LTW - Peninsula Tensions, Bball Fixing, & Tourism Rank

1. National

1) Korean peninsula turning into an Ice Age

The tension between South Korea and North Korea getting tight as the South Korea-U.S. annual joint exercise called Key Resolve got kicked off on Mar 11.Kim Jon-un keeps pouring out hostile verbal threats against the U.S. and South Korea such as “We will drive the enemy the into a fire pit,” “We can make a pre-emptive nuclear attack against the U.S.” and “the Korean War armistice agreement is no longer valid.” South Korean military issued a strong warning in return, vowing that there will be 10 times of retaliation , and that North Korean military headquarters would be annihilated once South Korea is attacked. While the U.S. is installing 14 additional missile interceptors in Alaska, South Koreans used to crying wolf from the North remain calm as they believe “barking dogs do not bite.”

  

Kim Jong-un probably learned escalating rhetoric from my wife. If I do not behave the way my wife wants, she first threatens “I will buy a Gucci watch.” If I still do not move, her rhetoric ratchets up to “I am going for my 3rd Prada purse.” If I still won’t budge, she will scream “I will have Lotte Department store make an expedite order for 10 Louise Vuitton handbags!”

2) A basketball star charged over game fixing

Kang Dong-hee was a Korean version of Isiah Thomas of Detroit Pistons in the 90’s, and is now the manager of Dongbu Promy pro basketball team. He was charged last week for his role in fixing games in March 2011 for 50 million won from two brokers. An arrested broker confessed he had received money from other people who purchased Sports Toto (Lotto) tickets and given portions to Kang. There were other game fixing scandals with other sports in the past, but it was the first time an incumbent manager was directly involved. 

  

Basketball is the 3rd most popular sports after baseball and soccer, but Korean basketball players are not really impressive. Most the Top 10 scorers in Korean Basketball League are Americans who have no chance of playing in NBA, and Korean national basketball team has failed to go to the Olympics after the 1996 Atlanta Olympics. Korean national basketball team has a chance to go to Rio de Janeiro Olympics in 2016 only if all of the players become transgenders.  

2. Economy

1) South Korea ranked 25th in tourism competitiveness

In the 2013 Travel and Tourism Competitiveness Index by the World Economic Forum that ranks 140 nations in 14 categories such as policy regulations, environmental sustainability, safety and natural and cultural resources, Korea ranked 25th this year, up from 32nd in 2011. Korea earned 4.91 points out of 10, ahead of tourist nations such as Italy (4.90), Greece (4.75), Malaysia (4.70) and Turkey (4.44). Switzerland was the top with 5.66, followed by Germany/Austria, and Spain. The U.S. ranked 6th, and Japan move up to 14th from 22nd in 2011. China dropped to 45th from 39th two years ago.

   

While the land mass of South Korea is very small, the same size as Indiana, it has many resources to attract tourists. Korea has distinctive four seasons, has many mountains that cover 70% of the land, is surrounded by seas with many islands and has historical sites with a legendary founder who was born 4,346 years ago. Tourists can also experience 100 degree hot capitalism while watching a minus 30 degree cold communism just 2km away north of DMZ that use nuke bombs for fireworks show. 

3. Auto Industry

1) 8 million Hyundai cars sold in the U.S.

Hyundai reached a new milestone in Feb, selling its 8 millionth vehicle in the U.S. 27 years after it launched Excel in 1986. Hyundai sold its 5 millionth car in 2007, and took just six years to reach 8 million. Eight million accounts for 20% of Hyundai’s total sales overseas, and over 6 million were shipped out of Korea.  The best selling model was Sonata which sold 1.94 million units since its launch in 1989, followed by Elantra which sold 1.91 million. As Hyundai sells nearly 500K cars a year in the U.S., it would be in less than four years to hit another milestone with 10 millionth in the U.S.

 

Hyundai Excel was an instant hit, selling over 170K in the first year, but Hyundai had to pay for its poor quality reputation that dragged Hyundai’s sales less than 10K a month level until late 90’s when Hyundai’s sales finally took off with Chairman Chung Mong-ku’s quality first campaign. Hyundai turned into a joke stew for Jay Leno in the 90’s, and Hyundai was ‘Wrong made Honda’, according to Jay Leno. 

2) Kia having an issue over a name

Kia’s new concept car Provo introduced at Geneva Motor Show last week is making a brouhaha in Britain and Ireland as it sounds like a celebration of terrorism. Prove is the street name for the dominant branch of the outlawed Irish republican Army which killed some 1,800 people during its 1970-1997 campaign to force Northern Ireland out of the U.K. British lawmakers appealed in the House of Commons to Kia to ditch the name. Kia insisted ‘Provo’ was to mean ‘provocative’ and said it would not use it in the U.K. or Republic of Ireland. Kia is not the first one with name problem. Mazda’s LaPuta launched in 1999 means ‘prostitute’ in Spanish.

 

Other Korean companies have the same problems. Korea’s No.3 bank Hanbit changed its name to Woori Bank in 2002, which means ‘Our Bank.’ While many foreigners may have worry to deposit money in Woori Bank, the names still remains Woori.  Another company is SoHeung Forging, which had supplied parts to a Metaldyne plant in Indiana. A sigh of relief that SoHeung’s business was with automotive parts, not with private parts. 

Regards,

H.S.

