LA LETTRE DU KOTRA Juillet 2001 Centre Coréen du Commerce Extérieur et des Investissements
KOTRA PARIS - 36, avenue Hoche - 75008 Paris Téléphone : 01.42.25.09.57 - Télécopie : 01.42.25.09.50 - email : email@example.com M. Seong-Kuk Hong - Directeur Adjoint M. Frédéric Claveau - Chargé de Mission
S O M M A I R EPOLITIQUE ÉCONOMIQUE, MACRO-ÉCONOMIE ET RESTRUCTURATIONS Localization of Foreign Chambers Foreign Real Estate Investment Opinion Changes 'Satisfy foreign investors' basic needs first' Seoul to expand FDI to 20% of GDP Aspects of Trade Friction The Wheels of Corporate Restructuring Still Rolling The road to an advanced economy SECTEURS ÉCONOMIQUES Management, questions interculturelles La culture des affaires en Corée et en Occident Investor relations, key to global business Survey on foreigners' behavior at Korean casino offers cross-cultural comparison Confidence before competitivenes Management Improvement System to Be Pushed Korean Firms Undergoing Radical Internal Changes Korean unions face changing environment Finance, banque et bourse LG Securities seeking foreign partner Hana pushing for strategic tie-up with foreign firms Deutsche Bank Submits Letter of Intent on Seoul Bank Technologies de l'information Int'l smart card conference to be held in Seoul July 18-19 Télécommunications English the key to telecom market Telecoms : direct Link to Europe Planned Services Imports : EU toughens regulations on packaging Transport : automobiles, construction navale What's Foreign, What's Domestic, If GM Enters Korean Car Market? EU Uncertain of SKorean Shipbuilding ROK Shipbuilders Pulling Away From Competition Energie/environnement Nuclear : EU to increase KEDO contribution to $87.5 million KEPCO pushing for Powercomm sale again BTP Gov't to Support Local SOC Projects 2nd bridge for Incheon airport delayed 6 months ENTREPRISES CORÉENNES Daewoo motor - Patron, prophète et vrp de l'emploi ENTREPRISES FRANÇAISES BNP Paribas et Shinhan Financial Group signent un protocole d'accord pour la mise en place d'un partenariat stratégique en Corée Shinhan-Paribas venture eyes market BNP PARIBAS lance Connexis en Asie, une offre globale en ligne destinée aux entreprises Coface Launches @rating Services Korean Air boards Air France and Delta Air Lines cargo venture La SETB transfère la fabrication des velours de soie en Corée
LOCALIZATION OF FOREIGN CHAMBERS - By Lee Chang-sup
The Kim Dae-jung Administration has an unexpected support group in a nation riddled with frequent regional and ideological tension.
The support group includes such international chambers as the American Chamber of Commerce in Korea (AmCham Korea) and the European Chamber of Commerce in Korea (EUCCK). These chambers encompass multinational CEOs doing business in Korea.
Although they have no voting rights in the upcoming presidential election, their cooperative stance is a great source of consolation for the Kim Administration. Their support for the Korean government may not be an embarrassment even to the opposition party.
International business people working in Korea have reasons for supporting President Kim. Foreign direct investment accounted for about 9.1 percent of the Korean economy last year, nearly treble the figure from five years ago.
AmCham and EUCCK have been quite supportive of the Kim Administration.
They publicly announced their support of Seoul's policy of engagement with North Korea, widely known as the Sunshine Policy.
They back Seoul's pro-foreign direct investment (FDI) stance and the economic reform program President Kim has been pursuing. AmCham has officially said, ``Since President Kim's election, a new and outward- looking Korea has emerged.''
It said Kim's globalization drive has had a positive impact: rationalizing the financial sector, improving lending and accounting practices, modernizing capital markets, modernizing the chaebol business model, and opening markets.
Such a proactive attitude toward the Korean government is a drastic departure from the 1980s when AmCham was the most critical voice inside the Korean business community.
AmCham was a trigger point in deepening trade tension between Korea and the United States in the 1980s and 1990s. It criticized the Seoul government for colluding with business and trade organizations to protect its home market. Its reports were ammunition for Washington policymakers to put pressure on Korea to further open its market.
It was difficult for AmCham staffers to talk with reporters freely then.
Now AmCham has installed a spokesperson to inform the media of what its members are doing.
This localization drive by foreign chambers, including AmCham, is noteworthy. AmCham has become a bridge between Seoul and Washington policymakers for deepening the understanding of trade issues.
It has urged Washington to appreciate the efforts Seoul has been making to crack down on violators of intellectual property rights. AmCham appears to have embarrassed the U.S. administration, not the Korean government, by repeatedly asking Washington to, ``Support Korea's entry into its Visa Waiver Program.''
It urged the conservative Bush administration to provide continual support for the Sunshine Policy. It has stressed that engagement is more likely to guarantee North Korea's openness, regional stability and security, and improvements in the North's famine situation, than a confrontational policy.
It encouraged U.S. businesses to ``investigate'' the potential of the Korean market and not to pressure Seoul into reluctantly buying American goods. AmCham also backs the Seoul-Washington free trade agreement and the signing of the Bilateral Investment Treaty.
The EUCCK has taken similar steps as an arbitrator between Korean and European trade officials. EUCCK President Jacques Beyssade has been seeking to help Korean and EU negotiators narrow misunderstanding over the shipbuilding subsidy issue.
Beyssade said, ``In that sense, we are increasingly `local' as our ratio of Korean member-companies is now one third of our total members.''
He added that he thinks that the difference between foreign and local companies is progressively disappearing.
In a nutshell, AmCham President Jeffrey Jones and EUCCK President Beyssade have become self-appointed ambassadors for Korea on economic issues.
Jeffrey Jones, who frustrates English daily reporters for his lectures in Korean language, describes Korea as ``our country.'' Like other Koreans, he was embarrassed when Korean stocks were undervalued by international standards because of opaque accounting practices.
AmCham and the EUCCK donated cash for farmers when the country was in the grip of a severe drought in June. Such donations, which are not extraordinary for Korean companies and business organizations, were surprising and refreshing as they came from non-Koreans. This act was one aspect of the localization drives these international chambers are striving to pursue.
The EUCCK has been sponsoring the Korea Sharing Movement and the National Council of Better Korea Movement, which aims at raising funds in order to buy much needed drugs to fight against tuberculosis, sending the medicine to North Korea. Beyssade said the consequences of malnutrition on the health of millions of North Korean children are a tragedy that EU companies do not wish to ignore.
Beyssade said the role of European entities is not and should not be limited to one of merely being an economic agent. ``European investors are fully part of the society at large and in this respect show their concern about the current social issues prevailing on the peninsula.''
Unlike the past, Korean and foreign business organizations are now working together to pursue common interests. A good example is the loose federation of the Korea Chamber of Commerce and Industry and the foreign chambers in Korea. They invited President Kim's top economic policy advisor, Lee Ki-ho, to a luncheon meeting last week in Seoul. Source : Korea Times - 11/07/2001
FOREIGN REAL ESTATE INVESTMENT OPINION CHANGES
Until just recently, the sale of any real estate property or land to foreign companies and individuals invited the worst of criticisms, that they were being disposed of at below-market prices.
While the buyers insisted that this was not the case _ even the sellers were often defensive about the transactions _ public opinion about such sales were very critical.
Interestingly enough, a recent survey conducted by Hanwha proved that this trend was changing quickly with a majority of respondents saying that it was ``inevitable.''
The survey, conducted by Hanwhareits.com, revealed that 49.7 percent of the respondents felt that it was necessary for revitalizing the sagging real estate market.
Another 18.8 percent said the disposal of the properties was an inevitable part of restructuring, showing that two third of netizens understood the need for such initiatives.
``What we have found through the survey was that the disposition of the general public over the sales of local properties and land was getting more global and mature,'' said one Hanwha analyst.
On the other hand, 9.6 percent of the respondents said there has to be more stringent policies and regulations by the government to control the purchase of domestic properties by foreigners.
``The general consensus in the past has been that the sales of properties and land to foreigners was a form of losing national wealth but this is obviously changing,'' the analyst said.
These changes, he said, is a necessary part of not only restructuring but of Korea becoming more global and more part of the global corporate community.
``The real estate market is a buyers market. What the seller thinks a commercial building or land is worth is not important. Often, they tend to overestimate the value of their assets,'' the analyst said.
Indeed, many foreign companies have complained about the bad publicity they get when they invest hundreds of billions of won in buying commercial buildings, the cash with which the seller is able to proceed with the reduction of debt and improving their general finances.
``Naturally, we are looking for good investment opportunities and this is the case not only in Korea but everywhere around the world,'' said one official of a foreign real estate agency.
For instance, Hyundai Development was recently able to negotiate the sales of I-Tower, Korea's single largest property, at 720 billion won but the press immediately pointed out that it should have fetched at least 800 billion won.
``When you look at the I-Tower, it not only involves huge amounts of money but the structure has no proven commercial value and so the risks were actually very high,'' the agency official said.
``The reality is that countries often run into economic difficulties during which time they have to have the help of foreign investors and this is what is happening in Korea,'' he elaborated.
An excellent example of how such strategies works is the recession in the United States brought an influx of Japanese investors who picked up numerous prized properties, including the Pebbles Beach Country Club and the Rockefeller Center but many of them are now back in the hands of American companies.
``The important thing is that the condition is suitable enough to bring in foreign investment. What difference does it make who owns the I-Tower as long as it plays an active role in boosting the economy,'' the analyst said.
firstname.lastname@example.org - Source : Korea Times 10/7/2001
'SATISFY FOREIGN INVESTORS' BASIC NEEDS FIRST'
One of Korea's biggest projects continues to be attracting foreign investment, and every sector has made recommendations about what could be done to achieve more results.
The European Union Chamber of Commerce in Korea (EUCCK), however, suggested yesterday that Korea try to satisfy foreign investors' basic needs before even thinking about numbers and bottom lines.
"It's not widely known, but one of the biggest complaints of foreign investors working in Korea right now deals with housekeepers - they don't have qualified ones," said Jee Dong-hoon, director of EUCCK in a phone interview with The Korea Herald.
According to Jee, many foreign businessmen absolutely require competent housekeepers to keep their house and serve their family, but they are not allowed to bring their own maids as Korea outlaws such workers.
The Korean government's perspective is that these families can hire Korean housekeepers, but that is not realistic due to wide language and cultural gaps, he said.
"The most ideal housekeepers according to European businessmen are Philippinos because they can speak English, cook multicultural food and take care of children well. But there is a great shortage of them and many families end up sharing one," Jee said.
In this light, the EUCCK recommended that the government allow entry of foreign housekeepers as long as they are accompanied by certified foreign investors.
"Korea has about 230,000 illegal immigrant workers right now. By contrast, even if you allowed three foreign housekeepers per one investing company, that would only total about 10,000 workers (there are 3,500 foreign investment companies here)," Jee said.
"I think Korea should start offering satisfactory living environments for foreign businessmen before trying for the financial investments," he said.
Source : Korea Herald 2001.07.10
SEOUL TO EXPAND FDI TO 20% OF GDP
Korea aims to expand foreign direct investment to 20 percent of the gross domestic product (GDP), or $120 billion, by 2003, a top government official said, pledging an all-out effort to improve the business environment for foreigners here.
Lee Ki-ho, senior Presidential secretary for economic affairs, said that the government is strongly determined to ease labor disputes, upgrade corporate and policy transparency and improve infrastructure, in a bid to attract more foreign direct investment to Korea.
As part of the drive, the class action suit system, which enables minority shareholders to step up their legal grounds for watching over the largest shareholders' irregularities, such as false disclosures, accounting frauds and stock price manipulations, will formally take effect in March, 2002, said Lee.
In a related move, corporate executives found to be involved in accounting irregularities will be subject to far heavier criminal punishment, he said, noting that an industry-wide autonomous oversight program, called peer review, will be introduced.
