LA LETTRE DE CORÉE Octobre 2003 Centre Coréen du Commerce Extérieur et des Investissements http://www.kotraparis.com
KOTRA PARIS - 19 avenue de l'Opéra - 75001 Paris Téléphone : +33 (0) 155 35 88 80 - Télécopie : +33 (0) 155 35 88 89 - email : firstname.lastname@example.org M. Dong Wong Lee - Directeur M. Frédéric Claveau - Responsable Investissements
¤ RELATIONS INTERNATIONALES
¤ POLITIQUE ECONOMIQUE, MACRO-ECONOMIE ET RESTRUCTURATIONS
En difficulté, le président sud-coréen joue à quitte ou double
¤ SECTEURS ECONOMIQUES
¤ ENTREPRISES COREENNES
¤ ENTREPRISES FRANÇAISES
- JAPON ET CORÉE PRÊTS À NÉGOCIER UN ACCORD DE LIBRE-ÉCHANGE
La conclusion d'un "Free Trade Agreement" nippo-coréen créerait un marché de 170 millions de personnes avec un PNB combiné de 4.560 milliards de yens
Jusqu'ici relativement frileux pour nouer des partenariats commerciaux, le Japon et la Corée du Sud vont intensifier leurs négociations en vue de créer une zone de libre échange. Dans un entretien accordé au Financial Times, le ministre japonais des Affaires étrangères, Yoriko Kawaguchi, a indiqué que le gouvernement nippon allait proposer d'entamer des négociations avec la Corée du Sud à l'occasion du sommet de l'APEC (Forum de coopération économique en Asie-Pacifique), la semaine prochaine, à Bangkok.
A l'exception d'un accord conclu l'année dernière avec Singapour, les Japonais étaient jusqu'ici restés à l'écart des accords bilatéraux en raison surtout de l'opposition de son puissant lobby agricole. Mais la concurrence est telle qu'il devient difficile pour l'Archipel de rester à l'écart. Résultat, le Japon vient d'entamer des négociations avec le Mexique et l'accord pourrait être scellé dans les tout prochains jours, lors de la visite du président mexicain Vicente Fox au Japon.
Même résistance du côté coréen qui jusqu'ici, est resté à l'écart des FTA ("Free Trade Agreement"). Séoul négocie depuis près de cinq ans avec le Chili mais se heurte, comme le Japon, à l'opposition des agriculteurs. Reste que selon le Korea Institute for International Economic Policy, la Corée se prive de plus de 35 milliards d'euros d'exportations par an en ne concluant pas d'accord de libre-échange.
Aujourd'hui, les estimations des experts sur la conclusion d'un "Free Trade Agreement" nippo-coréen donnent à réfléchir : un tel accord créerait un marché de 170 millions de personnes avec un PNB combiné de 4.560 milliards de yens. Soit presque la moitié du PNB des Etats-Unis !
Source : Les Echos - 13/10/03
- SÉOUL ET TOKYO VONT NÉGOCIER UN ACCORD DE LIBRE-ÉCHANGE
Un an après avoir conclu un premier traité avec Singapour, le Japon devrait, à l'occasion du sommet des chefs d'Etat et de gouvernement de l'Apec, lancer des discussions avec Séoul en vue d'en signer un second.
Le Japon commence à mettre de l'eau dans son vin. L'opposition de la deuxième puissance économique de la planète aux accords de libre-échange bilatéraux n'est plus aussi catégorique. Un peu plus d'un an après avoir conclu un premier traité d'ambition modeste avec Singapour, le Japon devrait, la semaine prochaine, à l'occasion du sommet des chefs d'Etat et de gouvernement du Forum économique Asie-Pacifique (Apec), lancer officiellement des discussions avec son voisin sud-coréen en vue d'en signer un second. Selon Séoul et Tokyo, l'objectif serait de pouvoir conclure dès 2005. Et, cette semaine, la visite dans l'Archipel du président Fox devrait également être l'occasion de conclure un accord de libre-échange avec le Mexique, un partenaire significatif (le Japon est son deuxième fournisseur et son trente-quatrième débouché).
L'évolution de la position japonaise ne reflète cependant pour l'instant l'opinion que d'une partie du gouvernement, de l'administration et des milieux économiques. Si le Premier ministre, le ministre des Affaires étrangères, le ministre de l'Industrie et du Commerce extérieur, ainsi que les fonctionnaires de ces ministères s'affirment comme des " libre-échangistes " modérés, ils trouvent face à eux les députés des circonscriptions rurales, ainsi que les représentants de divers secteurs, comme l'agriculture, qui redoutent l'ouverture des frontières. La pression du patronat industriel japonais ne cesse cependant de monter.
Les industriels s'impatientent
Estimant être désavantagés face à leurs concurrents occidentaux, les grands industriels japonais exigent des actes et plus seulement des promesses. Hier, ministres japonais et mexicains cherchaient encore à trouver un compromis afin que le président Fox ne reparte pas les mains vides. En cas d'échec - qui reste envisageable en cette période électorale au Japon -, les officiels nippons pourront toujours se donner bonne conscience en reportant l'attention sur l'ouverture des négociations avec les Sud-Coréens.
Source : Les Echos - 14/10/03
- BIZ COMMUNITY WELCOMES START OF KOREA-JAPAN FTA TALKS
The business community yesterday welcomed an agreement reached between President Roh Moo-hyun and Japanese Prime Minister Junichiro Koizumi on the sidelines of the Asia-Pacific Economic Cooperation meeting that the two nations will start talks for a free trade agreement (FTA) before the end of this year.
``We hope the start of FTA talks with Japan will accelerate South Korea¡¯s drive to form FTAs with other trading partners,¡¯¡¯ said a statement issued by five leading business organizations, including the Federation of Korean Industries (FKI).
The business lobby groups also urged the National Assembly to approve the South Korea-Chile FTA before the end of the ongoing session.
``A bilateral trade pact is a vital means of facilitating trade. If Korea ignores the trend, the national economy will be hit hard and we will be isolated politically and diplomatically,¡¯¡¯ it said.
The groups added that the delay in the FTA with Chile is linked to a drop in the export of automobiles, cell phones and color television sets.
``The trade pact with Chile would have little impact on the agricultural sector, which is the main reason for the delay,¡¯¡¯ it said.
While pushing for FTAs with trade partners, the business community called on the government to prepare compensation measures for industries where setbacks are predicted.
Seo Jee-yeon Staff Reporter email@example.com
Source : Korea Times - 20/10/03
- SOUTH KOREA, JAPAN MOVE TO OPEN FREE TRADE
A free trade agreement (FTA) between South Korea and Japan picked up momentum, as the nations' leaders agreed to launch full negotiations on concluding an FTA this year.
South Korean President Roh Moo-hyun and Japanese Prime Minister Junichiro Koizumi, meeting on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum summit, agreed to start the talks later in the year.
For South Korea, an FTA with Japan is expected to bring about long-term economic benefits, although the country may have to bear the brunt of Japan's comparative advantage in some sectors in the short term.
Analysts said that in the long term, however, the situation will likely be reversed when Tokyo's investment and technology transfers are expected to tip the scales in favor of Seoul.
Despite enormous future benefits, the wide differences in economic might and technology would force South Korea to specialize in low value-added products and sustain other side effects, some analysts warned.
The sectors to suffer most will be South Korea's automotive, machinery and electronics industries. South Korea levies tariffs of about 8 percent on such imports, while Japan imposes almost no tariffs on them.
In a span of one or two years South Korea might also suffer a growing trade deficit due to Japan's better competitiveness in the field of manufactured goods, according to analysts.
Elimination of cross-border tariffs, however, will not likely affect the semiconductor industries of either country because South Korea and Japan both specialize in memory and non-memory chip manufacturing. In addition, under an information technology agreement, 60 percent of semiconductor items are free from cross-border tariffs.
In a report, the Korea Institute for International Economic Policy (KIEP) expressed guarded optimism about the effects of such an agreement.
In the short term, the institute said, the FTA will increase South Korea's trade deficit with Japan by US$6.09 billion annually and the overall trade deficit by $1.54 billion. It would also make South Korea's gross domestic product (GDP) dwindle by 0.07 percent.
For Japan, its economy will grow an additional 0.04 percent and its trade surplus with South Korea will rise $6.09 billion, the report showed.
In the long term, however, South Korea's GDP will grow an extra 2.88 percent, with the overall trade surplus growing $3.01 billion, according to the KIEP.
Concerning the FTA, a joint study group of academic, business and government representatives issued a report on October 2 calling on the two governments to launch talks at an early date with an eye to concluding a comprehensive FTA within a "reasonable time framework".
The report concluded that a South Korea-Japan FTA will help improve Korea's trade balance with Japan in the long run, despite short-term shocks to the Korean economy.
"A bilateral FTA will be mutually beneficial and contribute to regional peace and prosperity," the report said, which also called for a comprehensive FTA covering the abolition of tariffs, investments, service and economic cooperation.
Smooth negotiations would enable the countries to sign an FTA sometime over the next two years, but it is still unclear whether the two sides can reach an agreement without a hitch, as domestic companies in both Japan and South Korea are likely to put up roadblocks.
Source : Asia Pulse/Yonhap/Asia Times - 21/10/03
- CHINA PLAYS GREATER ROLE IN NORTH KOREA'S ECONOMY
Isolation caused by a prolonged stand-off over North Korea's nuclear weapons drive has forced the reclusive country to rely further on trade with China, South Korean government data showed.
North Korea's trade with China rose 16 percent from a year ago to 378 million dollars in the first six months of this year, according to the Korea Trade-Investment Promotion Agency in Seoul Thursday.
In the first half, the North's exports to China increased four percent year-on-year to 108 million dollars while imports surged 22 percent to 270 million dollars.
The North's oil imports from China also increased sharply this year, it said.
North Korea imported 472,167 tonnes of crude oil from China last year, compared to 389,000 tonnes in 2000 and 579,000 tonnes in 2001, the South's foreign ministry said in a report to parliament.
The North's energy shortage has deepened after Washington and its allies stopped an annual shipment of 500,000 tonnes of fuel oil in November last year after accusing Pyongyang of running a nuclear weapons program. The North has relied heavily on outside donations to feed its 23 million population after failures in its centralized economy and natural disasters.
Limited economic reforms introduced last year have failed to bring about increased output because of chronic shortages of materials and the nuclear crisis.
The Japanese daily Asahi Shimbun reported last week that North Korea sharply devalued its currency recently, apparently hoping to boost exports in a bid to revive the battered economy
Source : AFP/ChannelNewsAsia - 09/10/03
- EN DIFFICULTÉ, LE PRÉSIDENT SUD-CORÉEN JOUE À QUITTE OU DOUBLE
Affaibli par la dégradation économique et politique que connait la Corée du Sud, le président Roh Moo-hyun, élu il y a moins d'un an, a proposé au Parlement d'organiser à la mi-décembre un référendum sur son maintien au pouvoir.
La meilleur défense, c'est l'attaque : Roh Moo-hyun a, semble-t-il, fait de cette maxime sa nouvelle règle de conduite. Mis à mal par un scandale financier touchant l'un de ses plus proches collaborateurs, tenu pour responsable de la récession économique et jugé incapable de trouver une issue à la crise nucléaire lancinante avec Pyongyang, le président sud-coréen a décidé de passer à l'offensive. En fonction depuis huit mois seulement, le très imprévisible hôte de la Maison-Bleue a proposé, hier, au Parlement d'organiser " autour du 15 décembre " un référendum sur son maintien au pouvoir. " Je suis parvenu à un point où je ne peux plus assumer la présidence ", a-t-il déclaré devant les députés.
" Roh Moo-hyun est un adepte de la démocratie directe. Il aime dialoguer directement avec le peuple , explique un diplomate européen en poste à Séoul. Il a été élu président l'an dernier, un peu à la surprise générale, rappelle-t-il. Minoritaire dans son propre parti, il n'appartenait pas à l'establishment, qui ne peut le supporter. " Un référendum constitue un bon moyen de contourner la classe politique sud-coréenne, qui ne le ménage pas. Ou du moins de la mettre au pied du mur.
Car cet appel aux urnes a des allures de coup politique. La Constitution ne permet pas d'organiser de référendum, sauf sur les questions de sécurité nationale. Il faudrait donc la modifier dans les deux mois qui viennent, a reconnu hier le président. Ce qui paraît peu probable. La plupart des députés ne veulent lui faire aucun cadeau. Or un vote de confiance pourrait bien en être un. Selon deux récents sondages, une large majorité de Sud-Coréens revoterait pour Roh Moo-hyun. Tombée à 25 % ces dernières semaines, la cote de popularité du chef de l'Etat est remontée en quelques jours à 40 %. L'hôte de la Maison-Bleue n'en reste pas moins affaibli. La mise en cause de l'un de ses proches conseillers, Choi Do-sul, un ami de vingt ans, dans la faillite frauduleuse, l'hiver dernier, du conglomérat SK, lui a fait beaucoup de tort. Roh Moo-hyun avait été élu sur des promesses de moralisation de la vie politique et de rupture avec les comportements de ses prédécesseurs, tous impliqués dans des scandales de corruption.
Pas de majorité au Parlement
Le président pâtit aussi de son manque d'assise politique. Sa formation d'origine ne dispose pas de la majorité au Parlement. Et l'opposition, qui n'a jamais digéré l'élection de cet " outsider ", fait tout pour lui mettre des bâtons dans les roues. Son parti a, en outre, éclaté le mois dernier, en raison des différends entre ses partisans, des jeunes réformateurs pour la plupart, et la vieille garde. Roh Moo-hyun ne peut ainsi plus compter que sur le soutien de 42 députés sur 273.
Le président souffre enfin de la sérieuse baisse de régime de l'économie. Pour la première fois depuis la crise financière asiatique de 1997, la péninsule a connu une récession au premier semestre 2003 : le PIB a reculé de 0,4 % au premier trimestre, de 0,7 % au deuxième. Et la machine peine à repartir. Le FMI table sur une croissance limitée à 2,6 % en 2003 contre 6,3 % l'an dernier. Si les exportations se redressent, en dépit de l'appréciation du won face au dollar, la consommation demeure déprimée. Le brutal coup d'arrêt donné au boom de crédit à la consommation, voilà un an, par la Banque de Corée et les établissements financiers se fait toujours sentir.
" Les Sud-Coréens n'ont pas le moral, reconnaît Philippe Li, avocat d'affaires à Séoul. Beaucoup s'inquiètent de la montée en puissance de la Chine sur le plan industriel et des délocalisations. " Et ce n'est pas la crise politique qui risque de leur donner de l'allant. Même si, au fil des ans, ils ont appris à faire avec ces brusques accès de tension. Blasée, la Bourse de Séoul n'a abandonné hier que 0,11 %.
C'est l'antithèse du politicien coréen traditionnel. Plutôt jeune (cinquante-sept ans), décontracté et libéral, le président sud-coréen se veut proche de son peuple. Roh Moo-hyun n'a pas fréquenté les grandes universités de Séoul comme ses adversaires politiques, mais a pris des cours du soir. D'origine modeste, cet ancien avocat des droits de l'homme sous la dictature militaire est un peu perçu comme un porte-drapeau par les jeunes Coréens qui veulent s'affranchir du très pesant modèle social confucéen.
STÉPHANE DUPONT - Source : Les Echos - 14/10/03
- INVESTOR'S DICTIONARY
How much tax must be paid during customs clearance for importing a used car (foreign brand) when moving to Korea?
Certain conditions have to be fulfilled in order to be able to import a used car when moving to Korea. For instance, the car has to be registered as a private possession before departure. Furthermore, it is necessary that the owner stay in Korea for a period of at least one year, or longer than six months if accompanied by direct family members.
The size of the car should not exceed a capacity of 9 people and should be a sedan, jeep or station wagon. Other types of cars - such as large trucks, caravans and pick-up trucks - cannot clear customs in Korea. For those types of vehicles, or if more than one car is imported, the normal conditions for the import of automobiles have to be fulfilled. This is also the case when importing cars that are for commercial use.
The taxes to be paid are 8 percent customs tax, 5 percent to 10 percent special excise tax depending on the size of the vehicle, 30 percent education tax and 10 percent VAT.
For further information, please contact Im Gyeoung-taeg at (02)3460-7561 or firstname.lastname@example.org.
Must a foreign employee of a foreign-invested company pay income taxes in Korea as well as in his or her home country?
In general, taxes are paid in both countries. However, it is possible to receive a tax deduction for a considerable amount of the taxes paid in Korea. If the status of the foreign employee has changed to "non-resident" in the home country and "resident" of Korea, taxes only need to be paid only in Korea, however, this may differ depending on the home country.
According to the income tax law in Korea, there is no distinction between a Korean and foreign citizen when referring to resident and non resident. That is, no matter what nationality, a resident is considered as someone who has a permanent address registered in Korea or has resided in Korea for a term of longer than one year.
For further information, please contact Lee Boo-yun at (02) 3460-7555 or email@example.com. - Source : Korea Times - 04/10/03
- ROK'S GEOGRAPHICAL ADVANTAGE APPEALS TO FOREIGNERS
The nation's proximity to emerging Asian markets such as China and India is one of its biggest appeals for foreign investors, state-funded trade and investment promoting agency KOTRA said yesterday.
In a survey of 40 foreign investors who participated in KOTRA's Hub Seminar in Seoul Sept. 24-26, 20.8 percent of respondents said South Korea is an attractive destination for investment thanks to its geographical proximity to Asia's key markets such as Japan, China and India.
It is the second biggest factor influencing multinational companies' investment decisions in South Korea after the nation's domestic demand (38.9 percent).
The skilled and experienced Korean workforce (12.5 percent) and the convenience in setting up a research and development centers (11.1 percent) are also major reasons in attracting foreign investors, KOTRA added.
"As part of efforts to attract foreign investors, it is important to maintain the nation's attractiveness as a export-led economy with strong domestic demand,'' it noted.
In comparison with the investment environment in China, the survey showed foreign investors think China has comparative advantage in terms of labor relations and market potential, while South Korea has better infrastructure and technology. Both nations are at a similar level in wages based on productivity and logistics fees.
