Posts tagged ‘market entry’
On Friday 27 August 2011, Mayor of Seoul, Oh Se-Hoon stated that he would resign immediately, as he indicated prior to the failed referendum on free school meals.
Initial assessments have been that Oh’s defeat is a blow to the Grand National Party (GNP) with the referendum seen as a test of voter sentiment ahead of parliamentary elections next April and the presidential vote in December 2012. Read more
On 21 February 2011, the Ministry of Knowledge Economy (MKE) stated that it expects software exports to increase by around 17.1 percent to a total of USD10.7 billion in 2011. Despite the Information and Communications Technology (ICT) manufacturing being a major driver of export growth in Korea, the ICT services sector has not made a commensurate contribution. Read more
The economic and policy challenges of ageing in Korea are well known and are frequently the subject of review by both private and public research providers. However, despite Korea’s significant trade dependence, the effects of ageing in key economic partners has not attracted substantial attention.
Changes in labour productivity, GDP growth, saving and consumption in the economies of China, Japan, Europe and the United States will have significant effects on the Korean economy. China serves as an example.
The Chinese population will age at a rapid pace after its working age population peaks around 2020. China currently does not have the same mechanisms to cope with ageing as advanced economies and is lacking in the tax structures, capital markets and developed health and pension plans that can ameliorate the economic implications of ageing.
In addition, China will face potential demographic imbalances between rural and urban populations as well as between the sexes, potentially leading to more significant social disruption. Ageing in China may prove particularly difficult and will impact Chinese consumption and import demand.
China’s inflation policy is now considered a distinct variable in the short-term assessments of the Korean economy. Research providers are beginning to realise that China’s ageing policy should also be considered a distinct variable in longer-term assessments of the Korean economy.
On 28 January 2011, the Korean Statistical Information Service (KOSIS) reported that national rice consumption fell to a record low level in 2010.
Average annual consumption per person fell 1.6 percent from the previous year to 72.8 kilograms, meaning average annual consumption per person has declined by approximately 22 percent over a ten-year period. This follows a November 2010 report by KOSIS that national rice production had fallen to the lowest level in almost 30 years due to excessive rains and decreased rice acreage.
KOSIS accorded the decline in consumption to the diversification of the Korean diet, noting the increase in the consumption of wheat based alternatives, but failed to mention supply constraints resulting from the record low levels in national rice production.
Rice consumption in Korea is still significantly higher in Korea than in Japan and Taiwan and the substantial differences between geographic, generational and urban/rural consumption indicate that wheat based alternatives will rise in the medium term.
On 25 January 2011, Korea Electric Power Corporation (KEPCO) announced the successful testing and opening of electric vehicle charging stations across the major transport route between Seoul and Daejeon.
The successful testing and opening of the charging stations mark a significant point in the progression towards public acceptance of electric vehicles. Korea is a global leader in electric vehicle development. Hyundai and Renault Samsung plan to release a commercially viable production models by 2012.
However, like many countries, Korea faces ongoing challenges with infrastructure to support further development, which has reduced public preparedness to accept electric vehicles as a viable alternative. The successful testing and opening of electric vehicle charging stations across the major transport route between Seoul and Daejeon thus represents a significant step. Early public uptake of electric vehicles will ensure that Korea maintain its leadership in the sector.
On 24 January 2011, President Lee met with leaders of the country’s top 30 companies at a luncheon hosted by the Federation of Korean Industries (FKI).
The meeting was marked by announcements that the companies would aim to invest more than USD98.3 billion, create 100,000 new jobs and achieve an export target of USD500 billion in 2011. A key component of the investment plans is the creation of research and development centres to incubate technologies to provide future economic growth.
Also notable was the companies appreciation of Lee’s statement that partnerships between conglomerates and small-and medium-sized enterprises (SMEs) to create sustainable economic growth should come through voluntary action rather than government regulation.
The meeting with the top 30 companies was the sixth since taking office and will be followed by a meeting with leaders of SMEs on 26 January 2011, which will focus on increasing both competitiveness and cooperation. The success of the meeting with SMEs will influence public perceptions of Lee, reflecting concerns that the CEO-turned-President has vested interests in protecting the top companies’ positions in the market.
