LA LETTRE DU KOTRA Novembre 2001
Centre Coréen du Commerce Extérieur et des Investissements
KOTRA PARIS - 36, avenue Hoche - 75008 Paris Téléphone : +33 (0) 142 25 09 57 - Télécopie : +33 (0) 142 25 09 50 - email : kotra@wanadoo.fr M. Seong-Kuk Hong - Directeur Adjoint M. Frédéric Claveau - Responsable investissements
COREE 2001 : Après les chaebols, quoi ?
Lundi 10 décembre 2001, de 14h30 à 18h30 (accueil à partir de 13h30) au CFCE,10 avenue d'Iéna, 75016 PARIS, métro Iéna, bus 82, 63 ou 32 La crise de 1997-1998 a conduit à une profonde transformation du "modèle" économique coréen : · Restructuration des chaebols et du système bancaire national ; · Ouverture massive aux investisseurs étrangers ; · Fort développement du marché domestique. La "révolution calme" de l'économie coréenne continue de susciter de multiples questions, de principe aussi bien que pratiques. Les réponses à vos questions, vous les trouverez à la journée "Corée" que le Centre français du commerce extérieur et les Services d'expansion économique de l'Ambassade de France en Corée organisent à Paris le 10 décembre prochain, avec le soutien actif du KOTRA et de la Direction Régionale du Commerce Extérieur d'Ile de France. Pour informations et bulletin d'inscription : CFCE, Aline de Lussy, +33 (0) 140 73 33 45 - aline.delussy@cfce.fr¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤ NOTEZ LE ! Le site web de l'ombudsman du KOTRA a changé ! Le nouveau site web est le : http://www.i-ombudsman.or.kr¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤ S O M M A I R E RELATIONS INTERNATIONALES ET BILATERALESSeoul's French community - a cultural exchange Local hotels marketing beaujolais nouveau Asia After 11 September Asia's Change-makers: A Vision of the Future Asia's Competitive Scorecard Implications of China's Entry into WTO for Domestic Companies South Korea, China, Japan Agree to Create Economic Ministers' Forum China's WTO Entry Is Opportunity, Threat to KoreaPOLITIQUE ECONOMIQUE, MACRO-ECONOMIE ET RESTRUCTURATIONSJP Morgan Warns of Risk for Korean Economy Experts Clash Over Interpretation of Economic Indicators 'Economic Growth to Stand at 2 Pct' IMF Calls for Modest Deficit Budget for 2002 South Korea: Update on the Economy and Business Environment Korean Emerging Market Considered the Best Amid Global Slump, Firms Slow Foreign Investments Korea : an attractive country Quasi-taxes Hinder Attraction of FDI Customs Rules to be Eased for Foreign Investors Government to increase SOC spending next yearSECTEURS ECONOMIQUESManagement, questions interculturelles Risk Management in Korea Foreign Workers helped Gestion : Transparence et efficacité Korea Turns Eye to Attracting Foreign Students Finance, banque et bourse Naissance de la Kookmin bank, le plus important groupe bancaire coréenTechnologies de l'informationROK Enters OECD's Knowledge Economy Top 10 List Services : Publicité Publicité : La télévision fait son cinéma Industrie des composants - électronique Après avoir défié Word, la Corée du Sud résiste à la messagerie instantanée du géant américain Semi-conducteurs : Bienvenue dans ma maison digitale Transport : aériens FAA Delegation to Arrive Sunday to Check Air Safety Measures Environnement Korea's Spending for Pollution Abatement Declines in 2000 Défense Seoul's F-X project may be affected Aéronautique : Rafale ou F15 ?ENTREPRISES COREENNESCorée : le renouveau viendra des PME KDI Calls for Drastic Chaebol Deregulation Samsung, LG Concentrate on Overseas Factories Semi-conducteurs, le coréen Samsung veut devenir le numéro deux mondial Daewoo Sale to GM Possible by Dec. 15ENTREPRISES FRANÇAISESCetelem veut tripler sa clientèle asiatique Renault Samsung respecte son plan de marche- SEOUL'S FRENCH COMMUNITY - A CULTURAL EXCHANGE
French citizens first came to Seoul on business four decades ago, and as French investment in Korea grows - recently surging to become the fourth largest investors behind America, Japan and Germany - so does the French community. Opportunities for cultural exchanges between Koreans and French also grow.
There are now more than 3000 French citizens in Seoul, enough to form a flourishing French village. Called Sorae, and located in Seochol-gu on Seoul's south side, a visitor can easily get here by taking the no. 2 community bus from outside the Gangnam Express bus terminal.
Once seen, it is obviously home to a French community: There are several hundred yards of pavement colored in the broad red, white and blue stripes of the French flag.
Groups of French people walk the street. Shops owned by Koreans, including a bakery and three wine shops, sell French products. One street is named after Paris's famous artists' precinct: Montmartre. Even the signs are in French: on the estate agent's windows, and a road sign warns motorists of a school, "Ecole".
The French school, of course, is a focus of the French community: Expatriate parents naturally look first for a good school; originating from the same lust for education they share with their Korean hosts.
This school is a beautiful, new, five story landmark. It isn't blatantly French (though instruction is in French and the curriculum is French), but looks symbolically Korean. The black strips on the Korean flag are worked on a huge scale into the school's five-story facade. Standing as a reciprocal acknowledgement of the Korean host community, it reflects Seocheol-gu's acknowledgment of the French presence in the red, white and blue pavement.
The school's facade also features a large glass screen, to encourage French students to look out onto the Korean community that surrounds them. The school's French architect. D. P. Jalicon, acknowledges this. He has said, "the screen symbolizes an exchange with the neighborhood. The life of a foreign community can only be conceived in terms of exchanges with the host country, its population and its traditions."
The message is reinforced in the school principal's office, again with a screen featuring the strips from the Korean flag. The school's principal, Mr. Guillame Cario, readily acknowledges the success of the policy of cultural exchange. He says the school enjoys "peaceful cohabitation between French and Korean Communities." The school, he says, accepts the condition of Korean Educational authorities to enroll a number of Korean students. It is an international school - which has grown rapidly to overcapacity.
The culturally open attitude is reflected by the students, who say they enjoy living in Seoul because Koreans treat them so kindly.
The French school is not the only the place for opportunities for cultural exchange. There is an official French - Korean information center hosted by the Seocheol-gu local government office. Hyeonae Lee, the president of the center and secretary at the French school says, "A lot of work over many years has gone into producing the proud school that stands in the village."
And another Korean woman, Mrs. Kim, is president of another cultural exchange organization: The Circle of French-Koreans. It has 150 members - 15 Koreans - and it organizes Bridge evenings, walking tours around Seoul and coffee breaks to help newly arrived French people adapt to Korean culture. Mrs. Kim says that their group is "Really interesting. Very close. Very intimate." However, since adapting to a new culture takes time and patience, the circle also provides a useful service.
What drives, of course, the need for mutually beneficial cultural exchange is reason the French come to Korea - business. The French Chamber of Commerce helps French business men adapt to Korea. Mrs. Celine Roullet, its new director, recently came to Korea after her husband who accepted a company position here. Mrs. Roullet says that more than 170 French firms operate in Korea, representing every sector of business, including banking, shipping, insurance, banking, plastics and in the building of the new high speed train from Busan to Seoul. She says that French companies bring more to Korea than just luxury goods and high culture, but also expertise in a number of fields.
"Any business man working here has to adapt to the Korean culture. It is unavoidable. In French companies, the boss is a French guy. The workers are Korean. If the boss behaves like a French man, then he can't get anywhere. This is true in the human resources field. They have to adapt," she says.
She adds that the French Chamber of Commerce helps French business people adapt by organizing workshops on Korean culture and business. She is also organizing a workshop to teach Korean people about French culture. Just as in an office, "A good atmosphere is needed to understand each other in business," she says.
Cultural exchanges also make good business sense. French companies, she observes, can also offer employment and career opportunities for Korean men and women. Mrs. Roullet hopes that French Korean trade will grow in the coming years.
Culture, education and business, all go together in the French Korean exchange.
By Paul Langkamp Contributing writer - Source : Korea Times - 2001.11.02 (paul_langkamp@yahoo.com)
- LOCAL HOTELS MARKETING BEAUJOLAIS NOUVEAU
Domestic hotels have begun a special marketing campaign ahead of the release of beaujolais nouveau, a French wine made from the most recent grape harvest, industry sources said yesterday.
Five-star hotels including Hotel Lotte Seoul and Grand Hyatt Seoul have scurried to show special menus using beaujolais nouveau sauce ahead of the release date slated for Nov. 15.
Beaujolais nouveau is made exclusively from grapes harvested in France's Beaujolais Province.
The French wine ships out to all parts of the world at midnight on the third Thursday of each November.
Hotel Lotte Seoul plans to hold a beaujolais nouveau festival at its European-style restaurant Schoenbrunn from Nov. 15 to Dec. 23. During the event, the hotel provides a complimentary glass of the French wine to customers who order one of the special set menus using beaujolais nouveau sauce.
The Grand Hyatt Seoul will offer beaujolais nouveau wine and special dishes with beaujolais nouveau sauce at all its restaurants and lounges from Nov. 14.
Other luxury hotels in Seoul such as the Holiday Inn, the Renaissance and JW Marriott also are heavily marketing activities centered on beaujolais nouveau.
Source : Korea Herald - 2001.11.07
- ASIA AFTER 11 SEPTEMBER
Even as the world wages the war on terrorism and aims to bring those responsible for the 11 September attacks on America to justice, efforts must be made to tackle the root causes of terrorism and enduring poverty in developing countries, the panel of experts told participants at the opening session of the World Economic Forum's East Asia Economic Summit 2001. "No part of the world has been untouched" by the tragic events of "9-11," session chair Gordon Campbell, Premier of British Columbia, Canada, and the Summit's Rapporteur, explained. Added Shamshad Ahmad, Permanent Representative of Pakistan to the United Nations, New York: "We have to seriously address the challenge of rooting out the causes of terrorism, injustice and instability wherever they are caused." According to Manuel Araneta Roxas, Secretary of Trade and Industry of the Philippines and Global Leader for Tomorrow 1996, one immediate challenge for the world is to launch a new round of global trade negotiations at the forthcoming World Trade Organization (WTO) ministerial meeting in Doha with an agenda that takes into account the concerns of developing economies.
In his welcoming remarks to participants, Frank Jürgen Richter, Director, Asia, World Economic Forum, said that "we are here to discuss how to rebuild our economies," warning that "the [current] downturn is going to get even deeper." But the global economy may benefit from its underlying strengths and from the boost it will get from China's imminent accession to the WTO. Campbell stressed that the strengths upon which the economies of the Asia-Pacific region were built in the past would remain the basis for their future.
Ahmad noted that Asia has experienced a great deal of economic and political turbulence, including war and terrorism, in the past. The "perennial reality" of the region is its "economic and political vulnerability." The attacks of 9-11, he said, are a "wake-up call, an attack on the world." He added: "The challenge we face is a faceless enemy. It transcends regions, boundaries, faiths and cultures. This is an invisible enemy we need to confront together." Ahmad reckoned that the biggest impact of 9-11 is the heightened level of fear across the world. He expressed the hope that the military operations in Afghanistan would end soon because a prolonged campaign would have "phenomenal consequences" for Pakistan, particularly on the economy and the inflow of refugees from across the border.
For his part, Roxas said that because the Philippines has had previous experience dealing with terrorism, his government has been a strong supporter of the US-led coalition. The main challenge facing the world, Roxas argued, is to keep the conduct of world affairs on track. He called on members of the WTO to work together to forge a broad-based agenda for the launch of what he hopes will be a new "development" round of trade talks.
The events of 11 September could aggravate divisions between states in Asia and within countries, said Simon S. C. Tay, Associate Professor, National University of Singapore and Global Leader for Tomorrow 2000. Not all nations will be able to contribute to the US-led war on terrorism to the same degree, as governments in the region have different views on the American security presence in East Asia. Some countries in South-East Asia have Muslim majorities or large Muslim minority communities and must therefore be sensitive to them. In addition, 9-11 has changed the dynamics of regional geopolitical relationships such as between Japan and China. Finally, Tay warned that the economic impact of the terrorist attacks on already weak East Asian economies could threaten regional stability. He hoped that China's economy and Japan's, if it can rebound, would help lead the rest of the region back to growth. Tay also called for a strengthening of the East Asian security infrastructure under the ASEAN Regional Forum. The toughest challenge is "building a sustainable peace that would undercut the roots of anger."
Finally, Jusuf Wanandi, Member of the Board of Trustees and Senior Fellow, Centre for Strategic and International Studies (CSIS), Jakarta, told participants that 9-11 had ushered in a new post-Cold War era where the focus will be on the fight against terrorism. The attacks were a major blow on the US psyche and body politic -- "worse than Pearl Harbour." We are already beginning to see the new contours of the geopolitical landscape, as Russia and China seek to put their relationships with the US on a more even keel. Pakistan's strategic importance has been significantly heightened. There must be a regional response to terrorism, but each country can only do what it is able to do, given domestic constraints. Above all, "the root causes [of extremism] cannot be forgotten." And it is important for governments to inform and educate their citizens on the reasons why terrorism must be fought. "The scourge of terrorism has to be dealt with because you need the sense of security to get the economy back on track again."
During the discussion, Ahmad reiterated his call for a comprehensive examination of the roots of instability, poverty and extremism in all areas of the world, particularly in troubled areas such as the Middle East, South Asia and Africa. He said that a major conference will take place in Mexico next year that will discuss how to establish a new development paradigm based on fair trade and equitable partnerships between developing countries and developed ones. Roxas said that it is important for the mainstream to assert itself to prevent radicals and extremists from taking charge.
Source : East Asia Economic Summit 2001 29.10.2001
- ASIA'S CHANGE-MAKERS: A VISION OF THE FUTURE
As East Asia faces the global economic downturn and the impact of the 11 September terrorist attacks on the US, the region can rely on its proven resilience but must move ahead with necessary reforms, fully support a new round of global trade talks and promote greater awareness of the concerns of developing economies. This was the consensus reached by participants at the closing session. While the 800 business, government, media and academic leaders at the Summit had come together "during a time of distinct economic uncertainty, there is a distinct light at the end of the tunnel," said Jaime Augusto Zobel de Ayala II, President and Chief Executive Officer, Ayala Corporation, Philippines, and a Summit Co-Chair. "Globalization is here to stay. There are tensions, but it's a movement that is very difficult to stop. The reality is that there has to be a development agenda as well. And [building] regional growth and prosperity has to be a cooperative effort." Added fellow Summit Co-Chair Nobuyuki Idei, Chairman and Chief Executive Officer, Sony Corporation, Japan: "With the world economy going down, Asia needs some consolidated thinking about the future -- what we can do by joining forces."
