Thoughts on Korean Business by Don Southerton

The Christmas Hoilday shopping season in Seoul begins...

It was announced that General Motors has selected its Daewoo subsidiary in Korea to develop the platform for the Chevrolet Aveo and other small cars for GM worldwide. That designation is what GM used to call a design homeroom, although it no longer uses that terminology, Nick Reilly, president of GM Daewoo Auto & Technology Co., said at a Korean press event. We will develop the common (platform), and then other parts of the world will take that architecture and they will produce their version of that car, Reilly said. It's very, very significant for us to be named as a development center for the world for those cars, and reflects the high level of GM Daewoo's expertise, he said. Development work in Korea is cheaper than in Europe and the United States. The Opel Corsa, GM Europe's second-best-selling model, and Chevrolet's top two sellers in Europe, the Aveo and Matiz, are based on the platform, called Gamma. The Aveo is called the Kalos in some European markets. GM ...

Hey today's my 400th Blog posting... It's been announced that South Korea will begin terrestrial digital multimedia broadcast (DMB) services this week. The technology allows users to watch TV broadcasts and other multimedia content moving at up to 200 km/h on their cellular phones, PDAs and laptops. Unlike the satellite DMB service which started earlier this year for a fee of about US$13 a month, the terrestrial DMB service will be free of charge. Users will be able to enjoy the service on the subway starting from next January. The government said the service will start in the metropolitan area but will be expanded throughout the country by the end of next year. Korea's video-on-the-go technology is also expected to expand overseas. Plans call for the service to soon be exported to Germany, Mexico and China, and Britain.

The success of American-style restaurants chains in Korea has led further expansion plans.. Outback Steakhouse, the largest family restaurant chain in Korea, plans to open 20 new stores next year, increasing the number of restaurants it operates to 90. This year, Outback focused on opening stores in Seoul and large provincial cities, including Busan. Next year, it plans to advance into smaller local cities, including Wonju of Gangwon Province. TGIF opened eight new shops in bigger cities, including Busan, Daegu and Changwon, this year and renovated its shop in Nonhyeon-dong, Seoul, which opened in 1994. TGIF estimates its sales to increase to $105 million this year from $96 million last year. Bennigan's has added six new shops to its chain this year. It plans to set up 14 more next year in cities like Ulsan, Cheonan, making the total number of shops 40. Sun@Food, which operates three restaurant chains - Tony Roma's, Mad for Garlic and Spaghettia - opened six new shops this yea...

Yesterday's post listed South Korea's wealthiest women. Several people have wondered how many of these women are connected to the Samsung fortune. The richest woman is Lee Myung-hee, Shinsegae president and daughter of the late Samsung Group founder Lee Byung-chul. The Samsung Group founder Lee Byung-chul died in 1987. Behind her in wealth is Hong Ra-hee, wife of current Samsung Group chairman Lee Kun-hee. She is also the executive director for the Hoam Art Museum director. Samsung Chairman Lee Kun-hee and his wife Hong Ra-hee had three daughters. (In Korea, wives do not take their husband's last name). Lee Kun-hee and his wife also has one son and heir Lee Jae Yong. Of the daughters... Lee Pu-jin is the eldest daughter and vice president of Shilla Hotel. The next oldest daughter, Lee Suh-hyun is a vice president at the fashion institute of Cheil Industries. Sadly, the youngest daughter, a student studying in NYC, recently committed suscide. Reports tell the young women...

South Korea's Shinsegae Group Chairwoman Lee Myung-hee retained her title as the wealthiest woman in South Korea in 2005. Lee Myung-hee's estimated personal stock assets has grown to over $1 billion this year. Interestingly, Lee is the younger sister of Samsung Group Chairman Lee Kun-hee. She is the daughter of Samsung Group founder Lee Byung-chull. Shinsegae ranks third in the department store business and its E-Mart ranks No. 1 in the discount chain industry. In Korea, Shinsaegae also operates Starbucks Coffee. Others on the list of Korea's wealthiest women include individuals connected to the Samsung and LG Groups.

An interesting aspect of Korean society is the focus on appearance...Here are two articles that highlight Korean cosmetics... First, Korean women used to be a few steps behind the global trend in terms of makeup and fashion. But now they are increasingly at the forefront. Natural and transparent are today's buzz words and are now the trend in South Korea which ends years of covering up with thick layers of foundation, powder and color. Today it's still cosmetics, but only the women themselves know how much. The trick of the transparent look is to use nearly the same number of layers but make it look as if their face is a clean palette. While prominent, Western features used to be popular, some experts say, the pendulum is swinging back to the traditional Asian look. A prime example is seen in some recent commercials that showcase models without the double eyelids of Caucasians. BTW I've read that on average most Korean women take over 30 minutes every morning to apply their...

