Monday, November 21, 2011

Last two weeks in Korea (Nov 21, 2011)

1. National
1) Jeju Island chosen as one of world’s 7 wonders
After a yearlong campaign, Jeju Island, Korea’s Hawaii, was named one of the new 7 wonders of the natural world by New7Wonders Foundation. Other winners were the Amazon Forest, Halong Bay in Vietnam, Iguazu Falls, Komodo National Park, Puerto Princesa Underground River in Philippines, and Table Mountain in South Africa. There were 28 finalists including Grand Canyon and Dead Sea.  Located 80km from southern tip of Korean peninsula, Jeju has land size of 1,848 square kilometers with 577,187 people. The Jeju Development Institute expects that there will be an increase of 73.6% in foreign tourists and 8.5% in Korean tourists with the recognition as one of 7 natural wonders. 
The nomination by the New7wonders Foundation was somewhat controversial as the organization decided the winners from votes by internet and phone calls without restricting duplication. A person with lots of time to waste, and money to pay for phone calls could vote for Jeju 1 million times if he or she wanted. Thank God for Jeju governor not contacting my wife for her support.
2. Economy
1) Kim Jongil not happy with cookies to North Korean workers concerns
Kaeseong Industrial Complex is located north of DMZ where many South Korean companies have plants. Choco Pies, the chocolate-covered, marshmallow cake, are given to North Korean workers as snacks. A trouble occurred as some of the workers smuggle them outside the industrial zone and sell them in the black market. So popular among the North Koreans, the pies are viewed as dangerous symbols of capitalism by the North Korean authorities. Pyongyang demanded that South Korean companies stop giving out Choco Pies, and give cash to the workers instead.  The South Korean companies had a meeting over this issue, but failed to reach an agreement over how many Choco Pies each company can give to their North Korean employees.  
I had similar experience. Only super rich could afford to enjoy bananas in 1982 as the import of banana was banned to protect Korean farmers. I joined the army to work in the U.S. army base in Seoul at that time, and found that rare bananas were given at each meal. I saved my share of bananas in the locker, and took them out for my brother and sister over the weekend. Time has passed, and anyone can import bananas as many as they want. Even Korean monkeys go on hunger strike when they are given bananas.

2) Work shift pattern may change?
Most of the plants in Korean auto industry run two shifts. With one hour each for lunch and dinner, it is 8:00am to 8:00pm for day shift, and 8:00pm to 8:00am the following day for the night shift. Companies can benefit as they can run close to 24 hours, with one third less employees than 8 hour three shifts practiced in other countries. Employees were O.K too as they can work higher paying overtime. Things can change as GM Korea announced that they will have three shifts operation so that employee can have more time for rest. The government said they will demand Hyundai/Kia do the same thing for more job creation and employee health.

GM Korea plans to do what works best in the nation its headquarter is located, without knowing the impact it will have on Korean OEMs or suppliers. When Hyundai opened its Bromont plant near Montreal in 1988, Hyundai gave free meals to its employees to follow the practice in Korea. The Canadian employees were so much happy, but other companies in Bromont were not, as they suddenly turned into a Scrooge compared to Hyundai. Hyundai had to change its policy, and began to charge $3.5 to the employees. The above pictures are Hyundai Bromont plant that is now closed.   
3. Auto Industry
1) Renault-Samsung gets a blue eye by golf bags
As most of golf courses are located outside Seoul in two hours drive range, the golfers tend to meet at a location and ride together in one car with all of their golf bags in the trunk. So it is very important that the trunk has to be big enough to hold minimum 4 golf bags as it has to be always four people to make one team. SK Encar, a used car dealer set up by SK Group, thus checked the size of 30 mid-size sedans sold in Korea, and said Renault Samsung’s top of the line SM7 and its smaller sister SM5 are no good for golfers as they could not take only three, not four golf bags. These two were the only local models that could not take four bags. Chrysler PT Cruiser was the worst as it could hold only 2 bags, while Ford’s new Taurus was the biggest with 5 bags.
SM 5 and SM 7 are designed by Renault-Nissan engineers who probably have small understanding of Korean way of thinking.  Another example is with North American cars in Korea.  Korea is small in land, and the parking lot is only 2.3m wide.  You park two 1,936mm wide Taurus side by side, and you have to wiggle out of the Taurus with doors only 15 centimeter open. (Sonata is 101mm narrower with 1835mm width.) Obama’s rhetoric wouldn’t help U.S cars sell better in Korea. It is American designer’s better understanding of Korean customs and realities.
2) Hyundai joins hands with GM over hydrogen fuel cell vehicle
According to local Herald Economy magazine, GM has signed a memorandum of understanding with Hyundai over joint development of future vehicles. A high ranking GM official said “GM’s top management has visited Hyundai headquarter in Seoul and R&D facility in Namyang last August, and proposed joint development if hydrogen fuel cell electric vehicle.”  A Hyundai official said Hyundai was positive to this proposal, thinking that it was a great accomplishment already to be proposed by a giant who spends 10 times more R&D money than Hyundai does. He said Hyundai Chairman Chung Mongkoo told his management to take a positive look at the GM proposal, and that official announcement can be made late this year or early next year.  Hyundai has supplied Seoul city with 19 Mohave and 14 Tucson models powered by hydrogen fuel cells.
Koreans call it “gemucee” to describe something big, powerful, and reliable, like gemucee refrigerator or gemucee Mike Tyson. Gemucee is how Koreans pronounce GMC, and this dates back to 1950s when Koreans were wowed by the performance of GMC military trucks during the Korean War. Koreans had only driven Japanese made vehicles run by charcoal until Gemucee trucks showed up in Korea. My brother in Hyundai probably hopes the latest joint development can result in Gemucee 2 that can wow the consumers all over the world this time.