But East Asian economies still have a lot to do to put their respective houses in order, warned Ronnie C. Chan, Chairman, Hang Lung Development Company, Hong Kong SAR, and another Summit Co-Chair. "Asian leaders are still in a bit of self-denial," he reckoned. "The Asian crisis isn't really over. We need to ask ourselves whether we are addressing the fundamental and structural issues and problems that caused the crisis to begin with. My worry is that while the longer-term structural issues aren't being addressed, now all these immediate problems -- the global slowdown, September 11 -- have come. This will only push back the agenda for reform." It is up to business leaders to take the lead in keeping up the pressure for reforms, Summit Rapporteur Gordon Campbell, Premier of the Canadian province of British Columbia, stressed. "The velocity of change must be relentless." He concluded: "September 11 has created a new urgency to move forward with trade liberalization and the next round of [global trade talks under the] World Trade Organization. It's critical that we hear the message of this Summit: We are all for the eradication of terrorism, but if we are going to do it, it is important for us to eliminate the sense of hopelessness that is felt in some communities. We have to understand the importance of a development agenda for the WTO. We have to invest in education. And we have to start building the social infrastructure that we need."
Reviewing the Summit, Claude Smadja, Principal Adviser, World Economic Forum, noted that the mood at the gathering had been better than he expected. He attributed this not to complacency, but to a sense of realism. It says something about the "resilience of the region and is testimony to what is happening in this part of the world: the region is coming of age." He argued that while it is true that many structural deficiencies still have to be addressed, "a lot has been done and is going on," particularly in the corporate and banking sectors. The issue of corporate governance is being discussed, while companies and governments are assessing the implications of China's emergence and Japan's stagnancy. "Gradually, this part of the world is trying to get a vision of its future -- a much clearer, assertive and pronounced sense of its destiny," Smadja declared. "There is a growing process of integration that we should not underestimate [and] that will have tremendous implications for the way we will be doing business in this region over the next two to five years."
Earlier, panellists at the final plenary session discussed the political, economic and social changes under way in East Asia and offered their respective visions for the region's future. Session Chair Ronnie Chan described the panel members as "change-makers" who are at the forefront of efforts to reshape East Asia. But Chan questioned whether it is possible to come up with a "unified vision" of Asia.
Hishammuddin Tun Hussein, Minister of Youth and Sports of Malaysia, and a Global Leader for Tomorrow 1998, focused on the impact of the 11 September attacks. He noted that while young Muslim leaders such as himself were horrified by the tragedy, there is now increasing concern about the US response, specifically the military action on Afghanistan. He warned that Washington's approach could end up dividing the world, rather than uniting it. Hishammuddin emphasized the need "to avoid a clash of civilizations." He proposed that the world should take a look at the success Malaysia has had in building a tolerant, multiethnic society, where "our diversity is our greatest strength." He added: "Malaysia is a model Islamic nation. It has much to offer the international business community, as multiculturalism becomes the model."
Supachai Chearavanont, President and Chief Executive Officer, Telecom Asia, Thailand, stressed the importance for East Asia to develop and integrate its markets. Economies must invest in education and other "economic infrastructure" to raise their competitiveness. Social and economic gaps must be addressed. Business and government leaders, he said, must recognize the interdependence among countries and between the public and private sectors. Asia, he concluded, can learn from the European Union how to build a cooperative community. Meanwhile, Marjorie Yang, Chairman, Esquel Group of Companies, Hong Kong SAR, focused on the prospects for Asia to grow. The key is for economies and companies to become more competitive --- by applying better governance and management and adopting technology -- but at the same time ensuring that citizens and employees become more wealthy and benefit from the fruits of greater productivity. Yang reported that her biggest challenge as a CEO is to get her knowledgeable and well-educated staff to speak their minds. She then argued that investment in energy and water conservation and environmental protection would pay dividends in the long run.
Panellist Taro Kono, Member of the House of Representatives of Japan and a fourth-generation Japanese politician, discussed the restructuring of his country's political system. Kono described the limitations faced by young reformers, complaining that "we don't have parliamentary democracy." He described the lack of accountability in the Japanese government and the problem of "non-performing politicians." Said Kono: "We need to reshuffle MPs according to policy lines." Pro-reform politicians of his generation, he concluded, "can't wait for the torch to be passed; we have to grab it -- we have things to do."
For his part, Kim Min-Seok, Member of the National Assembly, Republic of Korea, and a Global Leader for Tomorrow 2000, took up the issue of regional security. He called for support for the South Korean government's "sunshine policy" of rapprochement with the North. He also warned that the US-led war in Afghanistan should end soon, noting that "US policy in the Middle East is the real cause of terrorism." Asian leaders "may have to play some role in ending the war," he suggested.
In his role as a veteran businessman with global experience, Victor K. Fung, Chairman, Li & Fung Group, Hong Kong SAR, outlined key trends which he sees emerging in East Asia. One is the emergence of the Chinese economy, particularly with Beijing's imminent entry into the WTO. Fung predicted that the real impact of China's WTO accession would not become evident for another three to five years. Chinese exports would become highly competitive in the world market. In the coming years, he added, Japan is likely to complete its restructuring and re-emerge as a major economic power. How Japan and China interact will be important to watch. Fung was reluctant to forecast the longer-term impact of the 11 September attacks. Much will depend, he explained, on whether the US continues to cultivate globalized relationships or decides to withdraw. As for companies, he argued that cost wouldn't be the only key to success. Businesses that are flexible and can move quickly will be highly competitive. Fung reckoned that Asia's economy would still be export-led for the foreseeable future. But the region is seriously moving towards a higher level of regional cooperation and integration. He noted efforts by South-East Asia to come together with the larger North-East Asian economies under the "ASEAN-Plus-Three" format. While China has in recent years become a magnet for foreign direct investment, it will eventually become a source of direct investment for the region and the world, he concluded. Source : East Asia Economic Summit 2001 31.10.2001
- ASIA'S COMPETITIVE SCORECARD
With China's emergence as a global economic power, East Asian economies should forge closer regional networks and cooperative arrangements to boost their competitiveness. That was the message delivered by the panel of experts as they discussed the performance of East Asia in The Global Competitiveness Report 2001, the recently released study produced by the Forum in partnership with Harvard University. "When we talk about globalization and regional frameworks, we need to think of competitiveness in terms of regions too," said Zainal Abidin bin Sulong, Chairman, Malaysian Industrial Development Authority (MIDA). As it did last year, Singapore leads Asia's economies in the Report rankings, according to both the Growth Competitiveness Index (GCI), which measures the factors that contribute to the future growth of an economy, and the Current Competitiveness Index (CCI), which measures the factors that underpin high current productivity and economic performance. Singapore is No. 4 in the GCI ranking and No. 10 on the CCI list. Finland and the US are No. 1 and No. 2, respectively, on both tables.
Session chair Peter Cornelius, Director, Global Competitiveness Programme, World Economic Forum, told participants that the shock of the 11 September terrorist attacks had worsened the global economic downturn which was already under way. As the world faces the storm, he said, the key is to maintain and expand international economic networks and linkages to ensure that economies work efficiently. Wing Thye Woo, Professor, University of California, USA, argued that as a result of 11 September, Asia has suffered a "major loss" of competitiveness due to the resulting higher costs for America to do business with the region. US companies will refocus outsourcing from East Asia to geographically closer economies such as Mexico, Canada, the Caribbean and Central America. Woo argued that East Asia must now form deeper trade and investment links among themselves "to create an independent growth pole." Japan and China, he suggested, could strengthen their economic links.
John Chen, Chairman, Chief Executive Officer and President, Sybase, USA, outlined how his company assesses an economy's competitiveness. There are three factors to take into account: the size and strength of the "market of demand," the level of investment in education and the operating environment for businesses. On the surface, East Asia ranks well in each area, but Chen noted that on deeper examination, the region is not really as competitive as it may first seem. "Asia would benefit from long-term cooperation with its neighbours," he concluded. In doing so, the region will limit political risk and enhance its competitive advantages.
Under pressure from the emergence of China, economies in East Asia must struggle with the challenge of reorganizing and restructuring their workforce and labour market to enable them to reach "the next stage of evolution," reckoned Kyung H. Yoon, Area Managing Partner, Heidrick & Struggles, Hong Kong SAR. Having a human resource pool that is adaptable would be a critical advantage, she added. Masato Akazawa, Executive Vice-President, Japan External Trade Organization (JETRO), explained how Japan is engaged in its own crucial programme of structural reform that will enable it eventually to achieve higher growth rates. He insisted that Japan's fundamentals remain sound and that a major part of the problem the country faces is psychological.
Even high-ranking Singapore is facing a tough battle to maintain its competitiveness. Ko Kheng-Hwa, Managing Director, Singapore Economic Development Board, outlined the factors that have helped his country perform well in the competitiveness rankings. These include: political stability and good governance, investment in world-class infrastructure, heavy investment in human capital, the implementation of measures to encourage entrepreneurship, concerted efforts to develop new high-growth industries such as biomedical sciences, and the promotion of global linkages such as the ASEAN Free Trade Agreement and Singapore's bilateral free trade arrangements. The aim is to create "a second home for business, not just a hotel," Ko explained.
Source : East Asia Economic Summit 2001 30.10.2001
- IMPLICATIONS OF CHINA'S ENTRY INTO WTO FOR DOMESTIC COMPANIES
After 15 years of negotiation, trade ministers approved China's accession to the World Trade Organization (WTO) on November 10th. The country's membership in the WTO is expected to accelerate the Chinese government's current efforts toward reform and market opening. Successful efforts in this regard will lead to a surge in the flow of developed technologies and capital into China, enhancing the economy.
China will also benefit in other ways, with its status in the global economy and politics rising as the nation emerges as part of a viable alternative to the current U.S.-led world order. In the future, China may well play a leading role in building a new international economic and political order, rather than simply serving as a world production base and a market with huge growth potential.
In reaction to these recent events, Korean companies' hope for the wider opening of the huge Chinese market is rising, although concerns are growing over the prospect of far more intense competition with Chinese exporters in the future.
Prospects for China's entry
With its membership in the WTO, China is supposed to cut tariffs and eliminate non-tariff barriers. Significant progress has already been made in this regard as tariffs have been gradually cut from 40 percent or over in the early 1990s to average 15.3 percent in 2001. In addition, the average tariff rate on manufactured goods will be cut to 9.4 percent by 2005 in accordance with the market opening schedule. Specifically, tariffs on semiconductors, computers and computer equipment, telecommunications and other cutting-edge technological products will be completely eliminated by 2005, from their current average of 13.3 percent. Non-tariff barriers, such as import regulations and subsidies to some industries, will be completely removed by 2005.
The reduction of such trade barriers will likely lead to an additional $12-15 billion in imports for China. Consequently, China's trading volume is expected to exceed $700 billion in 2005.
With its entry into the WTO, China is also supposed to open its markets substantially further. Therefore, foreign companies' advancement into China is anticipated to increase rapidly, especially in the high-tech, service, financial and retail industries. As a result of this greater advancement by foreign companies, the Chinese market will experience a rise in competitiveness as the nation's economic structure naturally becomes more streamlined and competitive. Thus, Chinese companies, which currently are not up to international standards, will have to enhance their competitiveness or close down. But these hard realities will strengthen the fundamentals and overall competitiveness of the Chinese economy in the long-run. Indeed, the Chinese Academy of Social Sciences, a state-owned research institute, predicts that the annual GDP growth rate of the Chinese economy will grow by 0.5-0.6 percentage point due to the enhancement of competitiveness. Yet on the flip side, it should be noted there is potential for social and economic upheaval in the short-term, due to the likely increase in corporate bankruptcies and the subsequent rise in unemployment.
Impacts on Korean economy
There is a high likelihood that such changes in the Chinese economy will become a "mixed blessing" for the Korean economy. On the bright side, China's accession to the WTO will provide new export and business opportunities for many Korean firms, owing to the freer trading and much better investing environment in China. However, on the downside, their competition with Chinese exporters will become far more harsh in international markets and, perhaps, even in Korea.
There are concerns that foreign companies may transfer production facilities to China, as business conditions in China are improving. Then, Korean companies will face severer competition in the Chinese market, despite its increase in size, with global companies producing better goods in China. This also means that, as more and more foreign investment into Asia is directed to China, Korea will receive less foreign investment, an unfavorable situation. Furthermore, as Chinese products' competitiveness strengthens, many Korean-manufactured products will be driven out of major export markets such as the U.S. Lastly, Korea's agriculture industry is expected to be badly hit in the domestic market by cheaper agricultural imports from China, since the Korean government will not be able to do anything to curb those cheaper imports with China being a member of the WTO.
Taking these factors into consideration, while the Korean economy may benefit in the short term due to increased exports and business opportunities, domestic firms will face a potentially huge threat in world markets in the long run. As a result, many weak Korean companies, and possibly even some weak industries, will not survive, however hard they try.
Suggestions for Korean firms
China's entry into the WTO is, in some ways, a momentous opportunity for the nation's economy. But it also presents enormous danger if Korean companies fail to adopt appropriate measures in response. Accordingly, the Korean economy faces a crucial inflection point in its development with China's WTO membership of either taking-off to a higher level of competitiveness or deteriorating. The outcome will depend on the Korean corporate sector's response.
Perhaps the most important step for domestic companies is to develop goods that excel in both quality and technology to compete with the low labor costs of the Chinese producers, as there will be an increasingly great deal of overlap between both countries' industries. At the same time, they need to set up a new China strategy using Chinese firms as good business partners. This kind of "living together with the potential enemy" tactic can work to Korean firms' advantage if well laid out. For instance, they may produce low value-added products in China for the domestic market, and vice versa, export high value-added products made in Korea to China. In this way, they may discover "win-win" strategies with their Chinese counterparts.
To conclude, a new era is dawning for domestic companies with China's entry into the WTO. They must see both the potential benefits and dangers now, in the dawn's early light, and prepare accordingly, since the bright sunlight will soon demark the winners and losers.
The writer is a researcher at Samsung Economic Research Institute. - Ed.
Source by : Korea Herald (2001. 11. 19)
- SOUTH KOREA, CHINA, JAPAN AGREE TO CREATE ECONOMIC MINISTERS' FORUM BANDAR SERI BEGAWAN - Leaders of South Korea, China and Japan agreed Monday to establish a trilateral forum of economic ministers in an effort to strengthen economic cooperation, Seoul officials said.
South Korean President Kim Dae-jung met Chinese Prime Minister Zhu Rongji and Japanese Prime Minister Junichiro Koizumi on the sidelines of the two-day "ASEAN plus Three" summit that opened here.
They also agreed that the three countries hold their foreign ministers' group meeting in order to discuss follow-up measures on agreements made in their summit, the officials said.
"The three leaders agreed to open economic ministers' talks shortly, which would be on a regular basis, to seek cooperation in trade and investment and forge closer economic relations," said presidential spokesman Oh Hong-keun.
Oh said that the high-level economic forum, the first of its kind, will include finance ministers and trade ministers from the three Northeast Asian countries.
The trade ministers will discuss ways to expedite trade liberalization, prevent trade disputes and take a joint stand on multilateral trade issues, such as China's entry into the World Trade Organization (WTO), said an economic aide to Kim.
The financial ministers will tackle, among other things, cooperation in international financial matters and strengthen coordination on major macro-economic policies, the aide said.
In addition to creating the government-level forum, the three leaders agreed to hold an annual three-way business forum to be attended by leaders of economic organizations and businessmen, the official said.
