Category: Korea-Business

It looks like Putin’s War has opened a whole new market for the ROK defense industry:

Poland’s defense minister said his country will buy a large package of Korean weapons, including K-2 tanks, K-9 self-propelled howitzers and FA-50 light fighter jets, and also manufacture some weapons in Poland under license, according to a media report released Wednesday.  
   
In an interview with Polish defense media outlet Defence24, Polish Defense Minister Mariusz Blaszczak cited the Russian invasion of Ukraine as the main driver of the purchase.  
   
“The unpredictable nature of Putin means that we need to accelerate equipment modernization even further,” Blaszczak said. “It is of key importance to increase the levels of security as fast as possible for Poland. We can do this only by creating a powerful military that is strong enough to deter any potential aggressor from deciding to attack.” 

Joong Ang Ilbo

You can read more at the link.

Anyone want to buy the McDonalds franchises in South Korea?:

McDonald’s is moving to sell its Korean branches as more companies enter the overly-crowded fast food market here, the company said Friday. The U.S. fast food giant first attempted to dispose of its Korean business back in 2016 but failed to do so as potential buyers opted out, due to high sales prices and other reasons.

Mirae Asset Securities has been selected as a sales manager to find the new owner of McDonald’s Korea, which has seen its profitability deteriorate, despite rising revenue, because of rising wages and higher raw materials costs, amid intensifying competition. 

“McDonald’s is looking for a strategic partner in Korea to improve the company’s growth. We are working with an external consulting firm to review various options. We will provide more details on the sell off at the appropriate time,” a McDonald’s Korea official said. 

McDonald’s sales in Korea have actually increased from 724.8 billion won ($570.4 million) in 2019 to 867.8 billion won in 2021. This increase is only counting the revenue created from the restaurants McDonald’s Korea directly managed, and if sales created with franchisees are included, the figure reaches over 1 trillion won. It is the largest sales achieved by the American fast food restaurant chain in Korea. Its operating losses reached 44 billion won in 2019, 48.3 billion won in 2020 and 27.7 billion won in 2021. 

Various factors are attributable to McDonald’s money-losing business in Korea. Higher delivery service fees here during COVID-19 have increased its business expenses, along with soaring costs of labor and raw materials. 

Korea Times

You can read more at the link.

This is not surprising considering how this trucker strike continues to drag out which is all linked to high fuel prices:

South Korean steelmaker POSCO said on Sunday will halt some of its plants in the country due to a lack of space to store finished products, which have not been shipped due to a strike by truckers who are demanding higher pay as fuel prices surge.

POSCO follows automaker Hyundai Motor in cutting production lines as the strike by thousands of truckers disrupted cargo transport at the country’s industrial hubs and major ports.

Reuters

You can read more at the link.

I feel bad for the investors that lost their money, but investing in bitcoin has always had a casino like atmosphere to it. You should not invest money that you cannot afford to lose:

The collapse of Luna is starting to ripple through Korea as investors in the coin and companies associated with it add up their losses and adjust their plans.  

Victims range from retail punters to some of the largest business names in the country, and the damages go from trivial to existential, though the sense is that, so far, the Luna fiasco will not be a Lehman moment and threaten crypto markets or the broader markets in a systemic way.    

“I lost my entire lifesavings in just two days,” one person wrote anonymously on Bitman, a Korean blockchain community, on May 14. “I repeatedly sold Luna at a loss, bought more to lower the average price and sold it at a loss again. After losing more than 100 million won [$78,000] that I struggled to save for years, I can neither eat nor sleep. I loathe myself.”  

Terra coins were algorithmically pegged to other currencies though arbitraged with Luna coins. When faith in the design evaporated in early May, Luna lost most of its value in a matter of days and TerraUSD, which is the Terra that tracks the dollar, dropped to about 10 cents. 

One man, who claims to have lost 2 billion won ($1.6 million) by investing in Luna, was under investigation after showing up at the house of Kwon Do-hyeong, one of the masterminds behind the Terra stablecoin scheme.    
   
“Kwon should officially apologize and announce some sort of plan using any means available, including using his own money,” the man told the local press. “There are some people around me who have actually lost their lives.” 

Joong Ang Ilbo

You can read more about the cryptocurrency losses impacting South Korea at the link.

This is probably a smart move with the amount of major car companies now offering electric vehicle options that is driving increased competition. If Samsung wanted to get into this market they should have done it at least a decade ago in order to already have captured market share like Tesla has done:

But at Samsung, still Apple’s top rival in the smartphone segment, its proven “go-to-market strategy” won’t be applied in the finished EV segment, as the Korean tech behemoth decided recently not to manufacture its own brand of EVs, as two senior executives, both of whom are directly involved in the issue, told The Korea Times. 

The core reasons behind this decision are that it doesn’t believe its entry into the finished EV segment will see sustainable profits, and it holds the intention to continue avoiding any possible conflicts with its top clients, amid the focus on its contract-based semiconductor foundry business, according to them.

“After thorough reviews, response and discussions with clients, top Samsung management reached a consensus that making a foray into the finished EV segment won’t be the right fit both in terms of a profit standpoint and from a client management perspective,” one of the sources said on condition of anonymity.

