multinational food chains in Korea (TGIF, McDonalds, Starbucks, and, Yum Brands) no serious attempt has been made by Korean food chains into the global market. In preparation of entry into the foreign market, SunAFood opened its a prototype Korean restaurant ``Yookban’’ in central Seoul, last week. In Korea, SunAFoods is the fifth largest food service chain after Tony Roma’s, Spaghettia, Mad for Garlic, and Pepper Lunch. Yookban, which combines two Chinese characters meaning meat and rice. In Seoul , Yookban’s interior design and service are very modern and targets customers in their 20s and 30s. Among Korean foods, the company chose grilled meat and rice as the main menu, both of which are the most popular Korean foods among foreigners. Modeling Italian tapas-style dining, the restaurant serves different...

In an article in Korea Times, columnist and historian Andrei Landov made some interesting observations on divorce in Korea. The scholar notes that until very recently, divorce was almost unthinkable in Korea at least as long as middle-class households (that is, some 70 percent of all households) were concerned. In 1990, Korea still boasted one of the lowest divorce rates among developed countries, 1.1 divorces per 1,000 people, or about one third of the U.S. rate. Landov points out that in pre-modern Korea, divorce, although theoretically possible, was condemned by the public and discouraged by law. Divorced women would be rejected by society, and needless to say, would have virtually no chance of remarriage. A woman had to be faithful to her husband unconditionally. In old Korea, even widows were strongly discouraged from re-marrying and if they did so, their children were discriminated against in law. The 20th century changed the letter of the law, but not the general social a...

According to the U.S.-based marketing research firm Strategy Analytics, Korean mobile-phone makers make great strides in sales during the second fiscal quarter. Global mobile phone sales by Samsung Electronics Co. and LG Electronics grew 91 percent and 88 percent, respectively, thanks partly to a dramatic rise in demand from North America. Major firms such as Nokia saw only 10.9 percent year-on-year growth and Motorola saw 53 percent growth. Strategy Analytics noted that Korean manufacturers did better than their rivals in all aspects, including product development, technology advances and marketing. The research firm attributed the sector's solid growth in the second quarter to advanced-market consumers buying new models, as well as new demand coming from emerging markets like South America. Strategy Analytics predicted sales growth will slow in the third quarter and the sector could suffer from a parts shortage in the fourth quarter.

On August 4th in a news conference held in Seoul, GM chairman Rich Wagoner said its Korean affiliate GM Daewoo Auto & Technology Co. would be a prime engineering center of its Asian-Pacific operation. Wagoner notes GM Daewoo will play very important role in not just GM’s efforts to expand in Korea but also in Asia-Pacific including China. The Korean affiliate exports its compact cars in the form of complete knockdown, commonly known as CKD, to GM's joint venture in China. As of last year, GM Daewoo exported 46,368 CKD units to China. But in the first five months of this year, the Korean affiliate has already shipped 46,816 units to the country, raising hopes of more than doubling the export figure this year. GM Daewoo has a research and development facility at its flagship Bupyeong plant in Inch’ôn with 1,792 staff. It also runs an automotive design center in Korea with 78 researchers. Its larger rival Hyundai Automotive Group has about 6,500 Korean-based research ...

One year ago, fifty four year old Chung Mong-hun, chairman of several former Hyundai Group divisions including Hyundai Asan, Merchant Marine, and defacto holding company, Hyundai Elevator, committed suicide. Chung Mong-hun was the fifth son of Chung Ju-yung, the founder of the Hyundai Group, which for decades was the largest conglomerate in Korea. The death came amid accusations of controversial and illegal money payments to North Korea. Following the death of Chung, his wife Hyun Jeong-eun, assumed the reins as chairwoman of her husband’s Hyundai holdings. Soon the company became embroiled in a family feud led by Chung Sang-yung, the uncle of Chung Mong-hun. After eight months of maneuvering for control over the conglomerate, it now remains firmly in the hands of Hyun Jeong-eun. Experts see one benefit of the months of crisis-- Hyun Jeong-eun's leadership has matured and she has succeeded in strengthening Hyundai employee solidarity. I find it interesting that Hyu...

It was reported that executive directors at Korea's top 20 companies were paid nearly 1 billion won on average last year for their services. This converts to over $800,000 dollars. These executive paychecks reflect sizable earnings from lucrative bonuses. In a Korean firm, director’s are elgible to reap huge bonuses of between 400%-900% of their base salary. The size of executive paychecks has been under increased scrutiny in the wake of corporate scandals in recent years. In contrast, the average wage for Korean workers is $40,000 One justification for the high compensation is that workers below the director level are governed by labor laws, while directors often work 12-hour days on weekdays, and until 3 on Saturdays. In addition, their responsibilities require them to work 7 day a week, travel frequently, and entertain vendors and customers late into the evening. In Korea’s corporate management structuring, less than 3% of a firm’s department managers rise to dire...

Hyundai Automotive Group has moved into a coveted second-ranked Korean business group position. For decades, prior to the 2000 voluntary split up of the family-controlled conglomerate into five primary groups, the Hyundai Group had maintained the nation’s number one position. The automotive group, controlled by the Hyundai group founder’s son, Chung Mong Koo, has worked to re-position his firm from its initial fourth place ranking. Hyundai AG acquisition of the Hanbo Steel is indicative of Chung Mong Koo’s strategy to strengthen and expand Hyundai AG. Recently, the car group’s ranking was automatically raised a notch after number two LG Group was split into two holding companies-LG Corp. and GS Holdings on July 1, 2004. The current top conglomerate is Samsung. Hyundai AG has 28 affiliates, including its flagship Hyundai Motor, the nation's largest automaker.