LTW - Reading Champs, Psy Does Google Style, & Longer Range Missles

1. National
1) Korean students top in study on reading abilities
According to the recent OECD study titled “Education at a glance,” Korean students ranked top in their reading abilities among those in the 34 OECD nations and 8 non-OECD countries. Korean students scored 504 with mother with low education level, and 555 with mother with high education on OECD’s PISA reading assessment, while the OECD average score was 453 and 520 respectively.  PISA(Programme for International Student Assessment) is administered by the OECD every three years to provide nations of their progress in education by measuring the knowledge and skills of 15-year-old students in their respective languages.

There are two reasons for Koreans doing so well in reading. The first is that Korean alphabet invented in1443 is so easy to learn that even those with Paris Hilton IQ can read and write Gangnam Style lyrics after four hours of Korean class with me. The second is Korean mothers’ passion to have their children get education much ahead of normal curriculum. Korean babies begin to learn calculus at their mom’s womb.

2) S.Korea gets tentative permission for longer range missiles
It is about 400km from Busan to Seoul. As South Korea can keep missile with max 300km range under current missile range pact with the U.S., the missiles fired in Busan will drop in south of Seoul, like Pyeongtaek, instead of Pyongyang. Korean government thus recently made a strong push to the U.S., and got agreement to extend the range to 800km. Washington so far has objected to the longer range out of concern the ballistic missiles fired in S.Korea may reach China or Japan. With new 800 km limit, the missiles fired in S.Korea can hit targets any location in North Korea, but not Beijing or Tokyo.
  
Why does Barack Obama so much worry about South Korea’s missile range?  Kim Jong-un in North Korea is toying with missiles inherited from his father that can hit targets in Alaska, and Hu Jintao seems to have no problem with it. 

2. Economy
1) Samsung brand value rated top 10
Samsung ranked 9th in this year’s Best Global Brands by Interbrand, the world’s largest brand consulting company. It was the first time a Korean company got its brand value inside the Top 10. Hyundai Motor went up eight notches from last year to 53rd while its sister Kia ranked 87th, entering into Top 100 for the first time. Samsung’s brand value was estimated at $32.9 billion, while Hyundai and Kia’s were $7.5 billion and $4.1 billion respectively. The No.1 was Coca Cola with $77.8 billion, followed by Apple, IBM, Google and Microsoft. Three aspects are considered for brand value; the financial performance of the products, the role of the brand in consumers’ decision making process, and the overall strength of the brand.
 
 While Samsung has grown so much from nothing in the 50’s to No.9, it has been criticized for being greedy enough to get into small mom & pop store business. Lee Bu-jin, Samsung owner’s first daughter, founded Artisee Boulangerie, a bakery business, in 2006, but had to pull out grudgingly recently after huge criticism from the public. Imagine Bill Gates’ kids getting into chewing gum business.

2) Google CEO visits Korea
Google Chairman Eric Schmidt was in Seoul to introduce Google's first tablet PC, the Nexus 7. Schmidt also visited Samsung's headquarter in Gangnam to meet with Samsung's vice chairman and other top ranking officials. Schmidt did not mention whether he supports Samsung on its patent court battles against Apple, but he commented "one of the worst things has happened because there are so many patents in the mobile world that are overlapping and complicated." As Google’s Android is in most of Samsung’s smart phones, Samsung and Google are thought to be good friends against Apple.
  
Schmidt failed to meet with Korea’s richest man, Samsung Chairman Lee Kun-hee, but that was no problem as he instead met with the most known Korean celebrity, PSY. Instead of hours of stressful money talk with Chairman Lee, Schmidt chose to spend leisurely time to learn how to horse dance to "Oppan Gangnam style!"

3. Auto Industry
1) Hyundai employees get the best salaries
According to a survey by Chaebul.com, a conglomerate research firm, Hyundai Motor is offering the highest salary to its employees of 193 listed firms affiliated to the top 30 conglomerates by paying an average annual salary of $89.34 million won ($79,767) last year. This was the first time a company in manufacturing sector took the No.l spot. The average annual salary at the 30 conglomerates were at 63.49 million won ($56,687). Samsung Life Insurance ranked 2nd with 89.1 million won followed by SK Securities (85.1 million) and Kia Motors (84.9 million). World brand value No.9 Samsung Electronics came 11th with 77.6 million won.
   

It is good to see Hyundai pays the best salary in Korea as Hyundai is doing very well. It is, however, a bit frustrating that the employees at most of Hyundai suppliers are getting less than one third of what Hyundai workers get, even though their work intensity can be much harsher. Well, the world is not fair, I guess. Usain Bolt make millions of dollars after running less than10 seconds, while an Olympic marathon winner can earn only fraction of it after running over two hours.

Regards,
H.S.

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.

