Monday, January 28, 2013

LTW - Thick Glass Ceiling, Minor Baby Boom, & NK Anger

1. National
1) North Korea in anger over a slap in the face by UN
Just hours after the UN Security Council’s unanimous decision to sanction North Korea over a rocket launch in Dec, North Korea vowed to boost its nuclear program. North Korea said there will be no more denuclearization talks “due to the U.S.’s worsening hostility toward North Korea.” North Korea also lashed at China for its agreement on the UN sanction by saying “ Big counties had been pressured by the U.S. and relinquished basic principles that must be protected.” It has threatened “strong physical countermeasures” against South Korea if Seoul directly takes part in the sanctions. A report from Johns Hopkins University said North Korea’s third, Kim Jong-un’s first, nuclear test is imminent.

If we think the world would be much safer without Kim Jong-un, we might be wrong. Just look at what is happening in Egypt after almighty Hosni Mubarak gone. Kim, 28, got educated in Swiss with good understanding of democracy and capitalism. The world leaders need to give Kim a firm assurance that he wouldn’t be another Nicolae Ceausescu of Romania even if North Korea opens to the world.

2) More babies born in Korea
According to the government report, Korea’s fertility rate jumped up to 1.3 children per woman last year, the first time Korea to have reached the level in 11 years. The 1.3 mark is important as that level is deemed in the “lowest-of-low fertility” category.  From Jan to Nov last year, 450,600 babies were born, 3 percent up from the same period. The government warned that Korea will become a super-aged society by 2026, in which people aged 65 or over account for 20% of total population if the current rate of low fertility continues.

While the government incentives were the main reasons for the fertility rebound last year, another key reason was that 2012 was the year of “Black Dragon” which comes every 60 years. Koreans believe that the babies born in “Black Dragon” would have more fortunes in their life. Hard to believe? The marriage increased over 8% in Jan and Feb in 2012 over the same period in 2011, but got reduced to -8.3 percent in May, and kept declining throughout the rest of 2012 except for Jul and Oct.

2. Economy
1) Glass ceiling in government remains thick
 According to public information site, Alio(, only 9.1% or 272 executives out of 2,993 state-run institutions are women. Only 16 of 288 public institutions had female chief executive officers, and 149 had no female executives. The worst was the Financial Services Commission, which had only 1 female executive out of 109, less than 1%. . The best was Korea Childcare Promotion Institute where 66.7 percent of the executives were women.  Both ruling and opposition parties have jointly proposed a bill to raise the ratio of female executives to 15 percent in public institutions in three years and to 30 percent in five years.
If it is the glass ceiling in the government institutions, it is 10 inch thick steel plates in private companies as there are probably more female commanders in Al Qaeda than female executives in Korean private companies. There were three females out of 124 colleagues who joined Hyundai together with me on Dec 1, 1986. Two were assigned to the R&D design center where they sketch future models, and one to finance team. All of the three left the company within three years.

2) K-Swiss to be bought by E.Land
 Korea’s E.Land agreed to pay $170 million for K-Swiss to add the U.S. athletic shoemaker’s brands to its portfolio. The K-Swiss stockholder will receive $4.75 per share, 49% more than closing price on the NASDAQ. K-Swiss was not good financially as the revenue in the 12 months through September was $231M, compared with $508M in 2005. Net losses from 2009, 2010, and 2011 totaled more than $160M. E.Land’s business “will provide K-Swiss with the resources and scale to return to its former performance levels,” said Steven Nichols, President of K-Swiss.

E.Land was established in 1980 by Mr.Sungsoo Park who opened a small clothing store in front of Ehwa Women’s University in Seoul at the age of 28. Mr.Park has grown the company over 10 trillion won($9.5 billion) in sales in 2012. A devout Christian, Mr.Park’s success comes from his deep belief in God, and his frugality.  He drives his own Kia Carnival (Sedona in the U.S.), brings his own lunch box, flies in economy class, and stays in a cheap motel when in business trip. To save hotel cost further, Mr.Park makes his employees stay in one room together, rather than two or three.

3. Auto Industry
1) Leave me alone, damn politicians!
 Ssanyong Motors, Korea’s 5th largest automaker which went bankruptcy in 2009 then got bought by India’s Mahindra in 2011, is urging the main opposition party and outside activist groups to stop meddling in the labor disputes, arguing that such interference only makes the matters worse. Ssangyong union also issued a statement opposing the legislative investigation over the layoff of workers at the time of bankruptcy, saying that could jeopardize its corporate image and operations. The union said “Ssangyong’s revival depends on new investment and improved sales, but if politicians beat and shake the company, we all die.” The opposition Democratic United Party is still pushing for the legislative investigation, urging president elect Park Geun-hye from the ruling party to agree to the investigation.
Both Ssangyong management and union are preaching the politicians to leave them alone. A husband named Joseph was probably shocked when his wife Mary delivered a baby called Jesus not from his own blood, but Joseph was O.K with it. Over two thousand years have passed since. Why do still people keep talking and arguing about Mary having a baby, when her own husband Joseph had no problem with it?


