Thoughts on Korean Business by Don Southerton

Samsung and LG have been selected as the most influential name brands in Asia-Pacific after Japan's Sony. Based on a survey of about 2,000 advertising and brand managers and academics worldwide, the online magazine Brandchannel.com said that Samsung retained its second position in brand recognition last year while LG overtook Japanese automaker Toyota in the third spot. Placing LG third among brands with the most impact, American-based Brandchannel said that Korea's second-largest conglomerate appears to be trying to beat Samsung at its own game by countering a traditionally poor image with a better quality product. The magazine also said that LG's strategy to create a halo effect on other products through loyalty to the company's mobile phones seems to have paid off. LG sold more than $44 million in handsets in 2004, beating Sony Ericsson to place fifth in the global mobile phone market. Ranking fifth in Asia-Pacific is Australia's Lonely Planet, the b...

Korea’s gross domestic product ranked 10th in the world in 2004, according to the Ministry of Commerce, Industry and Energy. According to a ministry report on the Korean economy’s global standing, the country is estimated to have become the 10th largest global economy with a GDP of $667.4 billion last year, overtaking Mexico, whose GDP is estimated at $663.1 billion. In 2003, the country recorded a GDP of $605.2 billion, ranking 11th. It was placed 50th in terms of per-capita gross national income with $12,030, which increased to $16,900 in 2004 and is expected to break through the $20,000 mark by 2008. Korean exports stood at $254.2 billion in 2004, making it the 12th nation to see its exports reach the $2,500 billion mark. Its export volume was the world’s ninth largest last year, excluding transit trading countries, followed by the Netherlands, Belgium, and Hong Kong.

Two international schools for expatriates and Koreans are expected to open by 2007 in the planned Songdo New City in the Incheon Free Economic Zone (FEZ), the Chosun Ilbo has learned. Each would admit up to 2,100 students from kindergarten to high school level, or a combined 4,200. Koreans would make up about 40 percent of the intake or 1,700. The numbers come from a report, exclusively obtained by the Chosun Ilbo, by the Harvard Advisory Group (HAG), the consulting company dealing with the establishment of international schools in Songdo New City. According to a HAG official, a school should open up by 2007 at the earliest, taking in no more than 350 students the first year. But within five years student numbers would jump to 2,100. He also said it would be desirable to keep tuition fees at around US$20,000 per person, similar to international schools elsewhere in Asia. The report said graduates from Songdo's international schools would qualify to apply to universities all o...

South Korea, car sales and auto parts export rose 39.6 percent to $32.6 billion last year according to the Korea Automobile Manufacturers Association. The sharp increase in auto sales is attributed to improved quality and brand image, broader overseas dealer networks and strengthened marketing abroad, said the industry group. The number of Korean cars sold in North America last year surpassed 1 million for the first time since Korea began shipping autos to the region in 1984. A total of 782,982 Korean cars were sold in the United States, marking a 21 percent surge. Hyundai Motor Co. sold 418,615 units accounting for 2.5 percent market share. Kia Motors Corp. and GM Daewoo Auto & Technology Co. sold 270,055 (1.6 percent) and 94,312 units (0.5 percent), respectively. The three carmakers' sales to western Europe also rose 26 percent to 590,851 units, with a market share of 4.1 percent. The average export price per fully assembled unit exceeded $10,000 for the firs...

LG Electronics broke through the 1 trillion Won mark in operating profits for the first time last year, posting the biggest profits the company has enjoyed since it was founded in 1958. But the plunge in the value of the dollar meant that LGE's fourth-quarter operating profits fell by 70 percent compared to the previous quarter, and with the dollar predicted to continue its slide, profits are expected to take a hit in 2005. LGE said Tuesday that it recorded $25.85 billion dollars in sales last year, with operating profits of$1.21 billion and $1.47 billion in net profits. LGE's 2004 profits have been attributed to improved profits in its information and communication sector. LGE has set for itself a sales target of between $27 to 29 billion this year, a 20 percent increase over last year. The company also plans to invest $3.4 billion, a 40 percent boost over 2004, to strengthen its R&D capacities and expand facilities.

