Thoughts on Korean Business by Don Southerton

I have often wondered about the details regarding Hyundai Motor Group in financing its massive expansion. For example, the new manufacturing facility in Alabama cost over $1 billion. According to an article in the Korea Herald, Hyundai Motor Co.'s new U.S. production unit will borrow $200 million from a Japanese investment bank. Basis Point Publishing Ltd., a Hong Kong-based provider of Asia-Pacific debt market information, said that Sumitomo Mitsui Banking Corp. has been mandated for the $200 million two-track deal for Hyundai Motor Manufacturing Alabama LLC. Interestingly, the Mitsui keiretsu is affiliated with Hyundai Auto Group rivals Toyota and Honda. The deal, which has a guarantee from parent Hyundai Motor Co. comprises a $100 million one-year revolving credit and a $100 million three-year term loan. Syndication is expected this week as the borrower plans to close the deal by the end of July. Funds are for general working capital. This is Hyundai's second visit to the ma...

Concerns over the continued clout Korean large business groups continues to surface. In a recent Chosun Ilbo editorial article Samsung was the subject of concern. The editorial notes cites that a senior researcher at the Korea Institute of Finance, Lee Dong-gull, has contended the principles and constitutionality of the country's financial industry are being shaken by the excessive influence of a particular mammoth chaebol. Specifically the new report targets the Samsung Group. Senior researcher Lee, who served as vice chairman of the Financial Supervisory Commission (FSC) accused the commission of failing to tackle Samsung's ongoing breaches of regulations. In one example of concern the Samsung Card, one of the group's subsidiaries. Lee notes that Samsung breached the law by not seeking FSC approval for holding a 25.6 percent stake in Everland, the Samsung Group flagship and defacto holding company. Why? Essentially, Samsung clout in Korea is massive. For example, the gro...

One aspect of the Korean telecommunications industry is seeking out ways to get additional fees for add-on services from existing customer bases. According to the Korea Herald, the latest attempt to find new revenue streams, mobile-phone operators are racing to deliver video games to handsets, allowing users to play games with realistic three-dimensional graphics that rival those on computers and consoles. SK Telecom Co., the country's largest mobile carrier, and rival KT Freetel Co. launched phone-based game services in April, allowing customers to download and play 3-D games on their handsets. SK Telecom, offering 15 games, is off to a fast start after attracting more than 600,000 subscribers to its video game services, according to industry figures released yesterday. KTF, offering 11 games, has about 15,000 customers. Both companies plan to expand their content pool to 100 games by the end of the year. LG Telecom Ltd., the smallest carrier, plans to release a 3-D game service i...

The Garden Grove Sister City Association's 17th annual Friendship Luncheon is from 11:30 a.m. to 1:30 p.m. June 30. Corporate consultant and trainer Don Southerton will present "Bridging Cultures: Insights into the Korean Culture." Tickets, which can be purchased at the door, are $10 for the event at the community meeting center, 11300 Stanford Ave. Information and reservations: (714) 530-9637.

American Entrepreneurship , originally uploaded by dsoutherton . Interested in the roots of American entrepeneurialism and business? The Filleys: 350 Years of American Entrepreneurial Spirit will prove deep insights into the rise of American business from the mid seventeenth century to the twentieth century. A must read for students of business and entrepreneurship. Highly recommended for Koreans wishing to better understand American commerce and capitalism. Visit www.iuniverse.com for more info and to order your copy today...

I thought I might share an article from Chosun Ilbo on fashion advice. The rain fronts are advancing toward South Korea, and the wet season will be upon us next week. Amid the humidity and rain, few people feel like dressing up. But real fashion leaders love a challenge and will not be thrown by even the gloomiest of the wet days ahead. Here, Chosun Ilbo suggests some ways of brightening your cloudy days by picking the right things to wear. Dos for Women A basic rule is to wear a long top and short bottoms on a rainy day. Try a layered look of things that can take a little bit of getting wet and dirty -- such as miniskirts and cropped pants along with a colorful T-shirt under a white shirt. Flower-printed tops and dark bottoms entice peopleÂ’s eyes to the upper body, making stains left by rain and muddy water less conspicuous. Even if you prefer a monochrome look, bright primary colors like yellow and red will cheer you up on a depressing rainy day. Color and style matter, but what mat...