On 18 January 2011, the Ministry of Food, Agriculture, Forestry and Fisheries (MIFAFF) announced its third five-year ‘green farming’ development program, which will inject USD4.46 billion until 2015 to expand eco-friendly farming infrastructure and to facilitate a ‘green farming’ environment.
The plan will create up to 50 dedicated eco-friendly farming regions, which will increase chemical-free production areas from 4.9 percent of all arable land in 2009 to 12 percent within 5 years. Importantly, the plan will also upgrade distribution and sales systems to increase consumer awareness of domestic green agricultural production.
The announcement received minimal media attention with current domestic and international media clearly focused on the Ministry’s efforts to control the Foot and Mouth Disease (FMD) outbreak. However, the announcement will have a substantial impact on the sector.
The ‘wellbeing’ trend in Korean consumption has to date primarily benefitted importers of clean green produce. The underlying efforts to increase consumer confidence in locally grown food may expand the sub-sector, but will ultimately raise the competitiveness of local produce vis-a-vis imports.
On 11 January 2011, authorities announced they had indicted a 54-year-old man on charges of breaching the National Security Law (NSL). The man, surnamed Cho, allegedly spread messages praising North Korea and its leaders on Twitter and other social networking sites.
The North has increased its use of the internet as a propaganda tool and has opened Twitter and Facebook accounts, and revived previously registered, but rarely used “.kp” domain names.
In December 2010, the Justice Ministry stated that it would pay closer attention to North Korea’s use of Twitter and other social media to influence South Korean opinion. On 12 January,the Communications Standards Commission announced that it would begin blocking “.kp” domain names.
The internet has been a field of state concern for a considerable period of time and has allegedly been used as a critical resource for remotely encouraging political and social movements, as demonstrated by state responses to social movements in Iran and Thailand.
However, the decision to arrest Cho under the National Security Law risks raising public opposition. Cho had approximately 3000 followers and ‘re-tweeted’ messages from the user “@uriminzok”, believed to be a North Korean Government account. Such messages are not taken seriously by the vast majority of South Koreans who are well informed of the true situation in the North. Attempting to block the release may ultimately prove counterproductive.
On 12 January 2011, Minister for Strategy and Finance, Yoon Jeung-Hyun, stated that Korea needed to strengthen its economic fundamentals to prepare for fiercer competition in the post-crisis era.
Yoon noted that Korea entered the post-crisis era with solid fundamentals, including the achievement of economic growth over 6 percent growth and the successful hosting of the G-20 summit, but had to make efforts to resolve underlying economic and social problems.
One aspect covered by Yoon, was the need to change Korea’s position on immigration. Korea’s population will fall from 2018.
Currently, one out of every nine Koreans is elderly (over 65). By 2018, 14 percent of the population will be elderly. By 2050, 38 percent of the population will be elderly. This will put Korea in the same league as Spain, Italy and Japan. The more rapid aging that Korea will experience will bring substantial changes to the economy.
In terms of labour supply alone, there will be a deficit of entry level workers and an oversupply of senior and retiring workers. Immigration has been viewed as one possible solution. Minister Yoon proposed the creation of an immigration planning agency to coordinate a whole-of-government approach to immigration. It would seek to minimise social disruption and maximise economic benefit.
Korea has to date only just begun to face the challenge of an aging society. An immigration planning agency would provide better control over what has to date been viewed as a vital component to address the challenge of an ageing society.
It was announced on 10 January 2011 that the Ministry of Foreign Affairs and Trade (MOFAT) has established two teams of China experts and language specialists under its department handling Chinese affairs in an effort to strengthen diplomacy.
An analytical team will report on political, economic and foreign affairs developments in China, and a monitoring team consisting of seven language specialists will report on public sentiment in China.
The Institute of Foreign Affairs and National Security (IFANS), a think-tank affiliated to MOFAT, last month launched a centre dedicated to China affairs, which will act as a hub to collate research on China undertaken in Korea.
In March 2011, China will release its next 5-year economic plan and throughout 2011, political positioning between the ‘populist’ and ‘elitist’ factions within the fifth generation leadership will increase as China heads towards leadership transition in 2012-13.
Reflecting this, 2011 will prove to be a defining year for China’s impact on Korea in economic, political and strategic terms. The refining of MOFAT’s China capabilities will allow stronger coordination of policy towards China as these developments occur.
