Thoughts on Korean Business by Don Southerton

I was recently asked about the availability of my two books--The Filleys: 350 Years of American Entrepreneurial Spirit; and Intrepid Americans and Bold Koreans--Early Korean Trade, Concessions, and Entrepreneurship. Both books are available in paperback and e-book versions. Multiple on-line book sellers offer the books. This includes Barnes and Noble.com, Amazon.com, abebooks.com, iuniverse.com, buy.com, and ecampus.com. For American interested in Korean culture I recommend Intrepid Americans and Bold Koreans. For Koreans wishing to better understand the roots of American business, The Filleys, is an excellent survey of American business history. Questions? Just email me.

Nationalism and cigerette smoking? We'll at least it seem that Korean smokers are supporting their country. OR, is it just good marketing... According to a recent article titled...Is Icahn Helping KT&G Sales? Is it a taste for cigarettes or a show of patriotism? That question is being asked at KT&G, Korea’s cigarette maker, over the success of two brands that it is marketing amid a hostile attempt by U.S. corporate raider Carl Icahn to take over the company. The latest big hit is Esse Soun; the previous brand Arirang also sold well. Since its release to the public on April 12, the slim cigarette Soun is growing popular, with its mild and soft taste appeal. But that doesn’t seem to be the only reason. I used to smoke foreign cigarettes but now I smoke Korean cigarettes, especially new brands, said a Seoul resident who has smoked for 20 years. The primary reason is Icahn’s attempt to take over the Korean company. A KT&G official also said that there was no scientific d...

I enjoy the e-Magazine Seoulselection.com. They have a great article on the upcoming Buddha Birthday celebration. May 5th is Buddha's Birthday. To mark the Buddha's Birthday, Seoul will host a number of lotus lantern events throughout the city. From April 28 to May 5, Bongeun-sa Temple in Samseong-dong will hold an exhibit of traditional Korean paper lanterns. There will be parades and performances at Jogye-sa Temple and Insadong including the famous Lotus Lantern Festival. The actual Buddha's Birthday is on May 5, and is celebrated with Buddhist ceremonies at temples all across Korea.

Korean citizens can apply to become the first-ever Korean astronaut. Since the announcement thousands have applied. Should this brisk pace continue until the deadline, the applicants are on the pace to top 200,000. The number of applicants to become South Korea's first astronaut approached the 10,000 mark in just four days after the country started receiving applications last week. The figure stood at 9,852 as of 3:10 p.m. on Monday according to the Korea Aerospace Research Institute (KARI), which takes charge of the project of sending a Korean to space in 2008. What I see as interesting...and a strong indicator of a changing Korean society is ...Gender. The project appears to attract interests regardless of gender as the female applicants amount to 1,833-- 17.5 percent of the total.

Forbes Korea recently ranked Korean who have accumulated huge stock holdings. Six Koreans hold over a $1 billion in stock. Heading the list by a slim margin is Lee Kun-hee, chairman of Samsung Group. Lee topped the list as the value of his shareholdings reached 2.7 trillion won. Chung Mong-koo, chairman of Hyundai Automotive Group, ranks second. The gap in stock wealth between Lee and Chung was 3.2 billion won. (only about $3.2 million) Lee Jae-yong, vice president of Samsung Electronics, the only son of Samsung Group chairman, took third spot with 2.4 trillion. Two owner family members of the Lotte Group took fourth and fifth places. The value of stocks owned by Shin Dong-bin, vice chairman of Lotte Group and Shin Dong-ju, vice president of Lotte Japan, was at 1.4 trillion won and 1.3 trillion won, respectively. In particular, Shin Dong-bin has emerged as one of the top five richest people with stock as Lotte Shopping, the nationÂ’s largest department store chain, in which he Shin ho...

Hyundai-Kia Motors in Korea might be under investigation for issues including wealth transfer. But, their global ambitions stay on course. This article points out the Group's global plans. Korea Times Hyundai Motor, one of the world’s top 10 automakers, plans selling over 2 million cars in overseas markets this year for the first time in its history. The carmaker has set an overseas sales goal of 2.05 million units, up 16.5 percent from the 1.76 million reported a year before. It main targets include China, India, Western Europe and the United States. The U.S. market is Hyundai’s main target for large sedans and sport utility vehicles while small- and mid-sized cars are mostly aimed at other regions. Russia and Eastern European countries are also emerging as lucrative markets for the automaker. Its sales goal for the U.S. this year is 532,000, followed by 354,000 in West Europe, 300,000 in China and 189,600 in India. In the U.S. market Hyundai Motor and its affiliate Kia Motors las...

