LA LETTRE DU KOTRA Septembre 2002 Centre Coréen du Commerce Extérieur et des Investissements


KOTRA PARIS - 36, avenue Hoche - 75008 Paris
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M. Seong-Kuk Hong - Directeur Adjoint 
M. Frédéric Claveau -  Responsable Investissements

Vous possédez une technologie innovante et vous souhaitez vous investir à l'international. TECHNOMART EST FAIT POUR VOUS Saississez l'opportunité qui vous est offerte de venir présenter aux entreprises coréennes et du monde entier votre technologie et/ou vos processus innovants. Vous bénéficierez de conditions très privilégiées. Si vous êtes intéressé, n'hésitez pas à nous consulter, nous sommes à votre disposition pour vous aider. Contact : Frédéric Claveau - Tél : - fax : - ____________________________
VISITE DE REGIONS CORÉENNES Le 8 octobre prochain les régions du Kyonggi, Kangwon, Chungnam, Kyongbuk (jumelée avec l'Alsace) et Ulsan seront à Paris pour VOUS rencontrer De nombreux projets vous seront présentés dans les secteurs du : BTP, du Génie Civil et de l'Environnement/Traitement des Eaux Venez échanger avec elles et découvrir ou redécouvrir les opportunités d'affaires qui vous attendent Les rendez-vous se tiendront à : Novotel Paris Tour Eiffel 61, quai de Grenelle - 75015 Paris - Tél. +33 (0)140 58 20 00 Si vous êtes intéressé n'hésitez pas à nous contacter au +33 (0)142 25 28 44

Séoul et Pyongyang fixent un échéancier pour la réouverture de leur frontière
Korea proposes FTA with ASEAN, Australia
Asia-Europe business forum to open in Seoul
Asia, Europe leaders to discuss cross-continent railway project

Croissance coréenne : +6,1% 

Korea leaping forward to become Hub of Asia
The Quest for Hub status 
Assessing Korea's Investments & Hub Potential

Legislation : when products harm 

Banque et finance 
Foreign investors enjoy high dividends from domestic credit card companies 
Hotel chain Best Western enters Korea 
Korea's POSCO to invest $50 mln in U.S. biotech 
BASF expands Korean vitamins 
KOGAS initiates new management to maximize investor interest 

Conglomerates expand hiring of talented foreign experts 
Samsung va investir 3,4 milliards d'euros dans les LSI 
Samsung Electronics unveils future memory chip strategy 
Daewoo face à la grogne de ses fournisseurs  

ALSTOM : contrat de 155 M en Corée du Sud 
SAGEM : déjà plus de deux millions de modules GSM en commande 
L'Oreal setting trend in fast-growing cosmetics market 
Corée : Création d'une société commune de gestion de portefeuille entre le Crédit Agricole Asset 
 Management (CA-AM) et National Agricultural Cooperative Federation (NACF) 
Renault poursuit son avancée en Coréer du Sud 
Renault veut faire de Samsung son vecteur de développement en Asie 
Renault Samsung vient de lancer la SM3 en Corée 
Renault-Samsung : waiting list for SM3 models approach 10000 
Renault continue à investir en Corée 
Renault to invest W360 billion in Korea 
Renault Unveils Massive Investment Plan in Korea 
Automobile: Renault veut lancer Samsung en dehors d'Asie 
Renault's S.Korea unit set to break even in 2002 


Si cet article vous intéresse, n'hésitez pas à nous en faire part. Source : Les Echos - 3/09/02


¤ KOREA PROPOSES FTA WITH ASEAN, AUSTRALIA : Talks on a free trade agreement (FTA) with foreign trading partners are rapidly gaining momentum in Korea, with top government and business bodies floating proposals for FTAs with Australia and ASEAN (Association of Southeast Asian Nations) last week.

The Federation of Korean Industries (FKI), holding the 24th annual meeting of the Korean-Australian Business Council jointly with its Australian counterpart in Seoul Friday, proposed forming an FTA with Australia.

"A Korean-Australian FTA would be mutually beneficial," said Sohn Byung-doo, executive deputy chairman of the FKI, explaining the results of the business council meeting. "Through a free trade agreement with Korea, Australia will be able to easily penetrate the huge Northeast Asian market comprising China and Japan," Sohn said.

At the same time, he asserted, Korea will be able to further promote its Northeast Asian trade and logistics hub strategy through closer economic ties with Australia and other Pacific Rim countries. "The FKI delegates urged their Australian counterparts to fully take advantage of Korea's potential of developing into a regional hub linking the Pacific ocean and the continent."

In a similar context, Lee Koo-taek, chairman of the Korean-Australian Business Council, said that bilateral trade and investments are falling short of expectations, calling for closer ties in IT and biotechnology in the coming years.

Meanwhile, Minister of Trade Hwang Doo-youn revealed Saturday that the Korean government is already studying the feasibility of an FTA with ASEAN. "Korea is conducting a feasibility study on an FTA with ASEAN, while closely watching FTA progress among ASEAN countries and moves for China-ASEAN and Japan-ASEAN FTAs," Minister Hwang was quoted as saying on the sidelines of the ASEAN ministerial meeting in Brunei. "We are in the middle of looking for the best FTA solution for Korea."

Japan and China are said to be in the early stages of individual FTA-related contacts with 10 ASEAN countries. China, in particular, is reportedly expected to lower tariffs next year on specific imports from six major ASEAN countries - Brunei, Indonesia, Malaysia, Singapore, the Philippines and Thailand.

Japan has also set a goal of signing an FTA with ASEAN in 10 years.

Meanwhile, the Korean-Chilean working-level talks on a bilateral FTA, held in Geneva last week, allegedly ended without a specific agreement, due to a wide gap on liberalization of the agricultural product trade, government sources said. Both parties agreed to resume talks in October.

( - By Yoo Cheong-mo Staff reporter - Source : Korea Herald - 2002.09.16


¤ ASIA-EUROPE BUSINESS FORUM TO OPEN IN SEOUL - The 8th Asia-Europe Business Forum (AEBF), a meeting for top business managers in Asia and Europe, will open in Seoul in September of next year, the Federation of Korean Industries (FKI) said yesterday.

The forum, to be attended by some 250 businessmen, will be the setting for in-depth discussions on intra-region trade and investment and strategies for expanding international cooperation in financial service and information technology sectors.

Doosan Group's head Park Yong-oh will head the forum as the chairman, while CEOs of global giants like Phillips, Siemens and Mercedes Benz are said to have confirmed their participation in the Seoul event.

"Key topics on the table will probably include Korea's successful recovery from the financial crisis, recent changes in the Korean corporate culture and problems that Asian neighbors like China and Northeast Asian countries have in investing in Korea," a FKI official said.

Meanwhile, a number of high-profile Korean businessmen are planning to attend the 7th AEBF, slated for Sept. 18-22 in Denmark. The Korean guest list thus far includes Park, FKI vice president and heads of Daesung Group and Eugene Poongsan.

The seventh AEBF will explore cooperation expansion opportunities in eight business areas: trade, investment, financial service, information technology infrastructure, infrastructure, life science and medical equipment, food and environment.

"The Seoul forum will be a huge event, which will further help boost Korea's national image internationally right on the tail of the 2002 World Cup and the upcoming Busan Asian Games," the FKI official said. - Source : Korea Herald (2002.09.11)



Asian and European leaders will offer their support for South Korea's initiative to form an "iron silk road" that would link the two continents by rail when they meet in Denmark early next week, Seoul officials said yesterday.

In his keynote speech at the opening ceremony of the Fourth Asia-Europe Meeting (ASEM) on Monday, South Korean President Kim Dae-jung will ask ASEM leaders to provide cooperation for the Eurasian railway project, Kim's aides said.

Foreign Minister Choi Sung-hong said he expects the 26 participating leaders from Asia and Europe to express their support for the implementation of the ambitious project.

South and North Korea started construction work Wednesday for the reconnection of inter-Korean railway links, which will later be connected to the Trans-Siberian Railway (TSR).

A Russian news agency reported that North Korea proposed a meeting of transportation ministers with South Korea and Russia to discuss the link of inter-Korean railroads to the TSR.

President Kim will also brief the ASEM leaders on recent developments on the Korean Peninsula and request their continued support for the South's engagement policy toward the North, according to the aides.

Kim was assured that ASEM leaders will adopt the Political Declaration for Peace on the Korean Peninsula at the meeting next Tuesday, in which they will endorse his "sunshine policy" toward the North.

Kim will leave here today to attend the ASEM and hold separate bilateral summit talks with Japan and the European Union (EU) on the sidelines of the three-day biennial conference.

In talks with Japanese Prime Minister Junichiro Koizumi on Sunday, Kim plans to discuss with him their countries' policies regarding North Korea after being briefed on the Japanese leader's historic meeting with the North's leader, Kim Jong-il, in Pyongyang on Tuesday.

Before arriving in Demark Saturday, the South Korean leader will make a one-day stopover in the Netherlands, where he will meet ethnic Koreans there.

( - By Shin Yong-bae Staff reporter - Source : Korea Herald - 2002.09.20


¤ CROISSANCE COREENNE : +6,1% : Pour les six premiers mois de l'année, la croissance sud-coréenne s'élève à 6,1 %. La Banque de Corée annonce un rythme presque identique pour le second semestre. Cette vigueur inédite au sein des pays de l'Organisation de coopération et de développement économique est portée par l'augmentation des investissements et des exportations qui bondissent de 13,7 %. Etonnamment, la Coupe du monde de football, disputée en juin sur son sol et marquée par le surprenant parcours de l'équipe nationale, n'a pas tiré l'économie. La consommation a fléchi sur la période, et la fréquentation touristique a chuté de 40 % par rapport à 2001, notamment en raison de la défection de la clientèle japonaise. La Corée du Sud, en fait, bénéficie à fond du boom des télécoms, domaine dans lequel elle a pris des longueurs d'avance - Source : le point 30/08/02



South Korea is set to leap forward to be a hub in Asia.

Located between the two powers of China and Japan and further Russia, South Korea has been the geopolitical hub of Northeast Asia, witnessing myriad number of invasion or war between the giants.

Related Stories 
[1] Reclaimed Land to House High-Tech Complex
[2] Leisure, Logistics Zones Behind Incheon Airport
[3] Kimpo to Debut as International Business Area
[4] Shipping Belt to Link ROK to World
[5] Cheju to Serve as Gateway
[6] Inter-Korean Railway to Form Iron Silkroad
[7] Tax Package Ready for Foreign Investment
[8] Koland Devoted to Eco-Friendly Development

Now it is now trying to utilize its geographical location and high-end technologies to emerge as a local business hub and the gateway to the Asian market of two billion consumers.

South Korea's bid to be a transportation hub and an export base for Northeast Asia will be highlighted when the Seoul-Uijongbu and Seoul-Wonsan railway are reconnected under an agreement between North and South Korea.

The Korean peninsula will become a pivotal point in a low-cost railway transportation link when the railways are connected to the Trans Siberian Railroad (TSR) and the Trans China Railroad (TCR) linking ``the Far East'' with Europe.

Korea's aggressive opening to foreign direct investment started to bring the country into the center stage of in the local economy, from the economic turmoil during 1997-1998.

With the enactment of the Foreign Investment Promotion Act in 1998 that allowed aggressive takeovers by foreign companies, the government has succeeded in attracting huge volumes of foreign direct investment. In principle, there are no barriers to foreign investment while the number of business lines open to foreign participation has increased to 99.8 percent.

All limits on foreign investment in securities have been abolished while no restrictions exist on trading in any financial products. Foreigners now largely undertake the bulk of security trading on Korean exchanges.

At the same time, the overseas remittance of profits, principle, dividends and interest is legally protected. Since the crisis of 1997, the volume of inbound foreign investment has quadrupled.

Unlike other Asian countries, Korea has completely opened its real estate market to allow foreigners to own, trade or use land for any purpose and without limits.

In the near future Korea will further the promotion of foreign investment by designating free enterprise zones on the west coast.

They will include Cheju Island as well as areas around Incheon International Airport, such as Songdo, Kimpo and islands of Yongjong, Mui and Yongyu.

Businesses in the zone will be serviced with a package of tax incentives as well as convenient infrastructure such as road, traffic, housing environment and Internet.

Since early this year, the government has launched a campaign for Korea to become the business hub in Northeast Asia, which is emerging as one of the world's three economic blocs, including the American and European regions.

The world 13th largest economy with 47 million consumers faces a row of obstacles to hurdle to reach its target.

1/ Reclaimed land to house high-tech complex

Songdo, a reclaimed land south of Inchon, will transform itself into a high technology industrial complex from 2020.

The new land was last month designated as the special economic zone backing Incheon International Airport.

A bridge between Yongjong-do and Songdo will turn up ahead of the original schedule to beef up the special zone's role.

Beginning work on the land in 1994, Inchon city completed reclamation of 1.76 million pyong of land in January 2000, there is currently 2.07 million pyong, with the hope of there being a total area of 5.35 million by 2020.