Lee also stressed that Korea's labor-management relations are rapidly changing from conflict to cooperation, adding that the number of labor disputes in the first half of this year fell to 114 cases from 139 cases a year ago. Similarly, the number of local firms reporting no outbreak of labor disputes up to the end of May surged to 1,455 from 487 last year.
Notably, the average pay hike rate at domestic workplaces fell to 5.8 percent by the end of June from 7.8 percent last year, suggesting that Korean labor unionists are refraining from demanding excessive wage increases. Labor disputes at foreign-invested firms in Korea also dropped to 12 cases in the first half from 24 cases last year.
"China's remarkable economic growth of late is attributed to the surging amount of FDI. Foreign-invested firms accounted for about 20 percent of China's total exports last year," said Lee, while speaking to expatriate business leaders at the Korea International Business Council.
"The Korean government will help the foreign-invested firms play a pivotal role in the nation's exports." The KIBC is a joint body between the Korea Chamber of Commerce and Industry and foreign chambers of commerce stationed in Korea.
The top Chong Wa Dae official also recommended that foreign businesses consider capitalizing on nearly 6 million foreign tourists and visitors to Korea a year, with the number expected to surge to 10 million in five to 10 years. An estimated 400 million Internet users in Korea, Japan and China also present good business opportunities, he said.
He then predicted that the portion of FDI in Korea's annual GDP will rise from 2.1 percent in 2000 to over 20 percent in three years time. Earlier on Thursday, Minister of Commerce, Industry and Energy Chang Che-shik announced that foreign investments in Korea had increased 16.8 percent year-on-year to $6.7 billion in the first six months of this year, also vowing to improve the business environment for foreigners. He said that the government sees exports and foreign investment as key to sustainable economic growth, particularly as external conditions continue to worsen.
Meanwhile, foreign business leaders noted that the Korean government is paying greater attention to improving its negative image among overseas people, particularly in connection with labor disputes and exports of counterfeit goods.
Lee repeated Chang's remarks that the government will expand two existing foreigner-only industrial parks in South Jeolla Province by 990,000 square meters and open another 165,000 square meter complex in South Gyeongsang Province.
source by : Korea Herald (2001.07.07)
ASPECTS OF TRADE FRICTION
By Lee Chang-sup
Seoul trade negotiators are reminiscing in the ``good old days'' Korea had enjoyed in its trade relations with the United States under the Clinton administration.
Despite the accumulation of a trade deficit with Korea, the Clinton administration has not been so aggressive in selling more American goods to Korea.
There are a variety of reasons behind the soft U.S. trade policy toward Korea under the Clinton administration. First, the U.S. economy was booming in an unprecedented way. Thus selling more goods to Korea was not the immediate priority of the Democrat government.
Second, the U.S. was believed to have made a strategic judgemement that pressuring Korea into buying more American goods was of no long-term benefit to U.S. interests as Korea was recovering from the unprecedented financial crisis.
In other words, Washington adopted a benign trade policy toward Korea so that it moved out of its currency turmoil.
Thirdly, the amicable trade relations are partly attributable to the strong personal relationship between the two leaders-President Kim Dae-jung and Clinton.
Clinton respected the long-time Korean pro-democracy fighter.
Traditionally, the U.S. Democrats have been more dedicated than the Republicans in promoting democracy and human rights worldwide. Clinton badly needed President Kim in spreading freedom and democracy in Asia.
Furthermore, the Kim administration has more pro-Korean policymakers in the Clinton administration than in the Bush government.
Lastly, the Kim administration has adopted pro-FDI (foreign direct investment).
Whether Seoul liked it or not, a wide-ranging market-opening program was implemented in line with the agreement between Korea and the International Monetary Fund (IMF) in late 1997.
With the launch of the Republican Bush administration this year, however, Washington has raised its voice to highlight concerns and interests of American industries. The United States has been moving to curb imports of steel from Korea and other countries.
Matthew L. Myers, president of the Campaign for Tobacco-Free Kids in the U.S. criticized the Bush administration for having successfully pressured the South Korean government to scale back plans to impose a 40 percent tariff on imported cigarettes.
The South Korean government has announced that it is abandoning plans to impose the 40 percent tariff on July 1 and instead will phase it in over four years.
Myers told The Korea Times said it is yet another outrageous example of putting the U.S. tobacco industry's interests ahead of public health, Washington has also been seeking to promote the interest of U.S.carmakers, software vendors and farmers.
It has shown deep concern over the widening bilateral trade imbalance in the automobile sector. It contended that Korea shipped 570,000 cars to the United States while importing only 2,500 American vehicles last year.
Seoul officials countered that there is no barrier to the entry of foreign cars in Korea. They said that the sluggish sale of foreign cars in Korea is partly attributable to a less aggressive marketing drive by foreign dealers.
The Korean tax office has publicly announced that there is no such thing as tax audit of owners of foreign vehicles in Korea, an argument that the United States has repeatedly raised.
Washington also contended that Korea has a way to go to crack down on violators of intellectual property rights (IPR) despite progress over the past few years.
The United States has been watching carefully whether Korea will terminate the rule of separating the sales of domestic beef against foreign beef in the retail chain.
It is expected that the U.S. might step up its efforts to sell more American goods to Korea once the American economy becomes sluggish.
Bilateral trade amounted to 66.85 billion dollars last year, accounting for 20 percent of Korea's global trade. Cumulative U.S. investment in Korea amounted to 18 billion dollars last year.
Korea is America's fourth largest agricultural market and sixth largest export market overall. U.S. exports to Korea last year was the second highest in Asia after Japan but ahead of China. According to the American Chamber of Commerce in Korea, Korean trade supports seven million jobs in the United States.
Recently, the EU also stepped up its voice to redress its trade dispute with Korea. The EU is threatening to take its case against Korea's alleged subsidies to shipbuilders to the World Trade Organization. The EU is the largest foreign investor in Korea, accounting for 32.4 percent of all inbound direct investment. The EU is the second largest export market for Korea, which posted a surplus of 7,600 million dollars in its trade with the EU last year.
Japan has also taken action against Korean products. So far, it filed anti- dumping suits against seven Korean products. Japan has reportedly strengthened its inspections on imported fresh vegetables. Japan is Korea's second largest trading partner accounting for 16 percent of Korean exports and imports last year.
China is Korea's third largest trading partner with bilateral trading volume exceeding 30 billion dollars last year. China is Korea's second largest destination for foreign investment. Korea posted 5,650 million dollars in trade surplus with China last year.
As was shown in the recent ``garlic war,'' China has been seeking to redress its trade deficit with Korea.
Source : Korea Times - 27/06/2001
THE WHEELS OF CORPORATE RESTRUCTURING STILL ROLLING
The wheels of corporate restructuring kept on rolling during the first half of the year amid a deterioration in the economic environment.
Analysts agree that many corporations ratcheted up efforts to rid themselves of inefficiency and prepare for the future. They sold off insolvent operations, merged units and spun off non-core divisions to strengthen their financial structure and improve their liquidity.
Following is a brief summary of restructuring activities undertaken by major conglomerates so far this year:
- Samsung Group
Group Chairman Lee Kun-hee recently ordered Samsung affiliates to promote restructuring on an ongoing basis. Following the chairman's instructions, the group's member firms announced restructuring plans one after another. Watchers say Samsung's move was prompted by the prospect of a continued business slump in the second half of the year. The determination of the nation's top business group has apparently set the tone for restructuring at other groups.
Samsung Electro-Mechanics has decided to trim its work force to about 10,000 from 13,000. It plans to dispose of 13 profitable but noncore business units through direct sales to a third party or spin-offs. A company official said that he expects no difficulty in implementing the plan because these units are coveted by other industry players.
Samsung Corp. closed down its auction site in April, and plans to move its main office to Bundang outside Seoul by next year.
Samsung General Chemical trimmed its work force to about 1,100 from 1,300 and shifted the operational center of the company to its plant in Daesan on the western coast.
Samsung Engineering reduced the high-ranking officials and executives on its payroll by about 5 percent through an early retirement program.
Samsung Electronics is still reviewing plans to sell or spin off unprofitable divisions, while the group's financial and non-manufacturing units are also expected to pursue restructuring on a constant basis.
- LG Group
The group's restructuring has been carried out under the corporate strategy of "selection and concentration." Group Chairman Koo Bon-moo recently told heads of group subsidiaries to make sure that spending is made within the bounds of revenue.
LG Household and Health Care has sold off its sugar-alcohol business, which is profitable but not a core business, and sold its entire stake in a Chinese sugar-alcohol plant to a French firm.
LG Chemical also sold its pelverulent body paint and varnish business and its stake in Tianjin Co. in China for $33.7 million.
LG Cable and Machinery sold its heating system operation to a U.S. company for $7 million to concentrate on the optical cable and optical parts businesses.
Dacom trimmed its work force to 2,050 from 3,000 and attracted 6.8 billion won ($5.25 million) from Japan's TCI to spin off its customer service unit into Korea Customer Service Center.
LG Electronics received $1.1 billion by launching LG Philips Display in partnership with Philips Electronics of the Netherlands.
- SK Group
The group's most important restructuring project concerns the sale of part of its stake in SK Telecom to NTT DoCoMo.
SK Corp. is talking with the Japanese telecom operator about the possible sale of a 14.5-percent stake in SK Telecom.
SK Telecom, meanwhile, recently decided to withdraw from wired services altogether, suspending its Think Road high-speed Internet access services and planning to sell its stake in Hanaro Telecom. It also decided not to increase its equity position in Powercomm, an operator of a nationwide optical cable network.
SK Evertec, a chemical and textile unit, recently sold off its styrene monomer plant to BASF Korea for 169 billion won, while SKC sold its main office building for 66 billion won.
The group has in recent years invested in a total of more than 130 venture companies through its own subsidiaries and venture investment funds. It is now investigating whether any investments have been duplicated and how good their market prospects are.
- Hyundai Motor Group
Fresh from its separation from Hyundai Group, Hyundai Motor is still in an expansion stage, so while other corporations have been striving to downsize operations, the automaker has been adding new operations to streamline its production processes.
Hyundai Motor took 11 affiliates with it when it left the Hyundai Group last September, and it has since added five more. Its affiliates include Hyundai Logitec, a logistics company, Hyundai Powertec, a transmission-producing company, a automobile research and development firm dubbed NGV and KEFICO Corp., a manufacturer of auto parts.
Hyundai also reached an agreement with DaimlerChrysler to set up a company to produce commercial engines to expand its commercial vehicle operations.
Hyundai Mobis is also said to be close to an agreement with Textron on setting up a joint venture firm.
Hyundai and Kia Motors have consolidated their research, development and material procurement divisions in an effort to ensure efficiency.
- Hyundai Group
Once the nation's largest conglomerate, the Hyundai Group is now about to be reduced to a second-tier group as its major units are to be spun off.
Hyundai Engineering & Construction and Hynix Semiconductor are already more or less separated from their parent group.
Hyundai Construction has decided to carry out restructuring involving 2.7 trillion won ($2.08 billion) in funds to improve finances through a debt-for-equity swap with creditors, recapitalization and the issuance of convertible bonds (CBs). Its affiliation with Hyundai Group has been severed with the complete write-off of equity capital by its controlling shareholders, the closure of its public relations office and the reshuffling of staff at its restructuring headquarters.
Hynix Semiconductor also severed its affiliation with the parent group after Hyundai Chairman Chung Mong-hun and other major shareholders forfeited their shares. The company has attracted $1.25 billion in foreign capital by issuing global deposit receipts (GDRs).
Hyundai Heavy Industries (HHI) is also headed toward separation as Hyundai Merchant Marine (HMM) has decided to unload its shares in HHI in an effort to help the latter sever relations with the parent group. HMM intends to lower its equity in HHI to below 3 percent by the end of the year.
- Other groups
Korean Air, of Hanjin Group, computerized its office procedures to raise productivity, while part of its personnel have been reassigned to improve customer services. The company also took measures to sell off unprofitable properties and securities while strengthening its means of dealing with foreign exchange risks.