Vista, California June 21, 2005— Don Southerton, president of Bridging Culture™ and editor of this blog, announced the release of a new insightful book on American entrepreneurial history. Southerton notes that The Filleys: 350 Years of American Entrepreneurial Spirit provides snapshots into American entrepreneurship history for a broad readership through a series of biographic essays. These stories, centering on the accomplishments of one family, provide vivid insights into entrepreneurialism in America, spatially across the country and temporally over three centuries. Author Don Southerton guides the reader through multiple generations of the Filley family beginning in 17th century Puritan New England. The saga includes the rise of the Yankee trader, land speculation, and the development of American manufacturing. The Filley business endeavors represent a slice of the American entrepreneurial experience. Moreover, this experience was shared by many thousands of other Americans whos...

The Samsung Corporation, the international trade and construction arm of the Samsung Group, has suffered a $80 million loss in futures trading. This means it lost more than its net profit for the trading company $77 million last year. Samsung expects its Hong Kong subsidiary Samsung Hong Kong Ltd to record the loss from trading in metal futures. The Corp. notes the loss will be entirely reflected on the bottom line, since it wholly owns its Hong Kong arm. Samsung Corp. said it has not yet identified the reasons for the massive loss and was asking a Hong Kong futures broker to give detailed information. According to Chosun Ilbo, Samsung Corp. shares ended down 10.60 percent on announcing the loss. I would also expect foreign investors to reduced their shares in the company.

Daewoo might have collapsed in the wake of the 1997 Asian fiscal meltdown, but a Korea Herald article notes that former executives of the defunct Daewoo Group are moving to acquire surviving affiliates of the once massive conglomerate. A number of Daewoo units that were taken by over banks after the group collapsed will be put up for sale soon. The companies on the auction block will include Daewoo Capital Corp., Daewoo Precision Industries Co., Daewoo Engineering & Construction Co., Daewoo International Corp., Daewoo Shipbuilding & Marine Engineering Co. and Daewoo Electronics Corp. The contract for the sale of Daewoo Capital to a consortium of Aju Corp. and Shinhan Bank is expected to be signed this month. Aju Corp. is the largest shareholder of Daewoo Motor Sales. Its president, Lee Dong-ho, is a former secretary to Daewoo chairman Kim Woo-choong. The contract, if signed, will mean that Daewoo Capital is taken over by those friendly to the former Daewoo Group. Leaders of t...

LG Electronics, the world's fourth-largest cell phone manufacturer, announced it developed touch pad technology that can be used in mobile handsets. LGE notes the new technology is similar to the touch pad on personal computers.,This allows users to enjoy handset-specific applications more conveniently as compared to the traditional four-way direction keypad. LGE pointed out that the touch-pad technology is composed of a sophisticated sensor and embedded software that converts the finger movements of users into responsive control capabilities. The sensor and the software can also recognize a user?s fingerprints, a function that will ensure enhanced security. LG executive Steven Ahn said the novel input device will become mainstream in the years to come. In addition, Ahn noted: "This technology will change the rules of the mobile phone game in the not-so-distant future by creating a compelling new user interface." Ahn added that the technology will accelerate the trend of...

A Korea Times article suggests that Sovereign Asset Management is preparing to dispose of its stake in South Korea'?s largest oil refinery SK Corp. Interestingly, the Dubai-based fund modified the purpose of its shareholding in SK Corp. to "simple investment' from "management participation." In Korea, investors with over a 5% stakeholdership in a firm must designate the purrpose of that investment. Sovereign did not disclose the reason behind the reclassification of its investment purchase in SK Corp. Sovereign's change in stance came 10 days after Seoul High Court suspended SK Group chairman Chey Tae-won'?s jail term for his role in a $1.5 billion accounting fraud for five years although it upheld a three-year sentence on June 10. Last year, Sovereign had campaigned vigorously to oust Chey on grounds of corruption , but SK Group owner survived the ouster attempts. On another level, this indicates that despite a huge increase in foreign investment in Ko...