As a first step for the new planned city, the new 1.76 million pyong of land will host information and bio industry complexes and a residential area.

The 803,000 pyong dedicated to industrial complexes will cost 345 billion won and is expected to lure companies specializing in software, electronics and information equipment, new materials and mechatronics.

The residential area covering 538,000 pyong is expected to house 7,900 households or 22,900 people.

And ambitious project has already borne results in luring foreign and domestic investment.

A U.S.-based pharmaceutical firm VaxGen, developer of an AIDS vaccine, promised to invest $150 million to build a research and development center and production lines on a site on the reclaimed land.

Land sales by lots have been underway since last December for the 540,000 pyong residential areas.

For the 2.07 million pyong of land that currently exists, it is being handled according to an investment contract by a U.S.-Korean consortium.

The consortium, in which the U.S. Gale Company invested 81 percent and POSCO took the rest, also clinched a deal with Inchon city government to invest $12.7 billion on the future land.

The deal will enable the new city to have a row of skyscrapers by 2013.

The consortium intends to build an international convention center and a 60-story international business center in the city. And 60 office buildings, four hotels, department stores, shopping malls, 15,200 housing units and a 200,000 pyong large golf course will be located on the reclaimed land.

For the project, the government plans to mobilize a total of 2,338 billion won. Out of the aggregate sum, Inchon city government plans to shoulder most of the 2,130 billion won through the earnings from the sale of land.

The private sector will take the remaining 208 billion won for the construction of sewage disposal plants.

When the reclamation process is finalized, the 5.35 million pyong city will include 880,000 pyong of residential area, 315,000 pyong of commercial area, 440,000 industrial complexes, 373,000 pyong for education and research activities.

Another 200,000 pyong of land will be allotted for cultural activities and 3,080,000 pyong will go toward public facilities.

Backing the emergence of the new city, the government will assign Songdo as a special zone based on the law on special economic areas which is to be passed by the legislature this year.

The designation is expected to provide businesses located within the area with various tax benefit packages, one-stop administration services and enhanced residential and educational conditions, to encourage foreign investment.

The Yongjong-Songdo bridge is also expected to boost economic activity in the planned city.

The local authority has conducted negotiations with British firm AMEC, since the company submitted a blueprint for the construction in February 2000.

For the construction of the feeder roads for the bridge, the central and Inchon city government plan to chip in the required expenses.

The construction ministry said it will invest 561 billion won to expand Inchon city's first subway by 6.7 kilometers in case of any traffic congestion with the expected increase in population.

It also plans to broaden the road along the coast to 64 meters, or 12 lanes, and install more traffic friendly intersections.

In an effort to make the city appear environment-friendly, the ministry will also install aqueducts, an artificial lake and wetlands around the city.

2/ Leisure, logistics zones behind Incheon Airport

Once-remote Islands around the Incheon International Airport will take critical roles as strategic hub for logistics and the tourism business by 2020.

International logistics complex will be developed on a 5.7 million-pyong land of Yongjong Island where the international airport stands.

Youngyu and Mui islands, west of the airport, will also provide 2.13 million pyong for a resort area.

The construction-transportation ministry last month rolled out a development plan to renovate the airport-adjacent areas into global business and leisure centers, receiving research by Singapore-based Colliers Jardine.

The Yongjong development zone, just east of the airstrip, will include a 750,000 pyong public housing lot, 880,000 pyong industry and logistics area, and a 2.84 million pyong residential and tourism area.

When the development process is completed, a new town with 118,000 people will show up on the island.

On islands of Yongyu and Mui will surface an integral resort zones. A U.S. financial investment firm CWKA submitted a development plan in April last year and follow-up negotiations are at present underway in order to attract foreign investment to the remote isles.

According to the project, a total of $5.5 billion will be poured into building eight hotel buildings with 5,500 rooms and condominiums with 2,000 rooms. In addition, 89 residential buildings with combined 1,000 rooms will pop up for retirees.

Yongyu and Mui are also to host recreation facilities such as an aquarium, a golf course and a theme park, as well as 89 shopping centers and an international convention center.

Most of the required expenses will come from the private sector, but the central and Inchon city government will pick the tab for the construction of the infrastructure on the islands.

As a first step for the 20 year-long project, A 750,000 pyong of land on Yongjong Island was designated as public housing lot development area on June 28.

Korea Land Corporation plans to start the construction at the end of next year and let residents in at the end of 2006.

An industry and logistics complex covering 880,000 pyong is expected to create a synergetic effect with a neighboring tariff free zone, for which development plans had already been set up.

"We will set up concrete development plans for the complex in line with the projected emergence of a tariff exemption area. The two special areas are expected to show an effective division of roles in backing up the airport," said an official at the ministry.

On the development of the two other isles, A seaside tourism section is part of the project on Yongyu Island consisting of a boat hiring facility, theme park and so on, while Mui Island will witness leisure facilities like camps, golf courses, jogging tracks and archery fields.

The construction plans for Yongyu and Mui islands are still up in the air, largely depending on the outcome of ongoing negotiations over investment from outside. The ministry has set its eye on the build-own-operate (BOO) basis as a measure to channel inbound investment.

Inchon city has laid out its ordinance to prevent environment-destructive development in the vicinity of the special areas and plans to reinforce its review on the construction to keep the project under control.

The facelift of the once remote islands will boost traffic in and out of the region presumably to 307,000 passenger car units (PCU) per day by 2020.

A bridge linking Yongjoing Island and Songdo new town and a railway between the airport and Seoul will prompt traffic around the new towns. A total of 17 trunk lines will vein the three islands with nine of them crossing Yongjong.

A 50-kilometer long personal rapid transit (PRT) technology is under consideration for the region. The PRT is a computer controlled transportation system where passengers ride in three person cars on elevated guide-ways non-stop from where they started.

3/ Kimpo to debut as international business area

Reclaimed land in Kimpo, between Seoul and Incheon International Airport, is to emerge as an international business town housing a population of 89,000 residents from 2009.

The region was designated as a 5,420,000 pyong large special economic zone last month, complementing the function of the international airport. One pyong equals 3.3 square meters.

Kimpo will host multinational financial companies, become home for a floriculture industry and recreation activities.

The development plans for Kimpo include 330,000 pyong dedicated to the international business area, 1,670,000 pyong for residences and 3,420,000-pyong for sport and leisure activities.

In the 330,000 pyong international business area, 130,000 pyong will be zoned for large skyscrapers to accommodate global companies in the financial services sector, and another 100,000 pyong will be allotted for foreigner-only residential patches with population density kept below 60 persons per hectare.

The remaining 100,000 pyong will be used for the public facilities, parklands and roads.

The residential area will include 790,000 pyong for housing lots, 90,000 pyong for commercial areas and 140,000 pyong for general infrastructure.

The new town will have a population density of 133 persons per hectare, lower than those for Kwachon or Ilsan with 174 and 176 each.

To ensure the houses in the town aren't too monotonous by design, various floor space ratios will be applied to the region ranging 100 to 200 percent.

The sport-leisure area will consist of a 950,000 pyong golf course, a 430,000 pyong theme park and 320,000 pyong for equestrian clubs and a horse riding ranch.

Other 220,000 pyong of land will serve as fields for soccer and baseball for a while until the campus of a foreign universities or foreign medical facilities are attracted.

The 570,000-pyong for the floriculture industry will also emerge to boost high-end technologies as well as attracting tourists.

The Korea Land Corporation (Koland) in charge of the development in the region, plans to launch a campaign to encourage foreign investors to participate in the projects of the international business area and the theme park, in cooperation with the Seoul National University.

For the other project, Koland will finance most of the expenses except for the floriculture areas. It will spend a total of 2,523 billion won initially to purchase the land and kick off construction between 2004 and 2009.

The central government will pitch in to help with the construction of the traffic infrastructure and the floriculture complex.

The Korea Agricultural & Rural Infrastructure Corporation (KARICO) will also participate in the development of the floricultural area.

The government plans sell land lots and houses in 2006 and 2007 respectively. Residents will be able to move into the city from 2009.

To block any potential bad smell from wafting cross from the landfill to the north of the new town, the government will place the residential area more than three kilometer from the rubbish tip.

The city will also be surrounded with 1.7 kilometer of landscaped and natural parkland, and 250-meter wide nature strips will run parallel to the two streams running through the town to the Yellow Sea.

The new town will be nearly 65 percent covered with plants, including the floriculture area and a golf course, the highest ration in the country. Even excluding the two green areas, the ratio of nature zones will amount to 21 percent.

Traffic is estimated to reach around 190,000-car units per day. A highway along the planned Seoul-Inchon canal and a train station will be built to alleviate possible traffic congestion.

The new city's residents will also use a nearby interchange along the Singonghang (New Airport) Highway between Seoul and the international airport.

The government is also checking whether to install personal rapid transit (PRT) within the city. The proposed PRT is a computer controlled transportation system where passengers ride in three-person cars on elevated guide-ways non-stop from where they started.

4/ Shipping belt to link ROK to world

A shipping belt linking Seoul, Pusan, Kwangyang and Cheju Island is expected to emerge as maritime transportation hub over the next 10 years.

Seoul is to provide tax and financial incentives to lure both domestic and foreign ships to be registered in Korea. It is reported that 72 percent of Korean ships are domiciled overseas, about 10 percentage points higher than the non-Korean ships.

Private investments will be encouraged to establish a fund aimed at financing shippers. A revision of the law on ship registration will be sought for this end.

To dissuade local ships from seeking registration in other countries, the tax on shipping firms won't be based on operating tax but on tonnage carried. Other competitor countries such as England and the Netherlands have already put such a tax system into practice.

The maritime-affairs ministry will review the present ship registration laws to make Cheju Province the nucleus spot for ship registrations.

Ships listing their names in the Cheju special zone have benefited from tax benefits but it is pointed out that the benefits are not enough to lure ships to Cheju as a home for registration.

A 930,000-pyong international logistics complex and a 590,000-pyong facility will spring up in Pusan and Kwangyang each. One pyong is as large as 3.3 square meters.

This appears to be a measure to attract multinational companies, which tend to locate their assembly and distribution centers in the vicinity of international ports, and pursue the global trend of value added logistics and industry.

Making the prospects even brighter, the government recently settled the pending issue of securing the required land acreage for storage facilities for the London Metal Exchange (LME), the core component of the international trade in non-ferrous metals.

The country has been campaigning vigorously to host the regional depot to facilitate the further development of the national commodities futures market.

It has secured a total of 20,000 pyong of land for the operation of regional center to begin from July at the earliest.

Through these ambitious plans, Seoul plans to create a "maritime industry cluster, in which shipping companies, brokers, agencies, vessel managers, shipbuilders and even insurance and legal service companies gather together for `one-stop' marine transport services."

"Silicon Valley is another kind of cluster, and there are quite a few examples such as fashion footwear clusters of northern Italy or the automotive industry cluster in southern Germany. The shipping cluster in Pusan and Kwangyang is experimental but viewed as necessary for the country in the face of economic globalization and subsequent changes in the logistics industry," according to an expert.

In realizing all these projections, the country plans to become the fifth biggest shipping power in the globe with 40-50 million DWT in 10 years.

5/ Cheju to Serve as Gateway

South Korea's master plan for the business hub also includes its southernmost province of Cheju to make most of its traditionally unique role.

Seoul last November announced a plan to create an international free city on the island as gateway for foreign investors and tourists from around the world.

In a meeting chaired by then Prime Minister Lee Han-dong, the government endorsed the plan to turn the island into a hub city in East Asia, where a free flow of human resources, commodity and capital, coupled with maximum guarantees of enterprise activities, is possible.

The plan features, among other things, the extension of visa-free passage for foreign arrivals, especially allowing nationals of 17 hitherto-forbidden countries such as Vietnam, Mongolia, Cambodia and Pakistan to enter the island without visas.

The visa-free initiative will be applied on a gradual basis and foreign visitors will be allowed to enter the mainland without visas within a limited scope. Chinese people will also be able to visit the island without visas under the new plan.

According to the plan, the island will extend the maximum period of stay by foreign tourists to 30 days from the current limit of 15 days through a revision of the Immigration Law.

Foreign experts in such areas as foreign language education, information and communications, bio-engineering and the tourism industry will be able to stay for up to five years from the current limit of three years.

Investors, both domestic and foreign, who pour between $10 million and $30 million into tourism facilities, will be exempted from corporate and income taxes for three years after the start of business, a move aimed at expediting the inflow of foreign investment.

Tariffs will not be imposed on imports of equipment and other facilities for such foreign invested companies.

Foreign investors who enter the so-called free trade zone near Cheju International Airport will be exempted from corporate, income and provincial taxes for seven years.

To provide convenience for foreign investors, all administrative organizations on Cheju will have to receive and offer official documents in English.

Elementary, middle and high schools on Cheju will be permitted to employ foreign teachers for a maximum of three years.

To expedite the development project, the government plans to pour 2.9 trillion won for the construction of infrastructure such as an airport, ports and roads, and another 1.7 trillion won for the construction of industrial complexes, residential and shopping areas, and parks.

