Tuesday, December 25, 2012

LTW - Madame Prez, Samsung#1, & NK's Moonie Motors

1. National

1) Park Geun-hye elected as 18th president
Winning 51.6% of the votes, Park Geun-hye of the ruling conservative Saenuri Party won the 18th presidential race, beating Moon Jae-in from liberal Unified Democratic Party. Park became the first female president, and got the honor of being the first child of a former president as she is the daughter of former president Park Jung-hee who ruled South Korea from 1961 to 1979. Park was mostly favored by the voters in the 50s and 60s who were not comfortable with Moon’s left leaning policies. Park’s 5 year term starts on Feb 25 next year. No 2nd term allowed in Korean law.

Park owes a lot to Lee Jung-hee, the female candidate with 1% approval rating from the Unified Progressive Party known for its extreme pro North Korea policies. In a live three way TV debates with Park and Moon, Lee kept making rudely vicious comments against Park, but expressed warm words to Moon. This led many to believe Moon was a good friend of Lee. It was a typical case of “You are helping me a lot if you do not help me at all” to Moon. President elect Park might be serious about hiring Lee Jung-hee as her PR woman.

2) North Korea launches rocket successfully
North Korea unexpectedly fired a long-range rocket on Dec 12, putting a satellite into an orbit successfully. This proved the fear that North Korea has the technology to deliver a nuke bomb 13,000km (8,075 miles) away, or any place of U.S. territory. Though the U.N. denounced the launch as the violation of U.N. resolutions against North Korea, no real sanction is expected to take place due to objection from China. After analysis of debris retrieved from the Yellow Sea, South Korean government said Pyongyang had used red fuming nitric acid to fuel the first stage propellant.  That chemical is mostly used for intercontinental ballistic missiles in other nations like Iran.

The rocket launch was a Korean version of Sputnik shock. South Korea’s two attempts to launch the Naro rocket for a satellite failed in 2009 and 2010, and the third attempt this year has also been a flop so far, with two abortions just minutes before lift-off. What is more embarrassing is that the 1st stage rocket for Naro was made in Russia, meaning Naro is not wholly South Korea’s rocket. South Korea better pay Kim Jong-un only one tenths of what it paid to Vladimir Putin, and beg Kim to launch the damn Naro satellite rocket for South Korea.

2. Economy
1) Samsung stands tall as #1 cell phone maker
According to HIS iSuppli, Samsung has become the world’s #1 mobile phone maker in terms of annual sales, taking 29% of the global market, overtaking Nokia with 24%. Samsung got this goal achieved 24 years after it began making cell phones. Samsung also maintained its top position in the global smartphone market, with 28% market share, beating Apple with 20%. Nokia, HTC and RIM accounted for 5% each. On a separate note, Motorola, the first maker of mobile phones, announced that it will pull out of Korean market by February next year after losing the battle against Samsung and LG in Korea.
Motorola is just another foreign company pulling out of Korea, like Wal-Mart or Carrefour, with no real impact to me personally. The problem is Yahoo as it will end its business as of December 31. I will have to type in all of my e-mail address in my yhs816@yahoo.co.kr account into my Gmail account. The good side of it? I will become #1 in 500 words per minute World Championship after all the e-mail address typing.

3. Auto Industry
1) Unification Church to pass automotive decisions to North Korea
Pyeonghwa Motors’s president Park Sang-kwon said the management control of the joint venture company between South Korea’s Unification Church and North Korea will be taken over by North Korean government, according to Voice of America. “We transfer the right to them to practically run the company,” Park was quoted. Pyeonghwa Motors began operation in 2002, manufacturing about 2,000 vehicles every year with five different Fiat models, but was not making enough money due to lack of economy of scale. The total capital of the company was 43.5 billion won ($40M)) as of 2009.

It is probably a good decision to transfer the right to run the company from South Koreans to North Koreans. North Koreans will soon make Pyeonghwa Motors a bigger company than Hyundai, from what we have seen with the rocket launching.


