Category: Korea-Business

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.

Not only will he speak at the National Assembly, but he is expected to meet with top Korean business leaders as well:

Bill Gates, the founder of Microsoft and co-chairman of the Bill & Melinda Gates Foundation, has been invited to speak at the National Assembly during his stay in Korea on Aug. 15-17, but all eyes are on whether he will meet with key business leaders during his visit, according to industry officials, Wednesday. 

Gates will visit the Assembly at 10 a.m. on Aug. 16 and meet with Speaker Kim Jin-pyo. At 10:40 a.m., he will give a speech on the topic of “The importance of international cooperation and Korea’s leadership for coping with and preparing for COVID-19 and future infectious diseases” at the plenary session of the Special Committee on Budget and Settlement of the National Assembly.

This is Gates’s first visit to the National Assembly since 2013. Back then, he gave a lecture on the topic of “Smart Aid: Innovation for a Better World and a Stronger Korea” at the National Assembly at the invitation of then-Saenuri Party (currently known as the People Power Party) member Chung Mong-joon.

Afterward, Gates met up with key businesspeople during his past visits to Korea and all eyes are on whom he will meet this time around.

Korea Times

You can read more at the link.

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.