Renault Samsung Motors, South Korea's Number 5 car manufacter will export its SM3 compact sedan in partnership with Japan’s Nissan Motor. The SM3 is a Koreanized version of the Nissan Altima. At a press conference in Samsong-dong, southern Seoul, the car maker said the SM3 sedan will be exported worldwide under the Nissan brand from January. He added that about 30,000 units per annum will be produced in the Pusan plant for export use. Renault SA plans to expand investment in South Korea to develop it into a strategic hub to further advance into China and Europe. In Korea, Renault Samsung upgrades the interior of the SM3 (based on the Altima) and has given the SM3 a dynamic exterior design to suit the needs of Korean customers in their 20s and growing number of female drivers. Some see the SM3 as a move by Renault Samsung to the Hyundai Sonata. It felt the move to export means Renault Samsung would be placed in an important position in which the Korean subsidiary would also supply ...

One of the casualties of the 1997 Asian fiscan crisis was the Daewoo Group. A few of its affiliates are still controlled by creditors. Global construction companies are expected to participate in a bidding to buy Daewoo Engineering & Construction, which has been under the management of Korean creditors since the crisis. Potential bidders include the worldÂ’s top 10 construction firms, such as Hochtief AG of Germany, Skanska AB of Sweden, Vinci of France, Bechtel of the United States and Bouygues of France. Among domestic competitors are the Kumho Asiana Group, Doosan Heavy Industries & Construction, Hanjin Heavy Industries & Construction, SK Engineering & Construction, Isu Engineering & Construction, GS Engineering & Construction and Amco of the Hyundai Automotive Group. Many of the domestic and foreign builders are expected to submit letters of intention (LOI) in several weeks, according to Citi Global Market Securities, designated as the sale broker by credit...

Each year mothers pray and high school students cram in last minute preparation for what could determine much of their future... South Korea's College Scholastic Ability Test for the 2006 academic year will start simultaneously at 966 schools in 75 districts across the country at 8:40 a.m. on Wednesday. A total of 593,806 people will take the test this year. Education authorities earlier said the level of difficulty would be the same as last year. All CSAT takers have to report at designated schools by 8:10 a.m. and bring their admission tickets and IDs with them. They must leave their mobile phones at home because carrying them even by accident will be regarded as cheating. All other electronic devices including digital cameras, MP3 players, electronic dictionaries, camera pens, calculators, radios and walkmen are also banned.

South Korea's GM Daewoo Motors plans to launch four new models in Europe next year, aiming to reach annual sales of 500,000 cars by 2010 and further expand its market share to 3 percent. The annual sales target for GM Daewoo's new sport-utility vehicle, slated for European market debut in June, is 15,000 units, Erhard Spranger, executive director of Chevrolet Europe said yesterday. The SUV will be called the Captiva in Europe and both gasoline and diesel versions will be sold, Spranger said. The schedule also includes the new Aveo compact (called Gentra in Korea) in January; the Avanda midsize (a replacement for the Magnus) in April; and the diesel engine Nubira, a five-door version of the Lacetti subcompact. GM Daewoo cars, which outside Korea are sold under the Chevrolet badge overseas, currently command more than 1 percent of the European market. GM Daewoo expects this year's sales to be between 230,000 and 240,000 units.

SK Group is going global fast. In addition to China, Korea's leading conglomerate has been actively expanding in the Americas since early this year, most markedly in the areas of energy, wireless telecommunications and pharmaceuticals. SK Corporation is currently exploring oil fields in different parts of the Americas. SK is developing nearly 20 gas and oil fields in 12 different countries worldwide. SK Telecom, one of group's flagship affiliates, is likewise exporting its wireless and wireless integrated portal service businesses to the U.S., in collaboration with local internet companies. It has also recently unveiled with Earthlink - the third largest internet service provider in the U.S. - its U.S. brand-name, HELIO for the U.S. consumers. It aims to build a pool of nearly 3.3 million subscribers by 2009. While SK Group is most known for its energy and telecommunications businesses in Korea, SK USA, Inc., the group's U.S office also runs a New Jersey-based medical resea...

California-based Google, the world’s No.1 Internet search engine company is preparing to expand its business in Korea. Reports note Goggle will hire a regional chief for its new affiliate company which is expected to open in Seoul within a few months. The U.S. Internet giant, which leads the global search engine market with a market capitalization of $112.7 billion, has been interviewing candidates for the CEO of Google Korea, said the company’s public relations agent in South Korea said last week. Though the company refused to reveal details of the candidates, the agent said that the interviews are being held at its headquarters in Mountain View, California.

