Business Facts

Samsung of South Korea, originally sold noodles & groceries. They only moved into Electronis in the 1960s.

Business News - Asia

Here is a round-up of some of the latest Business stories of interest from around the major players in Asia.

SINGAPORE: Source: Business Times

SINGAPORE OUTPUT UP

Singapore's factory output probably rose in November from a year earlier when regional manufacturing supply chains were disrupted by floods in Thailand.

But the sector remains weak, with little growth expected on a month-on-month basis, amid continued weakness in Western economies that has crimped demand for Singapore-made electronic component and products. Singapore exports most of what it produces and its trade is three times gross domestic product.

SOUTH KOREA: Source: The Korean Herald

PRESIDENT ASKS BIG FIRMS TO AVOID LAYOFFS

President-elect Park Geun-hye has spoked out to ask firms to avoid redundancies. She also called on  owners to take self-reform measures and cooperate with her economic policy aimed at boosting fairness and transparency in the market and increasing welfare for low-income citizens.

“I will actively support investment aimed at creating future growth engines and jobs. I urge large conglomerates to change your ways as well,” Park said during her meeting with the representatives of large businesses at the Federation of Korean Industries.

KORAIL SAFETY QUESTIONED

Local passengers raised their eyebrows when the state-run railway operator Korail claimed the safety and on-time operation of its trains as global No. 1 in a report submitted for evaluation in June.

At the time, Korail was suffering from public condemnation after a series of frequent breakdowns and delayed schedules of the nation’s KTX bullet trains. Korail explained that it had cited official data from the International Union of Railways, or UIC, and then the agency was designated as one of the best state-owned companies of the year.

JAPAN: Source: Japan Times

HALAL FOODS ON THE RISE IN JAPAN

According to the U.S. Halal Association, the total global Muslim population is estimated at 1.6 billion, or around 25 percent of the world's population, with the $632 billion halal food market accounting for 16 percent of the global food industry.

The number of visitors to Japan from Indonesia, home to the biggest Muslim population in the world, as well as from Malaysia, where about 60 percent of the population is Muslim, jumped between 2003 and 2010, according to the Japan National Tourism Organization. The JNTO says the number of Muslim travelers to Japan is generally on the rise, although official data on Muslims are not available.

Seeing it as a business opportunity, some Japanese nonprofit organizations as well as private firms have started offering services assisting Japanese businesses to obtain halal accreditation.

JAPAN AND BURMA TO BUILD INDUSTRAIL ZONE

Myanmar and Japan agreed to start work next year on a huge industrial zone near Yangon, officials from the two countries said, as the impoverished nation hungrily eyes foreign investment. The 2,400-hectare Thilawa project will include a port and industrial park and be up and running in 2015, according to the Ministry of Economy, Trade and Industry.

Former junta-ruled Myanmar craves investment to spur growth and boost its dilapidated infrastructure, while export-reliant Japan is hunting new opportunities in the resource-rich nation to offset sluggish domestic growth.

MALAYSIA: Source: Business Times

MALAYSIAN AIRLINES BUYS 36 NEW PLANES FOR ITS FLEET

Malaysia Airlines has purchased 36 new ATR 72-600 aircraft worth RM3 billion. Malaysian Airlines (MAS) and French-Italian aircraft manufacturer ATR inked a memorandum of understanding (MoU) yesterday on the purchase of the turboprop planes.

Of the total ordered, Firefly will take on 20 aircraft, while 16 will be introduced into the fleet of its sister company MASwings.

MAS chief executive Ahmad Jauhari Yahya said MAS wants to do more, in terms of turboprop operations, and is looking at expanding Firefly's operations out of Peninsular Malaysia into regional routes such in Indonesia, Thailand and Singapore, as well as increasing the frequency of its domestic routes.

CHINA: Source: China Daily

MILD REFORM URGED IN BEIJING

More than 70 prominent Chinese scholars and lawyers have urged the country's new Communist Party leaders to undertake moderate political reforms including separating the party from government, though they avoid any mention of ending one-party rule.