When asked about where improvement is needed, labor relations topped the list with 31.6 percent followed by North Korean issues (13.7 percent) and administrative regulations (11.6 percent).
Meanwhile, 31 out of the 43 international companies from 14 countries that joined the seminar had plans to invest to South Korea over the next three years, the survey said.
The likely investors include Canada-based car part maker Magna International, FedEx and British Telecom.
"The prospects of foreign investment in the near future depend on whether the government implement its regional business hub initiatives as planned,'' KOTRA noted. - Source : Korea Times - 05/10/03
- FDI TARGET RAISED TO 14 PCT OF GDP BY 2010
Finance-Economy Minister Kim Jin-pyo yesterday said South Korea will seek to increase foreign direct investment beyond 14 percent of gross domestic product by 2010, up from the current 10 percent.
Kim, who concurrently serves as deputy prime minister, said the government will ease regulations to increase the efficiency of the logistics sector, as well as creating better living conditions for the expatriate community, in order to promote foreign investment.
In a speech at the closing session of the 12th East Asia Economic Summit in Singapore, he said Asian countries will be able to recover their economic dynamism through a freer and more open trading system.
The nation¡¯s top economic policymaker said the stalled negotiations on the Doha Development Agenda should be normalized immediately.
``We (Asian countries) will be able to reap the benefits of market enlargement and economy of scale by implementing free trade agreements (FTA),¡¯¡¯ he told leading business figures and experts attending the event, organized by the World Economic Forum.
His remarks came at a time when South Korea and Japan are set to declare the launch of official talks to forge an FTA by 2005.
``Asia accounts for one-fifth of both global gross domestic product and global trade,¡¯¡¯ he said.
The region¡¯s potential growth rate is among the highest in the world, and the combination of size and potential will enable Asia to become a powerful engine for global expansion, he added.
Kim also officially accepted a proposal for Seoul to host next year¡¯s meeting. firstname.lastname@example.org - Source : Korea Times - 14/10/03
- SMALL FOREIGN FIRMS BOOST FDI
From the abundance of SUVs and large luxury sedans clogging the narrow streets of Seoul to the sprawling palatial lobbies of the country's many luxury hotels, Koreans' predilection for all things "big" lives on. And such attitudes have permeated nearly every corner of Korean society - government economic policy planning included.
Despite the recent clamor over the continuing freefall of foreign direct investment (FDI) to Korea, seemingly very little attention has been drawn to the fact that the average size of individual investments has been shrinking significantly as well. In the two years immediately following the outbreak of the financial crisis of late 1997, the average foreign direct investment amount was $6.85 million, while from the year 2000 through the first half of 2003 this figure has dwindled by more than half to around $3.3 million.
Obviously, the composition of foreign investment is expected to be increasingly made up of small- and medium-sized firms since many of the world's major multinational business entities have already established a presence in Korea - a large, strategically positioned and savvy consumer market that any global player requiring a foothold in Asia cannot afford to overlook. In fact, nearly half of the Fortune 500 companies have invested some $18.2 billion in Korea. Furthermore, "can't miss" opportunities to swap up assets at fire sale prices such as during the aftermath of the financial crisis are now far and few between.
This trend toward smaller scale investments is not only an inevitability for a country with a clear-cut market saturation point such as Korea, but is also being bolstered by the recent government policy shift towards promoting investment in the high technology and knowledge-based industries. Of course, these sectors generally lack the need for large manufacturing facilities and bloated workforces, as is the case with many traditional brick and mortar industries.
Encouragingly, such policy vision shows increasing recognition on the part of government leaders that Korea now finds itself in an unavoidable 'nutcracker' scenario - caught between China's cheap labor and Japan's technological prowess - or is suffering from what some economists call the "middle-income country trap."
However, those in charge of executing the country's FDI attraction policy still appear to be bent on targeting the big fish while perhaps allowing many of the hidden treasures to slip under the radar.
Until now, the government agencies in charge of the nation's investment promotion activities seemed overly concerned with a potential investor's name recognition, net capital, and other size and prestige factors while failing to see the latent potential possessed by many up and coming, small- to medium-sized enterprises. Recent organizational changes within Korea Investment Service Center - the country's designated agency in charge of foreign investment promotion - have resulted in a more specialized division of work through the creation of the following industry-specific promotion departments: Main Industry Investment Promotion Team, New Industry Investment Promotion Team and Service Industry Investment Promotion Team.
Formerly, investment inducement activities at KISC were handled by teams dedicated to specific geographic regions, which lent to excessive resources and man-hours spent on prioritizing large, high profile investors as well as time wasted on responding to an inordinate amount of inquiries.
This new organizational structure, however, is hoped to result in better targeting of high potential strategic investments, many of which are of the small- to mid-sized variety, by utilizing staff with more specialized knowledge and experience in respective industrial sectors.
Around the world, the rapid emergence of the new economy has given rise to a plethora of smaller-sized enterprises possessing strategic cutting-edge technologies; and in line with Korea's new growth paradigm, these very firms are poised to help form the backbone of the country's long-term economic growth plans.
Furthermore, large multinational corporations possess the necessary global experience and networking wherewithal, as well as specialized international departments and workforce, that allow them to identify not only which untapped markets need to be penetrated, but also how to bring such plans to fruition. Smaller investors, on the other hand, often need a certain amount of "baiting" so to speak - which includes aggressive promotional campaigns and other focused activities - in addition to more personalized assistance with investment procedures, matchmaking, and so on.
By rolling out the red carpet only for large investors, we are running the risk of allowing crucial smaller contributors to Korea's new growth paradigm to fall through the cracks. There is also the danger of crowding out some up and coming domestic firms, which could ultimately result in a loss of national competitiveness. And with Korea's current industrial landscape still dominated by large conglomerates, small- and medium-sized investors will induce much needed healthy competition to the country's burgeoning base of venture firms and start ups, while broadening the country's overall industrial structure.
As progress in this regard will surely result in improved cumulative FDI performance, it is time to start paying more attention to smaller scale investments - the real drivers behind Korea's future growth model.
The writer is the Communications Coordinator at the Office of the Investment Ombudsman. Email: email@example.com - Ed.
Source : Korea Herald - 09/10/2003
- FOREIGN INVESTMENT GOES INTO FREE-FALL
The Samsung Economic Research Institute (SERI), one of leading business think tanks in Korea, said Wednesday that the amount of foreign direct investment (FDI) coming into the country this year would reach only US$1.2 billion, one-ninth of the US$10.3 billion in FDI achieved in 1999.
The research institute also noted that between January last year and March this year, only six multinational businesses' regional head offices or production plants opened up in Korea, lagging far behind the 46 in Singapore, 44 in Hong Kong, and 29 in China.
On top of the sharp drop in FDI, foreign companies that have advanced into Korea are showing signs of wanting to jump ship, the institute said.
SERI said the amount of FDI in Korea plummeted from 1 percent in 1999 to 0.2 percent of the total global FDI this year, backsliding to the level of FDI Korea achieved in 1980.
by Cho Hyung-rae (firstname.lastname@example.org) Source : The Chosun Ilbo - 01/10/03
- FOREIGN INVESTMENT IN SEOUL DECLINING
Foreign investment in Seoul has been shrinking since 2000 due to the prolonged global economic slump, a city official said yesterday.
According to the report submitted by the city of Seoul to the central government yesterday, total investment into the metropolitan area shrank from $6.8 billion in 2000 to $3.7 billion in 2001, $2.7 billion last year and $950 million in the first half of this year.
Cumulative foreign investment in Seoul amounted to $26.2 billion, or 31 percent of the $84.6 billion of total investment into Korea.
Source : Korea Herald - 07/10/03
- FACILITIES INVESTMENT FORECAST TO REMAIN STAGNANT
The following article is summary of presentation for the economic forum on the outlook for the Korean economy that The Korea Herald and Samsung Economic Research Institute held yesterday in Seoul. - Ed.
By Hong Sun-young
I. Current state of the economy
The Korean economy continues to slide downward. The poor performance of the Korean economy is mainly ascribed to sluggish private consumption. The only bright spot being exports with 17.1 percent year-on-year growth for the period between January and September of this year.
The nation's sluggish economy is all the more notable in that the world economy is showing signs of recovery. In contrast, the Korean economy is likely to continue sagging in the latter half and post a growth rate of below 3 percent for the entirety of this year, which is deemed to be a recession level for the nation.
II. Road blocks of the Korean economy in 2004
In 2004, external conditions for the nation's economy will likely get better, as the global economy is expected to gradually recover from the three-year recession.
However, some unfavorable conditions are darkening the prospect of the nation's early economic recovery. The biggest stumbling block is the weakening U.S. dollar. The value of the U.S. dollar will likely continue to fall in 2004, as the U.S. runs huge current-account and fiscal deficits.
Moreover, the U.S. is expected to intensify its pressure on East Asian countries, against which it runs huge trade deficits, to revalue their currencies.
The North Korean nuclear issue could be another drag on Korea's economic recovery. It is true that the situation may not be aggravated further, thanks to the great efforts made by the concerned countries at the six-party talks.
But disputes among the countries over guaranteeing the security of the North Korean regime and determining nuclear inspection measures are likely to continue. Also, the U.S. has adopted a "stick and carrot" policy toward North Korea, possibly making Pyongyang more determined to continue its nuclear plans.
Domestic factors are also raising concerns. First, financial institutions have reduced their lending to households, thereby aggravating a credit crunch for households and increasing the number of individuals with bad credit.
This could also prolong difficulties facing domestic retail financial institutions. Of course, the liquidity crisis faced by credit card companies has been somewhat alleviated thanks to efforts made by those companies to increase their capital, improve profitability, and facilitate restructuring.
However, we cannot completely rule out a possibility of another liquidity crisis, as credit card companies are suffering from 2 trillion won of new overdue loans every month, and rescheduled loans amount to 14.7 trillion won.
An unstable labor-management relationship and the upcoming elections for National Assembly members may also hinder the recovery of the domestic economy. Regardless of whether the ruling or opposition party wins, political instability may linger on for a while, thereby placing a further burden on the economy.
III. Prospects for the Korean economy in 2004
GDP growth: In 2004, external economic conditions for Korea will likely improve, as the global economy recovers from a three-year recession, brightening the prospects for the nation's export. However, Korea's GDP is expected to grow by 4.3 percent, which is below the potential growth rate, due to sluggish domestic demand. Moreover, any further appreciation of the won may hurt the nation's growth engine, exports, and cause the economy to possibly grow more slowly than the original forecast for 2004.
Private consumption: Private consumption, which remained stagnant in 2003, is forecast to grow by 2.9 percent year on year in 2004, as the government's tax cuts and supplementary fiscal spending, which start in the second half of this year, take full effect next year. Nevertheless, the recovery of private consumption is not expected to be as brisk as in the past, due to a staggering amount of household debt.
Investment: In 2004, the nation's facilities investment is likely to increase by around 4.2 percent, as a recovery in the global IT industry pushes up investment in IT-related sectors, and the government takes measures to boost corporate investment.
However, investment may not rise in earnest since ongoing labor disputes are eroding business sentiment and companies are failing to find many promising business opportunities.
Construction investment, which was quite active in 2003, will slow down to an increase rate of about 3.0 percent. Due to the fact that the nation's housing distribution rate is higher than 100 percent and real estate prices are stabilizing (or even declining), housing sector investment will probably be sluggish, greatly offsetting the heightened public sector investment.
Export:The nation's export is forecast to grow at a rate of 8.5 percent, mainly led by a recovery in the global IT industry. High-tech products such as LCD/PDP TVs, semiconductors, and cellular phones will likely lead export. Unfortunately, the expectedly stronger Korean won is apt to offset the increase.
When it comes to the non-IT sector, export of automobiles is expected to fall, as a stronger won will weaken domestic carmakers' price competitiveness. And, though the shipbuilding industry is anticipated to continue to enjoy growing exports, the fallen KRW/USD exchange rate may possibly hurt the industry's profitability.
Import:The increase in export translates into a rise in the import of intermediate and capital goods. The boom in export of IT products, in particular, will raise import of manufacturing equipment. Therefore, the nation's import is forecasted to record 9.7 percent growth year on year, and achieve an estimated trade surplus of $7.09 billion in 2004 (down by $1.27 billion from this year). The current account surplus is also expected to shrink to $2.47 billion next year, down 0.7 billion from this year.
Consumer prices: As for inflation, the consumer prices will likely rise only 2.8 percent in 2004. At the moment, there are several upward pressures on consumer prices, including a possible (upward) revaluation of the Chinese yuan, and Korea's coming election of National Assembly members. Nevertheless, oil prices and exchange rates, which have the biggest impact on consumer prices, are anticipated to remain around current levels, thereby greatly contributing to overall price stability.
Unemployment: The nation's unemployment rate is likely to decline slightly to 3.0 percent in 2004. The government's efforts to lower the unemployment rate for younger people are expected to bear some fruits. And the nation's economic recovery should create more jobs. However, the unemployment problem will be worse than the official figure of 3.0 percent suggests, as the number of "discouraged workers" continuously increases and the economic activity participation rate falls.
The writer is an executive director at the Samsung Economic Research Institute. - Ed.
Source : Korea Herald - 24/10/03
- LIBERALIZATION OF KOREA'S LEGAL KEY TO FURTHER GROWTH
The liberalization of Korea¡¯s legal industry is crucial if Korea is to become an important financial and economic center for the North East Asian business community according to a member of the British Government in Seoul this week to meet with government and industry leaders.
``If Korea is to attract the foreign investment that it hopes to in the months and years ahead, it is key that it has lawyers both local and international that can serve its economy and the multinationals that it hopes to attract as well as serve its consumers in a global market,¡¯¡¯ David Lammy MP, undersecretary at the Department for Constitutional Affairs said. ``Therefore liberalizing its legal services is key to that endeavor and it should move to do so as quickly as it can.
Lammy pointed out that Korea is ambitious in seeking to be an economic powerhouse in North East Asia and that the UK government supports Korea in that endeavor.
``Clearly the UK believes in liberalization,¡¯¡¯ Lammy said. ``We have international firms both in the UK and mainland Europe that hope to seek and do business in Korea in the future.¡¯¡¯
With regard to Korea¡¯s ambitions to be the financial hub of North East Asia, the undersecretary also emphasized that Korea will clearly be looking at what¡¯s going on in other places. With other countries in the region making progress, Lammy said it¡¯s important for Korea to take steps to liberalize its legal services. China for example, has moved extremely quickly in this repect with 109 law firms between Beijing and Shanghai and Japan has also now moved forward with liberalization, the British politician said.
``Clearly Korea finds itself amidst all of that and understands the need to move forward,¡¯¡¯ Lammy added. ``Our position in the UK is that this is a good thing.¡¯¡¯
Although the modernization of the legal sector might cause some to worry about the loss of jobs, Lammy eased fears, by pointing out that businesses will be attracted to Korea because of improved support services.
``When I qualified as lawyer in the early 1990s, everyone was nervous about foreign law firms opening up in London and taking all the business,¡¯¡¯ he added. ``Ten years later, yes, we have American law firms and we have over 200 foreign firms representing 39 countries, but it has been successful because we have all learned.¡¯¡¯
According to Lammy, what one will see is a bigger share because there will be more foreign investment and more activity and a growing economy. As such, all the signs are that Korea is poised to capitalize on that and actually that is beneficial for local lawyers. Foreign lawyers that take up office here will by and large work in specialized areas like commercial law and that is important to bear in mind, said Lammy.
``There has been a cross-fertilization of skills and that is what business needs to do to succeed and I think that would be beneficial for Korea,¡¯¡¯ he said. ``In a global market the sharing of skills is a positive thing and that is the message that I bring to Korea.¡¯¡¯
During his brief visit to Seoul, Lammy also had the opportunity to meet his Korean counterpart Justice Minister Kang Kum-sil.
``We had what I thought was a very good meeting,¡¯¡¯ he said. ``She made it clear that Korea had made an effort to liberalize its legal services as part of the WTO round in Cancun and that effort was very much on the table and was the right direction for the Korean government.¡¯¡¯
Lammy was appointed Parliament undersecretary for the Department for Constitutional Affairs on June 13, 2003 and was elected as the Member of Parliament for Tottenham, London in June 2000.
``It¡¯s a fantastic seat to represent. I am very happy that Tony Blair asked me to be part of his government and asked me to do this important work,¡¯¡¯ Lammy said. ``It¡¯s a great privilege for any minister to this job and I am pleased that Korea is the first country that I have come to as minister.
By Jeffrey Miller
Source : Korea Times - 09/10/03
- SEOUL TO OFFER FOREIGNER-FRIENDLY HOUSING RENTAL
Beginning next year, foreign residents in Korea will have an easier time renting an apartment in Korea, as the government plans to implement a scheme that will make the rental system, including deposit fees and rental contracts, more similar to those in other countries.
The Korea Investment Service Center, a state-sponsored agency, and the Ministry of Commerce, Industry and Energy said yesterday that they had drawn up measures to improve the housing conditions for foreigners living the country. The measures are part of a five-year plan to better living conditions for expatriates, the ministry said.
Under the measures, the government will introduce a standard housing rental contract form designed especially for foreigners. The new form is designed to end the almost-standard practice of landlords refusing to pay back "jeonse" deposits until they find new tenants, regardless of the expiration of contracts. Such practice has often led to disputes between landlords and foreigner tenants.
Jeonse is a uniquely Korean housing rental system, under which tenants pay a lump-sum deposit, instead of monthly rent, that is refunded when the contract expires.
The new contract form will allow a tenant to pay monthly rent in addition to a three- to six-month returnable deposit. Currently, landlords often demand that foreign tenants pay rent for the whole contract period, plus a deposit, in advance.
Real-estate brokers violating the new rule will be subject to "severe" administrative restrictions, the ministry said.
The government will also designate real-estate agencies for foreigners that meet certain standards, such as insurance protection and English-language skills. It will also operate a housing information center to mediate disputes between property owners and foreign tenants, the ministry said.
