LTW: Tokyo Tension, NK Threats, & Bonus Wage Ruling

1. National
1) Korea and Japan difficult over Mr. Abe and bullets  
The relationship between Korea and Japan is getting sour over two issues. The first one is the controversial Yasukuni Shrine visit by Japanese PM Shinzo Abe, which has drawn criticism from the U.S. and China, as well as both South Korea and North Korea. Even more Japanese have negative views on Abe’s visit to Yasukuni that holds 14 of Japan’s Class-A war criminals. The other is over the borrowing of 10,000 bullets from Japan’s Self-Defense Forces by the South Korean Hanbit Unit in South Sudan when there was a big battle in Bor last week. The Japanese government is using the case to bolster its right of “collective self-defense” as the 10,000 bullets to Hanbit Unit was Japan’s first ammunition to another country since World War II.

There are 284 Korean soldiers in Hanbit Unit whose assignment is to build infrastructure and to provide medical service, and my first son is one of the 284. The opposition party is criticizing the commander of Hanbit Unit for creating a diplomatic issue by borrowing bullets from the Japanese forces. That is non sense. If I am at a battle, and if my soldiers are at a risk because of lack of bullets, I would send S.O.S. for more bullets even to the enemy.

2) Kim Jong-un warns of sudden war
North Korean leader Kim Jong-un warned that war could break out “without any prior notice” while inspecting a military post, urging the soldiers to improve combat readiness. Kim was accompanied by a new troika who appear to be propping up his power after the execution of his uncle Jang Song-taik.

 

Rumors have it that Jang was executed because he had an affair with Kim’s own wife or Jang had attempted a coup to overthrow Kim, or Jang stole money out of Kim’s pocket. Whatever the truth, Kim was angry enough to spray his uncle with anti aircraft guns and then burn the remaining body with flame-thrower. Kim was a good diplomat, though. He was cautious enough not to borrow bullets from Japan.

2. Economy
1) Korean railway under strike 
The workers in KORAIL, the national railway, have been in strike from Dec 9, demanding the government scrap its plan to set up a new rail operator for the new bullet train line linking Gangnam to Busan, calling it the first step to toward privatizing the KORAIL. The government is responding that it is not “privatization,” but “normalization through competition.” The KORAIL employees are paid the best in the world, even more than those in the U.S. or Germany, while KORAIL is suffering under 17 trillion Won debt. The railway is running only 70%, but the strike is to end soon as KORAIL and the union is on a single track, running at max speed to each other at the moment.

  

Though railroad was first built in 1899 in Korea, between Seoul and Incheon, Choi Yeon-hye is the first female head of Korean railway.  She is using the same rhetoric as Ronald Reagan had with the striking U.S. air-traffic controls in 1981. “Come back to work by Dec 28 or face the consequences.” The Dec 28 has passed, and KORAIL did begin to hire new employees to replace the strikers. All the male heads of KORAIL before Choi had no balls to make the organization straight. Choi has no balls for sure, but it seems she has guts instead.

2) Supreme court rules on ordinary wage issue   
A big labor issue for the past two years was whether the fixed bonus is to be counted as the ordinary wage that is the basis of over time payment. The Supreme Court ruled on Dec 18 over the law suit filed by the union of an auto supplier Kabul Auto Tech that the fixed bonus be included in the ordinary wage, which is a victory for the union, but held back from forcing the company to pay three years’ worth retroactive pay, a good news for the company, under “principle of good faith and trust.” In short, the court said ‘change from now on, but leave the past alone.’ The labor department in the government announced it respects the court decision, and there will be big changes in the labor law within a few months.

  

 Outgoing GM Chairman Dan Ackerson complained to president Park Geun-hye last April to do something about the ordinary wage issue that may cause billions of dollars for GM Korea. With the latest decision from the court, Mr. Ackerson got only half of what he wanted. Mary Barra, the first GM CEO without balls in its 105 year history from January, will probably do better than any of her predecessors with all the guts she has to break the 105 inch thick glass ceiling.

3. Auto Industry
1) Hyundai becomes a legend with 1 million cars in China    
Hyundai Beijing has sold over 1 million cars in China this year, 11 years after it began production at its joint venture plant with Beijing Automotive Group, becoming the fastest automaker to reach that milestone in China. Hyundai’s sales target for this year was 970K units. Hyundai plans to maker more vehicles in China, with the grand opening of new commercial vehicle plant with annual capacity of 150K planned in mid 2014 that will add another 150K. Hyundai’s sister Kia will make some 500K in China this year.
   

Mr.Jae-man Noh had been the plant manager of Hyundai Beijing from the start-up until two years ago. Ex-quality manager at Hyundai’s Bromont plant in Quebec, Mr. Noh has been credited with expanding the Chinese market from ground zero with his “Qualite en tete, or Quality in mind” approach. Mr. Noh being a friend of mine from Bromont, I once asked him if Beijing Hyundai would be better had I worked under him in Beijing instead of leaving Hyundai. His answer was ‘Noh.’

Regards,
H.S.

