LA LETTRE DU KOTRA Octobre 2001 Centre Coréen du Commerce Extérieur et des Investissements


KOTRA PARIS - 36, avenue Hoche - 75008 Paris
Téléphone : - Télécopie : - email : 
M. Seong-Kuk Hong - Directeur Adjoint 
M. Frédéric Claveau - Responsable investissements


Fin novembre, début décembre 2001, la KOTRA organise à Séoul une rencontre entre les entreprises françaises et les gouvernements régionaux .

Ces derniers présenteront leurs projets, parmi, lesquels :

1°- Séoul : création d'un parc industriel dédié aux industries des média, des loisirs ('entertainment') et des technologies de l'information

2°- Busan : développement d'une zone de fret et de logistique pour le port de Busan, 1er port coréen

3°- Busan : création d'un parc naturel autour de Busan pour la protection de la faune et de la flore, avec une rivière en eaux vives, marais salans, pisciculture, réserve marine, ferme pour crocodiles

4°- Daegu : construction d'un bâtiment visant à abrîter d'une part les services régionaux du commerce extérieur ainsi qu'un hôtel 5 étoiles.

Pour les entreprises intéressées par cette présentation, n'hésitez pas à nous contacter.

Pour information, les frais de voyage et de séjour sur place seront entièrement pris en charge par le KOTRA



   Author Le Clezio Here for Literary Interchange
French defense chief to visit Seoul 
   EU Becomes Largest Investor in Korea
FDI : How to manage it ?
ROK Placed 23rd in Global Competitiveness
Economic Prospects Contingent Upon Duration of US Attack
Government`s Contingency Economic Measures
Macroeconomy : A Triangular Tide Is Approaching
Ministers fail to agree on chaebol regulations 
Euro Accelerates Restructuring of European Financial Firms
Kunsan Free Trade Area to Be Established in 2003
   Management, questions interculturelles
Factors of Foreign Business Success in Korea
Making it easier to do business
Finance, banque et bourse
Tax Deductible Stock Product will Sell this Month
Deutsche Bank's Negotiations for a Korean Bank Collapse
Technologies de l'information
Korea's Knowledge-based Economy ranks Third in the World…..Remarks OECD
Internet Population Surpasses 24 Mil.
Communication Market `A Third Strong-Player` Is Visible
Services : Distribution
Korea's Retail Market - BUCKING THE TREND
Catering to the Virtual Shopper On-line marketing takes off in Korea as the big names  in retailing make it easier, safer, faster 
and more fun to shop electronically
Industrie des composants - électronique
Semiconductor industry : A Change of Tack 
Biotech Industry Becoming Active
Transport : automobiles, transports ferroviaires et aériens
GM boucle le dossier Daewoo Motor
GM finit par acheter Daewoo 
EU's move against Korean dockyards postponed 
EU's move against Korean dockyards likely after Dec.
ROK-EU Shipbuilding Row Enters New Phase
EU, South Korea object to U.S. steel import ruling 
   Microsoft s'allie à Samsung dans la domotique 
   Lafarge, le numéro un mondial du ciment, entend mettre un coup d'accélérateur à son développement en Asie.
CRYO met en place une structure de management opérationnel pour répondre à la forte demande du jeu On-line
Dassault Aviation ferait l'objet d'espionnage
P&G, McDonald's, Renault Launch Charity Campaigns


An eminent writer in contemporary French literature said on Monday that literature is a tool for promoting ``equalized interchange among various cultures.

Jean-Marie Gustave Le Clezio also cast doubt on one culture's domination of the other's. Le Clezio, born in 1940 in Nice, held a press conference at the Institut Francais de Seoul, on Monday, as part of a six-day visit to Korea. Le Clezio, who is on his first trip here, has gained much attention from Korean readers, as his novels, including ``Hasard Suivi de Angoli Mala'' (``Wuyon'') and ``Trois Villes Saintes'' (``Songsurowun Se Tosi''), have been translated into Korean.

``Literature seems to make it possible for equalized interchanges among a variety of cultures. That is why I'm here with the hope of finding something humane through Koreans interested in French literature,'' Le Clezio said.

``Korean literature is also well-known to French readers, especially as a literature festival that included Lee Chung-joon (a leading figure in Korean writing) was held in Paris last year. I've read his novel ``Ye-on- ja'' (``Foreteller'') and was impressed,'' he said.

Le Clezio is scheduled to make a visit to the southwestern part of Korea as well as to lecture at Kwangju, South Cholla Province from Oct. 19 to 21.

Kwangju is the city where, on May 18, 1980, hundreds of citizens struggling against the military regime in power were killed or injured in a brutal crackdown. Asked about visiting Kwangju, and whether he addresses political struggles in his works, Le Clezio said, ``I belong to the generation that has grown up reading Sartre and Camus' socially concerned literary works. But while I don't think contemporary writers need to follow their style, I'm certainly aware of their demands and our mission.

``Democratization means not only acquiring the franchise but also doing away with racial or ethnic segregation and securing gender equality, and the like. I believe novels dealing with those are the very literature containing social matters.''

Le Clezio's ancestors once lived in the Republic of Mauritius on the Indian Ocean, which was a colony of Holland, the United Kingdom and France in succession.

``I endlessly cast doubt on one culture's domination of the other's,'' he said.

Le Clezio emphasized, ``I wrote some works concerned with the Third World, such as South America and Africa, which are aimed at revealing unequal globalization in connection with my experience.''

He also said that he could see exactly what the U.S. influence on Latin culture and other sectors was while living and writing in Panama.

``I'm reminded of what colonialism is because I grew up seeing a colony developed and liberated, as my father worked as a doctor in Nigeria,'' added Le Clezio.

Lecture Schedule at Seoul & Kwangju (In French, with Korean translations)

Oct. 17 at 3:30 p.m. / On liberty, at Ewha Womans University

Oct. 17 at 5:30 p.m. / On his upcoming work ``Revolutions,'' at the Institut Francais de Seoul

Oct. 18 at 3:00 p.m. / On literature, at Seoul National University

Oct. 19 / 4:00 p.m. / On globaliztion, at Chonnam National University in Kwangju

For more information, call the Daesan Foundation at (02) 721-3202 or the French Embassy of Korea at (02) 317-8545. Source : Korea Times 16/10/2001



French Defense Minister Alain Richard will arrive in Seoul on Sunday for a two-day visit to attend the Seoul Air Show 2001, a French Embassy official said yesterday.

He will meet with Korean defense officials to discuss bilateral defense industry cooperation, the official said.

A Korean Defense Ministry official said Richard's visit is seen aimed at promoting a French fighter jet, which is competing for South Korea's 4 trillion-won ($3.12 billion) military procurement project.

The Rafale aircraft, manufactured by Dassault Aviation of France, will participate in the weeklong air show, which will start Monday at Seoul Airport in Seongnam, Gyeonggi Province.

Source : Korea Times 2001.10.11



Foreign direct investment in Korea amounted to $1.05 billion in September, down 1.2 percent from a year earlier, mainly due to the prolonged industrial downturn, the Ministry of Commerce, Industry and Energy (MOCIE) yesterday. The FDI aggregate in the first nine months fell by 6.9 percent year-on- year to reach $9.71 billion. MOCIE explained that the foreign investment which rose 3.7 percent in June contracted for the three months up to September, registering negative growth rates of 66 and 17.2 percent in July and August, respectively. Major FDI deals last month included the sale of LCD lines of Hynix Semiconductor and a sell-off of stakes by Dacom. Other major investment projects involve companies such as Haitai and BASF.

FDI in the manufacturing sector in the January-September period accounted for 33.5 percent of the total, compared with 28.1 percent recorded as of August.

Fresh investment into food, paper, wood and ceramics continued to increase while that into electricity and electronics decreased, due mainly to the lackluster information and technology (IT) industry.

In the service area, the foreign investment in the communications industry which stood at only $1.76 billion last year, soared to $4.06 billion this year while the investment into financial services, electricity and gas sectors also increased, albeit slightly.

The European Union became the biggest investor in Korea with the largest amount of $2.16 billion as of September, accounting for 22.3 percent of the total FDI. FDI from the United States stood at $1.82 billion, accounting for 18.8 percent of the total, compared with 18.4 percent. The portion of FDI from Japan, hit by prolonged economic slowdown, also drastically dropped to 5.7 percent of the total from 14.1 percent a year earlier.

More than half the fresh investment took place in the form of purchasing new stocks while 44.4 and 5.6 percent occurred through acquisition of existing stakes and long-term credit. The portion of relatively big projects involving more than $10 million declined to 84 cases from 100 and 114 in 2000 and 1999. But the portion of investment entailing less than $5 million increased to 95.3 percent compared with 87.8 and 94.4 percent in 1999 and 2000.

Source : Korea Times - 9/10/2001


In what ways is foreign investment decided and how can we increase it? Most economic experts seem to agree that the latest decrease of inbound FDI is caused not just by internal economic issues but mainly by external economic downturn. Thus, apparently there is nothing we can do and also, so far, most articles titled in research of FDI have mainly focused on what government should do or what regulations need to be improved in order to attract more FDI. However, given current regulations and external economic environment, what could you do if you were an entrepreneur trying to attract foreign investment? This essay is focused on what processes foreign investment firms go through in an investment deal and how domestic entrepreneurs can actually complete it in success on their own.

General Steps and Processes

There are many types of FDI such as investment in stock market, buy-out for listed companies, venture investment before IPO, or M&A for strategic/operational synergies. In most cases, FDI goes through eight steps/processes: Deal sourcing, Valuation, Negotiation, Due diligence, Fund raising (project financing)*, Contracting, Monitoring, and Exit. Surely, these processes occur sometimes spontaneously but sequentially as well. However, lack of understating of these processes and the differences between domestic and foreign business practice in each step leads domestic companies into difficulties to draw successful FDI.

Sourcing Phase

Deal sourcing is the phase in which an investor search for an investee and vice versa. In this phase, what an investee should consider are threefold. First, an investee should be able to target right investment companies. Most investment firms have their own investment focus such as investment region, industry, period, stage of corporate development and etc. To approach an investor without above information is like trying to shop clothes for an adult in a children's clothing section in a department store. Secondly, an investee should be more careful to choose a funding broker. Currently, there is a large number of small funding agencies in Korea, but a few of them actually have enough experience and networks to lead an international investment. Thirdly, investment from foreign countries naturally takes longer time. It sometimes takes a few weeks but sometimes more than a few years but it certainly takes a longer time than usually expected due to different investment terms, practices, physical distance, language barriers and etc. In fact, I met a small domestic venture, running out cash, and its broker said that they planed to raise money from a US based large buy-out fund: However, as a reference, large buy-out funds rarely invest in a small size venture company.

Prepare valuation based on various methodologies and be equipped with logical arguments for defense.

There are various ways to evaluate the value of a company such as comparable-based, Discounted Cash Flow-based, or liquidation value-based. The company should be aware of its price based on most of these methods and prepare reasonable arguments to face the investor's efforts to cut down the price. One thing an investee should be really careful here is to prepare arguments based on objective facts and data rather than a personal opinion and belief. Always create an alternative with out-of-box thinking and manage the schedule up-tightly.

Negotiation Phase

Negotiation is like an ever lasing, tiring, and tensed rope dancing. Conflicts for benefits of each counter party always exist and to overcome, a company should be able to make a third way of 'win-win' or 'give and take' rather than 'yes or no' and 'all or nothing'. Surely, creating alternatives rely heavily on experiences of a company itself. However, Korean companies tend to lead the negotiation with a mindset of 'bull shit, no way'. Furthermore, a company must have an uptight schedule management. Generally an investor is not in rush at all to close the deal because he has money. Therefore, person to aggressively confirm the next step and milestone is the investee not the investor.

Due diligence Phase

Bluffing is poison in due diligence. Generally, a company has a tendency to exaggerate his status to woo an investor. He might overestimate the revenue, underestimate the cost, say his technology is more advanced than anything else, and no way to be copied. However, when an investor is at the company or is in a talk with potential customers of the company in due diligence, holes are everywhere. Once an investor feels that the company is not reliable and unethical, the investment is very unlikely to happen. On the other hand, if the company says he will achieve 10M$ in sales and actually achieved 15M$, he will gain stronger trust and more autonomy. Especially, fake accounting is really dangerous. Hidden numbers on a book will be found soon. The company should be honest with its weaknesses but tell an investor how he can get over them in a realistic way. Don't be afraid of English contracts, understand foreign business practice, and try to read implications between the lines in the contract.

Contracting Phase

In most cases, a deal with a foreign company is made with English contracts based on international investment practice and regulation. English contract is certainly difficult and complicated to be understood even by English native speakers and sometimes doesn't make any sense under the current Korean regulation. For example, issuance of Redeemable Convertible Preferred shares, Put- option, and tag-along are not familiar to Korean companies while Korean regulation to prevent a company with negative profit from redeeming investment is also not familiar to foreign investors. Therefore, a company cannot persuade an investor with only insisting, "we can't accept that clause", but make an investor yield through complete understanding of exact implication in each line with thorough reading. Don't think monitoring of an investor as an officious interference but build coherent mutual trust.

Monitoring Phase

Once an investor injects his capital into an investee's account, they both are not counter parties anymore but they are in a same boat. In other words, an investor after investment turns out to be the owner of the company. Therefore, it's so natural for the owner to be able to participate in the management. Furthermore, foreign investment firms generally have more management knowledge, networks, and information and very keen to maximize the corporate value. It might not be that harmful for a company to listen to the investor's advice and he should also develop ways to cooperate with the investor in more harmonized way for the future growth of the company Understand that an investor should harvest his money at the end and also be flexible for various exit options

Exit Phase

Since the most of funds are raised with the life cycle of 5 to 7 years, investment firms should, anyhow, dispose of their portfolios. Then, what an investee should do? He, at least, should know when the disposal will happen exactly and prepare for it. In Korea, there is a tendency that most companies believe that the only exit option is IPO. However, in fact, there are some other options too: M&A, Management-buy-out, back-door listing, and etc. Whatever the methodologies are, when the time comes, the investor will try to dispose of the company to pay back to fund donators. Therefore, the company should rather be proactive to secure those exit options in advance before the investor, being rush at the last moment, takes an unfavorable option to the company,. In capital market, investors usually complain that there is nowhere to invest while investees complain nowhere to be invested. Why it happens? It is because investors and investees have different ways of thoughts and eyes. Therefore, what should an investee do? Think and prepare in the eyes of an investor and that's the best way to happily get married with foreign investments.