The government will also work on a medium- to long-term plan to build rental housing complexes for foreigners in areas that they prefer, according to the ministry.
By Kim Hyun-chul - Source : Korea Herald - 24/10/03
- THE RETIREMENT PENSION SYSTEM TO BE INTRODUCED IN JULY 2004
Temporary workers who have been employed for less than a year along with employees of companies with no more than four workers will be subject to retirement benefits or pensions staring January 2007.
From July of next year, Korean businesses can also adopt the retirement pension system when the union agrees so that companies can save money at financial institutions including banks, insurance companies, investment trust firms to compensate their workers at the retirement.
The Labor Ministry announced yesterday that it would publicize its bill on securing workers` severance payment and present it to the National Assembly next month.
The bill, if enacted into law, will expand the coverage of the retirement pension system to include those who have been employed for less than a year or by companies with less than 5 workers, thereby benefiting over 4.49 million.
Under the plan, the employees for less than a year will be subject to severance payment as soon as the retirement pension system takes effect.
To ease too much burden, companies with no more than four employees are allowed to implement the system as late as January 2007 and begin the payment to the retirees at the 50% level before expanding the level on a gradual basis over years.
Companies with over four employees are allowed to adopt the severance payment system or the retirement pension system with consensus of the union members. Nevertheless, the government plans to encourage local businesses to turn to the retirement pension system through reducing its acknowledgement of damages in companies` holdings for the retirement payments, which is banned to exceed 40%.
Song, Young-jung, head of the department of the labor standard at the Labor Ministry said, "The current retirement payment system is flawed since employers do not always save the retirement money aside as the book says and therefore, companies cannot pay the retirees in some cases. The retirement pension system is introduced to complement such drawbacks meanwhile protecting compensations of workers in their retirement. "
The retirement pension system is allowed in two different kinds, which is either a defined benefit (DB) plan or a defined contribution (DC) plan. A defined contribution (DC) plan is a plan, which bases the pension at retirement on the accumulations in the member`s account at that date. And a defined benefit (DB) plan is a plan, which bases the pension at retirement on the member`s length of service and, usually, his or her average salary at retirement.
Besides, the individual retirement account (IRA) will be given to each worker so that the retirement money can be deposited even after the worker moves to another company. When the money is deposited at the IRA in lump sum, taxes will be taken hold until the pension is paid.
In case of the lump sum, the retirement pension is payable to workers regardless of their age. And individual companies can pay the pension money flexibly by the company`s regulations. Basically, those who are over 55 are eligible in receiving the pension money.
Financial experts noted, "The implementation of the retirement pension system is expected to generate other positive effects, such as revitalizing stock markets through additional funding of 15 trillion won to the financial market, which will be collected from local firms that will no longer have to hold retirement money inside except for 16 trillion won kept in the retirement insurances. "
by Kyung-Joon Chung (email@example.com) - Source : DongHa Ilbo - 28/09/03
- KOREA'S HUB AMBITIONS HINGE ON LABOR ENVIRONMENT
Few, if any, will refute the stark reality that the Korean economy increasingly finds itself stuck between a 'rock and a hard place.' On the one hand its manufacturing prowess is being chiseled away by more price-competitive emerging economies such as China, and its technological advances are still being overshadowed by Japan on the other. Fortunately, the country is waking up to the fact that it may have no other choice but to make a drastic move to another dimension in order to ensure future growth.
As has been widely publicized in recent months, Korea does indeed possess various advantageous factors that make its regional hub ambitions entirely feasible. For example, the country's pivotal geographic location at the heart of Northeast Asia and its well-equipped infrastructure make it an ideal base for logistics activities for countries wishing to prosper in the region. Its talented and well-educated workforce ensures competitive staffing for both manufacturing and service industries. Its global position as an IT powerhouse coupled with its strong traditional as well as cutting-edge industries provide a diverse industrial structure that holds many unlocked opportunities.
Recently, I served as moderator for the Business Leaders' Roundtable of "Hub Korea: A Forum on Korea as Northeast Asia's Business Hub," co-hosted by Korea Trade-Promotion Agency, which attracted some 40 executives of prominent foreign multinational firms with interest in investing in Korea. Not surprisingly, the issue of Korea's struggles with its inflexible labor market and militant labor unions became the center of discussion.
In recent months, the international community has been bombarded by disturbing images of Korea's militant labor culture. And this area has been a major source of concern for potential investors. Yet the international media is much to blame for the overblown perception of Korea as having an unstable labor environment. This is not to say that some element of truth to these reports and images doesn't exist.
Encouragingly, President Roh Moo-hyun has been flexing his political will - just recently he vowed to reform Korea's labor structure within the next two years, so that it would meet international standards, thus making Korea more attractive to foreign investors. He has also showed his resolve by cracking down on recent strikes by truckers with swift police intervention. In light of President Roh's pro-labor background, his recent promises to hold unions accountable for any illegal activity bode well for Korea's transition to a more "internationalized" labor culture and should result in enhanced foreign investor confidence.
In reality, Korea's unionization rate of 12 percent is actually significantly lower than that of many OECD economies. As of August this year, there were 25 cases of labor dispute at foreign-invested firms compared to 26 cases for all of 2002. Of the 18 cases investigated by my organization, the Office of the Investment Ombudsman, 14 were in the auto parts sector, showing that disputes mainly take place in the labor-intensive industries.
But of course the vast majority of foreign-invested firms never encounter labor-management discord, particularly in the high-tech and capital intensive sectors. In fact, for the year 2002, only 0.19 percent of foreign-invested firms in Korea experienced labor disputes.
When comparing Korea's labor standards and regulations to those of advanced economies, it is important to keep in mind that it has been merely 15 years since the democratic movement in Korea began to free the country from its long past of oppression and government control. Over this relatively short period of time, Korean labor policy has endured a process of trial and error in order to best serve the country's needs during a time of rapid economic expansion. It is my feeling that Korea's labor movement is in a transition period where we are converging toward global standards.
Speaking of convergence, one participant at the Hub Korea forum pointed out that although Korea can no longer compete with China in terms of labor costs for simple manufacturing industries, labor costs of the two countries become quite similar as we ascend up the ladder toward more skilled and specialized New Economy sectors. So, in fact, there is a window of opportunity for Korea to still market itself as a competitive destination for manufacturing.
What is needed is a prompt and decisive revamping of Korea's labor regulations and practices that can bear out visible results, rather than just a mere verbal promise to make Korea's labor market flexible within two years. Otherwise, Korea's labor environment in its current state coupled with the closing window of opportunity will only serve to further convince potential investors to seek greener, more peaceful pastures.
Dr. Kim Wan-soon is the Investment Ombudsman of Korea and professor emeritus of Korea University. He can be contacted at firstname.lastname@example.org. - Ed.
By Kim Wan-soon - Source : Korea Herald - 02/10/03
- LA RTT, VERSION CORÉENNE
Largement contestée en France, la réduction du temps de travail fait aujourd'hui des émules en Corée du Sud et pourrait s'avérer, à terme et à l'instar de la TVA, comme un véritable succès français à l'exportation ! Le pays du Matin-Calme va en effet adopter la semaine de cinq jours et ses employés travailler 40 heures par semaine au lieu de 44 jusqu'à maintenant ! Une véritable révolution pour cette économie qui, en pleine polémique française sur l'impact des 35 heures, était désignée par l'OCDE comme le champion mondial du travail avec quelque 2.410 heures travaillées en 2002. Bien loin devant l'Hexagone et ses 1.453 heures recensées par les experts du Château de la Muette.
Bien sûr, les Coréens traditionnellement rivés à leur poste de travail n'en sont pas encore à travailler 35 heures par semaine. Et dans les faits, s'il y a accord écrit entre la direction et le personnel, un employé de l'entreprise pourra effectuer jusqu'à 56 heures de travail durant une semaine. Mais la modification du droit du travail coréen est d'autant plus remarquable qu'elle puise son inspiration dans l'expérience française. Dès 1999, une délégation des deux principales confédérations syndicales, représentant plus de 1,6 million de salariés, était venue en France observer la mise en place des lois Aubry et avait depuis cette date réclamé la semaine de 40 heures.
La Corée s'est donné du temps pour mettre en oeuvre sa réforme : la nouvelle loi devra s'appliquer avant le 1er juillet prochain pour le secteur public, le secteur financier et toutes les entreprises de plus de 1.000 salariés. Puis s'étendra au reste de l'économie jusqu'en 2011. Mais comme les Coréens n'en sont pas à un paradoxe près, ils parviennent, tout en réduisant la durée de travail hebdomadaire, à réduire aussi le nombre de jours de congé annuel, qui, il est vrai, est particulièrement complexe à calculer, puisqu'il varie selon l'ancienneté. Un salarié ayant travaillé 20 ans verra ainsi ses congés annuels passer de 41 jours à seulement 24 à l'avenir. Et surtout ne pourra plus se voir payer ses jours de congé non pris. Or cela représentait une manne importante pour certains ouvriers puisque l'ancien système prévoyait une compensation égale à 150 % du salaire horaire.
Claude Fouquet - Source : Les Echos - 23/10/03
- SOUTH KOREA RELAXES RULES FOR CREDIT CARD COMPANIES
South Korea eased consumer credit card rules yesterday in an effort to boost the recession-hit economy as official indicators showed industrial activity remains sluggish.
Finance ministry officials said the government had eased restrictions on credit card firms allowing them to extend the maturity of loans while putting off next year's deadline to bring their cash advances into line with assets.
Domestic consumption drove South Korea's economic growth last year, promoted by easy credit that left a massive consumer debt hangover.
This year, credit-tightening measures have produced a credit crunch that helped nudge the economy into recession.
The hoped-for recovery has been a long time in coming but industrial output figures for last month showing 1.5 percent growth from a year ago were viewed as positive despite falling below market expectations.
The figure compared unfavorably with to last year's annual rate of eight percent but was up on the 0.7 percent rate seen in July, according to the National Statistical Office (NSO).
Industrial output rose on strong semiconductor and telecom equipment production and smaller losses from strikes at automobile companies, according to the NSO.
Output increased a seasonally-adjusted 3.4 percent month-to-month, the biggest gain since January last year.
"Semiconductor and telecom sector output expanded, resulting in firmer output activity, while consumption and plant investment remained sluggish," the NSO said.
Wholesale and retail sales, taken together, fell 2.7 percent last month from last year, the sixth straight drop, while wholesale sales showed signs of a rise.
"The August output data are positive enough to rekindle hopes of economic recovery in the fourth quarter," said Daewoo Securities economist Yi Hyo-Keun, predicting that exports would remain strong and consumption and investment would gradually recover.
Government officials cautioned, however, that output has yet to reach the level required to sustained a projected growth rate of three percent for this year.
Meanwhile, South Korea's current account posted a surplus for a fourth straight month last month, when it widened to US$1.39 billion from US$425.9 million in July, the Bank of Korea said.
The central bank, in a preliminary report, attributed the increase to increased merchandise trade surpluses and narrower service account shortfalls.
The merchandise trade surplus rose to US$2.37 billion last month from US$1.57 billion in July, with exports falling to US$15.59 billion from US$16.01 billion a month earlier, with imports declining to US$13.22 billion from US$14.44 billion.
At the same time, the country's index of leading indicators, the key gauge measuring the economic outlook, posted positive growth for a third straight month last month, rising 0.6 percentage points from a month earlier after a gain of 0.1 percentage points in July.
Source : AFP - 30/09/2003
- ALLIANZ SCRAPS NON-LIFE BUSINESS IN KOREA
Germany-based Allianz Group has decided to pull its non-life business out of the Korean market and regulators yesterday approved the move.
The group, specializing in life insurance, will sell its non-life insurance policies to LG Insurance, a domestic fire and marine insurer, according to the Financial Supervisory Commission.
The financial group has posted huge losses over the past few years after tapping the non-life insurance market, which other foreign life insurance firms have generally avoided.
Instead of closing down the business, Allianz said it will launch active strategies in South Korea in the bancassurance and life insurance markets.
The group¡¯s leading affiliate, Allianz Life, has also suffered from poor results in stock investments. The growth rate its investment income fell by around 50 percent, while ING Life and Prudential Life posted growth of 100 percent and 90 percent during the first half of the year.
Most domestic and foreign insurers have turned their attention to guarantee-type insurance, but Allianz has stuck to the sale of traditional savings-type products, according to domestic insurance sellers.
Source : Korea times - 17/10/03
- CARD WITH THE SMARTS
Helping to make use of public transportation even more simple and convenient is C&C Enterprise¡¯s radio frequency (RF) smart card. Since it was founded in 1994 the firm has become a leader in the electronic money industry through its superior ID recognition and smart-card based technologies.
Installing Automated Fare Collection Systems
How does C&C¡¯s smart card solution make life easier for the commuting public? In short, by coupling the Automated Fare Collection (AFC) system along with the radio frequency (RF) credit card to produce the first and only system in the world that enables commuters to defer payment of their public transit fares. Furthermore, the AFC system eliminates the need for commuters to reach for their wallets for paper bills or for coins to pay fares. All they need to do is simply touch a sensor at a subway barrier or as they board a bus with the card (or even with the card inside a wallet or purse) for instant payment approval, reducing long lines and thus significantly saving time.
In February 1999, C&C completed installation of the AFC system at 296 stations in the Seoul Metropolitan Subway system. One year later, C&C developed an inter-operating system with the public bus network and implemented discount programs to allow discounted transfers between trains and buses.
C&C signed RF payment transit card contracts with seven major credit card companies and banks in November 2001, and distributed 20 million cards for use by commuters in the Seoul Metropolitan Area alone. The concept proved enormously successful as demonstrated by the whopping 4.5 million transactions per day made using RF prepaid/debit/credit transit card in the Seoul Metropolitan Area. It is the goal of C&C Enterprise to supply its integrated system to the transportation networks in the world¡¯s major cities. In May 2003, C&C contracted to provide the AFC system for the new light rail transit construction project in Tianjin, China. The company is also a significant actor in other mass-transit projects driven by other Chinese cities in preparation for the 2008 Olympics.
A Player in the Intelligent Transport System Project
C&C Enterprise¡¯s technology reaches far beyond bus and subway train payments as evidenced by its participation in the Korean government¡¯s Intelligent Transport System (ITS) project. The aim of the project is to apply leading technologies to the existing national transportation system in order to create a more efficient transportation environment. Two types of technology represent C&C¡¯s participation in the ITS project: the Electronic Toll Collection System (ETCS) and Electronic Toll Payment System (ETPS) technologies.
The chief merit of the Electronic Toll Collection System (ETCS) is that it allows vehicles to drive through a tollgate without stopping to pay the toll. As a vehicle approaches a tollgate, a beacon (in fact, a data collection terminal) installed on the gantry collects vehicle information from an RF card inside the vehicle via wireless communication at frequencies of 860 MHz to 930 MHz. The ETCS automatically processes the information embedded in the card and conducts toll payment transaction as the vehicle passes through the tollgate.
A major project C&C Enterprise undertook in 2002 was an upgrade of the automated toll collection system on the highway between Gwacheon and Uiwang. The success of this project will eventually lead to the application of ETCS in more major highway tollgates. ETCS went on to demonstrate superior performance in a comparative test with competing systems organized by the Korea Transport Institute (KOTI).
The Electronic Toll Payment System (ETPS) is a ¡°touch-and-go¡± system utilizing RF smart card technology and operating at a frequency of 13.56 MHz. It works like this: the driver places his or her RF smart card near the terminal. The terminal communicates with the card to collect necessary data and to automatically process toll payment.
The advantages of ETPS are that it supports various payment methods, provides prompt payment, improves the level of convenience, has a semi-permanent life span, and is easily upgradeable.
In February 2003, the Korea Highway Authority (KLA) selected C&C Enterprise as its ETPS pilot operator. Over the last few months, C&C has installed electronic toll payment systems in 59 portal lanes at open tollgates in Pangyo, Cheonggye, and Seongnam. The KLA-sponsored project will be expanded to 1,592 portal lanes at 216 tollgates nationwide. The ETPS is expected to effect an 18-trillion won ($15 billion) annual cost reduction by reducing logistical expenses, highway operation and maintenance costs, air pollution, energy consumption and accident rates.
Despite the superb level of convenience they offer, RF smart cards are still not widely in use around the globe. Commuters still buy paper tickets whenever they board buses or subway trains in the leading cities of the world. Drivers still must stop their cars at most tollgates and scramble for cash, wasting their time and that of others as well as causing unnecessary energy consumption and air pollution. Globally, C&C Enterprise views these myriad situations as a gigantic opportunity - an opportunity to gain leadership of the smart card industry worldwide.
Face to face with Jun Yeong-Sam, CEO of C&C Enterprise
Just how important is the research and development effort of C&C?
I believe technology is the lifeblood of our company. Moreover, I believe that the level of technology is what differentiates us from other companies in the same field. The fact that 70 percent of our employees are researchers and 30 percent of total revenue is reinvested into R&D highlights our effort to stay ahead in the technological race.
Many of your investors attribute C&C¡¯s leadership of the electronic smart card industry to your management style. What is your take on this?
Well, I¡¯m an advocate of ¡°transparent¡± management. For example, I always try to disclose all decisions we make as well as the financial status of the firm to employees and investors alike. I always keep the door to my office open so that employees can come in and talk freely at any time.
General Electric¡¯s Jack Welch once said, ¡°Lead or else you will be dominated,¡± and this quote has become the guiding principle of my life. I often tell our employees to play the leading role and not be an observer in the workplace and elsewhere.
What is the ultimate goal for C&C?
I like to dream of a ¡°cardtopia,¡± where a single smart card can take care of every payment, anywhere. For instance, imagine buying an ice cream in Rome, paying for a ticket to a baseball game in New York and boarding a subway train in Moscow with just a single electronic smart card. Wouldn¡¯t that be amazing?
