Tag: business

South Korea over the past two decades has really ramped up the export potential of their defense industry and it is paying off now as the world rearms due to Russian aggression and Chinese expansionism:

The Korean 4.5-generation fighter jet KF-21 makes its first maiden flight in Sacheon, South Gyeongsang, in July 2022. [DEFENSE ACQUISITION PROGRAM ADMINISTRATION]

U.S. allies and security partners worldwide looking to re-stock their arsenals are increasingly turning to Korean defense companies to procure weapons.  
   
Korea signed defense export contracts worth a cumulative $17 billion in 2022, representing a 242 percent increase in a single year and making the country the eighth-largest weapons exporter in the world.  
   
The growth in Korean defense exports, which made up 2.8 percent of a global arms exports market dominated by the United States, Russia, France and China, is all the more remarkable given the late start of the Korean weapons industry compared to the big players. 

Rising Korean defense exports also more broadly signal the country’s growing capacity and will to supply arms to other U.S. allies in the face of rising military threats posed by Russia and China in Europe and the Indo-Pacific region.  
   
Korea’s potential as a source of advanced military hardware at a time when countries are still ramping up defense production became apparent in December 2021, when Australia inked a $730-million contract with Hanwha Defense for 30 K-9 self-propelled artillery howitzers and 15 armored ammunition resupply vehicles, and again in July, when Poland announced that it had signed contracts worth an estimated $14 billion for K-2 battle tanks, K-9 howitzers and FA-50 light attack aircraft from Korea. 

Joong Ang Ilbo

You can read more at the link.

It looks like these Korean corporations will need to determine if having restrictions in the U.S. market is worth partnering with these Chinese firms:

Legal experts in Korea have begun to sound the alarm regarding LG Chem, SK on and POSCO Group, warning them that their joint ventures, established here in Korea with Chinese firms, could be designated as foreign entities of concern under the U.S. Inflation Reduction Act (IRA).

If their warnings turn out to be true, the products of their joint ventures may lose ground in the U.S. market, as they will not be able to enjoy benefits from the country’s subsidy rules.

Last Friday, law firm Kim & Chang said that joint ventures with Chinese companies are likely to be regarded as foreign entities of concern, as the U.S. Infrastructure Investment and Jobs Act defined the term as any foreign entities owned by, controlled by, or subject to the jurisdiction of North Korea, China, Russia and Iran.

“The U.S. will not allow its taxpayers’ money to flow into China,” lawyer Shin Jung-hoon of the nation’s largest law firm said during a conference on countermeasures against the IRA.

Korea Times

You can read more at the link.

I agree with South Korea’s move to increase chip production, but putting these plants within North Korean artillery range around Seoul is not a good idea. These plants are so important they should be built further south out of artillery range:

South Korea will create the world’s largest semiconductor cluster in the Seoul metropolitan area by attracting 300 trillion won (US$229.81 billion) in investments as part of efforts to secure a competitive edge in the sector, the industry ministry said Wednesday.

It is part of the government’s comprehensive plan to promote six key industries — chips, displays, secondary batteries, bio, future vehicles and robots — which also called for the corporate investment of 550 trillion won by 2026, according to the Ministry of Trade, Industry and Energy.

Yonhap

You can read more at the link.

Some happy chaebol chiefs today in South Korea:

Korea and the United Arab Emirates (UAE) signed a total of 24 agreements worth $6.1 billion in traditional industries, such as energy and defense, as well as emerging businesses, including hydrogen, mobility, bio and digital transformation, according to the Ministry of Trade, Industry and Energy, Monday.

The ministry said about 320 officials from business lobby groups, Samsung Electronics, Hyundai Motor Group and other Korean companies, who accompanied President Yoon Suk Yeol’s state visit to the Middle Eastern country, held the Korea-UAE Business Forum at the Rixos Marina Abu Dhabi hotel.

Korea Times

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.

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 these teleworkers have work from home syndrome than the entire U.S. military needs to get diagnosed with this disorder because even when you are off duty you are still on duty. Maybe servicemembers can get an extra VA rating for this 😉 :

Three out of every 10 employees who telecommute are experiencing “work-from-home (WFH) syndrome” as the pandemic rolls on and the boundary between work and life blurs. 

According to a survey of 910 remote workers conducted by recruiting platform Job Korea from Sept. 3 to 10, 32.1 percent of the respondents said they have experienced the WFH syndrome, experienced as physical and emotional stress.

Where multiple answers were allowed, 54.8 percent said they experienced the feeling that they were still working even after work hours, similar to 46.2 percent who answered they felt a nervous and stressed all day. 

“In a from-home working environment, the physical distinction between work and home life is pretty vague. I think that’s why I can’t get my mind off of work even when my computer is turned off and feel like I’m working all day,” said a 28-year-old employee in Seoul who asked to be identified only by her surname Kim. 

Korea Times

You can read more at the link.

The real story is not being reported is what President Moon wants from the Biden administration in return for these investments. My guess will be he wants the U.S. to be more flexible on sanctions to jump start his North Korea engagement policy:

The United States is the world’s leading technology and innovation hub, but it is not a leader in the high-tech supply chain, mostly relying on Asian countries for essential items, such as semiconductors and batteries for electric vehicles. 

In the face of growing challenges from China, U.S. President Joe Biden wants to revitalize the domestic manufacturing capacity amid the global chip crisis and a looming shortage of batteries, and he is expected to welcome a series of announcements of massive investment plans by Korean companies ahead of and after his summit talks with South Korean President Moon Jae-in on Friday.

Yonhap

You can read more at the link.

Some further relief for business owners in South Korea:

The government said Saturday it will allow businesses outside the greater Seoul area to operate until 10 p.m. starting next week, relaxing the distancing rules amid growing discontent over the prolonged virus curbs. 

The revised measure will permit businesses like restaurants and fitness clubs to extend their operating hours by one hour under Level 2 distancing currently imposed on the provincial regions, Prime Minister Chung Sye-kyun said in a government response meeting.

“After careful deliberation based on the various opinions from all walks of life, we are adjusting the business hours for publicly used facilities,” he said.

Yonhap

You can read more at the link.

Major conglomerates in South Korea are ready to push back against the ruling party’s attempt to make them give up profits to other companies not making profits. It is going to be interesting to see how this plays out:

The move is sparking backlash from large business owners, with major companies claiming the measures are only implemented in socialist or communist countries. Companies have also been criticizing the proposal over the lack of guidelines determining on which level a company is deemed profitable.

The ruling party has stressed that the profit-sharing scheme would not be compulsory and that each company’s voluntary participation would be encouraged through various incentives. However, business insiders believe the government will continue to pressure firms to take part in the initiatives.

“The government says it is voluntary but will continue to pressure firms to take part in the profit-sharing scheme,” an industry official said. “The Moon Jae-in administration has restrained companies with dozens of new regulations that severely impact business operations. This administration has pressured companies financially much more than other previous governments.”

Dozens of corporations including Samsung Electronics, LG Electronics, Kakao and Woowa Brothers are expected to be subject to the scheme as they have been able secure large profits amid the prolonged pandemic.

Korea Times

You can read more at the link, but it is the responsibility of the government that shutdown companies like restaurants and bars to subsidize them through tax money, not other private businesses.