*In this essay, fund raising will not be explained since it's business btw investors and fund donators. The writer is working for the Tech Pacific which is a venture capital and corporate finance advisory firm headquartered in Hong Kong

(4) State Intervention Disincentives to Foreign Investors 
(3) Koreans Advised to Behave as Citizens of A Developed Country 
(2) Japanese Want Transparency in Doing Business Here 
(1) Foreign Investors Best Ambassadors for Korea 

Source by: Korea Times (2001.10.18)



South Korea placed 23rd in the Growth Competitiveness Index (GCI) ranking, but ranked 28th in the Current Competitiveness Index (CCI), down one slot from last year, according to the Global Competitiveness Report 2001-2002 released yesterday by the World Economic Forum (WEF). The annual report showed that Korea's GCI, which indicates the prospects for growth in the next five years, was enhanced to 23rd place, from 28th last year. However, the CCI slipped into 28th place from last year's 27th. The GCI and CCI combine hard data and survey data to assess competitiveness in a sample of countries. Therefore the assessments of both indexes in the WEF report have been estimated as constituting a reliable measure, revealing the comparative strengths and weaknesses of national economies. ``The tremendous uncertainty in the global economy brings about important challenges,'' said Klaus Schwab, founder and president of the WEF. ``It is now more critical than ever to assess how countries will fare over the next five years. The Global Competitiveness Report is an invaluable tool for identifying existing impediments to economic growth.'' In the research, Finland was reported as the most competitive economy in the world. Finland, for the first time ever, seized the first place in both the GCI and CCI rankings, followed by the United States, which placed second in both the standings, among the 75 countries investigated. While, Japan, which continues to suffer economic woes, maintained a low position at 21st in GCI and 15th in CCI, down one slot from last year. GCI rankings of several Asian economics in general fell, including Singapore, from 2nd to 4th, Hong Kong, from 7th to 13th, and Malaysia, from 24th to 30th. Notable gains in the rankings were posted by several Nordic economies, particularly Finland, Norway and Sweden. The research team looked into the level of technology, the public sector and macroeconomic environment to evaluate each country's potential for growth. Noteworthy is the fact that South Korea ranked 8th in terms of macroeconomic conditions, but the quality of public institutions stayed as low as 44th. As for technological competitiveness, South Korea squeezed into the top ten, at 9th. The GCI, which aims to measure the factors that contribute to the future growth of an economy, is comprised of three sub-indexes: the level of technology in an economy, the quality of public institutions and the macroeconomic conditions. These three factors explain why the prosperity of some countries is improving faster than others. In this year's survey the U.S. held the top post in terms of technological competitiveness, while Finland and Singapore ranked first in the public sector and macroeconomic conditions, respectively. On the other hand, the CCI aims to identify the factors that fortify current productivity, and therefore current economic performance. It reflects microeconomic fundamentals such as the quality of business environment and company sophistication and strategy. These two factors help explain why some countries can sustain a higher level of prosperity than others. South Korea grabbed 26th place in terms of company sophistication, but saw an even poorer result, 30th place, in the business environment posting. The government's management capability was graded particularly low. Among other factors that pulled down the country's rank were the low quality of social overhead capital (SOC) and the poorly developed facility and capital markets, which were also added to the evaluation of CCI. Regarding the transitions in economic development across the world, the report emphasized an increasingly important theme confronting many nations: countries face very different challenges and priorities as they move from resource-based to knowledge-based economies. The report said that the principal factors that contribute to global competitiveness, and thereby improve living standards, would therefore differ for economies at different levels of development. For example, once reaching high-income status, the basic challenge facing countries is typically to generate high rates of innovation and commercialization of new technologies, the report said. The report, produced in partnership with Harvard University, was co- chaired by Michael Porter of the Harvard Business School and Jeffrey Sachs, director of the Center for International Development at Harvard University. It surveyed over 4,600 business leaders worldwide. The WEF, incorporated in 1971 as an impartial and non-profit foundation, has been publishing the Global Competitiveness Report since 1979. The report has consisted of two index rankings, by GCI and CCI, since 2000. In the previous reports, the main emphasis has been on the growth of competitiveness. The WEF, based in Geneva, Switzerland, is an independent organization committed to improving the state of the world. The Forum acts in the spirit of entrepreneurship in the global public interest to further economic growth and social progress.

Source by: Korea Times (2001.10.19)



Exports and the inflation rate are certain to be aggravated if the U.S.retaliation against terrorists is prolonged and if the projected economic recovery take more than six months. For a country dependent on external factors, the retaliation, even though it is isolated to Afghanistan, can only have devastating effects. ``Naturally, the impact will be minimal if the U.S. succeeds in capturing the instigators of the terrorist attacks. But it could just as easily be prolonged,'' said one researcher from the Korea Economic Research Institute of the Federation of Korean Industries. Even though the retaliation had been on notice since the Sept. 11 attacks, it is expected to further slow down a recovery in the United States and its economic growth could be less than 1 percent this year. In fact, if the Japanese yen strengthens against the dollar, as should be the case with the economic slowdown, Japan could see negative growth this year, the KERI researcher said. For one thing, war will bring about strong uncertainties, dampening consumer sentiment and discouraging corporate investments, said the Institute for International Finance. ``The weakening of the dollar will not only affect the Japanese yen but the Korean won too, which means that the price competitiveness of Korean products will suffer,'' one IIF official said. Considering the fact that the U.S. accounts for some 20 percent of all South Korean exports, such developments will drastically reduce shipments to the economic powerhouse, he added. ``Should the retaliation be prolonged, a wide range of industries, including automobiles, which so far have remained unaffected by the global recession and the recent terrorist attacks, will see their markets shrink since many countries will soon be affected,'' said the KERI researcher. As far as inflation is concerned, the developments in the Middle East will push up the price of oil and other industrial materials. During the Gulf War in 1990, the price of West Texas Intermediary shot from $18 per barrel to $36. These adverse effects on the economy will combine to push back an economic recovery from the recently-projected fourth quarter of this year to the second quarter of next year. ``No matter how short the retaliation lasts, it is unlikely that we will see an economic recovery before the end of this year. It is simply a matter of how much longer it will take,'' said one researcher from the Korea Development Institute (KDI). On the other hand, the government has been asking the public and businesses to remain calm since the effects of the retaliation will mostly be indirect. On the part of corporations, Samsung Electronics said only 3.9 percent of its exports head to countries that are mostly Islamic and that the impact of the terrorist attacks and the retaliation on its shipments has been estimated at just 0.8 percent.

Source by: Korea Times (2001.10.09)



The government has pledged to work out additional measures to revitalize domestic consumption in case U.S. retaliatory war against terrorism extends over a long period. The government also decided to consider raising airline price to ease financial difficulty of the airline business circles, and to push forward with a plan to expand the export finance and the insurance support for the export companies that deal with the U.S. and Middle East area. The government hold an emergency economic minister`s meeting, presided by Deputy Prime Minister Jin Nyum, and a businessmen-policymakers joint contingency economic measure meeting, and prepared such economic measures. As the representatives of the economic organizations proposed the flexible operation of realty-transfer tax to revive consumption and investment, and the development of mid-long term investment items in stocks, the government decided to consider this positively. Moreover, the government also decided to check the trend of fund market and foreign exchange and stock market everyday. If the foreign exchange rate drops sharply, the Bank of Korea would be directly involved to take measure for the market stability. The government decided to push forward with the extension of expiration date of company bonds and commercial paper amounting to 700 billion won based on the premise of self-help of airline companies, and to consider temporary exemption of special excise tax on airplane oil. If the situation becomes worse, the government plans to raise the airline price. The government also decided to expand the financial and insurance support for the exports on the U.S. and Middle East area, and to enforce measures for the security of workers, who are in the Middle East area, and the transport stabilization for ships which pass through this area. Along with this, if the international oil prices rise up as the war extends over a long period, the government decided to lower the import prices by applying the allotted tariff and the flexible tax rate. If necessary, the government decided to issue the right to adjust demand and supply of oil. The government decided to draw up the second supplementary budget using the residual fund amounting to 2 trillion won, and to request for the consent of the National Assembly within this week to revitalize domestic consumption. The government also decided to push forward with measures as such; to supply sufficient fund; to ease regulations on corporation finance and to revitalize service-sector business; to expand the public work and to support the establishment of independent business; to expand the investment of the social overhead capital (soc) facilities and to stimulate the construction of housing. Deputy Premier Jin reaffirmed that the government would inject ample liquidity into the market to prevent potential credit crunches. He was committed to ensure stable supplies of oil in case of price hikes in crude oil on international markets.

Source by: DongA Ilbo (2001.10.10)



As the United States has begun to strike Afghanistan, the Korean economy that suffered from economic slump came to confront another direct hit. If the war becomes prolonged, U.S. consumption that covers 20 percent of Korean exports will decrease, and the price for crude oil will arise rapidly due to increasing tensions in the Middle East. Specialists are concerned that ``Payability of companies will become dull as the increase of raw material price and the decrease of exportation will take effect, and the recovery of economy will be delayed for the maximum of six months than expected.``

The Crucial Moment of Macro-Economy == The scenario that specialists are concerned about is that the war will become prolonged and expand to a full-scale war with Arab nations. Korean Institute for International Economic Policy forecasted on Oct. 8 that ``If the retaliatory attacks become prolonged, U.S. economy will experience `L-type` stagnancy of business activities, and if the war expands throughout the Middle East, not only the U.S. but also the world economy will fall into a severe depression.``

Korea Center for International Finance was concerned as well that the world economy would suffer from stagnation (low-development high-price) if the war became an all-out war.

Samsung Economy Research Institute pointed out that the Korean economy would experience a triple difficulty, namely, ? the world economic slump ? the increase of oil price ? the weakening of the dollar. It explained that the Korean economy can fall into two malicious paths of `the decrease of exportationaa slump in productionathe reduction of employmentathe increase of unemploymentathe decrease of income` and `the increase of oil priceahigh prices of commoditiesaunder-consumption`.

All Fields of Business Will Receive a Severe Blow If The War Becomes Prolonged == It is apparent that all fields of business will receive a severe blow if the war becomes prolonged even thought the amount of trade is not as large as the oil refinery and emulsifying industries.

Payability of companies will go bad immediately due to the added payment for war causalities insurance and the increase of oil price. Korea Trade-Investment Promotion Agency (KOTRA) forecasted that the damage to sea-borne industry would reach up to about 10 million tons if the retaliatory attack lasted for a month since the amount of sea-borne exports to the Middle East marked about 130 million tons last year.

In particular, business corporations are worried about a incident that may frustrate the orders of large-scale industrial plants placed by Middle East nations. Major business corporations such as Samsung Corporation, Hyundai Corporation and Daewoo International concluded after an immediate examination that business talks for ordering industrial plants with Middle East nations including Saudi Arabia, Arab Emirate and Israel appeared to be postponed.

The petrochemical industry is found to receive a severest blow with the rise of oil price. The oil emulsifying industry will be hardly able to satisfy the payability as the demand of emulsified products in the U.S. decreases and the oil price sharply arises. A blow to oil refinery industry will be visible at an interval of time as the decrease of oil consumption seems inevitable even thought it may saddle a part from the damages caused by the increase of oil price on consumers.

Source by: DongA Ilbo (2001.10.10)



Economic ministers yesterday failed to build a consensus on how to overhaul regulations on large business groups. The ministers were divided into two groups, with Deputy Prime Minister Jin Nyum representing those advocating a drastic softening of the current regulations and Fair Trade Commission Chairman Lee Nam-kee espousing a milder change in the present framework. The two sides failed to narrow their sharp differences on how far they should go in easing the limit on equity investment by affiliates of large business groups and how to define a large business group. As they produced no consensus, the ministers dispersed without releasing any statement. However, officials informed about the meeting said the ministers shared the view that affiliates of big business firms, however they are defined, need to be allowed to invest in the equities of other firms in excess of the current limit of 25 percent of their net assets. In specifics, however, they remained divided. The FTC chairman insisted that these firms be deprived of their voting rights for the stock in excess of the 25 percent ceiling, while other ministers called for exceptions from the uniform application of the rule. As to the other controversial issue of reclassifying big business groups, the two sides were further at odds.

The finance ministry insisted that the dividing line between 'large business groups' subject to a special set of regulations and the others be drawn between five and 10 trillion won in asset value, which is equivalent to 1-2 percent of the nation's gross domestic product (GDP). But the antitrust agency refused to yield an inch from its earlier stance that the line should be drawn at three trillion won in total assets. Under the current system, the FTC categorizes the top 30 business groups as a league of their own, subject to strict regulations. If the FTC's three trillion won proposal is adopted, the number of business groups to be brought under tight regulations will be 26, not much different from the current figure, which is the reason for the finance ministry's insistence that the barrier should be raised.