A Chosun Ilbo article reports that Seoul was ranked fifth highest costly city in a survey of 144 world cities. In a survey conducted by the international consulting firm Mercer Human Resource Consulting (MHRC), it showed Tokyo at the top and Osaka climbing from fourth to second. Analysis shows that the effect of the Korea's strong won meant Seoul's price index went from 104.1 last year to 115.5 this year. Seoul has jumping from seventh to fifth place. MHRC conducts the survey every year to provide data to national governments and multinational corporations that send officials and staff abroad. MHRC collects data in about 200 categories including housing, food, clothes, household goods, transport fees and entertainment costs. Interestingly, it computes the indexes using New York as its benchmark. New York came in at No. 13 but other U.S. cities like Los Angeles (No. 44), San Francisco (No. 50), Chicago (No. 52) and Washington DC (No. 78) finished in the middle ranks.

Import car companies (BMW, Mercedes, Lexus, Audi) to Korea are focusing their marketing strategy for the so-called "very, very important persons" (VVIP), According to the South Korean newspaper, Chosun Ilbo, BMW Korea held a separate launching event for its VVIP in Busan for two days just before holding an official event to celebrate the launching of its premium model New 7 series on June 13. The company invited 100 VIPP customers and their partners who had bought more than three of the maker's cars to the event, where they took test drives in the New 7 series, took a yacht cruise, watched an opera performance and played golf. Audi Korea also offered 150 customers who bought its luxury car A8 6.0 an opportunity to watch the opera Turandot in royal box seats at the Sejong Center for the Performing Arts. Hansung Motor, the official sales office for Mercedes-Benz, plans to invite some 400 of its VVIP customers and Lotte Department Store?s premium shop Avenuel? s VVIP custome...

The Korean business norm of after-work socializing of office workers is seeing a quiet revolution as the focus shifts from pubs and karaoke bars to gourmet restaurants and cultural events--at least to start the evening In a survey by South Korea's, JobKorea, which polled 414 office workers, 43.5 % cited gourmet dining as their favorite way of gathering with coworkers. This was followed by drinking and singing with 18 %, and group excursions like going to amusement parks, skating rinks, and baseball parks with 13 %, while a respectable 10.9 % named activities like movies, concerts and plays. Gourmet food was top of the list for both men and women with 43.7 % and 42.9 %. Nevertheless, drinking and singing remained in second place among men with 22.3 %. Women cited cultural performances next with 17.1 %. Barbecue and sushi restaurants were the places where most groups started the night, things went downhill from there. Next up were pubs or karaoke bars until a still more advance...

Hyundai Mobis Co., Korea's largest supplier of automotive components, opened its $50 million logistics center in Asan for its domestic and and foreign buyers. The 80,000-square-meter high-tech facility dubbed "Intelligent Warehouse" is the biggest in Korea and will supply 110,000 different types of automotive parts used in after-sale service. "The Asan logistics center will become the base camp of our global distribution network by supplying genuine parts 'just in sequence' to Hyundai Motor Co. and Kia Motors Corp.," said Park Jeong-in, chief executive of Mobis in a Korea Herald article. "We integrated the previously scattered distribution facilities that supplied parts to Kia Motors," said Park. Newly applied "intelligent" devices allow the facility to employ only 230 workers. Under the product bar code system, the bar code attached on each product is read by personal data assistants or PDAs and transmitted to the central control sy...

Women in South Korea's work force has increased rapidly in the past few years, More importantly, they have been able to make some inroads into traditionally male-dominated professions. Nevertheless, Korean women in top management positions is still rare. An exception is at Corning Korea. Lee Haeng-hee, age 40, is Corning Korea's CEO. In fact, Lee is one of a few female CEOs in charge of the Korean division of a multi-national company. Moreover, she is the first female Asian member of the Corning Management Group (CMG). The CMG is a internal leadership group that shares insights for strategies and the direction of Corning. It consists of 200 members worldwide. Corning is a U.S. high-tech company with a 153-year history, serving four major market segments; display technologies, environmental technologies, telecommunications and life science. When interviewed by Korea Times on why female employees and executives are fewer in numbers at local firms, Lee, who has led the Korean aff...