In the near future, an individual¡¯s social security number, electronic money, fingerprints, iris code and credit rating will be stored in a single electronic card, promoting convenience for consumers everywhere.
by Jonathan Choi ( email@example.com)
For more information on another top 100 promising medium-sized South Korean companies seeking foreign investment, please contact the Investment Consulting Team of the Korea Investment Service Center (KISC).Tel: 82-2-3460-7550/4
Source : KT&I - Septembre-octobre 2003
- FOREIGN INVESTMENT CEILING ON TELECOM FIRMS TO BE SCRAPPED
Foreign investors will soon face no limits in buying local telecom stocks, as long as they are for portfolio management, not for management control.
The Ministry of Information and Communication (MIC) said yesterday that the government is moving to lift the current 15 percent foreign investment ceiling for local facilities-based telecom service providers. But the move will require that foreigners give up their voting rights to influence or take over the management of the firms, it said.
The MIC and Rep. Lee Jong-kul of the Uri Party jointly submitted a revised bill for the Telecommunications Business Act including the changes to the National Assembly for approval. The Uri Party, composed of 44 reform-minded lawmakers who defected from the Millennium Democratic Party, is not yet an official political party.
The government, which wants as many foreign investors as possible to invest in lucrative telecom stocks, devised the plan to protect facilities-based telecom firms from unwanted takeover bids.
The government¡¯s latest move follows purchase of a 14.99 percent stake in SK Corp. by Crest Securities of the United Kingdom last April. Crest¡¯s investment in SK Corp. could have influenced management of the nation¡¯s largest mobile company, SK Telecom. SK Corp. is the de facto holding company for the nation¡¯s fourth largest conglomerate.
Under the revision, the government will not classify a local facilities-based telecom company in which the largest foreign shareholder holds a 15 percent stake or more as a foreign entity, if the foreign shareholder gives up its rights to interfere in critical management issues, including appointments of executives.
The current law stipulates that a telecom company comes under the foreign-invested company category when its largest foreign shareholder holds a 15 percent stake or higher. Once the company in question is classified as a foreign entity, it is subject to additional regulations.
``The revised law is expected to protect the managerial control of local facilities-based telecom firms from heinous takeover bids by foreign investors, while promoting well-intended foreign investment by lifting the ceiling on foreign ownership,¡¯¡¯ Lee said.
The largest foreign shareholders of local telecom firms wanting to increase their stakes beyond 15 percent should report to the information-communication minister their intention to renounce voting rights regarding critical management issues.
The same is applied to companies that hold the largest shares in local telecom firms, such as SK Corp., which holds the largest stake in SK Telecom, the nation¡¯s No. 1 mobile carrier.
If foreign entities seek to secure managerial rights in domestic facilities-based telecom service firms, they should undergo a public interest review from the MIC. If a foreign investor¡¯s acquisition of managerial rights in the local telecom firm is determined to disturb public interests like national security and public order, the government can arbitrarily issue correction orders and order foreign investors to dispose of their shares and suspend voting rights.
Foreign companies that do not implement correction orders by the government will be fined either 0.3 percent of the total shares they hold in local telecom service providers or a maximum 100 million won a day until they implement the orders.
The government will also scrap a regulation that bans foreign investors from emerging as the largest shareholders in KT to promote foreign investment, thus allowing Brandes Investment Partners, a U.S. investment firm that holds the biggest stake in the fixed-line and Internet operator, to make official its status as the largest shareholder.
The latest revision will also limit the exercise of voting rights by facilities-based telecom market leaders, namely KT and SK Telecom, for shareholdings beyond 5 percent in each other in order to create a fair competition environment.
But the government will allow cross shareholdings of more than 5 percent between telecom firms in different market segments, if a subsidiary of a telecom service company, such as KTF, mobile arm of KT, emerges as a dominant carrier.
Furthermore, it will prohibit foreign investors from acquiring more than a 10 percent stake in KT for management purposes to maintain the national identity of the flagship fixed-line and high-speed Internet provider.
The government also obliged facilities-based telecom carriers to get approval when they plan to dispose of their telecom facilities to protect service subscribers.
Kim Sung-jin Staff Reporter firstname.lastname@example.org - Source : Korea times - 23/10/03
- KOREA REVISES RULES ON TELECOM INVESTMENT
South Korea is moving ahead with revisions on foreign ownership rules in the telecommunication industry, allowing a single foreign investor to buy more than a 15 percent stake in a local telecom company for investment purposes, South Korea's Ministry of Information and Communication said on Thursday.
However, a foreign investor who holds more than 15 percent of a domestic telecom firm will be barred from exercising voting rights. The restriction is aimed at preventing foreigners from controlling major telecom service providers, such as KT Corp and SK Telecom Co, the ministry said.
The ministry said it would would push for changes that also call for the government to assess foreign investors on whether their investment could harm the public interest.
When the revisions take effect, Kim Dong-soo, the director-general of the ministry's telecom promotion bureau, said the South Korean government could order foreign investors to sell their stakes if they violated the new rules.
"If foreign investors don't comply with the government's order, the government can impose fines of less than 100 million won (US$84,900) every day, or three-thousandth of the total share buyout," he said.
The revision bill was drafted by Lee Jong-kul, a lawmaker from the United New Party for Participatory Citizens, Kim said in a press briefing.
The move is seen as a measure to protect key telecom companies from hostile takeover bids by foreign investors.
Last April, SK Telecom, South Korea's top mobile carrier, was affected by an ownership battle at its sister company SK Corp, South Korea's largest oil refiner, which has a controlling stake in the wireless giant.
After off-shore fund Sovereign Asset Management Ltd bought a 14.99 percent stake in SK Corp, speculations were raised that the fund would force the oil refiner to sell its shares in SK Telecom.
Currently, foreign investors are also prevented from owning more than 49 percent of KT, SK Telecom and other major telecommunications companies - Source : Yonhap/Asia Pulse/Asia Times - 24/10/03
- KOREA TO REVISE TELECOM FOREIGN-OWNERSHIP RULE
Korea is pushing ahead with a revision to the rules that govern foreign ownership in telecommunications companies, the Ministry of Information and Communication said yesterday.
Under the current regulations, if a single foreign investor holds more than a 15-percent stake in a local telecom operator, the company in question is classified as a "foreign enterprise."
But the new proposal will allow such companies to be classified as "local enterprises" as long as foreign investors do not exercise their voting rights in major decisions related to management.
The Information Ministry said the new bill will encourage foreign investors to increase their stake in telecom operators in Korea, while ensuring that key telecom companies protect their management control.
Unlike other industries, the country's telecom industry is tightly supervised by government regulators. The foremost reason is that KT Corp. and other major carriers operate extensive fixed-line, mobile and broadband networks, which have military, strategic and public functions in addition to offering normal telecom services for the public.
Ministry officials said the new bill will empower the government to review a takeover bid by foreign investors, and if the nation's security or other interests could be undermined, the regulators would be allowed to intervene in the process.
When the revision takes effect, the government could order foreign investors to sell their stakes if they violated the new rules. "If foreign investors do not comply with the government's order, the government can impose fines of less than 100 million won ($84,675) per day or three-thousandth of the total share buyout," a ministry official said.
Foreign investors, whose stake in a local telecom company is 15 percent or higher, will be required to register with the government. The information vice minister will head a committee to supervise the stake purchase of telecom firms by foreign investors.
The ministry said the new bill will put the foreign ownership limit for KT at 10 percent since it operates the backbone of the telecom network.
Foreign ownership in telecom companies in Korea tends to spark disputes, as was seen in April when top mobile carrier SK Telecom suffered a setback due to an ownership battle at its sister unit SK Corp., the country's largest oil refiner.
Currently, foreign investors are prevented from owning more than 49 percent of KT, SK Telecom and other major telecommunications companies.
(email@example.com) - Source : Korea Herald - 24/10/03
- EU UNIT OPENS CYBER WATCHDOG FOR IPR PROTECTION
By Seo Jee-yeon
The European Union Chamber of Commerce in Korea (EUCCK) yesterday announced it has opened a watchdog Web site to monitor violators of intellectual propriety rights (IPR).
``The Web site (www.eucck.org/ipr) is expected to become a cyber central for IPR issues, providing the most thorough and up-to-date information on counterfeiting prevention and IPR protection like patents and trademarks,¡¯¡¯ EUCCK director Park Yoon-sung said.
The EUCCK also expects the move to contribute to improving the image of Korea.
``In the Internet world of international trade, efficient utilization of cyber space is not the only effective approach to rectifying Korea¡¯s negative image as one of the most notorious places for counterfeit producers among the OECD countries,¡¯¡¯ Park added.
In addition, the Web site will help foreign companies in clarifying and analyzing IPR protection and enforcement status in Korea.
According to the EUCCK, a number of member firms have demanded establishing an integrated IPR information network as responsibilities for IPR policy-making and implementation have been scattered among several government organizations such as the Korean Intellectual Property Office, the Supreme Prosecutors¡¯ Office, the Korean Customs Service, the Ministry of Information and Communication, the Ministry of Culture and Tourism and the Korean National Police.
``The Web site will pave the way for Korea to become an IPR-wise advanced country providing an attractive investment and business environment for foreign companies,¡¯¡¯ Yoon said.
firstname.lastname@example.org - Source : Korea Times - 06/10/03
- BULLET TRAIN TO REVOLUTIONIZE WAY OF LIFE IN KOREA
Korea is putting the final touches on its first bullet train project that will go into service six months later, promising to bring "revolutionary'' changes to the daily lives of its people.
The French-built train will link the capital Seoul with two major cities on the southeast and southwest coasts Pusan and Mokpo. They will pass through about two dozen cities before reaching their final destinations.
"Holiday and travel cultures will undergo sweeping changes due to the sharply shortened travel time, helping promote a balanced land development and revitalization of local economies,'' said Oh Pyeong-soo, a spokesman for the Korea High Speed Rail Construction Authority (KTX).
The two train lines will be completed at the same time in April. One line will cover the 409-kilometer distance between Seoul and Pusan in two hours and 40 minutes, about half the present travel time.
The travel time between the two cities will be further cut to one hour and 56 minutes when its second-phase improvement project is completed by 2010, officials said.
The other line connecting Seoul with Mokpo will also cover roughly the same distance in two hours and 49 minutes, about half the present travel time.
South Korea is the size of the U.S. State of Indiana with a population of 48 million. Every corner of the country is within a half-day's travel but the bullet train will make the country seem smaller.
The largest civil engineering project ever in Korean history has been a subject of political controversy since it was launched in 1990 because of frequent design changes, delays and pork barrel politics. That forced the overall construction cost to more than double to 18.44 trillion won ($16.3 billion).
Despite all the controversy, however, officials are upbeat about the new service, believing it will spur what they called revolutionary changes in the nation's economic and logistics flows as well as in the lifestyles of ordinary people. Government officials forecast that the high-speed train will help relieve traffic and logistics congestion along the Seoul-Pusan corridor, which accounts for more than 70 percent of the nation's population, industrial production, rail passengers and container freight. One study estimates the new Seoul-Pusan train service will increase the nation's overall rail passenger transport capacity by 3.4 times, while the freight transport capacity of the existing line should jump 7.7 times.
In other words, the maximum daily passenger capacity by rail will surge from the current 180,000 to 520,000, or 190 million persons a year, while the freight transport capacity is to soar from 390,000 containers a year to 3 million containers, it said. Altogether, the new service will generate about 1.85 trillion won ($1.61 billion) annually in socioeconomic benefits by 2005, the study said.
The new system can also expect to spur the decentralization of Seoul, helping smaller cities in the central part of the country, including Chonan and Taejon, emerge as popular residential towns for commuters to and from the capital, officials said.
Japan reported similar effects when it opened its first bullet train "Shinkansen'' decades ago. The population of small towns through which the train passes increased by 10 percent between 1970 and 1985.
In the case of Hanamaki springs in Japan, tourist visits had more than doubled in 10 years after the opening of the Shinkansen in 1978, according to Korean rail officials.
The Seoul-Pusan and Seoul-Mokpo lines will use the same tracks from Seoul to the central city of Taejon where they will part and go in different directions to their final destinations.
The role of Taejon as a junction means a lot for commuters. The city, the home of many government offices, along with Chonan and other mid-size cities along the Seoul-Taejon route, are expected to become more attractive to people who want to move out of crowded Seoul.
Commuters in Taejon can reach Seoul in just 49 minutes aboard the high-speed train. The junction station will be later moved to the site of the administrative capital, which will be relocated somewhere in the central part of the country next year. Thereafter, the government will build a new high-speed rail between the administrative capital and Mokpo.
Officials insist the industrial and technological pervasive effects of the service will be enormous because the high-speed rail spurs the development of advanced aerodynamics, civil-engineering, mechanical and electronics technologies.
Such technologies can also be applied to materials, automation, information, aerodynamics and other future industries, they said.
"The nation's overall design capability for mass transport, such as general railroads, subways and light railroads, will be sharply enhanced, while automatic computer control and self-diagnosis technologies will be applied to automation of industrial robots,'' said Oh of the KTX.
The experience with the French technology has already helped Korea develop its own bullet train system. A locally manufactured high-speed train broke the milestone speed of 300 kilometres per hour in a test run Sept. 17, making Korea the world's fifth nation to possess such advanced technology. The speed of 300 kilometres per hour is on par with airplane takeoff speed and is about 50 km faster than French company Alstom-built high-speed trains.
Furthermore, the successful development of the world-class Korean bullet train will help Korean manufacturers advance on overseas markets.
Since late May, test operations have been under way along the Seoul-Taejon section, with separate tests scheduled to start along the Taejon-Taegu section in October. Testing along the Taejon-Mokpo section is slated for November. Officials said the Korean high-speed rail service will likely be named "K-Star,'' modeled after the EuroStar.
The fare for a Seoul-Pusan travel will likely be set at about 50,000 won ($44), about 1.2 to 1.5 times higher than the present deluxe Saemaeul train.
"On weekdays, about 60 high-speed trains will depart from Seoul for Pusan a day at intervals of 15 to 20 minutes, while the Seoul-Mokpo route will have 22 trains daily at intervals of 40 minutes,'' said Oh, adding the frequency will increase on weekends.
The government picked the downtown Seoul Station as the starting point for both Seoul-Pusan and Seoul-Mokpo lines, which will run through nearby Yongsan Station and Kwangmyong on the southeastern outskirts of the capital. Along with the launch of the high-speed rail, conventional railroad services will decrease by 10 to 20 percent.
According to KTX, the progress rate for the first phase of the Seoul-Pusan high-speed rail rose to 96.6 percent as of the end of August, with the figure set to climb to 98 percent by year's end.
"Facility installations for the newly built Seoul-Taegu section have already been finished, while electrification and system upgrade of the existing railway between Pusan and Taegu is nearing completion,'' said Oh. The second phase of the Seoul-Pusan line calls for the construction of a new high-speed rail between Pusan and Taegu by 2010.
Source : Korea Times - 01/10/03
- KOREAN AIR WINS 'AS 9100' CERTIFICATION
Korean Air Co., the larger of South Korea's two air carriers, has obtained the AS 9100 certification from Societe General de Surveillance, a leading agency for international certifications in the fields of quality, environmental and social-accountability management systems.
SGS Korea president Yves Hermes delivered the certification to Korean Air president Shim Yi-taek in a ceremony held Monday morning at the company's Busan aerospace plant.
Established by the International Aerospace Quality Group in 1999, the AS 9100 is an international standard based on ISO 9001:2000 and adds specific requirements that are critical for the aerospace sector. More than 50 aerospace companies worldwide, including Boeing and General Electric, have been certified under the system.
Korean Air said acquiring the certification gives it a basis for participating in the joint development and production of airplanes.
Source : Korea Herald - 07/10/03
- KOREA STRIVES TO KEEP FOREIGN SHIPPERS AT PORTS
The Korean government is planning to eliminate the port entrance fee for transshipment cargo at the Busan and Gwangyang ports beginning Oct. 1, the Ministry of Maritime Affairs and Fisheries said yesterday.
The measures are part of a bid to promote transshipment through the domestic port, which are suffering from signs of sluggish business in the wake of the truck drivers' strike and the recent Typhoon Maemi.
The maritime authority had already been offering 50 percent discounts for transit cargo entrance since July.
With the entrance fee exempted under the new policy, a vessel entering Korean ports loaded with 1,000 TEUs of transshipping freight can save 2.1 million won ($1,825).
The new system is expected to cost domestic port authorities 4.4 billion won annually.
According to the new plan, the ministry will also allow cross-costal container shipment to foreign shipping companies in a bid to offer them wider choices to run container shipping businesses in Korea.
It also revealed its intention to develop an incentive system, offering lower processing charges for large-sized transshipments.
Maritime administrations in Busan vowed to normalize operations at the nation's largest port by February next year, speeding the process of reconstruction from typhoon damages.
"Damaged container cranes will soon be repaired or replaced," the Busan Regional Maritime Affairs and Fisheries Office said.
"Hanjin Heavy Industries and Construction is building three cranes for the port and another three container cranes will be delivered from Japan's Mitsubishi Heavy Industries and installed within three weeks."
Hutchison Korea Terminals, which manages Jaseongdae Port in Busan, said it will replace three destroyed cranes with new ones within two months and complete repairing three other damaged cranes within three weeks.
In a related move, Minister of Maritime Affairs and Fisheries Choi Lark-jung visited Hanjin Shipping yesterday as a first step of the ministry's publicity campaign for domestic and foreign shippers, who in a recent survey showed increased disappointment in port operations in Korea.
"Minister Choi is also planning to visit foreign shippers operating in Korea and travel to China and the Netherlands in a bid to restore the deteriorating confidence of domestic ports and encourage shipping businesses here," an official at the ministry said.
It is a very rare event for the minister to visit shipping companies himself, officials noted, reflecting the urgency to ensure operational stability of domestic ports for major shipping companies.
"Shippers using Busan Port have raised questions about the port's competitiveness after massive strikes by truckers paralyzed the nation's logistics network twice so far this year and a powerful typhoon hit the southern part of the nation early this month," a company official explained.
A recent survey by the Korea Maritime Institute showed that 14 domestic and foreign shipping companies, or 52 percent of the polled 27 companies, were thinking about leaving Busan Port.