( By Park Sang-soo Staff reporter Source : Korea Herald 2001.10.12



With the introduction of the euro, the single currency of the European region, into the market, competition among European financial institutions has intensified, accelerating restructuring in the financial sector. At a central banking seminar hosted by the Bank of Korea (BOK), Ignazio Angeloni, deputy director of the inspection department at Europe Central Bank (ECB) said yesterday that following the euro's debut in the market, financial firms have sped up their restructuring, thus bringing about more mergers between banks. At the same time, the total issuance of euro-denominated corporate bonds soared by 100 percent to 600 billion euro at the end of the first half of 2001 from 1998. Euro-denominated bond issuance of non-residents surpassed that of residents during the period, he added. In the corporate sector, new stock issuance has been on a sharp rise, as new corporations suitable for rapidly changing environments continue to emerge, he said. He stressed that ECB has put more priority on price stabilization than the U.S. Federal Reserve Board and the Deutsch Central Bank, adding that it decided to keep an annual inflation rate in consumer price at below 2 percent. Meanwhile, he pointed out that the recent international financial market is characterized by a growing number of financial transactions in international markets, an increase in the number of derivatives and expansion of electronic payment systems. The BOK launched the five-day ninth Central Banking Seminar at its headquarters on Monday. A BOK official said that central bank officials from 18 countries, including Japan, Australia, China, Germany and Russia, are participating in the seminar titled ``Policy Responses of Central Banks in the Changing Financial Environment''.

Source : Korea Times - 24/10/2001



The international free trade area will be established in the land of 385,000 pyong in Kunsan city, Jeonbuk province in 2003. The government plans to exempt the rent for 10 years to the foreign companies that will invest more than 10 million dollars, or invest in the machinery or automobile business in this free trade area. The Ministry of Commerce, Industry and Energy (MCIN) announced yesterday that it is planning to establish the international free trade area for the manufacturing, physical distributing, trading, and financial companies in Kunsan in order to promote the development of south-west region. Lee Hee-Bum, the vice-minister of the MCIN, said, ``The government confirmed the establishment of the Kunsan free trade area, by accepting the request of Jeonbuk provincial government, and then through the examination of the appropriateness of the request performed by the Korea Institute for Industrial Economics and Trade (KIET) and the Korea Development Institute.`` And he also declared, ``The government plans to lure the machinery and automobile industry companies, which were selected as the regional strategic industries, with priority.`` For this project, the MCIN, already allocated 57.4 billion won, such as 32.7 billion won for land purchase and 24.7 billion won for incidental facilities, in the next year`s national budget, and plans to secure 85.8 billion won from the national budget in 2003. The Kunsan free trade area will be established in Gunjang national industrial complex, Osikdo-Dong, Kunsan city, with the total investment of 186.7 billion won. The Korea Land Corporation, which is in charge of the development, is now working for the reclamation and the basic facilities, and will start factory construction from next July. The MCIN decided to exempt ten years rent for the foreign companies, which invest more than 10 million dollar, which have over 30 percent of foreigners` equity and invest more than one million dollar, and which invest in the machinery or automobile business. And the ministry will charge low monthly rents for other foreign companies (40 won/m2) and for the domestic companies (80-320 won/ m2) depending on their export portion. Moreover, the ministry made a decision on the seven-year tax exemption and next three-year 50 percent tax reduction, including the national and local taxes of corporation, income, and property taxes, for the manufacturing, high technology, and industrial supporting service companies that invest over 30 million dollar and employ more than 300 workers. The free trade areas are established in Masan city, Kyungnam province (240,000 pyong) and Iksan city, Jeonbuk province (90,000 pyong), and there are 110 companies, including 51 foreign companies.

Source by: DongA Ilbo (2001.10.04)



During the last three years, foreign investment in Korea increased but remains modest. Since the 1997 crisis, foreign direct investment substantially increased to $15.7 billion in 2000 and currently there are close to 9,000 foreign businesses in Korea; however, foreign direct investment (FDI) in 2000 at 3.5 percent of GDP remains far below other countries, such as the United Kingdom. After six years of business management in Korea, I came to the conclusion that there is no general "business method" success formula; however, understanding people and their culture is a prerequisite to long-term achievements. Here are several thoughts for foreign managers in Korea:

(1) be prudent, you have less visibility than in your own country. Managers organize factors to achieve organizations' goals and to do so, they must anticipate consequences of their decisions; in a different culture, managers' understanding of consequences is more limited than in their own and to avoid things "going out of control" they must be more cautious than in their own culture.

(2) account for local character, do not try to change it. Koreans are emotional, intense, argumentative, dynamic, industrious, resolute and able. Because image is key, external signs are very important and interfere with business.

(3) account for local working culture, change it carefully. A "culture" forms when individuals experience for a long time, over a wide area and from different people, similar reactions to given events; it is a set of reflexes to situations that is "ingrained" in people to the point that it is deemed to be the "right way," different ways being "wrong." Expatriates often underestimate the weight of culture: do not "rush" new culture (adapt on the short-term, change on the long-run).

(4) do not blame Confucianism. Korean working culture is inherited from early stages of economic development (1970-90), i.e. from "quantity" growth where value comes from "hard work" and "low compensation"; most of the problems detailed below are not typical of Confucianism but of that working culture and can therefore be altered.

(5) refocus minds on value (focus is on volume). Only in "extreme" situations (i.e. bankruptcy) is profitability a strong psychological driver, therefore do not abruptly introduce profitability where growth is the psychological driver; actually, successful growth creates receptiveness to profitability.

(6) rebalance decision-making (organizations are "down to top") - a) top-down organizations raise two problems: one is moral hazard, i.e. decision-maker (employee) is other than the responsible (manager); the other being non-strategic and unstable decisions; b) to establish a more balanced decision-making process, improve regulations on authorization and change the minds and habits of employees through training and coaching.

(7) emphasize "creativity", "anticipation", "focus" and "capability to prioritize". Koreans are by nature creative, education and past habits make them copy; people react to events instead of also anticipating them, because of reflexes of the past; cheap labor offset lack of focus and prioritizing capabilities in the past, not any longer.

(8) do not copy the western system. In particular, do not delegate without preparing people for delegation and do not scrap regulations: go progressively from detailed regulations to more flexibility.

(9) human resources management must be at the center of the firm. Be selective and do not recruit "cheap." Half of Allianz Korea's training is "behavioral" (on "value driven," "anticipation," "flexibility" and "creativity") and financial basics (conflicts are often rooted in financial misunderstanding). Coaching is crucial but often ignored by expatriates that are in a rush to achieve results. Link compensation and promotion to labor productivity by rewarding performance; in Korea strong pressure on labor costs makes improving labor productivity vital. Concerning industrial relations, share productivity savings with employees and explain.

An intense culture makes Koreans achievement oriented; additionally, Korea has the ingredients for long-term economic success: social discipline and trust, eagerness to learn (eg. child education) and preference for the future (eg. high savings).

Since the 1997 crisis, Korea has been the champion of reforms in Asia through changes in corporate governance (external directors, reinforcement of audit, class action-suit), economic results measurement (new accounting rules closer to world standards, reinforced disclosure standards) and financial sector restructuring (150tnW of bad debts transferred to the government and new loan classification criteria closer to world standards). What lags is labor and capital flexibility because they entail direct social costs and systemic risks.

The key to the future is the "reform of the minds." Indeed, minds are still used to old ways and habits never change fast. And the key to the key is the education system.

The writer is president of Allianz First Life Insurance. The above article is a summary of his presentation on "Factors of foreign business success in Korea" at the Foreign Executives Forum held by The Korea Herald and Moriah Sept. 21-22 - Ed. Source by: Korea Herald (2001.09.25)



The Amendment to the Korean Commercial Code ("The Amendment)" was promulgated July 24th 2001 and became effective the same date. In its impact it is as significant as the previous amendments of 1995, 1998 and 1999.Following is a brief summary of major items in the Amendment, which may be of interest to foreign as well as domestic business people. The aims of the Amendment were, like former amendments, to

¤± enhance the transparency of corporate management¤± create the necessary legal infrastructure to facilitate the restructuring of a company, and¤± strengthen the international competitiveness of domestic companies The main contents of the Amendment are¤± enlargement of the realm of resolutions by general shareholders' meetings¤± improvement of the director and board system¤± strengthening of the preemptive rights of stock shareholders¤± introduction of the comprehensive share exchange and transfer system

1. Allowing company establishment by one promoter (articles 288, 543)

Before the Amendment, a minimum of three promoters was necessary to establish a joint-stock company (jushikhoesa) or limited liability company (yuhanhoesa). The Amendment now enables just one person to be the sole promoter and establisher of a company. This change was made to reflect and legalize the reality of Korean company establishment whereby listing of three promoters was a perfunctory matter and involved more the borrowing of others' names to meet the requirements of the law when in fact there was often only one actual promoter. Thus, the Amendment made the establishment of a joint stock or limited liability company much easier. Prior to the Amendment, though, a company with only one shareholder was recognized as a legal entity by the court if the reduction in the number of shareholders was due to a disposal of shares after establishment.

2. Introduction of the redemption of shares by a special resolution of a general shareholders' meeting (article 342-2)

The Amendment introduced the power to acquire or cancel (or redeem) a company's own shares by the special resolution of an annual general shareholders' meeting in the case where a company has profits to be distributed to shareholders. The Amendment grants this power even though no such provisions may exist in a company's articles of incorporations. Prior to the Amendment, the redemption of shares was possible through the capital reduction (article 438) or "profits redemption" procedures according to a company's of articles of incorporation (article 343, clause 1), or through the acquisition of redeemable shares issued by the company (article 345). This new form of redemption is a kind of "profits redemption" similar to that according to the articles of incorporation or the acquisition of redeemable shares. The Amendment facilitates the redemption of a company's own shares for managerial purposes, including the management of share prices under fluctuating economic conditions. The Amendment permits this even though there may be no such provisions in the company's articles of incorporation, since prior to the Amendment, the agreement of all shareholders was required to change the articles of incorporation to permit the redemption of shares. For the sake of reference, in the amendment bill of the Securities and Exchange Act submitted by the government, a listed company is allowed to redeem its own shares out of profits through a resolution of the board of directors under the authorization of the articles of incorporation.

3. Introduction of the comprehensive share exchange or transfer system (article 360-2 to 360-23)

The comprehensive share exchange or transfer system permits the giving or receiving of the entire shares of a company to or from another company in order for the second company to become a parent or subsidiary company of the first. The comprehensive share exchange system involves the issuance of new shares and their exchange for the entire shares of another company in order for the first company to become the parent company. The comprehensive share transfer system, on the other hand, involves the transfer of the entire shares of a company owned by shareholders to a newly established parent company. These systems were introduced to facilitate the establishment of, or the transformation of a company, into a holding company that can be regulated by the Monopoly Regulation and Fair Trade Act. The introduction of these systems has therefore made it extremely easy to effect a comprehensive change of shareholders of a company without any change of material organization. This part of the Amendment also includes provisions for:

¤± the rights of dissenting shareholders to request the purchase of their shares by the company¤± a simplified share exchange procedure¤± the small-scale share exchange procedure, which no requires only a resolution of the board of directors instead of a resolution of a general shareholders' meeting to proceed

4. Supplementing the means of convening a general shareholders' or board of directors' meeting (article 366, clause 2; article 390 clause 2)

The Amendment allows in article 366, clause 2 a convocation notice of a general shareholders' meeting to be distributed via an electronic document (viz., e-mail) as a substitute for a written notice, in order to make the convocation procedure easier and quicker. Another amendment bill submitted by some members of the National Assembly would have allowed the introduction of write-in voting without the authorization of a company's articles of incorporation plus voting via e-mail in a general shareholders' meeting. However, this was not adopted for the reason that its provisions could weaken the discussion function of shareholders' meetings. The current Act allows write-in voting by shareholders on the resolutions of a shareholders' meeting only when authorized by the company's articles of incorporation. In addition, article 390, clause 2 of the Amendment authorizes any director to convene a board of directors meeting when the director designated to convene the meeting neglects his duty without any justifiable reason.

5. Improvement of the share appraisal procedure (article 374-2, clause 4)

Prior to the Amendment, when a shareholder disagreed with the business transfer or merger of a company and asked the company to purchase his/her shares, the share price was decided by the appraisal of a public accountant if the shareholder and the company could not reach an agreement. Also, those shareholders representing at least 30 percent of all issued shares and who disagree with the offered price can bring the case to court. The Amendment makes it possible to bring the case directly to court without appraisal by a public accountant. This provision of the Amendment is intended to both guarantee and strengthen the right of access to the courts by dissenting minority shareholders.

6. Strengthening the right of directors to access information (article 393,clause 3,4)

Article 393, clause 3 of the Amendment stipulates that a director, including an outside director, can ask the representative director to report to him on the work of other directors or employees. Clause 4 of the same article stipulates that a director should report on his/her work at least every three months to the board of directors. Both clauses are intended to strengthen the right of a director to access information in order to enhance the transparency of a company and obviate the possibility of disputes by making clear the authority of a director. The Amendment places a responsibility on a director to monitor the agenda of the board and, in the case of dereliction of this duty, to be responsible for the damage incurred by such negligence. The Amendment also grants easy access to the confidential company material including financial statements to all directors, even the outside directors. For this reason article 382-4 was added to prevent misuse of this information by imposing the obligation of confidentiality upon all directors.

7. Specifying the objects of resolutions by the board (article 391, clause 1)

Article 393, clause 1 of the Amendment provides that the disposal or transfer of material assets, appointment or dismissal of managers, establishment, transfer or abolition of branch offices shall be made by a resolution of the board of directors. This is to strengthen the supervisory function of the board of directors by clarifying the objects of resolutions by the board of directors. Before the Amendment, almost all the important business decisions were made by company officers without resolutions by the board. This was a customary practice even though according to the KCC, all business decisions except those of an everyday nature and those decisions stipulated to be made by a resolution of a general shareholders' meeting, should be made by the resolution of the board of directors.

8. Strengthening of the preemptive rights of the shareholders (article 418, clause 1, article 513, 516-2)

Article 418, clause 1 of the Amendment stipulates that only the shareholders shall be entitled to the allotment of new shares in proportion to the number of shares that they hold. In addition, clause 2 of the same article permits the exception of the preemptive right of the shareholders only when the articles of incorporation provide otherwise and it is necessary for the attainment of managerial purposes including the introduction of new technology and improvement of the financial structure. Before the Amendment, a company could allot new shares to a third party without any restriction to their purpose, when the articles of incorporation had exceptional provisions to allot new shares to a third party.