Kim Woo Choong, who's rise and fall as the founder of the Daewoo corporate empire has come to embody South Korea's economic growth returned Tuesday after almost six years in exile as a fugitive. In 1967, Kim borrowed $5,000 and started a company that he named Daewoo, or "big universe" in Korean. In 30 years, Kim, who traveled overseas 200 days a year and claimed to have never taken a day off, built a textile exporter whose business once occupied a single room into a conglomerate with $67 billion in sales at its peak in 1998. Daewoo's cars, ships, refrigerators and television sets flooded markets around the world. By the 1990s, Kim shrugged off signs of economic slumps and went on a worldwide shopping spree. He bought dilapidated auto and home appliance plants in former communist countries and developing nations. At its peak, Daewoo took over a company every three days. By 1997, Daewoo had 40 affiliates at home and 396 subsidiaries overseas with 300,000 employees....

The appellate court in Seoul has handed down a suspended jail term to SK Corp. chairman Chey Tae-won. In addition, former SK Group chairman Sohn Kil-seung also received a suspended sentence. Both were accused of insider trading and accounting fraud. The SK Corp. is the de facto holding company for the SK Group, KoreaÂ?s fourth-largest conglomerate. The SK Group leading firm is SK Telecom. The Seoul High Court yesterday sentenced both Chey, 44, and Sohn, 64, to three years in prison with the term suspended for five years, easing a lower court sentence of three-year jail terms. In June 2003, the chairman of SK Corp. was convicted for accounting fraud and illegal stock trading between SK affiliates. Chey was indicted for inflating the firmÂ?s profit by 1.55 trillion won by falsely reducing the debts of its subsidiary, SK Global. He is also accused of profiteering 95.9 billion won by exchanging shares of SK Corp. with those of its hotel arm, Sheraton Walkerhill, at the unfair rate of o...

Since the late 1990s, South Koreans have been able to travel to Mt. Kumgang in North Korea. Hyundai Asan a division of the former Hyundai Group has been the sole provider of the venture. Initially the only means of travel was via ship. Several years ago a highway was built, however, travel was only permitted by tour bus. According to Korea Times, South Koreans will soon be able to travel by car to a resort town in Mt. Kumgang. They will also be able to camp out and cook on the beach. Kim Yoon-kyu, vice-chairman of Hyundai Asan, announced the plan during a media briefing held on the mountain, marking the one millionth South Korean visitor to Mt. Kumgang. The group has decided to develop a resort town on the 1-kilometer-long beach from Haegumgang Hotel to the Kosonghang raw fish restaurant at port Kosong. Shops, restaurants and lodgings will be established. ``Everybody will be able to invest in the facilities with $100,000-200,000. We expect investment from people whose hometowns are in...

Data from the Korean Stock Exchange and the Korea Listed Company Association suggest that the controlling families of Korea's largest conglomerates have significantly increased ownership in their companies over the past year. Why? Most experts agree that its is to defend family managerial control against the increasing chance of hostile takeover threats by foreign capital. , The Korea Exchange and the Korea Listed Companies Association notes that the holdings of the largest shareholders and closely related parties increased last year at the biggest conglomerates including Samsung Group, LG Group and Hyundai Motor Group. The data suggests that a growing perception of takeover threats by foreign private equity funds, coupled with a series of government measures aimed at restricting the power of family-run conglomerates, or chaebol, have been the main reasons behind sagging corporate investment over the past couple of years. Samsung Electronics Co., Korea's largest company by mark...