Korea Times

You can read more at the link.

It will be interesting to see if under her leadership she is able to make Naver a global IT brand:

Naver will become an incubator that creates innovative technology penetrating the global market and seek to go beyond providing services that are popular today, the company’s new CEO said Monday. 

“Not only all businesses owned by Naver began with the thought of going global from the start, but all of the objectives also point to going global,” Naver CEO Choi Soo-yeon said at a meeting with shareholders and board of directors where she was appointed as the new chief.

The IT giant will focus all of its management efforts on becoming a global top-tier internet company, it added.

The appointment of the 41-year-old female executive marks a major shift in its management, the company said. Choi is the youngest CEO to lead Naver, South Korea’s fourth-largest company by market capitalization. Having Choi as CEO signifies that the management will be led by the younger generation who grew up with the internet, and no longer by those who pursued evolution of the platform businesses.

Korea Herald

You can read more at the link.

If you are committed to ruining your lungs THIS cigarettes gives you the option to do it as cheaply as possible:

Two decades after its entry into the United States, local tobacco maker KT&G became the fifth best-selling cigarette company in the country. 

The low price of THIS cigarettes, which used to be widely smoked in Korea in the 1990s, is the reason why. In its first month of sales in the United States in December 2017, KT&G sold 1.36 million THIS cigarettes – a figure that skyrocketed to 38.25 million in June 2018. By June 2019, that figure jumped to 200.4 million, almost fivefold from the same month a year earlier. 

KT&G is particularly proud considering that the United States, along with China and Indonesia, are major cigarette markets that see fierce competition among some 100 global companies. KT&G’s market share in the United States now stands at fifth, ahead of JTI, or Japan Tobacco International, according to market research firm Euromonitor International.

KT&G attributed its success to its cheap price. Distributed at big-box retailers like Costco and Walmart’s Sam’s Club, THIS cigarettes cost as little as $2.97 per pack. The product is promoted in the United States with the tagline, “Is This price for real?”

Joong Ang Ilbo

You can read more at the link.

I guess we will see how long this position lasts with other electronic rivals like Sony and Apple developing plans to enter the EV market:

After Sony made a surprise announcement that it would start making electric vehicles, everyone at CES 2022 wanted to know if Samsung Electronics was going to too.  

Han Jong-hee, the vice chairman of the tech giant who oversees consumer electronics and smartphones, suggested not Wednesday, although automotive devices and parts are of interest to the company.   

“We’ve expanded the automotive business, especially through an acquisition of Harman,” Han said during a press conference on the sidelines of the tech trade show, which runs through Jan. 7.    
“But we don’t have any plan to enter car manufacturing,” he said. 

Joong Ang Ilbo

You can read more at the link, but Samsung at one time had Samsung Motors that built cars. However, this venture failed and they ended up selling it to Renault. This prior failure may be why they are hesitant to enter the EV market.

Though it looks like Texas will be the choice, I am kind of surprised to hear that New York is on Samsung’s short list for their new chip plant considering the state’s infamous taxes:

Samsung Electronics Co. appears to be moving closer to making a final decision on the site for its new chip fabrication plant in the United States, as global semiconductor companies have engaged in increasingly fierce competition amid a global chip crunch.

The South Korean tech giant was found to have withdrawn its application filed in January with Manor Independent School District (ISD) in Travis County, Texas, for corporate tax incentives regarding its new chip plant, the Texas comptroller’s website showed.

School districts in the state constitute an important party in the negotiations over building a new plant. 

The same kind of document filed in July with the city of Taylor, northeast of Austin, can still be found on the public site.

The two locations in Texas have been competing against each other to host the global chipmaker’s new plant believed to be worth US$17 billion. The South Korean company did not rule out other sites in New York and Arizona for potential sites.

Yonhap

You can read more at the link.

One of the things I love about South Korea is the high number of self-employed mom & pop stores that are few and far between in America now. The COVID protocols are really crushing these businesses now:

In the hit Netflix series, “Squid Game,” the main character, Seong Gi-hun, joins the fight-to-the-death challenge, driven by the 400 million won he owes, after the failure of his restaurants, a business he started after losing his job at a car manufacturing company. Hit by the COVID-19 pandemic and changes in the economy, many small business owners say they are no different from Seong. 

In an internet forum on the country’s top search engine and platform, Naver, where the self-employed share information, a man who runs a small sushi restaurant said he could not take his eyes off the show. “The show depicts in detail what it is like to be on the edge of a precipice,” he wrote. Another said he felt like he was living right in the middle of the game. The only difference is that “there will be no prize money even if I win,” he commented.

According to the National Self-Employed Emergency Response Committee, at least 22 small business owners have taken their own lives since the coronavirus pandemic began. One of them retrieved the deposit for her one-room studio apartment so as to pay her part-time workers before committing suicide. For many, even if the business is continuously incurring losses, immediately shutting down is not an option because they cannot terminate their rental contract without losing additional deposit money.

Korea Times

You can read more at the link.