Tax-free shops will be set up at airports and ports exclusively for local consumers to provide them with the chance to shop at a discount.

The construction-transportation ministry recently announced that students who has lived for longer than three years overseas are qualified to be enrolled in international schools on Cheju Island. The former time period was five years.

The ministry said it plans to place workforces for foreign language services in government offices on the island.

6/ Inter-Korean Railway to Form Iron Silkroad

The restoration of the Seoul-Sinuiju and Seoul-Wonsan railways can be the first step toward completing the so-called Trans-Korean Railway. And it will eventually connect the peninsula to transcontinental railways like the Trans-Chinese Railway (TCR) and the Trans-Siberian Railway (TSR).

The inter-Korean summit in June 2000 in Pyongyang broke ice after half-century long cold war in the peninsula, leaving rooms for the transpiration across the most fortified in the world.

The two parties agreed to re-connect the Seoul-Sinuiju line linking the two capitals, leading up to the Chinese border In the following month,.

The South has since then finished preparing 10.2 km out of its 12-km zone, leaving just 1.8 km zone inside the Demilitarized Zone (DMZ), even though the North, however, has practically done no work inside its 12-km zone from Changdan to Kaesong.

Another project is the 127km railway pavement between Kangnung on East Coast and the DMZ to link the railway to Mt. Kumgang in North Korea and further to Wonsan.

Even thought the volatile inter-Korean political climate has often posed obstacles the construction projects, few have denied that the cross-boarder project will benefit the two Koreas in the longer term.

The ambitious plans also gain momentum when Moscow signaled positive feedback late last year.

Russia opened an office in Pyongyang as part of its efforts to speed up the proposed connection of the TSR to the inter- Korean railroad in November last year.

In addition, Seul plans to conduct a feasibility study for constructing an undersea tunnel linking Korea and Japan, maximize the economic effect the cross-boarder surface transportation will accompany.

The construction-transportation ministry in April said that it would commission a local research institute to undertake the study.

A cargo of one 20 foot equivalent units (TEU) takes 26 days and $2,100 to travel from Seoul to Belarus by ship, but needs only 16 days and $1,300 with rail.

7/ Tax package ready for foreign investment

Foreigners are expected to benefit a package of tax incentives for direct investment as Seoul has decided to dish out more tax breaks or exemptions as part of a long-term plan.

A new tax incentive program was last month released as part of country's bid to lure more foreign investors, especially to abovementioned special economic zones.

Tax incentive schemes were also key to luring multinational firms to Korea, reflecting foreign businessmen's repeated calls for more tax breaks and exemptions.

According to the expatriates, local authorities currently impose higher income and corporate tax on foreign firms than its rivals such as Singapore and Hong Kong.

The corporate tax rates are now estimated at 27 percent on average in Korea. They are lower than 30 percent in Japan, China, and Thailand and 28 percent in Malaysia.

But the rates are higher than 16 percent in Hong Kong, 24.5 percent in Singapore and 25 percent in Taiwan.

As a result, Seoul has agreed to grant more tax incentives to foreign-invested firms as well as their foreign staff and employees assigned here.

Foreign firms doing business in the envisaged special economic zones will be allowed to enjoy exemptions and breaks on various taxes, which are similar to tax incentives currently available for those operating in exclusive foreign investment zones.

Under the program, foreign businesses will be allowed to get 100 percent exemption on income and corporate tax for the first seven years and 50 percent exemption for additional three years.

Customs duties, special excise tax, and value-added tax will not be imposed on capital goods imports by foreign-invested companies in the planned special economic zones for the first three years of their business operations.

In addition, foreign invested firms will be able to enjoy 100 percent exemption from acquisition, registration, property & land taxes for the first five years, followed by 50 percent exemption for another three years.

In order to benefit from the abovementioned tax exemptions, foreign manufacturing companies will have to invest $50 million won or more, while distribution firms will be required to invest more than $30 million.

In the tourism sector, tax exemptions will be available for firms investing over $20 million in the operation of tourist hotels and international conference facilities.

The tax incentives will also be granted to foreign firms investing more than $30 million in resort complexes or amusement parks.

In case of China, it offers total exemption of income and corporate tax on foreign direct investment for the first two years plus 50 percent exemption for an additional three years.

Malaysia provides 70 to 85 percent exemptions for five years, while Singapore grants 100 percent exemption for five to 10 years.

There is no such income or corporate tax exemption on foreign investment in Hong Kong.

8/ Koland Devoted to Eco-Friendly Development

Domestic public companies have leaped out of the bed of roses to join the cut-throat competitions in the market, since the government prodded them to horn competitiveness following the financial turmoil four year ago.

Korea Land Corporation (Koland) is no exception in facing the survive-or-not situation.

``We have sweated to transform our structure, operation and mindset centering on our customers since 2000 in an active response for the fast-changing industrial picture,'' said Kim Jin-ho, president of the company.

He said that Koland can not be a public company associated with the staff's overbearing attitude to customers.

As his words implies, the corporation has undergone drastic changes to be reborn as customer-oriented organization.

It has run a ``happy call'' system, through which the corporation conducts regular survey of customers to see level of their satisfaction over the service by item.

In its ``customer-monitoring program,'' the company's evaluation team, pretending to be customers, make phone calls to its staffs to access how gentle they are to the clientele.

The corporation has also installed ``OK Team'' within every branch under the direct control of each office head to respond customers' grievance over the service as quickly as possible.

Koland also plans to set up a commission consisting of around 10 customers in its every project area to monitor feedback from them.

``We would not just finish selling off land patches, but provide a package of services covering customers' land purchase to construction,'' Kim said.

The package includes a simulation service to evaluate the construction expense for customers.

The corporation also has adjusted its organizational system and operation process, enhanced its homepage to provide more information and agencies by the administration.

The enhanced services are quick to bear tangible fruits. Last year, the corporation chalked up more than five trillion won in turnover, record high in its history. Its operating profits hit 108.7 billion won.

The fine performance has dragged down its debt for the last few years. Its liability topped 8.4 trillion won in 1999, but slid to 7.8 trillion won in 2000, 6.7 trillion won last year. As of June this year, the debt shrank to 5.7 trillion won.

Accordingly, Its debt-to-equity ratio has fallen to below 200 percent level.

In June, the ratio stood at 182 percent, a sharp drop from 291 percent reported three years ago.

``We have disposed of a total of 3.3 million pyong lands this year, fetching approximately 3.3 trillion won. This is some double the amount for the corresponding period last year,'' said Kim.

``The fine performance is largely thanks to our customized services as well as the real estate market boom,'' the president added.

Koland plans to focus on disposal of other unsold lands to enhance its financial status and designation of other development areas for the rest of year rather than expand its businesses.

It was none other than the market that has endorsed such efforts. The National Information & Credit Rating and Korea Management Consulting & Credit Rating Corporation jointly upgraded the corporation's credit rating to AAA level last February, citing its much improved financial status.

``They thought highly not only of our achievement for the last years but of our prospect. The current development projects in Tongtan in Hwasong, and Chukchon & Tongbaek in Yongin are generally believed to earn us considerable amount of cash,'' he said.

A series of planned mega-size new town development projects has brightened the company's prospect, according to Kim.

Koland expects the raised credit rating would save expenses in floating debentures as the better evaluation in the market will pull down the interest applied to the firm.

``Now we have restored the market reputation befitting the country's biggest real estate specialist firm, enhancing the market awareness and credibility,'' Kim said.

Koland's way has not been just smooth. In particular, it had to shoulder bad firms' real estate assets by issuing 2.6 trillion won worth bonds just after the financial turmoil started in late 1997.

The flotation without the government's financial assistance jacked up the company's debt to financial sector.

The deflation in real estate market in late 1990s was the second blow to the already staggering Koland.

What the corporation resorted to at the thorny period was only the belt-tightening policy and whole-scale promotion campaign.

``It was hard process indeed, but we would not rest on the laurels from now on. Koland would go further to drag down the debt and become the one of the healthiest public firms,'' the 60 year-old general-turned president said.

Behind the fine accomplishment in record lie the corporation's consistent interests in environment.

A row of awards and certifications testify to the firm's devotion to the eco-system. The most recent one was the best eco-friendly management award granted by the Ministry of Environment earlier this year.

Kim said, ``We have set up a long-term plan to nurture eco-friendly technologies such as environment-minded complex design and garbage disposition skills as our core know-how.''

Koald will be loyal to the motto of ``sustainable development'' for the coexistence of human and nature, preserving green area, water circulation system, diversity of animals and plants, the president stressed. - Source : Korea Times - 30/08/2002



Promoting Korea as Northeast Asia¡¯s new business hub isn¡¯t just a matter of getting edge on the regional competition; it¡¯s a matter of economic survival

Northeast Asia has grown to rival the European Union and the North American Free Trade Area (NAFTA) as a global economic powerhouse. The Ministry of Finance and Economy projects that the weighting of Northeast Asia in word GDP will have increased from 20 percent in 1999 to 30 percent by 2020. In addition, the importance of Northeast Asia in world trade grew from 11.4 percent in 1998 to 12.3 percent in 2000, and is expected to jump to 30 percent by 2010. The volume of shipments originating within the region as a proportion of world trade has grown from 27 percent in 1997 to 28 percent in 2000, and is expected to reach 30 percent by 2006. The fact that the world¡¯s five largest ports, Singapore, Hong Kong, Busan, Shanghai and Kaohsiung (China) are located in East Asia underpins the validity of this forecast.

Currently, there is stiff competition among the countries of East Asia to become the focus of regional business and knowledge-based industry. In 1998, Singapore¡¯s Economic Development Board unveiled its ¡°Industry 21¡± project designed to create a hub of knowledge-based industry within the city state. Hong Kong has launched a special development team to help it gain preeminence as a regional business center, while China¡¯s strategy is to lure the regional branch offices of multinational corporations to the city of Shanghai.

To assess the position of Korea relative to such developments, the country has a leading advantage in that it is located between the world¡¯s second largest economy, Japan and the rising economic power of the 21st century, China. Korea¡¯s potential to become Northeast Asia¡¯s logistical and financial activities is gaining recognition, as evidenced by the decision of Lehman Brothers, the world¡¯s fourth ranking investment bank to downscale its branch in Singapore in favor of upgrading its Seoul office in 2002.

To exploit this potential, the Korean government announced April 4th a master plan to promote Korea as Asia¡¯s most business-oriented country. While the general outlines of the plan were publicized during the World Cup, an action plan was developed by the end of June, and details are to be finalized through seminars and public hearings by the end of December.

The master plan involves enhancing national competitiveness in view of the possibilities represented by Korea¡¯s geographical location. The core policy it represents is to attract the regional head offices of international corporations through creating special economic zones, plus developing the country¡¯s material distribution capabilities by enhancing the functions of existing harbors, airports and other infrastructure.

The overall aim is to stimulate general economic activity in Northeast Asia to new levels of value added by forging economic links with neighboring countries. Singapore is a case in point. While encouraging the development of high-technology businesses, Singapore transferred its traditional labor-intensive industries to low-cost neighboring countries such as Malaysia and Indonesia. It thus pursued the goal of a high-value added economy by exporting low-value production. Essential to maintaining a high-value added redoubt are outstanding competitiveness and transparency. This calls for the development of a local R&D base, a business service capability in management consulting, legal affairs, marketing, international finance, a business system based on international best practices and a governmental mindset committed to continuous reform.

OFFERING MORE THAN HONG KONG & SINGAPORE Once these requirements have been fulfilled, the elements to create a base for Asia/Pacific regional corporate offices will be in place.

Multinationals only establish regional administrative centers in areas with well-developed business service industries and financial markets.

However, the Korean strategy for creating a business center cannot help but differ that of a city state such as Hong Kong or Singapore. Taking into account the disparities between the size of national economies, while Korea may lag in the areas of English usage, openness and international practices, it is far ahead in terms of manufacturing capability, R&D expertise and IT technology.

Thus, while Hong Kong and Singapore have established themselves as logistical and business/financial centers, Korea can achieve the same but also serve as an important platform for producing components and intermediates as well as finished goods and so contribute to the development of manufacturing throughout Northeast Asia.

The Korean government has formulated four strategies to establish the country as a regional logistical center. They are:

 - Promoting Incheon Airport as the air transportation hub of Northeast Asia 
 - Developing Busan and Gwangyang as the mega-ports of the region.
 - Establishing rail links (an ¡°Iron Silk road¡±) that will connect the Eurasian continent.
 - Creating an efficient logistical distribution network

To elevate Incheon Airport to the position of a regional hub, its second stage expansion program will be advanced. Scheduled for completion in 2008, the project is expected to cost 4.7 trillion won ($3.6 billion). The expansion will add an additional 8.3 million square meters to the Airport, on which will be built additional runways, mooring masts and passenger boarding areas. The freight terminal will also be expanded to 430,000 square meters from the current 130,000 square meters by 2020.

