Thoughts on Korean Business by Don Southerton

Like land prices in America, the price of land in South Korea continues to rise . In fact, they rose an average of 18.9 percent this year driven by government-led construction projects. The price gain is the largest since 1990, and higher than 2004, when land prices soared an average 18.58 percent. According to Korean government statistics, land prices in Kyonggi Province and South Chungchong Province recorded the highest growth among the provinces, while Seoul saw a lower-than-average increase of 11.6 percent. Moreover, the data reflects rising property demands near Yongi and Kongju in South Chungchong Province,where the government plans to move an administrative capital. Seoul still has the most expensive real estate, but the slower price gain is due to the governmentÂ’s regional emphasis. In Yonchon, Kyonggi Province, land prices jumped 98.1 percent fueled by government projects to build residential complexes there. Yangju and Hwasong saw a 68.5 percent and 61 percent growth, respe...

Kia Motors Corp. in Korea, pleased by its sponsoring of the Asian X-Games 2005 in Seoul, announced it would sponsor more extreme sports events. The Korean automaker was the main sponsor of the four-day competition, which was Kia's first marketing initiative in extreme sports. Why? Kia note, "Flashing adventurous spirit of the new-generation, extreme sport is just right for our brand image of exciting & enabling," "We plan to diffuse Kia's brand to young people all over the world via promotions of in-line skating and extreme sports." Kia Motors inserted its logo in the X-Games logo, public relations materials, billboards and TV broadcasts, expecting a media exposure worth $14 million. The 2005 Asian X-Games attracted 200 competitors as well as media from around the world to the venue, Seoul's Olympic Stadium in Jamshil. Extreme sports, popular among under-25-year-old competitors for its daring acrobatic competition, were formerly used as a tool for...

LG electronics mobile phones sales in the United States during the first quarter of 2005 have pushed the company into second place among cell phone manufacturers. They had previously ranked in fourth place. According to Strategy Analytics, a U.S. mobile handset market researcher, LG sold 5.8 million handsets that accounted for a 17.2 percent share of the U.S. market. That beat the 12.9 percent of Nokia. In first place is Motorola. The electronics maker's strategy is based on its domination in the U.S. CDMA market and a growing presence in the third-generation phone market. CDMA, or Code Division Multiple Access, is a mobile-phone standard used in Korea. In the United States, LG Electronics said earlier this year that is has already begun selling next-generation cellular phones. LG phones are rapidly gaining ground in the United States, making strides over the past few years,said Ahn Myeong-kyu, president of LG Electronics' U.S. headquarters in New Jersey. LG's mobile phon...

Rumors have surfaced that former Daewoo chairman Kim Woo-choong will return to Korea. According to Chosun Ilbo, a team of government prosecutors has already started preparing the case against the Daewoo founder. One of Kim's Woo-choong lawyers said the former Daewoo chairman's health had been deteriorating after a long time and he had made up his mind to come home. Kim has lived abroad for the last five years, ever since he disappeared following a completion ceremony for a Chinese car parts factory in October 1999. Shortly after that Daewoo went bankrupt with over $60 billion in debts. The South Korean Supreme Court sentenced the former presidents of Daewoo subsidiaries $23 billion in fines and imprisonment for accounting fraud. Some feel that because Kim is finally ready to return Korea that he has already worked out an amnesty deal with the government.

Namdaemun , originally uploaded by dsoutherton . South Korean landmark Sungnyemun, or Namdaemun (Great South Gate) once was a one of the Seoul's four old fortress gates. For centuries it served as both an entrance to the capital city and a site for trade and commerce. Sungnyemun, built in the seventh year of the Chosun King Taejo’s reign (1398), is the oldest wooden structure in Seoul, but the surrounding fortress walls were removed in 1899 to build a electric trolley route. After extensive urban development in the area during the Japanese Colonial period (1910-1945), the gate became unapproachable to visitors. That has recently changed. The construction of a new plaza surrounding the gate means is easily accessible on foot by five crosswalks. After planting grass and trees in front of the gate, the city named the space Sungnyemun Square and announced it would open it to the public. The crosswalks will make it easy to walk from the plaza to the highly popular Namdaemun Ma...