Hyosung Corp., in the meantime, broke its textile performance group (PG) into first and second PGs, while making its technical yarn unit independent as a performance unit. It also removed the lumber unit from its trading performance group.
Kolon Group has spun off its water refining unit. Kolon Fashion will suspend its ladies wear unit this fall and ultimately terminate its operations.
Kumho Group reduced its total number of affiliates from 32 at the end of 1997 to 17. The group merged Kumho Petrochemical with Kumho Chemical in January, followed by the merger of Kumho Merchant Bank with Kumho Capital. Kumho Industry issued 200 billion won ($154 million) worth of asset-backed securities against its future sales proceeds. Kumho's Asiana Airlines sold two planes for $180 million.
Ssangyong Group sold office space worth $32 million in Seoul and turned over 29 percent of its shares in Ssangyong Cement to Taiheiyo Cement in Japan for 360 billion won ($278 million). In addition, it secured 300 billion in April in the form of a debt for equity swap. The company plans to sell its 67 percent stake in Ssangyong Information & Communication. Nearly half of the equity in Yongpyong Resort has been offered to the highest bidder.
Ssangyong Corp., in the meantime, sold off its stake in KIFCO to its Japanese partner NIFCO for $22 million.
Hansol Paper sold its 200,000 shares in Pan Asia Paper, a 33.3-percent stake, for $350 million in May in addition to selling its 290,000 shares in SK Telecom in June to a U.S. institutional investor. The company is on the verge of merging its real estate management firms and other affiliates into Hansol Development within this month.
Hansol Development is also hunting foreign capital for its Oak Valley resort development project.
Source by: Korea Herlad (2001.07.10)
THE ROAD TO AN ADVANCED ECONOMY
I. Korean economy at the crossroads
Most economists agree that Korea has not completed the process of economic restructuring. The corporate and financial sectors are still weak despite the nation's ample foreign exchange reserves, currently amounting to $94 billion, and the progress made in restructuring. Recently, exports have begun declining again and price instability is deepening. Furthermore, the nation is politically unstable, largely a result of the widening gap between the rich and poor, and increasing labor disputes. In addition, the absence of social agreement, or "contract," over the direction of the nation after the crisis has resulted in inconsistent government policies, only making things worse.
It's possible that the economy could slip into a Japanese-style long-term recession if the current instability of the domestic economy does not end. If so, the Korean economy may lose the momentum needed to advance further for several decades. Indeed, even if Korea continues to grow at 6-7 percent for the next 20 years, in 2020 the per capita national income would only reach $26,000, which the U.S. and Japan achieved in the early 1990s. Accordingly, it is imperative at this time to examine the experiences of other countries to eliminate instability and to develop Korea's growth potential.
II. Examples of the success and failure of nations
From a historical perspective, most countries experience some form of crises, including economic. But only those countries that adapted to change and took challenges as opportunities have achieved prosperity. In recent history, four examples of economic crisis-stricken nations can be found: Finland, the U.S.A., Mexico and Japan.
Finland is a good example of a nation transforming itself into a global digital power by overcoming the bursting of a so-called "bubble economy" in 1992. The resulting bankruptcy of its financial institutions caused its GDP growth rate and unemployment rate to record -6.2 percent and 17.9 percent, respectively, in 1993. Yet the nation succeeded in overcoming the crisis through the help of resolute government intervention in the financial sector, through which bad loans were disposed of rapidly. Moreover, as a means to create jobs and to reduce its fiscal deficit, Finland focused on the cultivation of its IT industry. Its success can now be seen through a survey by the International Institute for Management Development (IMD), an international business school in Switzerland, which showed that the country has ranked as the third most competitive country among the nations surveyed for three consecutive years from 1999 to 2001. Moreover, Nokia and Linux, the nation's two representative companies, currently lead the global IT industry.
The U.S. is another good example. In the early 1980s, the nation was in deep economic trouble, with high inflation and inefficient manufacturing industries, which were losing out to superior quality Japanese goods. In fact, the strong U.S. economy arose after more than ten years of restructuring, deregulation, and the arduous cultivation of new industries. The sweeping economic reform began under former President Ronald Reagan, who backed the tight monetary policy of the Federal Reserve Board (FRB) even though the country was suffering from negative economic growth. Second, corporate restructuring was promoted, which facilitated competition among companies, thereby bringing about greater productivity, a decline in prices and an improvement in the quality of services. Third, the nation increased its investment in high-tech industries, which brought about a venture boom and greater competitiveness in its IT industry in the 1990s.
In contrast, Mexico provides an example of a nation that failed to implement needed reforms when confronted with crises. It experienced its first economic crisis in 1982 due to domestic factors such as the overvaluation of the Mexican peso, a mounting current account deficit, a rapid increase of the nation's foreign debt, and external factors including a decline in international oil prices and a rise in international interest rates. In the case of its third economic crisis in 1994, the sudden outflow of short-term foreign capital after the hasty opening of its financial markets was a fatal blow.
But the fundamental reason behind recurring economic crises was the nation's failure to reform its economy. Instead, the government promoted only temporary and populist measures, including the boosting of its economy and wage increases. Furthermore, although its export structure had been crude oil-based and thus vulnerable to external shocks such as a fall in international oil prices, the nation failed to develop new promising industries. It also lacked a strong financial system to weather the in/outflow of international speculative capital.
Japan, too, failed to implement needed structural reforms. Although it showed a high adaptability to the changing global environment during the first and second oil shocks by transforming its industrial structure into a low energy-consuming one, it slipped into a long-term recession in the early 1990s after the sudden bursting of the "bubble economy." Since then, it has promoted patchwork measures such as the depreciation of the yen and economic stimulation. Moreover, the disposal of bad loans was delayed although it remains the only way to overcome the crisis. In fact, bad loans in the banking sector amounted to 64 trillion yen at the end of 2000. While the government's liabilities amounted to 642 trillion yen as of 2000, 118 percent of GDP, the highest ratio among the G-7 countries. This failure to reform is largely ascribed to structural problems in Japanese politics, the absence of strong leadership and the government bureaucracy.
III. Past crises and suggested measures to be taken now for the Korean economy
Korea faced several crises before 1997 - four since 1960, not including the crisis of 1997. In the past, these liquidity squeezes were resolved by improvements in external conditions, rather than through fundamental restructuring of the economic system. For example, the Korean economy managed to tide over the first crisis (1963-1964) through the recovery of formal diplomatic relations between Korea and Japan, which had been cut off after World War II. The second (1968-1971) was overcome by a Vietnam War-related economic boom. The third (1974-1975) was alleviated by domestic construction companies' participation in the construction binge resulting from the oil price hike, and the fourth (1979-1981) by the "three lows" which mean a low JPY/USD exchange rate, low interest rates and low oil prices. However, the nation was not as fortunate in 1997, when the country's accumulated structural problems resulted in the breakout of the so-called "IMF crisis."
Now is the time to learn from past experiences and to take action. The recent crisis is a golden opportunity to reform the domestic economy into one that is strong and efficient.
Then what measures are needed? The foremost task will be to dispose of ailing companies and financial institutions as soon as possible. Elimination of weak companies and financial institutions will certainly strengthen the market and the confidence of international investors. To this end, additional public fund injections should be promoted, if necessary, under the condition that transparency must be maintained and resulting losses should be shared appropriately. Also, moral hazard problems and illegal labor disputes during the restructuring process need to be strictly controlled.
Second, the legal system should be overhauled to allow market principles to function more efficiently. For example, a continual market-driven restructuring system to eliminate ailing companies must be introduced. That is, the disposal process of ailing companies should be flexible. Moreover, the legal system needs to be adapted to handle globalization and digitalization trends. New regulations for e-Commerce and e-Finance are also necessary.
Finally, new promising industries suitable to Korea should be established. For this, investment focus must be placed on industries that represent the current digital era such as semiconductors, digital home appliances, telecommunications and e-Commerce. Later, in order for continued exploration of these new fields, it is imperative that a social and government support system be provided to talented individuals.
These steps will certainly be accompanied by socioeconomic pains such as rising unemployment and low economic growth, though these pains are likely to be short-lived. However, once these measures are employed, the nation should stand poised to enter the ranks of advanced economies.
The writer is a researcher of the Samsung Economic Research Institute - Ed. By Rhyu Sang-young Source : Korea herald 2001.06.25
LA CULTURE DES AFFAIRES EN COREE ET EN OCCIDENT
Les employés coréens ont tendance à faire des questions professionnelles une affaire personnelle, à ne pas parler directement, à obéir aveuglément à leurs supérieurs, à accorder plus de valeur à l'amitié qu'au partenariat et à critiquer les accords conclus. Vous pensez à un jugement politiquement incorrect tissé de stéréotypes et de généralisations ?
Pourtant, connaître de telles informations peuvent vous aider dans vos futurs projets avec les Coréens, comme l'ont soutenu les dirigeants d'entreprises étrangères en Corée à l'occasion d'un séminaire intitulé " La culture des affaires en Corée " qui a eu lieu à la KOTRA, le 7 juin dernier.
" La Corée est un pays dont l'histoire unique et les profondes convictions confucéennes contribuent à sa culture des affaires spécifiques ", a souligné Tami Overby, directrice générale de la Chambre de commerce américaine en Corée et l'un des deux intervenants étrangers au séminaire. En conséquence, a-t-elle ajouté, les étrangers devraient essayer de comprendre son histoire et sa culture s'ils veulent réussir leurs affaires en Corée.
Le confucianisme offre, par exemple, un code social qui dicte les comportements, notamment l'obéissance et le respect pour les supérieurs et les plus âgés ; la considération pour l'humilité, la sincérité et la courtoisie, ou la conviction que la communauté prévaut sur l'individu.
De ces caractéristiques peuvent surgir certaines difficultés, par exemple le fait que les Coréens préfèrent en général parler indirectement pour ne pas enfreindre leur code de politesse et les étrangers doivent être attentifs à ne pas leur faire " perdre la face ", a précisé T. Overby qui vit en Corée depuis 13 ans.
Une autre différence entre les deux cultures est que les connections personnelles sont vitales en Corée. Alors que la société américaine est basée sur le contrat (employés et avocats passent beaucoup de temps à élaborer les détails du contrat ou les conditions de l'accord), la Corée est davantage une société basée sur la confiance.
C'est pourquoi, selon elle, développer des relations personnelles est crucial. "Les Américains terminent le travail et se préoccupent de la relation une fois l'accord signé. Les Coréens font le contraire : ils veulent construire la relation d'abord et s'ils vous font confiance, alors l'accord est conclu".
Parmi les autres conseils distillés par T. Overby : lorsque les Coréens disent "Non", cela veut souvent dire seulement " Pas de cette façon " ; les relations sociales (pendant et après le travail) est un mécanisme de réseau très valable ; et ne pensez pas que les Coréens soient malpolis ou malhonnêtes lorsqu'ils ne vous regardent pas dans les yeux, c'est juste qu'ils considèrent comme irrespectueux de regarder une personne plus âgée dans les yeux.
Philippe Tirault, président de la compagnie Heidrick and Struggles, qui représentait les entrepreneurs européens implantés en Corée, a lui aussi insisté sur les convictions confucéennes comme la clé de la culture coréenne des affaires. " Un entrepreneur européen doit d'abord comprendre que l'ancienneté est extrêmement importante en Corée et qu'ils auront à travailler dans un système où l'impulsion vient d'en haut. Cela affecte tout en Corée de l'organisation des affaires jusqu'au système de négociation ", a déclaré P. Tirault qui est en Corée depuis 1984. Parmi les nombreuses différences entre les deux cultures, la plus importante est peut-être la confiance que confèrent les Coréens aux engagements oraux au contraire de l'importance qu'accordent les Européens aux contrats écrits, a-t-il ajouté. " Les Européens ont tendance à penser que l'affaire est conclue une fois que le contrat est signé. Mais les Coréens n'hésitent pas à rediscuter les accords si les conditions changent ".