The development of Busan and Gwangyang as centers of maritime transportation involves building a large-scale international logistical distribution complex, expanding deep-water terminals and container wharves, as well as developing the areas surrounding the new port facilities. The aim of these initiatives is to oost capability (and volumes) to levels presently enjoyed by Singapore, Rotterdam and Shanghai.

Key to the realization of this project is the attraction of world-ranking logistical companies. Their management techniques and access to their international networks will enable Busan Port and Gwangyang Port to become global and regional transshipment points for cargoes forwarded from northern China and western Japan. Such companies could also help establish a rail freight delivery system from Northern China through North Korea to the South.

The third strategy, establishing an Iron Silk Road, involves the connection of inter-Korean and Trans-Asian railways, including the Trans-Siberian, Trans-China, Trans-Manchurian and Trans-Mongolian railways with the Kyung-Eui railway that will link Seoul with the North Korean city of Euiju. A related project is the connection of inter-Korean and Eurasian roads.

Enhancing the country's ports to hub status will require a commitment in terms of infrastructure and a willingness to introduce new procedures. New freight terminals and inland container bases will be built in the metropolitan and Busan areas, cooperative links will be forged between associated agencies, and support in terms of a trade-related database and new customs clearance procedures will be instituted.

In fact, all the above strategies call for revisions of law and systems. Possible responses include building a one-stop service logistical support center for international shippers.

HARDWARE & SOFTWARE Central to the government's agenda for establishing Korea as the business focus of Northeast Asia are the expansion of national hardware and software, i.e., the installations and systems, respectively, that facilitate the conduct of business.

A major hardware initiative is the designation of five "Special Economic Zone¡" (SEZs). Special laws and administrative bodies will govern each of the Zones.

The five Zones will be:

- Youngjongdo Island, the location of Incheon International Airport 
- Songdo New Town near Incheon Gimpo landfill site 
-  The port cities of Busan and Gwangyang. The ports may also be designated as duty free areas.
    Infrastructure projects to commence within these SEZs are:
- A major air freight terminal at Youngjongdo to serve as a regional logistical center and development on the island of a tourism
- Creating an international business district in Songdo especially to accommodate the Asian/Pacific headquarters of multinational 
    corporations and knowledge-based industry
- Building an international financial district on Gimpo landfill and realization of the Sangam digital/media/complex (DMC) in the 
    environs of the Seoul World Cup stadium.

Major prospective tenants for the Zones are regional headquarters of multinational corporations, service industries that support the IT/media/design industries, knowledge based foreign corporations, foreign invested manufacturing companies, and, with a view to attracting tourist traffic, theme parks.

The Special Economic Zones will be governed by a unique system of laws designed to create a foreignr friendly environment in a short period of time. An administrative body to be appointed by the government will provide a one-stop service in the fields of investment consultation, foreign education, financing and visa matters.

General administrative affairs will be managed centrally although there will be administrative branch offices in each of the Zones.

Even with the array of infrastructure that the new economic zones will have, it will be impossible to foster the rise of a regional business center with the magnetism of a Singapore or a Hong Kong without the necessary ¡°software.¡± That is, a specially created set of laws and systems designed to bring the local business environment more in line with that of the developed countries.

ENGLISH SPOKEN HERE Thus, within the zones, English will share equal legal status with Korean to the effect that all official and civil documents will be available in both languages.

To attract foreign corporate headquarters, it is essential that Korea develop an extensive human resource pool of persons with capability in English and other foreign languages. Greater funding will be provided for foreign language education and the training of educators to meet this need.

Immigration and exit/entry procedures are being upgraded to international standards. The practice of fingerprinting foreigners who require long-term visas is being phased out, and the possibility of allowing specialized workers longer sojourn periods is under consideration.

Also being considered are the issuance of long-term visas to employees of foreign companies within SEZs or allowing visa-free entry of specialized workers on short-terms visits to the country.

In tandem with these initiatives, the Korean government announced July 7th a detailed support plan for foreign investing corporations and foreign workers. Tax reductions for such corporations will be introduced during the course of next year while the expansion of tax exemption limits for individuals will start this coming January.

The American and European Union chambers of commerce in Korea have continuously pointed out that to attract more foreign investment the tax burden must be alleviated as corporation and income taxes in Korea are high compared to competitors such as Hong Kong or Singapore.

In response, the government will introduce large-scale tax reductions for foreign corporations planning to locate in the prospective SEZs and for foreign companies that invest in knowledge-based or cultural-content industries. The schedule of tax breaks is as follows:

A 100-percent exemption on income and corporate taxes for the first seven years and 50 percent for an additional three years is available for foreign companies investing

-  $50 million or more in the manufacturing sector 
-  $30 million or more in the resort and distribution businesses
-  $20 million or more in hotels and convention centers

Customs duties, special excise tax, and value-added tax will not be imposed on capital goods imported by such businesses for the first three years of operation. Furthermore, they will be able to claim 100-percent exemptions from acquisition, registration, property and land taxes for the first five years, followed by 50 percent reductions for another three years.

100-percent exemptions on income and corporate taxes for first three years, plus 50 percent for another two years are available for foreign firms investing between

-  $10 million and $50 million in the manufacturing sector 
-  $10 and 20 million in the hotel and convention business, and
-  $10 million and $30 million in the distribution sector

They will also be able to enjoy total exemption of customs duties on imports of R&D equipment and capital goods for the first three years. In addition, they will be eligible for 100-percent exemptions on acquisition, registration, property and land taxes for the first three years, plus 50 percent exemptions for another two years.

How the Iron Silk Road will operate

USING THE EURO For purposes of boosting national competitiveness, a select group of industries will also be eligible to receive the same range of tax benefits as large-scale investment projects detailed above, regardless of their scale or location. Accordingly, industries in the fields of information technology, biotechnology, nanotechnology and the contents industry, i.e., film, games and media will be designated as advanced-technology or service businesses that support the international competitiveness of domestic industry.

In offering breaks on corporate and income taxes, the government has decided to match the incentives provided by China and Malaysia and close the gap with Singapore and Hong Kong. The corporate tax rate in Singapore is 24.5 percent, which is a little lower than that of Korea. By contrast, though, companies investing in Korea can receive complete corporate tax exemption for 5 years to 10 years. Hong Kong offers no particular tax support for foreign investing companies, but its corporate tax rate is comparatively low at 16 percent.

Policies to boost labor market flexibility and aid the hiring of foreign personnel are being evaluated. At branch offices within the SEZs, the Office of the Investment Ombudsman will address grievances reported by foreign corporate management, quickly respond to labor disputes and offer counseling on Korean labor relations and means of dispute resolution.

For the convenience of locating companies, the U.S. dollar, euro, and Japanese yen will be allowed to circulate freely in the SEZs.

To relieve housing, education, and medical expenses faced by foreign employees of domestic or foreign companies, the government will raise the tax exemption ceiling on their allowances for overseas stays from the current 20 percent of their monthly wages to 40 percent. Most foreign employees receive 30 percent to 40 percent of their regional allowance as housing or child education costs. However, the tax exemption rate has been limited to 20 percent of their salaries, and has deterred potential foreign employees. The move will create a tax regime for foreign employees similar to that of Singapore, and narrow the gap with Hong Kong. The practical tax rate on an annual salary of $100,000 (annual income tax/annual salary) in Korea will be 11.0 percent (currently 14.5 percent), compared to 11.2 percent in Singapore, 9.6 percent in Hong Kong, 24.0 percent in China, 25.6 percent in Thailand, and 25.5 percent in Malaysia.

Korea's 2,000 foreign employees will be the first beneficiaries of this change that is expected to attract further foreign investment by alleviating the tax burdens on those stationed in Korea.

The laws governing foreign education will be drastically overhauled in order to provide schooling in the SEZs for the children of foreign personnel. The founding of branch schools of foreign educational institutions will be allowed in the Zones while the regulations governing the founding and management of international schools are to be simplified. At the same time, the lifting of barriers against Korean children attending such schools is being seriously considered.

To improve living conditions for foreigners, housing complexes designed to international standards will be built complete with amenities such as grocery stores catering to foreign tastes. The early introduction of foreign hospitals and pharmacies into the Zones is in the planning stage as is a cable system to provide residents with foreign broadcasting services.

Korea must secure its place as the business center of Northeast Asia within the next 5 years to 10 years if it does not wish to be lag behind in the information society of the 21st century. At stake are the very survival of the Korean economy and the prosperity of the Korean peninsula, even after such time as reunification might occur. Accordingly, this strategy will be pursued as a matter of the highest national priority, representing as it does the future development of Korea. - Source : KT&I juillet-août 2002


¤ ASSESSING KOREA'S INVESTMENTS & HUB POTENTIAL - World Business Leaders Round Table 2002

On May 30th, the World Business Leaders Round Table 2002 was held in the ASEM Hall in Seoul to discuss topics such as "Global Investment Strategies of Multinational Corporations" and "Realization of Korea as a Northeast Asian Business Hub". Hosted by the Ministry of Commerce, Industry and Energy (MOCIE) and Korea Trade-Investment Promotion Agency (KOTRA), the event was part of a program whereby international CEOs were invited to the World Cup opening ceremony and game. A total of 53 persons were invited, including 51 high-ranking executives from 44 companies such as Allianz, BMW, Softbank and Vinci, together with Professor R. A. Mundell of Columbia University and Professor A. De Meyer of Insead University.

Other distinguished personalities included the minister of MOCIE, the president of KOTRA, the head of the Blue House Economic Council, the Investment Ombudsman, the chairman of the Korea Chamber of Commerce and Industry (KCCI) and the presidents of foreign chambers of commerce in Korea.

The participating CEOs agreed that the enhancement of the investment environment through continuous reform, Korea's political stability and world-class IT industry are the strengths of its national investment environment. At the same time, they pointed out that a more flexible labor market, better unemployment support, better English education, more transparent accounting practices and development of policies to enhance technology on a regular basis are required for further development of Korea¡¯s business climate. Also mentioned was that the main criteria for choosing an investment destination are the feasibility of establishing long term partnerships, mutual credibility and the living environment. Below are some sample comments by the participants on their assessments of Korea.

Strengths of Korea's investment environment

"Korea has overcome the financial crisis in just three years. Such rapid adjustment ability increases the possibility for FDI and reflects a willingness to accept changes. Corporate and national accommodation capa-bilities are also very good." Olivier Barbaroux, CEO, Vivendi Water

"Political stability and reform-oriented government are crucial to attracting FDI."Al Rajwani, CEO, P&G Korea

"Economic reform must continue. Future credit ratings will depend on whether it continues or not." Robert E. Richards, president, Standard & Poor's (S&P) Asia

"The Korean government and public attitude toward FDI have changed positively. Korea¡¯s diverse manufacturing industry and high quality labor are internationally competitive. With its IT infrastructure, Korea has a strong potential to develop technologically and economically." David B. Wohleen, executive vice president, Delphi Corporation

"Korea has a world-class IT industry." Orlando Ayala, group vice president, Microsoft "Korea has been actively building IT infrastructure and attracting investment, unlike Japan. The future for Korean economy looks bright." Masayoshi Son, CEO, Softbank

"Clark has relocated its global engineering center to Korea, which it has defined as its product supply center for the world market. We consider Korea the best environment for investment." Kevin M. eardon, CEO, Clark Material Points for reform

"In order to adjust to the rapidly changing business environment, markets for factors of production such as labor must be more flexible. Korean entrepreneurs are often lacking in English proficiency which limits their participation in international business conferences and seminars." D r. Henning Schulte-Noelle, chairman, Allianz

"A flexible labor market is crucial for attracting investment. Policies addressing unemployment are required to decrease employees¡¯ fear of unemployment. English education must begin earlier for Korea to develop as the hub of Asian business. I would recommend a fixed exchange rate policy for Asia since an unstable currency drives away FDI." Robert A. Mundell, professor, Columbia University

"Fair competition is not yet in place because the financial market still demonstrates opaque business practices,and the government intervenes in the financial industry." David. B. Wohleen, executive vice president, Delphi Corporation

"Accounting practices fall short of transparency. Accounting fraud must be punished, but an incentive policy that rewards exemplary accounting practices is also required." Robert E. Richards, president, S&P Asia

"To attract FDI, the government must implement policies for the development of technology on a regular basis and cultivate markets for the factors of production." Arnoud De Meyer, president, Insead University Main criteria for determining investment destinations

"The main criterion for determining an investment destination is the feasibility of a long-term partnership. Since investment environments are very similar across nations, what is more important is the development of interdependence and credible relationships. In order to develop such partnerships, a long-term strategy and the ability to adjust to a changing environment are required." D r. Helmut Panke, chairman, BMW

"High quality foreign schools and living environment are more important than aspects of the business environment such as logistics." Gary E. Anderson, chairman, Dow Corning Measures for the realization of Korea as a Northeast Asian business hub

"As a geographic neighbor of China, potentially the world 's largest market, Korea is the best spearhead. I consider Korea to be the hub of East Asian business. In a few years, Seoul will be the center of business along with Shanghai and Beijing." Masayuki Matsushita, vice chairman, Matsushita Electric Co.

