Category: Korea-Business

Another auto manufacturer has shutdown production because of the coronavirus’s impact on China:

GM Korea is temporarily halting operations at one of its three car assembly plants as the Wuhan coronavirus outbreak threatens the steady supply of auto parts.

The Korean unit of General Motors said Wednesday that it is closing its Bupyeong factory in Incheon on Feb. 17 and 18 because of delays in the arrival of auto parts, including wiring harnesses, from China. 

The factory will resume operations on Feb. 19.

The decision by GM Korea follows Hyundai Motor, Kia Motors, Renault Samsung Motors and SsangYong Motor shutting their factories temporarily as a result of supply shortages.

Joong Ang Ilbo

You can read more at the link.

It looks like firing the person in charge of gathering economic statistics in South Korea has worked for the Moon administration:

Employment growth hit a five-and-a-half-year high last month, with the most notable turnaround in manufacturing jobs.

Optimism is tempered however as the momentum could stall with the Wuhan coronavirus still threatening the economy.

In January, 568,000 new jobs were added compared to the same month the previous year. That is the most since 670,000 new jobs were added in August 2014.

January was the second consecutive month in which more than 500,000 jobs were created. 

The big news was in manufacturing, where jobs were added for the first time in almost two years. Totals have been dropping since 2018. In January, 8,000 manufacturing jobs were added.

Most of the jobs created since last year have been in health and social welfare and added with the help of government spending.

Last month, 189,000 health and welfare jobs were added, the most of any category. A total of 92,000 transportation and storage jobs were added, followed by lodging and restaurant positions, at 86,000.

Joong Ang Ilbo

You can read more at the link, but notice that the major source of jobs is not organic job creation, but instead the government handing out jobs. Even more interesting is that the majority of the government jobs are going to the elderly who tend to vote more than younger people. Does anyone think that this is just a coincidence that is happening right before April’s parliamentary elections?

Here is another unexpected consequences of relying on Chinese parts:

The nation’s largest automaker Hyundai Motor confirmed Tuesday it will suspend all production lines at local plants in phases due to the disruption of parts supplies from China. 

The decision follows three-hour talks between the labor union and management, and the suspension is expected to last until around Monday. 

The production shutdown is due mainly to the inventory shortage of wiring harnesses, which are mostly produced in China. Handmade wiring harnesses need to be laid on the floor of vehicles during their initial assembly. Because every car model uses a different wiring harness, inventories are not usually accumulated due to difficulties in management, industry watchers said. 

Korea Herald

You can read more at the link, but this should give Korean companies a taste of what would happen if the Chinese decided to put a squeeze on the Korean economy for political reasons.

It is arguable that by being on the flight Cho was setting an example that he was willing to risk getting sick the same as his employees who volunteered to work these two flights:

Hanjin Group Chairman and Korean Air CEO Cho Won-tae faced criticism for being onboard a chartered flight arranged by the government to bring back Korean citizens from the coronavirus-hit Chinese city of Wuhan, according to industry officials Monday. 

Critics called Cho’s decision to be on the flight an “overaction” designed to improve his image ahead of an important general meeting of shareholders, as he apparently had no particular role on the aircraft that carried out the evacuation mission.

The government sent two charters Korean Air planes to Wuhan, one each on Thursday and Friday, completing the mission to bring home about 700 nationals from the epicenter of the deadly illness. Cho boarded the first flight.

Korea Times

You can read more at the link, but this sounds like people hating on the guy simply because of the family he comes from.

The future is here and now even the convenience store clerk may become obsolete:

According to Bloomberg, Amazon said it will increase the number of its smart stores to nearly 3,000 across the nation by 2021. This also led GS Retail to launch the first cashierless convenience store here in Sept. 2018 in Magok, western Seoul. Following this, other local retail giants have opened smart stores adopting hi-tech payment systems.

The most prominent example is the GS25 store that opened on the 20th floor of Eulji Twin Tower in Jung-gu, central Seoul, two weeks ago.

There are over 34 smart cameras installed in the store with some 300 weight sensors that all connect to an artificial intelligence (AI) system, which plays the cashier role. 

Cameras watch customers’ behavior and their movement around the store while sensors detect which items they have picked. When a customer finishes shopping, they can just walk out of the store and the payment is processed automatically through a mobile application. 

Despite the convenience, customers are expressing mixed feelings about cashierless stores.

“This is so cool. I don’t have to wait in the queue and I can just grab and go without taking my wallet out of my pocket,” said 31-year-old nurse Lee Jung-soo. “Sometimes I felt sorry for people behind me waiting for me to pay at the convenience store but this new automatic payment system allows me to walk out without stopping.”

However, 35-year-old office worker Kim Jong-bum expressed his discomfort over the move, saying the system could lead to problems involving privacy protection.

“Think about it. Cameras watching you everywhere, anytime. This AI program will first be adopted to convenience stores, then to restaurants and clothing shops. It is only a matter of time until they all connect to put you under surveillance,” Kim said.

Korea Times

You can read more at the link.

Here is an inner left wing fight over who should be able to appoint the chief of the Industrial Bank of Korea, the Blue House or the labor unions:

Protests outside the state-run Industrial Bank of Korea are expected to intensify, with the union’s fight against the top-down appointment of CEO Yoon Jong-won gaining support from powerful national labor associations in recent weeks. 