La manière dont les Coréens règlent les problèmes est également très différente de celle qu'utilisent les Européens, et reconnaître cette différence sera bénéfique aux deux cultures. D'après P. Tirault, " En Corée, les problèmes sont cachés aussi longtemps que possible, beaucoup de conflits sont résolus en dehors de l'environnement professionnel et les conflits bien résolus sont rapidement oubliés. Les désaccords deviennent également souvent personnels et les Coréens cherchent des solutions blanches ou noires. D'un autre côté, les Européens aiment chercher des solutions où tout le monde gagne, les problèmes sont débattus ouvertement, il y a des règles d'entreprise (une sorte de code de conduite) pour la résolution des problèmes et les conflits sont rarement portés en dehors de l'entreprise. En plus, les conflits résolus entre deux personnes laissent des traces ".
En dépit de ces différences persistantes, la culture coréenne des affaires devient de plus en plus multiculturelle, a ajouté P. Tirault.
Entre-temps, Kim Pyung-hee, un des consultants de l'Ombudsman Office, organisateur de l'événement, a présenté dix leçons pour réussir ses affaires en Corée. Parmi elles, essayer autant que possible de ne pas faire perdre la face à ses interlocuteurs coréens (ne pas critiquer les autres en public), se faire d'abord des amis, ensuite des clients (développer des relations de confiance avec ses partenaires commerciaux à travers la socialisation), attacher de l'importance au " comment " (une approche modeste et modérée est plus efficace qu'une approche directe et agressive).
Il est important également de s'adapter au style coréen de négociations (bien que les Coréens soient réputés pour leur habileté à négocier, de garder l'atmosphère de la négociation aussi chaleureuse que possible), d'avoir des contacts directs plutôt que seulement écrits et d'essayer d'apprendre la culture coréenne.
Kim Mi-hui - Source : Le Courrier de la Corée2001.06.18
INVESTOR RELATIONS, KEY TO GLOBAL BUSINESS
Among the biggest changes in the local business environment today is the increasing importance of foreign investors to private firms here. Given this, "investor relations" will be crucial to succeeding in global business in the future, a foreign public relations expert said.
"Korea used to be a government-led economy, which means that successful CEOs were those who were good with government-relations," said Michael Breen, managing director of Merit/ Burson-Marsteller, Seoul branch of the U.S.-owned public relations firm. "But today, the government is only one of the stakeholders, and the investors are the most important stakeholders. So, now, one has to shift focus to investor relations."
But in many cases, local companies still do not grasp this concept and those that do don't seem to know how they should go about it, he said. To help such companies, he offered a list of tips in an interview with The Korea Herald yesterday.
"Probably, the most important in IR is communications - companies have to be in touch with their investors. This means offering them regular newsletters, a good Web site with up-to-date information because fund managers use them often, and holding conference calls every few months," Breen said, adding that the last point is particularly important as this is what gives investors the opportunity to ask questions about a company's progress.
Honesty is another key aspect of investor-relations and something that many Korean firms still have to work on, he said.
"In fact, the chief difference between public relations and investor relations is that in IR, you have to be willing to report negative news about numbers. For example, if your sales are down, you can't hide it and pretend that everything's good because if your investors don't trust you, they're not going to put money into your company," he said.
"It is much better to say, 'Look, it's tough now, but this is what we're going to do about it,' rather than saying, everything is fine. That will earn their trust," he said.
He added that negative numbers aren't always the big turnoff to foreign investors that they are to Koreans, just so long as it is clear that the company has plans to change the situation.
Breen also believes Korean firms should be more diplomatic when seeking investments. "For example, one common complaint by fund managers about Asian companies is that they only go on road shows when they want money. Whereas, investors appreciate non-deal road shows that just give information, keeping them up-to-date on developments."
And of course, it is vital that Korean companies keep their words and follow-through on their business designs, he said. It is still all to common for local firms to announce some forward-looking plan and then come up with another later on, rather than looking back to the old promises, he said.
It is especially important that Korean firms follow these international guidelines as many foreign investors still have a negative impression of the Korean business community, he said. "Everybody knows that Korean companies used to keep different sets of accounts and that the ones that go to the public is not the real figures. This kind of story gives very bad impression to foreign investors," Breen, who has been in Korea for 18 years, said.
Meanwhile, realizing the need for the development of IR skills here, many foreign PR companies are looking to open branches in Seoul, he said. Currently, Merit/ Burson-Marsteller and Edelman Korea and a number of other companies have affiliations with Korean firms.
Accordingly, any company seriously interested in improving their IR skills would be well served to use these services, he said. "One thing you get with these international PR companies is experience. They are used to this kind of system and work and can come up with specific strategies," he said.
Merit/ Burson-Marsteller, which handled the international marketing for Incheon International Airport, currently has three kind of clients: foreign companies wanting Korean PR, Korean companies wanting international PR and Korean companies wanting Korean PR.
Breen also has advice for each of these categories of clients. For the foreign companies, he says, "Realize the importance of Korean media because it is very powerful in getting a firm public acceptance."
Local firms wanting to go abroad have to realize that more and more, the image and reputation of a company depends on its CEO, he said. "For instance, our company in America did a survey a couple of years ago to try to establish the role of a CEO from the communications point of view. We found that 40 percent of the reputation of a company depends on the CEO. So, those people have to be thoughtful and professional about how they communicate," he said.
(email@example.com By Kim Mi-hui Staff reporter
Source : Korea Herald - 2001.07.12
SURVEY ON FOREIGNERS' BEHAVIOR AT KOREAN CASINO OFFERS CROSS-CULTURAL COMPARISON
The different behavior of foreign visitors to Korean casinos provides a glimpse into their respective ethnicity and culture, according to a study released yesterday.
The comparative study, conducted on foreigners from various countries visiting Seoul's largest casino, open only to foreigners, found similarities and differences in behavior across cultures.
Dealers and managers at the casino were given a 28-question survey concerning overseas Koreans, ethnic Chinese, including those from Taiwan and Hong Kong, and visitors from Japan, the United States, Europe, the Philippines as well as Thailand.
"It is important to understand the dispositions of diverse nationalities in order to establish an effective marketing strategy for a foreign casino," said Kim Seong-sup, the director of the study at Sejong University. "We can thus better serve foreigners from various countries by accommodating facilities that meet their needs."
According to the survey, conducted by a research team of the Hotel and Tourism Business Administration department at Sejong University, westerners, including Americans and Europeans, enjoyed trying challenging new games, while the Japanese tended to demand a detailed explanation of the rules.
Natives of the Philippines and Thailand were passive during some parts of the games.
While the Japanese readily followed the dealer's instructions, overseas Koreans and Chinese, which included those from Taiwan and Hong Kong, did not.
Overseas Koreans, particularly, complained most often to the dealers.
Westerners, the Japanese and Koreans preferred playing alone, whereas the Chinese, Filipinos and Thais not only enjoyed gambling with others but also watching others gamble.
Within the casino, Chinese patrons were inclined to travel in groups of three or more, frequently causing a commotion.
Japanese patrons, on the other hand, were the most composed and did not stir up much trouble at casino tables. The survey also found that the Japanese were the most generous tippers.
The Chinese took the most time making bets, while the amount varied drastically from low to high.
The amounts bet by westerners, Filipinos and Thais were fairly consistent.
Visitors from China, the Philippines and Thailand appeared most suspicious towards casino employees and the security system that they took their chips with them even when leaving the table for a brief moment.
They also showed the tendency to recount several times the money they exchanged into foreign currency as well as the chips handed out by the dealer.
Furthermore, Chinese and Koreans smoked the most, and thus had to have the ashtrays renewed most regularly.
Source : Korea Herald 2001.06.27
CONFIDENCE BEFORE COMPETITIVENESS
True, Korea has had a very rough history and its experiences with foreign countries have not always been pleasant, but it has to get over its ugly past and build some confidence if it is to become an international competitor, a leader of the foreign banking community here said.
"I find that Korea is not confident enough despite the fact that it is now an almost developed country, not developing. I think it's still unsure whether it can weather all the foreign influence, but it is very important that they do," said Eric Berthelemy, president of Foreign Bankers Group (FBG), in an interview with The Korea Herald.
A couple of his recommendations: tone down cumbersome regulations like requiring substantial paperwork for each foreign exchange transaction, which annoys foreign investors, and stop treating the local and foreign banks the same because their business and size are very different.
"With some changes, there is no reason why (the) won should not become an important international currency and Korean financial market should become reference market in Asia," he said, adding that Korea has a lot to offer, such as an inexpensive stock exchange, and the low price earning ratios of Korean stocks.
Among the changes needed, unfortunately, are bigger issues, he said. One problem is that Korean banks are still very much under the government's control.
"Often, the banking industry is just channeling the funds to very capital-intensive industries. This was, in fact, one of the causes of the 1997 IMF crisis - there was too much money brought to investments without scrutinizing actual returns, which is the role of the banks. Though this has been changing somewhat, the banks should be given more freedom," Berthelemy, who is also the chairman of SG Bank in Seoul, said.
The lack of liquidity in Korea is yet another big problem, the banker said, as it is responsible for the very common attitude among businesses to think, "Whether I succeed or fail does not matter because the bank's going to pay all the debt." "There should be stronger signs that non-viable companies have to be let go," Berthelemy said.
Other weaknesses in the Korean bank industry he mentions: attitude towards matters of equity and underdevelopment of the corporate debt and long-term money market is "not pragmatic enough".
On the other hand, there are positive signs for future, he said.
"One of the most important things to come out of the IMF crisis, in fact, is the commitment of the local authorities to make changes. I think the current government is very open to discovering areas of needed improvement and actually making them. The only problem is that it takes so much time before the changes actually occur," he said.
There have been a lot of positive changes in the banking field here, he also noted. One is the merger of Kookmin Bank and HCB, which he forecasts will "create a very strong competitor in retail banking."
"There are too many banks in Korea and further mergers should be considered," he said.
But merger and acquisitions on a global scale are something that Korea may need more of, he added, saying that M&As are not just about selling or merging - like Europeans or American buying some local companies - but also about Korea making some acquisitions abroad.
"M&As can help a lot in making the company fitter and more adjustable to international competition. The market conditions are changing a lot so internal changes and goals are sometimes not enough," he said. He added that Korean companies were too small in many sectors, including banking, financial institutions, mechanical industries, chemical, telecommunications and IT.
"Some very profitable companies like SK Telecom, POSCO, Samsung Electronics and LG Electronics, for instance, are taking this approach, but they could do more," he said.
Meanwhile, Berthelemy predicts that the Korean economy will recover after 2002, later than predicted by many other economists.
This is because what Korea really needs is restructuring, but with so many international events (Asian Games, World Cup) and 2002 presidential elections coming up, this year and next weren't the ideal time to make them.
"But I believe, after the new government is formed, it will push for another round of restructuring and work to change Koreans' way of thinking and doing business," he said.
Unfortunately, his forecast for North Korea is more grim. While the Foreign Bankers Group will continue to monitor the country very closely, continuing to advise, cooperate and exchange information, it will be some time before foreign banks will want to open offices in Pyongyang, he said.
"My understanding is that the North Korea's problems aren't really in financial or banking. They are more concrete, like what will be the impacts of drafts on the next rice season, or whether they will be able to build an industrial complex. It's more government to government issue, not really something to be considered by foreign banks," he said.
Berthelemy, who also serves as the committee chairperson for banking sector at the European Chamber of Commerce in Korea, was born in France and came to Korea is 1998. He joined SG in 1986, and helped with advising of the Samsung Motors-Renault project last year. (firstname.lastname@example.org) By Kim Mi-hui
Source : Korea Herald 2001.06.25
MANAGEMENT IMPROVEMENT SYSTEM TO BE PUSHED
By Kim Jae-kyoung
``In order to prevent financial institutions from going insolvent, we will make good use of a management improvement contract system,'' Lee Keun- young, chairman of the Financial Supervisory Committee (FSC) said yesterday at a press conference for foreign reporters held at the Korea Press Center in Seoul.
In a keynote speech, Lee said, ``The management improvement contracts are very important, in that such contracts are carried out before troubled firms go insolvent.''