The poll prompted immediate denial by the marine authority. The ministry questioned the validity of the telephone survey and criticized the government-funded institution as being irresponsible.
By Kim Sung-mi (email@example.com) - Source : Korea Herald - 30/09/03
- THE GREEN MACHINE
The history of the Korean environmental industry is short but marked by explosive growth.
The environmental industry is comprised of those businesses that provide products and services designed to measure, prevent, control or correct the contamination of water, air and land, and manage waste, noise and other environmental damage related to the ecosystem. In a broader sense, the industry includes purification technology plus production of products and delivery of services to reduce environmental risks and minimize contamination and the use of natural resources.
Based on this definition, the scope of the environmental industry may vary between countries. Generally, however, the industry is classified into three broad categories: services, systems and resources. Services include: collection and analysis of samples; water treatment services for the maintenance and operation of wastewater treatment plants; solid waste management for collecting and treating waste; and restoration, consulting and engineering services for cleaning contaminated sites.
Systems include waste management facilities, air pollution control and prevention systems, as well as process control systems to prevent emissions of industrial pollution. Resources include the sale of recycled waste generated from industrial and consumer activities, as well as the sale of renewable energy and energy efficient systems.
The environmental industry is strongly characterized by the construction, maintenance and operation of social overhead capital for the common welfare. Since the demand for environmental products and services is driven by non-market factors such as national environmental policies or non-governmental (NGO) activities, environmental markets are usually created as conscious acts of will by the parties involved.
- DEFUSING THE NIMBY SYNDROME
Since the causes of pollution are extremely varied, environmental protection is a complex industry that requires the application of broadly integrated sciences and technologies, including plant engineering. These characteristics encourage the introduction of technologies developed in other industries. It is also why the environment sector is regarded as an emerging industry engaged in an interdependent relationship with other industries.
The environmental industry requires different processing technologies and systems depending on the source of environmental pollution, type and characteristics of pollutants, and processing methods; hence most environmental service providers operate on the basis of customized orders.
Recently, there have been a suite of changes concerning environmental management worldwide due to tougher regulations against pollution. These new standards are primarily aimed at environmental protection and defusing local disputes caused by the production of too much waste and the NIMBY (Not In My Back Yard) syndrome.
In Korea, the question of how environmental problems are addressed has become a major political issue due to the excessive discharge of pollutants, inadequate incinerators, landfills and waste treatment plants as well as intense ¡°NIMBY reactions¡± from residents in those localities such facilities are (or are planned to be) located. In contrast to the drive under the World Trade Organization (WTO) for freer global trade, international trade regulations at the same time are becoming stricter in respect of environmental protection.
In view of these domestic and international conditions, environmental protection is becoming progressively more important. Accompanied by the growth of other industries, the expansion of the environmental industry driven by technological developments could lead to the early realization of an environmentally friendly industrial structure. This will not only contribute to solving domestic environmental problems, but may enable Korea to more easily comply with international environmental regulations while providing opportunities for Korean environmental service providers to enter foreign markets. In short, the development of a domestic environmental industry will provide significant stimulus to the domestic economy.
Through the sustainable use of natural resources and minimizing the disposal of pollutants, the environmental industry contributes to a more efficient distribution of governmental and private funds by reducing the social costs of environmental protection (such as imported materials, pollution cleanup and treatment). Furthermore, the development of environmentally friendly materials and technologies will promote knowledge integration and generate more added value, as environmental-effects assessment, environmental design, monitoring, plant engineering and other environmental services form an important part of the emerging industry and create more job opportunities than other industrial sectors.
- THE PRICE OF 'GROWTH AT ALL COSTS'
In the course of paving the way for rapid economic development, Korea disregarded environmental concerns while promoting economic policies focused on national growth. It was only when environmental pollution became a serious problem that the government started to devise and enforce environmental regulations.
Therefore, such enforcement has been slow, and the history of the environmental industry very short since its growth is largely driven by government regulations. It has always taken major pollution incidents to spur the development of the environmental industry. This is because the public and government tend to recognize the potentially disastrous effects of pollution (and the benefits of a clean environment) only after a crisis takes place.
From this perspective, the Korean environmental industry can be said to have been created in the 1980s, while the phenol contamination of the Nakdong-gang River in the early 1990s marked a turning point after which the industry began to grow rapidly. However, in view of its short history, weak industrial base and lagging technolog y, the industry is characterized by technical shortcomings, a preponderance of small-scale businesses, poorly defined career opportunities and an adverse balance of trade in environmental products and systems.
To fully address Korea¡¯s environmental problems, it is necessary to attract foreign investment through which to improve those domestic technologies currently at the developmental stage, and so strengthen the competitiveness of Korean environmental firms to equip them to compete in regional markets such as China and Southeast Asia.
Since Korea can take advantage of its easy access to these regions plus other newly industrialized markets in its vicinity, the country is well-positioned to develop as a major base for the East Asian environmental industry. Consequently, it is imperative that Korea promote the introduction of advanced-country environmental technologies through the attraction of inbound foreign investment in order to bolster the industry¡¯s technological capabilities in weak areas and improve the trade balance in the environmental sector - a balance that has long been in deficit.
A HISTORICAL PATTERN OF GROWTH
The South Korean environmental industry has demonstrated consistent growth. Revenues grew from 3.24 trillion won in 1990 to 7.47 trillion won in 1997, representing an average annual growth rate of 12.7 percent. However, the 1997 financial crisis intervened to put a brake on industry growth and investment. Turnover, in fact, dropped by 13.5 percent in 1998 . the gravest year of the crisis.
Environmental Industry Production & Consumption Trends (Unit : billion won)
Source : Korea Institute for Industrial Economics and Trade (KIET)
Domestic consumption displayed a similar trend: purchasing recorded an average annual growth of 11.7 percent during the 1990/97 period, but fell off by 18.2 percent in 1998. Taking into account the convulsions wrought by the crisis, domestic production and consumption have posted historical patterns of continued growth since the early 1990s thanks to a constant increase in anti-pollution expenditures.
Anti-pollution measures began to expand substantially at the beginning of the 1990s. Total expenditures in this area increased by 10.2 percent from 3.94 trillion won ($4.15 billion) in 1992, to 4.34 trillion won ($5.4 billion) the following year. Expenditures continued to accelerate rapidly until 1997; by 16.1 percent to 5.35 trillion won ($6.65 billion) in 1994 and by 17.8 percent to 6.30 trillion won ($8.11 billion) in 1995. The rate of growth slowed slightly in 1996 to 14.8 percent as the volume of purchases increased to 7.24 trillion won ($8.93 billion), but the following year, the market gained its former vigor by growing at a clip of 16.3 percent with expenditures totaling 8.42 trillion won ($7.20 billion, at prevailing exchange rates).
Expenditure trends went into sharp decline in the crisis year of 1998, as businesses struggled for survival and environmental concerns went onto the back burner.
A study of different economic actors shows that anti-pollution expenditures declined substantially during this time (by 18.1 percent in the corporate sector, 39.1 percent among households, and by 6.8 percent in the public sector). A study of the cutbacks in 1998 indicates that although expenditures on processing waste materials remained almost the same as in the previous year (increasing, in fact, by 0.3 percent), those dedicated to improving air and water quality fell substantially by 21.1 percent and 19.1 percent, respectively. A significant decline was observed across the board throughout industry. The heavy chemical industry and service industry, for example effected cuts of 19.9 percent and 21.4 percent, and even the utility industry, which had recorded major acquisitions the previous year, sliced spending by 12.1 percent.
A TENDENCY TOWARD DEFICIT
Anti-pollution expenditures began to rebound as the economy started to recover and investment revived in 1999. Spending expanded by 10.75 percent to 8.23 trillion won ($6.86 billion) in 1999, slowed a little by growing 3.6 percent to 8.31 trillion in 2000, but bounced back the following year to record an 11.3-percent increase to 9.25 trillion won.
A more detailed analysis of trends over the 1992/2001 period shows that government sector spending recorded the highest rate of average growth (by 10.9 percent per annum) while that by industry grew by 9.2 percent. A study by medium shows that expenditures on waste materials processing recorded the fastest rate of growth (12.7 percent per annum), while investments geared toward improving water and air quality grew by 9.5 percent and 7.2 percent per annum, respectively.
South Korea has historically recorded a chronic deficit in the trade of environmental products. The Organization for Economic Cooperation and Development (OECD) reported that the country sustained a deficit of $3.4 billion in 1992 that subsequently swelled to $ 7.8 billion in 1995, before reaching its peak at $ 8.6 billion in 1996.
Reflecting this trend to deficit, South Korea¡¯s trade specialization index (TSI) for the environmental industry continued to sink from -0.5820 in 1995 to -0.6261 in 1996, and to -0.6519 in 1997. (The TSI measures the degree to which a country ¡°specializes¡± in importing or exporting a particular product or whether its trade is in balance, see box). Such a trend implies a continued deterioration in the country¡¯s terms of trade in this sector. Immediately following the crisis of 1997, however, the trade deficit slumped to $2.5 billion in 1998 in the wake of cutbacks in environmental facilities investment and a subsequent decrease in the import of equipment and raw materials. Since then, the deficit enlarged to $5.1 billion in 2000 and then dropped to the $4-billion level in 2001 and 2002. A study also shows that the TSI for this sector has improved to -0.38 since 1998.
The Trade Specialization Index (TSI)The index is derived by dividing the trade balance in the product or group of products by the volume of trade. In equation form it is expressed as follows: exports minus imports/exports plus imports. According to this equation, when Korean exports to a specific nation without importing anything, the value of the TSI achieves its maximum value of 1. When Korea imports from, without exporting to a specific country, the TSI sinks to its minimum value of -1.
Compared to more developed countries, South Korea¡¯s TSI indicates an import-dominated structure of trade. In short, South Korea enjoys a comparative trade disadvantage in regard to more advanced countries and a comparative advantage against developing countries. It formerly displayed a high degree of import specialization against the United States, Japan and the European Union (-0.8 in 1995), but since then the index has gradually improved by falling to -0.5 against the United States and -0.7 against Japan and the EU in 2001.
GETTING BEYOND FIRST-GENERATION TECHNOLOGY
In the meantime, Korea¡¯s $500-million environmental trade surplus with China reveals an export-dominant trade structure. The TSI against China was a relatively high 0.57 in 1995, but it continually declined to 0.42 in 2001. The index against India at over 0.8 pointed to a high degree of export specialization until 2000, before dropping slightly to 0.6 in 2001.
As demonstrated by the above, the structure of South Korea¡¯s environmental product and system trade with more advanced countries is characterized by chronic deficit, while displaying a tendency to improve gradually. Against developing countries, on the other hand, it reveals a tendency to slow deterioration despite the current surplus.
This ¡°double structure¡± of the environmental sector trade clearly reflects the reality of domestic industry at the present. More specifically, South Korea has waste disposal technologies as advanced those of industrial countries, and holds a certain share of the market in developing countries. On the other hand, it is still substantially behind industrialized countries in the area of high-tech processes and thus must rely heavily on imports from these countries, resulting in a huge deficit in trade.
The fact that Korea¡¯s TSI with industrialized countries (i.e., export capability) as the United States, Japan and EU is improving, while that with developing countries is worsening, shows that the country¡¯s environmental industry is in a ¡°nutcracker¡± situation.
South Korea¡¯s major export markets are Southeast and Southwest Asia, and primarily focused on niche markets in these regions in which the country enjoys a competitive advantage. These products include electrical dust collectors, bag filters and water purification facilities such as waste disposal and sewage treatment plants. However, despite such an advantage, shipments of environmental products accounted for a mere 0.05 percent of total domestic exports, even though this sector accounts for as much as 0.3 percent of the country¡¯s manufacturing output.
In general, South Korean environment technology has almost reached the level of an industrialized country in terms of waste disposal. Waste disposal is referred to as a ¡°first-generation technology¡± in the industry and involves the processing of discharged pollutants. However, in case of purification and restoration technologies, which are referred to as second- and third-generation technologies, respectively, South Korea is known to lag more advanced countries. Such countries have already reached the stage of exporting their first-generation technologies and are currently putting second-generation technologies to practical use. They have already completed the development of third-generation technologies that are just beginning to find applications.
A more detailed comparison shows that South Korea¡¯s environmental technologies compare unfavorably with those of more advanced countries, ranking below the 50-percent level on average, except in a few areas. In particular, with the exception of desulfurization and denitrification technologies, South Korean purification technologies for most manufacturing processes rate only 20 percent of advanced-country level.
While more advanced countries have expanded their investment in developing environmental technologies since the 1970s, South Korea has only a ten-year history in this area and consequently, accumulated investment has been low. As a result, its technologies are only at the 40-percent to 70-percent level of more advanced countries. Since the industry has concentrated the bulk of its investment in the waste disposal area, its sewage and toxic waste technologies are highly competitive while dust collection and desulfurization technologies have also been put to commercial use. On the other hand, such advanced technologies as clean manufacturing, earth environmental protection, and ecosystem restoration are still in a rudimentary state. Regardless, the projected investment in these areas is a mere 20 percent of the total domestic investment in environment technologies.
This implies that South Korean environmental technology policy is mainly focused on development of basic facilities and related technologies. The advanced environmental technologies currently being developed in the industrialized world are expected to lead the technological field in the 21st century because of their potential to create high added value, tap large markets, and effectively address mounting pollution problems. Nonetheless, South Korea has only a rudimentary level of such technologies at present. Unless there is an epoch-making advancement, its technological dependence on advanced countries is expected to accelerate.
Although the South Korean government environmental R&D budget has gradually increased since the mid-1990s, it accounted for only 0.027 percent of national GDP in 2001.
Government Expenditure on Environmental R&D (unit : billion won)
Source : The results of a survey, analysis and assessment of national R&D projects in 2001 and 2002, national Science and technology Commission, cited in Environment White Paper (2002)
THE KYOTO IMPACT
Moreover, public R&D expenditures in this area were only 3.7 percent of the entire government research budget for 2001, much smaller than those in other technological areas.
The health and size of the domestic environmental industry have changed over time in response to government policies developed in connection with industrial innovations both at home and abroad. The number of businesses operating in the environmental industry has thus tended to fluctuate with the seriousness of government policy toward the problems of pollution. The number increases when the government puts priority on a cleaner environment. Following the ratification of the Kyoto Protocol by South Korea in 2002, for example, the government began implementing tougher environment policies, generally considered a plus for the industry. On the other hand, when government policy is more growth- rather than environmentally oriented during times of economic contraction, the number of businesses decline.
A careful study of such trends reveals that the number of businesses in the industry declined by 5.5 percent in 1993 and 2.3 percent in 1998. These two periods are politically and economically similar in that on both occasions newly elected political administrations adopted a ¡°growth-first¡± policy. In 1993, the new administration of President Kim Young-Sam, set aside environmental concerns from the outset in favor of a bold economic policy designed to promote growth. With the onset of the financial crisis in 1998, the new government of President Kim Dae-Jung adopted a suite of radical measures in a desperate effort to revive the economy with the upshot that environmental policy was once again left by the wayside. In short, the one clear lesson to be learned from these two cases is that when the government retreats on environmental policy, the number of businesses in the industry declines.
According to the Ministry of Environment official registry, the number of domestic environmental businesses totalled 12,167 at the end of 2001. Among them, waste disposal plant contractors formed the largest portion with 22.7 percent of the total, followed by those in waste collection and transportation, 21.8 percent, and designers and builders of wastewater, night soil, and livestock waste disposal facilities, 14.5 percent. (See Table 7). One of the salient features of the South Korean environmental industry is that most businesses are small-scale; as many as 67 percent have an annual sales of less than 1 billion won.
Environmental Industry Businesses, by Major Area (2001)
Type of business N° of Business Type of business N° of Business
Pollution prevention 968 Night-soil collection and transportation 718
Survey Agencies 153 Night-soil disposal plant cleaning 1836
Wastewater disposal 51 Wastewater, night-soil and livestock waste disposal designing and construction 1764
Waste collection and transportation 2654 Water purifier tank and wastewater disposal plant manufacturer 62
Intermediate and Fired Waste disposal 867 Vehicle inspection agency 1103
Waste recycling 2759 Measuring device testing agency 5
Environmental Agency 194 Environmental effect evaluation agency 13
Total 12 167
Source : Ministry of Environment
With the reinforcement of regulations at home and abroad, and a greater awareness on the part consumers of the need to preserve the environment, the outlook for the environmental market in general is that it will expand rapidly.
In response to the introduction of ISO 14000 environment management systems and standards and former U.S. president Bill Clinton¡¯s proposed ¡°Green Round¡± of trade negotiations, many businesses have started to adopt a pro-environmental managerial stance as their central business strategy. Moreover, with the concept of sustainable growth gaining currency, an increasing number of businesses are beginning to understand the importance of recycling, restoration and clean production technologies.
The environmental industry is an area which requires knowledge-intensive technology at an advanced level. It has a great potential as an export industry and is expected to be an important creator of new jobs in the future. In particular, high value-added businesses such as environmental management, education and information services are forecast to thrive. Accordingly, the government is promoting the industry as a means of improving national competitiveness to enhance its growth potential.
On acceding to the OECD in November 1995, South Korea agreed to abide by the organization¡¯s environmental strictures. Under such circumstances, advanced countries are attempting to link trade concessions to developing countries with efforts, on their part, to more closely protect their domestic environments. This, too, may prove important in promoting future industry demand.
Total industry output was valued at 8.90 trillion won in 2001. It is expected to growth on average by 13 percent per annum until 2006, when it is projected to reach 14.97 trillion won ($12.48 billion at present rates). Output is predicted to maintain an annual average growth rate of 8 percent thereafter.
NEW TECHNOLOGY CREATION
By 2011, the environmental industry is expected to be worth 21.90 trillion won. The slowdown in the second half of the decade is based on the prediction that the South Korean environmental market will move into a mature stage thanks to a gradual improvement in environmental regulations, along with the advancement of public awareness about the need for a clean environment.
