Thoughts on Korean Business by Don Southerton

The total value of shares held by Hyundai Automotive Group chairman Chung Mong-koo have soared in the past two months, significantly reducing the gap with Samsung Group chairman Lee Kun-hee, the Korea Stock Exchange (KSE) said on September 30, 2004. Chairman Chung’s stakes in four listed affiliates of the group were valued at $1 billion as of last week. Chung owns 7.93 percent in Hyundai Mobis, 5.2 percent in Hyundai Motor, 10.8 percent in INI Steel and 10 percent in Hyundai Hysco. ``The rise in stock prices of Hyundai Automotive Group affiliates pushed the value of Chung’s shareholdings,” a KSE official said. Shares of Hyundai Motor have jumped 25 percent since August, setting a historic high on Sept. 20. Hyundai Mobis has also climbed more than 22 percent in the two months while INI Steel has also advanced.

Have a great Chusok Holiday Chu seok jal ji nae say yo.

Chuseok, which falls Sept. 28 this year, is observed to honor ancestors followed by a much-awaited reunion of family and friends. It is a time when Korean families come together over oodles of freshly made “songpyeon” (rice cakes) and fun traditional games as the gentle autumn breeze heralds news of a good harvest. For foreign tourists, Chuseok could be both the best and worst time to be in Seoul -- worst because since most Koreans travel to their hometowns and most shops are closed for business, Seoul resembles more of a ghost town than the bustling metro it usually is. On the brighter side, there is no better time than this to learn about Korean customs and traditions. For a novice to Korea, Chuseok offers some of the best insights into a culture that has managed to survive and flourish in today’s fast-paced society. Chuseok is a time for homecoming and family reunions, while featuring ancestor memorial services. At the break of dawn on Chuseok, family members dressed in their...

South Korea's strengthened fair trade act, now pending in the National Assembly, may allow Samsung Electronics to fall victim to hostile mergers and acquisitions accrording to an article in Korea Times. This might also impact Korea's top conglomates, who have increseing foreign stock ownership. The electronics giant's in-house documents pointed out that the revision of the fair trade act might pass control of the nation's flagship firm to foreign shareholders. The revised law, facing strong protests from chaebol and the main opposition Grand National Party, will reduce the combined voting rights of Samsung affiliates in Samsung Electronics to 15 percent from the current 22 percent. This means Samsung Electronics will face the possibility of coming under the sway of hostile corporate hunters as the voting rights of the 10 largest foreign shareholders amount to around 22 percent. ``We have learned that the 10 biggest foreign shareholders have frequently conta...

LG Electronics Inc. and Hyundai Motor Co. signed a memorandum of understanding for research and development of automotive multimedia services. The top Korean domestic makers of home appliances and automobiles will work closely to develop mobile services that connect autos and transportation information, home digital convergence networks and digital multimedia broadcasts Engineers from the companies will soon draw up more detailed plans for the partnership, which will help them gain firm footholds in the fast-growing automotive multimedia industry.

LG Group jumped to second place this year from fourth in market capitalization according to the Korea Stock Exchange and Kosdaq market Sunday. The market capitalization of LG Group with all its listed and registered subsidiaries ranked fourth at the end of last year with $17 billion, drastically soared to $29.6 billion as of the end of last week, up 67.9 percent. This lifted LG ranking to second. According to Chosun Ilbo reports, LG Group's has the largest growth rate among the "big four" conglomerates, a sign that the group enjoys market reactions going beyond simple "quantitative expansion." The spiraling growth in the group's market capitalization owes to the new listing of LG Philips LCD and investors' affirmative reactions to the split of LG and GS Holding in July.

Samsung Group is making all-out efforts to defend its management right by expanding its control of Samsung Corp., the effective holding company of the conglomerate. Samsung Corp. is the virtual holding company of Samsung Group, holding 3.48 percent stake in Samsung Electronics, 1.48 percent in Samsung Everland, 5.59 percent in Samsung Fine Chemicals, 3.12 percent in Samsung Card, 12.64 percent in Cheil Communications, and 4.28 percent in Samsung Techwin. Samsung Corp. has emerged as an object of potential hostile merger and acquisition moves since the latter half of last year when UK-based Baillie Gifford Fund purchased 4.85 percent of its stake, Hermes Fund 5 percent and Australia-based Platinum Fund 5.8 percent. Foreigners' equity share of Samsung Corp. soared more than double to 45.04 percent from 21.88 percent early last year. Separate from Samsung Corp., Samsung Electronics has been purchasing its own shares since August. Korea Stock Exchange officials interpret the m...