The petition drafted by Peking University law professor Zhang Qianfan calls on the party to rule according to the constitution, protect freedom of speech, encourage private enterprise and allow for an independent judicial system. It also calls for the people to be able to elect their own representatives without interference from the Communist Party.

WAGES INCREASE AND THE STRONGER YUAN MEANS LESS HIRING

The manufacturing industry's demand for new employees shrunk by more than 20 percent year-on-year in the first three quarters of this year, according to a recent survey released by the Seebon Human Resources Research Institute.

Among industries, shipping showed the greatest hiring demand, as the need for more employees in transportation, warehousing and postal services increased steadily in the first nine months of 2012, the report said. Contributing to that result has been the success of e-commerce and the ever-tenser competition among online shopping malls. Industrial restructuring has also led to the disparities in hiring demand, said analysts at the Seebon Human Resources Research Institute.

The survey also said the reduction in job opportunities has resulted in part from the international market's declining interest in products manufactured in China, and the greater number of robots now performing jobs formerly done by people.

INDIA: Source: Reuters

KINGFISHER STILL GROUNDED

Kingfisher Airlines has failed to present regulators with a clear funding plan under a proposal to get it flying again, the country's aviation minister said on Wednesday.

The airline, owned by liquor tycoon Vijay Mallya and suspended in October over unpaid debts and salaries, submitted a plan on Monday to the Directorate General of Civil Aviation (DGCA) to resume a limited service. According to local media reports, Kingfisher's parent company, UB Group, offered to inject 6.5 billion rupees ($118.3 million) into the carrier - a key condition for getting it airborne again.

#businessnews #asia

Walmart's failure in South Korea

Following on from their failure in Germany, Walmart failed in another market with a more easily identifiable different culture to that of America and The West: South Korea.

Walmart were keen on gaining a foothold in the South Korean market and again followed the principles which had worked well during their rapid expansion in the USA during the 70s and 80s. New stores were built on out of town or suburb sites due to the land cost being much lower.

The layout of the stores were similar to what worked in America with the famous ‘Action Alley’ and the old mantra of pile ‘em high, sell ‘em cheap in full verse.

Sadly for Walmart it really didn’t work out. In 2006 they sold their 16 stores to local company Shinsegae and their brand called E-mart. Why?

It comes down really to the average South Korean consumer/shopper.

Firstly, they don’t do end of the week big shops. Koreans prefer to shop daily, so increased frequency in shops and obviously smaller shops. This may have something to do with the smaller housing and smaller refrigerators that are common in East Asia.

Secondly, the South Korean shopper likes to be able to walk to their shop. They are not into the culture of driving miles to get a good deal the way Americans and increasingly the British are now in the habit of.

Thirdly, the South Koreans are patriotic. Perhaps this comes from the stalemate of the Korean War and the threat of their communist northern neighbours or maybe not? The South Koreans would rather buy a Korean product or shop in a Korean store than buy from the Imperial Food Conglomerate that is Walmart.

Finally, and in my opinion, most crucial of all is Korean culture. The South Koreans work long hours and work very hard. They like to spend their hard earned cash but are not too bothered about cheap items. Yes they like value, but they like quality also. Walmart were perceived (rightly or wrongly) by the South Koreans as being cheap and of poor quality. Even the store layout was criticised as looking like a warehouse.

This is in contrast to the E-mart brand which has seen some of their stores been described as “like spas”.

Walmart is not alone in failing in South Korea. Carrefour, Nestle, Nokia and even Google have all failed to set the heather on fire.

Ironically, Tesco has performed better. Tesco has placed a more local focus on what the stores look like and indeed content. They go for small packages in their Korean stores and crucially, unlike Walmart, have a local partner in Samsung, the electronics giant. Indeed, many Samsung managers and employees have transferred to Tesco to help them in their quest of eating into the South Korean grocery market.