Hyundai Motor Co., Korea's leading automobile manufacturer, has decided to acquire Mando Corp., one of the largest automobile parts suppliers in the nation. The auto company said yesterday that it has agreed with Mando's largest shareholder, Hong Kong-based investment company Sunsage, to buy Mando this year. Sunsage, jointly owned by JP Morgan Partners and Affinity Capital, holds a 73 percent stake in Mando, whose capital totals 35 billion won ($33.7 million). Hyundai said it has been conducting due diligence since last week. The acquisition price has yet to be negotiated, the automaker said. However, considering that the value of the Mando shares owned by Sunsage is in the range of 250,000 won per share, Hyundai's payment is estimated to be around $700 million. Hyundai's expansion of its automobile parts supply business has been putting pressure on Mando, particularly since Hyundai Mobis, a major affiliate of Hyundai Motor, took over another parts supplier, Kasco, in a...

One of directions Hyundai-Kia Motor Company is moving is producing its own steel... Korea Times notes... Hyundai Hysco, a steel-manufacturing arm of the Hyundai Automotive Group, has been a key steel plate supplier to its global auto producing affiliates _ Hyundai Motor and Kia Motors. The company saw its cumulative production of cold rolled steel sheet for cars at its factory in Sunchon, South Cholla Province exceed the 5-million-ton mark. Hysco said its Sunchon plant has reached the production mark in 62 months since it began operation in 1999, which is the shortest period of time for a single factory in the world. Manufacturing of cold rolled steel sheet for vehicles is considered to be one of the steel sheet production fields that requires the most complicated and fastidious technologies. Hysco will further focus on developing futuristic new materials and products for the auto industry as the local vehicle output has grown by about 10 percent on an annual average, a company officia...

South Korea has set a target of becoming the worldÂ’s fourth-largest automaker by 2015. Korea is currently ranked t sixth. The South Korean Ministry of Commerce, Industry and Energy (MOCIE) has unveiled a plan to increase the annual automobile production by 95 percent to 7.6 million vehicles in 10 years. South Korean currently produces 3.91 million units annually. According to the project, South Korea will capture 11 percent of the worldÂ’s auto production market in 2015, the MOCIE said in its joint seminar with the Korea Federation of Industries (FKI). Korea needs to overtake China or Germany to achieve the goal. The United States is the biggest auto producer, followed by Japan, Germany, China and France.

Two of South Korea's leading car audio equipment makers Hyundai Autonet and Hyundai Bontec will merge. In August, the Hyundai-Kia Motor Group and German electronics company Siemens bought a controlling 43.2% stake in Hyundai Autonet. Bontec has been an affiliate of Hyundai Motor and Kia Motors. Under the contract, one Bontec share will be exchanged for 2.599 Hyundai Autonet shares. The merger will unify Hyundai-Kia Motor Group's multimedia and automotive electronics supplier parts, while combined revenue likely will soar to $963 million next year from $400 million this year. Bontec's sales have grown more than 30% every year since 2001, with its operating profit ratio amounting to 13% in the first half of this year.

One aspect of Korean society is its fascination with their leaders of industry. The wealth and assets of these leaders is closely watched--akin with Americans who watch the lives of Hollywood leading actors or sport celberties. Korea Times notes... Hyundai Automotive Group chairman Chung Mong-koo's’s share of stocks in the group'’s units has reached nearly $2 billion on recent sharp rises in share prices. With Korea composite stock price index (KOSPI) once again renewing all-time highs last week, the value of shareholdings by top-rank executives and owners of Korea'’s leading chaebol, family-controlled conglomerates, has snowballed significantly, the Korea Exchange (KRX) said Sunday. The worth of Chung'’s stockholdings in the automotive group, which includes the nation'’s biggest automaker Hyundai Motor, soared by $654.8 million in just 10 months. Chung holds 6.78 million shares of Hyundai Mobis, 11.4 million shares of Hyundai Motor, 1.07 million shares of INI Stee...

Chosun Il bo Korea remains the global leader in per-capita use of the high-speed Internet service. In a report released by UN survey, Korea had the highest rate of broadband penetration last year. Twenty-five out of every 100 Koreans had access to high-speed Internet services, up 4 percent from the year prior. It is the fifth consecutive year Korea has ranked number one in the UN's annual survey. Hong Kong came second with 21.7 subscribers per 100 people, followed by the Netherlands with 19.8 and Denmark with 18.7.

Negociations between North Korea and the U.S., South Korea, China, Russia and Japan-labelled the Six-Way Talks have resumed...once again. Chosun Ilbo notes that the Six-party talks on North Korea’s nuclear program resumed in Beijing on Wednesday with a bilateral meeting between the main actors after a round-table session. The fresh round has the uphill task of sorting out the when and how of an accord whereby Pyongyang agreed to give up its nuclear arms program in return for economic assistance and security guarantees. The meeting mainly went over familiar ground. The U.S. affirmed that it will only provide North Korea with a civilian light-water reactor it is demanding once Pyongyang restores trust, returns to the Non-Proliferation Treaty and readmits IAEA inspectors. The North again insisted things must happen the other way round. Its chief negotiator Kim Kye-gwan also slammed U.S. President George W. Bush for again labeling North Korean leader Kim Jong-il a tyrant this week, saying ...

