Category: Korea-Business

The Global Post takes a look at the massage parlor culture of Korean business:

Not far from glitzy office towers of Seoul are the frenzied hangouts where business is really done: a cacophony of karaoke joints, shady neon-lit parlors, and cluttered barbecue restaurants full of drunken managers ordering their junior staff to pound shots.

To Koreans, the business districts of American cities appear staid, orderly and a bit dull. A shop-worn joke here has it that North America is a “boring heaven” while their country is an “exciting hell.”

No salesman (and the majority are men) gets far here unless he can sing mean, inebriated karaoke and then slug through negotiations the next morning with a thumping headache. South Koreans slam the world’s largest quantity of hard liquor, imbibing 11.2 shots of soju per week, more than twice the average Russian’s vodka consumption (although soju isn’t always as strong).

What happens when this macho after-hours culture goes too far, littering the company tab with payments to prostitutes and hostess clubs? “That’s the business model we depend on. When the Korean men are doing business together, they hang out at these places,” explained the sex industry consultant.

There’s a dark logic to the debauchery.

“When you’re a man and you do something dirty and sinful with your business partner around, you share your secrets, you share trust like brothers. You can always trust your new business partner.”  [Global Post]

You can read much more at the link about the different levels of clubs, massage parlors, and karaoke bars that serve as fronts for prostitution to include how many aspiring celebrities work in the high end clubs in hopes of landing a wealthy patron to help their careers.

This is an example of how absurd the competitive between Korean companies can get when things get this petty:

Following recent news that Korean alcohol company execs personally orchestrated a rumor-mongering campaign against the competition on Korean home turf, the bizarre story of an LG executive allegedly vandalizing Samsung-made washing machines in two Berlin appliance shops earlier this month leads one to question whether the country’s highly-competitive industries are taking it all a little too seriously.

On September 3rd, sales staff at the two different appliance shops in Berlin found five display models on the showroom floor with broken doors. The sales staff called local police after CCTV allegedly showed Jo Seong-jin, the president of the Home Appliance Division of LG Electronics, heavily leaning on the door hinges of the Samsung Crystal Blue washing machines so that they would be unable to close properly. The LG team was in town for the 2014 IFA electronics show.  [Busan Haps]

You can read more at the Busan Haps link.

Another day, another returned US beef shipment:

South Korea found banned bones in a U.S. beef shipment for third time this month and plans to send the entire shipment back to the United States, an official said Wednesday.

South Korea’s Agriculture and Forestry Ministry said it found rib bones earlier in the day in one box of a 16.15-tonne shipment that arrived in South Korea on Aug. 5, the ministry official said. He asked not to be named, citing the agency’s policy. [Kim Kwang-tae, C-News]

The Koreans have picked a good time to keep returning beef shipments because our US politicians are all consumed with General Petraeus’ report to Congress and are not likely to notice all the beef shipments being turned around from Korea. 

Here we go yet again:

South Korea said Tuesday it found bones, banned because as a mad cow disease prevention, in the latest shipment of American beef and will revoke import approval for JSP Swift’s plant in Grand Island, the U.S. packing plant that processed it.

The packing plant was already suspended from shipping meat to South Korea since July, said JSP Swift spokesman Marco Sampaio.    The latest shipment was sent before the Grand Island was suspended for a similar violation in July […]

South Korea’s Agriculture and Forestry Ministry said rib bones were found Monday in one box of a 15.5-ton shipment that arrived in South Korea on Aug. 10.

The ministry said it will send the entire shipment back to the United States. [Journal Star]

At this rate there won’t be any meat packing companies left in the US to ship beef to South Korea. 

OFK has two excellent postings I recommend everyone check out.  The first posting is about the apparent death of the US-ROK FTA.  Joshua as well as Brendon Carr provide some excellent insight into why this agreement is finally dead.  The second posting is about the agenda of the Second Inter-Korean Summit.  As I expected human rights, the closing of forced labor camps, and the freeing of South Korean hostages in North Korea is no where on the agenda. 

It is humorous to listen to Koreans complain about "invisible barriers" to their products:

Sales of Japanese cars in Korea are soaring, but Hyundai Motor isn’t doing nearly so well in its eighth year in Japan. The problem may be the high non-tariff barrier, a stumbling block for Korean automakers in Japan. The Korean government meanwhile does not discriminate against Japanese cars and Korean consumers are also generous towards their hefty price tags.

A Hyundai official in charge of vehicle shipments in Japan shared a recent bizarre episode. A Japanese customs official, detecting a tiny scratch on the windshield of a Hyundai car, demanded the company replace the windshields of all 500 cars that were going through customs at the time. The Hyundai official thought the request was preposterous but had no option but to do as told.