L2W - NK #2 Sacked, Kimchi Recognition, CNN Top Ten

1. National

1) No.2 man in North Korea got sacked

Being the son-in-law of North Korea’s founder Kim Il-sung, brother-in-law of Kim Jong-il, and uncle-in-law of Kim Jong-un, Jang Sung-taik has been known as No.2 man after Kim Jong-un. It seems Jang’s career has ended, however, as he has been stripped of all of his posts and arrested last week, while his two henchmen were publicly executed on charges of damaging the Workers Party. Jang’s another right-hand man is seeking an asylum in South Korean embassy in China. It is reported that Jang’s cronies have put their hands in Kim Jong-un’s slush fund overseas. Jang’s ouster is viewed as Kim Jong-un’s complete consolidation of power in North Korea, or the beginning of Nicolae Ceausescu type process in North Korea.. 

Money may not be the real reason that got Kim Jong-un ticked off. Maybe it was Jang’s fear of losing Kim Jong-un’s confidence as No.2 status to his competitor, and his relentless effort to thwart the entry of Kim Jong-un’s best friend, Dennis Rodman? 

2) Kimchi got recognized by UNESCO

Kimchi, the spicy vegetable dish from Korea, and kimjang, the culture of making and sharing kimchi, have become UNESCO’s Intangible Cultural Heritage of Humanity on Dec 7.  Korea’s Cultural heritage Administration said UNESCO recognized kimjang represents Korea’s culture of sharing and networking ahead of winter and gives Koreans a sense of identity and belongingness through bonding and solidarity.  Kimjang takes place between Nov and Dec, and has been a way of preparing and storing nutritious vegetables for use during long winters.

  

While many foreigners have hard time eating kimchi due to strong smell, ex-Metaldyne employee David Killion was an exception. A great engineer with many patents, Killion fell in love with kimchi from his first visit to Korea in 2000. Korean consumers, however, tend to petition Korean government to block Killion’s entry to Korea as local kimchi price went up 40% each time Killion visited Hyundai R&D center.

2. Economy

1) CNN lists top 10 things Korea is known for

CNN listed 10 things that Korea “pulls off more spectacularly than anywhere else.” Here is the list.  1. Wired culture with 82.7% internet penetration. 2. Whipping out the plastic with 129.7 transactions per person in 2012.  3. Workaholics with 44.6 hours per week. 4. Business boozing 5.Innovative cosmetics 6.Female golfers 7.Starcraft. 8. Flight attendants 9.Blind dates 10.Plastic surgery.  Please click http://edition.cnn.com/2013/11/27/travel/10-things-south-korea-does-best/index.html?iref=allsearch as it would help you learn the reality in Korea.

 

On the plastic surgery aspect, you must respect Korean plastic surgeons who are better skilled than God. They can turn a Whoopi Goldberg into a Whitney Houston only after a few hours of knife works, just like what they did to 2012 Miss Korea Kim Yumi.

2) Good news with Korean export

President Park Geun-hye attended 50th anniversary of Trade Day event where three good news were announced. Korea became the largest exporter to China with $150 billion, beating out Japan for the first time. Korea reached $1 trillion in trade volume for 3 years in a row. Korea expects to see its largest trade surplus ever with $47 billion, by the end of the year. The Trade Day was started in 1964 by Park’s own father to celebrate the country reaching annual exports of $100 million for the first time. While Korea was the near bottom 90th exporter with products like plywood, wigs and iron ore in 1964, it is 7th exporter this year with semi conductors, mobile phones and cars for $562 billion export. 

 

Philippine was a dream country for Koreans in 1964 as Korea’s personal income was only about one tenth of Philippine at that time. Long line for  work visa application in front of Korean Embassy in Manila these days, however. Why the other way around in 50 years?  Philippine had a dictator Fernando Marcos whose interest was in the wealth of his family while Korea also had another dictator Park Jung-hee whose interest was in the wealth of his nation.  

3. Auto Industry

1) A Genesis for New Genesis

Hyundai launched New Genesis sedan with a plant to sell 62,000 units, a 35% up from the record 46,000 units sold in 2011. As Hyundai has seen its luxury sedan market severely eroded by imports, mostly by German models, Hyundai’s focus on New Genesis development was to benchmark German competitors. (Hyundai and its sister Kia’ sold only 10,264 Genesis and 4,497 K9(K900 in the U.S.) in the first 10 months this year while the combined sales of the BMW 5 Series, Audi At and Mercedes-Benz E-Class stood at 30,909 units.) The New Genesis will sell for between 46.6 million Won and 69.6 million won, and is thought be a mega hit so far with 8,000 units sold in a week. 

While New Genesis got much better than its predecessor in general, it is not so in fuel efficiency because of added weights with more functions and features. It got 135kg weightier than its old version, and even 200kg more with 4WD option. What should be on the desk of Hyundai engineers working for the next Genesis to launch in 2019? Jane Fonda’s Workout Book.

2) GM Korea under fear with no Chevy in Europe

GM Korea is getting a direct hit from GM’s recent decision to halt sales of Chevrolets in Europe from 2016. GM Korea manufactured 780K vehicles last year, and shipped 186K Chevy models to Europe, meaning 24 percent sales drop for GM Korea that will entail large layoffs.  GM Korea runs thee plants in Korea, and most of the Chevy models to Europe are produced at Gunsan Plant located 300km south of Seoul. Gunsan has a capacity to produce 260K units a year. 

GM is known as the company run by bean counters, and its ‘no Chevy in Europe’ decision was made because the bean counters were not happy.  What should be in the hands of GM Korea union workers and management? My Years with General Motors by Alfred Sloan. “The business of business is business.”

Regards,

H.S.