President Kim proposed the forum, which he said would boost investment and increase exchanges of businessmen. Zhu and Koizumi endorsed the proposal, the official said.
The three leaders concurred to promote joint environmental projects and develop cooperative projects in the information and technology sector, the official said.
In addition, they shared the need for police authorities of their countries to cooperate in coping with threats of terrorism, drug trafficking and organized crime within the region.
The tripartite summit was followed by bilateral talks between South Korean President Kim and Chinese Prime Minister Zhu, during which the two leaders discussed bilateral economic cooperation, North Korea and other issues of mutual concern.
"President Kim took a positive note of the recent progress in industrial sectors between the two countries, including the mobile service, finance and insurance industries," spokesman Oh said.
Zhu reaffirmed that China will continue playing a constructive role in helping relations between South and North Korea, Oh said.
The two leaders agreed that members of the international community should strengthen policy coordination for an early recovery of the ailing global economy and participate in a global anti-terrorism campaign, the spokesman said.
The South Korean leader later held separate talks with Malaysian Prime Minister Mahathir Mohamad and Thai Prime Minister Thaksin Shinawatra.
Kim discussed with Mahathir ways to develop East Asian nations into a regional community and other issues of mutual concern, Kim's aides said.
In talks with Thaksin, Kim asked Thailand to provide support for South Korea's bid to host the 2010 international exposition in Yeosu, South Jeolla Province, the aides said.
Kim will return home Tuesday after participating in a Korea-ASEAN (Association of Southeast Asian Nations) summit.
Source by: Korea Herald (2001.11.06)
- CHINA'S WTO ENTRY IS OPPORTUNITY, THREAT TO KOREA
China's almost certain formal admission to the World Trade Organization (WTO) will be both an opportunity for and a threat to Korea, according to the Ministry of Commerce, Industry and Energy (MOCIE) yesterday. MOCIE said that a China's WTO membership will be an opportunity for Korea as more and more domestic companies are able to make inroads into the world's most populous market.
Specifically, MOCIE expects China to phase out non-tariff barriers and cutting tariffs on a range of products following its accession to WTO. That will significantly boost Korea's textile, electronics and electric appliances, autos, plastics and machinery exports to China, it predicted.
Further, opening up the service industry and relaxing foreign ownership restrictions on a number of important capital- and technology-oriented service industries, including distribution, telecommunication and financial and professional services, would open wide the floodgates for Korean firms going into the mainland market.
As WTO regulations would amicably settle trade disputes between the two North Asian countries, as seen in the Sino-Korea garlic dispute earlier this year, it predicted that the chance of Korea being economically handicapped would decrease to some extent.
Moreover, as an official member of WTO, China could speak for developing countries' interests during multilateral trade negotiations, ultimately enhancing Korea's overall foreign trade environment.
On the other hand, it pointed out that China's WTO entry would trigger fierce competition between China and Korea in third markets, divert foreign investment away from Korea and bring about trade conflicts within the WTO system.
The rapid development of Chinese manufacturing would place Korea in a much more intense, cutthroat global situation since a growing number of leading global firms will advance into China and the manufacturing of local brands will increase significantly. China's unrivaled competitive margin may seriously chip away at the Korean manufacturing industry's profitability.
In addition, multinational firms that have already established themselves in China could transfer a considerable sum of their high-tech technical know-how to Chinese enterprises by establishing joint ventures. This possibly could cause Korea and China to fiercely bid against each other in various industrial sectors such as petrochemicals, steel, shipbuilding, autos and information technology.
MOCIE also said it could not completely rule out the possibility that foreign direct investment (FDI) into Korea would comparatively diminish if a majority of foreign investors pile into China to take part in their lucrative infrastructure projects.
The ministry proposed that though the intensity of trade conflicts between the countries could wane with China's entry into the WTO, there is the possibility that China would affirmatively make use of the WTO's antidumping suit and emergency import ban measures against Korea.
Meanwhile, regarding Taiwan's WTO admission, MOCIE forecast that it would bring a positive influence in eliminating current obstacles that restrict economic exchanges between Korea and Taiwan, which could increase auto and electronic exports to Taiwan.
" The central government and the public have to draw out a thorough and systematic strategy on a long-term basis to maximize the opportunities arising from China's entry into the WTO and minimize threat factors,'' said MOCIE.
Source by : The Korean Herald (2001.11.09)
- JP MORGAN WARNS OF RISK FOR KOREAN ECONOMY
Despite the better-than-expected performance during the July-September period, the Korean economy will be vulnerable to adverse conditions in the coming months, as several temporary factors flattered the underlying activity trend in the third quarter while the external environment has worsened further, JP Morgan Chase said in a report.
Entering the third quarter, Korea displayed more signs of improvement. Industrial output advanced for two straight months, reversing its second quarter contraction. Demand conditions also became more favorable, despite all the anecdotal evidence of temporary disruption to economic activity, JP Morgan said.
Even the tradable sectors improved in August and September, despite the shaky external environment.
However, the investment bank said many Korean producers heightened their production schedules ahead of the Chuseok holidays, the effect of which is not fully captured by current seasonal adjustment calculations. For example, the holidays came in September last year, boosting August industrial production 3.2 percent month-on-month, but that was followed by a 4.1 percent decline in September, it said.
Accordingly, the output gain in September this year is likely at the expense of October's. Also, typhoons often reduce business days during the summer, but they occurred less frequently this year than usual.
JP Morgan went on to say that industrial production in August and September benefited insofar as global manufacturing began to shrink less rapidly from mid-summer through mid-September. More recently, though, global manufacturing seems to have come under renewed downward pressure, because households are, or are feared to be, cutting spending, the investment bank said.
With external demand not yet past its weakest point, Korea's third quarter activity gain was minuscule compared with that of 1998, when Korea's recovery almost coincided with the trough in global manufacturing production, it said.
Source by: Korea Herald (2001.11.14)
- EXPERTS CLASH OVER INTERPRETATION OF ECONOMIC INDICATORS
By Lee Joon-seung - Yonhap News
Mixed indicators related to the general condition of the Korean economy has caused experts to disagree on how to view the country's current health and future growth prospects.
Government officials, economists and businessmen have been split on how to view and interpret the countless figures and statistics released by government agencies and private think tanks.
On the one side, there are those who believe that despite the worldwide slump and the shock from the terrorist attacks on the United States, domestic conditions are stabilizing to the point that an economic rebound is possible, while opponents believe that recovery in the short term is unlikely, and that Korean businesses should do more to cut excesses and enhance competitiveness to stay afloat.
The release of industrial output figures for September by the National Statistical Office (NSO) showed a 5.1 percent hike from the same period last year, and a growth figure in the retail and wholesale sectors of 3.7 percent for the third quarter. This has provided ammunition for those clinging to the position that the economy was bottoming out.
"The decline in investment has eased from minus 19.4 percent in August to minus 6.1 percent in September, while inventory levels have fallen from 14.7 percent to 11.3 percent in the same period," said Lee Youn-won, an economic analyst for Daewoo Securities.
He added that, notwithstanding the slight dip in private consumption in mid-September following the terrorist attacks on the U.S., spending levels have remained solid, checking further economic weakening.
The NSO said that shipments of domestic consumer goods hit 10.4 percent in the third quarter, compared to an estimated yearly growth rate of 6.4 percent. Such healthy figures are important since the domestic consumer market accounted for 84.5 percent of the GDP last year.
Lee also said that although investment levels and exports remained in negative territory, they have been improving gradually.
Pundits of this positive view have further cited that although the export tally was far from encouraging, it was still better than figures posted by Korea's trading rivals. They attributed this to Korean strength in key consumption categories like communications equipment and automobiles.
Another indicator being viewed as conducive to optimism is the number of companies setting up operations in large cities. September's figure totaled 3,441, a 30.8 percent jump year-on-year.
There was also increases in manufacturing and transportation businesses indicating that new firms were not just small eateries and convenience stores started by people who have recently lost their jobs.
The unemployment rate for July to September was recorded at 3.3 percent and the inflation rate of 3.6 percent year-on-year for last month have also contributed to the optimism.
"The fact that industrial output and some economic indicators have turned around is indicative of the economy growing stronger," said Kwon Soon-woo of the Samsung Economic Research Institute (SERI). He then pointed out that the construction sector was showing signs of healthy growth that could fuel long term growth.
On the other hand, pessimists stress that seasonal factors have contributed to the outbreak of good news, and claim that international conditions do not favor a genuine recovery as yet.
Lim Ji-won, a researcher for JP Morgan Chase & Co, said that although there were some bright patches beginning to emerge, it was unlikely that a turnaround could be expected in the near future.
She noted that domestic demand had been able to sustain the economy since early this year, but that forward-looking indexes have been declining for some months now.
The business survey index (BSI) carried out on the country's 600 largest firms by the Federation of Korean Industries (FKI) showed that confidence in the economy for the near future was at levels not seen since earlier this year.
The JP Morgan economic expert said that exports were also a problem because there was a realistic possibility that consumer spending in countries like the United States will stagnate due to the war in Afghanistan.
"This could be a real problem because it has been Korea's exports of consumption goods that have done much to offset the sluggish sales of information technology products," she said.
Others have said that one of the reasons why industrial output for September improved was because the Chusok (Korean Thanksgiving) fell in October this year and that, as a result, there were at least two more working days in that month. They also attributed the near 20 percent hike in consumption to the usual spending spree associated with the holidays.
An official at the NSO was more direct and said that some of the surges related to the economy in recent months were the result of "irregular" conditions that might not be able to influence figures in the fourth quarter.
He said that internal consumption, shipments and factory operational rates could fall off.
Another weakness is the falling off of exports for the eighth consecutive month in October. Critics said that the 20 percent decline in export volume last month not only meant an immediate drop in profits for Korean companies, but also represented fears of economic recession in major trading partners were justified.
The Ministry of Commerce, Industry and Energy said that exports to the United States, the European Union and Japan fell by 32.4, 33 and 26.6 percent, respectively.
Because Korea produces more products than its citizens can consume, exports has always played a vital role in the country's growth.
The only positive sign related to macroeconomics they say can be found in the inflation rate that has tapered off in the second half of this year.
Lastly, labor and civic organizations have attacked what they view as distortions in the country's unemployment figures. They said that the only reason why only 3.3 percent of the eligible workforce was unemployed was because so many had given up trying to find jobs or landed temporary positions that pay less than what regular employees earn.
"The temporary workforce has grown to over 50 percent in certain industries," stressed Lee Woo-jin of the Korea Women's Association United.
She also cited a report by the International Labor Organization (ILO) that says the unemployment rate for Koreans aged 15-24 years old topped 12 percent.
Supporting the cautious view, Deputy Prime Minster Jin Nyum said last week that it was premature to say Korea was out of the woods, adding that the country should watch developments for at least three months to know for sure if some sort of recovery was being made.
Despite positive signs beginning to appear on the horizon, mainstream experts caution against euphoria, especially with so many variables beyond Korea's control affecting the world market.
They also advise people and businesses to use the present time to strengthen competitiveness in the international arena in order to better cope with the changing times. Source : Korea Times - 5/11/2001
- 'ECONOMIC GROWTH TO STAND AT 2 PCT'
The sluggish world economy has forced Korea to lower its economic growth forecast for this year to the 2 percent level, government ministers said yesterday.
The forecast is much lower than the 4-5 percent growth figure forwarded by the government in June.
In a meeting of the economic policy coordination panel chaired by Deputy Prime Minister Jin Nyum, government officials also said that third quarter growth was estimated at around 1 percent.
However, they said that certain leading indexes in September and expectations of a world economy recovery next year meant that the economy could rise 5 percent by end of 2002.
Officials added that they have begun to take action to ease a broad range of corporate regulations such as the discontinuation of designation of the country's 30 largest business groups, as well as make a concerted effort to improve the domestic investment environment for foreign capital.
"A joint private and government working group will be set up to review existing corporate regulation, and based on the findings a complete list of reforms measures will be compiled by the end of the month," said a government participant to the meeting.
He said easing regulations on businesses practices of the country's business groups would be included in the measures.
Chaebol firms have held a stance that the government should lift the regulation preventing them from directing more than 25 percent of net assets into subsidiaries or other companies as it places restrictions on their efforts to tap into lucrative businesses.
They have also called on the government to permit them to play a greater role in the financial sector.
In addition, economic ministers said that a pan-government effort will be made to entice outside investment.
Officials also said that 40 billion won ($30.8 million) from the first supplementary budget would be appropriated to help companies hire 10,000 information technology (IT) interns, and train 6,000 IT experts in the fourth quarter.
Related to this, a specialized vocational training company is being considered to increase the role of the private sector in coming up with mid and long term job security programs.
Meanwhile, the Ministry of Commerce, Industry and Energy (MOCIE) said that comprehensive efforts will be made to enhance the competitiveness of the country's franchise chain sector.
MOCIE said that they aim to create at least 10,000 franchised shops by 2004, and stressed that regardless of what types of businesses these shops are engaged in, the government would grant venture startup status for those that have management know-how.
Intellectual property generating businesses would also be eligible to receive the favorable designation. Under existing regulations, startup ventures receive tax and financial benefits.
They also said that chains recognized as having excelled in upgrading their operations would receive state subsidies amounting to 50 percent of the money they invested in business systems standardization and integration.
Besides this, the ministry said that it will establish the so-called Korea Consulting Personnel Bank that would recruit 10,000 former government administrators, corporate heads and chief executive officers as consultants.
Government observers said that in order for these policies to be implemented effort must be made to enhance cooperation and dialogue between the ruling and opposition parties as well as the related ministries.
Source by: Korea Times (2001.11.05)
- IMF CALLS FOR MODEST DEFICIT BUDGET FOR 2002
The International Monetary Fund (IMF) Tuesday called for South Korea to spend more to help stimulate its sagging economy and accept a "modest deficit budget" in 2002.
"The balanced budget is not a very good way to run public budget policy whenever growth outlook is weak because that could depress the economy even more," said Ajai Chopra, assistant director for the IMF's Asia and Pacific Department.
In an interview with Yonhap News Agency, the IMF official recommended that Seoul adopt "expansionary macroeconomic policies" to help boost domestic spending, noting that South Korea has the "scope to use expansionary policies".
Chopra, now in Seoul for an annual policy consultation meeting with Korean officials and representatives of financial institutions, expressed support for the move by the Seoul government to increase budget spending next year.
"We think the South Korean government's position to revise next year's budget is entirely appropriate," he said, dismissing concerns over the debt created by the infusion of public funds into ailing firms in the process of financial and corporate restructuring.
"Korea's debt is low compared with many other countries," he said.
"Korea has a lot of credibility in the management of state budgets because its budget deficit in 1998 returned to surplus very quickly in 2000, three years in advance of its target year of 2003," Chopra said.
Chopra also said that the decision by the Seoul government to roll over the public funds maturing in 2002 is "quite natural".
The IMF official warned that the recollection of public funds poured into ailing firms should not be the "sole purpose" behind privatization of financial institutions, saying, "It would be nice to recollect all of them, but it is not realistic."