LTW - Mud Throwing, PGH Nomination, CEO Jail Term

1. National
1) Diplomatic mud throwing continues between Korea and Japan
It started with Korean President Lee Myungbak’s visit to Dokdo island, Takeshima to Japanese, on Aug 10 and Lee’s following comments that Japanese Emperor Akihito should apologize for the colonial rule of Korea if the emperor wants to make visit to Korea. The Japanese government made a threat of canceling currency swap with Korea, and its Prime Minister Noda sent a diplomatic letter to Lee Myungbak, proposing to take the Dokdo issue to the International Court of Justice. Refusing to receive the letter, Lee Myungbak basically replied to Noda “Kiss my butt” by throwing the letter back to Japanese Foreign Ministry. Korean Marine Corps is planning a military exercise around Dokdo early September. North Korea also joined South Korea to condemn the Japanese government.

  

Mr.Noda must be in dilemma. While he is talking about bringing Dokdo issue to ICJ, he has to say what Lee Myungbak is saying to him to Hu Jintao over Senkaku (Diaoyudao by Chinese) islands which China intends to take to ICJ for the same reason Japan has with Dokdo. Noda is much like my wife; Raise hell about my new 35,000won ($33) soccer shoes, but keep mute about her 1 million won Prada handbag.

2) Park GeunHye nominated as presidential candidate for ruling party
Park GeunHye has been nominated as the presidential candidate for the ruling Saenuri Party. This is the first time a major party has put a woman as its candidate. Park, who lost the nomination to Lee Myungbak 5 years ago, might be the 2nd president in her family after his late father Park ChungHee if she wins in December against the candidate from the opposition Democratic United Party or the popular independent Ahn CheolSoo who has not yet declared his bid for presidency.

  

Park had to play the first lady when her mother got shot to death by a North Korean agent in 1974, and became an orphan when her father got assassinated by his own KCIA director in 1979. Park turned into a politician in 1998 after being elected as a lawmaker. Most of her popularity comes from those who still admire her father’s contribution to the nation. Her father transformed Korea economically from handicap 30 HyungSik Yoon to K.J. Choi during his presidency from 1961 to 1979.

2. Economy
1) Samsung lose to Apple in the U.S. patent court
Samsung means Three Stars, and it might be losing one of its stars as California court jury ruled that Samsung infringed on six of seven patents for Apple’s smart phones, awarding Apple $1.05 billion in damages. Adding insult to injury, the jury found no infringement by Apple on any of Samsung’s utility patents. The $1.05 billion is about one-fourteenth of Samsung’s operating profit last year. While Apple CEO Tim Cook praised the ruling as “An important day for Apple,” Samsung argued that the decision will hurt U.S. consumers. Samsung is certain to appeal the ruling.

 Samsung recently ordered its office employees to begin work at 6:00am in a campaign to make Samsung more competitive. With the California ruling last week, they probably now have to arrive at the office at 3:00am. There will be a lot of stars to pick in the sky around that time.

2) Hanwha Group Chairman put in jail for financial crimes
Kim SeungYoun, the CEO of Korea’s 10th largest Hanwha Group, was jailed for four years for causing 302 billion won in losses to his conglomerate and evading 1.5 billion won in taxes. Kim is the first head of a major conglomerate to be jailed for financial crimes. Owners of conglomerates or chaebols found guilty of financial crimes, including the biggest names in Korea, have traditionally been treated deferentially by the courts and let off lightly, under the excuse of “preventing shock to economy.” Seven owners of conglomerates have been indicted for financial crimes since 1990, but all of them received suspended sentences and eventually pardoned by the presidents.

  

Kim Seung-Youn was once put behind bars in 2007 for hiring gangsters to physically retaliate against a few hoodlums who beat his 2nd son pretty badly in a bar fight. Kim took the kidnapped hoodlums to a mountain in Seoul, and, wearing boxing gloves, personally punched them in the face till they were nearly dead. Not sure about this time with financial crime, but many were sentimentally supportive of Mr.Kim in 2007 for what he did for his son.

3. Auto Industry
1) Hyundai Chairman Chung visit his U.S. facilities
Hyundai Kia Automotive Group Chairman Chung MongKoo made quick visits to Hyundai Motor America in LA, HMMA in Alabama and KMMG in Georgia in three days. Mr.Chung met with Georgia Governor Nathan Deal and Alabama Governor Robert Bentley.  Mr.Chung message throughout the trip was very simple. Make better quality cars, and compete against Japanese rivals not with price, but with quality.  To meet consumer demands, Mr.Chung has recently put three shift operations for HMMA and HMMG..

    

  The news of Mr.Chung making another quality comments in the U.S. must have sent shivers to Hyundai suppliers. As the quality has been the locomotive of Hyundai’s growth for the last 12 years, Hyundai’s quality commandos in full combat gears raid on the suppliers that created quality problems. The commandos use all sorts of quality weapons like SPC grenades or 5S rifles to kill the possible suspects. If their ammunition runs out with suspects still hanging around, they turn into kamikazes, making your once peaceful plant a downtown in Baghdad.

Regards,
H.S.