Domestic consumption, based on existing pollutant-producing businesses is expected to contribute to expanding production during the first half of the decade. In the second half, however, the creation and expansion of demand for new environmental technologies (such as soil restoration and recycling) will contribute greatly to an increase in domestic consumption.
In the meantime, domestic consumption is projected to grow faster than production, as it increases by an annual average rate of 15.1 percent from 7.67 trillion won in 2001 to 15.48 trillion won in 2006. Thereafter, it will slow to an average rate of 11 percent to reach 26.40 trillion won by 2011.
In general, the environmental market can be divided into three areas: environmental services, resource utilization, and facilities. During the 2001-to-2005 period, the resource utilization segment is expected to grow fastest, at an annual average of 14.1 percent. Environmental services and facilities are estimated to grow at similar rates, namely 12.5 percent and 12.7 percent, respectively. Such general figures hide what are considered to be stellar performing areas. In the service area, for example, the environmental energy business is forecast to grow at a stunning 46.8 percent per year, while, in the facilities segment, clean production process and technology based businesses are expected to grow at 36.6 percent annually.
The industry is thus primed for growth. The speed and value added component of that growth will depend on how successful the industry will be at attracting foreign investment partners.
Ahn Ki-Cheol (firstname.lastname@example.org) Manufacturing Industries Analysis Division Korea Institute for Industrial Economics & Trade
Source : KT&I - septembre - octobre 2003
KOREA ON TRACK FOR BIO-ORIENTED SOCIETY
Industry association spearheads efforts to develop core infrastructure
The global biotechnology industry hopes to make biology-related products and services daily necessities for most people by 2010, and Korea is not an exception. Overseeing this drive locally is the Bioindustry Association of Korea, a nonprofit organization under the auspices of the Ministry of Commerce, Industry and Energy that is affiliated with the worldwide Bioindustry Association.
Whether a country is considered developed, developing or underdeveloped, the BAK said that each country participating in the Bioindustry Association has adopted strategies to bloom into a biologically oriented society.
The BAK said it aims to promote the progress of the biological industry by developing industrial research capabilities and enhancing the sector's business activities.
Some of the major fields the biological industry encompasses are technology, medicine, science and business.
For the next few years, the BAK is focusing on reinforcing the biological industry by developing software platforms and industrial hardware platforms to build an integrated information system for the industry, as well as establish business-to-business links and an e-commerce network.
Some of the association's major accomplishments in the 1990s include the development of hardware platforms for the biological sector and the fostering of international cooperation. Its global activities included conducting surveys concerning the sector, seeking assistance for government policies, and holding symposiums and seminars.
More specifically, the BAK has developed a platform to promote and develop the biological industry, which features developing core industry infrastructure and supporting related activities for small- and medium-sized businesses.
In the area of international collaboration, the association holds international events like BioKorea, Korea-Japan bio industry cooperation programs and a Korea-U.S. biotechnology and investment cooperation program, as well as organizes international conventions and analyzes trends related to the industry.
With respect to biological industry surveys and publications, the BAK publishes annual reports on the sector in Korea and a quarterly magazine called Bio Industry. The organization also actively engages in contributing to government policies and services for its members. For instance, it manages the Bioindustry Awards, receives feedback and collects contributions for government policies. It also manages meetings for various biological industry associations in Korea and makes efforts to recruit new members.
The BAK currently has 64 general members with voting rights. The members come from various fields of the biological industry, such as biopharmaceutical, biochemical, biofood, bioagriculture and environment, as well as bioprocess.
Meanwhile, associate members comprise 22 organizations and more than 84 individuals including professors, patent attorneys and industry experts.
Those involved in the industry may want to know that Bio Korea 2003, an international biological product exhibition and conference, is opening tomorrow at COEX in southern Seoul for a three-day run. Visitors will be able to network with participants from all over the world.
Other events taking place simultaneously are the Bio Symposium and Bio Job Fair 2003. The former will have about 70 companies and organizations from home and abroad showcasing their latest technologies and products, while local and foreign experts will hold a symposium to discuss the future of the industry. The latter will cover the diversity of jobs related to the biological industry, allowing visitors to gain insight into what experience and education is necessary to land a job in the sector.
By Yoo Soh-jung (email@example.com) - Source : Korea Herald - 21/10/03
- NEW HIGHWAY TO LINK SEOUL, EAST COAST
The government will build a new highway that will be the shortest link between Seoul and the east coast by 2010, the Ministry of Construction and Transportation said yesterday.
The "Second Yeongdong Expressway" will facilitate direct travel from the capital city to the northern part of Gangwon Province, diverting traffic from the current Yeongdong Expressway.
The government estimated the project will cost 3.46 trillion won ($3 billion).
The new expressway will consist of two sections. The first section, connecting Seoul to Chuncheon in Gangwon Province, is currently under construction and will be completed by 2008, the ministry said.
The second part will link Chuncheon to Yangyang, an eastern coastal city. The construction will begin next year and will be completed by 2010.
The government also plans to build an expressway connecting the eastern cities of Donghae and Samcheok, both in Gangwon Province. The four-lane expressway will extend 19 kilometers and a total of 620 billion won will be injected into the project.
By Seo Ji-eun (firstname.lastname@example.org) - Source : Korea Herald - 06/10/03
- LE CORÉEN POHANG STEEL CONTINUE À INVESTIR DANS LE PAYS
Le sidérurgiste coréen a l'intention de doubler sa production d'Inox en construisant une nouvelle usine en Chine, où l'on s'attend à une hausse de 20 % de la consommation de ce type d'acier étroitement corrélée à la croissance du PIB.
Le sidérurgiste coréen Pohang Steel (Posco) a décidé de doubler sa production d'aciers inoxydables en investissant dans une nouvelle usine en Chine. Il s'agit du quinzième projet de développement de Posco dans l'empire du Milieu, où le groupe a déjà investi 803 millions de dollars (690 millions d'euros). Il s'effectuera via la société Zhangjiagang, dont le groupe coréen détient 82 % du capital. Etroitement liée à la croissance du PIB, la demande d'aciers inoxydables devrait progresser de 20 % cette année en Chine.
L'investissement total s'élève à 700 millions de dollars (600 millions d'euros) et le site, qui devrait être opérationnel en 2006, permettra à Posco de doubler sa production d'Inox. La capacité de production de la nouvelle usine s'élèvera, en effet, à 600.000 tonnes par an, qui s'ajouteront aux 540.000 tonnes que Posco produira à compter de 2005. Posco et son associé chinois apporteront 40 % des financements (239 millions de dollars), le solde étant financé par des prêts.
Véritable locomotive de la croissance asiatique, la Chine fait actuellement figure d'eldorado pour tous les groupes de biens d'équipements et de biens intermédiaires. Le numéro un japonais de l'acier, Nippon Steel , et son partenaire européen, Arcelor , ont récemment annoncé leur intention de s'associer à leur homologue chinois Baosteel pour construire à Shanghai une nouvelle usine d'aciers plats d'une capacité de 1,7 million de tonnes par an. La Chine représente, d'ores et déjà, 20 % des ventes à l'exportation de Nippon Steel, qui a décidé de s'implanter localement pour mieux servir les constructeurs automobiles installés en Chine.
Nissan , Toyota et Honda , pour ne citer que les japonais, y ont déjà pris pied et, au total, les projets des constructeurs étrangers devraient se chiffrer à quelque 10 milliards de dollars dans les prochaines années. Ce qui fait même redouter des risques de surcapacité à très court terme. L'américain General Motors estime qu'il se vendra 4,4 millions de véhicules neufs en 2004, au lieu de 3,4 millions en 2002. Les capacités de production locales s'élevant à 2,7 millions d'unités cette année.
Source : Les Echos - 22/10/03
- KOREA GETS IN TOUCH WITH SCIENCE SATELLITE
Scientists have at last succeeded in communicating with Korea¡¯s first satellite launched for scientific purposes. The Satellite Technology Research Center under the Korea Advanced Institute of Science and Technology, or KAIST, said that it contacted Kosmos-3M at around 11:30 p.m. Monday on the 11th try. It was 56 hours after Russia launched the satellite.
Scientists said they also successfully communicated with the satellite one more time at 8:44 a.m. yesterday, so they now expect no problems in its operations.
The satellite, built for the study of the structure and the evolution of the galaxy, is carrying Korea¡¯s first space telescope. It will start scanning the skies in four to six weeks. The telescope was developed jointly with the National Aeronautics and Space Administration and University of California at Berkeley.
Source : JoongAng Daily - 01/10/03
- KOREAN SCIENTISTS SUCCEED IN CONTACTING FIRST SATELLITE
South Korean scientists succeeded in communicating with the country's first scientific research satellite late Monday night, two days after it was sent into orbit.
"We made successful contact with ST Sat-1 (Science and Technology Satellite 1) at 11:24 p.m. when it was in orbit over the Korean Peninsula," said researchers at the Korea Advanced Institute of Science and Technology (KAIST) Space Research Center, producer and manager of the satellite. - Source : Yonhap - 30/09/03
- THINK TANK BACKS LIMITS ON CHAEBOL
A state-run think tank yesterday told the government to tighten regulations on conglomerates, saying that the authorities should continue to limit big businesses' equity investments and push them to strengthen their outside-director systems.
In its comprehensive report submitted to the Fair Trade Commission to help the panel formulate market-reform policies, the Korea Development Institute hinted that current rules limiting chaebol's total equity investment levels are an effective regulatory tool, noting that 37 conglomerates' average gap between their power and stake holdings shrank from 33.6 percentage points in 1997 to 18.8 percentage points now.
However, the KDI stressed that controlling families still exercise excessive power compared to their stakes.
Using the KDI's own calculations, the report detailed the difference between voting rights held by each group's controlling family and their actual stake at 37 chaebol, or family-controlled conglomerates.
It revealed that two Daewoo affiliates, the car-making and shipbuilding units, maintain the best governance structures without any gap between controlling shareholders' power and their stake ownership.
At the bottom of the list was Hanwha Group, where the difference between controlling power and actual stake holdings reached 50.5 percentage points.
The comparable gap amounted to 26.43 percentage points on average at four top chaebol - Samsung, LG, SK and Hyundai Motor - and 26.9 percentage points at the 11 largest conglomerates. That was far higher than 18.8 percentage points, the average of the 37 groups addressed in the report.
The think tank claimed the wider gap seen in bigger conglomerates indicates that the growth in chaebol assets mostly stems from cross shareholdings among group affiliates, rather than controlling families' new investment.
The institute suggested a set of measures to help chaebol tighten their internal control, including publicizing their stake holdings within the group and release information on their cross shareholding structure. The suggestions also included establishing a committee on insider transactions, making stocks account for more of the salaries paid to directors, boosting transparency in appointing directors and encouraging meetings exclusively for outside directors.
The KDI also recommended that chaebol management be required to appoint a senior outside director as long as its chairman concurrently serves as the chair of the board of directors.
By Kim Ji-ho (email@example.com) - Source : Korea Herald - 06/10/03
- SAMSUNG TABLE SUR UN MARCHÉ MONDIAL DE 460 MILLIONS DE TÉLÉPHONES MOBILES EN 2003
En marge du Salon UIT de Genève, Samsung Electronics a annoncé hier relever sa prévision pour le marché mondial des téléphones mobiles en 2003. La demande devrait être plus proche des 460 millions d'unités de terminal mobile au niveau mondial que des 435 millions d'unités initialement attendues, les stocks étant à leur plus bas niveau depuis cinq ans. Le groupe considère que le troisième trimestre a été excellent dans ce secteur grâce, notamment, aux terminaux à écran couleur et à ceux intégrant des appareils photo.
Source : Les Echos - 14/10/03
- SAMSUNG S'ATTEND À UNE HAUSSE DE SES MARGES DANS LES MÉMOIRES
Samsung Electronics a annoncé hier que la marge d'exploitation de son activité mémoires, dont il est le premier producteur au monde, allait " fortement augmenter " aux troisième et quatrième trimestres. Les analystes estiment que la marge d'exploitation du groupe coréen dans ce domaine est de l'ordre de 30 % environ, alors que ses concurrents Hynix et Micron affichent des marges négatives. L'ensemble de la division semi-conducteurs de Samsung Electronics a, quant à elle, réalisé une marge d'exploitation de 15 % au deuxième trimestre.
Source : Les Echos - 30/09/03
- PROFITS EN HAUSSE POUR SAMSUNG
Le groupe sud-coréen Samsung Electronics a annoncé vendredi une augmentation de 6,6 % de son profit net au cours du troisième trimestre. De juillet à septembre, le chiffre d'affaires a également progressé de 15 %. Ces progrès sont dus aux deux points forts du groupe de Séoul : les composants électroniques et les écrans plats. Selon le vice-président du groupe, Chu Woo-sik, cette tendance devrait se poursuivre jusqu'à la fin de l'année, le quatrième trimestre devant même apporter des résultats record. Les ventes de composants électroniques et notamment celles des mémoires flash ont fortement contribué à ces bons résultats. Les ventes d'écrans plats à cristaux liquides ont progressé de 19 % au cours du troisième trimestre. Samsung est également le troisième constructeur mondial de téléphones mobiles.
Source : Les Echos - 20/10/03
- SAMSUNG ANTICIPE UNE HAUSSE DE 20 % DE SES VENTES EN 2004
Le sud-coréen Samsung a annoncé vendredi viser une croissance de 20 % de son chiffre d'affaires dans les mémoires DRAM, à 10 milliards de dollars l'an prochain. " Nous visons une part de plus de 21 % du marché mondial des mémoires, estimé à 47 milliards de dollars en 2004 ", souligne l'électronicien, premier fabricant mondial de ce type de composants. Samsung, qui a fortement investi sur ce segment, mise également sur une progression de 20 % du marché mondial des mémoires flash à 2,87 milliards de dollars cette année.
Source : Les Echos - 13/10/03
- SONY POURRAIT S'ALLIER À SAMSUNG DANS LES ÉCRANS PLATS
Sony tenté de signer un pacte avec le diable ! Le géant japonais de l'électronique grand public a confirmé hier qu'il pourrait s'allier avec le sud-coréen Samsung dans les écrans plats. A l'image du tandem européo-coréen Philips-LG, qui est devenu le numéro un mondial des écrans LCD, une alliance entre Sony et Samsung pourrait donner naissance à un nouveau poids lourd capable de briguer rapidement le titre de champion du monde sur un marché qui attire en ce moment tous les regards mais qui pourrait également s'avérer rapidement surcapacitaire.
Pour l'instant, les deux sociétés admettent simplement être en discussions. Sony prend même soin d'ajouter qu'il rencontre différents partenaires potentiels, et qu'il pourrait aussi, en cas d'échec des négociations en cours, investir seul sur ce marché des écrans plats actuellement en pleine explosion.
Pour le géant japonais, néanmoins, le temps presse. Déjà distancé par Sharp sur le marché des écrans haut de gamme et par les producteurs taïwanais et coréens sur celui des écrans d'entrée de gamme, le groupe est en train de passer à côté de l'un des segments les plus dynamiques du marché de l'électronique.
A double tranchant
Une alliance avec Samsung pourrait pourtant s'avérer à double tranchant. D'un côté, Sony, qui se fournit déjà en écrans LCD auprès de sous-traitants taïwanais, a besoin d'une source d'approvisionnement fiable. En s'alliant avec un producteur comme Samsung, il serait en mesure de générer rapidement des économies d'échelle et de disposer de volumes conséquents.
Mais, même dans le cas de la création d'une société commune, une alliance avec Samsung ne permettrait pas de neutraliser l'un des groupes qui s'est avéré au fil des ans être l'un des rivaux les plus redoutables de Sony. Une alliance avec Sony donnerait même un nouveau vernis de respectabilité à un producteur coréen en pleine progression, qui deviendrait ainsi plus crédible sur le marché de la télévision du futur.
Après avoir longtemps tenté de tout faire seul, Sony a été progressivement contraint à prendre un virage plus " réaliste ". Dans les mobiles par exemple, le groupe s'est allié _ pour l'instant sans grand succès _ avec Ericsson et, dans les microprocesseurs pour ses consoles de jeux, il travaille avec Toshiba et IBM. Une alliance de plus n'aurait donc à ce titre rien de choquant, mais l'inventeur du Trinitron, qui est devenu la marque de référence de l'électronique lors du passage de masse à la télévision couleurs, marquerait bien, en cas de mariage avec Samsung, qu'une page importante de son histoire est désormais sur le point d'être tournée.
BARROUX David - Source : Les Echos - 23/09/03
- ECRANS PLATS : SONY ET SAMSUNG PROCHES D'UN ACCORD
Le numéro un du téléviseur va créer une société commune avec le géant des écrans plats. Sony et Samsung veulent se renforcer mutuellement. Les deux géants asiatiques comptent créer un site commun de production en Corée du Sud.
Sony et Samsung devraient cette semaine officialiser leur alliance dans le monde des écrans plats. Les deux géants asiatiques négocient les derniers détails en vue de créer une société commune disposant d'un site de production d'écrans à cristaux liquides (LCD). Dite de " septième génération ", cette usine basée en Corée du Sud disposerait d'ici à 2004-2005 d'une capacité de production de 100.000 écrans par mois. Selon la presse japonaise, l'investissement que les deux partenaires devraient financer à égalité atteindrait 200 milliards de yens (1,6 milliard d'euros).
" Ils sont très complémentaires , souligne Masahiro Ono, analyste au Credit Suisse First Boston (CSFB). Sony est le numéro un mondial des téléviseurs classiques, Samsung, le numéro un ou deux du LCD. Ils peuvent se renforcer mutuellement ", ajoute-t-il.
Pas vraiment le choix
Certains reprocheront à Sony de signer un pacte avec un concurrent redoutable, mais l'analyste de CSFB estime que le japonais et, dans une moindre mesure, le coréen n'ont pas vraiment le choix s'ils ne veulent pas se faire distancer par le tandem LG-Philips ou par Sharp. "Les cash-flow de Sony ne sont pas suffisants pour qu'il puisse investir seul. Il lui fallait un partenaire. Dans ce cas, autant s'allier à un groupe puissant, capable de garantir des écrans de qualité dans des quantités suffisantes. Sony pourra toujours ensuite se différencier avec son savoir-faire marketing et les autres composants électroniques que comporte un téléviseur à écran plat " , souligne-t-il.