Chopra acknowledged a "global market condition in which the appetite for mergers and acquisitions diminished substantially."
"The important thing, however, is to start the privatization process," Chopra said, hoping that the government proceeds with the privatization of Seoul Bank and other banks as scheduled.
Chopra said the government's policy of regulating chaebols has helped "prevent over-expansion of chaebols, promote spin-offs and focus on core businesses".
"In the long run, such direct control should not be needed to regulate chaebols," he said. "Rather, the disciplining of chaebols should come from creditors and shareholders."
Chopra hoped that any further improvement in corporate governance, transparency and market mechanisms will eventually "diminish the so-called Korea Discount in which the value of Korean stocks are less than their valuation".
Chopra would not predict the economic forecast for Korea next year, citing "just too much uncertainty".
"But it's quite clear 4.5 percent is out of date because of the global outlook," he said. The IMF made that forecast before the Sept. 11 terror attacks in the United States.
Chopra expected the IMF will make a revised forecast "around the end of this month." "I think the risks are on the downside."
"It is quite striking that Korea is doing quite well compared with regional peers and even industrial countries," he said.
Source by: Korea Times (2001.11.14)
- SOUTH KOREA: UPDATE ON THE ECONOMY AND BUSINESS ENVIRONMENT
Describing the pace of economic reform in his country, Jin Nyum, Deputy Prime Minister and Minister of Finance and Economy of the Republic of Korea, used an analogy straight from the country's once-vaunted and still quite formidable automotive sector: while Korea may not be moving as fast as some would like down the highway of structural change, he said, "at least we are moving forward. We are not moving backward. At least we are moving in the right direction."
The importance of forward movement shouldn't be underestimated. Beginning with the 1997 Asian financial crisis, which triggered a massive bailout of the country's economy by the International Monetary Fund, the country has experienced at least two major shocks: the Internet boom and bust cycle of the year 2000, and the events of 11 September. Nevertheless, Korea should be well positioned to take advantage of improved global economic conditions when they do arrive, Jin Nyum said, because the country has made notable improvements in four key areas of reform: corporate governance, finance, labour and the public sector.
Most important, many of the "business groups" of South Korea, commonly known as chaebols, have been largely broken up or disbanded, he said. "Today half of the business groups that used to exist have left the market or slipped down. You could not imagine this before 1997, when joining a business group was like being admitted to a VIP club for businessmen to be free from oversight and regulation." At the same time, outside directors have been steadily gaining power in some large Korean companies, while minority shareholders have increasingly been making themselves heard in shareholders' meetings.
Jin Nyum said he considers it important that the restructuring of the Korean private sector be driven by market forces rather than rigid government edict. "We are changing the paradigm," he said. "Instead of government-led restructuring, we are relying on market-oriented innovations." Such innovations are changing not just private business, but also the government itself. "It is my conviction that government is for the people, who are, in effect, the 'customers' of government. Any government that cannot identify its customers and satisfy their needs will lose in an election."
One area in which Korea stills need the help of the world is in the area of investment, said Lee Kyung-Tae, President, KIEP-Korea Institute for International Economic Policy, Republic of Korea. "We are inviting foreign investment and cooperating with foreign investors," Lee said. "We are doing our part, while some may think we are moving too slowly we are trying to do our part. But we need the assistance of the business leaders gathered in this room and the economies they represent."
Unfortunately, "today's leading global economies -- Japan, the United States, the European Union -- are in a kind of stalemate," he said. "So we are in an unpredictable environment at the moment." In the absence of significant foreign investment, Korea has been forced to learn self-reliance, said John Sohn Byung-Doo, Vice-Chairman and Chief Executive Officer, Federation of Korean Industries (FKI), Republic of Korea. "Korea undertook the course of economic reform in 1998, and as a result we have achieved recovery in a relatively short period of time."
However, the challenge is more difficult today, Jin Nyum said. "In the past, we have been forced in Korea to put more emphasis, to focus more energy and resources, on the issues of the past and present. This year we are shifting toward a focus on the problems and challenges of the present and future." One piece of the government's strategy has been a focus on the stimulation of domestic demand through a combination of investment in public works projects such as highways, harbours and railroads, a cut in interest rates and a reduction in taxes.
On the subject of North Korea, he called for patience, not pessimism. "We had the most successful meeting between North and South in September," but that meeting was overshadowed by the "changed political environment" in the wake of 11 September.
Source : East Asia Economic Summit 2001 30.10.2001
- KOREAN EMERGING MARKET CONSIDERED THE BEST
The International Monetary Fund (IMF) evaluated Korea as the best emerging market. Specifically, IMF has turned on a "green light" for Korean economy, which has gone through drastic restructuring over the past years. IMF plans to make a public announcement during the annual IMF report board meeting after a careful composite of overall results.
After meeting with related heads of the Ministry of Finance & Economy, Ministry of Commerce, Industry & Energy, Ministry of Planning & Budget, Financial Supervisory Commission, and the Bank of Korea, IMF officials compiled reports to submit to the Korean government and will announce the long waited results at the beginning of this week.
"There will be three major comprehensive evaluations on the Korean economy. First of all, Korea's finance and capital emerging market is housing definitely differentiated growth from other countries," an IMF official said on the 11th.
The IMF officials also pointed out that since the Foreign Exchange Crisis of 1997, Korea has faithfully executed restructuring in the finance and corporate sectors and as a result, although there are still some areas that need further efforts, Korea has produced better outcomes than any other emerging countries. However, regardless of these successes, Korea must lay down more constructive financial policies and adhere to full enforcement efforts. The officials stressed that although Korea's emerging market is differentiated from others, in order to completely utilize this distinction, Korea must make economic policies that will fully support this.
In the case for Korea, although the second fall budget is already well under way, rather than maintaining a balanced budget, the Korean government should consider budget deficits to revive the ailing economy. A budget surplus would surely hinder Korea's recovery. Furthermore, for Korea to buoy its economy core problems like expansion of budget and solid financial policies are crucial factors that must be met, the official stressed. Lastly, an IMF official added that the Korean government must steer away from money & interest rates related policies to more flexible enforcement.
A top IMF official stated, "Korea has been applying monetary policies that are too strict (tight) in the past however, now is the time for the application of flexible enforcement with well-timed money supply to progressively conduce prosperous economy.
Sources provided by: Maeil Economy Daily (2001.11.11)
- AMID GLOBAL SLUMP, FIRMS SLOW FOREIGN INVESTMENTS
Total investment abroad by domestic companies in the third quarter fell 8 percent to $3.52 billion year on year, the Ministry of Finance and Economy said Thursday. The number of individual investments dropped 10 percent, to 1,423.
Amid the global economic downturn, domestic companies are finding it harder to find lucrative investments overseas, the ministry commented, and are focusing on maintaining their local operations.
Despite the overall drop in investments, LG Electronics received approval from the ministry for a $1.5 billion investment in the Netherlands for a liquid crystal display panels and television set plant. LG's investment had a huge impact on the overall decrease in foreign investment figures.
The number of investments undertaken by individuals and small and midsize companies was 1,374, accounting for 96 percent of the total number of investments abroad, and for 26 percent, or $930 million, of the total value of investments.
Source by: JoongAng Ilbo (2001.11.02)
- KOREA : AN ATTRACTIVE COUNTRY
KPMG Consulting has released a report on the attractiveness of Korea for foreign investment. While much necessary improvement remains to be done, the report notes foreign CEOs give Korea good grades and look to do more business here
On Aug. 20th, one of the world's foremost consulting companies, KPMG Consulting, released a report entitled "Foreign Direct Investment in Korea." The report details the Korean foreign investment environment and business conditions, the foreign investment system and incentives for investing companies along with the concerted efforts of the Korean government to attract foreign investment. In its objective multi-faceted analysis of Korean business and the domestic conditions for foreign investment, the report has important implications for Korea at a time when the weighting of foreign investment in national GDP is growing and its impact on domestic industry becomes more intense.
The trend in inbound investment to Korea has recently taken a negative turn. FDI inflow in the first half of the year reached approximately $6.7 billion, an increase of 16.7 percent from the $5.74 billion achieved in the same period of the previous year. However, four monthly investment totals out of six during the January/June 2001 period have been declines on the same months of 2000, casting gloom on the prospects for further FDI.
Waning inbound investment is due mainly to creeping global recession, particularly in the major economies of the United States and Japan as well as a downturn in the Korean economy. Furthermore, the emergence of China as a regional economic power has become a disadvantage to Korea in its efforts to attract foreign investment. Under the slogan "a strong nation through foreign investment," China is making a huge effort to lure foreign investment. It successfully attracted $24.2 billion in foreign capital in the first half of this year alone and is continuing to excite investor interest worldwide.
In July, researcher Yoon-jong Chang of the Korea Institute for Industrial Economics and Trade released his report, "Hitting Five Birds with One Stone: Analysis and Impact of Foreign Investment." In his report, Mr. Chang characterizes the positive impact of foreign direct investment (FDI) as a single stone that hits five birds in regard to boosting production. They include higher employment, greater exports, expansion of technological capability, building foreign currency reserves, plus the promotion of corporate and industrial restructuring. According to his analysis of the impact of FDI on the economy from 1980 to 1999, a 1-percent annual increase in FDI over five consecutive years produced an annual increase of 0.06 percent in gross domestic product (GDP) and personal consumption.
Meanwhile, the same amount of FDI generated increases of 0.21 percent and 0.08 percent in facility investment and construction investment, respectively, over the same period. Employment underwent an average annual increase of 0.02 percent over the five-year period, translating into the hiring of 4,000 new employees every year. Of particular note was that foreign-investing companies increased production by 20 trillion won and hired 51,300 persons from 1997 to 1999. In addition, they boosted exports by 15 percent and the national trade surplus by 20 percent.
The Korean government understood the importance of foreign investment in overcoming the financial crisis. As a result of broad-scale initiatives, investment increased rapidly from the end of 1997 onwards. Total inbound foreign investment on a reported basis at the end of 1997 stood at $6.97 billion, leaped to $8.85 billion in 1998, almost doubled to $15.5 billion by the end of 1999, and maintained momentum in 2000 by amounting to $15.69 billion. Meanwhile, the number of investments has sharply risen, from 1,055 cases in 1997 to 1,399 in 1998, 2,102 in 1999 and 4,140 in 2000.
The Place for Productivity
Recent increases in FDI have been somewhat slower when compared to those of past years. Experts conclude FDI inflows will not improve any time soon considering the current economic situation or external conditions. Accordingly, a consensus is building in government that a new FDI strategy must be forged. It is believed that an important element in such a strategy is the enhancement of the investment environment to ensure that locating companies will have international competitiveness so that Korea can match China as a regional investment platform. To this end, in addition to the massive liberalization policy that has been pursued, the corporate environment must be substantially upgraded. This must entail maintaining a sound macroeconomic policy and systematic stability, stabilizing labor/management relations, and a further relaxing regulations that hinder the course of business. It is current thinking that it is only after this kind of revamping that foreign capital inflows can be expected to be more vigorous.
According to the KPMG report, the Korean foreign investment environment is already strongly attractive to the foreign investment community. Furthermore, on the basis of interviews with several foreign executives, the outlook for future inbound foreign investment is extremely positive. The KPMG report analyzed the attractiveness of Korea for foreign investors across a broad front, from its geopolitical location and resulting market opportunities, to the aggressive policy of liberalization and regulatory reform.
What are the attractions of Korea to foreign investors? The country has ample, highly educated human resources in the form of engineers, technicians, accountants, and marketing personnel who are unmatched in their diligence. Quality labor is a priority requirement for foreign investment in any location. Korea has a fine labor force, the product of its well-organized education system. This is reflected in the fact that over 97 percent of labor force members have vocational training or college-level education.
Korean workers are also known for their diligence. In 1999, the average individual working hours per week of manufacturing labor in Korea stood at 50 hours. This was higher than that of most advanced countries including Japan, with 42.7 hours, the United States with 41.7 hours, and Canada, 38.7 hours. In terms of productivity, Korean workers rank high. The World Competitiveness Yearbook of 2001 published by IMD International placed Korea 24th among 49 countries assessed in terms of GDP generated per worker. This was a higher ranking than most Asian countries other than the highly developed economies of Japan, Singapore and Hong Kong.
Average Working Hours Per Week in Namufacturing Country 1996 1997 1998 1999 Korea 48.4 47.8 46.1 50.0 Japan 43.3 42.7 42.5 42.7 Taiwan 46.3 46.5 45.6 45.9 U.K 41.9 42.0 41.8 - USA 41.6 42.0 41.7 41.7 Canada 38.4 39.3 38.6 38.7 Australia 38.7 38.5 38.6 39.0Source: Ministry Of Labor, Administration Management Division. Labor Force Survery Yearbook, Japan 1999
One of the chief obstacles to attracting foreign investment has been the inflexibility of the labor market. In recognition of this fact, the government legalized layoffs in cases of managerial urgency in February 1998. The use of temporary replacement workers from placement agencies was written into law in July 1998. Also, it has allowed companies to introduce flexible working hours to accommodate fluctuations in demand. In February 2001, the Ministry of Labor announced that the proportion of companies using contract-based employment had grown to 27.1 percent of the national total, and those implementing performance-based remuneration, 21.8 percent. These trends indicate that the seniority-based remuneration system of the past is changing into one oriented toward ability and efficiency.
Prior to 1987, labor/management relations were generally peaceful, with only 300 or so labor disputes being recorded annually. However, during that period of political repression, the democratization movement found an effective means of expression in labor unrest. In consequence, the number of disputes skyrocketed to 3,700 in 1987. With advent of democracy in Korea, the nature of the labor/management relationship has changed from confrontation and conflict to participation and cooperation, with difficulties being resolved by negotiation.
As a result, the annual number of disputes by 1997 had fallen to 78, a substantial decrease from previous years. However, post-crisis labor/management conflict engendered by corporate restructuring and the concomitant layoffs prompted a gradual increase in labor disputes. The number rose to 129 in 1998, 198 in 1999, and 205 in 2000. By cause, 49.6 percent in this period were ascribed to wage demands and 48.8 percent to restructuring-related redundancies.
Ranking of National Information/Communications Infrastructure by Major Country
Country Score(Out Of 10) Ranking (Out Of 60 Countries) 1996-2000 2001-2005 1996-2000 2001-2005 Korea 8.3 10.0 16 1 USA 10.0 10.0 1 1 Japan 9.4 10.0 7 1 Taiwan 8.3 10.0 16 1 Singapore 9.4 9.4 1 4 Hong Kong 8.3 8.9 16 18 China 2.7 4.4 51 44EIU, "World Investment Prospects, "2000
- A Matter of Time
Labor relations within foreign-invested companies have been generally stable. However, disputes in these companies during 2000 increased significantly, quite possibly because of the increase in the number of foreign-invested companies locating in Korea in that year. A contributing factor is the desire by workers to be compensated for suppressing wage demands during the crisis years and to participate fully in the benefits of the recovery. Also important is the lack of understanding by foreign management of Korean labor culture. The disharmony created by the clash between the introduction of foreign ownership into Korean workplaces will likely be resolved substantially in the course of time as the local workforce grows more familiar with Western-style management techniques and overseas executives gain an appreciation of the uniqueness of their host community.