Samsung’s local dominance also aided Tesco when creating a valuable supplier network, again something that in the US is a major strength for Walmart, but in the Oriental land of South Korea, has proven to be a noose around her neck.

Again, I think this is another interesting story/case to share with students in order that we all realise the importance of culture and that even though the world is becoming smaller, there are still differences, which let’s be honest, should be celebrated. How boring life and business would be if everything and everyone was the same!

Samsung become the number one in the global smart phone market

Samsung overtook Apple in the first three months of the year to become the world’s largest smartphone vendor and ended Nokia’s 14-year run as the largest maker of all phone handsets by volume, according to research release Friday by Strategy Analytics.

The South Korean electronics giant reported Friday a record net profit of $4.44 billion in the first quarter, led by strong mobile sales.

“Samsung’s global smartphone shipments rose 253% annually to 44.5 million units, as demand surged for its popular Galaxy models such as the Note, S2 and Y,” Alex Spektor, associate director at Strategy Analytics, said in a news release.

Apple’s sales of 35.1 million iPhones in the first quarter helped lead the company to double first quarter profits. Nokia sold 11.9 million handsets January through March, more than half as many the Finnish firm sold year on year, eroding its smartphone market share to 8.2% from 23.5% in 2011.

Source: CNN Business

South Korea testing robotic prison guards

Robot wardens are about to join the ranks of South Korea's prison service.

A jail in the eastern city of Pohang plans to run a month-long trial with three of the automatons in March.

The machines will monitor inmates for abnormal behaviour. Researchers say they will help reduce the workload for other guards.

South Korea aims to be a world leaders in robotics. Business leaders believe the field has the potential to become a major export industry.

The three 5ft-high (1.5m) robots involved in the prison trial have been developed by the Asian Forum for Corrections, a South Korean group of researchers who specialise in criminality and prison policies.

South Korea building a new capital city

South Korea is following Brazil and Australia’s example by planning to build itself a new capital city. Construction started in 2007 and by 2012 the first government departments would be operating in the new city. The final replacement of Seoul as the South Korea’s seat of parliament and government is not expected before 2020.

The Yeongi-Gongju region, which was chosen from a list of four finalists, won on transport and environmental grounds. The site is close to existing high-speed railway lines and express-ways. The Cheongui airport is also nearby.

South Korea, with some 48 million people, is a densely populated country. The land per capita is 2,310 m2, smaller than that of France (12,540 m2), the United Kingdom (4,290 m2), and Japan (3,102 m2). South Korea, with its population density at 460 persons per km2, has the fourth highest population density in the world, coming after Bangladesh, Germany, and Taiwan, excluding the city states of Singapore and Hong Kong. The actual population density is higher than its estimate due to the uninhabitable mountainous areas.

For the full article read here:

http://www.citymayors.com/environment/korea_newcapital.html

South Korea agrees US trade deal at long last

South Korea's parliament has ratified a free-trade deal with the US, after years of wrangling over the issue.

Members of the ruling Grand National Party, which has a majority, convened to force the bill through in a 151-7 vote.

Most of the opposition abstained. One politician set off a tear-gas canister before the vote and others jeered as the bill passed.

The US Congress ratified the deal last month and it has now been made law.

It is America's largest free-trade deal since the North American Free Trade Agreement with Canada and Mexico in 1994.

The bill - first agreed in 2007 - was ratified in a snap parliamentary session.

"We have decided to push the free trade deal through parliament by voting, as it is almost impossible to reach a compromise with the opposition," GNP politician Park Jun-sun told local media.

South Korea to build on disputed islands

South Korea will spend 400 billion won ($345 million) building a breakwater, a power plant, an underwater observatory and a tunnel on disputed islands claimed by Japan.

Building begins in 2013 with a completion date of 2016. A 200 metre (656-foot) tunnel will connect the largest of the two islands, which are known as Dokdo in Korean, Takeshima in Japanese and the Liancourt Rocks internationally.