Ne représentant encore qu'une fraction, en volume, des 140 à 150 millions de téléviseurs vendus chaque année dans le monde (entre 1 et 2 %), les écrans plats connaissent un boom incroyable depuis deux ans, sortant de la sphère informatique pour entrer dans celle de l'électronique grand public. Sur un marché dominé par Sharp pour la technologie LCD et par d'autres acteurs japonais comme Matsushita ou Hitachi pour la technologie plasma (PDP), Sony n'est pour l'instant qu'un acteur de second rang. Ne disposant pas de ses propres capacités de production, l'électronicien achète l'essentiel de ses écrans à LG-Philips. Matsushita, qui achète, lui, une partie de ses écrans LCD à Samsung, pourrait avoir plus de mal à être livré en cas de sous-capacités de production et d'alliance entre son grand rival japonais et son fournisseur coréen.
DAVID BARROUX - Source : Les Echos - 20/10/03
- LG IN FINAL STAGES OF GOVERNANCE REFORM
The spinoff of four LG Group affiliates Tuesday has moved the restructuring process of Korea's second-largest business conglomerate into its final stages.
The latest spinoff was part of LG's larger strategic reform of its family-controlled governance structure through the reorganization of units under a group-wide holding company. The conglomerate has separated other affiliates as well, starting with the November 1999 spinoff of its insurance arm, LG Insurance Co.
LG's recent series of separations is geared toward simplifying the complexly intertwined ownership structure of the group, aiming to untangle the web of stockholdings of the group's two founding families, the Koos and the Huhs. LG said the move would allow the group to focus on its core businesses - electronics, telecommunications, chemicals and international trading.
The insurance unit is now controlled by the immediate family of the late Koo Chul-hwoi, one of the group's co-founders and a younger brother of the group's founding chairman, Koo In-hwoi.
LG also separated from its venture-capital operation, LG Venture Investment Inc., in March 2000 and a food service unit, Hour Home Co., in September 2000. Koo Cha-too, the fourth son of Koo In-hwoi, now controls the venture capital company; while the third son, Koo Cha-hak, is running the food unit.
Since October last year, LG Group has also been looking to split off the four units involved in Tuesday's move - LG Cable Ltd., LG-Caltex Gas Co., LG-Nikko Copper Inc. and Kukdong City Gas Co. - which will be controlled by the families of Koo In-hwoi's three other brothers including Koo Tae-hwoi. A formal application for the spinoff will be submitted to the Fair Trade Commission in early October for approval, LG said.
Meanwhile, John Koo needed resign from his post as the chairman of LG Electronics Inc., the country's second-largest maker of consumer electronics products, because he is a son of Koo Tae-hwoi, the largest shareholder of the cable company.
Under Korean law, an individual is barred from serving as a director of a company if the person or his relative is a board member of an affiliate seeking separation from the parent group. John Koo will take control of the four units to become independent from the conglomerate in October.
With the planned separation of the four affiliates from the parent group, LG will end up with 47 units under its wing, which will be controlled by the families of its chairman, Koo Bon-mu, and the chairman of LG Construction Co., Huh Chang-soo.
The two families own a combined 58 percent of LG Corp., the holding company for the remaining group affiliates.
But industry observers believe it is only a matter of time before the group's construction, oil-refining and retail units, which are run by the Huh family, will be separated from the conglomerate as well.
LG Group originally denied speculation of such a further split but recently said, "The direction is right, but it (LG Group) has not decided when (they would be spun off)."
By Kim Hyun-chul (firstname.lastname@example.org) - Source : Korea Herald - 02/10/03
- HANARO SEEK INJUNCTION TO BLOCK LG VOTING RIGHTS
About 20 employees and minority shareholders of Hanaro Telecom Inc sought a court injunction on Tuesday to block the voting rights of two LG Group finance affiliates in the company.
It was the first legal action taken against Hanaro Telecom's top shareholder LG, as a group of foreign investors vie for management control of the debt-ridden broadband operator.
The action claims that securities laws were violated when LG Marine Cargo Insurance and LG Investment & Securities purchased additional stakes of 0.8 percent and 2.15 percent stakes, respectively, in Hanaro.
"LG Investment & Securities had reported to a financial regulator that the stock purchase was aimed at investing into Hanaro, but it was a false report," said those seeking the injunction.
"It is apparent that LG's two affiliates bought Hanaro shares to intervene in the company's management," the statement said.
As a result of the two purchases, LG's stake in Hanaro rose to 18.01 percent, which could enable the group to torpedo a US$500 million deal Hanaro sealed in early September with a consortium of foreign investors led by American International Group (AIG) and Newbridge Capital.
Although the deal, which will give Hanaro's controlling stake to the foreign investors, has been made, it requires approval at shareholders meeting on October 21, and LG's efforts toward taking the helm of Hanaro are increasingly intensifying as that date draws nearer.
Hanaro, which is in favor of the foreign investors, has also begun receiving proxy votes from minority shareholders, who hold a combined stake of approximately 55 percent.
If the court admits the injunction to block the voting rights of the two LG affiliates before the crucial shareholders meeting, LG may not have enough votes to block the deal, said Doo Won-soo, a Hanaro spokesman. Currently, the two LG financial affiliates have a combined 5.82 percent holding in Hanaro.
LG has long hoped to acquire Hanaro to connect the broadband provider's massive customer base with its troubled telecom subsidiaries LG Telecom and Dacom.
Because the foreign consortium is likely to take over Hanaro, LG has made all-out efforts to thwart the deal, but it is in defiance of the government's apparent stance.
Information and Communication Minister Chin Dae-je has publicly expressed favor for the foreign investment deal to rescue Hanaro, which has been saddled with snowballing debts worth more than 2.2 trillion won.
LG, South Korea's second-largest family-controlled conglomerate, has pursued its own foreign investment deals with several overseas organizations as part of its efforts to prevent the AIG-led deal, but thus far things do not seem to be going well.
Also on Tuesday, Hanaro vice president Rhee Jong-myung told reporters that no foreign investors other than the AIG-led consortium would be able to conduct due diligence on investments in the company.
"So, it is then nearly impossible for LG to attract foreign capital within this year," Rhee said during a luncheon meeting.
The fresh capital would provide new life for Hanaro. Its main creditor, Korea Development Bank, said Hanaro may be put under court receivership if the foreign investment deal is rejected.
Source : Asia Pulse/Yonhap - 08/10/03
- LG SIDES WITH CARLYLE TO ACQUIRE HANARO
Moving ahead with a bid to acquire Hanaro Telecom, one of the leading broadband carriers in Korea, the LG group has decided to team up with the Carlyle group, a U.S. investment fund, to fight a consortium led by the American International Group (AIG) and Newbridge Capital, the two U.S. investment firms most active in Korea.
The AIG-Newbridge consortium and Hanaro signed an agreement on September 9 for a total US$1.1 billion investment from the consortium. If the agreement goes through, the consortium is to emerge as the largest shareholder in Hanaro, bypassing the firm's current largest shareholder, the LG group.
A high-ranking executive of the LG group said Tuesday that the group and Carlyle have been fine-tuning their negotiations to inject W700 billion into Hanaro, to acquire the firm's managerial rights. The executive said LG would contribute W300 billion, and the remainder would come from Carlyle.
The executive also said that the group¡¯s consortium with Carlyle is refining a plan to pay W3,300 to W3,500 per new common share to be issued by Hanaro, higher than AIG-Newbridge¡¯s offer of W3,200 per share.
The LG-Carlyle consortium is to unveil concrete terms for the joint acquisition plan on Wednesday.
The Korean group, which currently holds the largest, 18.02 percent, stake in Hanaro, is expected to attempt to defeat Hanaro¡¯s plan to attract US$1.1 billion from the AIG-Newbridge consortium. Hanaro is to hold a general shareholders meeting next Tuesday to discuss the AIG-Newbridge investment plan.
A Hanaro executive, however, said that the firm would circumvent the LG attempt by garnering support from minor shareholders.
by Paik Seung-jae (email@example.com) - Source : The Chosun Ilbo - 14/10/03
FIGHT FOR S.KOREA'S HANARO TO SHAPE TELECOMS MARKET
Two rival South Korean conglomerates are locked in a race to dominate the country's $27 billion telecoms market as each enlists foreign backers in a pricey battle to buy loss-making Hanaro Telecom Inc.
Tough times for a sector facing wilting growth and bracing for convergence of wired and wireless services mean the fight between LG Group and SK Telecom Co Ltd is only likely to get more intense, analysts say.
"Two big eagles are fighting for their survival," Dongwon Securities analyst Yang Jong-in said. "It's an unavoidable fight between top shareholders rather than foreign investors.
"They feel business is getting very tough and no one wants to sit idle and wait for their demise in a fast-changing industry."
As the second-largest broadband Internet provider in the world's most wired country, Hanaro is an attractive prize that could return to profit in the hands of a new owner, analysts say.
LG Group [LUGG.UL], which has long held ambitions of building a giant telecoms group, on Wednesday made a $630 million joint bid for Hanaro with U.S. private equity firm Carlyle Group. LG is already Hanaro's top shareholder, with an 18 percent stake.
For its bid to succeed, LG must scuttle a $500 million equity investment plan by American International Group Inc and U.S. fund Newbridge Capital, an offer back by Hanaro and its third-largest shareholder, SK Telecom.
LG is offering 3,400 won per share for a 51 percent stake, topping the AIG-led deal of 3,200 won per share for a 39.6 percent holding.
SK Telecom, which holds five percent of Hanaro and is the cash cow of the country's third-largest conglomerate, the SK Group, has rejected LG's bid as unfeasible.
SK Telecom has conquered the mobile phone market with a 54 percent share but lacks the fixed-line business analysts say it needs as the country prepares for the convergence of wired and wireless broadband services.
LG has made it clear it plans to reject the AIG-led plan, which needs to win approval at an October 21 shareholders' meeting. Hanaro is already collecting proxy votes from minority shareholders, who represent 55 percent of its stock.
LG Group, the country's second-largest conglomerate behind the Samsung Group, is seeking to bring together its telecom units to better compete with the industry's biggest player, KT Corp. KT Corp dominates fixed-line voice services with a 95.6 percent share, has just over half of the broadband market and almost a third of mobile subscribers.
"Without Hanaro, LG's long-term strategy really doesn't work," said Choi Young-suk, an analyst at Samsung Securities. "They may have to pull out of the industry in the worst-case scenario."
LG runs Dacom Corp, the country's number two fixed-line carrier, and is also the top shareholder in Powercomm.co, a cable network operator. It also has an interest in mobile carrier LG Telecom.
SK Telecom, for its part, doesn't want to miss a chance to lead a market that may provide a new source of revenue.
"Hanaro as well as other fixed-line players could become quite useful for SK Telecom, which is preparing for wireless and wire-line convergence over the longer term," said a telecoms analyst at a foreign brokerage.
SK Telecom saved Hanaro from the brink of a bankruptcy in late August by helping it pay 120 billion won in maturing debt.
But Hanaro needs further investment, and quickly, if it is to avoid receivership, its chief executive said on Thursday. Its debt of 2.2 trillion won ($1.87 billion) is more than twice its market capitalisation of one trillion won.
Nevertheless, analysts say Hanaro is an attractive opportunity that can return to profit as it cuts capital expenditure and marketing costs.
Its shares has soared nearly 60 percent since late May on growing optimism over its improving finances, even as the broader KOSDAQ market remained nearly flat.
"We expect Hanaro to swing to a net profit in the first quarter of next year," Yang of Dongwon said. "Whoever takes over Hanaro will save it from its liquidity problem." ($1=1,174.0 won) By Kim Kyoung-wha
Source : Reuters - 17/10/03
- LG GROUP REELS UNDER DEFEAT OF ITS HANARO TAKEOVER BID
LG Group, South Korea's second-largest conglomerate, is struggling with a feeling of "shock" after its chances to take management control of Hanaro Telecom Inc. were shot down.
On Tuesday, Hanaro shareholders voted in favor of a US$1.1 billion financing package offered by a consortium headed by American International Group and Newbridge Capital, handing over a controlling 39.6 percent stake in the broadband operator to the foreign investors.
By Kim Deok-hyun - Source : Yonhap - 21/10/03
- HYUNDAI TO BUILD CARS IN C. EUROPE
The Hyundai Motor Group is speeding up efforts to build its first European auto manufacturing plant, with its top executives scheduled to visit four prospective plant sites in Eastern Europe over the next week, company sources said on yesterday.
According to the sources, Kim Dong-jin, vice chairman of Hyundai Motor, Kim Yong-hwan, senior executive vice president of Kia Motors Corp., and other top executives are to inspect a number of candidate plant sites in the Czech Republic, Hungary, Poland and Slovakia, starting Oct. 12.
During the week-long tour, the Hyundai and Kia executives will finalize the group's search for a plant location on the basis of working-level officials' market research and feasibility studies. They will also meet with concerned government officials in these countries for discussions on investment incentives.
The Hyundai Motor Group will push to select the plant site by mid-2004 at the latest, with construction set to begin by the end of the year. The European plant is scheduled to produce 300,000 units of three passenger car models annually.
"Countries in Eastern Europe are the best candidate sites for the new plant in consideration of wage levels, brand awareness and other economic factors. The Czech Republic has emerged as the strongest candidate," a company official, asking to remain anonymous, said.
The Czech Republic's Ostraba region, for instance, is already home to a number of world-class auto parts manufacturers, offering significant advantages in access to locally produced components, as well as a highly skilled labor force, he said. In addition to its Central-European location enabling easy access to Western European export markets, the Czech Republic also has a talented pool of skilled technical and engineering professionals.
Kia is to take the initiative in the European plant project, while sharing strategies for new-car development and sales with Hyundai. In this regard, a wire report said Hyundai and Kia will jointly invest 500 million euros in the Europe plant before producing 160,000 units and 80,000 units a year, respectively.
Source : Korea Times - 10/10/03
- SSANGYONG MOTORS DENIES RUMORS OF SALE TO CHINESE CARMAKER
The president of Ssangyong Motors Co. strongly denied allegations Friday that the nation's fourth-largest carmaker, specializing in sport utility vehicles, is in negotiations for a sale to a Chinese auto firm.
Ssangyong has been under a debt workout program since 2000. Its creditors, led by Chohung Bank, seek disposal of their stakes, which reportedly represent 52 percent, or US$413.13 million, of the total based on a per-share price of 7,780 won as of Thursday.
Source : Yonghap - 17/10/03
- KAI WORKERS TO BUY KAI STAKE TO STOP KOREAN AIR'S BID
Employees at Korea Aerospace Industries (KAI) said Friday they will purchase Daewoo Heavy Industries and Machinery Co.'s entire 28.1-percent stake in KAI in order to stop Korean Air Co.'s bid for a controlling stake in the nation's sole aircraft manufacturer.
KAI staff, mainly unionized workers, also vowed to walkout should Korean Air purchase Daewoo Heavy's stake in the aircraft producer.
Source : Yonghap - 17/10/03
- KOREA AEROSPACE UNION THREATENS TO STRIKE
The labor union of Korea Aerospace Industries (KAI) has vowed to walk out as soon as Korean Air Co buys Daewoo Heavy Industries and Machinery Co's entire 28 percent stake in the aircraft manufacturer, industry sources said on Friday.
Korean Air, South Korea's national flagship carrier, has been striving in recent months to acquire a controlling stake in the country's sole aircraft producer, something the KAI union strongly opposes.
The union claims the takeover is unfair and inappropriate because it has been led by the government and is expected to make the defense-industry sector much less competitive.
However, Korean Air says it plans to inject 130 billion won (about US$113 million) in cash into KAI within this year to boost its financial soundness and will seek strategic alliances with foreign aerospace companies to turn KAI into one of the world's top 10 aircraft makers.
The unionized workers are planning to hold a midday rally and press conference in front of the Ministry of Commerce, Industry and Energy located on the outskirts of Seoul, sources said.
More than a week ago, Korean Air reached a preliminary agreement with Samsung Techwin and Hyundai Motor Co, the other two of KAI's three major shareholders, on the purchase of a controlling stake in the aircraft maker.
According to the agreement, the larger of South Korea's two air carriers would then be permitted to raise its ownership to more than 50 percent, allowing it to control the country's sole aircraft producer.
In October 1999, Samsung, Hyundai and Daewoo groups merged their aerospace affiliates to create KAI after their excessive competition managed to harm the two companies.
Samsung Techwin, Hyundai Motor Co and Daewoo Heavy Industries and Machinery now each hold a 28 percent stake of 26 million common shares in KAI, while creditors, such as Korea Development Bank (KDB), own a combined 15 percent interest.
Korean Air is expected to ink a formal contract with Daewoo Heavy Industries and Machinery on the purchase this month. Daewoo Heavy had been trying to dispose of its interest in KAI as part of self-rescue efforts since late last year.
Source : Asia Time/Asia Pulse/Yonhap - 18/10/03
- KOREAN AIR TO WRAP UP TAKEOVER OF KAI BY YEAR'S END
Korean Air said Wednesday that it will push ahead with its bid to take control of Korea Aerospace Industries (KAI), regardless of resistance from KAI employees.
Suh Sang-mook, director of Korean Air's aerospace business, said the nation's number one airline is scheduled to sign a final contract with Daewoo Heavy Industries and Machinery on the sale of the latter's 28.1-percent stake in KAI by the end of this month.
Source : Yonhap - 22/10/03
- L'OREAL TO INVEST W700 BIL.IN KOREA
The Korean operation of cosmetic giant L'Oreal will invest 700 billion won ($608 million) in the next five years to achieve its goal to double its domestic market share to 10 percent.
L'Oreal Korea, the nation's fourth leading cosmetics brand, yesterday announced an aggressive business plan as it celebrated its 10th anniversary.