Monday, December 10, 2012

LTW - PCH Retires, Election Heat, Gender Gaps & Pricey Seoul

1. National
1) A Korean baseball legend retires
Chanho Park, former L.A. Dodgers pitcher, announced his retirement after 19 years in the U.S., Japan and Korea. Park was the first Korean major leaguer when he joined the Dodgers in 1994. His best season came in 2000 when he won 18 wins. Park also played in Texas Ranges, San Diego Padres, New York Mets, New York Yankees, and Pittsburgh Pirates, with total of 124 wins, the most win by any Asian pitcher in MLB, one more than Tornado Nomo Hideo who won 123 wins. Park played a season in Orix Buffaloes in Japan, before returning to Korea this year to play in Hanhwa Eagles.

There are other world class Korean athletes with Park as family name. Jisung Park of Manchester United, Taehwan Park who won a 400m freestyle swimming in 2008 Beijing Olympics, and Seri Pak who have won 25 LPGA wins. Why only Seri chose to use Pak, not Park, as her family name?  Well, R pronounced in Korean sounds like “testicles,” so Seri Pak better not have R.

2) Presidential race heats on
With the Dec 19 presidential election approaching fast, the two candidates are busy crisscrossing Korea to appeal to voters. One of the two is Park Geun-hyeo, the candidate from ruling conservative Saenuri Party, and the other is Moon Jae-In from liberal United Democracy Party. Park is the daughter of late president Park Jung-hee who got assassinated by his own KCIA director in 1979 after 18 years in power. She came into politics in 1998 when she became a lawmaker.  Moon is the protege of late president Roh Mu-hyun, serving as Roh’s secretary. Roh committed suicide in May, 2009 when he was under pressure over a financial scandal a year after he left the Blue House, Korean version of White House. Park is leading the poll by some 3 or 4 percent. If Park does win, she will become the first female president in Korea.
A big brawl occurred lately at a bar in heaven as Park Jung-hee and Roh Mu-hyun were having a fist fight over who has to become the 18th president of Korea. “It has to be my daughter! She knows Blue House very well after living there for 18 years.”  “Hell, no! There was a building renovation done in Blue House a few years ago while I was there, and your daughter doesn’t know a damn thing about where the main office is located.”

2. Economy
1) It is expensive in Seoul! 
Seoul is one of the most expensive cities in the world to buy wind, infant formula, smartphones, cosmetics and jeans because of its exclusive distribution structure, according to Consumers Korea which compared the prices of 55 daily necessities sold at department stores, discount stores and supermarkets in 18 countries. Seoul was among the top 5 most expensive cities for 17 of the products. For example, Ritz Lytton Springs Zinfandel wine from the U.S. was sold at the highest price of 113,000 won ($104.20) in Korea, followed by China (97,490 won), Italy (78,170 won), Taiwan (75,420 won) and Thailand (58,160 won). In the U.S., the same product retails for 28,000 won, meaning it is four times more expensive in Seoul. Exclusive distributors like department stores tend to import and distribute foreign wines, cosmetics, jeans and infant formula, and they have the most expensive distribution margins and sales commissions.
A Metaldyne executive once stayed in Renaissance Hotel in Gangnam, Seoul, and he was very much surprised at the $38 price tag for a breakfast buffet at the hotel.  He ended up gaining 10kg in a week in Renaissance Hotel. Being very strict in his cost efficiency policy, he emptied as many dishes as possible, counting how much money spent per kilogram of food he consumed.

2) Korea’s gender wage gap the most 
According to the survey by OECD, Korea has the largest wage gap between men and women among 28 OECD nations surveyed. The average man earned 39% more than the average woman in 2010. The wage gap in Korea was 2.6 times bigger than in the OECD as a whole, which is 15%, and 10% points higher than 2nd raked Japan which had 29%. The third place was Germany with 21% gap, followed by the U.S. and Canada. The gender wage gap in Korea was 40% in 2000, so it took 10 years to lower it by only one percent.