``Insolvent financial companies will be disposed of under the routine financial restructuring system,'' he added. ``In particular, to activate the restructuring system, we will enhance a partial deposit guarantee system.''
``In addition, we will deal with the debt-ridden financial institutions based on market force and try to induce firms with high debt ratios or poor profitability to sign a contract to improve their financial status,'' he stressed.
He said that in order to win confidence from the market, priority should be put on management transparency and the establishment of advanced corporate governance.
To that end, the government has mapped out a plan to introduce a class action system step by step, place heavier responsibility on outside directors and strengthen punitive measures against window dressing and unfaithful auditing, he explained.
In spite of the full-fledged restructuring for the past three years, the local market is still exposed to liquidity risks, he said.
He pointed out that in order to avoid further economic slumps in the midst of uncertainties in both domestic and overseas markets, we have to put priority on improving the fundamentals of the Korean economy, adding that the restructuring is a unique solution for boosting the sluggish Korean economy.
email@example.com - Source : Korea Times 10/7/2001
KOREAN FIRMS UNDERGOING RADICAL INTERNAL CHANGES
Korean companies are cautiously taking small steps toward organizational changes that do away with traditional top-to-bottom management and the paternal relationship with employees.
For example, a building remodeling company adopted a four-day workweek last year. All its employees, including salesmen and designers, now work the shorter week, but their wages have not been trimmed.
"In the remodeling business, designing abilities and ideas bring competitiveness, and spending more time does not necessarily lead to better sales," said Cho Il-hwan, chief executive of the firm, Keul & Jung -- both words mean chisel in Korean. Mr. Cho said "the company chose the four-day week to increase productivity and improve focus on work."
Keul & Jung represents what appears to be a nascent trend among Korean companies to adopt a more liberal and independent organizational format. The salient features of the new business operations blueprint are a shorter work week, the spin-off of divisions as independent firms and a team-oriented structure. Early reports suggest these steps have increased competitiveness and motivation.
Golden Connector Industrial Co., maker of high-end connectors, has spun off several divisions, appointing company employees as their chief executive officers. Golden Connector still provides capital, offices and equipment and collaborates on the distribution of electronic parts. The spin-offs, which maintain close ties to the parent, plan to move forward from supplying Golden Connector to making finished products.
"Golden Connector will support these affiliated companies independently, developing and manufacturing special connectors for electronics, computers and mobile phones," said Yun Yeo-sun, the firm's chief executive officer. "Golden Connector and these five firms broke from a top-down relationship and plan to cooperate in marketing when these companies start making goods."
In March, Xeline, a developer of telecommunication devices, created a team-oriented organization, with each group managing its own budget, personnel recruitment and sales.
Lee Chun-yong, director of the firm's management support team, independently administers an annual budget of as much as 3 billion won ($2.3 million). Xeline examines contributions by its employees twice a year, and the information is used to determine promotions and wages. The company's sales teams, formed according to product, are responsible for their own sales and repair service. Source : Joong Angilbo 2001.06.27
KOREAN UNIONS FACE CHANGING ENVIRONMENT
DEVELOPMENT: Union members at several heavy industrial companies in SouthKorea have decided not to join a general strike called by the militantKorean Confederation of Trade Unions (KCTU). ASSESSMENT: The KCTU had announced that about 100,000 workers would joinin a general strike planned for the end of this week, but members of theHyundai Motor union and the Daewoo Shipbuilding union (with 38,500 membersand 7,000 members respectively) have decided not to join in en masse,sending only limited delegations to the strikes. Hyundai HeavyIndustries' 19,000-member union will be taking part, but only for one day.The total turnout is estimated to be about 45,000.There are several forces at work against labour militancy in Korea, which resurfaced earlier this year (see the Daily Briefing of 20 February) inresponse to cutbacks made by companies following reforms initiated by thegovernment of Kim Dae-jung. One is declining unemployment: in May thejobless total fell to 780,000, or 3.6% of the workforce, a three-year low.Another factor is the growing hostility to strikes. A 50,000-strongwalkout in June, involving airlines and hospitals, was branded "selfish"by the domestic media, and the government is hoping to capitalize on apublic anti-union backlash.But unions still have a significant voice, especially as the government'sreform efforts are giving way to more politically expedient action in therun up to the presidential election of 2002. The difference will be inthe way they use this voice, with groups like the KCTU taking note ofpublic discontent - and the reduced turnout for the current strike - tochange tack and possibly eschewing militant action to resolve futuredisputes. The unions understand that the prospect of economic recovery(Finance Minister Jin Nyum said on Wednesday 6% GDP growth this year couldbe achieved if the US economy recovers soon) might make more firmsamenable to union demands, if only to prevent strike action damaging theirrecovery hopes. Companies like Hyundai Motor and Daewoo shipbuilding have already shown a willingness to placate their workers with wage hikesrather than face strike action.[The July issue of the AsiaInt Economic Intelligence Review
LG SECURITIES SEEKING FOREIGN PARTNER
LG Securities & Investment Co. said yesterday that it would seek out a foreign partner for its investment trust management business.
"LG is considering signing strategic partnerships with foreign investment banks in order to introduce their advanced techniques in asset management," company president Suh Kyung-seok said in an interview with Yonhap News Agency.
He also said that LG Securities & Investment will pay the largest possible amount of dividends should it attain its income goal of 240 billion won for this year.
Source : Korea Herald 2001.06.22
HANA PUSHING FOR STRATEGIC TIE-UP WITH FOREIGN FIRMS
Hana Bank President Kim Seung-yu said yesterday that the bank will push for strategic alliances with foreign financial institutions as part of its efforts to become a financial services group.
"By tying up with foreign financial companies, Hana will learn their advanced management skills and expand business operations," Kim said in a meeting with reporters.
Hana, which marked its 30th anniversary yesterday, will make fully-fledged efforts to attract foreign capital when its stock price reaches a level that truly reflects its enterprise value, he said.
"Through tie-up with foreign financial institutions, Hana will try to become a financial services group living up to global standards," the bank president stressed.
Kim said that the bank will not consider merging with a domestic bank for the time being. "Instead, Hana will focus on recording the maximum profit possible and thus raising its stock price through an overhaul of business operations."
Hana had been in talks with KorAm Bank on a merger but their negotiations fell apart as KorAm's largest shareholder, the Carlyle Group of the United States, was opposed to the idea.
Kim further said that Hana's ratio of loans to large companies to its total lending stood at 41.9 percent as of the end of May this year, sharply down from a peak of 70 percent, while its loans to the household sector rose to 27.2 percent from 13 percent.
"By the end of this year, we plan to raise consumer loans to 30 percent of the total lending and lower loans to large companies to 30 percent," he said.
Kim said that Hana will put up 60-percent reserves against loans to ailing Hyundai Engineering and Construction Co. at the end of this month; 35-percent provisions against lending to Hynix Semiconductor Inc.; and 30-percent loan-loss reserves against Hyundai Petrochemical.
Source : Korea Herald 2001.06.26
DEUTSCHE BANK SUBMITS LETTER OF INTENT ON SEOUL BANK
According to the Korea Deposit Insurance Corp. Tuesday, Deutsche Bank submitted a letter of intent to the KDIC expressing its intention to take over 30 percent to 50 percent of equity in Seoul Bank.
KDIC said that it has judged that Deutsche Bank is not interested in taking over managerial rights in the Korean firm.
One KDIC official commented that it would determine whether or not to move ahead with the negotiation to sell off the stake to the German financial company in due course.
The same official said that more details on the acquisition plan will be known only after the negotiation is launched.
(Kim Young-jin, firstname.lastname@example.org) Source : Chosun.com 10/7/2001
INT'L SMART CARD CONFERENCE TO BE HELD IN SEOUL JULY 18-19
International smart card conference, SmartWorld 2001, will be held for the first time in Korea July 18 and 19 at the Convention and Exhibition Center (COEX).
The two-day event will focus on a wide range of smart card issues relevant to the Korean and global smart card markets, with presentations by Korean and international smart card experts from various sectors.
"This will be the biggest event held in Asia to date," said Greg Pote, general manager of the Asia Pacific Smart Card Association (APSCA), the organizer of the event, during an interview with The Korea Herald. "And this shows that Korea is emerging as a very attractive potential market for smart cards."
Smart Cards are semiconductor-based products that are unique in their ability to store data securely in a portable card form, and are therefore being used extensively by financial institutions for authentication and initiation of payments worldwide.
In Korea, smart cards have been used in cash cards and transport fare systems.
The future is even brighter considering that all credit cards in Korea will have to be converted to smart cards by 2005 (deadline set by Visa and MasterCard), while every mobile phone will contain at least one smart card as they will be the key to e-commerce, Pote said.
"Many even predict that cash notes and coins themselves will sooner or later be superseded by smart electronic cash facilities," he said.
Accordingly, the theme of the event will be how and why smart cards will transform all business and government services in Korea. There will be seminars, keynote speeches and case studies featuring successful instances in which smart cards have been used.
One case study will look at the "Octopus scheme" in Hong Kong, an automated fare-collection scheme that covers every transport operator in the city. Implemented in 1997, 91 percent of the population now use the smart card system, which translates to 6 million people totaling daily transactions of $5 million, Pote said.
Other high-interest programs include "Smart Health Cards," which focuses on health card usage in other countries and what can be learned from those schemes, and the role of the government in the smart card industry.
"There are many things happening in Korea that have relevance to what's happening outside of Korea - electronic cash is an excellent example. The Europeans have been experimenting with e-cash since the early 1990s, as well as some of the other Asian countries. There's a lot that Koreans can learn if they wanted to by looking at that.
"At the same time, there's a lot of new and interesting technologies being developed in Korea and they can show them here. So, it's an information exchange," he said.
The fee for the two-day event is $500 and there's room for 150 visitors. (Register at www.apsca.org).
APSCA is the Asia Pacific division of an international affiliation of Smart Card associations around the world. Its main objectives are to promote the adoption of smart cards and to educate members in the latest technology, standards, applications and market trends. APSMA holds around 30-40 forum meetings and events every year.
By Kim Mi-hui Staff reporter Source : Korea Herald 2001.07.04
ENGLISH THE KEY TO TELECOM MARKET
While Korea's telecommunications market is one of the most advanced and fastest growing in the world, it is too closed and distinctive to be a world competitor, a foreign telcommunications business leader said.
"Korean telecom market is very domestic in that it still Koreanizes specifications. But this ends up hurting both the imports and exports because the local products aren't compatible with other systems and services," said Janos Fugedi, president of Ericsson Korea.
This is sure to be a problem, though, when considering that the home market is very limited and Korea will have to look to exports to survive sooner or later just like other countries, Fugedi said.
The uniquely Korean system has proven disadvantageous in other ways as well, he said, citing the newest service in the local market - caller ID - as an example. The program was available in the United States 10 years ago, but because it was not compatible with Korean products thus far, it had to wait all those years to work here, he said.
Not adapting skills related to English can be detrimental in forming world partnerships, too, Fugedi said. According to him, Korean telecommunications managers are still lacking in English language skills, which is a big barrier between Korea and its globalization goals.
"Even on a global scale, a lot has to do with personal relations. We meet leaders of major operators like Vodafone, BT, AT&T, from around the world in big events. But we rarely see Koreans come to those events where they can mingle and make friends. And these are the guys Koreans would like to get investments from," he said.
Koreans may not have needed such international socializing skills before, but it is now very crucial as Korea needs foreign investment, which will help Korea open up its market both directly and indirectly. "Foreign investments will help Korea adapt some international systems as well as create competition," he said.
And there are many foreign investors who are interested in Korea, largely due to its market size, Fugedi said. But Korea has large improvements to make before they do.
One of them is Koreans' determination to accept financial investment and nothing else from their foreign partners. No partner will like the fact that they will have no say in the business they are investing in, he said, adding that just a couple of instances of bad investments are usually enough to scare away potential investors as well.