This provision was introduced to protect the interests of shareholders against the dilution of their share ratios for the purpose of defending managerial rights and to block the misuse of share issuance as a means of evading inheritance tax.

Han-Ju Kim, Dongsuh International Law Offices Tel: (82-2) 3471-3705, Fax: (82-2) 3471-3708 E-mail:



The government and the ruling party decided to release an `indirect investment product` which will benefit tax deduction and an effect of making up the investment loss. Jin Nyum, Minister of Finance and Economy, explained this plan at the leaders meeting yesterday that ``the government will raise the united operation fund of financial asset of 5 trillion won from the pension fund and the development of the tax deductible products.`` Deputy Prime Minister Jin also revealed his plan to provide 39,000 jobs by the internship employment during the 4th quarter of this year and to promote a field training programs for 10 thousand participants in the medium or small business during the winter vacation. In addition, he reported such economic measures as stirring up the domestic economy to countervail the slowdown of export, increasing the function of national budget to the national economy, a flexible operation of interests, expansion of the national subsidies to the finance and insurance for the export to the Middle East and the U.S. areas, the operation of the demand-supply adjustment in case of the big hike of oil price, expansion of the public labor projects, and the expansion of the initial fund of small business. Kang Woon-Tae, chairperson of the policy coordination committee 2 of the New Millennium Democratic Party, revealed at the quadrilateral meeting of the party that ``it is necessary to establish measures to activate the stock market and to provide, for example, an initiative of tax deductions to the persons who hold stocks over 2 years. [The party] has to go for the legislation of it.`` In relation, the government will develop indirect investment products, which offer tax deduction to induce the long-term stock investment, replacing the laborer stock savings that the subscription of this product will close at the end of this year. An authority of the Finance and Economy Ministry explained ``this product will provide tax deduction to a certain amount of the investment and, for the loss of principal at the time of maturity, additional tax deduction or increase of the free-tax income will be provided. The limit and the object of the benefit will be expanded more than that of laborer stock savings and the period of maturity is likely to be 2 years.`` The laborer stock savings that had introduced at the end of last year limited the maximum amount of deposit to 30 million won and provided 5 percent tax deduction to the deposit at the annual settlement of account. The customers will consequently benefit 10 percent of tax deduction at the time of maturity.

Source by: DongA Ilbo (2001.10.12)



SEOUL, South Korea, Oct. 10 - Talks between the government and Deutsche Bank about the sale of SeoulBank, on the trading block since the worst days of the South Korean economic crisis in 1998, ended today after the government refused to take on additional bad loans.Korean negotiators, under the aegis of the Korea Deposit Insurance Corporation, set up during the crisis to protect banks from bad loans, said the talks had collapsed three months after Deutsche Bank, through its private equity arm, Deutsche Bank Capital Partners, had signed a letter of intent to buy as much as 50 percent of SeoulBank's shares.Park Seung, executive director of the Korea Deposit Insurance Corporation, said the next step would be to seek a Korean buyer or to consign the bank to a government-run holding company. The collapse of the negotiations severely disappointed government officials, who had regarded the sale of SeoulBank as crucial not only to winning the confidence of foreign investors but also to revamping the banking system.Mr. Park, who heads the committee responsible for selling troubled banks taken over during the economic crisis, attributed the collapse of the talks to Deutsche Bank's insistence that it have the option to return bad loans to the government for as long as three years after the sale. He added that Deutsche Bank apparently regarded SeoulBank as a short- term investment and not a serious management proposition.Frustrated over Deutsche Bank's reluctance to assume responsibility for SeoulBank's remaining bad loans, officials pointed out that the government had poured more than $6 billion into the bank since buying 95 percent of SeoulBank and Korea First Bank in January 1998.The International Monetary Fund, before the purchase of both banks, had demanded that the government agree to sell them before Nov. 15, 1998, as a condition of the $58.5 billion rescue package put together by the fund to keep Korea out of bankruptcy.The government sold a majority stake in Korea First Bank to Newbridge Capital two years ago but failed about the same time to conclude a deal on SeoulBank with HSBC Holdings.Since then, officials have negotiated with numerous foreign banks and set countless "final deadlines" for selling SeoulBank. The latest deadline was Sept. 30.The troubles of SeoulBank, Korea First Bank and several other banks in which the government assumed control during the economic crisis stem largely from loans extended to the country's huge conglomerates as well as thousands of small enterprises.The banking system continues to pay the price for its bad credit practices with the government-controlled Korea Exchange Bank and Koram Bank both attributing reduced earnings to huge loans made to Hynix Semiconductor.The creditors, led by Korea Exchange Bank, are considering a new $5.3 billion rescue package for Hynix, the world's third-largest producer of memory chips.

Source : New York Times 11/10/2001



The level of Korea's knowledge-based economy ranked third among the thirty participating OECD countries. According to "the Science, Technology & Industry Evaluation Report of Member Nations" published by OECD on the 20th of September, Sweden led the top of the list as the leading knowledge-based economy followed by the U.S., Korea, and Finland. Based on the 1998 standard, Sweden has injected 6.5% of total gross domestic product (GDP) into various knowledge-based activities such as development, research & software, and advanced education. The U.S. injected 6%, Korea 5.2%, and the average member nations injected about 4.7% in general.The evaluation report also stated that in the nineties the member nations' knowledge-based activity investments grew, on the average, by 3.4% yearly and the increase rate of fixed-asset set aside for knowledge-based activities enormously exceeded 2.2%.Knowledge-based oriented manufacturing and service sectors, from a production perspective, Swiss took the title with 36% of its GDP followed by Germany, U.S., and U.K.The biannual Science, Technology & Industry Evaluation Report released by OECD evaluates and statistically ranks advanced countries' progress in development of high-tech and knowledge-based economies. OECD emphasized through the report that the ability to create, supply, and utilize knowledge will be the core element in competitiveness, creativeness, and improvement in life.

Source by: Kookmin Daily (2001.09.20) Translated by: KOTRA



Around 24.1 million South Korean citizens are estimated to have access to the Internet as of September this year, said the Ministry of Information and Communication (MIC) yesterday. According to a survey conducted by marketing research agency Internet Metrix, 24.12 million people, or 56 percent of the South Korean population, aged 7 years or older, now regularly use the Internet at least once per month. This compares with the 22.23 million people or 51.6 percent of the population at the end of June, an increase of 4.4 percentage points, and 20.9 million or 48.6 percent last year. Roughly 1.9 million users came online in just three months. The ministry explained that Korea makes up 4.7 percent of the entire global Internet population that amounts to 513 million people, and this is one of the higher rankings. Internet Metrix surveyed a total of 3,854 households totaling 10,978 people, including homes in Cheju Province, on behalf of the Korea Internet Information Agency, a state-run advisory group on Internet policy. Some 22.79 million people, or 52.9 percent of the population, that are 7 years and older logged onto the Internet more than once per week. There were 18.63 million, or 50.2 percent of the population, who were 16 years or older that accessed the Web at least once per month. Among them, 17.45 million or 39.6 percent of the population, used the Internet more than once per week. The survey found a steady rise in the female Internet population, and it reached 10.58 million, a rise of 0.7 percentage points from the population statistics in end-June. By gender, 13.54 million of users were men and 10.58 million were women, the report said. By age group, the 7-19 age bracket was the most active, and about 91.1 percent of that age group was reported to have access to the Internet. The survey said Internet usage rates in the 30-39 and 40-49 age brackets also increased significantly. Particularly, the Internet population in the 30-39 age bracket increased the most from December last year. Some 61 percent of that age group uses the Internet. About 70 percent of respondents were found to access the Internet at home, 15.9 percent at the office, 6.9 percent in Internet cafes and 4.5 percent in schools. The survey revealed that 49.7 percent of netizens use the Internet for searching for information, and 22.7 percent of Internet users went online to play computer games and enjoy entertainment. As for information searching on the Web, 36.3 percent used the Internet for schoolwork, 28.8 percent for office work and 22.5 percent for finding leisure, hobby and entertainment related information. The survey said online shoppers were found to purchase commodities and auto-related products the most, with 30.4 percent of respondents. Apparels and accessories followed with 29.2 percent, books 26.1 percent, electric and electronics appliances 15.9 percent and making reservations 15.5 percent. Some 58 percent of online shoppers purchased goods with their credit cards. The advisory group said the final survey report will be published at the end of this month and an electronic version of the full report will be available at The next survey will be conducted in December. Source : Korea Times - 17/10/2001



A diastrophism has begun in Korea's communication market. In almost every field of the communication market including cable and wireless, express internet business, and IMT-2000 Time Division Multiple Access (TDMC) System, a trend of reconstruction has appeared. SK Telecom Co. (SKTC) announced to give up its cable communication business. On the other hand, Korea Communication Co. (KCC) decided to accelerate its cable communication business saying, ``The last 1 km is cable``. LG Telecom Co. (LGTC) is aiming to regain a lead by strategically uniting with Hanaro Telecom , Inc. (HTI) to secure the IMT-2000 TDMA business license. In the express internet business field, the HTI is leading the market reconstruction movement by trying to take over the late-starter companies such as Dreamline Co. (DC). As the quota sale of Powercom Co. (PC), a future major communication carrier, approaches, a reconstruction of the market is becoming visible. # An already begun diastrophism = Declaring to take over the PC, the HTI is moving fast. Since the SKTC and the Posco, both 5 percent stock holders of the PC, decided not to bid for the PC, the HTI is likely to buy the PC. The KCC, a state-run company, has taken steps to become a private company by selling the stock-share of 30 percent of the PC., its subsidiary company. The communication business circle is observing the sale of PC stock-share as a `deciding factor` of the market reconstruction. For the `third player`, the PC, equipped with a first-class infrastructure that can match that of the KCC, is a must-buy item. At the same time, the HTI admitted that they are negotiating with the DC and the SKTC to take over the express-internet business. If the HTI buys the two companies¡? express-internet business division, its current market share of 25 percent will increase to 30 percent threatening the KCC. And the SKTC is negotiating with LG to sell the 7.48 percent stock share of the HTI.

# Scenario of the reconstruction = To rearrange the communication market as a `three strong-players` system is a dream-come-true for the Ministry of Information and Communication (MIC). The MIC also has a plan to create a `third communication carrier` by combining the TDMA consortium led by the LGTC, and the late-starters such as the HTI and the PC. Minister of the MIC Yang Seung-Taek is strongly supporting the ministry¡?s plan by saying, ``If the nationwide network of the PC and the customers of the HTI are united, there would be a lot of synergy effect.`` Shin Yun-Sik, the president of the HTI is claming, ``If the two companies are combined, the new merged company can save 2 trillion dollars of investment cost. It is a big advantage for even our country.``

# Stumbling blocks = There are many stumbling blocks to see the `third carrier`. The HTI has a plan to take over the late-starters including the PC through a joint bid with the LGTC and a foreign company as a consortium. However, there is a slim chance for the plan to be actualized since the HTI and LGTC both are out of funds. Some experts are even skeptical whether the `minor players` in the communication market can earn a strong synergy effect.

Source by: DongA Ilbo (2001.10.24)



Korea's buoyant retail market doesn't seem to know there's an economic slowdown on. Stocks of the major department stores and discount retailers in the domestic retail market continue to gain in strength with some registering two- to three-fold increases compared to earlier this year.A growing number of leading foreign retail corporations are entering the Korean retail market, setting up their own chains or purchasing existing retailers. Despite the economic slowdown that is hitting most sectors, the retail companies are recording outstanding business performances, with revenues surpassing levels those of the previous year. The massive distribution firms, especially the discount retailers are locked in a competitive battle with each other to expand their market shares. The successes of their innovative techniques combined with the competitive forces that drive them are changing the face of the Korean retail industry. Until quite recently, the Korean retail market was composed of outdated family-run corner shops, conventional markets, supermarkets and department stores. As of 1995, the market began to undergo rapid change with the rise of discount retailers. The change was further prompted by the financial crisis at the end of 1997, which wrought far-reaching changes upon the structure of the distribution industry. Cash-strapped families were looking for bargains to meet their hard-pressed budgets and the main beneficiaries were the low-price discount retailers. The era of discount retailing in Korea began long before the crisis, though, the first company to venture into this area being domestic in origin. Shinsegae, better known for its upscale department stores, opened its first E-Mart discount store in November 1993 in the Chang-dong, Dobong-gu district of Seoul. Shinsegae's move prodded other competitors like Lotte and Samsung to enter the discount-retailing fray. Sensing potential, foreign concerns also began to advance into the domestic retail market following its liberalization in 1996. Since then domestic discount retail market has continued to grow. Last year alone, 47 new massive discount stores (with more than 3,000 square meters of retailing space each) opened their doors, pushing the total volume of sales through these outlets to 10.20 trillion won, up 33 percent from a year earlier. Currently, there are more than 170 discount stores operating in Korea. Another 30 to 40 are due to open shortly, bringing the total to 200 by year's end with combined annual revenues of 13 trillion won. At this point, major domestic chains like Shinsegae E-Mart and Lotte Magnet will claim some 77 percent of the discount retail market, with foreign operations taking the remaining 23 percent.

