South Korea’s small and medium sized enterprises have been losing competitiveness over the past several years, mirroring the declining power of its big export-based conglomerates called chaebol that have driven the country’s economic growth.
A report by the Korea Small Business Institute suggests businesses have failed to take advantage of government programmes to support SMEs and have shown a lack of innovation as they struggle to prosper in a sagging economy. Read more
In spite of Mikhail Gorbachev’s warning this month that the world is on the brink of a new Cold War, it is Asia that we should be worrying about, says former Australian Prime Minister Kevin Rudd. The region is home to seven flashpoints which, if they erupt, could end the greatest economic growth story of the 21st century.
“We face this remarkable set of circumstances where global growth will be driven from Asia,” Rudd told beyondbrics in a recent interview in Dubai.“But Asia from a political perspective is a potentially unstable region. So the world [should have] a deep interest in not just the future growth trajectory, but also the political and security circumstances which underpin that equation.” Read more
The number of regulations governing South Korea’s financial sector has been creeping up, raising concern at the possible damage to the country’s goal of becoming a world economic power.
The number of regulations rose from 918 in 2009 to 1099 in September this year, an increase of almost 20 per cent in five years, according to a recent report by Kim Jong-hoon, a South Korean lawmaker and member of the country’s National Policy Committee. Read more
Asian companies are the hardest hit by fines for breaking antitrust law in the US, a new Korean report has found.
Fines imposed on Asian companies by the US increased from $428m between 1995 and 2004 to $5.1bn between 2005 and September of 2014 – or 77 per cent of all fines for such offences – according to a report published on Monday by the Korea Chamber of Commerce & Industry.
One of the report’s authors says Asian companies are falling foul of “cultural” differences with the US, where what they regard as cooperation is often seen as collusion. Read more
South Korea, which has one of the highest numbers of smokers per capita among member countries of the Organisation for Economic Co-operation and Development, has declared war on tobacco.
The government laid out its battle plan on September 11, including at 80 per cent increase in prices of tobacco products, a ban on manufacturers and retailers from advertising tobacco products and the introduction of picture warnings on tobacco packs. Under the plan, the average price per pack would go up to Won 4,500 ($4.35) by the start of next year. The current price is Won 2,500, unchanged for about 10 years. Read more
South Korea’s global competitiveness in the World Economic Forum’s (WEF) rankings slipped to 26th this year, down one spot from last year and the lowest rung achieved by the nation since 2004.
The slide down the ranking was due to an uneven performance, with ratings on its institutions and labour market efficiency both declining, the WEF report said. It added that a middling performance in financial market development in particular prevented Korea from closing the competitiveness gap with three other Asian tigers of Singapore, Hong Kong and Taiwan. Read more
As the global automotive industry continues its recovery there is particularly bright news for investors in OEMs (original-equipment manufacturers – otherwise known as automakers) that are focused on emerging markets.
The global automotive industry has been more successful than most at producing investor value, says the Boston Consulting Group in a recent report, A Comeback in the Making. Component manufacturers posted a median annual total shareholder return (TSR) – a measure of the value a company creates for its shareholders – of 33 per cent between 2009 and 2013, while OEMs produced a TSR of 29 per cent in the same period. Compare this to a 21 per cent TSR for the 26 global industries tracked by BCG.
But it was carmakers focused on emerging markets that were especially successful at pushing up value for shareholders. Read more
Investors should be extra careful about betting on South Korean banks, given the sector’s frequent internal strife and failures of risk management.
The latest case is Kookmin Bank, the country’s biggest consumer lender. The bank has come under increasing scrutiny after a series of scandals involving an internal power struggle among its top executives and allegations of leaked customer data, embezzlement and illegal loans. Read more
A surge in the popularity of automated banking services in South Korea has slashed the number of people who still use bank branches to a small minority, encouraging industry restructuring.
According to a Bank of Korea research report, only 11.2 per cent of South Koreans used branches as of June, compared with 88.8 per cent using automated channels such as ATMs, internet banking and mobile banking. Read more
“When eating an elephant, take one bite at a time”, US Army officer and Vietnam veteran Creighton Abrams once said.
In his new book, The Rise of the New East, Ben Simpfendorfer does just that. His elephant is “The East”, the group of almost 50 emerging markets ranging from Turkey to China that is home to well over half of the world population.
Simpfendorfer gives his topic a thorough treatment. While his insights seem logical and intuitive, taken together they give an impressive oversight of into key trends shaping the region. beyondbrics noted five insights that particularly stood out. Read more
South Korea’s benchmark Kospi index hit a three-year high this week on the prospect of rising dividends after the government announced tax measures aimed at unlocking billions of dollars in corporate cash reserves. It also unveiled a $40bn stimulus package to boost the country’s flagging economy as Choi Kyung-hwan, the new finance minister, promised to introduce expansionary fiscal policy. Read more
Lee Eun-Seok woke up in the middle of the debris and looked for survivors but it was no use. Seoul had already turned into a huge hive, infested by giant hornets.
So goes the story in Hive, one of the “webtoons” that have become hugely popular in South Korea and which are poised to become the country’s next booming export, according to some bullish forecasts. Read more
South Korean carmakers are up in arms over Chile’s proposed bill to impose an environment tax on diesel vehicles, which is likely to hit Korea’s car exports to the Latin American country and cause diplomatic friction.
Chile is one of the key export markets for Korean automakers such as Hyundai Motor and its affilate Kia Motors, both making rapid inroads into emerging markets. Korean cars are the best-selling imported vehicles in Chile, with 30 per cent of the country’s fast-growing auto market. Read more
South Korean companies, notorious for their insensitivity towards shareholder value, may be incentivised to boost dividends.
The finance ministry said on Tuesday that it is seeking ways to funnel bigger proportions of huge corporate cash reserves into the broader economy as growth in Asia’s fourth-largest economy stalls due to weak domestic consumption with many households plagued by heavy debts. Read more
You might be awkward in the spotlight and less than attractive but that need not stop you from becoming a television star, according to a burgeoning industry that has sprung up in Seoul to train and groom would-be TV announcers.
Korea’s three major broadcasting companies hire only three to five announcers a year, typically to host news or entertainment shows. The jobs are in high demand – a recent opening at the SBS network attracted 2,000 applicants – reflecting the prestige of the country’s successful entertainment industry, as well as an increasingly tough jobs market for young graduates. Read more