The Federation of Korean Trade Unions, one of the two largest umbrella labor organizations here, announced Wednesday that it was joining the IBK unionists in protesting what they see as excessive government meddling in the organization’s personnel affairs.

The new leader of the FKTU, Kim Dong-myung, visited the IBK headquarters in central Seoul to announce the organization’s participation and vowed to continue until the workers’ demands were met. The FKTU had around 930,000 members as of the end of 2018, according to data published by the Ministry of Employment and Labor in December. 

The Korean Confederation of Trade Unions, which has a membership of more than 960,000, announced it was joining the fight earlier this month. 

Korea Herald

You can read more at the link.

This seems to be yet another example of the loss of confidence in the Korean economy considering that Elliott was losing money in their investment into Hyundai Motors:

New York’s Elliott Management has completely cashed out of the Hyundai Motor Group, selling all of its shares in three related auto companies.

It is estimated that the fund lost money from the holdings, holdings which may have cost $1 billion.

The sale of the shares was widely reported in the Korean press, and Financial Supervisory Service data show no Elliott Management holdings in any of the companies. Hyundai Motor would not confirm the unloading of the stake.

Local press reports say that the shares were sold before the end of last year. Elliott Management revealed its equity interests in the group in April 2018.

Recent disclosures show the fund had owned 2.9 percent of Hyundai Motor, 2.1 percent of Kia Motors and 2.6 percent of Hyundai Mobis before the sale.

The estimate of losses on the holdings is based on the fact that when Elliott first acquired the shares, they were trading at higher prices than they are now. Hyundai Motor shares were in the 150,000 won ($129) to 160,000 won range in early 2018. They are now trading at about 130,000 won.

Joong Ang Ilbo

You can read more at the link.

It seems pretty clear that the brother is trying to sideline her because of the bad publicity her presence would bring. With that said people need to get over the whole “nut rage” incident. She was vilified, sent to jail, lost her job, humiliated, and then even divorced by her husband. I think she has been punished enough for turning a plane around at the airport:

Cho Hyun-ah, former Korean Air executive vice president, accused her younger brother Monday of not leading Hanjin Group in accordance with their father’s dying injunctions, signaling a sibling feud over control of the logistics-centered conglomerate.

Cho, who is notorious for her 2014 “nut rage” incident, released a statement via her legal representative, claiming that Hanjin Group Chairman Cho Won-tae is not following their father’s instructions regarding group management.

“Our father wanted the family to run the business together, but Hanjin Group is currently neglecting his last words,” Hyun-ah said through her legal representative. 

Former Hanjin Group Chairman Cho Yang-ho died of a chronic lung disease in Los Angeles in April at the age of 70.

Their feud surfaced in May when the board of Hanjin KAL, the group’s holding company, belatedly named Won-tae as the group’s new chairman reorganized by the Fair Trade Act. Hyun-ah and her sister Hyun-min allegedly disagreed with their brother.

The three seemed to have reached a consensus when Won-tae told reporters that the three have ironed out their differences and agreed to work together. However, Hyun-ah has not yet returned to the family-run business. 

Korea Times

You can read more at the link.

Via a reader tip comes news that an increasing number of hotels in South Korea are ditching their name brand:

The Namhae Hilton also changed its name to the Ananti Namhae in January 2018, while the Hyatt Regency Jeju also converted to the Shore Hotel Jeju. 

Two Walkerhill hotels also ditched the brands Sheraton and W of the global hospitality giant Marriott International in 2017 and turned into the Grand Walkerhill Seoul and the Vista Walkerhill Seoul.

Speculation was rampant that Shinsegae Chosun Hotel that operates four Marriott-brand properties ― the Westin Chosun hotels in Seoul and Busan, the Four Points by Sheraton Seoul Namsan and the JW Marriott Seoul ― might part ways with the Westin brand, but it renewed the contract recently to retain the name.

However, the company plans to launch five new hotels by 2023, but it has yet to decide whether to go into partnership with global hotel chains, according to its officials. Last year, Shinsegae opened its first standalone brand L’Escape Hotel in Seoul. 

“The reason more local hotels are ending their relationships with popular global brands is that the benefits of using those brands are not as significant as expected,” a hospitality industry official said.

“In addition, some owners are unhappy about complying with strict instructions from brand headquarters to meet their standards.”

In addition, with online travel agencies (OTAs) gaining a bigger presence in the hospitality sector, local hotels are relying more on these platforms rather than focusing on partnership with global brands.

Korea Times

You can read more at the link, but I know for me the brand is important because of points programs that lead to free stays. That is going to be a major market that will be lost by ditching major name hotel brands.

Korea’s economic news continues to get worse:

Korea’s exports will likely decline by 10.2 percent this year from the previous year, according to the Korea International Trade Association (KITA).

The trade lobby said in a report Thursday that it expects outbound shipments for this year to record $543 billion due to global trade friction and tumbling semiconductor prices, making it fall far short of the record milestone the country achieved last year of $604.9 billion.

Exports have recorded on-year declines since December last year.

“Exports will drop by around $60 billion compared to last year, and around $30 billion [of the drop] is due to semiconductor prices that have fallen by 40 percent,” said KITA CEO Kim Young-ju during a briefing at the KITA headquarters in Gangnam District, southern Seoul. “On top of this, petrochemical prices fell 10 percent from the previous year due to falling global crude oil prices.”

Joong Ang Ilbo

You can read more at the link.