In Korea, GM Daewoo Auto & Technology Co. recently unveiled its coming model lineup and outlined aggressive sales targets for this year and next. Korea's third-largest automaker hopes to increase sales this year to about a million units after moving 900,084 vehicles last year. About 80 percent were sold overseas. It expects to sell more than 1.2 million next year. To achieve the goals, the automaker will release eight new and revamped models over the next 15 months. The new passenger car lineup includes the all-new Matiz, Korea's best-selling minicar, the Statesman, a luxury sedan sold in Australia by GM's affiliate Holden, and the company's first sport utility vehicle, code-named C-100, which will vie with Hyundai Motor Co.'s Tucson and Kia Motors Corp.'s Sportage. The new Matiz will hit showroom floors in March. So far, about 1.3 million Matiz cars have been sold worldwide. General Motors owns 42.1 percent of GM Daewoo. Its partners are Jap...

The world’s largest shipbuilder Korean-based Hyundai Heavy Industries Co. (HHI) has obtained the contact to build four massive container ships. The Chinese shipping group Cosco Asia Maritime placed the order. The ships, to be built for delivery by 2008, will be have decks the size of three soccer fields. Currently, the world's largest container ship is 8000 TEU and was built by in 2004 by Hyundai Heavy Industries for German ship owner Conti Reederei Gmbh. The new ships will be over 10,000 TEU. HHI said the orders mean it has taken some 30 percent of the world’s large container ship (over 8,000 TEU) market.

South Korean-based Doosan Group hopes this year will mark the beginning of a new era as a global conglomerate. According to the Korea Herald, Doosan Heavy Industries & Construction Co.'s rapid growth and its planned acquisition of Daewoo Heavy Industries & Machinery Ltd., Korea's largest construction equipment manufacturer, are to be springboards for the expansion. Doosan Heavy, the sole maker of power generating equipment in Korea, already has a 30 percent global market share in the construction of desalination plants, but Doosan Heavy's CEO Kim Dae-joong envisages further growth. The world`s largest desalination plant was built by Doosan Heavy in Fujairah, United Arab Emirates. The acquisition will increase Doosan Group's sales and allowing the Group to jump from the nation's 12th largest private-owned conglomerate to ninth. Aside from building power plants and desalination plants, Doosan Heavy also casts and forges key industrial materials...

In 2003, Chung Mong-hun, chairman of Hyundai-Asan Corp. jumped to his death amid scandal and charges of illegal payments to North Korea. Chung's untimely death has but heralded a series of suicides among Korean social and business leaders. For example, former chief justice of the Supreme Court Yoo Tai-heung recently jumped off Mapo Bridge over the Han River in Seoul and ended his life over worries about his chronic disease. Last year in February, the late Pusan Mayor Ahn Sang-young took his life. One month later, Nam Sang-kook, former president of Daewoo Engineering & Construction, ended his life. Although those prominent figures committed suicide due to alleged involvement in bribes-related scandals or investigation of the prosecution except Yoo, the deaths are considered contributing to the rising trend of suicide in the society. According to the Korea Suicide Prevention Center, the number of suicides tend to increase up to 17 times after reports of noted fi...

Seoul City announced its new Chinese name _ ``首爾 (soual),'' meaning ``leading city'' _ Wednesday. Seoul city officals have spent about a year selecting the name. The new name is aimed at solving confusion caused by the differences between the Chinese characters ``漢城 (hancheng)'' as used by China and the original pronunciation of the city's name. The official said the city had received ``very passive'' responses from the Chinese Embassy in Seoul regarding the name change. Despite the city's intentions, the new name is not likely to meet ready acceptance among Chinese speakers. ``Seoul City is treating this as a very simple matter, but it could be a big issue in Chinese-speaking countries. The city should have at least cooperated with the Ministry of Foreign Affairs and Trade of Korea,'' Xu Baokang, a correspondent from China's People's Daily, said during the news conference. Citity officials note the Chinese n...

South Korea's Hyundai Motor Co., which sold more vehicles globally last year than Japan's Honda Motor Co., said it will make one-third more cars in China in 2005, part of a plan to become one of the world's top five automakers by 2010. In an article in Korea Herald, Korea's largest carmaker noted it plans to make 200,000 vehicles in China this year through its Beijing Automotive Industry Corp. venture. Hyundai Motor will add the Tucson sport utility vehicle model, Click and Verna compacts to the Sonata and Elantra sedans it is already making in the Chinese capital. Hyundai Motor, based in Ulsan southeast of Seoul, is counting on overseas markets to maintain its sales growth, as it aims to overtake Volkswagen AG and Nissan Motor Co. to be among the world's five largest carmakers within five years. Hyundai Motor and its Kia Motors Corp. affiliate sold 3.4 million vehicles worldwide last year, placing them ahead of Honda and PSA Peugeot Citroen. Hyundai Mo...