The gender wage gap in Korea is nothing compared to the wage gap between the military and the civilians. My two sons joined the military three months ago in September, the first son in the army and the second one in the air force. They are getting 81,500 won ($80) a month. Well, the wage gap has been narrowed a lot for the last 30 years. Their father got 3,000 won a month when he joined the army in Aug, 1982.

3. Auto Industry
1) GM Korea to build turbo engines 
GM Korea announced that it will invest over 100 billion won ($92M) to build next generation 1.4L turbocharged gasoline engines at its Bupyeong plant in Incheon. The turbo engine will power the Chevrolet models including Trax SUV from the first half of next year. Sergio Rocha, the president of Gm Korea, said “The significant investment is a clear evidence of GM’s long-term commitment in GM Korea and confidence in our ability to offer more advanced engines to satisfy our customers.”  There has been a criticism to GM Korea lately over its recent decision not to make new Malibu models in its Gunsan plant.
The Bupyeong plant is surrounded by high rise apartment buildings now, with land price about $360 per square foot, but there was nothing when Saenara Motor Company built the plant in 1962. The first model rolling off from Bupyeong was 1961 MY Nissan Bluebird that Saenara manufactured with imported components from Nissan as SKD (Semi-Knock-Down). It then became like Chapter 1 in Matthew in the New Testament. Saenara got sold to Shinjin Motors 1965. Shinjin Motors got bought by GM in 1972. GM sold the plant to Saehan Motors in 1976. Saehan then got purchased by Daewoo Motors in 1978. Daewoo Motors was acquired by GM in 2001.


Monday, November 19, 2012

LTW - Defectors Return, Korean Diabetes, Hyundai goes to Brazil

 1. National
1) Defectors from N.Korea return to their country
The North Korean news agency announced that Kim Kwang-hyok, 27, who defected to South Korea in 2008 via China has returned to North Korea along with his wife, also a North Korean defector whom he met in South Korea. Showing the couple in a press interview, the news agency reported that the couple was lured to the South “by dint of gimmicks, appeasement and manipulation of brokers and agents of the South Korean intelligence agency” and “suffered a miserable life in S.Korea.” It was the 2nd time North Korea reported on the returning defectors in the media this year.

North Koreans defect to South Korea because of poverty, but North Korea has claimed that the defectors are not the victim of poverty in North Korea. One North Korean said in a press interview that “More South Koreans are moving to the U.S. than North Koreans coming to South Korea. Are the South Koreans the defectors to the U.S. because of poverty in South Korea?”

2) More Koreans have diabetes
According to a report from the Korean Diabetes Association, one in 10 adults over 30 was diabetic in 2010. The rate rose to 22.7% for people over 65. If to include those suffering from pre-diabetes symptoms like abnormal glucose levels, nearly half (47.4%) of all senior people are either diabetic or close to it.  The rate of diabetes among Koreans was 8.6% in 2001, and rose to 9.1% in 2005.  KDA said the rising number of senior citizens, surge in obesity, lack of exercise, consumption of fatty foods and stress are the main reasons behind the increase.
I respect my wife for spending two hours every day at a fitness center as I feel 5 minutes on a treadmill is worse than 5 hours of watching a cricket game. My respect for her evaporates quickly, however, each time she pushes the button for an elevator at my apartment where we live on the third floor.

2. Economy
1) Hyundai Heavy Industries to build a diesel engine plant with Cummins of U.S.A.

Hyundai Heavy Industries broke ground to build a new diesel engine plant in a joint venture with Cummins Engine in Daegu, 300km southeast of Seoul. The plant will produce 50,000 engines a year once it is completed in 2014 with $80M investment. HHI said the JV will secure a steady supply of engines for construction equipment as it is expanding its business in this field. HHI’s construction equipment division has sales of $3.7billion last year, up 29% from 2010. HHI expects the new plant will generate 5,000 new jobs and $1.8 billion in economic effect.

HHI is the world’s largest shipbuilder with 53.7 trillion won ($48.8B) in sales in 2011.With slowdown in European economy, HHI just began offering “honorary retirement” package to cut labor cost, the first time to do so in its 40 year history. What is irony is that HHI had spent billions of won in T.V commercials until just a few months ago to boast their contribution to the society by saying “Do you know a company whose average employee service period is 19.1 years?”  Well, “Do you know a company which plans to cut average employee service period by 30% in less than 3 months?”