I have to wonder what American car manufacturers and beef producers are thinking reading these complaints?

This is just one reason why the US should not sign a free trade agreement with Korea:

In a move that could hinder the passage of a bilateral free trade pact, South Korea effectively blocked all U.S. beef imports from reaching store shelves Thursday after banned parts were found in a recent shipment.

The discovery of unauthorized animal parts in a July shipment, including spinal material, comes as the United States pushes for a full reopening of what once had been the third-largest overseas market for its beef.

Seoul ended a ban of three and a half years last month on U.S. beef that was prompted by a 2003 outbreak of mad cow disease in the United States, allowing in boneless U.S. beef from cattle under 30 months old.

But South Korea announced Thursday that it was stopping inspections of U.S. beef under quarantine, meaning that beef already in warehouses would be prevented from reaching store shelves. It will now decide whether to ban U.S. beef altogether.

Any agreement signed with the Koreans will not be upheld by their side and the continuous banning of US beef is just a perfect example of this.  The Korean government has now banned all US beef to Korea because of one box of T-bone steaks that was labeled for consumption in the US. 

You may remember back in June US beef shipments were banned when four boxes of beef that were meant for the US market some how ended up in the Korean beef shipment.  It was later found that the four boxes were samples of US beef provided to a South Korean company in California.  This company was some how able to get the four boxes of beef into the US shipment to Korea, which ended up banning US beef all together until the US Congress got involved and threatened trade sanctions. 

 I find it hard to believe that the US beef exporter, Cargil would have been sloppy enough to send another box of meat that was meant for US consumption.  I agree with Brendon that there may be a "Patriotic Korean" somewhere along the export chain making sure that a box of beef meant for the US market ends up in the shipment of beef meant for export to Korea.  There is already evidence of this from the investigation after the June ban and I would not be surprised if another South Korean connection is found again this time. 

Everyone ask yourself, would Korea pull this crap with China?  We already know the answer to that question when the Korean government backed down on their Chinese kimchi ban during the Great Kimchi Crisis of 2005 when China threatened a trade war with Korea.  There has never been a problem with Chinese kimchi since.  If the US government is serious about exporting beef to Korea than it needs to start learning to play by rules the Koreans understand.  Just ask China. 

You can read more at Lost Nomad.

Not even protesters throwing crap on U.S. beef, has been able to slow the demand for the product:

Consumer demand is now sizzling, and experts are predicting a major market shakeup once imports begin to arrive in earnest.

Lotte Mart, the first of the big supermarkets to resume selling the meat, said its stock of 40 tons of chilled beef sold out on the second day Saturday at all its branches. At that rate, it expects to sell the remainder of its frozen U.S. beef by Tuesday morning. Market insiders attribute the higher than expected popularity to the price competitiveness of U.S. beef in comparison to its quality. In other words, it’s cheap and tasty.

The only people more upset about this than the protesting farmers, are the black market ajummas outside the USFK camps.

From the Chosun:

The prices of beef, pork and chicken are all falling in the aftermath of the Korea-U.S. free trade agreement. U.S. beef imports are still minimal but just the expectation of a full fledged import onslaught is weighing heavily on domestic meat prices. It’s good news for consumers but bad for Korean farmers.

The National Statistical Office says prices of pork and both domestic and imported beef fell together for the first time in eight years in the April-to-June quarter. Domestic beef prices slipped 2.0 percent and foreign beef 3.7 percent year-on-year, while pork dropped 6.9 percent.

The Chosun article tries to make the fall in prices for meat seem bad for Korea and even offers this evil looking American cow to back up their claims:

The fall of food prices is good for consumers and if Koreans feel they need to support the domestic meat market than they still have the option of buying Korean meat just like car buyers in the US have the option of buying a cheaper Korean car or a more expensive American one.  Rising quality of Korean cars and cheap prices is forcing American companies to improve the quality and prices of the vehicles they offer.  This is called capitalism and free trade, in the end the consumers win, not just the evil American beef producers. 

From Reuters:

Foreign direct investment plans lodged with South Korea fell for the fourth successive quarter in the April-June period, data showed on Wednesday, denting the Asian nation’s ambition of becoming a regional business hub. The commerce ministry said foreign direct investment commitments fell 35 percent to $1.76 billion for the second quarter from a year earlier, following 28 percent and 3.9 percent annual drops respectively for the previous two quarters.

Analysts listed high equity valuations, high costs of doing business and an inflexible labour market among the factors that have been pushing foreign investors away from South Korea and toward cheaper places such as China, Vietnam and India.

There are a variety of reasons for the drop in FDI to Korea, but I think the Lone Star witch hunt is the straw that broke the camel’s back.