LTW - Back in Blue, Worm Diplomacy, & H Power

1. National
1) Park returns to Blue House after many years
President Park Geun-hye was sworn in as the 18th president on Feb 25, returning to Blue House (Korean White House) 33 years and 3 months after she had to leave following her father’s assassination. Park pledged to stimulate the flagging economy and warned North Korea that it will end up the “biggest victim” of its nuclear ambitions. Her speech much focused on economic revitalization. Mentioning the “Miracle on the Hangang River” his father achieved, Park promised she will create a second Miracle on the Hangang River. She used the words “Korean people” 57 times and “happiness” 20 times during the speech.
    




Hangang is the river that cuts through Seoul from east to west. Though her father was criticized for his dictatorship and playboy life, he is polled to be the greatest of the nine presidents after 1945 liberation, thanks to his role in economic development. If Park Geun-hye does create the 2nd Hangang Miracle, no Koreans would care even if Park Geun-hye makes more boy friends than Paris Hilton.

2) NBA rebound king meets Kim Jong-un
Former NBA star Dennis Rodman sat next to Kim Jong-un last week, watching the Harlem Globetrotters match against North Korean team with the young leader and drinking Coca Cola. “You have a friend for life,” Rodman told Kim who is known to be a diehard NBA fan from his high school days in Swiss. Rodman praised Kim as “awesome and honest guy” and hoped his visit would break the ice between the U.S. and North Korea. Rodman’s visit was the 2nd visit by American celebrities this year after Google’s Eric Schmidt visit in January. The U.S. State Dept. made little of the visit, just commenting Rodman is only an American individual.
    

In the interview with ABC’s This Week after the visit, Rodman said that the only thing Kim wants from Obama is just a phone call, that Obama and Kim can be good friends as both are basketball fans, and that the U.S. and North Korea don’t have to have a war. I had never thought the “Worm” in NBA would later become the prime candidate for this year’s Nobel Peace Prize.

2. Economy
1) Companies get slapped over dispatch workers
The Supreme Court ordered GM Korea CEO to pay a fine of 7 million won and upheld criminal charges for having dispatch workers build vehicles along with regular employees. The Ministry of Employment and Labor also discovered that 1,978 sales workers of suppliers to E-Mart, Korea’s largest retailer, were illegally put to work, and ordered E-Mart to hire them legally. If E-Mart refuses, it will have to pay a fine of 10 million ($9,234) for each of illegal employee. Under the current labor law, any form of dispatch work is deemed illegal except for some fields that require special expertise and technology,
 
 It was very rare for companies to have outsource employees through dispatch work in the past. Even the cooks or security guards were hired as regular employees. That practice changed from 1987 when the union got much powerful following the democracy movement in that year. The demands from the unions have often gone beyond common sense, however, and the companies had to use outsource employees or temporary workers to get around all the hassles with hard line unions. The union activists demand that the dispatch work system be eliminated for more regular employees, but they seem not to acknowledge they were the very reason temporary or dispatch workers have been mass created for the last 26 years.

3. Auto Industry
1) Hydrogen-fueled cars in production at Hyundai
Hyundai celebrated the first production of the hydrogen-powered Tucson at the production line dedicated solely for hydrogen fuel cell vehicles at its Ulsan plant. The Tucson is powered by 100kw fuel cell and two hydrogen storage tanks, and can drive up to 594km (369miles) on a full charge with 27.8km per liter (65.4 miles per gallon) fuel efficiency. Hyundai plans to sell 1,000 Tucsons by 2015, all in the overseas market as Korea does not have hydrogen infrastructure yet.  Hyundai proudly announced it is minimum two years ahead of competitors like Mercedes-Benz, GM or Toyota in hydrogen fuel cell technology.
 

Located 430km southeast of Seoul, Ulsan is Korea’s Detroit with over 1 million vehicles rolling out from Hyundai’s five factories. The Ulsan plant must be in high alert these days after news of hydrogen Tucson launch. Kim Jong-un might take H-Bomb as his next challenge after nuclear bomb.

2) GM Korea commits long-term investment
Tim Lee, president of GM International Operations, said GM plant to invest 8 trillion won ($7.38 billion) in GM Korea over the next five years. “We do not invest 8 trillion won lightly. We are here to stay and Korea is certainly part of GM’s plan. Our actions speak louder than the rumors that are circulating,” said Lee at its Bupyeong plant. As for the Gunsan plant missing out on the new Cruze model, Lee said GM is coming up with another plan to keep the factory running. Sergio Rocha, president of GM Korea, announced the “GMK 20XX - Competitiveness & Sustainability” plan under which GM is expanding its R&D center at Bupyeong, making it GM’s 3rd largest after the U.S. and Brazil. It will also produce six next-generation GM global vehicles and power trains, including its first global full battery electric vehicle, the Spark EV, at its Changwon plant. GM Korea sold a total of 800,639 vehicles worldwide last year, and only 145,702 units, or 9.6% M/S, in domestic market.
 

As GM Korea’s main Bupyeong is located near Seoul, while Hyundai was in Ulsan, it has traditionally attracted better talented college graduates than Hyundai has. (Not that I was an imbecile.) With some more leg-up support from Detroit, GM Korea people can show much better slam dunk performance than the Worm did in Detroit many years ago.

Regards,
H.S.