Hyundai and Kia are recognizing the increased buying power of women. In Korea, Hyundai Motor’s new product lines have benefited from sales in the new power group. Females account for some 30 percent of Hyundai’s customers for its newly launched Sonata sedan, higher than Hyundai’s overall average of 23.8 percent. In fact, Hyundai recently began marketing Sonata N20 Elegance, a special model for women. The edition allows female drivers of a relatively short height to adjust the distance from the driving seat to the pedals. Other features include a telescopic steering wheel, a back warning system (BWS) and sliding console box. Moreover, Hyundai’s small SUV Tucson, which has been on the market in Korea since March 2004, has seen a 22.7-percent female customer ratio. Kia Motors has also benefited from the increased sales by the women buyers. Kia Motors recently re-introduced its entry-level SUV Sportage and seen the impact of the female consumer group. For example, female buye...

LG Electronics vice chairman Kim Ssang-su disclosed a negative view on digital camera business at a recent working-officials meeting. Underlying the shift is a recent rapid deterioration of profitability in the digital camera business. On the other hand, LG Electronics is positively studying a plan to build a cellphone manufacturing plant in Pyongtaek, Gyeonggi Province during the first half of next year. The plan calls for integrating its CDMA (code division multiple access) plant in Guro, Seoul and GSM plant in Cheongju, North Chungcheong Province. LG Electronics envisages developing itself into the third largest cellphone maker in the world by 2006, one year earlier than originally planned.

Hyundai Motor Co., Korea's largest carmaker, adding details to its pledge to expand operations into China, which include plans to build a second passenger car plant. This will, of course, support Hyundai Automotive Group’s drive to expand in the world's fastest growing auto market--China. Hyundai Motor also plans to double the size of its existing China plant. Chung Mong-koo, Hyundai AG chairman announced he had finalized an agreement with senior Beijing officials to build a new plant on a 3.3-square-kilometer site near the capital. Hyundai AG expects to spend $600 million on the plant. Chairman Chung noted that the new plant will play a crucial role in the manufacturer's efforts to raise Hyundai Motor production capacity in China to 600,000 units by 2007. At the new facility, Hyundai plans to manufacture 300,000 Click minicars and other models per year by 2007. The carmaker now has a plant in Beijing that produces 150,000 Avante compacts and Sonata midsize s...

Herald Media, Inc., which publishes the Korean Herald, has been appointed a business partner in Seoul English Language Village Program by Seoul Metropolitan Government. Herald Media is in charge of developing education programs, hiring and training teachers, and actual operation and maintenance of the Village. The Seoul English Language Village, located in the center of the city, is scheduled to be opened in November 2004. Seoul English Language Village will focus on providing young Korean students with real-life experiences in English through a hands-on approarch. Native English teachers will conduct certain roles, such as policemen or doctors, as well as in-class teaching. Seoul English Language Village program is largely different from ordinary teaching environments in that, unilateral education is kept to minimal. Requirements * Native English speaker with BA/BS degree of higher * Teaching experience preferred but not necessary * Enthusiastic about teaching and wor...

LG Electronics, South Korea's largest home electronics maker unveiled what it calls the world's first 55-inch liquid crystal display (LCD) television set with a built-in digital broadcasting receiver. LG’s rival Samsung Electronics has released 57-inch LCD TV sets, but it like many large LCD screens require separate equipment such as that requires to receive digital broadcasting. In a Korean news release that followed the launch of 55-inch LCD TV, LG Electronics president Woo Nam-kyun remarked that LG Electronics would improve its brand marketing in the global LCD TV market, which is estimated to reach 9 million units in 2004. Woo also noted that LG will also intensify efforts to gain a leading status in the global flat-panel display market.

In the popular Korean TV mini-series "Full House” the storyline is a 21st century version of Cinderella. In Korea, a middle class worker meeting and falling in love with a millionaire (often a family member of one of the top conglomerates) is a popular plotline in TV, movie, and print. "Full House's" version has one of the lead characters as a sales and planning team manager at LG Electronics. The program is therefore a great LG marketing tool. LG phones play a prominent role in the show. For example, Choi Joon-hyuck's face lights up when the lead actress pulls out an up-market LG Cyon camera phone and begins talking to her lover. And, in another close-up shot frames actress Song Hye-gyo's pretty face snuggling up to the sleek, fashionable mobile phone. Mobile phones are commonplace in Korean society. Interestingly, the only mobile phones that are prominently displayed by the main cast in "Full House" are LG models. To position its product...

Samsung, Korea's largest conglomate, will launch a three point strategy for expanding its European market. A Chosun Ilbo article pointed out that Samsung officals will take specialized approaches to different European regions. Samsung's new plan seeks to target the consumer market in Western Europe, developing a production base in Eastern Europe, and aquire a natural resources procurement base in CIS countries. Samsung announced the plan to adopt the new strategies at a conference for the presidents of its electronics-related firms held in Budapest, Hungary. One outcome is to boost Samsung's sales in Europe over next year by 25 percent . The 2004 goal is $20 billion. A key strategy for Samsung is to move all its plants, now scattered across Europe, to Eastern Europe. Six electronics-related companies of Samsung Group -- Samsung Electronics, Samsung SDI, Samsung Electric, Samsung Corning, Samsung SDS and Samsung Networks operate at a total of 46 locations in 16 Eur...