From a historical perspective, the focus of labor/management relations is shifting from the division of company revenues between workers and owners to cooperation and mutual efforts to achieve corporate competitiveness. The present direction of labor/management relations is in accordance with the trend toward globalization and accommodation of global competitive forces, and is likely to continue in the future.
With regard to social overhead capital, Korea has excellent roads, ports and airports, and serves as a transportation hub for the whole of East Asia. Its superb level of infrastructure is reflected not only in areas such as road and railway densities but also in its electricity charges and communication costs, which are among the most competitive in Asia. In particular, the country's information and communications infrastructure is in a class of its own as indicated in "World Investment Prospects" published by the Economist Intelligence Unit (EIU) in 2001. The report indicted that in this field Korea is likely to remain the leading country from 2001 to 2005 among the 60 surveyed. The level of high-speed Internet use is the world's highest, while the Korean high-speed network and its potential are rated the best in the Asia.
According to the KPMG report's analysis of social overhead capital costs of major cities in 1998, Seoul ranked lowest in terms of electricity and marine transportation costs. It also ranked lowest, excluding Shanghai, in terms of air transportation, industrial gas and water costs.
Comparison of SOC Costs of Major Cities (Relative index Seoul=100)
Category Seoul Hong Kong Los Angeles Osaka Shanghai Singapore Electricity 100 124 128 262 123 110 Maritime Transportation 100 106 210 123 110 107 Air Transportation 100 91 116 210 81 140 Industrial Gas 100 396 112 157 67 345 Water 100 189 182 1459 39 264source:KPMG,1998
Korea has developed a well-balanced, internationally competitive industrial structure, producing a range of manufactures from high-tech products to intermediary materials and consumption material products. Such an industrial structure affords foreign investors the opportunity to create greater value through connection with highly efficient Korean industries that enjoy big shares of world markets. The output of the semiconductor industry, for example, ranked third in 2000 on a world scale. In particular, Korea's semicon industry claims 38 percent of the highly competitive world DRAM market. The industry has the advantages of technological advancement, an experienced top-quality labor force, along with leading mass processing/production technology. Major producers Samsung Electronics and Hynix Semiconductors (formerly Hyundai Electronics) are ranked No. 4 and No. 11 among the world's largest semiconductor companies in 2000.
Korea made great strides in the information/communications industry during the 1990s following its designation as a national strategic industry. An aggressive development policy toward the industry resulted in production increasing 5.9-fold from 18 trillion won in 1991 to 107 trillion won in 1999, and its contribution to gross domestic product (GDP) jumped from 7.2 percent in 1991 to 22.2 percent in 1999. In tandem with its growth in the domestic market, the information/communications industry made inroads into the world market, claiming a 2.6 percent share as of the end of 2000.
- Asia's Best Incentives
It is only in the last 20 years that Korea has realized the importance of foreign investment and made efforts to encourage its inflow. Until the 1970s, Korea pursued a growth strategy that relied upon commercial debt plus loans issued by multilateral bodies such as the World Bank. However, the 1980s debt crisis among developing countries pointed to the limits of such a strategy. Thereafter, national policy switched emphasis from dependency on debt financing to actively promoting inbound foreign direct investment. In the 1990s, the focus of policy shifted again to attracting foreign investment in the high-tech field.
The government strove to raise standards of market liberalization to advanced-country level after its entry to the OECD in 1996. In 1998, Korea laid a sound basis for foreign investment in the country by writing the Foreign Investment Promotion Act (FIPA) into law. The Act switched the focus of legislation concerning foreign investment from control and restriction to promotion and support. It broadened the range of industries in which investors could claim tax benefits, allowed intellectual property rights and stocks as investment currency and introduced the Foreign Investment Zone in which locating companies can claim a host of incentives.
A major attraction of locating in Korea for many foreign investors is the tax incentives in the form of reductions and exemptions that the Korean government provides. Foreign investors in a high technology business, industrial-support services, and locating in a Foreign Investment Zone, are 100-percent exempt from corporate taxation for their first seven years in operation and can claim a reduction of 50 percent for the next three. Also, foreign investors are 100-percent exempt from acquisition, registration, property and aggregate land tax, for the first five years and 50-percent exempt for three years thereafter. Together with lease payment exemptions/reductions on publicly owned properties, the range of government incentives are some of the most generous offered in Asia.
To assist foreign investors throughout the entire investment process, the FIPA permitted the establishment of Korea Investment Service Center (KISC) within the Korea Trade and Investment Promotion Agency (KOTRA). KISC effectively concentrates in one location all those elements of government that foreign investors must come into contact with to realize their investment plans. Designed to handle the requests of foreign investors promptly and efficiently, KISC provides comprehensive service from the initial stage of investment consultation in professional fields such as taxation and tariff reduction to incorporation and the like.
KISC also provides such services as plant site selection and on-site support for purchasing, licensing and approval procedures. It will also help out on matters related to day-to-day life for foreign corporate personnel and their families. To assist foreign-invested companies resolve difficulties they incur in doing business in Korea, KOTRA operates the Office of the Investment Ombudsman with its team of trouble-shooting professionals ("home doctors") in the fields of construction, taxation, finance, labor relations, and customs to mention just a few.
The government also allowed the hostile takeover of domestic companies by foreigners. Under separate legislation, it liberalized the capital markets and the foreign ownership of real estate. Foreign-invested companies are now treated on an equal footing with their domestic counterparts. To the chagrin of wholly owned Korean companies, foreign-invested enterprises receive preferential treatment in areas such as tax incentives and site selection and the like. Also, with the exception of cases where a threat is posed to national security, public health and welfare, and environmental preservation, there is no restrictions as to where a foreign-invested company might locate.
According to a survey by the Bank of Korea, companies 50 percent or more foreign-owned performed outstandingly in regard to profitability and financial status. These companies recorded a rate of ordinary operating profit of 8.1 percent on revenue in 1999, a 2.9-percent increase from 5.2 percent in 1998. Their average debt-to-equity ratio declined to 110.45 percent from 194.4 percent at the end of 1998, pointing to steadily strengthening financial structures. Their contribution to domestic business is enormous. In the manufacturing sector, companies at least 50-percent foreign-owned accounted for 18.5 percent of all domestic sales revenues, 21.2 percent of value added, and 9.7 percent of hired personnel in 1999. Foreign-invested companies have performed exponentially in all aspects of business - production, exports and employment - on the basis of an organized and rationale approach to the Korean market and outstanding management.
- A Natural Optimism
The sales performances of certain foreign-invested companies continue to break new records. Revenues of information and communication companies such as Nokia, Motorola, HP, IBM and others including BASF have topped the 1-trillion won mark. These companies also excelled in the field of exports. HP Korea recorded $1.5 billion in exports in 2000 matching a similar feat in 1999. IBM Korea exported $2.5 billion worth of parts in 2000. Nokia TMC, established in the Masan Free Trade Zone as a wholly owned subsidiary of Finnish mobile communication multinational, Nokia, produced $2.4 billion worth of mobile telephone terminals and exported the entire volume in 2000. Exports by Korea Fujitsu soared from 17 billion won in 1999 to 30 billion won in 2000. Foreign-invested companies are poised to emerge as leaders of Korean industry through the synergy of advanced Western-management techniques and high quality Korean labor.
Weakening performance in the U.S., Japanese and European Union economies is impeding the Korean recovery. However, the CEOs of 10 foreign-invested companies that gave interviews to KPMG, including Korea Fuji Xerox, Siemens VDO Automotive and Air Liquide, expressed optimism on the growth potential of the Korean market. They also responded that they will expand their production in, and exports from Korea as the performances of their companies have been entirely satisfactory in spite of the slowed-down economy.
The respondents said that among the negative aspects of the Korean investment environment are labor /management issues and political instability. They emphasized that these are major obstacles to foreign investors. Labor relations appear to be an abiding problem in the eyes of foreign executives. In the report entitled "Awareness of the Domestic Investment Environment" released in July by the Federation of Korean Industries (FKI), some 46 percent of executives at 75 foreign-invested companies responded that there been little change compared to the pre-crisis era.
In fact, 28 percent said labor relations had worsened. An ongoing concern for foreign-invested companies is whether normal management activity is protected under the law if the company's labor union acts illegally. Unreasonable demands for wage increases by labor unions impairs corporate competitiveness and hinders foreign companies in their efforts to do business in Korea. Seventy-four percent of companies surveyed by the FKI claimed that the wages of Korean workers were higher than in competing countries in Southeast Asia or China.
The Korean government understands these problems and undertakes to resolve them. It takes strong action against illegal labor union activities to avoid them impacting negatively on the ability of foreign-invested companies to conduct business and makes efforts to ensure pay raises do not exceed worker productivity.
Korea's political environment has stabilized since the 1980s with the successful transition of government to a civilian administration and the concomitant democratization of political system. Meanwhile, there is a strong grass-roots movement to bring about improvement in the political climate. A host of civil organizations are active on a number of issues, such as demanding government enforce the Anti-Corruption Law and boost transparency and fairness in official dealings. As a result, such issues are higher on the government's agenda. Stability on the Korean Peninsula has also been enhanced by the Sunshine Policy of the current Kim Dae-jung administration, which aims at engagement, cooperation and reconciliation with North Korea. The signature initiative of the policy was the visit by President Kim to Pyongyang, the capital of the North to meet with its leader, Kim, Jong-il in June 2000. An immediate benefit was the reciprocal visitations of families separated since the end of the Korean War.
Long-established foreign companies are quick to point out that Korea is a far safer place to conduct business in than what many outsiders think. Public attitudes toward foreign takeovers of Korean-owned companies and to foreign investment in general have undergone a sea change. Also, it now generally accepted that management should relinquish control of a company in the event of financial failure. With the implementation of Foreign Investment Promotion Act in November 1998, Korea made a substantial improvement of its investment environment in the aspects of policy and systems. The government is expected to make continued improvements on a mid- to long-term basis in regard to political stability, labor/management issues and others. In the short term, improvements can be expected in the areas of investment incentives, simplification of investment procedures, efforts to enhance the overseas image of Korea as a business location and a strengthening of investment promotion activities.
Updated Sep 3rd 2001, By Seong-Woo Hong
Source : KT&I sept-octob 2001
- QUASI-TAXES HINDER ATTRACTION OF FDI By Kim Wan-soon
Foreign companies have increasingly been raising their grievances related to various kinds of quasi-taxes such as dues, donations and allotments. In particular, they are exasperated at the numerous membership fee notices from never joined organizations and the foundationless legal power to assess fees.
Quasi-taxes are the monetary payment obligations imposed on persons or firms in addition to standard taxes. Even if there is a benefit in return for payment, all user charges that limit a consumer's choice are regarded as quasi-taxes. Quasi-taxes include voluntary donations, contributions as well as fees, allotments, service charges, and premiums that are levied without legal basis.
Of course, it is desirable for firms to return benefits to society in various ways. But if firms donate according to compulsive measures, the economy will inevitably retract, as is the case with hiked tax rates. The most apparent problematic features of the current quasi-tax system include double levies, opacity of public expenditures, and the absurdity of the levying procedure and the outdated rationale of legislation as time passes.
Foreign companies' complaints with regard to quasi-taxes are as follows.
First, since as many as 630 legal quasi-taxes are imposed, the need to hire staff in charge of quasi-taxes often adds to management expenses. Moreover, many foreign CEOs not accustomed to Korean society and have no way of fully understanding the myriad of quasi-taxes and their various names. The Korean government has played a major role in increasing the type of quasi-taxes levied through establishing various industrial associations and public corporations, business organizations that are funded through the proceeds from quasi-taxes such as contributions, membership fees, and service charges.
Second, the widened gap between employees' received wages and employers' labor costs due to compulsory welfare expenditure on the part of companies also raises serious problems. In general, companies should bear indirect labor costs such as staff education and training expenses, compulsory welfare expenses, and voluntary welfare expenses in addition to direct labor costs such as wages. Foreign companies are often frustrated by burdensome indirect labor costs that are not reflected as ordinary wages or direct labor costs in most labor statistics.
In fact, the U.S. Bureau of Labor Statistics (BLS) shows that the indirect labor cost percentage out of total labor costs in the manufacturing industry recorded 23.0 percent _ a dizzyingly high figure when compared with competitors such as Taiwan (9.1 percent), Hong Kong (3.3 percent), Singapore (9.2 percent), and Japan (16.0 percent). Korea's indirect labor costs are also higher than the OECD average (19.2 percent) as well as that of America (20.7 percent). The cause of such high indirect labor costs mainly results from the steep increase of the quasi-tax burden such as national pension and employment insurance payments.
The government has made attempts to reduce the quasi-tax burden for companies. In fact, three quasi-taxes _ the ASEM membership fee, an allotment for the Sports Promotion Foundation and an allotment for the Culture & Arts Promotion Foundation _ have been abolished or are on the verge of being rescinded. Nevertheless, nine new allotments have newly been established since 1998 and the total amount of quasi-tax burden has steadily increased notwithstanding the government's promise. Hence, I strongly doubt whether the government truly has the policy fortitude to lessen the quasi-tax burden.
As many of you know, globalization and the development of IT technologies have opened up infinite possibilities for capital movements across borders.
If Korea's past track record of levying excessive quasi-taxes on companies and treating private companies as philanthropic organizations is not improved in the near future, it may find itself faced with domestic companies fleeing Korea in search of a less burdensome environment. This holds true for the hosting of FDI as well.
The number of quasi-taxes levied by the government should be reduced and certain categories abolished altogether in order to facilitate vigorous economic activity of both domestic and foreign-invested firms. Ensuring the appropriateness of the quasi-tax burden, fortifying the legal foundation for levies, and making the particulars of public expenditure open to the public, are some of the imminent tasks facing the quasi-tax system. Such comprehensive measures will go far in making a more attractive environment in which to do business.
Source :Korea Times - 7/11/2001
- CUSTOMS RULES TO BE EASED FOR FOREIGN INVESTORS
The Korea Customs Service (KCS) will greatly modify current customs regulations to better accommodate all the foreign businesses working in Korea, the customs office said yesterday.
The list of focus topics for adjustment includes promoting more paperless customs procedures, simplifying import/export declaration processes, minimizing logistics costs and lightening financial burdens in all areas of customs dealings, the office said.
"Foreign investment is a shortcut to enhancing the competitiveness of a nation, therefore, it deserves the support of the customs administration," Yoon Jin-sik, commissioner of the Korea Customs Office, said during a special meeting titled "Customs Conference for Foreign Business" held at the Seoul KCS office yesterday.
Over 40 foreign business leaders, including multinational company CEOs and representatives from foreign chambers of commerce and foreign embassies, participated.
KCS said that one of the biggest complaints by foreign businesses continues to be complex customs procedures.
Accordingly, the customs office will designate more foreign firms as paperless import declaration companies, meaning customs can be cleared electronically, etc. This includes allowing electronic requests for complementary documents and temporary opening of the customs house for import clearance. "This will speed up clearance greatly," Yoon said.