Meanwhile, Korea should also consider investing in other countries as that's another way to become more global. And investing in developed countries in particular is ideal as it will encourage a competitive spirit on an international scale as well as bring about short-term profits.
"Japan and China are investing in developed countries like Italy and Germany, but Korea is going into underdeveloped countries like Vietnam and Bangledash. But payoffs in shorter term is better in developed countries," he said.
The strong influence from government is another major problem in the sector, Janos said, noting that it is not the end-users and the market that drives the business deal, but the authorities.
"Korea is a very engineer-driven industry. And it is based on technology than on sound business cases. The engineers influence everything, but they don't care if they make money or when they make it because they are normally paid from government.
On the other hand, modern operators focus rather on business cases, revenues and cash flow, he said.
He also recommended that the operators here could achieve much more benefits by entering long-term relations with vendors, rather than having short ones that requre many lengthy evaluations for new vendor partners. Long-term would guarantee price reduction by volume and build friendship, he said.
He also has some personal philosophies, which he has gained while working here. One is training one's staff. This is very important since they have to promote products and services in the domestic market, and hiring those with networking and lobbying skills are crucial. "I recommend particularly that companies train them in international business and post them overseas as often as they can so that they can get some international experience," he said.
Yet another tip he offers is to promote quality time with the clients - such as dinners, golf and travels - rather than drinking parties. Golf is especially ideal because it gives one lot of time to socialize.
"But with drinking parties, you don't remember much the next day and you have to start from square one," he said. "Just ask yourself, what would that person like to do instead
of drink? And then you can have innovative ideas."
Ericsson, 53, entered Ericsson in 1967 and has been in Korea for three years.
(email@example.com) - By Kim Mi-hui Staff reporter - Source : Korea Herald - 2001.06.28
TELECOMS : DIRECT LINK TO EUROPE PLANNED
Korea Telecom said Thursday that it had signed contracts on direct Internet access with British Telecom, Telecom Italia and other major European companies. The deal allows Korea Telecom's Internet access service program, Kornet, and its high-speed variety, Megapass, to connect to those of European companies without going through the United States. The company plans to expedite Internet connection between Europe and Korea.
Korea Telecom has been paying a sizable sum of money to UUNet, Global Crossing and other American companies to connect to European services. The company can now save millions of won in fees by the direct access contract, it said.
Source : Joong Ang Ilbo 2001.06.21
IMPORTS : EU TOUGHENS REGULATIONS ON PACKAGING
The European Union announced that it will stiffen its import regulations regarding packaging, which is expected to have a cost-related impact on the local exporting industry.
Beginning Oct. 1, all wooden packaging and supporting palettes going into a European country will have to be either heat-treated for a minimum of 30 minutes or processed by CPI (chemical pressure impregnation) to eliminate germs.
The present policy requires only that wooden packaging does not have bug holes (traces of contamination) and has a moisture content of less than 20 percent . The new regulation is a sign of growing concern in Europe for the environment, the Ministry of Commerce, Industry and Energy said. "But it can also be looked at as a form of trade barrier," said Wang Min-ho, an official at the ministry's distribution service information department.
The affect of the new regulation will be mostly cost-related. All wooden packaging manufacturers must provide heat treatment or CPI systems to meet the requisite, which could be costly considering that the heat system, deemed the more accurate of the two methods for killing germs, is said to cost about 60 million won per set.
As each company will require more than one set to meet demands, the cost would be significant, Wang predicted.
The European Union made it clear that it will conduct thorough examinations of incoming packaging, and those that don't meet qualifications will be held back or returned at the exporters' expense.
Accordingly, the ministry advises all exporting companies to check to see if they are using wooden packaging, such as boxes, crates, or palettes; learn about the changing packaging regulations in all their export targets; and push packaging suppliers to meet the new demands.
Packaging producers, on the other hand, should install heat treatment or CPI equipment as soon as possible, the ministry said.
At a government level, the ministry will offer financial support for the palette industry so that they can purchase the necessary equipment, while the Ministry of Agriculture and Forestry will establish standards for certification of various heat-treatment equipment manufacturers, they said. (firstname.lastname@example.org) By Kim Mi-hui Staff reporter Source : Korea Herald 2001.06.29
WHAT'S FOREIGN, WHAT'S DOMESTIC, IF GM ENTERS KOREAN CAR MARKET?
Many Koreans who visit the United States notice that there are a lot of different brands of cars on the roads £ unlike Korea, where the roads are monopolized by Korean makes.
GM's acquisition of Daewoo Motor may change Koreans' perceptions about buying foreign cars.
Son Chang-gyu, a general manager at Toyota Korea, suggested that the merger could lead to loss of identity for domestic cars and soften Koreans' reluctance to buy foreign cars. "The distinction between domestic cars and foreign cars will blur," he said.
"Generally, people's perceptions of the auto industry will be broadened," said Kim Hyo-joon, chief executive of BMW Korea. As more auto manufacturers, even domestic ones, establish strategic relationships with other companies of different nationalities and procure parts globally, Mr. Kim said, the origin and nationality of cars will become obscure.
There still exists hostility against the purchase of foreign cars. Incredulous headlines report the "stunning" 82 percent increase in foreign car sales in the first four months of 2001, compared with the same period last year. Yes, foreign sales here are up to 2,200 units, a drop in the bucket compared with the 495,329 units Korean auto manufacturers sold overseas in the same period.
Unlike other foreign goods, foreign automobiles in Korea are not only visible but also traceable. Cars are not something people use secretly in the privacy of their homes. The owners must register them and pay taxes on them.
Not all agree that Korean perceptions of auto imports will change. "There will not be dramatic changes," said Lee Hang-koo, an assistant researcher at the Institute for Industrial Economics and Trade. "The government used to implement various indirect restrictions on auto imports. Now, this only has to do with public sentiment."
GM's presence in the Korean market, he added, should cause the United States to ease trade pressure.
The media's reaction is not only due to nationalism, but also to the fact that owning a foreign car in Korea means status. A newsmagazine, reporting on lifestyles in the high-rent Gangnam area, said owning a foreign car is an accoutrement for the lucky, who have the means and will to buy foreign cars.
"The foreign car market will expand when income levels rise," said Mr. Lee. Foreign car buyers will hear less criticism when imports become affordable to all. Source : Joong Ang ilbo 2001.06.26
EU UNCERTAIN OF S_KOREAN SHIPBUILDING
The Associated Press - Washington Post -Thursday, July 5, 2001; 2:05 PM
BRUSSELS, Belgium -- The European Union expressed pessimism Thursday about the chances of reaching a deal with South Korea in their dispute over alleged unfair pricing by Korean shipyards.
Officials said the EU was close to lodging a formal complaint with the World Trade Organization and asking the WTO to authorize temporarily subsidies for European shipbuilders while the case is examined - a process that could take two years.
EU officials said it was possible the two sides could make a last attempt at an amicable solution Thursday and Friday in informal talks at the Organization for Economic Cooperation and Development in Paris. But the Europeans saw little sign of a breakthrough.
"There hasn't been any substantial progress since the week before," said Anthony Gooch, EU trade spokesman.
He told reporters the chances of a deal that would head off a WTO complaint were "not looking likely at the moment."
The EU's head office - the European Commission - is expected to agree on turning to the WTO and adopt its proposed subsidy plan on July 18, in time for it to submit its case to the WTO's dispute settlement body when it next meets on July 24 in Geneva.
The EU claims South Korean subsidies are causing distortions in the international shipbuilding market by pricing its ships up to 15 percent below cost.
The trade group had announced plans to file a WTO complaint by June 30 unless South Korea makes concessions, but last week said it would give the Koreans a few more days.
South Korea is the world's largest shipbuilding country, taking more than 35 percent of all new ship orders worldwide last year.
ROK SHIPBUILDERS PULLING AWAY FROM COMPETITION
By Nho Joon-hun
In actuality, Korea stumbled into being the world's leader in building ships, particularly for special-purpose ocean-going vessels which cost, at times, hundreds of millions of dollars.
Not accident, but perhaps a stroke of incredible luck and the determination of a man named Chung Ju-yung, the late founder of the Hyundai business empire.
The fabled story has it that Chung was able to convince foreign maritime transport companies to give him orders, despite the fact that he had no experience nor a shipyard, with a bank note carrying a picture of the legendary iron-clad turtle ship which Admiral Yi Soon-shin developed to ward off Japanese invaders in the 15th century.
And, as the saying goes, the rest is history. After the global shipbuilding industry experienced severe recessions throughout the second half of the 1980s, companies like Hyundai Heavy Industries and Daewoo Shipbuilding have been excelling.
``The main trick is that we have moved our industry to a point where we have the type of price competitiveness that companies around the world envy,'' said Han Dae-yoon, vice president in charge of the ship building business division at Hyundai Heavy Industries.
Even as some industries in countries like Japan and the European Union dwell in recession, both Hyundai and Daewoo have the comfort of saying that they have over two years worth of back log orders.
``Over the past three decades, we have built an industry and the necessary infrastructure to ensure that we can construct vessels at half the cost of countries like Japan or France with no compromise in quality or performance,'' Han said.
The specialty, unlike in some other Korean industries, is not confined to low-end vessels and Korean companies command respect for the highest-end products, like LNG (liquefied natural gas) carriers.
Hyundai initially depended on the domestic market for securing orders for LNG carriers but last year managed to win orders for three units from Nigeria.
Averaging 135,800 cubic meters, the LNG carriers once used to fetch as much as $240 million but fell to as low as $150 million and recently recovered to $170 million and are moving up.
In addition to LNG carriers and crude oil tankers, Hyundai also has a commanding position in Ropax vessels (Roll-on-roll-off car ferries), and ultra-large and very-large container ships.
These brisk activities have made it possible for Hyundai to achieve a total turnover of $2.9 billion last year with plans to increase this further to nearly $3 billion this year.
Such market presence _ based on the combination of turnover and tons produced, Hyundai had a global share of around 16 percent _ Hyundai is making strides to move into other high-end markets, including the construction of cruisers, an area in which European shipbuilder have the undisputed leadership.
Despite segmented leadership, the Korean trio of Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries, is the overall leader in the global market with the fourth being Mitsubishi of Japan.
According to statistics, Korean companies won 45 percent of all orders last year based on gross tonnage and 35 percent based on compensated GT _ that is the tonnage being weighted on the price of vessels involved.
Such performance is a significant improvement from the 33 percent in GT of 1998 when Japanese companies had 41 percent. Last year, Japanese shipbuilders had no more than a 29 percent market share.
While this is impressive, the growing market share has invited allegations of government subsidies and dumping during bidding and the European Union has threatened to formally file a complaint with the World Trade Organization (WTO).
``The EU is insisting that the Korean government provided subsidies to shipbuilders to boost their competitiveness but this is not the case. It is a matter of differences in legal interpretation,'' said Lee Gam-yeol, director general for the capital goods industry at the Ministry of Commerce, Industry and Energy.
He said any financing that shipbuilders received was through an understanding with creditors and that the government had no role whatsoever. ``Our lawyers have confirmed that such financing arrangements cannot be seen as government subsidies,'' he said.
Delegations of Korea and the EU met in Seoul recently in an attempt to work out their disputes prior to heading to the WTO but the talks ended in deadlock and another round of negotiations is scheduled for the end of this month in Brussels.
``When you look at the facts, companies around the world are choosing Korean shipbuilders because they most effectively meet their requirements.
It is free market competition and you really cannot blame Korean shipbuilders for increasing their market share,'' Lee noted.
No matter what the global market situation is, there is no denying that Korean shipbuilders are riding high as demand for high value-added vessels continue to increase.
``There has been increasing demand for high-end vessels like LNG carriers for which only a handful of companies have the technology to build,'' said Ki Won-kang, vice president in charge of specialty vessel marketing at Daewoo Shipbuilding.
He said aggressive overseas marketing has meant that Daewoo has won orders for as many as eight LNG carriers from countries like Australia and Belgium and negotiations are underway for other projects.
``We are focusing on our expertise in specialty vessels and utilizing our market presence both at home and abroad to continue providing customers with better products and services,'' Ki said.