The argument over the islands nearly led to a naval incident in April 2006, when South Korean gunboats patrolled a Japanese survey of the islands.

South Korea has upped its claims to the islands off its eastern coast by stationing Coast Guard officers and lighthouse keepers there in addition to two permanent civilian residents, a fisherman and his wife.

The seabed surrounding the rocky islands may have rich natural gas deposits. Japan claim the islands were not part of the treaty handing back land after the Second World War.

Source: Bloomberg

Seoul's own super skyscraper

A new super skyscraper is being built in Seoul, South Korea and will be the largest tower in Asia when finished in 2014. Lotte Super Tower 123, designed by Kohn Pederson Fox, will be the second tallest skyscraper in the world behind Burj Khalifa in Dubai.

The giant tower act as the new HQ for Lotte Group, whose subsidairy, Lotte Construction, will build the skyscraper. The Lotte Super Tower 123 will have excellent green credentials and will offer the people of Seoul shops, apartments, offices and a hotel.

For more read here:

http://inhabitat.com/tallest-building-in-asia-revealed-for-seoul-south-korea/

Business Profiles: Samsung

Samsung is a global multinational firm based in Seoul, South Korea.

Samsung is focused on key areas such as electronics, engineering, ship building and construction. Samsung was formed in 1938 and for most of its early life stayed in South Korea. In the 1980s Samsung did begin to invest in foreigh factories and in the 1990s won a contract to build one of the Petronas Towers in Kuala Lumpur, Malaysia. Samsung also built the Taipei 101 and the Burj Khalfia, all three buildings at one time held the title of the world's tallest, with Burj Khalifa currently the champion.

Samsung has been involved in recent fights with Apple in the smartphone (Samsung Galaxy) and the relatively new tablet PC market (Galaxy tab). Late in 2011 Samsung overtook Apple as the world's largest smartphone maker.

Like Coca Cola and Atlanta in 1996, Samsung has been heavily influential in the awarding of the 2018 Winter Olympics to Pyeongchang, South Korea.

1GB Broadband for South Korea

I was watching BBC's excellent programme Click the other day on BBC News and it reported that South Korea is the world's most wired-up nation with incredible existing speeds of 100 MB per second for broadband.

In the report it talked of how wi-fi is expected in South Korea and how the current government are spending £19 billion on upgrading the network.

The dream for South Korea is for 1GB per second speeds! They are aiming not for 2020 or some far off date but 2012!

What does this say about how some countries are speculating and investing in their countries future and infrastructure, while at present our coalition are looking for ways to slash public spending.

Investing in technology is the way James Dyson - the millionnaire inventor of the bagless vaccum cleaner - believes we have to take on the Asian Tiger Economies in the 21st Century. We can't compete on price of labour or manufacturing, but we can compete in the service sector and in technology. But we have to spend in research and development... and spend training our young people.

If we are not growing and developing our skills as a nation, then we are set for a very difficult next 20 years, regardless who is in power in Westminster or Holyrood for that matter!

Read the full article here: http://news.bbc.co.uk/1/hi/programmes/click_online/9093991.stm

The Miracle on the Han River

After the stalemate of the Korean War South Korea was a developing nation. It was on a par with the British Gold Coast (Ghana) and Malaya (which became Malaysia and Singapore).

However, something truly remarkable happened in South Korea. It has been called the Miracle on the Han River (the Han River runs through Seoul, South Korea's captial city) and has been used as a template for economic growth and development for a developing nation.

Seoul was a typical developing city. High unemployment and high poverty. However the US Government, determined to keep the South out of the hand of the Communist North, followed the template of the rebuilding of both Germany and Japan.

Rapid industrialisation began in the late 1950s and the aim was to become a massive exporter to the Western markets of goods such as electronics, ship building, textiles, cars, and steel.