The office will also try to simplify import/export declarations, it said. Examples include allowing immediate use of inspection-free goods upon arrival, abolishing examination and approval of the customs house on cargo and reducing obligations to the operator of the licensed bonded area.
The third major topic of reform, reduction of logistic costs, will be achieved by maximizing the effects of the Customs Free Zone, designating a comprehensive bonded area for FDI companies and allowing admission of dutiable goods to a Free Trade Zone without Duty Payment, he said.
"Finally, we plan on lightening the financial burden on foreign investors by permitting such things as admitting of raw material dutiable goods under the name of a third party to a bonded factory without Duty Payment and designating more manufacturing companies as a credit security companies," Yoon said.
A long list of other plans for easing custom regulations was distributed in a 120-page booklet published by the Korea Customs Service.
Meanwhile, the KCS designed the list based on real complaints by foreign investors working in Korea, the office said.
"We have been noticing that foreign direct investment (FDI) is slowing down these days, after a dramatic increase during the 1997 financial crisis. This calls for more efforts by the government to attract FDI," Yoon said. As of September, FDI stood at $9.7 billion, 7 percent down from the $10.4 billion recorded in the same period last year.
To pinpoint possible causes of such decline and to look for ways to better serve foreign businesses already working here, KCS undertook a long-term study, collecting complaints from foreign investors and their representing organizations for the past four months. It ended up with 290 categories of complaints.
"Of them, we found that 86 were something we could solve at our office, 85 already dealt with, 68 need long-term review and 51 should be addressed by other agencies," Yoon said. KCS met five different times to address some of the complaints directly.
"One of our chief goal in all this is letting all the foreign investors here know exactly what we are doing and encourage them to speak out about any complaint at any time," Yoon said.
Source by: Korea Herald (2001.11.16)
- GOVERNMENT TO INCREASE SOC SPENDING NEXT YEAR
The Korean government will budget an additional five trillion won for social infrastructure projects next year in a bid to add momentum to the economic recovery expected to commence from around the second quarter of 2002.
To finance a bigger 2002 budget, the government plans to issue an additional one trillion won to two trillion won in government bonds next year.
Emerging from a meeting with key economic officials, Kang Un-tae, policy coordinator of the ruling Millennium Democratic Party (MDP), said his party and government officials shared the view that more aggressive fiscal spending is necessary to spur economic recovery.
"The planned five trillion won will be entirely aimed at boosting the economy. The figure is equivalent to 1 percent of gross domestic product," Kang said.
Stressing that budgetary spending is seen as a more viable tool to bolster the economy, he said his party wants cooperation from the opposition Grand National Party (GNP), which has repeatedly called for a tax cut.
There has been talk of expanding next year's budget scale. Last week, Deputy Prime Minister Jin Nyum said the government plans to increase next year's budget by five trillion won, from the initially proposed 112.58 trillion won, to boost infrastructure spending.
The International Monetary Fund, which currently has a team in Seoul, also recommended the Korean government accelerate and increase budgetary spending to keep the economy afloat.
But analysts said the government's move to increase budgetary spending would be thwarted by the opposition party, which has already cut the government-proposed secondary budget scale by 300 billion won to 1.6 trillion won.
Meanwhile, the additional issuance of one to two trillion won in state bonds is a reversal from the government's earlier plan to limit next year's government bond issues to two trillion won in a bid to achieve a balanced budget.
As to the issue of a balanced budget, Kang said, "Economic policies are dictated by economic conditions." Source by: The Korean Herald (2001.11.14)
- RISK MANAGEMENT IN KOREA
By Reg Bancroft - CEO and President,Royal & SunAlliance Korea
The financial crisis that swept over South Korea in 1997 and the subsequent maelstrom it caused brought into light the very real and urgent need for marked improvements in risk management for both the government and businesses here.
Unfortunately, however, the level of urgency and the genuine eagerness to implement sound risk management measures within the business environment is still lacking.
The fact that standards of corporate governance in Korea are low vis-?vis those enforced in developed countries, underscores the reality that risk management systems have not yet been firmly established within the business community. While the importance of risk management is well recognized, managing risk is still in its infancy.
Korean executives are currently in the early stages of their risk management journey, that is, they identify spot risks, single risks that are managed as isolated cases, and devise solutions by using practical experience and management conventions. Risk, however, is seldom, if ever, a series of unrelated and isolated events. As such, it must be assessed and managed in a holistic and systematic manner.
Manifestations of risk are observed everywhere. On the national level, each country is assessed and categorized by institutions such as, S&P and Moody's, according to the level of risk associated with such factors as financial, social and political risk of the country.
On the corporate front, foreign exchange risk or hedging against foreign exchange risk is a chief concern for a vast majority of Korean companies as Korea is fundamentally an export driven economy. Domestically, financial institutions that lend or insure companies must, by the very nature of their business, assess, manage and predict risk as thoroughly as possible.
Even for the individual, counting all the insurance products we encounter evidences the ubiquity of risk.
What then is risk management? Basically, risk management encompasses the following activities: analyzing and forecasting the probability of an outcome, categorizing it into such groups as expected, desired and unfavorable, implementing measures that will minimize the probability of an unfavorable outcome and attempting to lay off or pass to others the residual risk.
Risk management practices worldwide have developed rapidly in the last ten years. They are now being codified into comprehensive national codes.
Australia and New Zealand adopted the first risk management code in 1997 and the United Kingdom (UK), the European Union (EU) and the United States (U.S.) are close to adopting such practices.
Why do Western countries put such a high emphasis on risk management practices compared with Korean companies? There are essentially three reasons.
First, they are much more concerned about preserving and increasing shareholder value.
Second, there exists a corporate governance and compliance environment in which directors, executives and auditors are obligated to implement measures to identify, manage and avoid risk wherever possible.
Third, in a large part, due to the aforementioned reasons, effective risk management practices produce tangible benefits to all stakeholders, one of which is the much higher relative market capitalization that western companies enjoy.
If Korean companies were perceived as principally pursuing shareholder value, exercising sound governance and implementing effective risk management measures, it would not be unreasonable to expect their market capitalization to considerably exceed present levels.
Another benefit would be that a stronger focus on risk management would reduce the total cost of risk, a large part of which is the premium paid to transfer risk to the insurance industry. Take the weak state of the Korean insurance industry for example. This is largely due to the fact that the ability to price for risk is relatively undeveloped.
It should be noted that there are positive signs that Korea is moving in the right direction. According to a recent survey conducted by the Euro- Asian Business Consultancy (EABC), Korea has a higher awareness of the need for risk management than Japan.
Moreover, a higher percentage of Korean companies reported that they have a risk management function. However, this will only bring a positive benefit if the risk manager carries significant weight within the organization.
One prevalent and troubling feature of Korean companies is that form often takes precedence over content- once a risk management function is established, what should be done next? For example, all the banks have complied with the Financial Supervisory Service's (FSS) order to establish an independent risk management department.
Whether or not they are operating effectively is the real issue - in general the tools to build a holistic risk management program just aren't available. More likely, Korean executives' approach to risk management will deal reactively with spot risks or single issues as they arise rather than proactively setting out to minimize the cost of the risks that he or she manages.
Risk management, until quite recently, was a field that had been neglected, if not, non-existent in corporate Korea.
Present realities of participating and surviving within the global economy, however, render this untenable. Risk is not something that should be or can be dealt with in a case-by-case basis but must be considered holistically and systematically.
In addition, risk, by definition, is unique to each entity, that is, no two countries or companies can manage risk the same way.
As there are no two identical companies, there are no two identical risk management programs - each has to be custom built. As such, the first step on this long journey is to recognize that risk management is not a luxury but an absolute necessity that demands constant attention.
In addition, it is important that risk management is considered more than a fire fighting activity - it has to be seen as a systematic approach that creates a unique corporate risk culture and adds value to the organization.
That way, the risks inherent in building dynamic businesses will have less propensity to stand in the way of an organization achieving its goals.
reg.bancroft@kr.royalsun.com
Source : Korea Times - 28/10/2001
- FOREIGN WORKERS HELPED
The government's new program to help foreign industrial trainees legally extend their stays in Korea is flawed, critics say.
Foreign industrial trainees, who come here to take difficult and low-paying manufacturing jobs, are typically recruited to work at Korean firms for two-year stints. The new program requires them to pass a test, for which they must be competent in the Korean language and culture, to be eligible to work in Korea for another year. By providing this legal avenue, Seoul hoped to prevent foreign workers from staying on illegally after their employment terms end. The new system was instituted early last year, but participation has been less than expected.
The foreign workers are eligible to take the test after working for 18 months in Korea. From the inception of the program through this September, only about 17,000 workers of about 55,000 eligible for the test took it, and only about 12,000 passed. Based on those numbers, the government estimated that more than 21,000 of the eligible workers have become or will become illegal aliens here.
Many workers avoid taking the test because they are not confident with the Korean language. But many employers discourage them from taking it. "Our production schedules are wrecked when the foreign workers prepare for the test instead of working overtime," said the owner of a manufacturing firm in Incheon.
Because competence in the Korean language is crucial to pass the test, most of the ethnic Koreans from China do well, while applicants from other countries tend to have trouble. Critics also point out that about half of the questions on the test are related to Korean culture and have nothing to do with the skills required for industrial jobs.
The Korea Federation of Small and Medium Businesses has requested that the government end the tests and grant employers the right to choose whether they can rehire foreign workers.
It also asked that the extension periods be extended from one year to two. Source by: JoongAng Ilbo (2001.11.05)
- GESTION : TRANSPARENCE ET EFFICACITE
Les " accords de Séoul " prônent un système d'audit indépendant
Le 27 octobre dernier, les participants au 17e Congrès de l'INTOSAI (International Organization of Supreme Audit Institutions, Organisations internationales des institutions supérieures de contrôle des finances publiques), appelé INCOSAI, ont adopté des directives, regroupées dans les "accords de Séoul" qui devraient fournir aux différents gouvernements les moyens d'instaurer un système d'audit indépendant et
efficace. Ce nouveau système d'audit "idéal" sera le gage d'une gestion "transparente et efficace" de plus de 100 institutions internationales. Les 500 délégués des 140 membres de l'INTOSAI se sont réunis à Séoul pendant une semaine afin de réfléchir aux moyen de mieux contrôler la gestion des institutions internationales et de veiller à leur bon fonctionnement : " Les organisations internationales sont financées grâce aux subventions des Etats membres, les organes d'audit ont tout intérêt à vérifier leur bonne gestion, leur responsabilité financière et leur transparence ". Les participants n'ont cependant pas jugé bon d'améliorer l'état des opérations d'audit au sein des Nations Unies. " Il y a eu unanimité au sein du Congrès à propos de la nécessité de garantir l'indépendance des systèmes d'audit ".
" L'expérience mutuelle profite à tous " est la nouvelle devise de l'INTOSAI
Pendant une semaine, les auditeurs venus du monde entier ont pu prendre part à des sessions plénières ainsi qu'à divers comités et réunions de travail autour des deux principaux thèmes suivants : " l'audit des institutions internationales et supranationales " et " la contribution des organismes d'audit aux réformes gouvernementales et administratives ". Porte-parole de l'Assemblée nationale, Lee Man-sup a affirmé dans son allocution de félicitations que les membres de l'INTOSAI se devait d'avancer dans la coopération pour combattre le nombre croissant de crimes internationaux. " Une vaste collaboration au niveau international se fait cruellement attendre à l'heure où fraude et corruption sous forme d'extorsion et de blanchiment d'argent sont en recrudescence dans les transactions internationales ". Le dirigeant parlementaire a également exprimé son désir que cette réunion de l'INTOSAI aide les pays membres à réaliser ce que le peuple demande, à savoir " un gouvernement qui se concentre sur ses rôles premiers ". Sous le thème " l'expérience mutuelle profite à tous ", l'INTOSAI se veut depuis sa création en 1953 un forum d'échanges d'informations et d'expériences sur l'audit en même temps qu'un lieu de développement des techniques de l'audit.
La Corée du Sud renforce son statut diplomatique
L'accession de la Corée à la présidence de l'organisation des meilleures instances d'audit du monde devrait aider à renforcer le statut du pays dans la diplomatie et le commerce internationaux. " Assurer la présidence de l'INTOSAI devrait donner une chance à la Corée de renforcer son statut sur la scène internationale ", explique Lee Jong-nam. M. Lee a également souligné qu'il y avait eu une controverse sur la transparence dans la gestion de plusieurs centaines d'organisations internationales telles que les Nations unies et le Fonds monétaire international (FMI). Il a rappelé que de telles discussions étaient cruciales dans la mesure où ces organisations reçoivent des contributions de la part de pays membres. Craignant que le climat de tension dû aux récents attentats aux Etats-Unis ne démobilise les participants, M. Lee a été agréablement surpris de compter sur la présence de 500 délégués de 140 pays membres et de 13 organisations internationales, dont la Banque mondiale. L'évènement s'est déroulé au COEX (Convention and Exhibition Center). La Corée a rejoint l'INTOSAI - qui compte aujourd'hui 177 pays membres - en 1965. Kim Ji-ho - Source : Courrier de la Corée - 2001.11.09
- KOREA TURNS EYE TO ATTRACTING FOREIGN STUDENTS
The government announced yesterday that it has decided to set aside an 847 million won ($658,966) budget to launch a project aimed at proactively attracting foreign students to South Korea's educational institutions. The program, to begin next year, is to cope with the intense global competition in attracting international students.
According to the Ministry of Planning and Budget (MPB) and the Ministry of Education and Human Resources Development (MOE) yesterday, they agreed to allocate 507 million won for the initiation of Internet websites where foreign students will be able to get information on Korean schools and apply online.
A further 340 million won will be earmarked for printing promotional material and for promotional activities for Korean colleges and universities.
Moreover, the Ministry of Legislation will take measures to simplify paperwork and procedures as well as ease entry requirements for foreign students who wish to study at domestic schools, while encouraging universities to actively lure foreign students.
Some 150,000 Korean students are currently studying overseas in such countries as the United States, Japan and Australia. Only slightly over 6,000 foreign students studied here last year, which resulted in an estimated $820 million education deficit.
According to the statistics released by the MPB, as of April 1, most foreign students who came to Korea for study purposes were from Asia, amounting to 4,698 people, followed by 664 students from North America and 452 students from Europe.
On the other hand, Korean students were studying the most in Canada, with 53,888 students as of end of 1999. The U.S. was second with 42,890, Japan third with 12,746, Australia fourth with 9,526 and China fifth with 8,460.
``The project to attract foreign students that will be launched next year is expected to contribute greatly to the internationalization of domestic universities and help lift their global competitiveness. Moreover, it will improve the international balance of payments in educational expenses,'' said an MPB official.
In the case of the U.S., the U.K., France and Japan, they are putting all- out efforts into attracting talented foreign students with excellent academic records. Japan aims to lure 100,000 foreign students in the early 21st century. Prime Minister Tony Blair of the U.K. hopes to attract over 40 percent of the entire English-speaking world's student population to come study in Britain during his term in office.
And France has launched a large-scale promotion to attract foreign students to boost number its foreign student population to the 500,000- level, from the current 300,000.