LG Electronics Inc. Seoul headquarters announced that Best Buy rewarded LG Electronics USA Inc. with the BRAVO! Award that recognizes the electronic maker's dedication and technological prowess. LG's North American subsidiary received the brand recognition award from Best Buy, a major U.S. retail chain. Best Buy's BRAVO! Award program began in 1999. In addition , LGE was honored for excelling in product manufacturing and supply chain management. J.M. Lee, LG Electronics' president of digital display brand division. noted that "In the past year we have not only implemented an innovative, new supply chain system, but made every effort to enhance our partnership with Best Buy," Lee also remarked "We are honored that Best Buy recognized our achievements and look forward to another successful year." LG Electronics forms earns $38 billion in global sales of consumer electronics, information technology and communications products.

Pantech , originally uploaded by dsoutherton . In Korea, Pantech & Curitel has introduced two “T-slide” , so called because the handset takes on a T-shape when the bottom slider is fully stretched with the vertical display rotated at a 90-degree angle. The company says the models combine slide and horizontal display phone features popular among the young, allowing users to take and edit photos vertically or horizontally and watch multimedia content on a horizontal display. The models have a subway navigation function, which provides information on the shortest route and exits if users input their departure and destination and can transform text into voice messages. They also have an electronic dictionary and mobile banking service. The phones will hit the market late this month or early next month priced at about $500.

Samsung Electronics “Anycall” mobile phone topped the American Customer Satisfaction Index (ACSI) produced by University of Michigan and the American Society for Quality (ASQ) for a second year. Samsung garnered in all 71 points in the customer satisfaction category, one point ahead of rival Nokia and Motorola. Both Nokia and Motorola tied for second place. In 2004, Samsung Electronics ranked first with 73 points, one point ahead of Nokia and three ahead of Motorola. Also noted in the report, wireless service provider Verizon Wireless was the leader with 67 points. T-Mobile, which was excluded from last year’s survey, came second with 64 points, and Sprint was third with 63 points. Singular and Nextel followed with 62 and 59 points.

In the wake of the opening of Hyundai Motor Company's Alabama manufacturing plant, Chung Se Yung who spearheaded Hyundai's entry into auto manufacturing has died of pneumonia. He was aged 78. Chung Se Yung, a brother of the late Hyundai Group founder Chung Ju Yung, was responsible for setting up Hyundai Motor in 1967. Having earned his master`s degree in political science in the United States, Chung started his business career at Hyundai Engineering and Construction Co. In 1957 and became the first chief executive of Hyundai Motor Co. Chung was credited with expanding Hyundai into one of global automakers before his retirement in the late 1990s. In 1999, control of Hyundai Motor went to Hyundai founder Chung Ju Yung's son, the current chairman Chung Mong Koo. Interesting, Chung Se Yung had planned that control of the motor company would go to his own son In Confucian tradition, Chung Se Yung yielded to the request of his elder brother, Chung Ju Yung that the car company ...

Hyundai Motor Manufacturing Alabama , originally uploaded by dsoutherton . Hyundai Motor will celebrate the completion of its U.S. car plant in Montgomery Alabama. Hyundai Motor Chairman Chung Mong-koo noted at the ceremony in Montgomery. “With the start of operations at its Alabama plant, Hyundai Motor has become a truly global carmaker." The event has become a media spectacle. Aside from dozens of South Korean journalists from a variety of publications, reporters from Agence France-Presse, the New York Times, Washington Post, USA Today, Bloomberg.com and Forbes magazine are in Montgomery for the event.

iSuppli Corp, a research firm reported that Korean mobile-phone makers have made major strides as global trends in recent years but must deploy a more targeted market approach to sustain profitability. In the first quarter this year, Samsung Electronics Co. and LG Electronics Inc. became the No. 3 and No. 4 handset suppliers in the world, respectively, but Nokia and Motorola had a 4.5 times larger average revenue per handset than both Korean companies. An iSuppli spokesperson noted, "To cope with the challenges of achieving higher positions, Samsung Electronics and LG Electronics must adopt additional strategies beyond just offering the widest variety of models in the market," "It will require more specific targeting of the key demographic users of handsets, in which Samsung Electronics and LG Electronics will need to develop models that could have a larger share in each demographic," he said. According to figures by iSuppli, Korean manufacturers produced about 27 ...