Monday, January 14, 2013

LTW - Google in NK, Prez #'s, & Good To Be Born Korean

1. National
1) Google CEO visited North Korea
Google CEO Eric Schmidt and New Mexico governor Bill Richardson made a four day visit to North Korea on Jan 7 despite U.S. government’s opposition. They met with leading North Korean officials, and toured a computer lab at Kim Ilsung University. In the interview at Beijing Airport after the visit, Schmidt said he went to express his view that North Korea will be better off with more cell phones and wider internet use. Richardson said “dialogue rather than conflict” is needed at this time of leadership changes in South Korea and Japan. South Korean government hoped the Americans’ visit will promote peace and stability in Korean Peninsula. Not known whether they met with Kim Jongun.

It might be that the real motive for Eric Schmidt’s visit was to meet with Kim Jongun to transfer his state-of-the-art horse dancing skills he learned from PSY during his visit to Seoul last September.

2) Presidential transition committee kicked off
 President-Elect Park Geun-hye got her presidential transition committee kicked off. The transition committee will get reports from current administration to help Park set up new policies for her 5 year tenure that starts on Feb 25. She also began to meet with envoys from key nations. In a meeting with China’s Vice Foreign Minister, Park said “North Korea’s nuclear weapons can not be tolerated, but added “doors will be open for dialogue and cooperation through a trust building process.” In the meeting with Japanese envoys, Park called for building up mutual trust in accordance with public sentiment.
Park is to meet with the envoys from the U.S. this week.
It might be that Park was destined to be the Korean president. Here is why. Park won 51.6% of the vote and her father took power after the military coup on May 16, 1961. She became the 18th president and her father ruled Korea for 18 years until 1979. Park is becoming the president at the age of 60 and her father got killed at the age of 60 by his own KCIA director. The opponent Park defeated last month was Mr.JI Moon, and her mother was killed by an assassin called Mr.SK Moon in 1974. Just a coincidence?

2. Economy
1) Korea ranked 19th best to be born
Korea ranked 19th best country for babies to be born, to the Economist Intelligence Unit, a think tank affiliated with the business magazine. Of the 80- countries surveyed, Korea scored 7.25 points ahead of Japan in 25th (7.08), and China in 49th (5.99). The U.S. and Germany shared 16th spot. Switzerland came first, followed by Australia. The 11 categories of the ranking were geography, demography, social and cultural characteristics, public policy, gender equality, political freedom, health, job security, crime rates, the state of the world economy and future income projected for 2030.
 When I was a kid in the 60’s, Korea was one of the poorest nations in the world, with personal annual income of less than $100 when that of Philippines was over $800. I remember my friends lamenting “how happy could we be if we were born in other rich countries like U.S. or Canada!”  Fifty two years have passed since Park Geun-hye’s father took power and initiated economic miracle process. Korea became a nation that my two sons born in Canada chose to keep Korean citizenship by joining the military last September.

3. Auto Industry
1) Denso and Doowon beat Halla, thus Visteon
According to the Korea Economic Daily, Hyundai has begun diversifying its air climate control systems supplier. To the newspaper, Hyundai Alabama has changed its supplier for next generation Sonata from Halla, a subsidiary of Visteon, to Denso. It also reported that Hyundai Beijing will be getting components from Doowon for its new models.  Denso being a keretsu company of Toyota, Hyundai has relied on Halla for the bulk supply of climate controls systems. Halla also has been Hyundai’s good partner with 60% of its sales from Hyundai/Kia. The newspaper said Hyundai may further diversify climate control systems suppliers to meet the interest of global manufacturing sites.

 According to another daily called Jose Ilbo, a Hyundai official said the business to Denso and Doowon from Halla has nothing to do with what happened between Hyundai and Halla last September.

2) Subaru and Mitsubishi say sayonara to Korean market
Subaru announced that it will withdraw from the Korean market. Launched in 2009, Subaru Korea was not successful in seducing Korean customers with its Legacy, Outback and Forester models. In 2011, Subaru Korea sold only 664 units, and mere 558 units by Nov this year. CXC Motors, the sole distributor for Mitsubishi in Korea is also likely to end its operation shortly. It has been selling Lancer, Outlander and Pajero, but has sold pathetic 61 units by Nov last year. In the mean time, the import cars took 10.01% of Korean market in 2012, breaking 10% market share barrier for the first time with 130,858 units sold. BMW was the leader with 28,152 units followed by Mercedes(20,389), VW(18,395) and Audi(15,126). The best selling model was BMW 520d which sold 7,485units.

 Hyundai also didn’t do well in Japanese market, and had to withdraw a couple years ago. The withdrawal of Subaru or Hyundai has nothing to do with the public sentiment between Koreans and Japanese. The car markers just need to “build models in accordance with customer sentiment,” to borrow words from Park Gen-hye.