Thoughts on Korean Business by Don Southerton

Hyundai Motor Co., Korea’s largest carmaker, cut its forecast for domestic Korean sales this year by 27 percent because of weakening demand and rising oil prices. The automaker lowered its forecast for sales in South Korea to 1.1 million units from 1.5 million units in a statement by Hyundai Motor Vice Chairman Kim Dong-jin, which appeared on the company’s internal Web site. “The business environment is worsening,” Kim said on the internal Web site for Hyundai Motor employees. “We are being threatened by weak domestic sales and high oil prices.” Hyundai Motor, Kia Motors Corp. and Korea’s three other automakers have been focusing on exports as consumer demand slumps at home. Growth in Asia’s third-largest economy stayed at a one-year low of 0.6 percent in the third quarter, partly because credit card debts forced consumers to spend less.

Louis Schweitzer, chairman & CEO of Renault SA, arrived in Korea on Monday amid speculation over the company's new strategy for the local subsidiary Renault Samsung Motor Co. Renault Samsung was formed in 2000 after the French auto giant acquired controlling assets of Samsung Motor Inc. The manufacter exports only a small number of cars most produced for Korean domestic marketl. Schweitzer's visit has drawn huge attention mainly due to widespread rumors that Renault is considering building a new engine plant at the Busan base. Korea's smallest carmaker produces small and midsize models using platforms provided by Nissan Motor Co., Renault's subsidiary in Japan.

Hyundai Motor and affiliate Kia Motors has announced that Moody's Investors Service has revised upwards the auto manufacturers' investment grades to Ba3. The reclassification lifts the two companies out of the below investment grade ranking for the first time in seven years. The new grading is the first one the automakers have received since South Korea was hit by a financial meltdown in 1997. Kia suffered greatly from the meltdown, collapsing under its debt load—Hyundai subsequently acquired its rival. An official from Kia Motors expected that the raised grading would enable both companies to secure the financial resources needed for large-scale overseas projects such as building Kia’s new plant in Slovakia. Hyundai has large overseas operation in the U.S., China, and Turkey.

North Korea continues to dominate Korean news--most of the articles reflecting a thawing in the North's position regarding the stalled 6-way talks and hopes for their resumption . Here's a summary of some of the recent articles: 1) The United States is likely to name a special envoy to monitor the human rights situation in North Korea before the end of this year after Congress on Saturday set aside an initial $3 million primer for the North Korean Human Rights Act, legislative sources in Washington said. The House of Representatives allotted $1 million for the special envoy and $2 million to fund a conference on North Korean human rights issues in Seoul as part of the Omnibus Appropriations Bill for 2005. The funding is separate from the $24 million earmarked under the controversial human rights act, which was signed into law last month, but it will kick start two projects detailed under the legislation, analysts said. The special envoy, who sources at Congress sai...

Six years ago North Korea opened up some of the port to South Korean business partner Hyundai Asan Corp. to operate tour off scenic Mount Geumgang. Last week, on the the six-year anniversary of the mountain tour program, Pyongyang also gave the go-ahead for Hyundai to start building two golf courses in the hills overseeing the port. Hyundai Asan plans two golf courses - one of nine holes and the other over a regular 18 holes - with completion scheduled for late next year in a project regarded by many officials here as a sign that the communist state is moving toward a market economy. A article in the Korean Herald noted that signs of capitalism are already sprouting in the tour area. North Korean tour guides hawk souvenirs such as handkerchiefs and Korean traditional liquor made from rice(soju) for US$3. "Something unimaginable in the past has been taking place these days," said Cho Woo-kyung, an assistant manager at Hyundai Asan. "When the tour starte...

LG Electronics Korea introduced the world’s largest 71-inch Plasma Display Panel (PDP) television to the consumer electronics market. The retail price for the product is a whopping W80 million or $75,000 . It comes fully equipped with a set-top box, or integrated receiver decoder (IRD), and a home theater that enables users to watch wide-screen movies at home. This is the highest-priced model yet to hit the market. in fact, I'm told it is adorned by a 24k gold stripping around. Prior to the launch of this screen, Samsung Electronics’ 63-inch PDP TV and LG Electronics 55-inch Liquid Crystal Display (LCD) TV dominated the top-end of the market, costing around $18, 700 each. More important, the electronics giant also announced its goal to step up as the largest PDP TV supplier in the world by 2006, seeking to control 20 percent of the world market share. LG Electronics is estimated to have a 12 percent share in the 3.4-million-unit global PDP TV market this year, the thir...