The Lessons of Localization

With all their marketing savvy, massive capital resources and distribution techniques that have enabled foreign discounters to take sizable chunks of other overseas markets, one might ask how the domestic operators have managed to outmaneuver their overseas counterparts. Senior executive director of E-Mart, Chong O-mok explained, "Domestic firms are generally well aware of the customers' needs, plus they have well-trained employees to help customers get what they want." Through this strategy E-Mart has succeeded in continuously expanding its business and solidifying its status as the No. 1 domestic discount retailer. Through its 35 stores, E-Mart registered revenues of 1.65 trillion won during the first half of this year, up 74.5 percent from a year earlier. This figure is two-fold those of either Lotte Magnet or Carrefour Korea, which compete for the second place. Currently, foreign discount retailers lag behind their domestic competitors in revenues and stock turnover. These world-class multinational companies have failed to win the loyalty of domestic clients mainly because they have failed to localize their marketing effort in terms of inappropriate interiors and commodity displays. Industry insiders have fingered Macro of the Netherlands and Continent of France, earlier investors in the Korean retail market, as casualties of this failure to localize. Their poor sales made them liabilities to their parent corporations and were sold off to Wal-Mart of the United States and Carrefour of France, respectively. With this lesson, foreign retailers have since speeded up their localization efforts while easing up on the application of business tactics developed by their head offices. Terry Leahy, CEO of the British-based Tesco Group during his visit to Korea in May said, "Tesco will focus on a localization strategy in Korea as there is growing competition in the market between domestic and foreign discount stores." Owner and operator of 907 stores around the globe, the Tesco Group spent $250 million in May 1999 to purchase a 51-percent stake in the Samsung HomePlus chain. Through the exercise of an option, Tesco's stake in the joint venture now stands at 81 percent. Tesco's debut in Korea has been a success with the new HomePlus stores chalking up record revenues.

Discount Retailer Turnover, 2000 (Unit: million won)

Ranking	Discount Retailer	                                                                Tumover	Change(%)	Market share(%)	
   1	       E-mart (Shinseage)	                                                             2,900,000	84.6	                 28.4	
   2	       Carrefour (Carrefour Korea)	                                               1,200,000	28.4	                 11.8	
   3	       Magnet (Lotte)	                                                                      1,180,000	98.4	                 11.6	
   4	       Homeplus (Samsung Tesco)                                                    	651,000	51	                     6.4	
   5	       Kim's Club (New Core)	                                                            642,500	2.6	                    6.3	
   6	       Hanaro Club (National Agricultural Cooperative Federation)   	638,110	4.3	                    6.3	
   7	       Lg Mart (Lg International)                                                         	455,661	54.4                  	4.5	
   8	       Mega Mart (Nonshinmga)                                                        	403,175	30.3	                   4	
   9	        Wal-mart (Wal-mart Korea)                                                      	402,676	 9.8	                    3.9	
  10	       Aram Mart (Aram Mart)	                                                            256,400	36	                      2.5	

Source: Korea Chain Stores Association

Carrefour Korea is also in the midst of a localization drive, judging it as paramount to building a consumer base in the Korean market. Toward that end, the chain has been endeavoring to win clients by, for instance, offering a more personalized level of service beyond merely selling low-price products. Carrefour, which first began business here in 1996 currently operates 21 stores across the country and has emerged as one of the leading foreign discount retailers. As most of its stores are located in easily accessed, heavily populated areas and offer spacious parking, they provide a convenient style of shopping geared in particular to families.

The struggle between all the big retailers, domestic and foreign, is evident in the major commercial zones where many of them have located outlets. The metropolitan area of Seoul, home to half the country's population and more than half of its purchasing power is the prime focus of the discount retailers in locating their stores. E-Mart, with the largest number of outlets, currently has 18 of its 35 stores in Seoul and its metropolitan area, with the others located in densely populated major cities around the country. Twelve of Carrefour's current 21 stores are in Seoul and its vicinity area. The exception to this trend is the Samsung Tesco HomePlus chain, which has focused on the provinces where it has been rewarded for its attention by a growing customer base.


Geographical Distribution of Major Discount Retail Stores, May 2001

Region	                                                                E-Mart	Magnet	Carrefour	HomePlus	Wal-Mart
Seoul	                                                                         8	         3	           4	              -	               1
Metropolitan Peripheral Region(Including Incheon)	 10	         7	            8	             3	               3
Regional Metropolitan Cities                                                   6	         6	            2	            2	                2	
Others	                                                                      11	         2	            2	            2                	-
Total	                                                                         35	       18	            21	          7	                6

source: Korea Chain Stores AssociationNote: As of end of May 2001

Battleground Seoul

It is in Seoul and its metropolitan region that competition between the discount retailers has been toughest. The newly built satellite community of Ilsan is a case in point. With a population of 400,000, Ilsan is host to 10 discount stores including E-Mart, Magnet, Carrefour, Wal-Mart and LG Mart plus four department stores, among them Lotte and New Core. Lotte Magnet and Hanaro Club, a retailing arm of the National Agricultural Cooperative Federation, recently heightened the competition by opening stores in the same Ilsan district. Wal-Mart will shortly follow suit once it has completed renovation of the local Kim's Club it acquired.

The marketing war in the metropolitan region has begun to spill over into provinces. In Daegu, where HomePlus has racked up some 254.1 billion won in sales annually, E-Mart moved to claim a share of the market by opening a massive 13,220-square meter store. Lotte Magnet was the first discount retailer to locate in Ulsan and quickly built annual revenues up to 125 billion, a success that has not escaped the attention of Wal-Mart and HomePlus who are poised to open stores of their own in the southwestern regional city. Given the rising level of competition in the major commercial centers, retailers have begun to employ new tactics, focusing on enlarging their outlets and enhancing services instead of relying simply on offering low prices.

The retailer that best typifies this trend is HomePlus, whose sales are at record levels. "Our strategy lies in winning the hearts of our customers by providing an elegant shopping atmosphere and better services rather than merely offering products at prices 10 or 20 won lower than other discount retailers," said CEO Samsung Tesco, Seung Han Lee. The 39,600-square meter HomePlus no. 8 store that opened July 26th in Kang Suk, Incheon, for example, offers a new standard in terms of pricing, service, shopping environment, and convenience. The store provides a playroom for children, baby sitting service, car service center, travel agency, bank and beauty parlor. With this "total service approach," HomePlus is top in sales in the seven areas it has so far located.

On the coattails of this success, HomePlus plans to speed up its efforts to expand in the domestic market. Tesco CEO Terry Leahy declared the British firm would augment its commitment to Korea as the country represents an extremely promising market with huge growth potential. "We plan to invest a total of 4 trillion won by the year 2005 to increase the number of stores to 55," said Mr. Leahy during his visit to Korea, May 14th. Building on the success of Homeplus in Korea, the Tesco Group is looking to make inroads into the East Asia market.

Most discount retailers including Samsung Tesco plan to increase the number of their stores. Massive distributors like Lotte, Shinsegae, and Carrefour will invest a total of 1.5 trillion won during the latter half of this year to build 25 new outlets, representing an average investment per store of approximately 60 billion won. Some 50 stores are also planned to open next year. According to a survey conducted by the Korea Chain Stores Association (KOSCA) on 11 major distribution companies with more than five discount store units, eight had plans to open new stores to boost their market shares. The survey revealed that Carrefour plans to increase its stores from the current 21 to 40 by the year 2005 while Hanaro Club seeks to increase its stores from 13 to 30 over the same period. Costco Wholesale, which currently runs five stores, plans to open an additional nine. The number of stores controlled by the 11 major companies is set to increase to 200 by the end of the year from the current 175 and to 366 by 2005. Shinsegae CEO Koo Hak-soo indicated that the discount store market is well into its period of rapid growth. "We project the number of E-Mart stores to grow rapidly until we open our 80th by 2005, after which we expect our rate of new store openings to level off," he said.

Department Store Gambit

Meantime, the department store market has already entered its mature phase. Most experts conclude that the discount stores will claim a substantial share of the department store market by 2003. To address the changing business climate, department stores are already focusing on profit-first management and quality products rather than just increasing total revenues. They plan to build greater business stability by targeting customers above middle-class who are less vulnerable to changes in economic conditions.

The major Seoul-based department stores, backed by their outstanding capital resources, are busily transforming themselves into high-quality specialist stores focusing on fashion brands. As part of this drive, they are expanding the floor space they allot to imported brands while enhancing services for their upscale clientele. In contrast, medium-sized and provincial department stores have been concentrating on meeting the needs of local, lower-end consumers. Their gambit has paid off. Department store turnovers have continued a pattern of gradual growth since 1999, registering a 14.3 percent year-on-year in 2000 to 15.20 trillion won. Sales are expected to maintain stable growth this year, reaching a total of 17 trillion won.

Another type of retail outlet that enjoys growing popularity since it first appeared in 1989 is the convenience store. According to the Korea Convenience Store Association the nation's around-the-clock stores numbered 3,224 as of the end of June this year; the number has been soaring by 77.8 percent on average per month throughout 2001. The Association believes the convenience store market to have a potential 6.6 times its present volume in consideration of Korean national income and population size.

The three leading convenience store firms - LG25 (LG Shopping), Family Mart (Bokwang) and Seven-Eleven (Lotte) - have an oligarchic hold on the market, claiming 68.7 percent of the total number of convenience stores and 74.5 percent of the sector's entire sales. Their total revenues amounted to 786 billion won in the first half, up 38.8 percent from a year earlier. Analysts attribute their success to the stores' provision of services that closely match the needs of their customers' daily lives.

For instance, the presence of automatic teller machines (ATMs) in many convenience stores has encouraged many homemakers to visit them to pay telephone or electricity charges in order to avoid the usually congested bank counters. In addition, they can have packages home-delivered to anywhere in Korea as well as dine on instant food. Most convenience stores have now offer such services as home delivery, photo development, laundering, flower delivery, mobile-phone recharging and sales of subway tickets. Every day, some 2.14 million people visit Korea's convenience stores, exceeding the daily average for department stores (410,000) and discount stores (1.31 million).

That's Entertainment!

As competition has stiffened, retailers have diversified their areas of business and sought new ways to spark consumer interest. Studies show that consumers now look to shopping as a total experience beyond the simple purchase of goods. To meet these desires, the "entertainment shopping mall" where customers can simultaneously enjoy shopping and other pleasures has made its debut in Korea.

The conventional market in Dongdae-mun (East Gate) has been transformed into a state-of-the-art fashion shopping mall, matching consumers' demands for both merchandise and entertainment. As well as being a conventional market of individual traders, well known in Seoul for its bargains, it has been reaching out to younger consumers with video games and a food plaza. In particular, the "Milliore" and "Doosan Tower" buildings, constructed in the last three years, have already taken firm root as the "shopping heaven" fashion shopping malls for the younger generation.

Located within the World Trade Center Seoul in Samsung-dong, southern Seoul, the COEX Mall is the first and largest of the new retailing hybrid, that is the entertainment shopping mall. The opening of the mall was timed to coincide with the Third Asia/Europe Meeting (ASEM III) in October 2000. The 119,000-square meter behemoth accommodates a convention center, hotel and trade exhibition center at ground level and massive entertainment and shopping facilities one floor below. The largest of its kind in Asia, featuring shopping, business and leisure facilities, the COEX Mall attracts some 200,000 visitors each day on weekends and 80,000 on weekdays.

Other centers offering a broad scope of shopping and leisure opportunities include the recently opened Central City located in the Seoul Express Bus Terminal and the Techno Mart in eastern Seoul, opened in April 1998.

Numerous specialist shops have begun to appear, their major appeal being their stress on the individual and providing unique value, enabling customers to directly experience products and services. The flourishing Body Shop chain of stores best represents this trend. In a cozy atmosphere, customers can personally sample cosmetics to test if they match their skin types. Korea's first Body Shop opened in the Myong-dong fashion area in May 1997 and presently number 40 nationwide.

With increasing focus on recreation, the lifestyle of Koreans has also begun to change. This trend is expected to intensify with the implementation of the five-day workweek, prompting consumers to seek further leisure activities and so expanded consumption. Korean consumers are thus likely to opt for retailers who can combine pleasure, convenience and value. Each of the three major players in the discount market will continue to capitalize on their own particular strengths. Discount stores aim to provide a total "one-stop shopping service," encompassing a comprehensive range of merchandise needs. Department stores promote high-quality service and products to an elite clientele. Convenience stores accommodate day-to-day needs and the large-scale entertainment/shopping mall successfully blends the concepts of leisure and consumption to create a new shopping paradigm.

Undoubtedly, the Korean retail market has changed forever and will continue to change, the only surety being that it will continue to offer more convenience, excitement, variety and value.

Source / KT&I sep/oct 2001 Updated Sep 3rd 2001, by Jung-Ah Hong (



The phenomenon of the Internet shopping mall has been spawned in tandem with the rapid growth rise in Internet use. According to a recent poll by Internet research institute, NetValue, the number of Internet users reached 20 million last year, among which 37 percent (about 7 million) were users of an Internet shopping mall. The Internet shopping mall market continued its spectacular growth in 2000, achieving revenues of 2.3 trillion won compared to 760 billion won in 1999.

There are presently 2,000 Internet shopping malls in Korea. Most are small-sized and only marginally profitable. Only 5 percent of them have managed to generate annual sales of more than 1 billion won, while the majors ¦¡ Samsungmall, Hansol CS Club, Interpark and LGeShop ¦¡ are well-capitalized offshoots of Korea's mighty chaebol. Samsungmall ( has become Korea's leading Internet shopping mall in terms of product variety, client service, and profitability. Since the site opened in 1998, it attracted sales of 72 billion won and 180 billion won in 1999 and 2000, respectively. This year, it expects revenues to hit the 300-billion won mark.

Samsungmall revamped its site in February this year, deploying cutting-edge technology to facilitate efficient Internet shopping, delivery, and security. It has also introduced a system to monitor cargo delivery routes. Other players, too, have fielded remarkable advances in Internet technology.