Monday, November 7, 2011

Last two weeks in Korea (Nov 7, 2011)

1) Police chief urges lethal weapon on mafia gangsters
Angered by timid police response to quell sword wielding vicious fights between two rival mafia gangs in Inchon, Cho Hyunoh, the commissioner of the National Police Agency, declared war on organized crime rings, and permitted police to fire guns if necessary. While the police can carry guns, there have been strict and cumbersome rules to follow before firing actual bullets.  Asked about the possible human rights abuse with the quick use of guns, Cho said “no need for human rights for gangsters.” You can not tell mafia gangsters by normal appearance in Korea, but it will be much easier if they go naked as most of them have tattoos like below.
 I was in serious jeopardy on May 2, 1989, in Canada. A police man pulled me over when I drove fast not to miss the plane from Dorval Airport in Montreal for my marriage in Korea on May 5th.  I did exactly what I would do in Korea.  I opened the door and got out of my car, to explain the police man why I had to drive fast. Then, I put my right hand inside my jacket, just to take out my driver’s license from the pocket.  I had to learn hard way what “freeze” means on that day.

2) Inchon Airport gets the best airport award
Inchon International Airport was named on the inaugural “Roll of Excellence” by the Airports Council International, a federation of over 1,700 airports around the world. Inchon Airport received the praise after having been chosen as the world’s best airport for six consecutive years from 2006. The “roll of Excellence” was established this year, and airports that consistently made it to the top five for five years straight are eligible.
Inchon Airport is the best. Then what is the worst? It is O’Hare Airport in Chicago from my personal experience. I made a visit to the U.S thru O’Hare Airport last April, and it took me 1 hour and 10 minutes to pass the immigration due to long line, especially for foreigners. I returned to Korea a week later, and checked how long for immigration process at Inchon Airport. Just 2 minutes!  Because I was a Korean? It was 1 minute and 30 seconds for the foreigner who was in the same flight with me. O’Hare Airport can sue me any time if I added even a minute.

2. Economy
1) Korea-US FTA bill still under opposition
The FTA bill is going nowhere as the opposition party is now proposing to put it on the national referendum. The opposition Democratic Party Chairman, Sohn Hakkyu, took it to the streets handing out leaflets to build support for blocking the Korea-U.S. FTA. The Democratic Party is insisting that the ISD(Investor-State Dispute Settlement) provision in the bill has toxin inside against Korea, and is demanding the government to re-re-negotiate with the U.S. which already signed the bill. With the ruling Grand National Party showing reluctance to pass the bill in fear of ugly physical fight against DP lawmakers, and with the DP taking it as part of their strategy for the presidential election next year, it seems it may take a while for the bill to pass the National Assembly.
I’m in dilemma. Sohn Hakkyu was the governor of Gyeonggi province, and came to Metaldyne Korea at the grand opening ceremony in 2005. He belonged to Grand National Party at that time, and was a strong advocate of FTA with the U.S.  He then defected to Democratic Party in 2007 when he was losing presidential party nomination to current president Lee Myungbak. Sohn now plans to run for presidential election again next year as the leader of Taliban against the FTA. Should I vote for him or not?  Many millions of Koreans have the same dilemma as they also once thought Sohn could be the best leader in the nation.

3. Auto Industry
Hyundai-Kia Chairman Chung Mongku met with the Chinese officials from Yancheng city, and signed a contract to build Kia’s third plant with an annual capacity of 300,000 units in the city where Kia’s two existing plants are located.  The groundbreaking will take place at the end of 2012 for completion in 2014. Kia official said the third plant is need to catch up with fast growing Chinese market,  which rose to 11.12 million vehicles last year, up 34% from 2009.Once Kia’s third plant is completed, Hyundai-Kia will have capacity of 1.73 million units in China, 200,000 more than 1.53 million capacity in Hyundai’s main Ulsan plant in Korea
The tall man in dark suit next to Chairman Chung is Mr.Seol, a Chinese born in Korea. One of seven vice chairmen under Chairman Chung, Mr.Seol has been the main man for Hyundai’s China project since early 2000, and has done a pretty good job with all the success stories in China. A living proof of “no quanxi, no business “in China.

2) Hyundai union selects new leader more militant
While Mr.Chung was upbeat at the signing ceremony for Kia’s 3rd plant, he was probably much stressed out at the bad news over the weekend. One of the main reasons Hyundai was successful last three years was from the union leader who was reasonable enough to avoid perennial strikes in favor of practical benefits for union members. So no strike during his three year leadership.  This might change as Hyundai union members have selected Moon Yongmoon as the new leader for the next two years. Supported by infamous Korean Confederation of Trade Unions, a Korean version of UAW, Moon announced he will fight for the transfer of outsource workers to regular employee status, for the repeal of time-off system, and for two 8 hour consecutive shifts that will eliminate mid night working. All the bad stuffs that will give a direct impact to Hyundai’s profitability.
With Mr.Moon as the new union leader, Hyundai will face the reality again in which average three weeks a year can be wasted with strikes, much like what had been going on every year prior to three years ago. Many people in Hyundai management thus pray in despair that Mr.Moon somehow turn into another Sohn Hakkyu in Democratic Party, the master in about face.