LTW - Longest working hours, British Open Champ, & Hyundai War

1. National
1) Psy’s Gangnam Style tops iTunes chart
It was just 6 weeks ago I talked about a little breeze blowing from Gangnam in Seoul. It turned into a mega typhoon as the Gangnam Style finally took No.1 spot on the iTunes Top Songs Chart, making Psy the first Korean to get the honor. Psy horse danced in ABC’s Good Morning America, and taught Britney Spears on how to dance “The Ellen Show.”  He also wowed the crowd live in Manhattan on NBC’s “Today’ and made it Psy-turday Night by appearing on Saturday Night Live. The Gangnam Style was viewed by 250 million people in YouTube. If you are still not one of the 250 million, here it is.  http://www.youtube.com/watch?v=9bZkp7q19f0

      

Park Jae-sang is his real name, but Park used Psy as his name when he released his first album titled “Psy from the psycho world” in 2001. Psy had not been a role model because of his dabbling with marijuana and dodging military service, much like Bill Clinton. What’s the difference between the two?  Psy did “inhale” marijuana, and taught an attractive lady on how to horse dance, not on how to use a cigar.

2) Ji-yai Shin wins LPGA British Open
If Psy was in the U.S., Shin Ji-yae was in Britain for the sensation. Shin won Women’s British Open, beating her Korean friend Park In-bee by 9 strokes at Royal Liverpool Golf Club on Sep 16. It was her second LPGA win this year after Kingsmill Championship just a week ago. It was also her second British Open win after four years, and 10th LPGA championship.  With Shin’s British Open, Korean girls won three of the four major LPGA tournaments this year. Yoo Sun-young won the Kraft Nabisco in April, and Choi Na-yeon grabbed the U.S. Women’s open in July. Chinese Feng Shanshan was another major winner with Wegmans Championship in June.

  

Many Korean ladies have plastic surgery to make their eyes bigger for western look. With all the success from Asian girls in LPGA, American women in LPGA are serious about eye surgery the other way around.

2. Economy
1) Koreans working longest hours 
According to the Ministry of Strategy and Finance, Koreans work average 44.6 hours a week, the most hours of the 34 OECD nations, 15 hours more than the Dutch who have the shortest working hours of 30 hours a week.  However, the annual average wage was U$35,406, which is a medium size wage. While Koreans work the most hours, their productivity ranked at a low level as its labor productivity ranked 23rd among the OECD nations. Luxembourg, Norway and the U.S.A. were the top three for labor productivity.

   

Talking of productivity, Metaldyne engineers were in an 8 hour meeting with Hyundai many years ago. One hour was spent for meaningful discussions, and the rest of the seven hours on how to write meeting minutes better. Ex-employee Dave Tabbert can testify.

3. Auto Industry
1) Visteon in war with Hyundai 
According to a local newspaper, Halla Climate Control owned by Visteon of U.S.A. is in a big confrontation against Hyundai as HCC flatly refused Hyundai’s request for annual cost reduction. It is said HCC threatened to stop supplying parts if Hyundai debits the money unilaterally. Hyundai is at a loss as they can neither give special favor to HCC by taking it off from the cost reduction list, nor can take a risk of HCC, which supplies 54% of air con to Hyundai/Kia globally, stopping vehicle production throughout the world. HCC was established in 1986 as a joint venture between Mando and Ford which sold its shares to Visteon in 1999. Visteon currently owns 70% of HCC, and its CEO is Tim Leuliette, someone very familiar to many people reading this Korea update.

   

. There will be a last minute negotiation to avoid a major clash from the chicken game as HCC's stock value takes nearly 50% within Visteon Group , and Hyundai can not afford to stop the production line due to lack of parts from HCC. However, a David tried to cut a Goliath’s throat out of anger, and did leave a deep scar on the Goliath neck. That scar will be there for long time for the Goliath to remember.

2) Samsung’s Big son talks with Carlos Ghosn of Renault 
Lee Jae-yong, the COO and the only son of Samsung Chairman, met with Carlos Ghosn of Renault-Nissan Alliance. While details of the meeting were not released, it is rumored the two talked about the sale of 19.9% of Samsung’s share in Renault-Samsung Motors in line with Renault’s plan to sell its RSM shares to Nissan. Samsung allowed Renault to use Samsung name until 2020, but with the recent crisis in RSM, Samsung do not see many merits with Samsung name in RSM. If Samsung does get rid of the RSM shares, it would mean Samsung is sticking to its commitment made at the time of bankruptcy in 2000 that “Samsung would never again go into the business that has wheels.”

    

What can be another business Samsung will soon ditch?  It must be refrigerators business as refrigerators also have wheels.

Regards,
H.S.

LTW - Moon Dies, Pieta Wins, Korea=AA-, & NK Coke

1. National

1) Unification Church founder Rev. Moon dies at 92

Rev. Sun-myung Moon died of pneumonia in Seoul at the age of 92. Born in 1920 in what is now in North Korea, he founded Unification Church in 1954. His church has gathered millions of followers all over the world, and his businesses involving real estate, publishing and even gun manufacturing have also flourished to the level of conglomerates. Moon’s Unification Church was much criticized by established Christian organizations because Rev.Moon declared himself at the messia. Though Moon was a staunch anti-communist, he made up with North Korea founder Kim Ilsung, Kim Jong-un’s grandpa, with a big hug with Kim in 1991. The leadership of the Unification Church will be transferred to his youngest son, Hyungjin (Sean), and the control of the businesses will be passed to his 4th son. Kukjin.