Daewoojpg , originally uploaded by dsoutherton . Former Daewoo chairman's return home creates divisions The return of former Daewoo Group chairman, Kim Woo-Choong, has spawned divisions among Koreans on how he should pay for accounting irregularities that led to his conglomerate's collapse. While former Daewoo executives, as staunch supporters, are taking action to seek a fair trial, victims from the collapse of the conglomerate in 1999 want to make counter claims. Kim has been in hiding overseas since Daewoo went bankrupt. recently, Mr. Kim has also been on the Interpol watch list for accounting fraud and embezzling funds and diverting them overseas. His return means he faces possible criminal charges. Last week, Chung Joo-ho, the president of "Daewoo men," the club for ex-Daewoo executives, through the club's Web site began shoring up support asking members to actively voice their opinion of Kim's return and cooperate to ensure the merits and demerit...

Ever since former U.S. ambassador to South Korea Christopher Hill was promoted to Assistant Secretary of State for East Asian and Pacific affairs, the ambassador's position in South Korea has been vacant. With the controversy over North Korea the position is one of significance. It is thought that the U.S. administration has narrowed its list of candidates down to three, diplomatic sources in Seoul have announced. Possible candidates include U.S. Ambassador to Russia Alexander Vershbow, former U.S. State Department spokesman Richard Boucher and former U.S. Secretary of Commerce Mickey Kantor, according to the sources. Vershbow, who started his diplomatic career in 1977, is a Russia expert specializing in European security and issues related to weapons of mass destruction (WMDs). He served as ambassador to the North Atlantic Treaty Organization (NATO) from 1998 to 2001. A diplomatic source in Washington said that the selection process for the U.S. ambassador's post in Korea is ...

The Hyundai Automotive Group under Chairman Chung Mong Koo has steadily integrated its operations. Now, it is also expanding to diverse areas. In addition to buying auto parts maker Korea Automotive Systems Co. (see yesterday's blog), Hyundai, which holds the nation's two largest automakers Hyundai Motor Co. and Kia Motors Corp., also owns Haevich Leisure Co. Hyundai said the new company's role is to provide leisure services for the automaker's VIPs or to hold golf tournaments in its existing resort on Jeju Island, south of the peninsula, called Haevich Resort, which is owned by Chairman Chung Mong-koo's wife, with Kia Motors and Hyundai Motor also as major shareholders. Hyundai is not alone in resort ownership in fact as a Hyundai official noted in the Korea Herald "Most big conglomerates such as Samsung own resorts and leisure businesses. There is no reason why we shouldn't. As we move our focus to larger luxury sedans, we needed to intensify sports m...

Hyundai Mobis Co., Korea's largest auto parts supplier, announced it acquired a controlling stake in Korea Automotive Systems Co. (KASCO). Mobis purchased 38.3 percent or 1.84 million shares of Kasco, the maker of brakes and power steering oil pumps. Mobis acquired from Korea Flange Co (KOFCO). Hyundai Mobis, producer of modules or functional sets of individual components, aims to become one of the world's top ten auto parts makers by 2010. The company wants to double its sales to $15 billion. It plans to do so by investing $1 billion in developing new technologies. Mobis is part of the Hyundai Motor Group, which has set a similar deadline for becoming the world's No. 6 automaker. Commanding a quarter of the domestic brake system market, Kasco saw sales of $255 million and net profit of 19.8 billion won last year. "As Kasco's brake system is the most important part of our chassis module, we plan to increase Kasco's annual production capacity of 1.5 million br...

According to Chosun Ilbo, South KoreaÂ’s largest hypermarket chain E-Mart has had more than 1 billion shoppers since it opened its first center. As of late May, the discount store had registered 1.01 billion customers - counting visits rather than separate individuals - and revenues of roughly $33.3 billion. E-Mart opened its first store in Chang-dong, Seoul in November 1993. The company said if a customer wandered around an average of 1 km of aisles per visit, the cumulative distance shoppers traveled from onions to chewing gum was equivalent to going round the earth 25,000 times. In celebration, E-Mart is holding its biggest blowout sale ever until June 15. It will offer free, 1 million units of commodities like soap and detergent to customers with coupons. It will also offer 1 million watermelons at a 40 percent discount. A surprise discount of 60 percent will also be offered until Friday to unsuspecting customers on an item they have chosen.