3. Auto Industry
1) Hyundai opens its Brazil plant.

Hyundai Chairman Chung Mongkoo was in Piracicaba, 160km northwest of Sao Paulo, for the grand opening of its first automobile plant in South America. Built on a 1.4 million area with investment of $700, the plant can roll out 150,000 units a year. The HB20 subcompact car that runs of gasoline and bio-ethanol is the plant’s first model. With the 35% duty exemption for those from the new Brazil plant, Hyundai expects to boost its sales in Brazil significantly from 85K a year to capture 10% of the Brazil market. The Brazil plant is Hyundai’s 7th overseas plant after India, Turkey, Beijing, Alabama, Czech Republic, and Russia, not counting Kia’s three other overseas plants.

I can testify the grand opening of the Brazil plant was the work of nearly 14 year preparation. When I put my resignation in Hyundai, my boss thought I was still a value for the company and put me in Brazil project task force team on April 30, 1999. I left the company on May 10, though. There had been ups and downs with the Brazil project ever since, and Hyundai finally broke ground in Oct, 2010 as Hyundai thought its goal of world’s No.4 maker would not be possible without a plant in Brazil that has become world’s 7th automotive manufacturing country. It wasn’t that Hyundai wanted to reinforce its soccer team by hiring a bunch of Pele’s proteges.

2) GM Korea’s Gunsan plant in dispute
The union in GM Korea is protesting at the company’s recent decision not to produce new 2014 MY Cruze in its Gunsan plant, 300km south of Seoul. Employing 3,300 employees, the Gunsan plant currently manufactures 260K passenger cars a year, and 160K of them are Cruze. GM Korea President Sergio Rocha said there will be no reverse of the decision, and the decision was made after GM’s strategy over manufacturing cost, profit and sales opportunities. The union threatened that “GM will receive huge protest from the workers unless it revokes its decision.” The union also said they can even wage strikes.

The union is getting emotional instead of logical, just like what they have been doing so many years under Daewoo Motor days. This is GM, a typical American company, and it is those in Detroit who are making global strategic decisions. The union can strike, make protest visits to GM in Detroit, petition to Korean politicians or have PSY sing “Gunsan Style” at Today Show, but all their efforts still would not be productive unless they can better explain to Mr.Rocha and GM CEO Dan Akerson why Cruze production in Gunsan means more money to GM than anywhere else. Just an opinion of someone who has worked for an American company for 14 years after Brazil project.


Monday, November 5, 2012

LTW - NK Bro in SK?, Dokdo vs. Google Maps, Hyundai Sales

1. National
1) Kim Jong-un’s brother in South Korea?
Rumors are floating that Kim Jong-nam, 41, the first son of late Kim Jong-il and half brother of current N.K. leader Kim Jong-un, has recently sought asylum in South Korea while residing in a third country and that South Korean authorities have safely secured him. South Korean government played down the rumors, but a lawmaker from the ruling party said that an official from National Intelligence Service said “It is difficult to comment on that” when the lawmaker asked the spy agency if they knew anything about Kim Jong-nam’s whereabouts. Just by coincidence, Kim Jong-nam’s eldest son living in Europe described his uncle Kim Jong-un as a dictator on a recent Finnish television talk show.
As the eldest, Kim Jong-nam was expected to take power from his father, but that dream went away when Kim Jong-nam was caught by Japanese immigration in 2001 when he tried to enter Japan under false passport to visit Disney Land in Tokyo. Kim Jong-il probably thought running a nation isn’t a Mickey Mouse game. 