Recently a number of Korea's top Groups under attack by the government prosecutors have offered huge atonement to society. Many westerners find this norm unusual and of concerning. This Korea Herald editorial, although with a political slant, highlights and explores the practice. On Jan. 4 this year, President Roh Moo-hyun went to a banquet hall to exchange New Year's greetings with business leaders. Speaking of his wish to address the problem of bipolarization, he told the executives that he may have to ask them to help him. Many took the president's remarks as pressuring big corporations to donate money to help the poor. Now Roh may feel happy because one conglomerate after another is offering a huge sum of money as a "social contribution." It's amazing that even a U.S. private equity fund has joined what seems to have become a trend. But anyone with sensible judgment should not welcome this development, because all the donations seem to have been made with...

Women have gained significant roles in Korean society. Perhaps, the most obvious change is seen in Korean politics. The new Korean Prime Minister Han Myeong-sook is representative of not only changing norms but her life is a testimony to the casue in Korea. PROFILE Han, Myeong-sook Born in 1944 in Pyongyang, now the capital of North Korea, Han, 62, devoted herself to pro-democracy activities and led the country's women's movement before entering politics in 2000 during the Kim Dae-jung administration. Dreaming of being an author, she entered Ewha Womans University in Seoul as a French literature major in 1963. But her life changed after she met husband-to-be Park Sung-jun, a pro-democracy activist during the Park Chung-hee government in the 1960s and 1970s. Both were members of a Christian students' club. Park, now a professor at Sungkonghe University, was jailed for 13 years for his pro-democracy activities only six months after the two married in 1968, and Han later foll...

One topic I frequent is the Korean workplace. I scan Korean news for popular surveys..like this one. People who often slander their bosses or are seen as fickle in their behavior toward their subordinates ranked first in a survey of office workers of the most hated figures in the office. In the recent survey of 717 executives and staffers at a major Korean corporation, 52.2 percent of respondents opted for superiors as particularity irritating . They were followed by bosses who took credit for their subordinates' achievement (15.9 percent), kept them late at the office (13.9 percent) and abruptly forced them to dine out (8.9 percent). Keeping people late and forcing them to attend after work functions are common norms of the Korean workplace.

I enjoy looking at global branding. This article highlights Korean branding. I often tell groups that Car Branding has huge impact and is one reason why many American knew the Hyundai brand years before Samsung and LG became popular. Korea Times International rankings tell the ``prestige gap’’ between business and financial companies in Korea. Hyundai Motor, including its affiliate Kia Motors, ranked sixth in 2005 in world automobile sales, while no Korean commercial bank makes the global banking top 50. Hyundai and Kia are drawing more attention in overseas markets as Korea’s prosecution has been investigating the two domestic capital-controlled automakers for nearly a month. Business leaders worry about the affect the Hyundai scandal will have on the macro-economy, as the auto industry has topped the exports of major industries over the past several years. Furthermore, the domestic automobile industry has been the most dutiful player among major industries, which are responsible for ...

In one of my workshops for Hyundai-Kia, we were discussing the trend in Korea towards "Health." For example, I remarked that Korean websites for McDonalds were designed with a nutritious and health-focused look. In response, on American noted "So, why do so many Smoke?" I noted it's a concern. In fact, I explained that many cities were addressing the issue. This article is timely. Korea Times A 27-year-old woman, identified as Lee, got a burn on her wrist from the lit cigarette of a smoker, while walking on a street in downtown Seoul a couple of weeks ago. People walk on a non-smoking street in Tonam-dong, northern Seoul, Tuesday. The Songbuk district office designated the street around Sungshin Women's University as a non-smoking zone in 2003 to reduce the soaring rate of smoking among teenagers and women. On a crowded street, a burning cigarette can be very annoying as it can hurt other pedestrians. I want others not to smoke on such a busy street. I don...

One of the attributes of Korean business is its state of the art telecommunications. Koreans are "wired." But are they the most "wired" ? Korea has one of the highest Internet penetration rates in the world. According to the latest data compiled by the Organization for Economic Cooperation and Development, Iceland tops the list with nearly 30 percent of the population subscribing to a broadband Internet connection. Korea ranks second, followed by the Netherlands and Denmark. The average number per 100 inhabitants in all OECD member countries is below fourteen. By the way, Korea boasts the fastest broadband download speed, along with Japan, thanks to the use of fiberoptic cable connections. In fact, Korea's Internet is about 10 times faster than the U.S.

I'm frequently quizzed on Korean labor and wages. Rising costs of labor in Korea are an issue. They have forced many Korean firms to move their manufacturing outside Korea. This article gives some stark insights in labor productivity and costs. The cost of labor in Korea's manufacturing industries rose at the fastest pace in the world since 1990, according to U.S. government data. The report added to concerns about the Korean economy's sluggish labor productivity growth. The hourly compensation, including wages, labor taxes and employers' social insurance expenditure nearly tripled in the 1990-2003 period, according to statistics released by the U.S. Department of Labor in March 2006. The labor cost index of Asia's fourth largest economy stood at 279 as of 2003, compared to the benchmark level of 100 in 1990. This contrasts dramatically with other Asian peers such as Singapore which recorded a figure of 198.8. Korea's hourly labor cost amounted to nearly half ...