200511090004_00 , originally uploaded by dsoutherton . Popular Korean actor Jang Dong-kun is on the cover of Time’s latest Asia edition. The cover story titled Reinventing Korea discusses the impact of Korea from movies to music to groundbreaking science.

As expected Hyundai Motor Manufacturing Alabama will start test production this month on the redesigned Santa Fe sport-utility vehicle, gearing up for the start of commercial production, which is slated to begin in spring 2006. The Santa Fe will be the second vehicle produced at the South Korean automaker's state of the art Montgomery Alabama plant.

I'm always interested in Korean consumerism...In fact, Korean business is very savvy at looking at their consumer trends. Korea Herald notes... Korea's thirty-somethings, most of whom were formerly known as the hip generation-X,( and 20:30ers) were found to be among the heaviest spenders over the past two years, along with those in their fifties. During the first three quarters of this year, the propensity to spend for Koreans in their thirties rose 1.5 to 1.6 percentage points from the same period in 2003 when consumer spending began to pick up, the National Statistical Office reports. The propensity to spend indicates the ratio of expenditure against disposable income at domestic households. Spending among the Gen-xers trailed only the twenties age group, which was found to be the most aggressive spenders. Their propensity to spend was up more than 3 percentage points from the same period two years earlier. As Koreans who spent their teens in the late 1980s and early 1990s, t...

As I thought would happen... Hyundai Motor Co has been left as the sole bidder for South Korean auto parts maker, Mando Corp. as Siemens and TRW Automotive backed down from talks to buy the unlisted firm, a Mando official said on Saturday. More than 10 local and foreign companies had initially showed interest in acquiring Mando, which makes brake and steering systems, in a deal reportedly worth up to $2 billion. But the bidders were cut to three -- Hyundai, German engineering group Siemens and Michigan-based TRW Automotive Holdings Corp, according to Mando. Unlisted Mando was put up for sale by its majority shareholder -- a consortium of buyout firms JP Morgan Partners and Affinity Equity Partners -- which paid $446 million in 2000 for a 72.3 per cent stake in the Korean firm. If Hyundai acquires Mando, the Hyundai-Kia Auto Group moves one step closer to a fully integrated manufacturing organization, The Group already owns a number of parts affiliates including Mobis and Bontec.

Samsung Electronics Co. is targeting $110.4 billion in sales revenue by 2010 to become one of the world's top three electronics companies. A Samsung Electronics head said this will be achieved through clinching market leadership in more than 20 products compared to the present eight. The company will also strategically nurture eight areas that include large storage memory chips, next generation displays and air control system. The meeting was the first of its kind organized by Samsung, Asia's largest technology company by market value. The heads of the company's four main businesses attended the event to outline long-term plans for each division. The chief executive also said the company hopes to achieve a position of leadership in four emerging businesses: personal media devices, home networks, U(ubiquitous)-health and home care robots.

Korea Herald notes... Twinsumers, Contents Generation, Cool Hunters, Fantastici- sm, Concrete Consumers. These words represent today's young consumers, according to the LG Economic Research Institute (LGERI). The LGERI report shows the specific spending patterns of young consumers. Young people rely on other consumers' reviews on products. Many young consumers prefer Internet shopping. Internet shopping makes it difficult for consumers to get information on products. Thus, opinions of consumers are very important. These consumers are called Twinsumers. Young consumers also want products that are special and unique. The LGERI report says that young people want to experience adventure and fantasy when shopping. This is called Fantasticism. On the other hand, Concrete Consumers are not affected by advertising campaigns. They do not trust advertising. Today's young consumers also like to share information. SK's Cy- world offers a platform in which young people can share inf...

Check this out... Vista, California November 3, 2005— Don Southerton, president and CEO of Bridging Culture™ has announced the release of his new book on early entrepreneurialism in Korea. Intrepid Americans: Bold Koreans--Early Korean Trade, Concessions, and Entrepreneurship, Southerton’s second book on entrepreneurship, focuses on early business and commercial interactions between Americans and Koreans over a century ago. In an often overlooked aspect of history, Southerton argues that many Koreans benefited from social-economic transformation that dominated late nineteenth century East Asia. These bold Koreans accepted change, entered the free market system, operated businesses, and embraced capitalism. Within the book, author Don Southerton provides captivating insights into the opening of Korea to the West and subsequently the impact of intrepid American capitalists, concessionaries, and missionaries in transforming Korea. These glimpses presented through numerous photographs, i...