Influenced by Reaganomics, the South Koreans also kept inflation low by reducing the money supply, but also embarked on many public works to rebuild infrastructure such as transport links and communication links.

A major announcement to the World that South Korea was a major player in the global economy was the succesfull 1988 Summer Olympics held in Seoul.

South Korea is often cited as an imitator of Japan, but with the US influence and the gradual move away from a Government controlled market to one that reflects consumer needs, the comparison is actually a natural one.

The benefits to the average South Korean has resulted in an incredible rise in the standard of living, and superior education to what was available in comparitor nations of the 1950s.

The Tiger Economies of Asia have attempted to copy South Korea and many have grown their own economies but none have had the impact on the ordinary people as the South Koreans have.

Malaysia has the aim of being developed by 2020, and the influence of South Korea is apparent. A move away from agriculture to manufacturing, and the building of public projects such as the KL monorail and the KLIA (Kuala Lumpur International Airport) in addition to hosting an Formula 1 race and the 1998 Commonwealth Games.

But as we have seen with India, the problem is that if a nation moves too quickly to the services sector they run the risk of having nothing unique. The same could be said of manufacturing, but as we all are aware, South Korea, Japan, and Taiwan have built their economies on cheap but good quality goods, relying on cheap labour, but also excellent quality control and standardisation where possible.

Singapore and Hong Kong are different in that they have built their prosperity on being financial hubs. But again they are relatively small city-states (well Hong Kong does have a unique status in China!) compared to the behemoths of India and China.

I think the Miracle of the Han River may be replicated in other nations but they do rely on the backing of a major importer like the United States and they need to create global brands that will attract consumers.

But there is no doubt that the 21st Century will belong to Asia and the Pacific.

Asian Tiger Economies

The boom in Asian markets over the last 15 years or so is hopefully an inspiration for the economies of Africa and Latin America.

India is also beginning to take off in quite dramatic fashion, following to some extent the rapid boom in China.

However, historically the 'Tiger' Economies refers to Hong Kong, South Korea, Taiwan, Malaysia, and Singapore.

Hong Kong was the model that has been duplicated by the rest. It is interesting to note that in Hong Kong, Singapore and Malaysia, Britain governed them before independence. The trade links and contacts utilised by the UK is probably the main reason for this and not some old Imperialist propaganda! It is also important to recognise the large Chinese populations in these nations or the influence China has had on their indigenous culture.

The reasons for the growth of these nations have been many. It is often reckoned that:

• low Government spending has also encouraged high investment from overseas
• an emphasis on creating skilled workers in place of a reliance on natural resources
• excellent labour relations between employees and owners
• having a 'can-do' philosophy
• focusing on emerging markets and technologies
• adopting Japanese Production Methods

They have specialised in either Financial Investment or Information Technology.

South Korea is the world's largest shipbuilder and from the ashes of the Korean War they have created global multinationals such as Samsung, Hyundai and Daewoo, all permanent rivals of their more illustrious Japanese counterparts.


What are the future implications for the EU? Or for the USA? Or even Japan, who for so long has been the Asian economic superpower, but after the 90s and deflation, Japan may find it hard to regain its omnipotence.

These traditional Asian Tigers along with the likes of Thailand, rely heavily on exports. With the world currently in recession, fewer goods are being shipped abroad to the Western consumers who buy these goods due to their technical brilliance, and more often than not, their low price.

Many of the Tigers relied on Tourism also, but again more and more people are staying at home (incidentally, this factor is reported as having boosted our own Halfords company in the UK as more people bought camping equipment and bikes rather than jetsetting off across the globe), but where does it leave the Tiger economies?

It will be fascinating to watch African and Latin American nations who do not have vast natural resources trying to emulate the Asian Tigers. Whereas the other developing nations who do have vast natural resources may opt for the route that the likes of Dubai are going down by using their current wealth to prepare for the days when the oil runs out.

If we are to summarise the emergence of the Tigers it really is down to their committment to low cost and good quality.