The latest round of events in North Korea continue to intrigue the media and watchers of Kim Jong-Il. The Japanese monitoring agency Radiopress has reported: “North Korea's official media on November 17 dropped the glorifying description of "dear leader" from the nation's leader Kim Jong Il.” Although events in the North Korea are always shrouded in mystery, many watchers of its affairs have suggested that Kim Jong-il might be trying to tone down the cult worship by his people. One reason might be in order to improve his image with the United States. Some speculate that downsizing the personality cult might be aimed at avoiding negative rhetoric with the second Bush administration over its nuclear ambitions and human rights issues. I contact Leonid Petrov, a Seoul-based scholar on North Korea whose insights I value. He has checked the DPRK's radio transcripts. Petrov notes, “They continue using ‘Dear Leader’ as before. But sometimes they use the longer ...

What's going on in North Korea…? There have been unprecedented signs of changes in North Korea, a country that has maintained its Confucian-based hereditary succession system and cult of personality for more than half a century. The Russian news agency Itar-Tass reported Nov. 16 that portraits of the country’s leader Kim Jong-il had been removed from some public buildings. Then on Nov. 18, the Japanese news agency Radiopress, which monitors North Korea’s media, reported that the country’s official news agency dropped the honorific “Dear Leader” from its report of Kim’s visit to an army unit. Some foreign press also made a series of reports on the removal of Kim’s portraits. This is a strange since there has previously been perpetual idolization of Kim Jong-il and his father. In fact, rumors are flying that there has been a coup and Kim has even been removed from power. What do these signs mean? First, rumors over Kim and his father demise have surfaced for decades, so o...

610,146 Korean high school students will take the College Scholastic Ability Test at 912 schools on Wednesday. The exam draws much public attention since high scoring in the tests is paramount to one's acceptance in a top Korean university, a prerequisite for being hired by a top Korean employer such as Samsung, LG, or Hyundai. Thus, this test is seen by most Koreans as a crucial step in fostering a successful career and livelihood. To Korean's, test day usually means traffic congestion in Korea's major cities as students travel to the test locations. In fact, civil servants and employees of financial institutions and large companies in most cities except for Cheju Island are allowed to report to work at 10 o'clock, one hour later than usual. The measure is designed to ease traffic congestion. Amazingly, no vehicle will be allowed to pass within 200 meters of schools where exams are taking place. Students will answer five sections in the exam: Korean lang...

Since the massive flooding of North Korean croplands in 1995, over $2.19 billion of international aid has been received the North according to a Seoul research institute. The November report was from official data compiled by the United Nation's office for the Coordination of Humanitarian Affairs. Out of the total sum that flowed into the poverty-stricken nation between July 1996 and October 2004, $1.38 billion, or 62.8 percent, was sent through the Consolidated Appeals Process (CAP), through which U.N. agencies, national governments, NGOs and individual donors share information and set the aid goal together. International aid to North Korea can be categorized into the CAP and additional aid from individual countries and NGOs, according to Kwon Tae-jin, a senior researcher at the Korea Rural Economic Institute (KRI). Most Americans would be surprised that the United States tops the list with aid amounting to $644 million during the period. This does not include U.S. aid in l...

South Korea President Roh Moo-hyun arrives in Los Angeles on Friday Nov. 12 enroute to his summit meeting with U.S. President George W. Bush on Nov. 20. The Bush-Roh meeting will focus on how to cement the alliance between South Korea and the United States, following Bush's successful re-election. The summit talks, which will take place on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in Santiago, Chile, will also deal with the continuing impasse over the North Korean nuclear weapons program. The six-way talks aimed at resolving the nuclear standoff have been stalled with North Korea having refused to come to the dialogue table despite growing pressure from relevant parties. Roh, along with wife Kwon Yang-suk, will arrive here on the first leg of his tour of three South American nations including Argentina, Brazil and Chile via Los Angeles. With regard to President Roh's visit to Los Angles, I was interviewed by the LA's Korea Times on Wedn...