2) Google got caught between Korea and Japan?
While its CEO Eric Schmidt tried to be friendly with Koreans, even learning “Gangnam Style” horse dancing from Psy last month, Google has angered many Koreans by deleting the Korean address for the Dokdo islets (Takeshima by Japanese) from its map service, under pressure from Japan. Google has refused to reconsider the change despite the protest from Korean government. Google claims it is trying to be neutral, but Koreans think it not neutral at all to delete Korean address for Dokdo and to identify it by the old nautical name “Liancourt Rocks” as the islets are officially administered by Korea. 
It seems the feared aftershock of President Lee Myunghbak’s surprise visit to Dokdo in August is taking place. Dokdo became well known to other nations after his visit, and many might think Dokdo is in dispute, much like Kashmir. Lee’s next move is to hold a press conference to tell everyone in the world in 110db that his Rolex watch for wedding in 1970 belongs to him, not to someone else. 

2. Economy
1) Apple gets slammed by U.K. court, again.  
A U.K. court ordered Apple to repost a message on its website saying “Samsung did not copy its patented designs.”  The court said the Apple included “incorrect” and “untrue” information in a message that was to acknowledge the original court ruling that Samsung’s Galaxy Tab did not infringe on the design of the iPad.  On Oct. 25, Apple did post a message on its U.K. homepage acknowledging the court ruling, but quoted a judge who said the Galaxy Tab’s design was “not cool enough” to be mistaken for an iPad. 
Samsung’s relationship with Apple is quite weird. Samsung sells 8 billion dollars worth smart phone components like semi conductors and LCD screens to Apple each year, but its Galaxy models have to compete against iPhone or iPad made of its own components. Samsung sales division’s worst enemy is itself. 

3. Auto Industry
1) Hyundai to develop 3.0L Turbo engine.  
Hyundai announced its plan to develop a 3.0L Lambda turbo gasoline engine at its 12th annual International Powertrain. Hyundai said it plans to use the turbo engine for Grandeur (Azera) and Genesis for better fuel efficiency and horse power by 10%. Kim Haejin, the newly appointed head of Powertrain R&D, said “Demand for eco-friendly, high ?efficiency engines and transmissions is rising so we plan to speed up development of cutting-edge powertrain technologies.” Hyundai currently has turbo version for 1.0L Kappa, 1.4L Gamma, and 2.0L Theta. 
Hyundai seems to be determined to make turbo as its key strategy as WIA, Hyundai’s sister company, has just decided to get into turbo charger business. WIA’s entry can turn turbo charger market currently crowded with BorgWarner, Honeywell and Mitsubishi, into an arena for UFC fighters.

2) Hyundai’s sales in China spikes  
Beijing Hyundai set new sales record in September, thanks to unexpected gains from the recent Senkaku/Diayou island dispute between China and Japan that sparked boycotts against Japanese products. Hyundai sold 84,188 units in China in September. With the 43,639 units its sister Kia sold in China, the total sales for both reached record 127,827 units, up 9.5% from the previous peak of 116,763pcs in the same month in last year. Toyota China saw its Sep sales drop 48.9% on year to 44,100 and Honda China also suffered 40.5% decline on year to 33,931 in Sep. Ranking 3rd in sales last year with combined sales of 1.17 million units, trailing VW with 2.19 million and GM with 1.2 million, Hyundai-Kia sold 930K units as of September this year.
While it was all good news from China, it was not so from North America because of Hyundai-Kia problem with U.S. EPA over fuel consumption rating. Though the discrepancy was due to the misunderstanding of test conditions, according to Hyundai, Hyundai-Kia management made a full apology and will reimburse average $88 for 900,000 consumers who bought Hyundai-Kia models in question. A 0.0009% owner of Hyundai stocks, my wife thought Hyundai was making a right move by being proactive, and decided to hold her stocks.


Monday, October 22, 2012

LTW - China Tensions, Costco Troubles, & DMZ Apologies

1. National

1) Diplomacy with China in action over the death of a Chinese fisherman
The Minister of Foreign Affairs and Trade expressed regrets over the death of a Chinese fisherman killed during a crackdown on illegal fishing off South Korean waters near Mokpo. The fisherman was violently wielding hacksaws against Korean coast guards before he got shot dead by a rubber bullet. About 30 Chinese fishing boats were illegally fishing in Korean waters when the accident occurred. The Korean minister’s prompt show of regrets was to prevent the incident to develop into a full scale diplomatic issue. A Korean coast guard was killed by the Chinese in Dec 2011 in his attempt to arrest illegal fishermen near Incheon.
Why do Chinese fishermen keep coming to Korean seas for more fish even if there is huge sea to catch fish near Chinese borders?  It may be the fish caught near Chinese sea have "Made in China" in their fins?