A number of firms listed on the Korea Stock Exchange reported a combined net profit of $12.1 billion in the first quarter 2005. This was down 16.2 percent from 2004. Why? High oil prices and a stronger Korean won against the dollar combined to worsen their bottom lines. Most significant was that net income plunged as leading exporters as Samsung Electronics, LG, Hyundai and Kia were hit hard by a stronger won. Essentially, the Korean won’s appreciation weakened corporate earnings from exports while higher oil prices raise production costs for manufacturing firms.

courtesy of Detroit News , originally uploaded by dsoutherton . On May 20, 2005, Hyundai Motor will celebrate the grand opening of its first American manufacturing facility. The Montgomery plant will manufacture the popular mid sized Sonata and Santa Fe SUV. The $1.1 billion dollar plant is but one aspect of Hyundai's plan to further their North American operations. Along with corporate operations in Orange County California for Hyundai and Kia, the auto group has made major investments in design and R&D. (See photo) This investment has been also been highlighted in national advertising showing the new facilities.

LG , originally uploaded by dsoutherton . LG Electronics plans to appeal to younger customers with a new line of high-end multimedia cell phones. In Korea, LG CEO Park Mon-hwa said the company would focus on manufacturing state-of-the art multimedia cell phones, such as digital multimedia broadcasting (DMB), WCDMA/HSDPA and WiBro gadgets. The new products (see photo) unveiled include a 360-degree rotation satellite DMB phone, a slide Bluetooth phone, an ultra-slim 5-megapixel digital camera phone, a 3D game phone, an MP3 music phone and a phone with an inbuilt breathalyzer, for the traffic policeman in all of us. The satellite DMB phone has a power-saving chip allowing users to watch up to three hours of broadcasts and movies. It is also equipped with a 2-megapixel digital camera.

In Korea, top ranking among the nation's leading conglomerates is cherished. The market capitalization ranking of Korea's conglomerates has seen a quiet revolution in recent years due to the sale and spin-off of affiliates and varying business performance. Last week, Samsung's market capitalization continued growth cemented its position as Korea's first business group. Samsung's market value amounts to 20% of the entire stock market and is larger than the combined market capitalization of LG, SK and Hyundai Motor. What I find interesting is that despite spinning off LS Cable and the GS Group last year, the LG Group's market value jumped two notches from fourth place to second. This adds credibility to LG top management who hoped the spin-offs would allow LG tp concentrate on core business sectors. Meanwhile, SK Group was the only conglomerate among top 10 business groups whose market value shrank because of an accounting scandal and stalled growth of its core...

Hyundai Automotive Group plans to build an integrated steel mill handling the entire steel-making process from refining iron ore to producing industrial-use steel. POSCO’s is currently the only one in Korea. If Hyundai Motor enters the blast furnace business, it could -- with its subsidiaries INI Steel, Hyundai Hysco and BNG Steel -- become a competitor to POSCO. “In accordance with instructions from chairman Chung Mong-koo, we’ve drawn up a comprehensive roadmap to enter the blast furnace business,” the company announced. “We plan to officially announce the investment size and project schedule sometime next week at the earliest.” The area around INI Steel Dangjin Mill (formally Hanbo Steel) in Dangjin, South Chungcheong Province is being suggested as a top candidate for the plant. According to Chosun Ilbo, within the Hyundai Auto Group there were voices urging caution with such massive investment, expressing concern over Chinese overproduction. Nevertheless Chairman Chung decided to j...

Buddha's birthday has an addition meaning for some Koreans besides the Buddhist celebration--amnesty from criminal convictions. Thirty-one businessmen convicted of bribery, accounting fraud and other criminal charges will be given special amnesty on the occasion of Buddha’s birthday. To be pardoned include many executives from Korea's top conglomerates: Lee Hak-soo, vice chairman of Samsung Group’s corporate restructuring office Kang Yu-sik, LG Group vice chairman Kim Dong-jin, Hyundai Motor vice chairman Park Chan-bup, CEO of Asiana Airlines Shin Dong-in, president of Lotte Shopping. Why? The special amnesty is designed to restore the businessmen’s honor and reinstate them so that they can concentrate on reviving the economy. The ministry said the government has decided to pardon those businessmen in recognition of their contributions to the economy. It expressed hope that they will make more efforts to help boost the sluggish economy. The ministry explained that most ranking ...