Source by: Korea Times (2001.11.16)
- NAISSANCE DE LA KOOKMIN BANK, LE PLUS IMPORTANT GROUPE BANCAIRE CORÉEN
La Tribune du 6/11/2001
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- ROK ENTERS OECD'S KNOWLEDGE ECONOMY TOP 10 LIST
By Ryu Jin
Among the 30 OECD member countries, South Korea has the 10th brightest future for its high-technology industry, the London-based Financial Times (FT) reported yesterday.
Korea held 10th place on the list of countries in terms of ``knowledge- based industry.'' It also tied for first place with Ireland on the list of labor-productivity growth, according to the FT report.
In the report released yesterday, the FT compiled a league table of countries best placed to develop their high-tech industries, based on the 2001 edition of the OECD's (Organization for Economic Cooperation and Development) biennial Science, Technology and Industry Scoreboard, which brings together statistics on different OECD countries' performance.
Switzerland, not generally regarded as being a top innovator and entrepreneur, grabbed first place in the rankings. Though it is known for its high quality business environment, Switzerland was not included among the top 10 countries in some recently released rankings, such as the report from the World Economic Forum last month.
In the FT/OECD league table, Sweden, another country that few expected to place at the very top in terms of industrial performance, seized second place, followed by the U.S., Ireland and the Netherlands.
In sixth place was Hungary of the former Communist bloc, coming ahead of Canada, Belgium, the U.K., South Korea and Finland.
The FT said in the report that Germany, Japan and France were surprisingly low in the table, in 12th, 13th and 16th place, respectively. Italy was 20th, behind Denmark and Norway.
Among the 10 indicators utilized in making the table were: a country's proportion of total output provided by knowledge-intensive manufacturing; the number of patents a country files in specific ``families'' of technologies, divided by its population; recent labor-productivity growth; spending on information technology, including hardware; investment in venture capital; and the number of foreign students in university-level education, divided by the total student population.
jinryu@koreatimes.co.kr
Source : Korea Times - 29/10/2001
- PUBLICITE : LA TELEVISION FAIT SON CINEMA
Le septième art, source d'inspiration publicitaire du petit écran
Visiblement désespéré, l'acteur et coqueluche de la jeunesse coréenne Chung Woo-sung déclare sa flamme à la comédienne hongkongaise Zang Ziyi, laquelle ne semble pourtant guère sur le point de le quitter. Cette scène, qui pourrait fort bien constituer le "Happy end" d'un grand film d'amour, apparaît en fait sur le petit écran, durant quinze secondes, dans le cadre d'une annonce publicitaire consacrée à une boisson gazeuse.
A l'instar de cet emploi du couple vedette d'un film unanimement salué par la critique, "Warrior" (guerrier) pour ne pas le nommer, la publicité télévisée s'inspire de plus en plus de la distribution des productions cinématographiques à succès, dont elle reprend parfois les scènes les plus inoubliables aux termes de marchés assortissant la promotion de ces films à celles de marques commerciales. Une tendance qui allait connaître son apogée l'été dernier par le biais d'alliances entre limonadiers et producteurs de films désireux, dans leur intérêt commun, de mieux retenir l'attention des consommateurs tout en accroissant l'audience des ©"uvres cinématographiques.
Après avoir conclu un accord de coproduction avec le distributeur hollywoodien de "La Planète des Singes", le confiseur industriel Haitai Confectionery a inséré un extrait de ce film de science-fiction dans le spot publicitaire de la boisson Combi Cola. En outre, plusieurs scènes et personnages qui en sont également tirés ont fait leur apparition sur le produit lui-même, ainsi que sur quelque 10 000 affiches publicitaires représentant ce dernier.
Daewoo motor et Motorola Korea misent sur les acteurs
C'était ensuite au tour de Woongjin Foods de réquisitionner, pour les besoins de la publicité télévisée de sa boisson gazeuse "Green Cider", les acteurs Cha Seung-won et Kim Sung-jae, premiers rôles masculins de la production à gros budget "Kick the Moon" (un coup de pied dans la lune). Parodiant quelques unes des scènes les plus mémorables de ce film policier, les deux compères arborent leurs costumes d'acteurs.
De même, des scènes issues des films "Godzilla" et "Driven" (pulsion) allaient respectivement être employées dans les annonces publicitaires diffusées à la télévision par les sociétés Daewoo Motor, pour son modèle "Matiz", et Motorola Korea. "Les messages publicitaires recourant aux acteurs de films à succès semblent laisser une image plus durable des produits correspondants", estime Lee Jin-soo, l'un des responsables de l'agence Daehong Communications, dont la série d'annonces publicitaires consacrées à la boisson "2 %" du producteur Lotte Chilsung compte la participation du couple vedette Chung/Zhang. "Les réactions des consommateurs sont très encourageantes, notamment celle de la jeune génération", ajoute-t-il. Cette nouvelle tendance, qu'inaugurent les industriels en mettant en ©"uvre une publicité d'origine cinématographique, s'avère tout aussi avantageuse au box-office, selon les professionnels du septième art, puisque les films qu'elle concerne jouissent d'une meilleure diffusion dans le public grâce à l'importante audience du support télévisuel.
"L'impact de la publicité télévisée, certes très difficile à évaluer, est sans conteste bénéfique à ces films en termes de communication", estime Lee Yoon-joo, un responsable de l'importante société de distribution coréenne Cinéma Service. Et de fait, jusqu'au début du mois d'août dernier, "Kick the Moon" arrivait en tête du box-office, enregistrant dans toute la Corée plus de quatre millions d'entrées pendant les quatre semaines qui ont suivi sa sortie sur les écrans. Dernièrement, l'épopée fantastique "Warrior", qui se situe à l'époque de la dynastie Goreyo, a reçu du public un accueil satisfaisant qui, aux dires des critiques, serait en passe se transformer en succès.
Prochaine cible marketing : " le seigneur des anneaux "
Conscients des retombées dont bénéficient les ©"uvres cinématographiques, leurs distributeurs rivalisent de dynamisme pour solliciter les industriels coréens, multipliant tournées et présentations commerciales à la recherche d'un parrainage et de partenaires susceptibles de retenir leur film comme support de communication. Dans le cadre de la promotion du film "Le seigneur des anneaux", qui sortira bientôt sur les écrans, la société Young Fine vient ainsi de convier les représentants de quelque cinquante entreprises auxquels elle a projeté un condensé de bandes annonces relatives à cette ©"uvre. A cette occasion, ils ont pris soin de se centrer sur un argumentaire commercial inventoriant les points forts du film. Ce dernier, adapté du roman du même nom de J.R.R. Tolkien, a été bien accueilli par la critique lors du Festival de Cannes qui se déroulait au mois de mai dernier. En outre, l'ouvrage, dans sa traduction en langue coréenne, s'est vendu à 600 000 exemplaires durant l'année qui a suivi sa publication et il a donné le jour à un jeu vidéo qui s'en inspire et dont la commercialisation est prévue pour le mois de décembre prochain, juste à temps pour la sortie du film. "Au vu de la notoriété du film ainsi que de son potentiel commercial, nous ne doutons pas de la possibilité de trouver des partenaires commerciaux", affirme Min Chung-won, le président de Young Fine. Il arrive même qu'un projet de "jumelage" avec une publicité télévisée prenne forme dès la première phase de production d'une ©"uvre cinématographique coréenne, et ce, afin de susciter de manière anticipée l'intérêt du public quant au film et à la distribution de celle-ci. Dans le cas de productions étrangères, les distributeurs n'ont pas la tâche facile pour élaborer des annonces publicitaires sophistiquées pour la télévision dans la mesure où le temps et les informations dont ils disposent à cet effet sont beaucoup plus limités. Choe Yong-sik
Source : Le courrier de la Corée 2001.11.09
- APRES AVOIR DEFIE WORD, LA COREE DU SUD RESISTE A LA MESSAGERIE INSTANTANEE DU GEANT AMERICAIN
Pour le lancement de Windows XP en Corée du Sud le 26 octobre, Microsoft avait bien fait les choses : hôtel Hilton, publicités géantes et surtout visite remarquée de Bill Gates dix jours auparavant pour préparer le terrain.
La fête a bien failli être gâchée : Daum Communications, le premier portail coréen, avait cherché en vain à obtenir d'un tribunal de Séoul une injonction pour bloquer la vente du nouveau système d'exploitation de Microsoft. Au motif que le géant américain profite de sa position dominante pour imposer à l'utilisateur toutes sortes d'applications qu'il pourrait trouver ailleurs. Comme ce fut le cas pour le navigateur Internet Explorer, qui, incorporé à Windows, a laminé les parts de marché de Netscape. Cette fois-ci, Daum Communications se considère directement menacé par le logiciel de messagerie instantanée distribué avec Windows XP et permettant de discuter en ligne. La pratique est extrêmement répandue en Corée, où la moitié de la population est connectée à Internet (et dans neuf cas sur dix à l'Internet à haut débit). Daum, qui affiche treize millions de visiteurs par mois, est numéro un sur le marché de la messagerie instantanée locale, avec 20 % des utilisateurs. Microsoft arrive en troisième position avec Messenger. "Les autres sociétés ne peuvent pas se battre à armes égales contre Microsoft. C'est comme si Microsoft participait à la course en voiture de sport, et nous à pied", dit Jaewoong Lee, trente-trois ans, président fondateur de Daum Communications. Jaewoong a lancé Daum en 1995 à son retour de deux années d'études en France : c'est alors un site culturel alternatif. En 1997, Daum va décoller en 1997 grâce à son service de courriel gratuit et le développement des messageries. Le premier portail coréen n'a pas été détrôné depuis.
Fierté nationale
Ce n'est pas la première fois que Microsoft rencontre de la résistance dans un pays où l'excellence technologique est devenue une question de fierté nationale. En 1997, Microsoft, qui ne parvenait pas à imposer sa version coréenne de son traitement de texte Word, avait tenté de racheter son concurrent, Haansoft, alors en difficulté. Mal lui en prit : les jeunes cadres de Haansoft lancèrent une campagne nationale pour sauver leur société. Ils se mobilisèrent tant et si bien qu'ils finirent par racheter les parts du fondateur. "Pour 20 millions de dollars, Microsoft prenait le contrôle de Haansoft et "tuait" purement et simplement notre application", se souvient Jhun Ha-jin, l'actuel président, rentré de la Silicon Valley pour être nommé à la tête de Haansoft en 1998. En trois ans, Jhun Ha-jin a fait de Haansoft un acteur incontournable de la Net-économie coréenne. L'aventure Haansoft a valeur de mythe en Corée, nombre de Net-entrepreneurs coréens y ayant fait leurs classes. A ce jour, Microsoft Word n'a toujours que 20 % du marché, contre 75 % pour Hangul, le logiciel de Haansoft.
Daum Communications, appuyé par un consortium d'une quinzaine de sociétés de la Net-économie coréenne, compte sur la plainte déposée en septembre auprès de la Commission de la libre concurrence (FTC) coréenne pour faire barrage à l'offensive de Microsoft. Peu encline à froisser un investisseur étranger aussi prometteur, celle-ci a annoncé qu'elle attendrait les conclusions des procédures en cours aux Etats-Unis pour statuer.
Brice Pedroletti Source : o LE MONDE | 07.11.01 | 13h22
- SEMI-CONDUCTEURS : BIENVENUE DANS MA MAISON DIGITALE
Samsung et Microsoft s'allient pour developer les réseaux numériques à domicile. Premier producteur mondial de mémoires à semi-conducteurs, Samsung Electronics a conclu avec Microsoft, le 16 octobre dernier, une alliance stratégique qui a pour objectif de développer une activité commune aux deux sociétés dans le domaine des réseaux numériques à domicile. Il s'agit du premier regroupement auquel participe la Division eHome que vient de créer le constructeur américain en début d'année et qui se consacre au développement de nouvelles technologies permettant aux utilisateurs d'accéder à des services de loisirs et de communications, ainsi qu'à des fonctionnalités de commande, qui leur sont intégralement fournis à domicile. Les deux sociétés prévoient de réaliser conjointement le développement et la commercialisation d'une nouvelle famille de produits alliant matériels Samsung et logiciels Microsoft, avec accès notamment au programme Windows Media Technologies de ce dernier. C'est à cette fin que Bill Gates et Chin Dae-je, respectivement président de Microsoft et directeur de la Division Digital Media Business (supports numériques privés), ont signé à Séoul un protocole d'accord en vue de la commercialisation et du développement communs d'équipements électroniques en technologie numérique. "Le partenariat Microsoft/Samsung donnera naissance à une nouvelle génération de technologies numériques à domicile qui changeront la vie des gens sans pour autant la compliquer", a déclaré Bill Gates.
"Nous entrons aujourd'hui dans une décennie numérique où le raccordement de petits équipements intelligents et la mise en oeuvre de solutions évoluées de loisirs à domicile permettront aux utilisateurs de découvrir les nouvelles applications des technologies et de tirer le meilleur parti de ces dernières", estime-t-il. Chez Samsung, M. Chin affirme quant à lui : "C'est avec impatience que nous attendons de travailler avec Microsoft à la mise au point d'une nouvelle gamme de technologies à domicile innovantes. La technologie Microsoft nous sera très précieuse pour parvenir à notre objectif de fournir aux usagers une connectivité dite " transparente " et de faciliter la réalisation de leurs propres réseaux à domiciles". Dans cette perspective, c'est un véritable écosystème alliant micro-ordinateurs, équipements numériques, services et dispositifs intelligents à domicile, que construira Samsung pour permettre, simplement et à moindre coût, de convertir les locaux de l'usager moyen en résidences numériques de future génération. Aux termes de l'accord de partenariat, Samsung s'est engagé à proposer un ensemble de produits et technologies liés à la plate-forme Microsoft.NET, ainsi que les logiciels de PAO et les produits Windows intégrés de l'Américain, notamment le programme Windows Media Technologies et le nouveau concept d'eHome. Dans le prolongement de son étude Windows CE, Samsung investira dans le développement d'une large gamme de dispositifs numériques intelligents dans le cadre de la plate-forme numérique de Samsung. Ce dernier estime que cette union marque une étape décisive de la stratégie qu'il poursuit en vue de se classer parmi les plus grands constructeurs mondiaux à l'ère de la technologie numérique, affirmant que sa coopération avec Microsoft lui permettra d'offrir des solutions évoluées de fourniture de contenus et de loisirs à domicile. YSJ
Source : Le Courrier de la Corée 2001.11.09
- FAA DELEGATION TO ARRIVE SUNDAY TO CHECK AIR SAFETY MEASURES
A delegation from the U.S. Federal Aviation Administration (FAA) will arrive in Seoul Sunday to evaluate Korea's air safety, the Ministry of Construction and Transportation said yesterday.
The ministry said it has completed measures to bring air safety back to the highest level within the year and the FAA experts will inspect the results next Monday and Tuesday.
The ministry said the FAA moved its inspection schedule forward to ensure enough time to reevaluate Korea's air safety measures before the Thanksgiving holiday season gets underway.
The FAA will decide whether Korea's air safety level should be upgraded or not in the middle of next month at the earliest after they return to Washington, the ministry said.