Like Hyundai, Daewoo's technology expands across the board, from LNG carriers and crude oil tankers to 300,000-DWT (dead weight ton) double hull VLCCs and this is the base of its goal of reaching a turnover of 2.8 trillion won this year.
With Korean companies setting ambitious goals in terms of both turnover and orders received, there is an air of confidence, particularly with the Japanese shipbuilding industry undergoing restructuring and European companies experiencing difficulties in moving into other market segments.
email@example.com - Source Korea Times - 5/7/2001
NUCLEAR : EU TO INCREASE KEDO CONTRIBUTION TO $87.5 MILLION
The European Union (EU) plans to provide about $87.5 million by 2005 for an international project planning to build nuclear reactors in North Korea, a member of the European Parliament said yesterday.
The EU has contributed a total of $75 million to the Korean Peninsula Energy Development Organization (KEDO) since it joined the consortium, led by the United States, South Korea and Japan, in 1997.
Glyn Ford, a North Korea expert in the parliament, said the EU would play a bigger role in the provision of reactors to the North, which he said is crucial to regional peace and security in Northeast Asia.
Ford unveiled the EU plan at a seminar in Seoul on "Change on the Korean Peninsula: the Relevance of Europe."
Ford said the EU would continue to support the KEDO project, though the consortium suffers from financial problems and construction delays.
"But with past, current and future delays, it will be a surprise if the first light-rater reactors are completed before 2010 and if the total cost is not at least double the initial esitmate of $4.5 billion," he said.
The reactor project, however, warrants such international efforts, he said, as it will prevent North Korea from facing the crisis of collapse and trying to restart its suspended nuclear programs.
"$9 billion is a small price to pay to avoid the global economic environmental and humanitarian tragedy that could otherwise result," he said.
Ford visited Pyongyang in April 1999 to discuss exchanges between the European Parliament and the North's Supreme People's Assembly.
firstname.lastname@example.org - By Hwang Jang-jin Source : Korea Herald - 2001.06.20
KEPCO PUSHING FOR POWERCOMM SALE AGAIN
Korea Electric Power Corp. (KEPCO) plans to put its affiliate Powercomm back on the auction block, officials at KEPCO and Powercomm said yesterday.
KEPCO will launch the sale of the communications network provider by posting a bidding notice around June 29 with the actual bidding set for October.
KEPCO plans to unload 30 percent of its old shares and 5 percent of its new shares through the bidding.
The company is already meeting with a number of companies expected to participate in the bidding - SK Telecom, LG Telecom and Pohang Iron and Steel Co. (POSCO) - to explain how the process will work.
KEPCO intends to find a majority shareholder for the affiliate through a strategic alliance, which could change the layout of the local communication industry.
The company managed to sell only 10.5 percent of its shares in Powercomm in the first bidding last July, with POSCO and SK Telecom each buying 5 percent. The privatization of Powercomm, targeted for the end of this year, had to be shelved for the time due to lack of investor interest.
KEPCO and market analysts are not sure whether it will find enough buyers for its Powercomm shares this time either.
Powercomm is the second largest communications network firm with a fiber optic cable network stretching over 3,678 km.
Source : Korea Herald 2001.06.22
GOV'T TO SUPPORT LOCAL SOC PROJECTS
The Ministry of Commerce, Industry and Energy said yesterday that it would increase support for local governments' social overhead capital (SOC) projects to help them attract more foreign investments.
Specifically, it will designate the most promising of ongoing projects and then set them up with top consulting firms to receive professional advisory services as well as overlooking everything from the analysis of prospects to the creation of the offering memorandum for each, it said.
For the first phase, the ministry named five projects in five different districts. They are DMC's (Digital Media City) high-tech business district development, the building of a new logistics complex and oceanic center at the mouth of the Nakdong River in Busan, construction of a five-star hotel and Daegu Trade Center in Daegu and the building of Ulsan bridge and a highway in Ulsan.
Each of these projects has been paired with leading consulting and accounting firms including BHP Korea, Ltd., with the Ministry picking up 70 percent of the bill for the consulting services, at an estimated cost of 686 million won.
MOCIE hopes to attract a combined total of $2.087 billion in foreign investment at the end of its efforts, it said.
"We decided to step in the local governments' SOC projects because despite talk following the financial crisis that the local governments would work to bringing in more foreign investment, there hasn't been much progress," a MOCIE official said.
"We believe that the problem may be in the planning of the projects themselves, as we've concentrated too much on just promoting them so far," he said.
Following the advice of the consulting professionals, the Ministry will pursue stronger investment-attracting plans like improving business infrastructure in the project districts and scheduling more road shows, it said.
Meanwhile, the ministry is currently working on developing cooperation with other government branches like the Construction and Transportation Ministry, Maritime Affairs and Fisheries Ministry, Planning and Budget Ministry and 16 local governments to discover other areas that could be improved to draw more foreign investments.
Source by: Korea Herald (2001.07.13)
2ND BRIDGE FOR INCHEON AIRPORT DELAYED 6 MONTHS
The project to build a second suspension bridge connecting Songdo City and Inchecon International Airport will start in the second half of next year, a delay of more than six months from the original plan, the Ministry of Construction and Transportation said yesterday.
"England's AMEC was selected as a preferred bidder for the project since no private company applied for the public bidding, but it would be difficult to embark on construction by the end of the year as planned," a ministry official said.
To secure transparency and credibility in the project, an advance assessment is necessary in addition to negotiations on the method of the contract and the ratio of national funding, the ministry explained. Therefore, it would take at least one year to decide these factors before beginning the layout for the construction, it said.
As a result, the project, which was supposed to begin in December, and be completed in 2006, will begin in the latter half of next year, finishing in early 2007.
AMEC submitted a plan last February to construct a 10.25 km suspension bridge connecting Songdo City and Incheon International Airport region, which will cost 1.5 trillion won, including 30 million won provided by the government. - (email@example.com) - Source : Korea Herald - 2001.06.28
DAEWOO MOTOR - PATRON, PROPHETE ET VRP DE L'EMPLOI
Engoncé dans un costume bleu marine, l'homme s'approche d'un ouvrier, s'agenouille devant lui, abaisse son front jusqu'à terre et le supplie : "Acceptez mes excuses les plus sincères, vous et votre famille, pour avoir été obligé de vous licencier. Je suis déterminé à vous retrouver un emploi."
Les méthodes de Lee Jong Dae, chargé par la justice du redressement judiciaire de Daewoo Motor, sont totalement atypiques. Appliquant à la lettre la philosophie confucianiste qui prévaut en Corée, ce patron par intérim considère que "chaque employé est un enfant de l'entreprise" et qu'à ce titre celle-ci lui doit protection et assistance.
Daewoo, conglomérat autrefois deuxième entreprise coréenne mais aujourd'hui coquille vide dont l'ex-patron Kim Woo Chong est en fuite pour détournement de fonds, a été mis en redressement judiciaire en novembre 2000. La responsabilité de la partie automobile a échu à M. Lee, un dirigeant appointé par le tribunal et spécialiste de ces situations de crise : dans son précédent poste, il s'est occupé de Kia Motors, autre constructeur en déliquescence. L'homme tente de sauver ce qui peut l'être.
Les banques ont refusé de mettre encore la main au porte-monnaie si une restructuration n'était pas réalisée. Restructuration que réclame également le dernier acheteur potentiel de l'entreprise, l'américain General Motors. M. Lee a donc licencié 7 000 employés. Depuis, il paie de sa personne pour leur retrouver un travail.
Deux fois par mois, il parcourt aux heures de pointe les trains de banlieue avec un panneau rouge où figure en grands caractères : "Aidez à sauver Daewoo Motor". En mars dernier, il a envoyé 26 000 lettres à d'autres entreprises en leur demandant de bien vouloir engager chacune au moins un des licenciés de Daewoo Motor. Il s'est personnellement déplacé dans 130 compagnies avec lesquelles le constructeur est en affaires pour leur demander de reprendre d'anciens salariés.
Les parlementaires sont aussi une de ses cibles. Un lundi après-midi, Lee Jong Dae s'est rendu à l'Assemblée nationale coréenne, au bureau des députés, et a hurlé : "Chaque véhicule Daewoo vendu donne de l'espoir à mes employés !" Un programme "Vendeurs honoraires de Daewoo" s'est aussitôt mis en place parmi les politiques, dont les membres pressent leurs amis et connaissances d'acheter les voitures du constructeur coréen.
Tous ces efforts rencontrent cependant peu de succès. Le programme "Vendeurs honoraires de Daewoo" ne réunit à ce jour que 17 membres et a réalisé 74 ventes, 601 licenciés ont retrouvé un emploi grâce à Lee Jong Dae. General Motors refuse de commenter ce comportement. Le futur repreneur pourrait pourtant en être grand bénéficiaire. La politique des courbettes désarme la contestation syndicale et la prépare au pire. Choo Chae Young, l'ouvrier devant lequel Lee Jong Dae s'est prosterné, l'a aussitôt relevé et enlacé : "Vous n'êtes responsable de rien. Merci de ramener l'espoir dans nos vies." d'après The Wall Street Journal Source : Courrier International - 9/7/2001
BNP PARIBAS ET SHINHAN FINANCIAL GROUP SIGNENT UN PROTOCOLE D'ACCORD POUR LA MISE EN PLACE D'UN PARTENARIAT STRATEGIQUE EN CORÉE
BNP Paribas et la Societe Holding Shinhan Financial viennent de signer, le 28 juin a Singapour, un protocole d'accord en vue de la mise en place d'un partenariat strategique global en Coree. Ce partenariat prevoit le developpement d'importantes activites de services financiers sur le marche coreen, grâce a la mise en commun des competences complementaires des deux groupes. Ces derniers vont notamment constituer des filiales communes dans le domaine du credit a la consommation et de la bancassurance, par le biais de Cetelem et de Cardif.
Ce protocole d'accord a ete signe par Choi Young-hwi, Vice-Président de Shinhan Bank et Directeur du bureau constitutif de la Societe Holding, et par Philippe Cottus, Directeur regional de BNP Paribas pour la zone Asie-Pacifique, base a Singapour. Aux termes de ce protocole, BNP Paribas va prendre une participation dans Shinhan afin d'etablir un partenariat a long terme entre BNP Paribas et la Societe Holding Shinhan Financial (dont la denomination est pour l'instant provisoire) et qui sera creee prochainement.
De meme, le 28 juin, les conseils d'administration des societes Shinhan Bank, Shinhan Securities, Shinhan Capital et Shinhan Investment Trust Management se sont reunis simultanement pour transferer leurs activites au sein de la Societe Holding Shinhan Financial. Ces conseils d'administration ont decide d'entamer les procedures juridiques de constitution de la Societe Holding par transfert d'actions et en ont vote les modalites. Il a egalement ete decide de tenir une assemblee generale des actionnaires le 9 août, en vue d'approuver le transfert d'actions qui sera execute le 1er septembre. En outre, les conseils d'administration ont approuve les statuts de la Societe Holding.
Le comite constitutif de la Societe Holding a soumis une demande d'autorisation pour creer la Societe Holding aupres de la Financial Supervisory Commission, parallelement a la decision des Conseils d'Administration.
Conformement au protocole d'accord, BNP Paribas va acquerir une participation de 4 % dans la Societe Holding Shinhan Financial, plafond maximum de prise de participation d'un actionnaire conformement aux statuts de cette societe. BNP Paribas aura un representant qui participera a la gestion de la societe. La prise de particpation interviendra au plus tard 6 mois apres la creation de la Société Holding.
En outre, le protocole d'accord prevoit que Cetelem et Cardif, deux filiales detrenues a 100 % par BNP Paribas, pourront se developper sur le marche coréen du crédit a la consommation et de la bancassurance par le biais de filiales communes, detenues a 50/50 avec Shinhan Group.
- Cetelem, n°1 en Europe du crédit a la consommation, est repute pour son savoir-faire en matiere de scoring, de gestion des risques et de marketing. Au sein de leur filiale commune, Cetelem apportera son savoir-faire et Shinhan Group sa clientele et ses reseaux de distribution.