Korea's global competitiveness has improved since according the Chosun Ilbo... but the country came last in terms of labor-management relations among 60 countries for the third year running. The Swiss International Institute for Management Development (IMD) reported that Korea came 29th out of 60 countries in terms of competitiveness, climbing six places since last year. In the rankings Korea labor competitiveness remained mediocre due to fractious management-labor relations. On a positive note, Korea placed at or near the top of the list in terms of broadband communication subscriber ratio (first), broadband costs (second), patent productivity (second) and exchange rate stability (second). Interestingly, the U.S. came first overall, followed by Hong Kong, Singapore and Iceland. Among other Asian countries, Taiwan came 11th, Japan 21st, Thailand 27th, Malaysia 28th, China 31st and India 39th. The IMD has been evaluating national competitiveness since 1989 by ranking nations in 314...

In a change in policy, Samsung Electronics has provided luxury Lexus sedans to seven of its presidents. The Lexus replace Hyundai Motor’s Equus sedans. Samsung Electronics said provision of luxury sedans to top rank executives follows a promise by Samsung Group chairman Lee Kun-hee that he would treat his executives on the same footing with their counterparts in top-tier global multinational corporations. According to one sources, Samsung Electronics decided to purchase Japanese brand cars taking into account the fact that our major Japanese business associates have purchased Samsung’s products on a massive scale Top executives of other Samsung Group affiliates are also expected to replace their sedans with latest foreign offerings later this year. Until last year, the Samsung Group has provided executive vice president and above level executives with Equus, the most expensive model produced by Hyundai Motor, and SM7 to senior executives with ranks above vice president. Samsung head, ...

Korean Culture Alert: Buddha’s Birthday--Korean National Holiday According to legend, Buddha was born in a garden in Lumbini, in what is today southern Nepal. It is said that when he was born birds sang, flowers bloomed, and sweet rain fell from the heavens to welcome his arrival. Soon after he was born, Buddha took seven steps, with a lotus blossom appearing in each footprint he left. Hence in Asia, lotus blossoms are often associated with Buddha. This year Buddha’s birth will be celebrated through out Asian on May 15. (The eighth day of the fourth lunar month.) In Korea, Buddha’s birthday( sekka tanshin-il0 is one of three traditional holidays celebrated yearly. Commonly referred to as “Chopail,” the day is observed as a national holiday on which followers of Buddhism across the nation head to temples for special services. Non-believers and their families also visit the temples, often located in scenic mountain areas. For Koreans, a popular feature of the holiday is the Lotus Lanter...

Recent profit taking by foreign investors and the impact of a weak U.S. dollar has driven down value of Korean top conglomerates. Nevertheless, the rankings of the top firms and their leadership has not changed. Remaining at the head of the pack, the total value of shares held by Samsung Group chairman Lee Kun-hee is the highest among owners of the nation’s 10 largest conglomerates. Lee’s stakes in the group’s four listed affiliates were valued at 1.38 trillion won ($1.38 billion), down 8.7 percent from 1.51 trillion won on March 11. Chairman Lee owns 1.91 percent in Samsung electronics, 1.41 percent in Samsung Corp., 0.31 percent in Samsung Fire & Marine Insurance and 0.1 percent in Samsung Securities. In second place is Hyundai Automotive Group chairman Chung Mong-koo. Chung’s top Hyundai’s holdings include affiliates valued at 1.33 trillion won, down 7 percent from 1.43 trillion won over the 2-month period. Chung has 7.93 percent in Hyundai Mobis, 5.21 percent in Hyundai Motor,...

The sale of Mando Corp is expected as major foreign shareholders of South Korea’s second largest auto parts maker sell their interest. The speculation that Mando will be put up for sales was triggered by a report by The Financial times which said the company may fetch about $1.5 billion-$2 billion, generating a windfall for owners JP Morgan Partners and Affinity Capital. The sale of Mando is drawing the attention by the Korean stock market for the second time in about six years. The company made headlines when it was sold in 1999 after the collapse of its parent company Halla Group two years earlier. Mando is a main supplier to Hyundai Motor, South Korea’s largest carmaker, and its affiliate Kia Motors. Mando also operates a tier one plant in Alabama. The Hyundai Motor Group, a potential bidder, already has Hyundai Mobis, the nation’s largest auto parts maker. But, I see the high asking price reducing Hyundai Motor’s appetite for Mando. Foreign investors JPM Partners and Affinity contr...

