L2W - Kaesong Reopening, Hyundai Strike, & 50 Years of Stamina

1. National
1) Kaesong complex in N.Korea to reopen
Officials from South Korea and North Korea finally came to an agreement on Aug 16 to reopen Kaesong Industrial Complex in North Korea after North Korea accepted S.Korea’s demand that the North take responsibility of the shutdown and promise to prevent a recurrence. Pyongyang promised that political factors will not affect the operation of the industrial park. The agreement came 133 days after N.Korea closed it to protest joint S.Korea-US military training. With the Kaesong agreement made, Seoul and Pyongyang are to begin negotiation this week on the resumption of North Korea’s scenic Mt.Keunggangsan tour, and reunions of families separated during the Korean War.
 
The agreement is viewed as a victory for S.Korean president Park Geun-hye who have kept strong stance despite bellicose threats from Kim Jong-un for the past several months. Park gave ultimatum earlier that South Korean companies will be paid for insurance for the properties left in Kaesong, meaning she is O.K even with Kaesong permanently closed, and dollar hungry Kim Jong-un finally became a chicken, turned the wheel, and raised a white flag. Park knew a barking dog never bites. 

2) John Kerry sends special message for Koreans
U.S. Secretary of State John Kerry sent a video message to Koreans in celebration of Aug 15 Liberation Day. It is rare that the secretary of state send written statements on major national holidays of foreign countries. “On behalf of President of Obama and the American people, it’s my pleasure to congratulate the Korean people as you celebrate the anniversary of your independence,” said John Kerry in the video. He began and ended his message saying “Annyong haseyo” and “Chooka hamnida”, “hello” and “congratulations”, respectively. The video marks the 60th anniversary of the Korea-U.S. alliance, and a source in Washington said, “Kerry asked officials to come up with a special gesture to mark the anniversary.”

You are in bad situation if two of your best friends are growling at each other, and you don’t want to side with either of the two.  Obama must be dilemma when Park Gen-hye or Abe asks his position on Dokdo Island (Takeshima) and East Sea (Sea of Japan). The best answer from Obama would be Dokdoshima and Sea of Middle.

2. Economy
1) Bacchus drink celebrates 50 years of stamina
Bacchus is a god of wine and giver of ecstasy, and it is why Dong-A pharmaceutical named it Bacchus for its noncarbonated taurine containing energy drink 50 years ago. Total of 17.7 billion bottles were sold in the past 50 years , and if all those were laid end-to-end, they would go around the earth more than 53 times. Over 480million bottles of Bacchus worth 170.9 billion won ($153.5M) were sold last year alone, and it is the best selling product as a single item at Dong-A. Celebrating the drink’s golden anniversary, Kang Shin-ho,, the chairman of Dong-A, announced that he plans to make Bacchus a global drink. Dong-A is exporting Bacchus to 28 nations including the U.S. and Canada.

 Koreans carry gifts when visiting patients in the hospitals, and Bacchus has been the No.1 pick for many years. It tastes fine, and we are wishing the patients to get well and feel ecstasy soon.

3. Auto Industry
1) Ssangyong in black again
Ssangyong was in disaster after bankruptcy and massive lay off that triggered a Baghdad war in its plant in Pyeongtaik in 2009. India’s Mahindra bought Ssangyong in 2010, and got a new start. It seems it paid off as Ssangyong returned to the black in both operating profit and net profit with the highest earnings in 30 quarters in April to June. Sales reached 907 billion won, operating profit of 3.7 billion won, and net profit of 6.2 billion won in the 2nd quarter. Sales was up 26.9% from the same period last year, selling 38,195 units, 15,993 units in the domestic market, and 22,202 overseas. It was more impressive as the total sales of Korean cars took a 1.7% dive over the same period, and its market share rose from 3.2% in 2012 to 4.4%, making fun of Renault Samsung with 3.9%.

Ssangyong’s resurrection was possible because of new car sales and Mahindra’s belt tightening policy to yield profitability. But more important was the support of union which left it to company’s decision for this year’s wage negotiation. Ssangyong union turned itself around in three years the way Michael Jackson has changed his color.

2) Hyundai votes to strike
A record 80.4% of Hyundai Motor workers approved a strike at a vote on Aug 13. Hyundai union made about 180 proposals, which included wage increase of 130,500won ($117) per month, a 30% share of net profit and 10 million won for employee’s children who fail to go to college. The union walked off the table after Hyundai management decided not to respond to those demands. The union can strike as early as Aug 20 when the national Labor Relations Committee declares the arbitration period over. Hyundai has been in strike for 22 years out of the past 26 years since the union was founded in 1987.

The union is to Hyundai what Kim Jong-un is to South Korea, demanding ridiculous things with harsh threats. New president Park put an end to that practice with her handling of Kim Jong-un over Kaesong, and it is now Hyundai management’s turn to do the same job, especially with the large overseas capacity that can afford a strike in Korea. We will know soon if Hyundai management did a good job or not, by checking whether my wife still holds Hyundai shares she has kept for 14 years.

Regards,
H.S.