Top 10 Most-visited Shopping Mall Sites

          No	Shopping Mall	                                       visits(%)	Users(%)	
           1	LGeshop(lgeshop.Com)	                             4.3	        13.8	
           2	Hansol CS Club(csclub.Com)                     	2.8	        13.2	
           3	Interpark(interpark.Com)	                             4.6	       11.1	
           4	Lotte(	                                            4.8          	8.4	
           5	Samsung Electronics(	      3.6	          6.3	
           6	Samsung Shopping Mall(          5.0	          5.0	
           7	Zeromarket(	                      5.6	          3.5	
           8	Sendymal(	                         4.7	          3.3	
           9	Buynjoy(	                                2.3	          3.0	
         10	Buychal(	                                 2.0	          2.5	

source: valueNet

One outstanding characteristic of LGeShop is that it displays its products not only by simple digital pictures but also by video presentations called VODs (Videos on Demand), which may last from 1 to 10 minutes. LGeShop currently produces 100 of these videos per month; during June it was possible to access some 2,000 VODs through the site.

In addition to new forms of product displays, the malls attract clients through various promotional events. For example, Hansol CS Club "Shoptainment" channel offers, as the title suggests, a combination of shopping and entertainment. Opened last year, the channel offers information and service on topics closely related to daily life such as health, entertainment, sports, real estate and banking. LGeShop's "Cartoon-e-Shop" features entertaining comic strips based on topics drawn from everyday life that promote the products the mall has on offer, a new shopping format that has boosted customer satisfaction.

With the rapid spread of electronic commerce, the on-line market has become the hottest battleground of Korea's established marketers. Off-line distributors such as department stores, supermarkets and discount stores have switched their focus to the on-line market while existing on-line firms have restructured in efforts to capture market leadership. For instance, E-Mart now operates ( as its unitary site, the result of a merger of the sites of Shinsegae Department Store, E-Mart and Cybermall for the purpose of creating a leading general on-line retail group.

Although these newer sites launched by off-line retailers lag those of existing operators, they are believed to have the potential of the rapidly growing Lotte Internet Department Store, currently the fourth-most visited Internet shopping mall.

The major off-line retailers have been able to move smoothly into the on-line market through the know-how they have acquired in their conventional mode of business. Domestic discount retailers, in particular, have been swift to establish an on-line presence. In their on-line form, the discount retailers are likely to become leaders in the Internet shopping mall market by offering as many as 20,000 to 30,000 items each. Foreign discount retailers, on the other hand, have not yet revealed their intentions regarding the on-line market. Carrefour is scheduled to open its own homepage this year, but only to provide information on the company and its products.

The TV home shopping market has also demonstrated potential as a "store-less" retailing channel. Last year, the market underwent outstanding growth, registering 1.1 trillion won in total revenues, compared to 600 billion won in 1999. Sales are expected to increase to 3 trillion won in 2003 and 7 trillion won in 2005.

The number of television viewing households soared from 2 million in 1999 to 3.5 million last year, so contributing enormously to the rapid growth of the market. Home TV shopping is expected to grow continuously due to dramatic changes in lifestyle such as reduced shopping hours, increases in credit card use and the discontinuation of the shuttle bus services provided by off-line retailers.

LG Home Shopping and CJ39 Shopping now dominate the domestic TV home shopping market since they received governmental permission to broadcast in August 1999. LG claims a 60 percent share of the market while CJ39 accounts for the remainder. However, a major upset in the market is expected with planned entry of three new companies ¦¡ Nongsusan TV, Woori Home Shopping and Hyundai Home Shopping ¦¡ in November.

Boosted by the explosive increase in sales by store-less retailers such as Internet shopping malls, TV home shopping channels and catalogue sales, the home delivery industry has undergone phenomenal growth. From 85 billion won in 1993, business sources forecast the industry size will reach 1.4 trillion won this year, compared with 1 trillion won last year. As three more TV home shopping channels are set to open and the Internet shopping mall market is expected to continue its rapid growth, the home delivery market is expected to be augmented by 30 percent annually over the next five years.

At present, the Korean logistics market is dominated by three big names ¦¡ Hyundai Logistics, Hanjin Transportation and the Korea Express Co. Together, they account for 60 percent of the domestic market. Smaller companies and the motorcycle-based "quick service" operators account for the remainder. Foreign logistics companies have already laid the groundwork to explore and enter the domestic market. As foreign concerns focus mainly on international businesses through business ties with local firms, they presently account for a minimal share of the domestic market. Of them, DHL has been recording outstanding business in Korea, concentrating on shipments to and from the rest of Asia. Currently it accounts for 42.2 percent of the domestic international delivery market, followed by FedEx (17 percent), TNT (14.9 percent), UPS (13.6 percent), and EMS (10.9 percent), respectively.

Due to the huge potential for growth of the nation's logistic market, an increasing number of domestic and foreign companies have moved into the delivery market through takeover of existing companies. Samsung Corp., for instance, recently entered the market under the name of "Samsung HTH" by acquiring HTH, the company that delivered products ordered through Samsung's on-line shopping mall. Based on its experience in the logistics area over the past five decades, Cheil Jedang has launched its CJ-GLS delivery company. Multinational companies like TNT and FedEx have recently indicated their intention to operate independently in Korea rather than through joint venture arrangements. Japanese logistics companies like Sagawa Kyubin (Express) are also poised to enter the domestic logistics market and so intensify the already severe level of competition. Three major convenience store companies ¦¡ LG25, Family Mart and Buy the Way ¦¡ recently established the e-CVS Net home delivery firm ( while Seven Eleven is also planning a similar initiative.

Given the satisfaction levels reported through the use of on-line shopping plus the growing number of channels and ancillary services, this new commercial format can be expected to continue attracting more purchasers. Meanwhile, the nature of on-line consumer demand has begun to diversify. To cope with the rapidly changing business climate, on-line retailers have employed new strategies to reduce delivery times, lower prices and provide a wider range of information on their merchandise, developments which themselves herald further expansions in the on-line retail market.

Source / KT&I sep/oct 2001 Updated Sep 3rd 2001, by Jung-Ah Hong (



Korea's semiconductor industry has been buffeted by declining demand and free-falling prices. Moves are now afoot to switch the focus of the industry to serve the now vast non-memory as opposed to memory chip markets Semiconductor production has been a Korean backbone industry since the early 1990s. All experts are of the opinion that it will take a leading position in the Korean economy during the 21st century as well. The domestic semiconductor exports (including assemblies) reached their peak last year. Total industry exports last year hit $26 billion, their largest volume since their previous peak of $22.1 billion in 1995. This performance has resulted in the industry becoming a major contributor to the national economy. However, in the second half of last year, the domestic and world semiconductor industries entered a deep slump, a condition all the more evident this year. The depression within the information/technology (IT) and personal computer (PC) industries that have been the vehicles for world economic growth have sent the world DRAM market price to one-tenth of what it was last year. In consequence, it is extremely difficult to predict when the industry might begin to recover. Most market survey agencies including World Semiconductor Trade Statistics (WSTS) Inc. and Dataquest (DQ) agree that overall, the world semicon market will have undergone a double-digit contraction by the end of 2001 compared to the year previous. The basis of their prediction is the continuing, negative macroeconomic outlook for the United States, Japan, Europe and other areas, as well as the slowdown in the growth of PC and mobile phone demand, products which consume huge amounts of semiconductors.


In particular, domestic semicon companies that focus on DRAM production have seen their profitability evaporate in line with the steady decline in semiconductor prices, a fall in demand for user-products like PCs, plus mounting oversupply in world markets.

For this reason, most world semiconductor producers scaled back their planned facility investment in 2001 and cut back on employees in anticipation of worsening recession in the industry. Samsung Electronics reduced its 2001 investment plans by over 2 trillion won. It had initially scheduled to invest in some 6.6 trillion won worth of capital equipment this year but subsequently adjusted this downwards to the 5.4 trillion won range and finally to 4.4 trillion won. Meanwhile, Hynix Semiconductor (formerly Hyundai Electronics) suspended operation of its Eugene, Oregon fab (plant) for six months, followed by suspension of three lines in at its Incheon plant for one week in early August. Based on wafer fabrication, domestic semicon output in 2000 reached $16.8 billion. Within this total, memory chips accounted for 83.6 percent. In particular, DRAM production, the major focus of the industry leapt 31.3 percent in comparison with 1999 to $11.4 billion.

Weighting of Semiconductors in Total Exports(Units:US$100 million, %)

Classification	         1995	1996	1997	  1998	1999	2000
Total exports(A)	   1,251	1,297	1,362	1,323          1,437	1,724 
Semiconductors(B)              221              178               174	   170	   203	   260
Weighting(C)	         17.6	  13.7	   12.7	   12.8	  14.1	  15.1

Source: KOTIS, (Korea Trade Information Service)

Total semicon exports in 2000, including assemblies soared by 28.3 percent in comparison with 1999 to $26 billion, accounting for 15.1 percent of all national exports. Semiconductors thus ranked as the No. 1 export item for the ninth consecutive year since they took the top spot in 1992.

However, due to slackening demand for IT products with the onset of economic slowdown or stagnation in major world markets, waning PC demand, falling DRAM prices and sliding assembly exports, domestic semiconductor exports in 2001 are expected to fall on a yearly basis by 31 percent to 35 percent to between $17 billion and $18 billion.

Semiconductor exports maintained a consecutive monthly decline from January to August this year, with cumulative value down 38.7 percent in comparison with the same period last year. Even worse, this decline was the principal cause in the worsening of the national trade account, pulling total exports down by 5.8 percent on the year. Overnight, Korea's most important export item, the semiconductor, has become the key factor in the erosion of the national trade surplus.


Semiconductor Production/Exports, 2000 ( Unit : US$ million, %)

Classification 1998 1999 2000

Total Change from year previous Total Change from year previous

Production Memory 6,570 10,098 53.7 14,034 39.0

-DRAM 5,623 8,681 54.4 11,395 31.3

Non-memory 1,260 1,684 33.7 2,753 63.5

Wafer Fabrication Total 7,830 11,782 50.51 6,787 42.5

Exports Wafer Fabrication Total 7,016 10,198 45.4 14,937 46.5

Memory 6,220 9,207 48.0 13,125 42.6

-DRAM 5,348 7,954 48.7 10,725 34.8

Non-memory 796 992 24.6 1,812 82.7

Assembly and Others 9,996 10,074 0.8 11,078 10.0

Total 17,012 20,272 19.2 26,015 28.3

Source : Korea Semiconductor Industry Association(KSIA),



Nonetheless, the position of the Korean semiconductor industry in the world market is still significant. The industry is the world's third-largest producer behind that of the United States and Japan. According to Dataquest, the Korea's semiconductor industry had a 7.7 percent share of the world market in 2000 worth $226.2 billion. This market presence breaks down to 27.2 percent of the entire memory field and 38 percent of all DRAM purchases worldwide. On the other hand, Korean non-memory production accounted for a meager 1.5 percent of the world chip market in 2000, so presenting a long-term challenge for the domestic semiconductor industry.

In the international sales rankings of semiconductor companies for 2000, Samsung Electronics matched its feat for 1999 by achieving fourth place with approximately $10.6 billion in revenues, an increase of 48.6 percent compared with the previous year. Hynix Semiconductor, sold approximately $6.3 billion worth of product to claim 11th position, the same ranking as in 1999.

Despite being the world's third-largest semiconductor producing country, Korea also imports a great deal of the same product. Due to relatively weak infrastructure in the electronic, information and communication industries and insufficient design capability in the semiconductor industry, Korea relies heavily on imports in the non-memory field.

The size of the domestic semiconductor market (based on wafer fabrication) in 2000 grew by a stunning 42.9 percent to $10.8 billion, up from $7.5 billion in 1999. Also, the weighting of domestic semiconductor output in the world market has increased to 4.8 percent in 2000 from 4.4 percent in 1999. However, the domestic market this year is likely to fall to $8.0 billion, a reduction of 25.9 percent from 2000. Demand within the domestic semiconductor as of 2000, centered on micro components, with a 27.4 percent market share, followed by logic (20.7 percent) and memory (20.6 percent) products. These three products accounted for 69 percent of entire demand. Analog (19.8 percent), discrete (9 percent) and other products (2.5 percent) made up the balance of the remaining 31 percent.

Imports from the United States and Japan satisfy the bulk of domestic demand. Some 32.5 percent and 19.8 percent of all domestic industry purchases are met by American and Japanese suppliers, respectively. Imports from the United States comprise mainly ASIC and MPU products, those from Japan, non-memory products, and from Europe, communication and analog chips. The domestic market for semiconductor equipment peaked in 1995 at $4.2 billion since when it has declined. Demand, in fact, plummeted to $1.4 billion during 1998 in the wake of the financial crisis. However, facility investment has since recovered with the rapid increase in Internet and communication demand after 1999.


By 1997, the domestic equipment market had grown to represent 9.3 percent of the world market, and as such, Korea had emerged as a major consuming country. The market had somewhat contracted proportionately by 2000 to 8.6 percent of the total, but it is still the target for direct or joint-venture investment, after/service center establishment by advanced-country corporations on account of its market potential and superb infrastructure, among other points.


Sales Rankings of Global Semiconductor Companies, 2000(Unit: US$ million)

1999 2000 1999 2000 Change(%) 2000

Rank Rank Company Revenue Revenue (99/2000) Market share(%)

1 1 Intel 26,806 30,298 13.0 13.4

2 2 Toshiba 7,623 10,864 42.5 4.8

3 3 NEC 8,838 10,643 20.4 4.7

4 4 Samsung Electronics 7,125 10,585 48.6 4.7

5 5 Texas Instruments 7,120 9,202 29.2 4.1

6 6 ST Microelectronics 5,077 7,890 55.4 3.5

7 7 Motorola 6,394 7,678 20.1 3.4

8 8 Hitachi 5,560 7,286 31.0 3.2

9 9 Infineon 5,223 6,711 28.5 3.0

10 10 Micron Technology 3,410 6,314 85.2 2.8

11 11 Hynix Semiconductor 4,830 6,287 30.2 2.8

Source: April 2001, Dataquest


Domestic semiconductor equipment production in 2000 stood at $800 million, of which $470 million worth was purchased by domestic chipmakers and $330 million was exported. The major items produced by the domestic semicon facility industry cover the gamut of processing equipment and include CVD, track, wet station and assembly equipment, plus peripheral items such as molding machinery, bonders and handlers.