According to Chosun Il Bo, the organizers of the Seoul Motor Show have picked three best cars at this year's car show. In the concept car sector, the winner was BMW’s hydrogen racing car H2R. Hyundai’s Grandeur was picked in the passenger car field, Nissan’s FX45 was named in the sports utility vehicle (SUV) category. All of the three cars were awarded with the Korean Industry, Commerce and Energy Minister Prize. The winners were chosen through a survey of domestic and overseas reporters who covered the motor show. The organizer note that the number of visitors to the show has surpassed 760,000 since it opened on April 29.

The number of people in their 50s holding jobs rose to an all-time high in March 2005. This mean there is an increasing number of older Koreans who choose work over retirement. The number of workers aged between 50 and 59 reached 3.5 million in March, up 7.6 percent from a year before, the National Statistical Office (NSO) reports. The number of those in their 50s with jobs accounted for 15.5 percent of the total workforce in March, up from 14.6 percent a year earlier, the NSO said. About 22.57 million people out of a population of 48 million had jobs two months ago. The figure has shown a steady upward movement over the past few years since the 1997-1998 Asian currency crisis with more being forced to work due to their deteriorating financial situations. ``With a rising life expectancy, more older people are forced to continue working as it is increasingly more difficult for their savings and pension to sustain them,’’ a NSO official said. The official added that the majority of old...

Union officials at Hyundai Motor Co. in South Korea said they would seek an 8.5 percent pay increase this year. The figure was decided during a two-day meeting with representatives of Hyundai's 42,000-strong union workers. It will translate to an average $108.9 increase in monthly salary, the union said. In Korea, summer is the traditional labor talks period at many Korean companies. The union said it plans to deliver its demands to management this week and begin negotiating at the end of the month. That sets the stage for strikes by summer if demands are not met. As the largest auto union, the Hyundai workers typically set the pace in auto industry labor demands. Hyundai workers have routinely gone on strike in past years and salaries of assembly line workers are now approaching or exceed the pay for the average office worker. Last year, during the first stage of labor-management negotiations, the Hyundai union demanded a 10.48 percent pay rise and a significant increase in tempo...

I find it interesting, that there is a grassroots step toward unification between North and South Korea. (Not really). Products from the Kaesong Industrial Complex, a North-South Korean joint project in North Korea, are being marked "made in Korea" for export, the South Korean Unification Ministry notes. A ministry official said South Korean kitchen utensil maker Living Art will begin export pots and frying fans worth $57,000 manufactured in the industrial park to Mexico as made-in-Korea goods. Why the merchandise was labeled "Made in Korea" is not a government-level decision, but the Mexican importer decided to mark the goods that way to comply with Mexico’s customs law. The pots and frying fans have already been shipped from Kaesong to South Korea on March 30 and leave for Mexico via Busan on Tuesday. The pans are popular items in Seoul--often purchased by South Koreans of North Korean birth or family origin.

An article in Chosun Ilbo notes that the South Korean company building a golf course in the North Korea's popular Geumgang Mountains has created a bizarre hole where the ball will careen into the cup--just as long as the golfer lands his shot anywhere on the green. "Considering the symbolism of the Diamond Country Club, which is 45 percent complete, we plan to make a 'hole-in-one green' where golfers get a hole in one as long as they put the ball on the green," said Chang Gi-dae, the chairman of Emerson Pacific which is building the course. The green is found on the par-3 (155m) fourteenth and shaped like a bowl, so as long as a shot lands on the green, it will drop into the cup. "The green won't be used every day. We plan to use it on special days or for special people." The course features a par-7 hole that is the longest in Asia. At 1,004 yards, the Diamond Country Club's seventh would be 40 yards longer than the current record holder seventh ...

New Technology , originally uploaded by dsoutherton . South Korean telecommunications firm TU Media started to beam satellite digital multimedia broadcasting (DMB) to Korean cell phones. Satellite DMB enables viewers to enjoy seamless video streaming, theater-quality audio and data through a hand-held device. (See photo) TU Media, a unit of SK Telecom, has launched seven satellite DMB video channels-- news, sports, soap operas, games, movies, and the firm’s own station --plus 20 audio channels. The company will aim to make "take-out" TV more attractive by increasing the number of video channels to 14 and add popular TV programs to its line-up.