In Korea, Hyundai Autonet has opened an online shop for its in-car navigation system. The company sells product under the brand name "Pontus." Autonet's Easy Car navigation system was first released last August and has sold over 50,000 models since. In addition to distributing it through shopping centers like Hi Mart and Electro Land, Hyundai Autonet has now moved into online sales. Recently, Hyundai Motor Group, Autonet's largest customer, has expressed an interest in acquiring the manufacturer. Hyundai Autonet was formed in 2000 when it was spun-off from Hyundai Electronics.

Koreans living in the United States had median family incomes substantially below that for all Asian families, although Asians as a whole were better off than all American families according to a recent U.S. census report. The median income of Asian families was $59,324 - $9,000 higher than the median for all families - but Korean family income only stood at $47,624, according to the bicentennial report by the U.S. Census Bureau issued in December 2004. The report, entitled "We the People: Asians in the United States," provides a portrait of the Asian population on several demographic, social, and economic characteristics collected from Census 2000. The data in the report are based on the sample of households that responded to the bicentennial census. Nationally, approximately one out of every six housing units was included in this sample. All comparisons in the report are at a 90-percent confidence level. But Korean men and women reported lower earnings among b...

LG Electronics has formed a strategic alliance with Home Depot, the largest home goods chain in the U.S., to sell its home appliances. LGE will start selling refrigerators, washing machines and dishwashers at Home Depot's 1,800 outlets in the U.S. starting from the second quarter. LGE has been supplying home appliances to the U.S.'s largest home appliance store Best Buy since 2003.

South Korean president Roh Moo-hyun in his annual address noted he would concentrate on reviving the economy in 2005. According to Choson Ilbo, the speech focused almost entirely on the economy. This is evidence of how serious a state the economy is in, and of Roh's determination to confront the country's economic woes. The president's proposed solution is primarily two-fold. One element is rescue through investment expansion and a front-loaded budget. Roh said he would launch a fiscal stimulus package in the first half of the year and added he would urgently execute a comprehensive investment plan to draw ample private sector capital into public investment. Fortunately, many firms have said they will increase investment from early this year, Roh said. If this happens, he believes that the economy can recover its vitality starting from the second half of the year. The government is planning to spend half its annual budget -- W100 trillion -- in the early part of the ...

U.S. Ambassador to Korea, Christopher Hill, has tentatively been named Assistant Secretary of State for East Asia and Pacific Affairs. Current U.S. Ambassador to Australia Tom Schieffer has been tentatively selected to replace Hill in Seoul. If the appointment is confirmed, Hill will be replaced only five months after he was appointed U.S. ambassador to Korea on August 12 last year - an unprecedentedly brief tenure. I'm not surprised since there have been indications that Hill would head the U.S. delegation in the Six Way talks with North Korea.

Korea's Seoul National University produced the most holders of American doctoral degrees of any university outside the U.S. from 1999 and 2003. An education weekly, the University News Network, reported that a recent study noted there were 1,655 holders of U.S. doctoral degrees who had been undergraduates at Seoul National. The study was conducted by the University of Chicago. More amazing was that in all schools globally SNU came second only to the University of California, Berkeley. Berkeley had 2,175 of its grads earning doctoral degrees.

Korean Conglomerate Ownership , originally uploaded by dsoutherton . The stock ownership in Korea's top conglomerates finds Samsung and Hyundai Motor's leaders ranked one and two respectively. Over the past year, Chung Mong Koo, Hyundai Motor chairman made the most gains with the success of Korea's top carmaker.

2004 was a record- breaker for Hyundai Motor America. The American division of the Seoul Korea based company announced annual U.S. sales of 418,615 vehicles for 2004. This was an increase of 4.6 percent over 2003. The company enjoyed its strongest December ever last month. Led by solid year-over-year sales gains for the Santa Fe sport-utility vehicle and the Sonata sedan. Beginning in March, the two vehicles that soon will be manufactured in Montgomery, Alabama. December 2004 total monthly sales hit 37,148, up 7 percent over December 2003. Last summer, Hyundai officials planned to sell 430,000 vehicles in 2004 as a stepping-stone toward the company's larger goal of hitting 1 million in U.S. sales by 2010. Market conditions later prompted the company to downsize that goal to 420,000. In comments in a Montgomery Advertiser article , Chris Hosford, executive director of corporate communications for HMA in California, said, "while we are disappointed that we didn't h...