The issue of mixed race children has recently surfaced with Hines Ward being awarded the MVP at the 2006 Super Bowl. For many years mixed blood offspring were ostracized--many Korean feeling the people should remain homogeneous. I very aware of the old norms of discrimination against biracial children. In fact, one of my acquaintances is of mixed race like Hines Ward. In many cases these children were abandoned and then raised in orphanages--perhaps the worst in Korea. This article highlights Korean changing norms... April 8 (Yonhap) -- Korean-born American football star Hines Ward said Saturday that he hopes to set off a change in the way his native Korea treats mixed-blood children and that he will help them succeed. Hopefully I can kind of lead the way for you guys, the U.S. Super Bowl MVP told a group of about 100 biracial children and their parents at a Seoul hotel. I know you guys go through a lot of adversities, overcome a lot of hardship and prejudice and have people discrimin...

Recently one of the participant in a Bridging Culture workshop emailed me and asked "What does housing cost in Korea?" I explained that the high cost of apartments in Seoul. The article highlights the demand on government sponsored housing. An estimated two million people are vying to win the rights to buy one of 815 apartment units to be built in Pangyo, south of Seoul. The winners will be decided in a 1-in-up-to-3,000 chance draw. They are expected to see a hefty increase in the value of their yet-to-be-built apartments immediately after they are declared winners in the new town, whose proximity to the upscale Kangnam makes it very attractive as property investments. The applicants hold accounts in which they have deposited the required amount of money for the purpose of applying to purchase the apartments. They are also obligated to prove that they have not owned houses for a long period of time, among other things. Private construction companies will build the 815 units, ...

One topic dominating the Korean media is the Hyundai-Kia scandal. What I find fascinating is how Koreans see the charges against Hyundai-Kia. Most Koreans have a wait and see attitude. Others feel that attacking Groups like Hyundai-Kia and Samsung will weaken the Korean economy. Taking a broader look, some Koreans are unhappy with the practices of Korean big business. A few activist groups take a stronger stance. For example, A Korean civic group announced in a press conference that they have discovered 70 illegal or unfair share transactions committed by affiliates of chaebol, or family-controlled conglomerates, in the last 10 years. The figure accounts for 27 percent of all dealings carried out between 1995 and 2005 by 250 companies controlled by 38 conglomerates, the People's Solidarity for Participatory Democracy said in its report. Among the 250 firms, 64 were found with the irregularities. The civic group said it will file complaints against the board members of Hyundai Glo...

In the latest round of attacks on Korean big business, Samsung Group Chairman Lee Kun-hee and fourteen former and incumbent board members of the group's apparel unit have been sued by minority shareholders over their alleged mismanagement. Essentially, the charges stem from a deal that helped hand over the group's control from Lee to his only son. Three shareholders of Cheil Industries Inc., Samsung's apparel unit, filed the suit on Sunday, accusing Lee and the board members of causing losses to the company by intentionally losing its right to buy the corporate bonds of Samsung Everland Inc., the group's amusement park affiliate. I've always found it interesting that the popular amusement park serves as the defacto holding company. Transfer of wealth remains an issue among many in Korea, whether its Samsung, Hyundai-Kia, or the other large conglomerates.

In 2005, Hyundai Motor Co. sold 570,000 cars in Korea and more than triple that number globally. 2006 target is total global sales of nearly 2.7 million vehicles. Concerns of loss profits due to strong Won. The carmaker plans to offset falling export profits due to the strengthened domestic currency by increasing overseas production. Having built and sold 636,000 cars worth $7.5 billion at its overseas plants last year, Hyundai Motor plans to churn out 922,000 vehicles worth $11 billion abroad this year. Up market The automaker also plans to change its compact car-based export structure by increasing sales of more expensive vehicles. As for the U.S. market, Hyundai plans to increase its share of midsize or larger cars from last year's 60 percent to 68 percent to beef up profits. New Product New models with more refined designs and improved technology will be added as well. In addition to the new Santa Fe sport-utility vehicle and the new Verna compact, which were launched in Kore...

This was quite a pleasant surprise--a women CEO of Jaguar, Land Rover, Volvo Korea. If fact, it makes perfect sense since one of the important buyer groups in Korea is women. This is a new trend in a county where men once dominated the purchase of cars. More recently, carmakers including Hyundai-Kia have begun to wisely focus on women buyers--the new Sonata, for example, has a number of features that cater to women. Korea Time Nowadays, it is not hard for passers-by to see German and Japanese cars on the streets of Seoul's upscale areas in Apkujong-dong or Sinsa-dong, south of the Han River. [ see some of my earlier posts on the Korean luxury cars market.] Sometimes, the number of Hyundai Motor's Sonatas or Grandeurs look smaller than that of BMW or Toyota sedans in the parking lots of Hyundai Department Store in Apkujong-dong or Ritz-Carlton Hotel in Yoksam-dong. For the wealthy and those who are ready to pay to get noticed, picking a car can be a challenge. BMWs and Lex...