"A hub must be developed in Korea for business expansion in Northeast Asia." Jan Hammer, senior vice president, Odfjell

"Companies that target the international market don't endow regional headquarters with much significance." Fritz W. Froehlich, CFO & vice chairman, Akzo Nobel

"Dow Corning doesn't have regional headquarters. Korea need not concentrate so much on attracting corporate regional headquarters. Our employees at our Korean office are all Korean, with some that support sales, marketing and technology for all of our Asian business. A company's central production line and R&D center will bring in more investment and create more employment than its headquarters." Gary E. Anderson, chairman, Dow Corning

All the participants commented that the event was well coordinated and that it had provided them with an opportunity to rediscover a changed Korea. MOCIE said that it will follow-up on companies that expressed a willingness to invest to enable such plans are realized, and support the development of Korea as a Northeast Asian business hub by recommending companies to relocate their regional headquarters in Korea. - Source : KT&I juillet août 2002


¤ LEGISLATION : WHEN PRODUCTS HARM : Korea's new product liability law promises to change the way companies design, test and introduce their products as well as respond to customer complaints

A first draft of the Product Liability Law was presented in 1982 but was ignored by the National Assembly. The first official proposal was legislated January 12th 2000. After twenty long years of dispute between the Consumer Protection Agency and the government, product liability law came into effect July 1st 2002.

Product liability law determines whether the seller or the manufacturer of a product is liable to a consumer for a damage caused by a defect. Those products covered by the law include all movables that have been industrially produced. The manufacturers to whom the law refers are those of a finished product, a component part or the producers of any type of raw material. Also, those who put their name, trademark or other distinguishing feature on the product are considered producers of the same. The same applies to all importers of products into the country.

Basic Facts about Product Liability Law :

Negligence and strict liability are the two legal theories that underpin product liability law.

First, negligence theory deals with conduct and puts the burden of proof on the consumer. Consumers must prove that the manufacturer's conduct in designing a product that has caused them damage was unreasonable. Reasonable conduct is determined by the "reasonable person standard." If the conduct is judged as unreasonable, that person is liable to pay for the damages he or she caused.

Strict liability focuses on the quality of the product that caused the injury. The consumer no longer has to prove the manufacturer's conduct in making or designing a product was unreasonable. One only has to show that the product itself is defective. Seven factors are analyzed to determine defect:

 - the product's usefulness
 - the availability of safer products to meet the same need
 - the likelihood and probable seriousness of injury
 - the obviousness of the danger
 - the public expectation of the danger
 - the avoidability of injury by care in the use of the product, including the impact of instructions and warnings, and
 - the manufacturer's or seller's ability to eliminate the danger of the product without making it useless or expensive.

Likely Impact of Product Liabiity Law :


·Difficult for consumers to launch lawsuits·Compensation for damages for defective products is minute·Disadvantageous for consumers to sue ·Focus is on increasing sales, not on product safety·Rapid introduction of new product lines

AFTER PL ·Consumers can easily launch lawsuits·Hefty compensation for damages arising from defective products ·Disadvantageous for corporates to be sued ·Safety becomes paramount in product design·Focus on assessing product safety prior to market launch

Increased product liability litigation :

With the introduction of PL law, it is probable that an increasing number of consumers will launch lawsuits against producers when they discover any problem with the manufactured products they have purchased.

For example, the annual number of lawsuits in Japan increased two-fold to 1,000 after PL law came into being in 1995.

Risk to corporate management increased :

Even a small lawsuit against a corporation can put it in serious risk of closing its doors because of the potential for a decline in corporate image and consumer confidence.

The Conference Board, a New York-based nonprofit business-information service, found in a recent survey widespread worry among corporates about the impact of possible liability lawsuits. Such concerns had caused 47 percent of companies to discontinue one or more product lines, 25 percent to stop certain product research and development, and 39 percent to decide against introducing new products.

Greater pressure on management :

Since PL law will enforce higher safety standards, production costs will be higher. Also, the introduction of new product lines will inevitably be delayed since products will have to be thoroughly tested for their safety. Because of the time and resources poured into conforming to the product liability law, companies will have to forgo much in terms of products not developed and launched.

Conditions under which product liability litigation is established :

With product liability law now legislated, producers now bear greater responsibility for any defective products. In order to stay within the law, producers must better understand the conditions under which product liability litigation can be prosecuted.

Manufacturing and design defects :

A prosecutor (viz., consumer) must show that the quality of a product is below standard in order to be successful in a lawsuit against a manufacturer. Moreover, even if product benefits society overall but harms or injures even one individual, the producer will be held responsible for making such a product. Here are examples of such cases:

-  Use of a certain brand of cosmetic that caused skin problems
-  A TV catching fire by itself and causing a house to burn down
-  Chewing on a piece of metal that was inside a hamburger

Lack of warning :

One cannot assume that a product will never be used according to the manufacturer¡¯s intent. Misuse of a product can lead to possible injuries and accident. Thus, corporations bear responsibility to label products with instructions as to their proper use and warn that possible misuse can lead to injury. If these warnings are deemed by a court of law to be insufficient, then the producer will be considered liable for the lack of warning. Here are examples of such cases:

-  The man who became alcoholic after drinking a certain brand of beer
-  The cigarette lighter left on a car dashboard that later exploded
-  The baby who suffered brain damage after drinking baby oil.

Failure to fulfil a guarantee :

A manufacturer must guarantee the function of his or her product. If the product does not fulfill its intent then the manufacturer can be sued under the product liability a w. Moreover, if the product fails to function as described in a catalogue or instruction manual, and as result causes physical harm to an individual then the manufacturer will certainly be liable under this law. Such an example is where a fire alarm does not sound to warn of fire in a house.

Corporate Response to Product Liability Litigation :

Are Korean corporations ready for product liability law? According to research done by the Korea Product Liability Center, 76 percent of companies do not fully understand the basics of product liability law, and 66 percent demonstrate lack of interest in the subject. According to the survey, the capability of corporations to settle such cases is almost non-existent.

The following are three appropriate corporate responses to the introduction of product liability law.

Response 1: Putting product quality and safety first

-  Focusing on product safety before corporate profit and establishing the same within the corporate culture.
-  Refusing to sacrifice product safety because of cost and the need to meet production deadlines.
-  Addressing the issue of product safety at the initial stage of research and development because poorly designed products
   will invariably reveal some defect over time.

Response 2: Attaching sufficient labels of warning

-  Warning labels, instruction manual and the like should always be prepared from the consumer¡¯s perspective in order to be
 easily read and understood. 
-  Litigation based on manufacturing or design defects is difficult to undertake and the outcome is often doubtful. Litigation on 
the grounds of insufficient warning, on the other hand, is generally far more successful. Producers must therefore pay special 
attention to the labeling of their products.

Response 3: Anticipating, avoiding and recovering from litigation

-  Form a professional team that can respond efficiently to such litigation and use the procedures and practices of a leading
 corporation as a benchmark. For example, General Motors maintains a product liability team of sixty lawyers and professional
-  A speedy response to customer complaints and injuries is required together with a readily accessible channel through which
 they can voice their concerns. By providing a quick response and solution to their complaints, consumers will be less likely to
 sue the company in the first place.

Response 4: Winning public confidence

- When a product liability incident occurs, respond as if source of the problem resides in the product until the problem is solved.
- Never deny that such incidents occur with your product and never blame them on customer misuse. Neither should you claim
 that a defect will never appear again without an attempt to address the perceived problem. Negligence in this area will leave the
 possibility open for the same type of incident to recur until the public eventually loses confidence in your product. 
- After discovering a product defect, a company must quickly conduct research as to the source of problem and publicly
 demonstrate its commitment to resolving the same. For instance, a company's Web site can detail progress on the work to
 eliminate a product defect as well as provide space for visitors to voice any other complaints associated with the product.

Updated August 7, 2002 by James Suh ( - Source : KT & I - juillet-août 2002


¤ FOREIGN INVESTORS ENJOY HIGH DIVIDENDS FROM DOMESTIC CREDIT CARD COMPANIES : Korea's top three credit card firms, including LG Card, KEB Credit Card Service and Kookmin Card, paid out a total of 88.8 billion won in dividends to their foreign shareholders in fiscal 2001, more than a two-fold increase from 2000, industry sources said yesterday.

LG Card paid out a total of 51 billion won last year to foreign investors, a whopping increase of 157.6 percent from a year ago.

Last year, the credit card firm's dividend payout ratio was 39.5 percent, or 1,975 won per share.

Kookmin Card also saw an increase of 128.4 percent in dividend payouts to foreign shareholders last year, with a total of 18.04 billion won paid out to them.

KEB Credit Card Service also paid out a total of 19.75 billion won in dividends to foreign shareholders last year, a 108 percent rise from a year ago.

"A high dividend payout was possible due to hefty profits. Foreign investors scrambled to local credit card firms on expectation that they could record high returns on investments," said a LG Card official.

Against this backdrop, foreign investors often called for a higher payout ratio, according to the industry sources.

Foreign ownership of local credit card firms continued to rise last year. For one, Kookmin Card's foreign ownership rose to 19.72 percent at the end of last year from 14.33 percent a year ago, and that of LG Card also rose 36.9 percent from 19.9 percent over the cited period.

Analysts said the local card industry is nearing saturation point, with asset quality feared to deteriorate down the road.

"This year's profit figures will be disappointing. Local card firms will be pressured to cut dividends as well," an LG Card official said.

Source : Korea Herald (2002.09.04)


¤ HOTEL CHAIN BEST WESTERN ENTERS KOREA : A global hotel chain firm Best Western International (BWI) is fully launching into the market here, industry sources said yesterday.

According to BGH Korea Inc., a Korean section of BWI, said the company will be adding a hotel to its chain, which currently under construction by Shinsegae Development Co. in Nonhyeon-dong, southern Seoul.

The signing ceremony between the two firms will be held tomorrow, the officials said.

The hotel being built by Shinsegae Development is slated to open in January 2004 under the name "Best Western Gangnam," with 15 stories and four levels underground and 128 guest rooms.

Best Western will additionally enlist two to three semi-luxurious hotels by the yearend and expand the chain by a minimum of 20 by the end of next year, the officials said.

Best Western first entered the market here in June last year and is currently operating four chain hotels including Best Western New Seoul, Best Western Dongdaemun, Best Western Legend in Daejeon and Best Western Uljin.

"With reasonable price and highest-quality service, Best Western Gangnam, will become the first semi-luxury business hotel in the Gangnam region," a BgH official said.

The official added that the chain will be expanded throughout the country including the northern part of Gyeonggi Province in the future.

Best Western, based in the United States, has over 4,200 hotel chains in more than 80 countries across the country.

Source : Korea Herald (2002.09.10)



South Korean steel giant POSCO Co (05490) said on Wednesday it would invest about $50 million in U.S.-based biotechnology companies over four years as it seeks to move into new business areas.

POSCO is also looking at the telecommunications and energy sectors for potential investments, as the world's second-largest steel maker tries to diversify.

The group recently set up a U.S. subsidiary POSCO Bio Ventures L.P. for the investment, it said in a statement.

"We plan to develop new medicines in Korea, using the proceeds, and export them to other Asian countries by 2012," it said.

POSCO shares rose 2.2 percent to 116,500 won ($97) at 0238 GMT, outperforming the broader market (KS11) up 1.36 percent. ($1=1198.1 Won) - Source : Reuters - 11/09/02


¤ BASF EXPANDS KOREAN VITAMINS : In autumn 2002 chemical giant BASF will suspend lysine production in Gunsan, Korea, as the company integrates new vitamin manufacturing features.

The lysine plant will be shut down at the beginning of October for about six weeks. During this period, a new plant to manufacture vitamin B2 will be integrated into the existing fermentation plant for lysine at the Gunsan site. Due to high demand for lysine this year,BASF reports, availability is likely to be limited until the end of December.

The company stressed that availability of vitamin B2 will not be affected, as this product is currently supplied from the Ludwigshafen site.

Lysine, an important amino acid in animal nutrition is added to concentrated feed as a source of protein and offers an alternative to soybeans. In 2001, BASF sold 800 million worth of lysine and is one of the three largest manufacturers of lysine worldwide.

Source : - 10/09/02


¤ KOGAS INITIATES NEW MANAGEMENT TO MAXIMIZE INVESTOR INTEREST : The Korea Gas Corporation (KOGAS) has overcome the hurdles brought on by the 1997 financial crisis and has currently geared its policies toward boosting investors' relations, company officials said.

KOGAS chairman and CEO, Kim Myung-kyu, said that the corporation has initiated innovative management based on a philosophy of open, transparent and efficient management, aiming to nurture a new corporate culture that maximizes value for shareholders, customers and employees.

He added that to heighten expectations of its shareholders, KOGAS seeks to reform the corporation's management system, diversify its business and secure cutting-edge technology.

