Category: Korea-Business

With the KCTU behind these protests I don’t know if these truckers are actually striking for improved pay or to crater the ROK economy because someone from the Korean right is President:

President Yoon Suk-yeol ordered his ministers, Sunday, to make preparations to expand executive orders to striking truckers in the refining and steel industries, with the government vowing to mobilize a maximum number of police to crack down on illegal protests by the unionized truckers.

“The government will not compromise with any forces that collectively resort to illegal acts and violence, and will hold them accountable for each of their infractions,” Yoon said during a ministerial meeting on the truckers’ strike. “Otherwise, damage stemming from chronic illegal strikes will be repeated in the future.”

Yoon added, “The government should crack down on these illegal acts and take stern measures by mobilizing the full administrative forces. … Also, ministers should prepare to expand the executive order to truckers who are involved in the refining and steel industries.”

The comments came after a strike by the Cargo Truckers Solidarity (CTS) stretched on for the 11th day as of Sunday. The CTS has been refusing to transport cargo since Nov. 24, demanding a permanent guarantee of a minimum freight rate by the government. 

The president signed an executive order last week to get unionized truckers to return to work. The strike, involving 2,500 truckers transporting mostly cement products, caused significant damage to the country’s construction industry. Losses have also been reported in the refining and steel industries. (……)

Referring to a nationwide strike by the Korean Confederation of Trade Unions (KCTU) scheduled on Tuesday as “politically motivated,” Yoon ordered his ministers to crack down on illegal acts by “mobilizing the full administrative forces.”

Having more than 1 million members, the KCTU is one of Korea’s largest labor unions. It is also the umbrella organization of the CTS and plans to stage the nationwide strike on Tuesday to support the truckers.

Korea Times

You can read more at the link, but the Yoon administration has a good argument that this is politically motivated because why didn’t the KCTU conduct this strike when Moon Jae-in was president? Yoon has only been president for a few months and now they launch their strike?

For people that own iPhones in Korea, Apple Pay appears to finally be on its way and Apple has Hyundai to thank for it:

Despite earlier market expectations that Apple Pay would be launched in Korea from Nov. 30, it is estimated that the starting date of the payment service in the country will be delayed to sometime around December.

Hyundai Card, which is a key partner in bringing Apple Pay to be available in Korea, remained tight-lipped about the matter, in a phone conversation with The Korea Times on Wednesday. 

“As of now, we cannot confirm any matters regarding Apple Pay,” an official from Hyundai Card told The Korea Times. 

Korea Times

You can read more at the link.

2045 is a long ways off so I will believe it when I see it, however I do agree the space economy will be the next big economic driver for those who have the technology to access it:

Korea will launch a space mission to Mars no later than 2045, according to a roadmap for the nation’s space mission unveiled by President Yoon Suk-yeol on Monday. 

“A country having a space mission will lead the world economy and be able to resolve challenges human beings are facing,” Yoon said during an event to announce the country’s roadmap for the space economy at the JW Marriot Hotel in Seoul.

The space economy refers to the economy beyond our planet, including exploring deep space, extracting resources that are rare on Earth and developing technologies necessary for space exploration.

“The dream of becoming a powerhouse in space is not distant. It will be an opportunity and hope for children and the youth,” he added.

Korea Times

You can read more at the link.

Who would have imagined that the bankruptcy of the Legoland Korea amusement park could lead to such negative economic impacts in South Korea:

Gangwon Province Governor Kim Jin-tae has been facing criticism from both the ruling and opposition parties for his “hasty” decision not to fulfill a payment guarantee for the developer of Legoland Korea, creating a liquidity crunch in the nation’s corporate bond and commercial paper markets. 

During the ruling People Power Party’s (PPP) emergency committee meeting, floor leader Rep. Joo Ho-young blamed Gangwon Governor Kim Jin-tae and warned of a butterfly effect.

“The Gangwon governor’s announcement not to fulfil the payment guarantee, despite its capability, has sowed distrust and created a big stir in the market,” Joo said.

He was also critical of Kim’s predecessor, former Gangwon Province Governor Choi Moon-soon of the main opposition Democratic Party of Korea (DPK), saying Choi pursued the Legoland project “without considering the financial status of the province, whose financial independence stands at a mere 27.4 percent this year,” while adding that Governor Kim is also responsible for amplifying the market concerns. 

“We have to remember that a butterfly flapping its wings sometimes causes a storm,” Joo said. 

Joo’s remarks came a day after the government said it would expand the provision of liquidity to over 50 trillion won ($34.7 billion) hoping to ease jitters in the country’s bond market stemming from the “Legoland shock.” 

Gangwon Jungdo Development Corp. (GJC), the developer of Legoland Korea, established a special purpose company to fund the construction of the Legoland resort, but declared bankruptcy on Oct. 6 after missing a payment of a 205 billion won asset-backed commercial paper issued by the special purpose company. 

Gangwon Province had guaranteed the commercial paper’s payment, but on Sept. 28 it declared that it would file for GJC’s bankruptcy to a local court, instead of paying the debt.

Korea Times

You can read more at the link.