As part of its multi-part vision, the company said it plans to nearly double its investment spending for the next five years to 700 billion won from the 360 billion won spent in the last five years.
Part of that spending will go to intense research for localizing products for the traditionally demanding Korean market, Pierre-Yves Arzel, L'Oreal Korea president, said in a press conference.
"According to our research, Korean women use an average of 20 products during the course of one day," he said. "French women average six or seven products per day." Localizing management is also a top priority, according to Arzel.
The company currently employs five expatriates in top management positions but plans to decrease to two by 2008.
Also included in the five-year roadmap is a goal to increase its industry market share from the present 5 percent to 10 percent by 2008.
He said that despite obstacles like government regulations and labor disputes, efforts to further penetrate the Korean market are a top priority for L'Oreal Group.
"Korea is one of our top-10 target markets worldwide," Arzel said. "If you want to be a global market leader, you can't forget Korea."
In addition to business expansion, Arzel said that the company plans to grow as a responsible corporate citizen.
L'Oreal Korea will announce a new social commitment in 2004 to support various charities, as well as continue their efforts for the "Women in Science" program, which is aimed at supporting women in scientific professions.
By Revekah Kim - (firstname.lastname@example.org) - Source : Korea Herald - 30/09/03
- L'OREAL TO INVEST W700 BIL. IN 5 YEARS
The world's largest cosmetics company, French giant L'Oreal, yesterday said it will invest 700 billion won in the local market over the next five years, doubling its market share to 10 percent from the current 5 percent.
``The investment plan is based on the growth potential of the Korean market as the world's eighth largest cosmetics market. It is already one of top ten priority markets for the L'Oreal Group in the world. L'Oreal Korea managing director Pierre-Yves Arzel said. ``During the next five years, our goal is to make the market grow to the 10th biggest from the current 15th within the group's affiliates worldwide.¡¯¡¯
His remarks came at a news conference at the Seoul Plaza Hotel in downtown Seoul to commemorate the 10th anniversary of the company's operations here.
L'Oreal Korea has grown at a double-digit rate for the nine years prior to 2002 since 1993. With sales of 157 billion won last year, it became the fourth largest cosmetics firm here where domestic cosmetics companies like LG dominate.
`` L'Oreal Korea is expected to overtake the number three cosmetics firm Coreana this year and is aiming to take the second spot in five years" Arzel said.
Along with the market expansion goal, two other business objectives for the next five years are to step up localization and invest in Korean talent, he said.
While accelerating local product development, L'Oreal Korea head stresses the company's social responsibility by citing the example of the company's charity plan to support small orphanages beginning next year.
``We will also transfer power to Koreans, reducing the number of foreign managers to two in five years,'¯ he said.
Management training for Koreans is conducted in and away from Seoul and so far, eight employees work overseas, the company said.
``The company will continue put another focus of personnel management on hiring those who are young and less experienced college graduate talents,' Arzel.
Asked about the prospects for the Korean economy and the cosmetics business, he predicts the national economy will turn back to 4-5 percent growth next year and the sagging cosmetics industry, which is forecast to shrink 10 percent, should recover.
``The only issue that global companies, including multinational cosmetics firms, are challenging is regulations. Korea still has many unique regulations that do not exist in other nations,¡¯¡¯ he added.
email@example.com By Seo Jee-yeon - Source : Korea Times - 29/09/03
- L'OREAL DIRECTOR BLASTS KOREA'S UNIONS
Pierre-Yves Arzel, the managing director of L'Oreal Korea, the massive French cosmetic company, said Monday that the Korea's president and union leaders would have to work together to persuade foreign investors to increase their foreign direct investment (FDI) in the country. The amount of FDI coming into Korea has gone moribund over recent years.
Arzel made the remarks during a press conference to mark the 10th anniversary of L'Oreal's Korean affiliate. He also said that violent union members, rapidly increasing wages and complicated government regulations were serious roadblocks to the inflow of FDI into Korea.
The director added that France and other countries in general have two different images of Korea: one as a center of militant union activists, and the other is of North Korean dictator Kim Jong Il.
Arzel said the average labor wage increase rate usually stands at about 3 to 5 percent a year in the United States and Europe, and also in China, but in Korea the unions have been calling for an annual wage increase of up to 20 percent. This demand for higher wages has been putting a huge burden on foreign investors.
by Song Eui-dal (firstname.lastname@example.org) - Source : The Chosun Ilbo -29/09/03
- CARREFOUR RENFORCE SA PRESENCE EN COREE DU SUD
Le Distributeur va y investir 800 millions de dollars de 2004 à 2007.
Carrefour va investir en Corée 800 millions de dollars entre 2004 et 2007. C'est ce qu'a annoncé hier son PDG, M. Daniel Bernard, au Ministre du Commerce sud-coréen Yoon Jin-Sik, lors d'une réunion à Séoul. Le numéro deux mondial de la distribution entend ainsi renforcer sa présence dans ce pays, confronté à un environnement économique difficile et où la concurrence, notamment locale, est vive, avec des acteurs très agressifs en matière de prix. Présente en Corée du Sud depuis 1996, avec 26 hypermarchés au 30 juin dernier, l'enseigne y a déjà investi quelques 1,5 milliard de dollars - son plus gros investissement dans un pays asiatique. En 2002, le chiffre d'affaires de Carrefour en Corée s'est élevé à 1,243 milliards d'euros, soit une hausse de 1,7% à périmètre constant. Trois hypermarchés ont été ouverts au cours de l'exercice précédent.
" A moins que carrefour n'investisse massivement, il sera à la traîne ", laisse cependant entendre un analyste spécialiste de la distribution, qui voit également dans la capacité des distributeurs à proposer des prix toujours plus bas l'un des facteurs essentiels de réussite. Carrefour occupe aujourd'hui la quatrième place du secteur. Mais alors qu'il prévoit d'investir l'an prochain 200 millions de dollars dans l'ouverture de quatre hypermarchés, le leader national, E-Mart, a indiqué pour sa part qu'il aura consacré 560 millions de dollars pour inaugurer 13 magasins cette année
A des rythmes différents en fonction des marchés, carrefour pousse en tout état de cause ses pions en Asie. ( )
Source : La Tribune - 07/10/2003
- CARREFOUR TO INVEST IN KOREAN OPERATIONS
French retail giant Carrefour has said it plans to invest W250bn (US$216.1m) in Korea next year in four new stores and improvements to existing stores.
"We are well aware of the huge potential in the Korean retail market. The current pace of investment will continue for the coming three or four years," Philippe Broianigo, head of Carrefour Korea, was quoted by the Korea Herald as saying.
Carrefour's total investment in its Korean operations is expected to reach W1.8trn next year. The company, which opened its first Korean store in Seoul in 1996, now operates 27 stores nationwide.
Source : Just-food.com - 29/09/03
- FRENCH BUSINESS GIANTS MARCH INTO TOWN
French multinational businesses are taking a long, hard look at the Korean market, and are finding lots to l'amore.
Carrefour, the world's second largest retail chain, with its headquarters in France, said last week that it has decided to make an additional W1 trillion investment in Korea by 2007. L'Oreal, Atofina, and Alcatel and other French firms have also unveiled plans to make new investments or to expand existing investments in Korea.
Carrefour is to invest W250 billion (US$217 million) in Korea next year to open four new stores and to remodel its seven stores in operation, said Philippe Broianigo, the head of Carrefour Korea, last week.
In August, Atofina, the chemicals branch of TotalFinaElf, a business conglomerate based in France, set up a joint venture with Samsung General Chemicals, named Samsung-Atofina, on a joint investment of US$1.55 billion. Atofina's contribution is estimated at US$775 million.
Pierre-Yves Arzel, the managing director of L'Oreal Korea, the massive French cosmetic company, said Monday that the company has decided to invest W700 billion over the next five years to expand its market share in Korea.
Patrice Couvegnes, the president of the French Chamber of Commerce and Industry in Korea, said that Korea is a strategic market, as the country is located between China and Japan. He added that the Korean market, estimated to be the 12th largest in the world, is attractive because of its great potential domestic consumption.
by Song Eui-dal (email@example.com) - Source : The Chosun-Ilbo - 30/09/03
- CARREFOUR TO KEEP INVESTING DESPITE TOUGH REGULATIONS
By Seo Jee-yeon
Daniel Bernard, visiting chief executive officer of French firm Carrefour, the world¡¯s second largest discount chain, expressed difficulties in expanding business out of Seoul due to excessive local government regulations, Carrefour Korea said yesterday.
His comments came in a meeting with Commerce, Industry and Energy Minister Yoon Jin-shik in Kwachon.
Bernard told Yoon that Carrefour Korea has had trouble with complicated and prolonged procedures when attempting to gain approval from local governments to set up new branches outside of Seoul, the company¡¯s press release said.
He reportedly cited high indirect costs incurred when expanding the chain to local cities as one of the main barriers blocking business expansion in Korea.
Despite challenges and barriers to doing business in Korea, however, Bernard confirmed that the company would continue to invest 2.5 billion won per year in Korea through 2007.
Late last month, Carrefour Korea representative director Philippe Broianigo unveiled the group¡¯s future investment plan for Korea.
Although Carrefour Korea has continued to expand in sales, topping 1.8 trillion won in 2002 since it was established here in 1996 as the first foreign discount outlet, its growth has slowed and has been overtaken by local discount chain E-Mart.
firstname.lastname@example.org - Source : Korea Times - 06/10/03
- CARREFOUR TO EXPAND KOREAN OPERATIONS
Daniel Bernard, CEO of the Carrefour group, the world's second-largest retail chain, said Monday that its Korean chain stores would reinvest the full amount of the profits they generate in Korea. The CEO also said that the group would also invest US$200 million every year until 2007 in its Korean operations. Carrefour is based in France.
Bernard made the remarks during his meeting with Yoon Jin-shik, the head of the Ministry of Commerce, Industry and Energy (MOCIE), that day.
The Carrefour CEO was also said to have told the minister that the chain would take competitive Korean products and supply and market them through Carrefour's global chain stores.
Industry sources said that since its advancement into Korea in 1996, the chain has invested US$657 million in Korea, posting W1.46 trillion (US$1.2 billion) in sales last year. Carrefour Korea has posted a profit every year since 1996.
by Song Eui-dal (email@example.com)
Source : The Chosun Ilbo - 06/10/03
- CARREFOUR DETAILS FOUR-YEAR PLAN IN KOREA
Carrefour, the French retailing giant, on Monday said it would invest $800m in South Korea over the next four years to better compete with bigger rivals in one of Asia's fastest-growing retail markets.
Foreign-owned discount chain stores, such as Carrefour, Tesco and Wal-Mart, have all struggled against domestic market leaders such as Shinsegae's E-Mart and Lotte Shopping's Magnet.
South Korea, the third-largest economy in Asia, may have slid into recession due to weak domestic spending, but analysts expect large discount stores to see their market, estimated to be Won17,400bn ($15bn) a year, grow 15 per cent annually as shoppers shun traditional open-air markets and small family-owned stores.
Carrefour, the fourth-biggest discounter in South Korea behind E-Mart, Tesco-controlled Home Plus and Magnet, will invest US$200m a year between 2004 and 2007 to open new stores and renovate existing ones. The French retailer told the Financial Times in May that it planned to invest €1bn in South Korea over the next five years.
But analysts say it will not be easy for Carrefour and other foreign retailers to catch up with domestic rivals.
"They have not been very successful in figuring out Koreans' consumption pattern," said Yong Sang-min, analyst at Daishin Securities. "Domestic discounters entered the race early and invested heavily to stave off competition."
Carrefour currently has 26 stores and a market share below 10 per cent. It opened its first outlet in Korea in 1996 and posted Won1,496bn in sales last year. Another foreign player, Wal-Mart, has performed worse, making just Won747bn in sales from its 15 outlets in 2002.
Meanwhile E-Mart, the dominant player which controls one third of the market, has 56 outlets and posted Won4658.1bn in sales last year. Shinsegae, the country's top department store, invests about Won600bn in E-Mart every year, almost three times more than what Carrefour has in mind.
E-mart is closely trailed by Home Plus in terms of market share. Home Plus, a joint venture between Samsung and Tesco, made Won2,146.9bn in sales last year from its 26 stores. UK-based Tesco owns a 90 per cent stake in it.
Analysts say that Carrefour and Wal-Mart can learn from Tesco, which has managed to cross cultural differences by working with a local partner. "It quickly adapted to Korean taste by hiring Koreans for top management posts and its upscale interior is appealing to consumers," says Park Jin, analyst at LG Investment & Securities.
By Song Jung-a in Seoul - Source : Financial Times - 06/10/03
- CARREFOUR TO INVEST US$800 MILLION OVER 4 YEARS
Carrefour's chief executive officer said yesterday that the world's second-largest retailer would invest $200 million in Korea every year until 2007 and the entire profit from its Korean business will be re-invested in the nation.
During a meeting with the Minister of Commerce, Industry and Energy Yoon Jin-sik, Carrefour CEO Daniel Bernard also unveiled the French corporation's plan to sell local products through its global distribution network and assist Korean companies in their export marketing.
Bernard is visiting Korea to supervise Carrefour's Korean operation, which runs 27 large-sized discount stores nationwide.
Source : Korea Herald - 07/10/03
- KOREAN AIR CONFIRME SA COMMANDE DE 5 TRÈS GROS PORTEURS AIRBUS A380
L'avionneur européen dispose désormais de 121 commandes pour son futur très gros porteur, soit 26 de plus qu'au début de l'année. Les A380 commandés par Korean Air seront déployés entre Séoul et la côte ouest des Etats-Unis, puis vers la côte est des Etats-Unis et l'Europe.
Korean Air, partenaire d'Air France au sein de l'alliance SkyTeam, a annoncé hier avoir signé une commande ferme portant sur 5 très gros porteurs Airbus A380, assortie de 3 options, confirmant ainsi la lettre d'intention signée avec l'avionneur européen en juin, lors du Salon du Bourget. Plus ancien client d'Airbus en dehors de l'Europe, Korean Air lui a, par le passé, acheté 51 avions gros-porteurs, dont 32 A300 et 19 A330. Les A380, pour lesquels le choix des moteurs n'est pas encore arrêté, seront déployés sur des lignes à forte densité entre Séoul et la côte ouest des Etats-Unis, puis vers la côte est des Etats-Unis et l'Europe.
Le contrat signé avec le transporteur sud-coréen, estimé à 1,375 milliard de dollars - le tarif catalogue de l'A380 est de 275 millions de dollars l'unité -, porte désormais à 121 appareils (129 si l'on prend en compte les lettres d'intention) le carnet de commandes du futur très gros porteur - 550 places en configuration classique. Ce carnet s'est enrichi de 26 unités depuis le début de l'année, grâce à la commande massive passée par Emirates (21 appareils) en juin, et recense désormais 11 clients.
Ce succès commercial est de bon augure pour l'appareil, dont le vol inaugural est prévu pour le premier trimestre 2005, les livraisons devant, quant à elles, débuter en mars 2006 avec la réception par Singapore Airlines du premier exemplaire de série. L'assemblage des sous-ensembles du prototype a déjà commencé, et celui de l'appareil se fera au printemps prochain, après la mise en place d'une logistique combinant transports terrestre, maritime, fluvial et aérien entre les différentes unités de production d'Airbus et le site d'assemblage final à Toulouse.
Source : Les Echos - 24/10/03
- FRENCH ARCHITECT LAUNCHES DESIGNER HOMES
World-renown French designer and architect Philippe Starck has joined hands with Kolon Engineering & Construction in a joint venture to expand the global reach of his residential development company, launched as Yoo-K.
Following a unique concept of designing interior living spaces according to the tastes of their future owners, Starck and British real estate developer John Hitchcox have a vision of creating apartments that liberate people in environments of their own choosing.
``Yoo is made for you, not us. We help you to find yourself, and by finding yourself, you are able to find your own family, home and life,¡¯¡¯ said Starck, 54, about the guiding belief of the four-year-old company during a news conference Saturday at Gallery The Show in Apkujong-dong in southern Seoul.
Whether the residences are set in refurbished office buildings or new facilities, the interior design can be selected by the tenant from four different themes, namely culture, minimal, class and nature, and then filled in with furniture, lighting and household products from a catalog of Starck¡¯s expert recommendations, including his award-winning creations for brands Alessi, Kartell, XO and Flos. And with a career marked by grander achievements in architecture such as the Asahi Beer Hall in Tokyo and the Royalton and Paramount Hotels in New York, Starck is a name that can be trusted if modernity and sleek hipness are factors in your lifestyle.
Despite his brand power, which has graced high-end products to basic home goods for U.S. discount retailer Target, Starck doesn¡¯t seek to restrict customers¡¯ aesthetic sensitivities to his ideas about design. ``We propose not to impose,¡¯¡¯ he said. Yoo¡¯s ambition is also a reaction against contemporary interior design, which he says is ``outdated¡¯¡¯ and a persistent status quo of 15th century ideas, where the family is disconnected and isolated from one another. The Yoo concept tries to reunite family and guests in a setting that is ``more alive¡¯¡¯ and uncomplicated.
With Yoo projects firmly established on six continents in major cities including New York, Miami, Buenos Aires, Melbourne, Sydney, Hong Kong, Tel Aviv and London, where the company is based, Starck and Hitchcox plan to bring their egalitarian dream to South Korea ``from the first home to the last home,¡¯¡¯ with prices ranging from an affordable $100,000 to more pricey $7-8 million units. Yoo-K¡¯s CEO is Choi Soo-il, 56.
The target location of the domestic adaptation of the Yoo philosophy is Hyundai Villa in Nonhyon-dong, Kangnam-gu in southern Seoul. With the real estate market bubble near bursting point, just how the proposed development will respond to local pressures is uncertain, as no details on the planned 72 units were released.
However, the Yoo concept of freedom in style and individuality of a person¡¯s home will no doubt be a welcome departure from the thousands of identical high-rise apartments which populate the metropolis of Seoul.
Dan Hong - Source : Korea Times - 20/10/03