The positive outlook of KOGAS operations is based on its recent stock performance: Between May 18 and Aug. 14 this year, the stock price of KOGAS rose 24 percent to 19,750 won from 15,900 won, while the Korean Composite Stock Index dropped 16 percent to 711.24 from 844.67 won.

Since then, the percentage of stakes held by foreigners has increased to 7.5 percent from 3.6 percent, officials said.

KOGAS struggled in a state of economic unrest during the Asian financial crisis, but officials said it overcame the challenge by implementing various reforms, such as reducing staff by 15 percent and restructuring the organization.

They noted that annual sales in 2001 totaled 7.2 trillion won, more than double the comparable figures during the financial crisis.

Furthermore, natural gas sales in 2001 reached 15.6 million tons, up 1.4 million tons from 2000. The total revenue in 2001 reached $5.4 billion, up 18.2 percent from the previous year.

And despite the volatile global market and unfavorable business conditions, the corporation in 2001 reaped a net profit of $223.9 million, a 214.3 percent increase from the previous year. Officials marked this as KOGAS' best financial performance since its establishment.

They attributed the success to an increase in operating profit influenced by rising natural gas sales, and reduced interest expenses thanks to the trend in low interest rates and dividend income from equity in Oman and Qatar.

KOGAS chairman Kim explained that the corporation paid a dividend every year between 1992 and 1996, with the average total dividend payout amounting to 5.9 percent of its net income. KOGAS then raised the payout ratio to 23.2 percent in 1999, when it was listed on the Korea Stock Exchange, and to 25.9 percent in 2001.

"We are heading towards a more aggressive dividend policy to positively reflect the growing importance of the stock price hike" Kim said.

The government established the KOGAS in 1983. Since then, it has been the nation's sole importer of natural gas.

Its import quantities have grown steadily over the years, and KOGAS has emerged as the largest liquefied natural gas (LNG) importer among gas companies worldwide.

The corporation imports the natural gas on a long-term contract from various countries including Indonesia, Malaysia, Brunei, Qatar and Oman.

In 2001, KOGAS' natural gas imports amounted to 16.2 million tons, a 10.9 percent increase from the previous year.

The natural gas is sold to power generators, such as the Korea Electric and Power Corporation, as well as to city gas companies, which sell gas on a retail basis to residential, industrial and commercial customers.

Officials said urban areas throughout the nation are benefiting from the natural gas supply, thanks to KOGAS' commitment to delivering a convenient and environment-friendly energy.

The corporation currently supplies natural gas to 66 cities and counties, with plans of expanding its services to encompass 93 cities and counties by the end of 2010. By this time, officials said KOGAS would be serving nearly the entire nation.

They project the average annual growth rate of the demand for natural gas to be approximately 4.3 percent by 2015.

To meet the rising demand, KOGAS plans to complete the construction of a nationwide trunk line network stretching 2,442 km and the third LNG terminal by the end of 2002.

Since 2001, the corporation has been operating two LNG terminals in Pyeongtaek and Incheon.

The government is prompting the privatization and restructuring of state energy companies to enhance competitiveness and efficiency in the energy industry.

Officials said the corporation considers the challenges of privatization and restructuring an opportunity to grow and meet world-class standards.

As KOGAS made 2001 a springboard for meeting ambitious goals in the 21st century, it has begun laying the foundations for sound future growth in the new business environment.

The fundamentals include increasing corporate value by effective management and development of new profit sources through power plant projects and active participation in overseas activities.

Officials said a number of U.S. and Southeast Asian financiers will take the initiative to promote investor relations with KOGAS from late August to early September.

Chairman Kim said that strengthening these relations will take the firm commitment of management and employees.

"We will harness our pioneering spirit and make our utmost efforts to maximize shareholders' satisfaction." ( By Yoo Soh-jung Staff reporter - Source : Korea Herald - 2002.08.20



Amid the rapid pace of globalization, the demand for foreign-educated experts is soaring in Korea. According to industry sources, domestic conglomerates are going abroad in large numbers to hunt for talented foreign experts, viewing them as key in their bid to join the ranks of world-class corporations, in this era of intensifying global competition.

Samsung, LG, SK, Hyundai Motor and other leading industrial groups are all in the midst of recruiting competent employees from prestigious U.S. and European institutions. They are offering huge signing bonuses, stock options, luxury cars and even apartments to talented master's degree and doctorate holders from abroad.

Samsung Group recently announced an ambitious plan to hire about 1,000 degree holders from home and abroad annually in the fields of electronics research and development, marketing, financial services, design and information technology.

Korea's largest conglomerate also unveiled plans to set up R&D centers in the United States, Europe, Japan, China and other strategic regions to better absorb talented foreign experts, while inviting excellent college students in India, China and Russia, all strong in basic sciences, to study at Korean institutions.

As part of the global talent drive, Chin Dae-je, chief executive of Samsung Electronics' Digital Media Business, personally flew to Silicon Valley last month to hire 10 digital media specialists, while Samsung Group Vice Chairman Yoon Jong-yong and other top executives are frequently contacting executive-level officers and top engineers at leading global companies. In addition, Samsung Electronics' System Large-Scale Integration (LSI) business division has hired 24 doctorate-level researchers from the United States, Japan and Russia and 40 foreign-educated Korean experts so far this year.

In a similarly aggressive drive for overseas experts, Hyundai Motor, Kia Motors and Hyundai Mobis last month recruited about 100 auto-engineering, marketing, finance and strategy planning specialists from among degree holders at renowned U.S. institutions. For the unprecedented recruiting campaign, Hyundai Motor President and CEO Kim Dong-jin and other top group executives personally traveled to Harvard, Yale, Princeton and 15 other top U.S. universities for interviews with students.

"Massive overseas expansion projects, including construction of new auto plants in the United States and China and extension of U.S., European and Japanese R&D centers, have triggered huge demands for competent foreign talent," said a Hyundai Motor spokesman. "We are also running short of top experts in the development of core technologies in the fields of power trains, electronic control and telematics." He said that Hyundai Motor will also launch a large-scale headhunting effort in Europe and Japan next year. In particular, auto-parts maker Hyundai Mobis has revealed a plan to have 10 percent foreign staff.

At LG Group, electronics, chemicals, investment-securities and three other key affiliates recently hired about 100 foreign experts with masters of business administration degrees or excellent engineering expertise. To this end, the group dispatched its top executives on a recruiting mission to 40 U.S. universities in 24 cities in June and is planning another similar mission this fall.

LG Life Sciences has filled 72 percent, or 65 positions, of its 90 doctorate-level researchers with graduates from top U.S. universities. LG Electronics is also planning to fill 250 of its new recruits totaling 2,500 this year with overseas Korean or foreign experts. "While visiting a top U.S. MBA school in April, I was surprised to find that 80 percent of students there had already been contacted by one or two Korean conglomerates," said an LG executive.

SK Group is also steadily visiting major overseas universities and R&D institutions in the hopes of recruiting top experts in the fields of IT and life science, while POSCO Corp. is planning to fill 60 of its 200 new positions this year with foreign-educated Koreans.

According to a survey of 328 chief executives at the nation's 1,000 largest corporations, Korea's college educational system was given a score of merely 40, if the U.S. level is set at 100, indicating problems with college education in Korea. "Unless the Korean educational system produces a sufficient pool of globally competitive talents, domestic conglomerates are expected to continue to expand their overseas hires in the coming years," said a fellow at the LG Economic Research Institute.

"In other words, graduates of domestic colleges, particularly in the engineering fields, will gradually lose ground at leading Korean conglomerates to their foreign-educated rivals," he said. - Source : Korea Herald (2002.08.31)



Pour réduire son exposition au marché des mémoires, le groupe sud-coréen veut quintupler en cinq ans ses ventes de puces complexes LSI.

Sur un marché des semi-conducteurs qui peine à se relever de la crise historique vécue en 2001, le salut est dans la diversification. Du moins pour les producteurs de mémoires, le segment le plus exposé aux fortes variations de prix. Le sud-coréen Samsung Electronics, le n°1 mondial des mémoires, vient ainsi de présenter un plan d'investissement massif dans les LSI (large scale integration). Ces circuits intégrés à haute densité sont de plus en plus utilisés dans l'électronique grand public, l'automobile ou encore la téléphonie.

Au cours des cinq prochaines années, Samsung va donc investir 4.000 milliards de wons (3,4 milliards d'euros) avec pour ambition de quintupler ses ventes de LSI : de 1,4 milliard de dollars cette année (22% du chiffre d'affaires total du groupe), celles-ci devraient passer à 7 milliards de dollars en 2007. Dès cette année, le segment des LSI accaparera 10% des investissements du groupe, soit 500 milliards de wons (427 millions d'euros), 67% de plus que l'an dernier. Les effectifs dédiés à la recherche, eux, devraient passer à 5.000 personnes dans cinq ans, contre 2.000 aujourd'hui.

"Nous voulons devenir l'un des cinq plus grands producteurs mondiaux de LSI d'ici 2007", a résumé Lim Hyung-kyu, le président de la division LSI du groupe. Samsung n'est aujourd'hui qu'au vingtième rang mondial de ce marché.

Mais sa croissance ne passera pas seulement par l'investissement : Samsung veut aussi forger des alliances sur ce marché de conquête. Les discussions déjà engagées dans ce sens devraient donner des résultats d'ici "deux ou trois mois", a assuré Lim Hyung-kyu, et "au-delà, nous prévoyons de réaliser des fusions-acquisitions à l'étranger après deux ou trois ans de renforcement de notre activité".

Les LSI ne sont pas le seul segment à avoir le vent en poupe chez Samsung : le géant sud-coréen continue d'investir dans les combinés mobiles (lire ci-contre) et entend profiter du boom des téléviseurs et moniteurs à cristaux liquides, technologie dans laquelle il a récemment augmenté ses investissements. Le groupe peut se le permettre : son bénéfice a doublé au deuxième semestre, à 1.920 milliards de wons (1,64 milliard d'euros) et il table sur une nouvelle progression en fin d'année.

Source : - 27/08/2002



Samsung Electronics yesterday unveiled plans for a "second takeoff" of its memory chip business based on the commercialization of nano technology.

Outlining its future business strategy in a press conference, Samsung said nano processing will be extensively employed to mass produce the next generation of dynamic random access memory (DRAM) chips.

Samsung said it has successfully applied mass production capabilities to 90 nano-class processing technology for DRAM manufacturing. The company added it has developed the world's first working prototype of a 2-gigabit (Gb) NAND flash memory device.

The world's leading memory chip manufacturer said the 90 nano-class technology allows chipmakers to overcome the "0.10-micron barrier." It also said production of DRAM chips using this method was a revolutionary milestone in reducing size and enhancing the capabilities of semiconductors.

The 90 nano-class technology can be used to perfect the 70 nano-class process and can be applied to the so-called fusion memory chips of the future.

Samsung also said a 2-Gb NAND chip allows for the creation of a thumbnail size 4-Gb memory card that in turn has enough data storage capacity to hold 70 music compact discs or four full length video movies.

In addition, Samsung said the new NAND flash memories will translate into greater mobility and multimedia applications for digital cameras, game machines and personal computers (PCs).

It will also mean the phasing out of camera film and PC floppy disks.

Besides this, Samsung said the 90 nano-class technology has allowed the setting up of a 20,000 unit capacity 300mm wafer line by March 2003. The chipmaker said this line will be managed in conjunction with the flash memory DRAM production to enhance efficiency of the overall chip manufacturing processes. Moreover, it will give Samsung the edge to move beyond the 0.12-micron processing skills of its competitors.

Top of the line 512-megabit (Mb) double data rate (DDR) modules and 1-Gb DRAMs are to be made on the 300mm wafer line.

Hwang Chang-gyu, the president of SEC's memory chip division, said memory chips were making revolutionary leaps with the expansion of the information technology (IT) businesses worldwide.

"The current paradigm is a shift from PCs towards more versatile and high capability digital gadgets," the top executive said.

In relation to its business makeup and its analysis of the latest DRAM market, Samsung said it has started to move away from its reliance on general PCs in 2001. It has raised the percentage of its overall business in the super-fast DDR synchronous dynamic random access memory (SDRAM), Rambus and graphic DRAM chips to 70 percent of products it makes.

This they claimed has led to better sales despite the drop in SDRAM prices on the world market. The electronics giant forecast its sales in 2005 will reach $14 billion, while estimates for 2010 are $25 billion. - Source : Korea Herald (2002.09.17)



Le principal équipementier du Sud-Coréen a interrompu ses livraisons en raison de délais de paiement trop longs, forçant ainsi Daewoo à stopper sa production. Demain jeudi, 191 autres fournisseurs vont faire de même.

Daewoo a été obligé d'arrêter sa production, faute de stocks. Son principal fournisseur Delphi Corée a suspendu ses livraisons mardi en raison de délais de paiement trop longs. En tout, Daewoo doit rembourser 850 milliards de wons (726,8 millions d'euros) à l'ensemble des équipementiers.