LTW - War Anniversary, A Bite out of Samsung, Forced Labor Payments

1. National
1) 60th anniversary of end to Korean War
South Korea, North Korea, and the U.S. had ceremonies, different, of course, to mark the 60th anniversary of the armistice that ended the Korean War (1950-1953) on July 27. South Korean president Park Geun-hye reiterated her will to build a global peace park in DMZ as a stepping stone towards reunification at the ceremony. North Korean Leader Kim Jong-un had more show for the occasion by holding a large scare parade of soldiers and military weapons in Kim Il-Sung Square, with many foreign journalists invited covering the event. Kim Jong-un didn’t make a speech, but waved to the crowed with Chinese vice president Li Yuanchao who was invited to demonstrate North Korea’s strong tie with China. President Obama visited Korean War Memorials, declaring “That war was no tie. Korea was a victory.”
 
Kim Jong-un would have marked the 60th Anniversary in Seoul had it not been for the 16 nations that sent military forces to South Korea at the break of Korean War. They were U.S.A, U.K, Philippines, Thailand, Canada, Turkey, Australia, New Zealand, Ethiopia, Greece, France, Colombia, Belgium, South Africa, Netherlands, and Luxembourg. Thank you! 

2) An anti-feminist perishes in a stunt to raise fund
Sung Jae-gi, a well known anti-feminist, died after he jumped off a bridge in Hangang River in Seoul. Sung made a stunt to raise money for the men’s right group he founded, Man of Korea, and had planned to swim ashore, which he could not. Sung, 45, has been calling for the revival of a system that rewards men who have completed their military service, and was demanding the government scrap an impending special law on prostitution that would make men legally responsible if caught buying sex while giving immunity to the prostitutes. He also called for the abolishment of the Ministry of Women and Family, insisting there are hundreds of NGOs and government agencies in Korea for women’s rights, but none for men’s rights except for Man of Korea. Sung’s Man of Korea was in financial trouble, receiving 19.5 million won ($17,511) in donations from Mar 2011 to May this year, but spending 246.7 million won over the same period.
 
Here is some irony. Korean females are exempted from mandatory two year military service that pays some $80 a month, because women are supposed to be not strong enough. However, women are allowed to join the military as officers and sergeants for their occupation. Watch out when you come across Korean females in military uniforms. They must be former Olympic weight lifters or disc throwers.

2. Economy
1) Obama takes a bite out of Samsung
Obama overruled U.S. International Trade Commission’s June decision to block imports of Chinese made Apple phones that violated Samsung’s patents. If Obama had endorsed the decision, older smartphones like iPhone 4 and iPad 2 assembled in China would have been banned from entering the U.S. from this week. Michael Froman, the U.S. trade representative, said the decision was made after the review of effect on competitive conditions in the U.S. economy and consumers. It was the first time ITC import ban has been overturned by the U.S. government since 1987 in a case that involved Samsung. Samsung said it was “disappointed” while Apple spokeswoman said the company “applauds” the administration’s decision.”

The Obama’s decision to protect Apple from Samsung clearly shows how much South Korean economy has grown for the past 60 years since the truce signed on July 27, 1953.  A nation whose average personal income was less than $80 a year at that time now has companies like Samsung that competes head on against Apple. This could not have been possible without the 16 countries that came to rescue South Korea from the communism, and the ‘good’ dictator Park Jung-hee, Park Geun-hye’s father, whose motto was ‘My life is for my country and my people.’

2) Nippon Steel ordered to pay forced laborers
Seoul High Court ordered Nippon Steel to pay 100 million won( $87,950) each to Yeo Woon-taik (90) and three other Koreans taken to Japan to work for Nippon Steel in 1941, in unpaid salaries and compensation for mental suffering. “Nippon Steel committed crimes against humanity by mobilizing forced labor for the war of aggression by the Japanese government. Such invasion not only goes against international law but also against the Japanese Constitution,” said a judge. The plaintiffs are not to get the compensation soon, though, as Nippon Steel has appealed the order, insisting Japan had already adequately compensated Korean victims under the 1965 treaty that normalized relations between the two nations, when Japan paid a lump sum in the form of aid.
  
 Japan paid $300 million free and another $200 million in low interest loans to South Korea to the treaty in 1965 which Park Jung-hee signed. That was a lot of money for Japanese economy at that time, and this entire amount was used as seed money to build infrastructures like Seoul-Busan Highway and Pohang Steel Company(POSCO). Park’s decision to sign the treaty despite huge protest was the starting point South Korea began building its economy from the ashes of Korean War. North Korea’s Kim Ilsung, Kim Jong-un’s grandfather, refused to sign the treaty out of national pride, and thus no compensation money yet, thus still in economic limbo.

3. Auto Industry
1) Hyundai Kia keeps adding global market percent
The combined global market share of Hyundai and Kia reached 8.8% in the first half of this year, selling 3.68 million units out of 42.05 million global totals. Hyundai had a 5.5% with 2.30 million units while Kia took 3.3% with 1.38 million. Hyundai and Kia’s global share has been increasing from 6.4% in 2008, 7.8% in 2009, 8.1% in 2010, and 8.6% in 2011. While sales in North America and Europe dipped a little bit, Hyundai and Kia have been strong in BRIC’s nations. Experts expect the market share can reach 9% this year if the overseas sales momentum continues in the second half.

 Global sales was good news. Here is a bad news. Hyundai and Kia are still the only car makers that do not have wage negotiation completed yet. Hyundai employees are reportedly earning about 100 million won a year in salary in average, and they will get another 100 million won more if Hyundai accepts all the demands the union has put on this year’s negotiation table. I am praying to God these days this never happens. Otherwise my wife would turn into Inbee Park and I into a Srixon golf ball at British Open for the ‘crime’ I committed 14 years ago in May, 1999.

Regards,
H.S.