LTW - Dokdo Visit, Olympic Medals, & Electricity Rise

1. National

1) Lee Myungbak’s visit to Dokdo creates controversy

President Lee Myungbak made a surprise visit to Dokdo, an island Japan calls Takeshima, on Aug 10. Lee declared at the island, “Dokdo is genuinely our territory. Let’s defend it with pride.” While Korean government said the president’s unprecedented visit should not be an issue as the island belongs to Korea, Japan made a strong protest, immediately recalling its ambassador to Korea. Japan also said they would take Dokdo issue to International Court of Justice. Many try to understand Lee’s visit as a result of his frustration with the Japanese government over the issue, but there is a suspicion that Lee used Dokdo visit as the last tool to boost his rock bottom approval rating of 18%. 

  

What would the rest of the world think if Barack Obama suddenly pops up in Anchorage, and declare “Alaska is genuinely our territory. Let’s defend it with pride.” Lee’s appearance in Dokdo might be appealing to Koreans emotionally, but he probably just kicked off the process to turn it another Kashmir between Korea and Japan. 

2) Olympic Team South Korea shines in London

It took 20 days of travel from Seoul to London when South Korea’s first Olympic team participated in 1948 London Olympics where Korea South Korea won only 2 bronze medals, ranking 32nd.  Sixty four years have passed, and South Korea won 13 golds, 8 silvers and 7 bronzes, ranking 5th after Russia. Korean archery team took 3 golds out of 4, and shooting team won 3 golds out of 15. North Korea also did quite well as it won 4 golds and 2 bronzes, ranking 20th. The most watched event was the soccer match against Japan for bronze medal in which Korea beat Japan 2:0. 

     

Koreans are not allowed keep guns, but won five medals (3 golds, and 2 silvers) in shooting events. Americans can carry guns freely, but gained four medals (3 golds and 1 bronze). Another mystery to be listed in Ripley’s Believe It or Not. 

2. Economy

1) Psy’s “Gangnam Style” creates Psy syndrome around the world

K-Pop rapper Psy’s “Gangnam Style” has exploded in the U.S. and the rest of the world. Drawn by funky beat and funny dance moves, over 20 million people and on have seen the 4 minute video clip. It ranked No.25 on Billboards ‘Social 50’, and was featured on CNN, proving its global popularity. Hundreds of parody videos have been uploaded in the YouTube. People are calling Gangnam Style the second Macarena, which became a hit all over the world in 1996 with its addictive dance move and catch melody. Gangnam, meaning south of river, is a newly built posh town south of Seoul, where Renaissance Hotel, Samsung and Hyundai-Kia HQ are located. 

If interested, please click http://www.dailymotion.com/video/xs87f4_psy-gangnam-style-yyyyy-mv_music    For CNN report, hit http://www.youtube.com/watch?v=Bz95ahmCEGQ  

     

Foreigners think the catchy chorus part “Oppan Gangnam Style,” meaning “I am Gangnam Style,” sounds like “Open Condom Style.” No problem. You will find the “Gangnam Style” is sexy as well.

2) Electricity bill to rise 4.9%, again

The government allowed the increase of the electricity price by an average of 4.9%. The increase for households is 3.9%, while 6% for industries. If a household uses 300Kw a month, it will pay 1,200 won ($1.06) more, and a company with 59,000Kw a month will pay 327,000 won additionally. Korea Electricity Power Corporation (KEPCO) originally requested 10.7% up last month. There was 9% increase last year, and another increase is expected at the end of this year. Koreans still enjoy the electricity only half the price of what it is in Japan, and this is blamed for the severe electricity shortage last week under 36degree (96F) hot weather as people do not feel the need to conserve energy. KEPCO is currently selling the electricity below cost, and this is why they are under 3 trillion won ($26.5B) debt

     

KEPCO’s headquarter is also located in Gangnam. It is appealing to Koreans not to use electricity these days. It is like Ford is putting ads on CNN, begging consumers not to buy Taurus. Strange it may sound, but that is “Gangnam Style.”

3. Auto Industry

1) Renault Samsung Motors to cut its employees

When Carlos Ghosn showed up in Korea last month, he was an angel to RSM employees as Ghosn announced that Rogue will be manufactured in RSM’s Busan plant from 2014 for export to the U.S.  When he sent another message from his office in France after his return, he was a devil as his message was to cut heads.  RSM just announced that they would accept voluntary “honorary retirement” to cut costs due to weak auto sales. RSM is offering up to 24 months salary in addition to legal segregation pay. There are currently 5,500 employees and RSM plans to reduce 2,000 or more. RSM said the company would become much healthier after restructuring. RSM has been suffering from slow sales since last year, and took it a shock to fall behind Ssangyong Motors, the perennial last one, from June this year. 

   

The economy in Europe is bad these days, and French car makers are closing their plants in France, appealing the French government to do something about Korean made cars sold in France under FTA. Carlos Ghosn, however, announced that he will make Rogue models in Korea, instead of his original plan to make them in France.  Is Carlos Ghosn also a “Gangnam Style?”

Regards,

H.S.