Messia or not, Rev. Moon did make a few miracles. The full moon occurs once in a month. With seven sons and six daughters, it was full moon every evening at Rev. Moon’s home.

2) Korean film ‘Pieta’ wins top award at Venice 

Korean film director Kim Ki-duk’s “Pieta” won the Golden Lion for the best film at the 69th Venice Film Festival. It was the first time a Korean movie has won a top price form any of the world’s three largest film fetivals; Venice, Cannes and Berlin. The movie is about a ruthless debt collector who gradually changes after a mysterious woman who claims to be his long-lost mother visited him, apologizing for abandoning him at birth. But the woman suddenly disappears and the man is confronted with an enormous secret. The movie, whose title was inspired by Michelangelo’s sculpture “Pieta,” is Kim’s 18th since his debut in 1996.

   

Kim Ki-duk is quite a director. Born in 1960, he had to drop out of middle school out of poverty. Working as a factory work, he had no training or education in film making. His first film, Crocodile, was made when he was 36 years old. Though he has been well known since then, he has been in constant conflict with others in film industry for his peculiar personality. He even called himself “A monster who fed on inferiority complex,” before putting himself in exile from society in 2008. With the top award at Venice last week, Kim can now call himself ‘A monster with a golden lion on his head.”


2. Economy

1) Korea’s credit rating better than Japan’s for the first time

Fitch ratings, one of three major credit rating agencies, upgraded Korea’s credit level by on notch from A+ to AA-, the fourth highest level given by Fitch. It was the first time Fitch raised Korea’s rating since 2005 when it upgraded it from BBB+ to AA-. With the upgrade last week, Korea’s credit rating is on a higher level than that of Japan for the first time in history. Just 10 days prior to Fitch’s upgrading, Moody’s also raised Korea’s rating to Aa3 from A1, the highest Korea has had so far.  

Samsung is bigger than Sony, and Korea got higher credit rating than Japan. So, Koreans can laugh at Japanese economy? Hell, no. Japan’s GDP last year was $5.87 trillion, five times more than Korea’s $1.12 trillion. Japan’s per-capita GDP was $44,600, twice more than Korea’s $21,500. Korea still has to rely on Japan for high-tech components and equipment, and the trade deficit with Japan stood at $28.6 billion last year. Korea still has a long way to go before it can say sayonara to Japan.

2) Coke sold in North Korea

It is said there are only two nations in the world Coca Cola still has yet to penetrate; Cuba and North Korea. It seems Coke is having a success in one of the two as a video posted on YouTube showed an Italian restaurant in Pyongyang serving Coke along with pizza to customers. The restaurant is the 3rd Italian pizza parlor open in Pyongyang by Corital, a North Korea-Italy joint company. The employees at the restaurant called Coca Cola as “Italian Coke.” The video on YouTube was the first evidence that North Korea was selling the soft drink from “American Imperialist.”

      

It looks Swiss educated Kim Jong-un’s is changing North Korea from the days of his father. Kim Jong-un had Mickey Mouse and theme of Rocky IV played in concerts early this year, shows off his attractive wife publicly in major events, rides a roller coaster with foreign ambassadors at an amusement park and allows his people to taste the soft drink from the most capitalistic company. What’s next? North Korea has become a full blown capitalist country if you see in YouTube Paris Hilton dancing to PSY’s Gangnam Style in her skimpy skirt in downtown Pyongyang.

3. Auto Industry

1) Ford CEO visits Seoul for sales pitch

It seems foreign car makers are thinking Korean market as a hidden bonanza. Following the footsteps of Toyota’s Akio Toyoda and Renault’s Carlos Ghosn, Ford’s Alan Mulally became the third CEO of major automakers to visit Korea this year. At a press conference in Seoul, Mr. Mulally said Ford has aggressive plans to build brand awareness and grow sales in Korea. While Ford has been doing well recently, selling 2,791 units from Jan to Jul this years, up 28% from a year earlier, it is still ranking 7th of all foreign brands, taking only 3.82% of the import market, down 0.16% on-year. Mulally said Ford will launch six new models like Taurus and Mustang in Korea in the coming months to boost sales, and that the Korea-US FTA would help lower the cost.

Ford blew up a good chance to become a major player in Korea many years ago. Ford was originally picked as the preferred bidder for then bankrupt Daewoo Motors in 2000. Ford has gone through due diligence, but, decided not to buy Daewoo that had over 1 million units a year capacity all over the world. Too much headache with Firestone tire recall at that time was one of the main reasons not to. GM thus picked up Daewoo in 2002 at a very good price, and turned it into a successful production and R&D base to supply Chevy brand models around the world as well as in Korea. Ford wrongly thought Daewoo was “A monster that might gobble up a lot of money.”




Regards,

H.S.