- Cardif commercialise des produits d'assurance par le biais de contrats de partenariat avec des banques et des etablissements financiers, mais aussi des courtiers et des conseillers financiers independants. BNP Paribas occupe la 4e place parmi les compagnies d'assurance-vie en France avec ses deux filiales Cardif et Natio-Vie.
Le groupe realise 20% de son chiffre d'affaires hors de France, dans 24 pays. Bien que la bancassurance ne soit pas encore totalement autorisee en Coree, mais dans un contexte de dereglementation probable prochainement, la Societe Holding Shinhan Financial et BNP Paribas sont convenues que leur filiale commune commercialisera les produits de bancassurance de Cardif (assurances credit, assurances de type protection individuelle, etc.) a l'ensemble de la clientele de Shinhan Group, notamment de Shinhan Bank.
Ce partenariat permettra d'optimiser les synergies, d'offrir des services performants a la clientele coreenne, et constitue pour BNP Paribas une opportunite de se renforcer sur le marche asiatique. La Societe Holding Shinhan Financial offre la notoriete de sa marque et son important reseau sur le marche local, BNP Paribas apporte son savoir-faire et sa technologie. Les deux parties ont conclu cette alliance avec l'objectif de creer de la valeur pour leurs actionnaires et de fournir des services de qualite a leurs client.
Par ailleurs, Shinhan Financial Group et BNP Paribas ont annonce leur intention de developper davantage leur cooperation dans un proche avenir, dans des domaines tels que le metier titres et la banque privee. Le calendrier pour chacun des metiers sera fixe dans le contrat final.
Ce partenariat strategique entre Shinhan et BNP Paribas ne peut pas etre compare avec d'autres prises de participation de societes etrangeres dans des etablissements financiers coreens. En effet, BNP Paribas sera un investisseur operationnel a long-terme, et les deux societes mettront en commun leurs savoir-faire et leurs moyens dans tous les domaines d'activite qui releveront a terme de la Societe Holding Shinhan Financial. Ce partenariat devrait faire figure de pionnier dans la restructuration en cours du secteur financier en Coree.
M. Lee In-ho, President de Shinhan Bank, a declare . "Depuis le debut de l'annee, nous avons eu de nombreux entretiens et mene de nombreuses negociations en vue de trouver le bon partenaire strategique pour nous aider a innover dans nos competences de base telles que le developpement de produits, la commercialisation et la gestion du risque au sein de chacune des filiales de Shinhan Group. Je suis particulierement heureux que nous ayons enfin trouve le partenaire avec lequel nous pourrons envisager une croissance a long terme". M. Lee In-ho a egalement exprime sa grande confiance dans les synergies qui naitront de ce partenariat, avant de commenter : "BNP Paribas est une institution financiere europeenne de premier plan. 80 des 100 premieres entreprises au monde sont des clients de BNP Paribas. Grâce a ce partenariat strategique, les clients de la Societe Holding Shinhan Financial vont beneficier de services financiers de pointe differents de ceux qui existent aujourd'hui en Coree. Cela creera de la valeur pour l'actionnaire de la Société Holding."
Michel Pebereau, President-Directeur General de BNP Paribas, a commente: "Je suis ravi de la signature de cet accord en vue de la creation de filiales communes entre Cetelem et Shinhan d'une part, et Cardif et Shinhan d'autre part. Il s'agit, pour Cetelem, d'une occasion extraordinaire de devenir un operateur de premier plan dans le domaine du credit a la consommation en Coree, et pour Cardif de beneficier des opportunites de dereglementation du marche de la bancassurance dans ce pays. Je suis certain que ce partenariat sera durable et fructueux."
BNP Paribas, l'un des tous premiers groupes europeens de services financiers et l'une des principales societes françaises, est un acteur important en Asie et a une presence active aux Etats-Unis. BNP Paribas developpe trois grands domaines d'activite : la Banque de Financement et d'Investissement ; la Banque Privee, Gestion d'Actifs, Titres et Assurance ; la Banque de Detail. BNP Paribas Capital regroupe les activites de Private Equity du groupe. BNP Paribas est la deuxieme banque de la zone euro par l'importance de ses resultats, avec un benefice net de EUR 4,12 milliards pour l'exercice 2000, et une rentabilite des capitaux propres de 20,9%. Le groupe emploie 80 000 personnes dans le monde et est present dans 87 pays.
En Coree, le groupe est présent au travers d'une filiale, de Cetelem Korea pour le credit a la consommation, et de la succursale locale de Cardif.
Shinhan Group (qui comprend Shinhan Bank, Shinhan Securities, Shinhan Investment Trust Management, Shinhan Capital et Shinhan Life Insurance), l'un des principaux groupes financiers de Coree, propose une large gamme de produits, qui vont de la banque de detail aux cartes de crédit, en passant par la gestion d'OPCVM, les services bancaires aux entreprises. Shinhan Bank est la deuxieme banque de Corée en termes de capitalisation boursiere. Leader du marche en termes de performance et de qualite de ses actifs, elle a degage, en 2000, un resultat net de 327 millions d'euros. Shinhan Bank occupe l'une des premieres places dans les services bancaires au segment des entreprises de taille moyenne, mais aussi dans les activites de banque en ligne, avec une offre de produits innovants. Actuellement, Shinhan Bank compte 328 agences et 5,2 millions de clients.
En améliorant la transparence de sa gestion et par l'apprentissage de techniques financieres avancees par le biais de son alliance strategique avec une institution financiere d'envergure mondiale telle que BNP Paribas, la Societe Holding Shinhan Financial pourra s'engager dans un processus de developpement actif, tourne vers l'avenir, et qui devrait constituer une percee majeure pour le secteur de la finance en Corée.
Source : BNP-Paribas - 28/06/2001
SHINHAN-PARIBAS VENTURE EYES MARKET
A consumer banking joint venture between Shinhan Bank and PNP Paribas will tap into a niche market of people in low- and middle-income brackets, a Shinhan official said yesterday.
"Initially, the joint venture will focus on the low and middle classes," the official said. "Then, it will branch out into revolving loans, credit cards, and home improvement lending."
Announcing a strategic alliance recently, Shinhan and the French bank agreed to establish a joint venture specializing in consumer banking this year - Source : Korea Herald - 2001.07.12
BNP PARIBAS LANCE CONNEXIS EN ASIE, UNE OFFRE GLOBALE EN LIGNE DESTINEE AUX ENTREPRISES
BNP Paribas lance Connexis en Asie, une solution globale en ligne qui offre la possibilité aux entreprises de gérer leurs comptes en temps réel. Connexis permet, quels que soient l'heure et l'endroit, d'accéder en quelques clics aux services bancaires de BNP Paribas en Asie. Innovant et évolutif, ce produit Internet est aussi convivial et totalement sécurisé.
Connexis est à la fois un outil de reporting et un outil transactionnel qui permet aux entreprises d'optimiser la gestion de leur trésorerie. Il permet de suivre en temps réel les mouvements et les positions de tous les comptes inscrits dans les livres de BNP Paribas en Asie (comptes courants, dépôt, engagements, ...), de procéder automatiquement à des mouvements de rééquilibrage et d'initier des ordres de paiement unitaires et de masse vis à vis de tiers.
Connexis s'accompagne d'un engagement de qualité sur le délai de traitement des opérations et sur l'accès à des informations en temps réel. Ce service est parfaitement sécurisé grâce à un système de signature électronique conjointe qui s'adapte à l'organisation hiérarchique de chaque entreprise, et à un mode de transmission crypté qui assure l'intégrité, l'authentification et la confidentialité du message.
Il sera prochainement enrichi par d'autres fonctionnalités afin de couvrir l'ensemble des besoins des entreprises (reporting multi-banques, consolidation de comptes, change, ouverture de lettres de crédit, gestion du poste client,...), et de constituer pour cette clientèle une offre complète en ligne. Il sera ensuite étendu à d'autres implantations géographiques du groupe BNP Paribas.
Connexis est accessible à travers le nouveau portail Asie (http://asia.bnpparibas.com) qui regroupe l'ensemble des sites asiatiques de BNP Paribas (Inde, Hong-Kong, Chine, Corée du Sud, Indonésie, Malaisie, Philippines, Singapour, Taïwan, Thaïlande, Vietnam, Australie).
Source : BNP-Paribas - 06/07/2001
COFACE LAUNCHES @RATING SERVICES - By Seo Jee-yeon
The French Coface group, a credit insurance and credit information provider, has landed in the Korean corporate credit market armed with its web-based corporate credit rating program, @rating.
At a press conference at the Chosun Hotel yesterday, Coface president Jerome Cazes said that @rating is the first company rating system in the world to provide insurable protection services. He explained that it offers risk management for transitions between companies listed in @rating's database.
``Thanks to the Internet revolution, it is possible to inspire trust from worldwide trade partners on the basis of stable credit rating by making transactions quick, simple and global with low cost,'' the president said.
He said @rating provides three levels of service: credit rating, quality labeling, and credit protection.
At the first level, Cazes explained, ``@rating measures the financial strength of companies in over 90 countries on a single, simple, and consistent scale, ranging from X, to 1@, 2@, 3@, and 4@.''
``An X level company is a weak company. You can work with them, but you have to take a risk. If you add an @, this means that it is safe enough to work with. The number of @s gives you the amount of credit that you can safely extend to this company.''
``You can extend up to $20,000 safely to a 1@ company, $50,000 to a 2@, $100,000 to a 3@, and more than $100,000 to a 4@ company,'' he said.
The @rating quality label certifies the financial strength of a company, and the rating is generally good for one year. All company partners worldwide get free access to this quality label.
Cazes stressed that @rating is important not only for the dominant Korean chaebol, banks and Internet companies, but also for the many more numerous small enterprises spread across the country.
Asked about the credit level of such small companies, Cazes answered that, ``Overall, small companies' credit rating is generally undervalued. Many small companies achieve a 2@ grade, higher than that of many German companies. To upgrade their image though, small companies need to use an international rating system.''
The @rating system of some 35 million companies can be checked at Coface's homepage. The group has already registered 6,000 local companies through tie-ups with the National Information and Credit Evaluation Inc., The Korea Export Insurance Corporation, the Korea Trade-Investment Promotion Agency, and EC Plaza.
firstname.lastname@example.org Source : Korea Times 2/7/2001
KOREAN AIR BOARDS AIR FRANCE AND DELTA AIR LINES CARGO VENTURE
Korean Air has officially joined Air France and Delta Air Lines as a founding member of a cargo joint venture, to be launched later this year. (6/21/2001)
Apparently, the three carriers are also founding members of the SkyTeam Cargo alliance with Aeromexico and CSA Czech Airlines. This new venture will offer customers the benefits of a combined sales force, a centralised reservation and service centre, a comprehensive route network and a common product line.
In addition, the joint venture will be based in Atlanta with regional offices in Atlanta, New York, Chicago and Los Angeles, and will be managed and staffed by experienced cargo employees of all three carriers.
Furthermore, the company will be equally owned by Air France, Delta Air Lines and Korean Air, and governed by a joint board of directors. The venture will provide career opportunities to cargo employees in the areas of sales and sales support.
LA SETB TRANSFÈRE LA FABRICATION DES VELOURS DE SOIE EN CORÉE
La Tribune - édition du 04/07/2001
LA SOCIÉTÉ d'exploitation des Etablissements Bonnet à Jujurieux a transféré le tissage de soie écrue en Corée. La fermeture de l'atelier a entraîné le licenciement de 10 personnes. Elle est liée au départ du technicien responsable de ses métiers, lequel n'a pas pu être remplacé, car il n'existe plus de formation qualifiante pour les métiers artisanaux. La SETB, qui crée des velours de soie façonnés très haut de gamme pour l'industrie du luxe et de la haute couture, devrait réaliser près de 18 millions de francs de chiffre d'affaires cette année, dont 80 % à l'export. - H. Ly.