Delphi à lui seul attend encore 200 milliards de wons pour des pièces livrées depuis novembre 2000. "Jusqu'à mai, deux semaines étaient nécessaires pour se faire payer. Maintenant, les remboursements sont retardés jusqu'à cinq semaines", déplore un responsable de Delphi Corée. Un groupe de 191 fournisseurs a lui aussi décidé d'interrompre les livraisons à partir de jeudi.

"La production dans nos trois unités a été stoppée", a déclaré un responsable de Daewoo. Le constructeur sud-coréen, racheté par le géant américain General Motors en avril, estime à 15 milliards de wons (12,8 millions d'euros), soit 2.000 voitures, la perte que ce mouvement va occasionner par jour.

"Nous n'avons que des stocks limités de pièces détachées. Notre président poursuit les négociations avec nos plus gros équipementiers afin de gagner leur coopération", a indiqué un porte-parole de Daewoo.

Selon le quotidien Korea Economic Daily, la Banque coréenne de développement, créancière de Daewoo, projetterait de donner jusqu'à 100 milliards de wons aux fournisseurs du constructeur sud-coréen. Mais Daewoo n'était pas en mesure de confirmer cette information. Quand aux responsables de la Banque coréenne de développement, ils ont indiqué que cette décision faisait toujours l'objet de discussions. Daewoo a en effet besoin de la bénédiction de ses banques créancières pour rembourser ses fournisseurs.

Par ailleurs, Daewoo a subi un autre coup dur mercredi à la suite de l'injonction du ministère de la Construction et des Transports lui demandant de rappeler 290.000 véhicules de gamme moyenne vendus en Corée en raison d'un défaut de freinage. - Source : - 28/08/2002


¤ ALSTOM : CONTRAT DE 155 M EN COREE DU SUD : Le contrat, porte sur la gestion de projet et de fourniture d'équipements destinés à la liaison ferroviaire de l'aéroport de Séoul, en Corée. Cette nouvelle ligne de 60 kilomètres, reliera Incheon, l'aéroport international de Séoul et le centre de la capitale et devrait entrer en service fin 2005. La part revenant à Alstom pour ce deuxième contrat devrait être de 155 millions d'euros.

Source : - 27/08/2002


¤ SAGEM : DEJA PLUS DE DEUX MILLIONS DE MODULES GSM EN COMMANDE : SAGEM vient de signer plusieurs nouveaux contrats concernant les modules de radiocommunications GSM qui portent ainsi à plus de deux millions le nombre d'unités commandées sur les neuf premiers mois de l'année.

Ces succès positionnent désormais SAGEM parmi les fournisseurs les plus importants de ce marché. Bénéficiant de la synergie avec son activité téléphonie mobile, SAGEM propose une gamme complète de modules de radiocommunications intégrant la technologie GSM comme les dernières évolutions du GPRS permettant de gérer des écrans couleur, des sonneries musicales Hi-Fi, des messages évolués contenant du texte, des images et/ou des sons.

Déjà présent en Chine, SAGEM étend sa présence en Asie avec de nouveaux clients comme MAXON Telecom Co. Ltd., l'un des principaux constructeurs coréens de téléphones mobiles, qui a retenu SAGEM pour la livraison de modules GSM & GPRS issus de la deuxième génération de produits. Le module MO 130 sera à l'origine d'une gamme de téléphones avec grand écran couleur, GPRS 4+1, EMS, sonneries Hi-Fi, jeux en couleur et bien d'autres fonctionnalités évoluées. Le contrat porte sur la fourniture de modules sur une période de 12 mois.

Depuis sa création en 1974, MAXON Telecom Co. Ltd. s'est spécialisé dans la fabrication de terminaux de télécommunications sans fil (sans fil domestique, DECT, GSM, CDMA, etc). MAXON Telecom Co. Ltd. a des centres de Recherche et Développement au Danemark, en Grande-Bretagne et en Corée , ainsi que des usines de production en Thaïlande, aux Philippines et en Corée, avec une capacité de production pouvant atteindre plus de 10 millions d'unités par an.

Ces nouvelles commandes confirment la prépondérance technologique de SAGEM en matière de télécommunications mobiles, la reconnaissance de son savoir-faire à l'international ainsi que le succès de sa technologie intégrée dans la gamme de produits modules de radiocommunications (MO130, MO170, MO190).

Le Groupe SAGEM est un groupe de haute technologie aux assises internationales. Deuxième groupe français de télécommunications, troisième groupe européen en électronique de défense et de sécurité, leader mondial en biométrie à base d'empreintes digitales, SAGEM est implanté dans plus de vingt pays. Pour obtenir plus d'informations, merci de consulter le site Web SAGEM :

Informations Presse : Hervé PHILIPPE, Directeur Financier Tel. +33 1 40 70 62 57 - Fax. +33 1 40 70 62 15 E-mail: - Source : - 17/09/2002


¤ L'OREAL SETTING TREND IN FAST-GROWING COSMETICS MARKET : Think globally, act locally is a common management principle, and all successful international companies stick to the phrase.

The French cosmetics giant L'oreal, the world's largest cosmetics company, is no exception. It keeps the rule in Korea as well.

About 95.5 percent of the 800 employees of L'oreal Korea are Koreans. All of its cosmetics products on sale here are localized on the basis of tests on Korean consumers.

But this is not enough to explain the company's double-digit sales growth for the eight years since it launched its Korean operations in 1993.

L'oreal Korea has expanded the number of its brands to 15 in line with the needs of Koreans. The product portfolio in Korea targets four different segments _ luxury, mass, beauty salons and pharmacy markets.

It posted sales of 122 billion won last year and is seeking to hike its market share up to 4.5 percent this year, to become one of top three cosmetics players in Korea.

Its performance is regarded as successful in view of the fact that foreign brands capture less than 20 percent of the Korean cosmetics market. Many foreigners regard the Korean market as a hard nut to crack. Few countries in the world are perceived to have such a strong proclivity for local brands.

What, then, lies behind the fast growth of the Korean operation? Pierre-Yves Arzel, 44, managing director of L'oreal Korea, pointed out a differentiated management philosophy. The company is a global giant, but it acts like a start-up locally.

" We are a still small company even if we are successful. We try to keep the spirit of a start-up business. No doubt it is a big start-up. But it is a still growing company consisting of different teams for different brands. So we keep this entrepreneurship, passion, and `fighting spirit' to keep the company ahead of competitors," he noted.

" Some brands are well known in the Korean market but others are still new. Eight years are not enough time to establish all the brands firmly," he added.

"Luckily, our entrepreneurship is well-suited to dynamic Koreans and the fast-growing Korean market," he said.

"Korea is one of the top 10 cosmetics markets in the world and Korean consumers are ready to spend money for beauty," Arzel said.

He has no hesitation in highlighting the fact that Korean entrepreneurs are willing to take risks, sometimes without counting money as a key factor to boost business.

"We are very lucky to have very dynamic hairdressers here. They are not only good technicians and but also entrepreneurs. They develop a business and invest money," according to the L'oreal Korea president.

L'oreal's brands targeting professional hair dressers at beauty shops are expected to post the highest growth, followed by its pharmacy brand Vichy.

L'oreal group is noted for its aggressiveness in developing new brands and expanding markets, but it has never been beyond the domain of cosmetics. It has kept buying local cosmetics brands in every segment of the cosmetics market, developing them as globally competitive brands and distributing them worldwide.

"We are a true global player. We are operating globally with a diversity of cosmetics brands, targeting both mass and upscale consumers. We are different from other cosmetics giants, such as the Estee Lauder group that has focused on selective brands and mass market giant Procter & Gamble (P&G)," he noted.

The company introduces brands step-by-step in line with the consumer demands of each country.

In Korea, L'oreal started its operations by launching selective and luxurious brands in department stores in 1993. Then, it put on sale professional brands in hair salons. The company moved into mass-market brands, such as Maybelline New York, by utilizing cosmetics stores in 1998 and its pharmacy brand, Vichy, has also debuted.

It puts its priority on high-end brands to maximize sales, but it also invests a lot in the fast-growing mass market.

"A real mass market that offers quality products at a reasonable price has yet to be fully formed in Korea. Korean consumers are still afraid of reasonable prices, regarding cheap products as bad quality goods. For many years, Korean consumers had to swing between very bad products at cheap prices and expensive quality products. L'oreal has made efforts to convince consumers to believe in mass-market brands," he said.

When it comes to threat in the market, Arzel pointed out that competition has been escalating as not only domestic brands and other foreign companies are expanding investment to tap the growing local market.

L'oreal Korea is a female-dominant company as 75 percent of its total workers are women. Thus, it seeks to set an example to cultivate women in the workforce.

"L'oreal Korea doesn't hesitate to develop the potential of female workers and offer them opportunities internationally. Now, two heads of the four divisions are female. We don't particularly recruit more female workers. Our policy is to provide excellent employees with the most important positions, regardless of sex, age or nationality. I believe that our policy appeals to a lot of female workers," he said. - Source : Korea Times(2002.09.04)



Crédit Agricole Asset Management et National Agricultural Cooperative Federation annoncent la signature d'un accord en vue de créer à Séoul une société commune de gestion de portefeuille (Investment Trust Management Company ' ITMC), conformément aux termes de la lettre d'intention signée en avril dernier. La nouvelle société, dénommée en anglais "NACF - CA Investment Trust Management Co., Ltd.", sera détenue à 60% par NACF, et à 40% par CA-AM, avec un capital de 25 millions de USD.

"NACF - CA Investment Trust Management Co., Ltd." recevra au cours des prochains mois l'agrément des autorités locales de tutelle, et devrait être en mesure de démarrer son activité pendant le premier trimestre de l'année 2003. Les objectifs fixés à "NACF - CA Investment Trust Management Co., Ltd." sont ambitieux puisqu'il s'agit pour elle de devenir l'une des 5 premières sociétés sud-coréennes de gestion de portefeuille d'ici à 2007.

Ce partenariat avec NACF, première banque de détail en Corée (un coréen sur deux est client de NACF) et affichant 200 milliards USD de total de bilan, permet à Crédit Agricole Asset Management d'accéder à un réseau de distribution de 867 agences dans tout le pays, et ainsi de développer son activité auprès des particuliers. Crédit Agricole Asset Management était présent depuis septembre 2000 sur le marché de la clientèle institutionnelle coréenne.

Cette opération s'inscrit dans la stratégie de développement à l'international de Crédit Agricole Asset Management qui privilégie des partenariats avec de grands acteurs locaux, détenant de fortes positions sur leur marché des particuliers.

Source : La Société - 11/09/2002


¤ RENAULT POURSUIT SON AVANCEE EN COREER DU SUD : Si cet article vous intéresse, n'hésitez pas à nous en faire part. - Source : La Tribune - 18/09/02


¤ RENAULT VEUT FAIRE DE SAMSUNG SON VECTEUR DE DEVELOPPEMENT EN ASIE : Si cet article vous intéresse, n'hésitez pas à nous en faire part. - Source : Les Echos - 18/09/02


¤ RENAULT SAMSUNG VIENT DE LANCER LA SM3 EN COREE : Lors de la présentation de la SM3, la filiale de Renault a dit ne pas envisager à court terme d'étendre son unique usine en Corée du Sud. Cette dernière dispose d'une capacité suffisante pour le lancement d'un troisième modèle.

Avec la SM3, Renault Samsung vient d'introduire son deuxième modèle en Corée du Sud. Cet événement ne nécessitera cependant pas d'agrandissement d'usine à court terme, a assuré la filiale du constructeur français Renault. Son seul site coréen dispose en effet d'une capacité de production suffisante pour le lancement d'un troisième modèle.

Le succès rencontré depuis 2001 par son premier modèle, la SM5, avait accrédité l'hypothèse d'une augmentation des investissements pour développer la production. "Nous avons encore beaucoup d'espace disponible non seulement pour construire la SM3, mais encore pour produire une troisième voiture," a toutefois déclaré Jérôme Stoll, directeur général de Renault Samsung, lors d'une conférence de presse donnée sur l'île de Cheju à l'occasion de la présentation de la voiture.

Renault Samsung a récemment fait passer de 88.000 à 92.000 véhicules son objectif de ventes en 2002, contre 70.000 véhicules vendus en 2001. Renault a pris en septembre 2000 le contrôle de l'ancienne filiale auto de Samsung. Sa participation actuelle est de 70,1%. - Source : - 30/08/2002


¤ RENAULT-SAMSUNG : WAITING LIST FOR SM3 MODELS APPROACH 10,000 : By Seo Jee-yeon - The newly released SM3, the second product from Renault Samsung Motors following the SM5, will target both the domestic and overseas markets, according to the Franco-Korean carmaker's CEO Jerome Stoll.

SM5 been quite successful in the mid-sized sedan market with double-digit monthly sales growth over the past two years, but it has been a flop overseas.

``When it comes to business objectives, we consider not only market share increase but also expansion of volume to be important. We expect SM3 will expand its segment market, from the small-medium car market, into the medium one. We will advance into overseas markets step by step in liaison with our partners. However, we plan to focus on the domestic market for the moment,'' Stoll said in an interview with The Korea Times.