2) Defense minister apologizes over loose surveillance of DMZ The Minister of Defense made an apology over the defection of a North Korean soldier who was able to pass through the heavily armed border undetected. The military has been much criticized for its failure to detect the North Korean defector on Oct 2, who crossed 4km of DMZ and climbed through barbed wires before he knocked on the door of an army barracks to say he wanted to defect. It is mocked as “knock-knock defection” in Korea. The worse part was that the military initially tried to cover-up, saying their surveillance camera first detected the defector. Five generals are to be disciplined for trying to cover up.

 I was stationed in DMZ for a week in 1981as part of military training in college. We were warned to be vigil all the time at night or North Koreans can creep up any time to cut our throats. No North Koreans showed up, but we had to hear many hours of North Korean propaganda songs blaring out from giant speakers. One of the songs was titled “Pyongyang Style.”

 2. Economy 1) GCF headquarter to be based in Incheon  Incheon city beat Germany's Bonn to host the Green Climate Fund (GCF), a new world body similar to the International Monetary Fund. This is the first time Korea became home to one of the world's major international bodies.  The 190- member GCF was established in 2011 to help reduce greenhouse gases, carbon emissions and slow climate change with 800 billion funds. Incheon made a commitment to provide 15 floors of offices in the newly developed Songdo International Business District and $9million in operating costs. According to an analysis, the GCF headquarter can generate economic effect worth 380billion won ($344 million) a year.  

 Incheon is best known for successful Inchon landing by U.N. forces led by General Douglas MacArthur on Sep 15, 1950, which turned the Korean War upside down in favor of U.N. and South Korean forces.  Millions of bombs were dropped on Incheon occupied by North Korean forces at that time during the landing.  Koreans hope billions of dollars will drop on Incheon from GCF landing this time.

2) Costco in trouble for not following the government policy   Costco is getting retaliatory shots from the government for refusing to comply with Seoul city government's demand to close on Sunday to help mom and pop stores in the city. Seoul City thus deployed officials to three Costco stores in Seoul with a magnifying glass to see if there is any type of violations Costco is making. The officials found 14 violations such as a problem with emergency lighting and a violation of meat safety standards. The Costco stores inspected will be shut down for five days with 30 million won fine because of the violations.  This is typical case of "Goesim Joi."   Hard to explain , but Goesim means “rude; impertinent; outrageous” and Joi means crime. Goesim Joi is committed if a person or an organization of lower position (worker/supplier/private company) irritates those in upper position (boss/OEM/government) by doing things that are perfectly legal or proper.   
Still have hard time to understand Goesim Joi? I asked my wife a few months ago why she has no problem with spending millions of won for many of her Prada and Louis Vuitton hand bags, but gets cranky about my 15,000 won Adidas soccer ball. I had to sleep in a sofa for three days on charges of Goesim Joi after that question.

3. Auto Industry

1) Hyundai outsource workers porters in electric poles
  Two members of Hyundai outsource workers union climbed an electric pole in Ulsan, making their nests at 50meters high from the ground. They are demanding the immediate action to give full regular employee status to the entire outsource workers. They are threatening to jump off the pole if the police try to capture them.   Hundreds of outsource employees gathering under the pone to wage candlelight vigils in support of the two men high above. Hyundai and the police also have sent their forces to the pole to prevent the worst from happening.   
 Union activists tend to wage sit-ins high above the ground to get the attention and publicity. Just a year ago, another union activist staged a sit in protest at the top of a goliath crane for 309 days at Hanjin Heavy Industry in Busan. According to Buddhist theory, there is another life before birth and after death. If the theory is true, the monkeys in the trees have high potential to become union activists when they are reborn.
Regards, H.S.