Semiconductor Equipment Industry, Supply and Demand Trends (Unit : US$ million, %)

Classification 1996 1997 1998 1999 2000 2001(E)

Exports 123 162 113 142 332 300

Supply(Production) Domestic Consumption 591 485 285 242 471 325

Total 714 647 398 384 803 625

Demand Domestic Consumption 591 485 285 242 471 325

Imports 3,308 2,453 1,065 1,691 3,558 1,910

Total 3,809 2,938 1,350 1,933 4,029 2,235

Ratio Of Domestic Supply to Demand(%) 15.2 16.5 21.1 12.5 11.7 14.5

Source : April 2001, KSIA


Domestic semiconductor equipment production this year is expected to top $630 million, a reduction of $170 million compared to 2000 due to the slowdown of world semiconductor demand. Out of total output, it is estimated that $330 million will be supplied for the domestic market and the remainder will be exported. Furthermore, the overall domestic semiconductor equipment market is expected to contract to $2.24 billion, down 44.5 percent from 2000.

The major importing countries for domestic equipment are Japan and the United States. Also, a variety of inspection and assembly equipment is imported from Japan, and includes the entire range of processing equipment such as steppers, tracks, etchers, furnaces and others. From the United States, the local semicon production industry purchases thin-film equipment and precision measuring devices such as CVDs, ion implanters and sputters.

In the area of semiconductor material, local manufacturers satisfy a greater proportion of domestic demand than is the case in the equipment industry. The domestic semiconductor material industry emerged in 1984 as full-scale wafer fabrication by semiconductor manufacturers began to take off. The main items produced by the local semicon materials industry include silicon wafers, lead frames, bonding wire and Epoxy Molding Compound (EMC). Total domestic demand for semicon material in 2001 is expected to amount to $2.11 billion, subtracting exports of $390 million from production of $1.61 billion, and adding $880 million worth of imports.

The domestic semiconductor material market slowed down in 1998/99 in tandem with the slump in the world semicon industry. By 2000, though, domestic semicon material demand increased to $2.1 billion.

The domestic semicon material industry relies heavily on overseas technology and financing. Approximately 80 percent of companies in the field have technological and capital alliances with multinational corporations.


As of 2000, the biggest demand for semiconductor material is for DRAM silicon wafers and assembly materials. Overall, some 30 percent is for silicon wafers, 14 percent for lead frames, and 13 percent for BGA boards and the like. In 2001, domestic production will likely meet 52 percent of demand for silicon wafers, 76 percent for lead frames, 43 percent for BGA boards, 91 percent for bonding wire, and 29 percent for EMC.

Semiconductor material imports in 2000 amounted to $900 million, meeting 42 percent of domestic demand. In 2000, imports are likely to fall to $880 million, due to the ongoing slump in the world semicon industry. As of 2000, 33.4 percent of the domestic semiconductor material market is claimed by Japanese companies. The main import items are EMC, polysilicon, lead frames, photo resist, chemical products and others. Some 5.5 percent of domestic demand is satisfied by imports from the United States.

In fact, some 9 percent of all semiconductor material imports as of 2000 came from Japan. Imports from the United States account for 13 percent of the total, and other regions, 8 percent. Semiconductor material exports are expected to continue making slight increases each year, having risen from $320 billion in 1999 to $380 million in 2000 and to an estimated $390 million in 2001. The fall in exports in 1997 and 1998 were due to a combination of declining semicon prices, a reduction of required inputs because of improvements in processing efficiencies, and a worldwide easing in semiconductor demand.

Semiconductor Materials, Major Import Sources(Unit : US$ million, %) 
1997 1998 1999 2000 2001(P)
Imports Japan 879(69) 607(73) 585(67) 709(79) 689(78)
USA 126(10) 101(12) 119(14) 116(13) 113(13)
Other 265(21) 127(15) 166(19) 76(8) 82(9)
Sub-total 1,270(100) 835(100) 870(100) 901(100) 884(100) 
Domestic Supply 1,030 1,042 1,119 1,223 1,226
Total 2,300 1,877 1,989 2,124 2,110

Source : April 2001, KSIANotes: () indicates weighting in import total(%) P indicates projection


Those domestic semiconductor producers that made extensive investments exclusively in the memory sector are now making efforts to convert their plant to produce non-memory chips because of the current crisis in the semiconductor market. In this regard, the government is lending what assistance it can. The Ministry of Commerce, Industry and Energy (MOCIE) plans to spend 2 billion won in a pilot project to manufacture application-specific integrated circuits (ASIC) to be undertaken by an ASIC design company. Of the 36-billion won budget necessary to complete this project by 2005, half will be provided by MOCIE. The Ministry of Information and Communication (MOIC), now building the ASIC Support Center in Garak-dong will invest 4.8 billion won in the manufacture and launch of non-memory pilot products. The non-memory market has grown to be vast, accounting for 76 percent of the entire world semiconductor market last year. This market is dominated by the United States (57 percent) and Japan (29 percent). As mentioned, Korea's share is a mere 1.5 percent.

Semiconductor Materials Demand, Production and Imports by Main Items(Unit : US$ million, %)

1999 2000 2001(P)
Classification Domestic Supply Imports Total Domestic Supply Imports Total Domestic Supply Imports Total
Silicone wafers 275 315 590 330 305 635 318 282 601
Lead frames 222 73 295 230 74 304 216 66 283
BGA boards 111 133 244 115 151 266 148 172 320
Bonding wires 115 22 137 114 10 125 111 12 123
Epoxy Molding Compound(EMG) 35 64 99 26 65 91 26 64 90
Other 361 263 624 408 296 703 407 288 693
Total 1,119 870 1,989 1,223 901 2,124 1,226 884 2,110

Source : April 2001, KSIA Notes: P indicates projection


Experts unilaterally agree that the non-memory sector has infinite growth potential as its products can operate in a range of equipment like audio/video equipment and mobile phones. This contrasts to memory semiconductors like DRAM and SRAM that have the function of being able to store simple data. While in 1996, non-memory design companies numbered only 20, more than 80 were in operation at the end of last year. Large companies like Samsung Electronics, Hynix Semiconductor have newly established non-memory production lines (foundries) or converted existing DRAM lines. The non-memory foundry company, Anam Semiconductor has expanded its manufacturing capability this year by 50 percent, while Dongbu Electronics is a new entrant to the foundry business. The problem devolves to one of individual company resources. According to a survey by COSAR (Consortium of Semicon-ductor Advanced Re-search), 82 percent of domestic design companies are small enterprises with capitalizations of less than 300 million won and face limits to further capital procurement.

In fact, the industry estimates that the only companies that managed to raise funds of over 1 billion won this year were the 10 largest in the business. For the sustained development of the non-memory sector, there must be stable support in the form of skilled human resources, access to financing, and an up-to-the-minute industry infrastructure.

U.S.A Japan Korea 
World Production Ranking 1 2 3 
World Market Share(%) 50 228.5 7.8 
Non-memory 59 29 1.5 
DRAM 20.2 23.2 38 
Facility Investment(US$ billion) 12.3 8.6 4.3 

Source: Dataquest, Ministry of Commerce, Industry And Energy

By Ki-man Lee, Research/Public Relations, Korea Semiconductor Industry

Source : KT&I sep/oct 2001


Korean biochemical venture companies that have thus far concentrated on research and development and producing samples for testing are becoming more active, building their own factories and preparing for mass production. According to industry sources yesterday, Insect Biotech is currently constructing a 1,400-pyoung factory in Hansol Venture Valley, near Daedeok Bio Community, in order to produce a type of protein disintegration agent called "Protease HY-3" which were found in active microorganism in silk spiders. The company plans on completing the factory and its own research center by the end of this year, producing about 1,000 tons of Protease HY-3 per year which will be used to make about 2 trillion won worth of detergents and other products beginning next year. Another company, Real Biotech, will soon build a factory for levan, a macromolecule consisting of tens of thousands of fructose cells which will be used for basic cosmetic and functional food that reduces cholesterol and other harmful bacteria. To be built in Gongju City, South Chungcheong Province, the factory will have a production capacity of about 10 tons of levan per month.

DMJ Biotech is also gearing up to construct a factory that will produce about 200 tons of compound mixture that increases fluidity of concrete in the Wolsan District Industrial Complex in South Chungcheong Province.

Gavis Korea is already building a factory, in Sacheon on the southern coast that will manufacture about 300 tons of bio feed additive made from leftover grapes after making wine that will be used in cosmetics and burn-treatment medication in. Built on a budget of about $2 million, the factory will be completed at the end of the year and go into mass production beginning March.

Other biotech ventures ready to start business include Sun Bio, which built a factory in Pyeongchon for manufacturing "SB1" (emergency medication), and Enotech Medical which will move into its factory and research center for medical products in Daeju next month.

Source by : Korea Herald (2001.10.15)



Après des mois de négociations, l'américain General Motors a signé un protocole d'accord pour la reprise du constructeur sud-coréen en faillite.

Le premier constructeur automobile mondial met enfin la main sur Daewoo Motor. Après des négociations interminables et un prix offert pour le groupe sud-coréen qui n'a cessé de baisser, la saga touche à sa fin ou du moins on peut l'espérer. General Motors (GM) a signé vendredi un protocole d'intention pour reprendre le constructeur coréen en faillite Daewoo Motor Co, a annoncé la compagnie américaine. Mais dans ce même communiqué, GM précise que l'accord ne le lie en rien et qu'un protocole final doit être signé avant la fin de l'année.

Selon les banques créancières de Daewoo, GM et ses partenaires ne paieront que 400 millions de dollars pour 67% des parts du capital de Daewoo. Les créanciers recevront pour leur part 1,2 milliard de dollars en actions privilégies représentant les 33% du capital restant de la nouvelle compagnie.

Le communiqué de GM précise que cette nouvelle compagnie n'exploitera que deux des trois usines en Corée du sud et ne conservera que les actifs en Egypte et au Vietnam sur les 12 pays où Daewoo avait des installations. Le groupe américain espère que cette nouvelle entreprise génèrera un chiffre d'affaires annuel de 5 milliards de dollars.

GM s'était associé à l'italien Fiat pour reprendre Daewoo Motor, après le retrait par Ford de son offre d'un montant de 6,9 milliards de dollars en septembre dernier. Le constructeur sud-coréen s'est effondré en novembre dernier et ses dettes s'élèvent à quelque 17,5 milliards de dollars.Source : La - 21/09/2001



General Motors devra composer avec les syndicats réticents.

a tornade économique déclenchée par les attentats n'a pas fait caler General Motors (GM). Après plus de six mois de négociations, la firme américaine et les créanciers de Daewoo Motors ont signé jeudi un accord sur le rachat du deuxième constructeur automobile sud-coréen. Ce dernier, qui prévoit la création d'une nouvelle société dans laquelle GM injectera 400 millions de dollars (437,2 millions d'euros) n'est toutefois pas assuré de mettre fin au feuilleton social mouvementé de l'ex-branche auto du défunt conglomérat.

Conflit. Les syndicalistes les plus endurcis de l'entreprise, partisans farouches de sa nationalisation, travaillent pour la plupart dans l'usine de Pupyong près de Séoul... que GM a refusé de reprendre. Associé aux créanciers qui conserveront 33 % du capital de la nouvelle structure, l'américain ne reprend d'ailleurs que quatre des seize usines Daewoo Motors: deux en Corée, une au Viêt-nam et une en Egypte. Le réseau commercial international est lui totalement absorbé.

Partage. Quant aux dettes colossales du constructeur, estimées à 17 milliards de dollars (18,6 milliards d'euros), les banques (qui n'avaient pas le choix) se partageront le fardeau avec l'Etat coréen. Sur le papier, le débarquement de General Motors en Corée est logique. GM connaît Daewoo, puisque les deux furent partenaires jusqu'en 1992. Le constructeur américain est en outre déjà bien placé en Asie puisqu'il possède des intérêts en Chine, mais surtout au Japon, avec 50 % du capital d'Isuzu, 20 % du capital de Suzuki et 21 % de Subaru. GM a les savoir-faire qui manquent à Daewoo: design, réseau commercial efficace, connaissance des marchés internationaux. Les Coréens apportent au nouveau propriétaire une place de choix sur leur marché, deuxième en Asie après le Japon, et un label (véhicules robustes et bon marché) utile pour conquérir de nouveaux publics, notamment dans les pays émergents. La firme a d'ailleurs dégagé au premier semestre 2001 ses premiers profits depuis la faillite de sa maison mère, en août 1999.

Reste que l'entreprise porte un nom associé à l'épopée industrielle de la Corée du Sud. Ses syndicats ont fait de ce dossier un symbole. Or, ce rachat devrait déboucher sur l'arrivée à Séoul de cadres américains et sur une remise à plat des relations avec les fournisseurs et les distributeurs.

Source : Libération 22/09/2001



The European Union's campaign to boost government subsidies in the local shipbuilding industry and its complaint to the World Trade Organization will likely be delayed due to internal conflict, an international wire service said yesterday. According to Bloomberg, Germany and Ireland were active participants in the latter suit, particularly, but France held back saying it needs more proof before going along with the formal complaint to WTO. Meanwhile, the Netherlands, Sweden, Denmark and Finland opposed asking their own governments for more subsidization. Accordingly, with the EU members in conflicting positions, collective action seems impossible, the news report said.

The shipbuilding industries in European Union regions received 9 percent of government financial support through last year. By contrast, Korea is receiving about 39 percent in government subsidies, they argued, claiming it violates world trade regulations.


Source : Korea Herald 2001.10.10



The European Union will likely take its formal complaint against Korean shipbuilders to the World Trade Organization (WTO) sometime after December, the Ministry of Commerce, Industry and Energy (MOCIE) said yesterday.