The ministry said it has revised aviation-related laws, including those related to the issuance of airline operation certificates (AOC), to eliminate the factors that led to the downgrading of Korea's air safety level. The ministry issued the AOCs to Korean Air and Asiana Airlines under the revised laws.
The ministry said it also completed revisions in training and education programs for air crews at the end of last month.
A ministry official said the ministry expects positive results from their efforts to return Korea's air safety status to the highest level within this year, although it could take longer due to the U.S. military action in Afghanistan.
Source by: Korea Herald (2001.11.15)
- KOREA'S SPENDING FOR POLLUTION ABATEMENT DECLINES IN 2000 By Kim Jae-kyoung
Korea's spending for pollution abatement and control decreased slightly last year compared with a year earlier.
According to the Bank of Korea (BOK) yesterday, the nation's spending for preventing environment pollution totaled 7.96 trillion won in 2000, down 54.1 billion won or 0.7 percent from the preceding year.
The proportion of the spending to the nation's gross domestic product (GDP) stood at 1.54 percent, a decrease of 0.12 percentage points from a year before.
The central bank pointed out that the proportion of 1.54 percent is far behind advanced countries, such as the U.S. and Germany, which recorded 1.74 percent and 1.65 percent in 1994, respectively.
By economic subject, the government poured the largest money, totaling 4.15 trillion won (52.2 percent), into pollution abatement and control, followed by businesses with 3.47 trillion won (43.6 percent) and households with 3.03 trillion won (4.2 percent).
Among local firms' spending, current expenditure accounted for 73.2 percent with 2.54 trillion won, while investment costs took up 26.3 percent with 930.4 billion won. A further 154.4 billion won was spent on prior prevention and 1 trillion won on post management.
In the meantime, the nation's environment investment ratio, representing the portion of investment in the environment against fixed capital, dropped to 2.12 percent in 2000 from 2.73 percent in 1999.
The central bank attributed the sharp fall to the fact that local governments had severe difficulties in setting up sewage and waste disposal plants due to residents' avoidance of such facilities coupled with the lack of finance.
Advanced nations have drawn out the statistics on expenditures for pollution abatement and control since the 1970s, to calculate the green GDP.
The green GDP indicator tracks economic output and takes environmental issues into account. In particular, member countries of Organization for Economic Cooperation and Development (OECD) are obliged to turn in their statistics to OECD.
kjk@koreatimes.co.kr Source : Korea Times - 06/11/2001
- SEOUL'S F-X PROJECT MAY BE AFFECTED
Boeing's failure to win the U.S. air force's next-generation fighter program may affect the aerospace giant's bid to clinch South Korea's fighter project, defense analysts said yesterday.
The analysts said that the latest development in the United States may have a negative impact on South Korean officials, who will select the nation's new jet fighters one way or another.
They noted that there is already speculation that Boeing may cut back on its military aircraft assembly lines.
There is also the possibility, the analysts said, that the company may step up its efforts to win the Korean contract in order to make up for the loss in domestic demand.
The Korean representative of Boeing, meanwhile, expressed strong confidence in its bid for South Korea's 4 trillion-won ($3.2 billion) next-generation fighter project, code-named "F-X."
"We are disappointed by the decision, but we have a great future. We remain the best aerospace partner for Korea, and the F-15K remains the best solution for the F-X competition," said Roger Kip Taylor, vice president of the Boeing office in Seoul.
In a news release, Taylor said, "Our future fighter production is greater than the European producers even without the Joint Strike Fighter (JSF)."
Boeing lost Friday to Lockheed Martin in a competition to win the U.S. air force's military contract to develop the JSF warplanes, a program potentially worth $400 billion.
"Boeing is prepared for the future and we are committed to working with our counterparts in Korea in shaping the future of aerospace," Taylor said.
"We remain the largest producer of military aircraft, commercial aircraft and space systems, and we offer the best plan for ensuring long-term growth and prosperity for Korean aerospace companies."
Boeing is one of the four competitors for Seoul's F-X project, which calls for the introduction of 40 fighter jets by 2008.
The other contenders are Dassault Aviation of France, the maker of the Rafael aircraft; the European consortium Eurofighter, which offers its Typhoon; and Russia's Sukhoi, for its Su-35.
Most defense experts predict that it will be a two-way competition between Boeing and Dassault Aviation. Eurofighter is still regarded as a dark horse, with Russia's Sukhoi a distant fourth.
Two weeks ago, the Seoul government implied a possible delay to next year in its announcement of the winning bidder and model for its F-X program. South Korea originally planned to announce the successful bidder and model in July this year, but has put the announcement off several times.
(sjkang@koreaherald.co.kr) By Kang Seok-jae Staff reporter Source : Korea Herald 2001.10.29
AERONAUTIQUE : RAFALE OU F15 ?
Boeing perd du terrain dans le projet F-X
En ratant le contrat de l'US air force pour développer les avions de guerre JSF (Joint Strike Fighter), Boeing vient peut-être de laisser passer sa chance de décrocher le très convoité projet F-X, en Corée du Sud. Le plus gros producteur d'avions militaires n'a pas convaincu face à son concurrent Lockheed Martin et a perdu le 28 octobre un contrat de 400 milliards de dollars. Un mauvais point pour Boeing qui est entré dans une compétition féroce pour remporter le projet F-X, un contrat comportant la vente de 40 avions de chasse à la Corée du Sud d'ici 2008. Ce projet représenterait pour l'américain une somme de 4000 milliards de wons(3,2 milliards de dollars). Cette nouvelle tombe d'autant plus mal que Boeing apparaissait comme le grand favori. Il avait déjà placé toutes les chances de son côté en proposant, peu avant le 23 octobre, un programme avantageux de transfert industriel de 2,8 milliards de dollars vers la Corée du Sud. Le constructeur avait également déclaré que son projet comprenait un programme de transfert technologique centré sur le développement d'un programme d'avions de chasse coréens. Certains experts ont d'ores et déjà avancé que Boeing pourrait réduire son secteur d'assemblage d'avions militaires. Mais il se pourrait également que la compagnie renforce ses efforts pour remporter le contrat coréen pour compenser ainsi la perte du contrat de l'US air force.
Une décision reportée à l'année prochaine
Le constructeur américain disposera d'un peu plus de temps que prévu pour convaincre puisque la Corée du sud devrait reporter à l'année prochaine l'annonce du modèle gagnant. "Il n'y a aucun changement dans notre projet d'annoncer à la fin de cette année quel est le candidat et le modèle gagnant pour notre projet d'avions de chasse, mais il pourrait simplement être reporté si nos conditions ne sont pas satisfaites", avait déclaré Choi Dong-jin, le 22 octobre, conseiller ministériel pour les achats dans une conférence de presse du ministère.
C'est la toute première fois qu'un haut responsable du ministère de la Défense évoquait publiquement l'éventualité d'un délai dans la sélection du candidat. Le gouvernement était censé annoncer le résultat de sa sélection au mois de juillet dernier, mais cette décision a déjà été repoussée de plusieurs mois. La plupart des experts de la défense tablent toujours sur une compétition finale entre les deux principaux candidats, Boeing et Dassault Aviation. L'Eurofighter, proposé par le consortium européen (EADS, BAE Systems et Finmeccanica), est toujours considéré comme le candidat inattendu, avec en quatrième et lointaine position le Sukhoi russe. Tous les concurrents, dont les responsables étaient à Séoul à l'occasion du Seoul Air Show début octobre, ont proposé de se conformer aux 70 % de compensation suggérées par Séoul pour son projet d'achat d'avions de chasse. La France avait quant à elle proposé à la Corée du Sud de lui offrir la technologie pour construire des missiles air-air et à longue portée si le Rafale était retenu. Le consortium européen EADS, composé par la Grande-Bretagne, l'Allemagne, l'Italie et l'Espagne, a également exprimé sa volonté de se conformer aux exigences de Séoul pour son programme d'avions de chasse. Kang Seok-jae
Source : Le Courrier de la Corée 2001.11.09
- CORÉE : LE RENOUVEAU VIENDRA DES PME
Les Echos du 13/11/2001 Si cet article vous intéresse veuillez nous contacter
- KDI CALLS FOR DRASTIC CHAEBOL DEREGULATION
The state-run Korea Development Institute (KDI) yesterday urged the government to allow the nation's top 30 industrial giants to easily advance to new business operations by easing strict regulations on their investments.
Making public a mid-term report on the Vision 2011 Project, the KDI recommended that the watch list of the 30 largest business conglomerates, or chaebol, should be scrapped as part of drastic deregulations. ``In order to firmly establish the market economy in line with global standards, it is necessary to ease the ban on chaebol's entry into non-core business areas,'' a KDI official said.
The government has enforced the ban in a move to prevent chaebol from excessively expanding into non-core businesses, claiming that their over- expansion might cause unfair practices and distort market discipline.
However, the government is now trying to ease the regulations designed to control the mammoth conglomerates in a desperate bid to reinvigorate the economy during a prolonged global slowdown.
Mapping out a long-term development project, the KDI recognized the need to promote fair competition among key business conglomerates by easing chaebol-related regulations. ``It is irrational for the government to block chaebol from making inroads into non-core business sectors in accordance with the chaebol watch list,'' the KDI said.
The KDI also called on the government to take measures to promote spin- offs of chaebol affiliates in a move to bar the family-run conglomerates from monopolizing economic power.
For this purpose, it suggested that the Fair Trade Commission be allowed to file a request with the court to decide on a split of a certain subsidiary from its conglomerate.
However, the think tank urged the authorities to strengthen regulations banning mutual shareholding among chaebol affiliates, adding that the regulations ought to cover smaller business groups in addition to the top 30 conglomerates.
Many executives of overextended chaebol have illegitimately taken advantage of mutual shareholding in order to control their affiliated firms without making actual investments in them.
The KDI also proposed a plan to allow a person or a company to file a suit directly to the court in order to demand compensation for damage caused by unfair trade practices by chaebol firms.
Currently, a plaintiff is required to take his or her case to the Fair Trade Commission before going to court.
The KDI also called for the speeding-up of the promised process of privatizing nationalized banks in a bid to improve their competitiveness by adopting performance-oriented management systems.
It also suggested that the government should privatize more state enterprises, adding it is necessary to lift various controls on utility services charges.
The research center also called for the creation of watchdog agencies for the telecommunications and energy businesses, to ensure their effective operation.
It urged the government to make utmost efforts to create a more favorable investment environment as it might lose foreign investment to China, which is expected to emerge as the leading economy to monopolize foreign capital and technologies within about 10 years.
The KDI plans to finalize its action plans for the Vision 2011 Project next month. The Ministry of Finance and Economy will then set out to put together the action plan to have the project set in motion from next year. Source by: Korea Times (2001.11.13)
- SAMSUNG, LG CONCENTRATE ON OVERSEAS FACTORIES By Nho Joon-hun
Overseas production at some businesses has long exceeded domestic manufacturing volumes, and many companies are once again resuming offshore investment to further increase their production base.
The construction of offshore factories slowed down to a virtual stop in the immediate period following the financial crisis of 1997. But overseas activities are now becoming more and more visible.
``The general recognition is that where there is strong local demand, production should be moved to that location in order to reduce distribution costs and to improve corporate image,'' one analyst explained.
Samsung Electronics kicked off operations at a monitor factory overseas with an annual production capacity of 1.3 million units to capitalize on the local personal computer market.
It is also reportedly pushing another plant for its locally incorporated SEIIT for the production of code division multiple access (CDMA) mobile handsets.
At the same time, Samsung has decided to invest $20 million to set up an optical disc drive manufacturing facility near Manila in the Philippines, following its second plant in Indonesia.
In addition, Samsung operates numerous other overseas plants, including a projection TV facility near Barcelona and another monitor plant in Hungary.
Next year, company officials confirmed, Samsung will begin manufacturing plasma display panels in Tianjin along with a $39-million hard disc drive factory in Brazil.
In the case of LG Electronics, it completed construction of an integrated home electronics plant in Monterrey, Mexico, with a total investment of $100 million, the second such complex outside of Korea following the other one in Tianjin.
It is also negotiating with Chinese companies to set up a joint venture through which it will invest $30 million in a plant specializing in CDMA mobile handsets, company officials said.
Having set up facilities in Nanjing, Sao Paulo and Mexicali for the production of 1.1 million liquid crystal display monitors in August, LG is now reviewing the possibility of operating additional lines in locations like Britain, India and Indonesia.
LG has already kicked off the production of 60,000 plasma display panels in Shenyang in June and its annual production volume is expected to be ramped up to 150,000 units next year.
``Even with concerns over the hollowing out of Korean industry, it is a proven fact that increased outbound investment tends to attract more foreign direct investment,'' the analyst said.
Consequently, companies should be weighing the benefits of local production rather than being concerned about criticisms that they may invite for taking their business to other countries, he added.
jakenho@koreatimes.co.kr - Source : Korea Herald 9/11/2001
- SEMI-CONDUCTEURS, LE CORÉEN SAMSUNG VEUT DEVENIR LE NUMÉRO DEUX MONDIAL
Les Echos du 30/10/2001 - Si cet article vous intéresse veuillez nous contacter
- DAEWOO SALE TO GM POSSIBLE BY DEC. 15 By Samuel Len
SEOUL (Reuters) - Creditors could finalize the sale of South Korea's Daewoo Motor Co to the U.S. General Motors Corp. by December 15 if the labor union backs the deal, Daewoo's main bank said on Thursday.
After more than a year of talks, GM signed a memorandum of understanding in September with KDB to acquire four plants from Daewoo, Korea's third-largest automaker measured by sales.
"If the union pact is settled, a final deal is possible by December 15," Yoon Jae-min, spokesman of the state-run Korea Development Bank (KDB), told Reuters by phone.
GM and other unidentified investors offered to pay $400 million for 67 percent of a joint venture with creditors, led by KDB, who would kick in $197 million for 33 percent.
For GM, the acquisition would offer production bases in Asia, the fastest growing automobile market in the world.
For South Korea, the deal would mark a major milestone not only for creditors, who have spent more than two years hunting for a suitor for Daewoo, but also for a government keen to show it is pushing reform of debt-laden companies.
Both GM and Daewoo Motor have said they were optimistic that a final deal could be reached by the end of this year.
GM would take over two of Daewoo's domestic and two overseas plants, with a combined annual output topping 500,000 vehicles. Also included in the agreement are all of Daewoo Motor's 22 overseas sales units.
"GM has completed due diligence on Daewoo's overseas subsidiaries," KDB Governor Jung Keun-yong told reporters on Thursday.
"Now the collective bargaining contract with the union must be resolved," he said.
Earlier this week, Daewoo started talks with its union to revise a contract clause that requires labor's consent for a sale or layoffs.
Daewoo's union, with a history of violent protests, is seeking the reinstatement of more than 1,700 workers at the main Pupyong plant west of Seoul who were laid off in February as part of restructuring efforts.
As of the end of last year, Daewoo Motor's liabilities stood at 22 trillion won ($17.3 billion) compared with 9.1 trillion won in assets.
Source : Reuters 15/11/2001
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