With Stoll discussing overseas market penetration, it becomes apparent that Renault Samsung will be hitting the roads outside of Korea in the near future and the Renault group now considers the Korean market as a strategic point in Asia after witnessing a faster-than-expected growth.

According to the company, Renault group chairman Louis Schweitzer is scheduled to visit Korea on September 18 to celebrate the second anniversary of the Korean operation and unveil the group's vision.

In the short term, Renault Samsung will focus on the domestic market with two models in tough competition with local brands.

As far as SM3 is concerned, the company has to battle the dominant Hyundai Avante XD of the small-medium car market that currently holds 70 percent of the market.

"As part of strategies to clear out a threat in the market, we are focusing on the quality of our products and customer satisfaction" the Renault Samsung head said.

The company's confidence in product quality can be seen in the car's price being 4 percent higher than its competitors.

``Actually, the price of the SM3 is not that much higher than its competitors. However, considering that the customers in the sub mid-sized car market should be very sensitive to the price, I consider the price gap to be fairly balanced by the cost of usage,'' he stressed.

``In addition, SM3 has many differentiated strengths in comparison with competitors. First of all, SM3 has excellent fuel efficiency. And we try to strengthen customers' safety most of all. For example, we attached side air bags for the first time in a 1,5 liter mid-sized vehicle. And we are very proud of the refined interior, dynamic exterior and various conveniences that will satisfy customer needs,'' he added.

In accordance with his expectations, the waiting list for SM3 sedans over the past two months has grown to 9,000 units, the company said.

``The company expects to sell 14,000 vehicles this year from Sept. 2 when the SM3 was launched on the market,'' Stoll said.

The company expects to sell 100,000 vehicles, including the SM3, by the end of this year and break even next year. - Source : Korea Times - 12/09/2002


¤ RENAULT CONTINUE A INVESTIR EN COREE : RACHETÉE au géant Samsung, il y a deux ans, la filiale coréenne de Renault dépasse largement ses objectifs. Avec seulement deux modèles (dont un est commercialisé depuis début septembre), ses ventes sur le marché local devraient dépasser les 107 000 exemplaires en 2002. En outre, Renault Samsung Motors (RSM) affiche un résultat bénéficiaire avec vingt-quatre mois d'avance. Dans ces conditions, Louis Schweitzer, le président de Renault, a décidé de donner une nouvelle impulsion avec un plan d'investissement de cent millions d'euros par an (656 millions de francs), jusqu'en 2005. Une enveloppe devrait permettre le développement de deux nouveaux modèles. Grâce à cette offre élargie, produite dans son usine de Pusan (Corée du Sud), RSM devrait se tourner vers l'exportation. " L'objectif est de vendre 250 000 unités en 2010 sur les cinq continents", a précisé le patron de Renault.

Source : Le Parisien - 18/09/2002



French automaker Renault is to invest a total of 360 billion won (about $300 million) in its Korean affiliate, Renault Samsung Motors, over the next three years, its visiting chairman said yesterday.

Renault Chairman and Chief Executive Louis Schweitzer said that the company is planning to spend 120 billion won annually by 2005 to help Renault Samsung secure a solid foundation for sustained growth. Visiting Korea to celebrate the second anniversary of Renault Samsung, Schweitzer also revealed that the Korean venture will introduce two more models and seek to be listed on the Korea Stock Exchange.

"The massive investments will help Renault Samsung introduce its third and fourth models and reinforce its competitiveness against Hyundai Motor and other Korean automakers," said Chairman Schweitzer. "By 2010, Renault Samsung will expand its annual output to 500,000 units, with half of them sold outside Korea," he said in a press conference at the Grand Hyatt Seoul Hotel in downtown Seoul.

In addition to the two new models, the Renault group is to export some of its own vehicles directly to the Korean market, he said, suggesting that multipurpose vehicles could be the first to be sent here.

"Renault Samsung will be developed into the Renault group's strongpoint for the Asian market. The Korean affiliate will assume the role as sales and research and development center for the region." He then said that the Renault automotive group will build 10 vehicle platforms, eight engine groups and seven transmission groups by 2010, offering maximum synergies for Renault Samsung.

The chairman, while praising the Korean venture's labor-management relations as very constructive, said that Renault Samsung is the most successful overseas venture of the French auto group since 1995, when it began to be internationally active. Indeed, Renault Samsung's per-hour productivity has grown remarkably from 26 units to 60 units in a period of just two years, he added.

In this regard, Renault Samsung President and CEO Jerome Stoll said that the company expects to post an operating profit this year, two years ahead of schedule. He also said the company plans to develop a third model to add to its lineup of two. A fourth model will then be developed on a platform to be shared by companies under Renault, probably Japan's Nissan Motor. The fourth model will be targeted at a new market segment and "prepare for large-scale exports," he noted.

The venture, created in September 2000 when Renault paid $565 million for a 70 percent stake in Samsung Group's auto unit, released its second car model, the SM3, in August to spur sales. The SM3 model is built on the same platform as the Bluebird Sylphy made by Nissan, in which Renault owns 44 percent. The smallest automaker in Korea expects to sell about 90,000 of its SM5 and SM3 models this year, or 26 percent more than in 2001. ( By Yoo Cheong-mo Staff reporter - Source : Korea Herald - 2002.09.19


¤ RENAULT UNVEILS MASSIVE INVESTMENT PLAN IN KOREA : By Seo Jee-yeon - French carmaker Renault would invest 360 billion won over the next three years in its Korean subsidiary, Renault Samsung Motors (RSM).

In a press conference in Seoul, Renault group chiarman Louis Schweitzer also unveiled a research and development (R&D) investment plan to make RSM's design center into a regional design center.

He arrived Monday for a three-day vist to Korea. It is the first time that the chairman visited Korea since the company took over the automobile arm of Samsung in 2000. His visit was made on the occasion of the second anniversary of RSM.

``RSM is developing its third model following the SM5 and the latest compact sedan SM3 model to boost the existing line-up. It has been engaged in the development a fourth vehicle through its alliance with Renault-Nissan in a bid to gain a greater share of the local market and prepare for large-scale exports,'' he stressed.

``RSM is a linchpin of the Renault group strategy and the Renault-Nissan Alliance. We expect our Korean operation to play a crucial role in pursuing our profitable growth strategy,'' he said.

RSM, with a production capacity of 26 vehicles per hour, is expected to break even next year and will export its vehicles on a large-scale from 2005 with a variety of new models, according to RSM president Jerome Stoll.

Stoll added RSM will strive to become a future hub of the Renault group in Asia. This strategy fits well with Korea's strategy to become a hub in Northeast Asia. - Source : Korea Times - 18/09/2002


¤ AUTOMOBILE: RENAULT VEUT LANCER SAMSUNG EN DEHORS D'ASIE : Le redémarrage du petit constructeur sud-coréen Samsung Motors, deux ans après sa reprise par Renault, paraît bien engagé et il se prépare à élargir sa gamme pour pouvoir exporter y compris en dehors d'Asie. La réussite de cette filiale était "attendue à terme, mais elle nous a surpris par sa rapidité", a déclaré mardi à Séoul le président de Renault, Louis Schweitzer, deux ans après la création de Renault Samsung Motors (RSM). Il a rappelé devant la presse que Renault a été le premier constructeur automobile étranger à s'implanter en Corée du sud, lorsqu'il a pris en 2000, à des conditions très avantageuses, le contrôle de Samsung Motors, laminé par la crise économique de 1998. Le Français a payé 274 millions de dollars pour 70,1% du capital de la nouvelle société RSM, dont les autres actionnaires sont le groupe Samsung et les banques créancières. Une usine ultra-moderne, dans laquelle Samsung avait investi plusieurs milliards de dollars, est ainsi tombée dans l'escarcelle de Renault. Située à Busan dans le sud du pays, elle avait été équipée par Nissan, selon un accord de coopération technique conclu en 1994 entre Samsung et le groupe japonais, avant que Nissan ne s'allie avec Renault en 1999. Cette usine sans syndicat, où le coût horaire du travail est moitié moins élevé qu'en France, et où la moyenne d'âge des salariés est de 31 ans, a une capacité de 240.000 voitures par an, actuellement largement sous-utilisée. Le premier bilan est positif: Renault Samsung Motors est bénéficiaire depuis le premier semestre 2002, avec deux ans d'avance sur les prévisions, a souligné M. Schweitzer. La réussite de Samsung contraste avec les difficultés du roumain Dacia, racheté par Renault en 1999. Mais elle peut être rapprochée d'un exemple de "même nature" mais d'une toute autre échelle, celui de Nissan, a souligné M. Schweitzer. Avec une part de marché de 8,7% au premier semestre, Samsung Motors est devancé en Corée du sud par Hyundai, Kia et Daewoo. Ses ventes, prévues à 107.000 voitures en 2002, ne représentent qu'une fraction des volumes commercialisés dans le monde par Renault (2,3 millions en 2001). Samsung n'a actuellement que deux modèles, tous deux développés sur la même plate-forme que des Nissan de taille équivalente, la SM5 lancée en 1998 et la SM3. Lancée en juillet, celle-ci a nécessité un investissement de 100 M EUR. Pour se développer, Renault Samsung Motors va investir 100 millions d'euros par an, dans les trois prochaines années. Ces investissements seront auto-financés par RSM, a précisé le directeur général de la filiale, Jérôme Stoll. "Il n'y a pas d'augmentation de capital prévue à ce jour", a ajouté M. Schweitzer. Un troisième véhicule est attendu en "2004-2005", selon M. Stoll, et un quatrième est "en phase préparatoire". Doté d'une gamme plus large, RSM pourra exporter à grande échelle. Sur une production de l'ordre de 500.000 voitures par an envisagée à l'horizon 2010, Samsung devrait en exporter la moitié "vers la quasi-totalité des continents", a indiqué M. Schweitzer. - Source : AFP - 18/09/2002



Europe's fourth-biggest carmaker, Renault SA, said on Wednesday its South Korean unit would break even in 2002, two years ahead of schedule, and it pledged to spend almost $300 million over three years on new models.

Renault Samsung Motors Inc had attained pole position within the group in terms of sales outside of Europe, Renault (RENA) said, justifying hefty investments for future growth.

France's Renault took over the former unit of the Samsung Group [SAGR.UL] two years ago and holds a controlling 70.1 percent stake. The deal has been hailed as one of the smoothest foreign takeovers in South Korea.

Soaring sales of Renault Samsung's SM5 mid-sized sedan led it to boost its 2002 sales target recently to 92,000 cars from an earlier 88,000. It sold 70,000 cars in 2001 and recently launched a second model.

"We expected an operating profit in 2004," Renault Samsung chief executive Jerome Stoll told a news conference. "We shall achieve it this year."

South Korea's regulatory Financial Supervisory Service has said Renault Samsung posted a net loss of 59.5 billion won ($49.23 million) in 2001.

Renault Chairman and chief executive Louis Schweitzer, currently visiting the South Korean operations, said back in 2000 "sceptics had voiced concern over the acquisition" but the group was committed to future investment.

"We have an investment plan for 120 billion won ($99.29 million) each year for the next three years to help lay the foundations for Renault Samsung Motors growth," he said.

Third model :

Schweitzer added that Renault had a third model in the pipeline at Renault Samsung, while a fourth was under consideration, but he declined to elaborate on the third model and when it would be launched.

Renault Samsung is still one of smallest players in South Korea's 1.5 million vehicle market, where the nation's largest automaker, Hyundai Motor Co (05380) and affiliate Kia Motors Corp (00270), control a majority stake.

Schweitzer reiterated Renault Samsung's development plan, announced last year, to be able to produce 500,000 vehicles by 2010, half for the domestic market and half for export.

Renault also holds a 44.4 percent stake in Japan's Nissan Motor Co Ltd (7201), Japan's third-largest automaker, which is thriving under the leadership of former Renault executive Carlos Ghosn. He is slated to replace Schweitzer as chief executive of Renault in 2005.

Renault Samsung will share 10 vehicle platforms with Nissan and Renault by 2010, although it will not sell cars here under the Renault brand until then, Schweitzer said.

He added that Renault Samsung might import and distribute Renault cars in South Korea.

The French automaker said there was no capital increase planned at Renault-Samsung. "Today, Renault Samsung, through its own results, is able to fund its development," Schweitzer said.

A number of regional carmakers are forging partnerships or are poised for a takeover. Japan's Nissan and China's second-largest auto group Dongfeng Motor Corp will announce a 50-50 joint venture on Thursday to exploit one of the world's fastest-growing vehicle markets, China.

In South Korea, General Motors (GM) agreed in April to lead a joint venture together with Japan's Suzuki Motor Corp (7269) to revive Daewoo Motor, the third-largest carmaker, as GM Daewoo Auto & Technology Co. It is expected to be launched in October. (US$ 1 = 1208.6 Won) - Source : Reuters - 18/09/2002



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