It is amazing the consternation the loss of Kakao services for about two days has caused in South Korea and now the government is ready to step in and regulate them to prevent another “digital platform disaster”:

The ruling and main opposition parties lashed out at tech giant Kakao Corp. on Monday, branding a massive service disruption that occurred over the weekend as a “digital platform disaster” and summoning its founder to a parliamentary audit.

On Saturday afternoon, a fire started at a SK C&C building that houses the data center that Kakao uses, prompting a power outage that disrupted the company’s namesake messaging service KakaoTalk, as well as ride-hailing and public services tied to the app that more than 40 million use. 

The blaze also affected Naver, the country’s top internal portal, which uses the same data center.

“The point of this crisis was that the business did not have appropriate backup systems in order to cut costs,” Rep. Park Hong-geun, floor leader of the main opposition Democratic Party (DP), said, accusing Kakao of failing to “think about responsibilities while maintaining the market dominant position.”

“Considering that digital services provided by the private sector have deeply permeated into the people’s lives, we can no longer leave things to individual companies,” he said. “We will swiftly provide legislative measures so that we will not again become helpless against such digital platform disasters.”

Yonhap

You can read more at the link.

What the U.S. is doing is pushing industries to make a choice between the U.S. or Chinese markets. Korea is trying to find a middle ground which so far the Biden administration does not want to offer them:

Korea Inc. faces an uphill battle as a push in the United States for economic security is taking its toll on companies dependent on China for manufacturing or for the supply of materials and components.    
   
The U.S. is passing laws and enacting executive orders to bring the manufacturing of products important to national interest back to U.S. soil. Chips, batteries, electric vehicles(EV), solar cells and certain biotechnology products are on the list, and China is the main country of concern.    
   
A number of Korean companies have been affected already.  

Hyundai Motor’s EV sales in the U.S. have fallen since the passage of the Inflation Reduction Act (IRA), as its EV models won’t be qualified for the subsidies under the act.    
   
Samsung Electronics and SK hynix are having to rethink their use of China as a major manufacturing base for semiconductors as a number of U.S. rules are making it difficult to transfer key technologies to China, which is the second largest source of memory chips for these companies after Korea.      
   
Korea feels betrayed by its ally and is fighting for workarounds that would allow its companies to continue sourcing heavily from China. It is now engaged in an intense lobbying effort to get the rules watered down or waivers for its companies.  
   
This anniversary special will explore the impact of the U.S.-China tech war on Korean business and map out ways to curtail the damage. It is based on interviews with academics and researchers.    
   
Some argue that the dependence on China needs to be reexamined, while others argue that the Yoon Suk-yeol administration should come up with sizable financial incentives and tax cuts to attract manufacturing facilities for chips and high-tech products to Korea. 

Joong Ang Ilbo

You can read more at the link.

U.S. service members in South Korea continue to gain continuing buying power as the won continues depreciate against the dollar:

The Korean won has weakened severely against the U.S. dollar, sending its value to 1,362 won per dollar as of Sept. 2 ― the lowest since April 2009. Excluding global financial crisis periods, the currency value is the lowest since April 2001 when the global economy had just started recovering from the IT bubble recession.

The won-dollar rate was once below 1,300 right after the U.S. Federal Reserve’s Federal Open Market Committee (FOMC) meeting, on the hopes that the Fed might pivot to decelerating the pace of its rate hikes. The dollar index (DXY), measuring the dollar value against six major currencies, came down to 105 by the end of July from the previous peak of 108. Now the index has moved up even further beyond 109, which is the highest since 2001.

The resurgence of the dollar index has stemmed from the weakening euro ― now below parity ― as well as concerns that the Fed will keep raising rates aggressively. In addition, the weakening Chinese yuan, amid China’s sluggish recovery and the central bank’s rate cuts, has caused the Korean won to weaken further. 

Korea Times

You can read more at the link.

Economic conditions in Korea may not be good, but it good for U.S. troops stationed there that are getting a great exchange rate against the won:

Current economic conditions are “severe,” the presidential office said Tuesday, as the Finance Ministry warned speculators not to pile into the won trade, with the currency now at levels not seen in more than 13 years.  
   
“Internal and external economic conditions, like the weak won and the growing trade deficit, are severe,” presidential spokesperson Kim Eun-hye said on Tuesday.  
   
Earlier that day, President Yoon Suk-yeol said he will address the economic risks in an emergency meeting and make sure the falling won “does not impose negative impacts on our market.”

The won broke 1,340 to the dollar for the first time in 13 years and four months on Monday. It continued to fall Tuesday, hitting 1,346.60 won intraday. The currency has declined more than 10 percent this year.  
   
A declining won puts Korea in a tough situation as households are weighed down by debt and being squeezed by inflation. Raising rates would held stabilize the currency but threaten the housing market, while inflation could remain high if rates are increased too slowly.  
   
The brewing economic crisis is as much a test for the president, who is already battling a low approval rating and has few tools at his disposal, as it is for the central bank. 

Joong Ang Ilbo

You can read more at the link, but the current economic problems is probably going to only further drop President Yoon’s approval ratings.