This delay is due mostly to continuing internal conflict within the organization, the ministry said, explaining that the European Union members still seem to be at discord on the issue of asking for temporary subsidy from their own government.

"Most of the countries are at an agreement about pursuing WTO lawsuit against Korean shipbuilders, but are of different opinions concerning asking their own government for temporary subsidization," a ministry official said, adding that an agreement will likely be reached at a meeting scheduled for early December.

The EU decided May 8 of this year that it would file a complaint with the WTO regarding Korean shipbuilders' alleged illegal practices, namely that the Korean government is providing unwarranted subsidies to the shipbuilders.

An opinion that the European shipbuilders should also ask for subsidy from their own government followed in late July, but the idea is seeing opposition from some of the members, particularly Britain, Sweden, the Netherlands and Denmark.

At the moment, those supporting the idea are Germany, Spain, Greece and Portugal while those remaining undecided are France and Belgium, the ministry said.

But the Korean government has already begun preparing for EU's action together with the Ministry of Foreign Affairs & Trade, MOCIE said.

Conflict between the European and Korean shipbuilders came forward in early May when the EU announced that it would file a complaint with the WTO regarding Korean shipbuilders' alleged illegal practices unless a settlement is reached by June 30.

The first meeting failed and the second round of shipbuilding negotiation talks took place in Brussels June 25-26, without much success in coming to an agreement.


By Kim Mi-hui Staff reporter

Source : KOREA HERALD N- 2001.10.22



By Shim Jae-yun

The simmering dispute between South Korea and the European Union over shipbuilding has entered a new phase as both sides are bracing for another round of contentious negotiations.

The EU will file a complaint against South Korean companies with the World Trade Organization (WTO), claiming that their ability to offer lower prices in international markets is due to government subsidies.

Due to the lack of consensus among EU member countries, the envisaged filing of anti-dumping suits against South Korean manufacturers seems unlikely by December.

The Ministry of Commerce, Industry and Energy (MOCIE) yesterday predicted that a WTO action is unlikely as the EU nations are divided over the matter regarding the provision of subsidies to European shipbuilders.

The EU nations will likely press for the WTO suits as they agreed earlier, although they have yet to determine whether or not to provide European firms with subsidies, a MOCIE official noted.

The European countries are set to hold a meeting of executive members to discuss the matter in early December.

Germany, Spain and Italy are supporting the idea of offering subsidies to their local companies instead of filing a complaint against South Korea. The United Kingdom, Sweden, the Netherlands and Denmark remain determined to bring the matter to the WTO. France and Belgium have yet to clarify their stance in this respect.

The EU has threatened that it would bring the matter before the WTO should the two sides fail to agree on the matter by the end of June.

MOCIE has begun efforts to prepare countermeasures through close consultation with the Ministry of Foreign Affairs. In a related move, a group of business leaders representing Korea's major shipbuilding companies recently left for Cadiz, a city in Spain, to take part in a meeting of JEKU, the conference of representatives of shipbuilding companies from Japan, Europe, Korea and the United States.

To help find a private level solution to the shipbuilding dispute, the executives from Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipyard met with their European counterparts during the conference session last week.

The Korea Shipbuilding Industry Association criticized the EU nations for seeking to bring the matter to the WTO, although South Korean companies have not received any government subsidy at all, it claimed.

The official continued to say that it does not make sense for the EU to claim that South Korean companies have been offering ``dumping prices'' as domestic firms have begun focusing on lucrative vessels with high added values.

Source : Korea Times - 21/10/2001



NEW YORK - South Korea and the European Union are criticizing a U.S. trade panel ruling that said subsidized imports have hurt U.S. steel companies.

Both warned yesterday that if protective barriers were enforced, they likely would file a complaint with the World Trade Organization.

The ruling by the U.S. International Trade Commission was a step toward protective barriers that could impede imports from a number of countries, South Korean officials argued.

"The ruling can severely hurt free and fair steel trade," South Korea's Commerce, Industry and Energy Minister Chang Che-shik said in a release.

In its ruling, the U.S. trade commission said 12 of 33 domestic U.S. steel product lines, including hot- and cold-rolled steel, suffered seriously because of cheaper imports, mostly from Brazil, China, Russia, Japan and South Korea.

Since 1998, 26 U.S. steel companies have filed for bankruptcy protection, including Bethlehem Steel, the third-largest steel company.

"The problem in the United States is not because of foreign imports but because of high domestic labour cost," said Kim Sung-woo, a spokesman at Korea Iron and Steel Association.

Source : The Associated Press , National Post, 24/10/2001



Le géant du logiciel et le sud-coréen vont développer des technologies permettant la gestion automatique du domicile. Un partenariat sans composante financière.

Le géant du logiciel Microsoft et le sud-coréen Samsung ont annoncé mercredi avoir conclu un partenariat dans la domotique, afin de mettre en commun leurs compétences spécifiques sur ce créneau. "Les deux compagnies ont l'intention de travailler ensemble à développer et lancer sur le marché une nouvelle gamme de produits basés sur des équipements informatiques Samsung et des logiciels Microsoft", ont déclaré les deux groupes lors d'une conférence de presse à Séoul. Samsung a précisé que cette alliance ne comportait pas de dimension financière.

La domotique consiste à développer des technologies permettant d'automatiser la gestion de l'habitation. Pour Microsoft, qui dispose d'une division entièrement dédiée à cette activité, "eHome", il s'agit là d'une alliance stratégique, a souligné le groupe de Bill Gates dans un communiqué. "eHome" a pour but de développer les technologies permettant aux consommateurs de disposer "de domiciles entièrement commandés et contrôlés informatiquement, en matière de loisirs et de communications, quand et où ils le désirent", a expliqué le communiqué publié par les deux compagnies. Bill Gates, actuellement en voyage en Asie pour promouvoir les technologies de son groupe, vient d'arriver en Corée du Sud, où Internet à un taux de pénétration de 56%.

Le directeur général de l'un des acteurs majeurs des cartes à puces a assuré que les deux groupes allaient développer "un écosystème informatique qui permettra de transformer n'importe quel domicile en une habitation domotisée de la nouvelle génération, et ce de manière facile et économique en termes de prix". Source : La - 17/10/2001 à 11:24



C'est ce qu'a laissé entendre son président-directeur général Bertrand Collomb qui souligne par ailleurs que le chiffre d'affaires réalisé en Asie "est le moins élevé mais a la croissance la plus rapide". Celui-ci représentait en 2000 près de 9% des ventes totales du groupe Lafarge. Bertrand Collomb se veut ambitieux à ce propos en envisageant un objectif de 15% dans sept ans.

Il est vrai que depuis quelques temps, Lafarge entend mettre toutes les chances de son côté dans cette partie du globe à la faveur d'une importante politique de prises de participations. Lafarge a par ailleurs finalisé fin septembre un accord avec le groupe nippon Aso Cement Corporation: il s'agit là d'une première dans ce secteur au Japon pour une société étrangère.

A noter que sur le continent asiatique, Lafarge est présent en Corée du Sud, en Malaisie, aux Philippines, en Chine et donc au Japon. Récemment, des rumeurs étaient colportées selon lesquelles Lafarge était sur le point de faire son entrée dans le capital du groupe sud-coréen Tongyang Major Corp contre 100 millions de dollars.



(26/09/01 07:10:22)

Face à la forte croissance du jeu On-line sur la zone Asie, le Groupe Cryo annonce la mise en place d'un management asiatique, dont le double objectif sera de développer les activités Jeux Off-line et On-line.

1- Activité Jeux Off-line

Le développement des jeux Off-line se fera par le biais d'accords de licence à long-terme avec des partenaires privilégiés.

Une première étape a été marquée par la finalisation d'un accord de distribution avec la société sud coréenne Innotz. Dotée d'un capital de 25 millions d'euros et employant 160 personnes, Innotz, créée en 1983, est devenue une société de tout premier plan en Corée grâce à son réseau de distribution et à l'exploitation de jeux On-line comme Starcraft. La société rassemble à ce jour une communauté de plus de 500 000 joueurs. Introduite au premier marché de Séoul en 1995, Innotz y figure comme la seule société sud coréenne cotée spécialisée dans les jeux vidéo.

L'accord stratégique conclu avec Innotz porte sur la distribution de l'ensemble de la production Off-line du groupe Cryo sur le territoire sud coréen.

2- Activité On-Line

Dans le cadre du développement en Asie de ses activités On-line, le Groupe Cryo a finalisé deux prises de participation stratégiques :

· La prise de contrôle de la société GameAZ, située à Hong-Kong. GameAZ assure la diffusion des jeux On-line du Groupe sur Hong-Kong et sur la Chine. Le deuxième associé stratégique de GameAZ est le Groupe PCCW, holding de contrôle de Hong-Kong Telecom, dirigé par Richard Li.

A terme, GameAZ assurera la production de ses propres jeux en ligne à travers la création d'un joint-venture avec l'Université de Hong-Kong et la création d'un nouveau studio de développement en Chine.

· Une prise de participation dans la société At Dream, en Corée du Sud. At Dream, dont les autres actionnaires sont l'équipe fondatrice, dirigée par Hyun Kim ainsi que les sociétés Haansoft et Cosmo Partners, assurera la représentation et le développement des activités On-line de Cryo sur ce territoire tant pour les jeux que pour les activités liées à la technologie.

At Dream a notamment joué un rôle-clé dans les démarches suivantes :

- Signature de l'accord avec la société Innotz ;

- Etablissement d'un accord de partenariat avec Game Infinity, organisation du Korea Game Promotion Center regroupant les meilleurs développeurs de jeux vidéo sud coréens. Cet accord offre au Groupe Cryo un accès privilégié aux capacités de production existantes sur le territoire ;

- Accord de licence avec la société Codinet, développeur de jeux vidéo et membre de l'organisation Game Infinity, pour la diffusion du jeu On-line El-Kardian en Europe et aux Etats-Unis.

L'objectif est de regrouper à terme l'ensemble de ces actifs afin de tirer le meilleur parti du développement explosif du jeu en ligne sur la région.

La direction de la structure Asie est confiée à Giles Darke, Responsable Commercial Asie du Groupe Cryo depuis mars 2000, qui a négocié et conclu les contrats commerciaux du groupe en Asie. Précédemment, il a exercé pendant 12 ans des fonctions commerciales et réalisé des accords de partenariats pour des sociétés informatiques en Asie et en Europe. Il sera secondé par Anne Mengoli, nommée Responsable Marketing Asie. Chef de Groupe des Jeux On-Line au sein du Groupe Cryo depuis janvier 2001, elle a auparavant été Responsable Localisation puis Chef de Produit Europe chez l'éditeur américian Disney Interactive.

A propos de CRYO

Cryo conçoit, développe et édite des logiciels de jeux interactifs destinés au grand public. Sa politique éditoriale s'appuie sur la construction de la marque CRYO, autour d'une gamme de produits multi-supports (PC, Consoles, Mac, DVD). Cryo axe également son développement dans le domaine stratégique du on-line au travers de sa filiale Internet Cryonetworks (jeux on-line, langage de programmation d'application Internet multi-utilisateurs SCOL).

Source : Company



Alors que le constructeur français Dassault Aviation est engagé dans un combat serré pour un marché militaire en Corée du Sud, les Echos nous apprend que le groupe pourrait faire l'objet d'espionnage industriel.

Ainsi, la police sud-coréenne a ouvert une enquête suite à la découverte d'un système d'écoute téléphonique au sein du bureau de Dassault à Séoul.

Le groupe est actuellement en lice pour un contrat portant sur la fourniture de 40 chasseurs à la Corée, pour un montant de 3,2 milliards de dollars.

Le marché se révèle très disputé. Parmi les concurrents du Rafale de Dassault, on compte en tout premier lieu le F-15K de l'américain Boeing. Ce dernier, version moderne du F-15 âgé de plus de 20 ans, fait office de favori. Pratiquement tout le matériel militaire sud-coréen est de fabrication américaine et près de 37.000 américains sont présents au sud du pays.

Parmi les autres concurrents, on note Eurofighter, regroupant la Grande-Bretagne, l'Allemagne, l'Italie et l'Espagne, qui propose le Typhoon, un nouvel appareil en fin d'essai. Plus anecdotique, un Soukhoï russe qui fait office de "outsider".

Alors que le Séoul Air Show ouvre ses portes aujourd'hui, le choix du vainqueur devrait intervenir au mieux à la fin du mois. De nombreux analystes tablent plutôt pour le début de l'année prochaine.

Source : - 15/10/01



By Seo Jee-yeon

Multinational companies doing business here are preparing for an array of charity campaigns for socially isolated minorities as part of efforts to improve their brand image.

Next Tuesday, consumer products maker Procter & Gamble Korea (P&G) will host the Making Kimchi for Love campaign at the Korea House in Seoul with the support of the foreign community.

The company said that P&G, the American Chamber of Commerce in Korea (AmCham), the American Embassy in Seoul, the U.S. Army and the Seoul International Women's Club would all take part in the event to make kimchi.

The kimchi will be donated to orphanages and homes for the aged.

``This event is also aimed at helping foreign residents deepen their understanding of Korean culture,`` P&G said.

Restaurant chain McDonald's will also kick off a charity music concert with video TV station MTV on the last day of this month at the Mesa shopping tower.

About 1,000 customers will be invited to the music concert where they will buy a special set menu designed for the charity. About 100 million won could be generated through the concert, McDonald's Korea said, and it will be donated to children's charities.

In the auto industry, Renault-Samsung donated 206 million won from its profits over the past three months, the French-Korean company said.

It added in a statement that, ``Renault-Samsung launched the donations to build an image of being a socially responsible corporation and to get close to the local community. By the end of this month, the company will donate funds to orphanages and homes for the deaf and disabled across the country.''

Source : Korea Times - 24/10/2001


SOMMAIRE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retour table KOTRA