In a recent report based on the salaries at Korea’s major corporations in 2003, SK Corporation paid the most in terms of individual annual salaries at $53,127, ranked second was SK Telecom at $50,477. Based on the Korean Stock Exchange’s estimates of Korea's top firms, the average annual salary level reached the $45,000. Samsung Electronics’ annual salary level totaled $44,387, while Hyundai Motors’ totaled $42,342 The study also noted that steel producer POSCO (19,485/19,373) and Hyundai Motors (50,984/51,471) maintained a rather constant number of employees over the 2002/2003.

Korean labor union members at Hyundai Motor said on Monday they voted in favor of joining a strike proposed by a wider labor group, the Korean Confederation of Trade Unions. According to Reuters, the Korean Confederation of Trade Unions (KCTU), the country's second-largest labor group with 620,000 members, had asked member unions to vote on whether to strike to try and thwart changes to the Korean labor law. The umbrella group also opposes the government's move to sign a free trade agreement (FTA) with Japan, which will most likely help Japanese carmakers gain a larger foothold in the South Korean market, dominated so far by local players, the report added. The news agency noted that Hyundai Motor's 42,000-strong union has been at the forefront of labor disputes this year and is a key force within the KCTU. In Korea unions often take up issues beyond worker rights and compensation. For example, unions in Korea have been proponents of democratic social change sin...

South Korea’s top envoys to its neighboring powers and the U.S. will likely undergo a shakeup next year as Seoul tries to realign its diplomatic front. At stake, among others, are ambassadors to the United States and China. According to officials Monday, the government has begun reviewing candidates for the two posts set to be replaced in February. Amb. Han Sung-joo, who has served in the U.S. for about two years, has repeatedly said he was willing to quit the job before February next year, though his country wants him to stay more in consideration of the critical situation facing the two allies. Seoul and Washington have been going through various issues, including the realignment of American forces in South Korea, in addition to the North Korean nuclear crisis. One of the candidates often floated to be Han’s successor is Moon Chung-in, chairman of the Presidential Committee on Northeast Asian Cooperation Initiative, according to Chong Wa Dae (the Korean Blue House) sourc...

On Thursday November 4, I spoke to a number of my Korean colleagues regarding the U.S. presidential election. With the election now behind us, the overarching concern among the Koreans was U.S. policy towards North Korea. Most hoped U.S. world not take military action. This concern has been echoed in South Korea. For example Korea Times noted that top South Korean officials sought Friday to douse concerns that the re-election of U.S. President George W. Bush could exacerbate the North Korean nuclear crisis, predicting that Washington will persist with diplomacy and noting signs of flexibility from Pyongyang. ``I believe that North Korea is showing signs of changing after the U.S. election,'' Unification Minister Chung Dong-young was quoted as saying by Uri Party spokesman Im Jong-seok during a meeting of ruling party officials and security-related ministers at the Prime Minister's Office. Minister Chung said the North recently indicated a willingness to allow So...

The South Korean government on Wednesday was taking a cautious attitude as it watched the results of the U.S. presidential race unfold as President George W. Bush gained a lead in the closely fought election. With the final result remaining unclear despite early media projections, government ministries and other agencies as well as Chong Wa Dae (the Korean Blue House) gave no comment on the crucial vote. Government officials and presidential staffers, however, spent a busy and restless day assessing the possible outcome of the poll across the Pacific and its impact on the Korean peninsula for the next four years. The key issues concerneing South Korea include the talks with North Korea and the economy.

After a four and a half hour of rain-soaked gameplay, the Hyundai Unicorns claimed the Korean Series title by fending off the Samsung Lions 8-7 in Game 9 of the Korean Series held in Seoul on Monday November 1, 2004. The Hyundai Unicorns, who compiled a record of 75-53-5 to finish atop the regular season for a second consecutive year, won the series by 4-2 with three draws. It was the Unicorns' fourth title in nine seasons, since they joined the league in 1996. Among the eight clubs of the KBO, only the Kia Tigers, or former Haitai Tigers, have won more championships than the Unicorns as they have claimed nine Korean Series trophies since 1982.