Hyundai Heavy Industries , originally uploaded by dsoutherton . The NS Challenger, the first ship built on ground instead in a dry dock, is set to make a maiden voyage. Hyundai Heavy Industries, the world's largest shipbuilder, ushered in a new era in the shipbuilding industry by using the "on-ground" method in building the crude oil carrier.

Hyundai Motor Co. and Kia Motors Corp., Korea's two biggest carmakers, together sold more vehicles worldwide in 2004 than Japan's Honda Motor Co. Hyundai Motor and affiliate Kia together sold nearly 3.4 million vehicles last year, almost 18 percent more than 2003. That's more than the 3.16 million vehicles that Tokyo-based Honda expects to have sold last year. Honda is Japan's third-largest carmaker. Hyundai Motor and Kia are aiming to be among the world's five largest car sellers by 2010.

Don Southerton, BC president was recently mentioned in the Montgomery Advertiser. The Alabama newspaper, like much of Montgomery, has taken an interest in Korean culture with the construction of the $1 billion Hyundai Motor Manufacturing plant. Here's an excerpt from the timely article by reporter Tiffany Ray: New Year's celebrations are already a memory here in Montgomery, but in South Korea, Hyundai's headquarters, residents have a second round to look forward to. In addition to celebrating the change of the calendar to 2005, South Korea also observes the lunar New Year, an older tradition common in many Asian countries. In Seoul, South Korea's capital, residents ring in Jan. 1 literally. Don Southerton, president of Bridging Cultures, a California-based consulting business that focuses on U.S. and South Korean business relations, said an ancient bell in the city chimes 33 times -- a lucky number -- to herald the New Year. The lunar New Year will arrive o...

South Korean automakers sold 25 percent more vehicles in December 2004, compared to a year ago. The manufactures cite the demand in the United States and China . According to the International Herald Tribune, the nation's five carmakers sold 467,042 vehicles last month, compared with 373,050 a year earlier. Exports rose 36 percent to 369,514 units, while domestic sales fell 3 percent to 97,528 vehicles. Hyundai and its smaller rivals are raising production and sales abroad as orders at home decline because a tightening of consumer credit left many people unable to afford new vehicles. Hyundai and Kia are building plants overseas as part of plans to become one of the top five automakers in the world by 2010. Hyundai Motor sold 21 percent more vehicles last month as exports to the United States and Europe surged and domestic demand rebounded. Hyundai Motor sold 230,437 models in December, the carmaker said in a filing to the Korea stock exchange. Exports, including sales f...

Hyundai Motor Chairman Chung Mong Koo , originally uploaded by dsoutherton . Chung Mong Koo announced Hyundai's "Innovation toward customer satisfaction" stategy for 2005. Chung like the heads of most of Korea's business announce their respective company's plans for the new year on Januray 1st.

Hyundai Motor Group Chairman Chung Mong-koo said during a New Year's speech to employees that stagnant domestic demand, a global economic slowdown, and volatile exchange rates pose a challenge, but Hyundai will brave through the difficulties to continue their growth. Hyundai's like most Korean firms leaders make New Year's speeches to announce company strategies for the upcoming years. Hyundai Motor Co., South Korea's top automaker, forecast a near 14 percent rise in 2005 sales, underpinned by solid foreign demand and an expected pick-up for frail domestic sales. Hyundai, which aims to become one of the world's top five carmakers together with affiliate Kia Motors Corp., is aiming for sales of 2.39 million units in 2005, up from 2004 sales of 2.1 million units. Affiliate Kia Motors Corp. also put out a strong sales target for 2005 of 1.34 million units, up 23.8 percent from sales of 1.08 million units in 2004. " Hyundai will step up innovation to im...

New Year's Eve, Seoul , originally uploaded by dsoutherton . New Year's Eve in Seoul. Thousands of Koreans ring in the New Year (literally) in central Seoul area, Jongno. The celebration focued on the ringing of the Posinggak bell--a tradition reaching back centuries.