As the Chinese government’s expansionary measures are driving their growth, Korean firms including the major high-tech companies are taking advantage of the opportunities and act upon them accordingly.
Korean display maker, LG Display (formerly LG Philips LCD) has landed new deal with Guangzhou City to construct G8 (8th Generation) LCD fab. This means that China will begin producing LCD panels domestically for the first time, which will be another major step for China. China is the largest television market in which over 20 million flat panel TVs were sold last year.
Meanwhile, Samsung is reportedly considering building a semiconductor production line in China.
This move by Korean firms demonstrates the strategic shift in Chinese market. China is Korea’s largest trading partner: Korea’s trade volume with China was over 168 billion USD last year. Until now, China has been a base of exports to other countries, utilizing cheap labor production. 93% of Korea’s total shipments to China are comprised of parts and equipment for manufacturers. Currently, only 25% of products manufactured in Korean factories there are sold in Chinese market while about 75% of them are shipped off to other countries. Korean firms are setting up production facilities there to target China’s potentially profitable domestic market.
Interestingly, a Chinese official, Lou Jiwei, chairman of the sovereign wealth fund, China Investment Corp., seems to be reassuring Korean firms about their strategies for the Chinese market: “Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose.”
Friday, September 25, 2009
Tuesday, September 22, 2009
Hyundai’s Clever Value-Driven Strategy Winning in the U.S. Market
While American carmakers are reeling from the current economic downturn, Korean carmakers, Hyundai and its affiliate Kia Motors are using the recession to their advantage, posting a whopping 47% sales increase year on year.
From the NY Times:
After years of struggling to prove to consumers than it was more than a second-tier brand, Hyundai Motor America and its affiliate, Kia Motor America, accounted for 8 percent of the new-vehicle market in the United States in August, more than Chrysler’s 7.4 percent. The company sold more than 60,000 vehicles last month as buyers rushed to take advantage of the government’s cash-for-clunkers program before its end.
http://www.nytimes.com/2009/09/22/business/global/22hyundai.html
Hyundai has come a long way since it entered the U.S. market in 1986. At the time, inexpensive product lines of Hyundai were known for poor quality. They have made an enormous effort to become a top player in the U.S. market. As a result, “Hyundai and its affiliate Kia Motors Corp now command a combined 7.5 percent market share, making them larger on that basis than Nissan Motor Co.”, according to Reuters. Washington Post reported on September 1st that “globally, the Hyundai-Kia Automotive Group has jumped to fourth in sales, climbing ahead of Ford this year, according to the Automotive News Data Center.”
Hyundai’s strategy for building technological competence symbolizes Korea’s technological capacity accumulation process in a way. They started as an assembler of Ford cars and surged to become a formidable automaker in the global market through intensive technological learning from foreign entities.
China has followed similar path to build their automobile production and design capabilities: for instance, China’s Shanghai Automotive bought Korea’s troubled Ssangyong, then abandoned it. Hyundai is well aware that the Chinese are catching up fast.
Hyundai has localized their production worldwide to serve local customers better. Over 50% of their sales were made with cars manufactured at their plant in Alabama. Kia is also reportedly setting up a new plant in Georgia.
Hyundai is turning the recession into a golden opportunity to expand their market share and step up their brand recognition. They have pursued aggressive marketing strategy for taking full advantage of the U.S. government’s cash for clunkers program.
Hyundai has provided customer with values of good quality and service for less money. Moreover, they are eager to build their brand identity as a first-tier company. They have promoted a pricey sedan, the Genesis which won North American Car of the Year at the Detroit auto show, claiming to be an alternative to Mercedes, Lexus and Cadillac.
Hyundai’s growth trajectory is quite similar to that of Samsung that is now regarded as a top-tier firm in the U.S. market. For Samsung, the Asian financial crisis was the turning point to make a leap from a cheap, hardly-known brand to a high-end contender in global IT market, as discussed in the previous posts.
From the NY Times:
After years of struggling to prove to consumers than it was more than a second-tier brand, Hyundai Motor America and its affiliate, Kia Motor America, accounted for 8 percent of the new-vehicle market in the United States in August, more than Chrysler’s 7.4 percent. The company sold more than 60,000 vehicles last month as buyers rushed to take advantage of the government’s cash-for-clunkers program before its end.
http://www.nytimes.com/2009/09/22/business/global/22hyundai.html
Hyundai has come a long way since it entered the U.S. market in 1986. At the time, inexpensive product lines of Hyundai were known for poor quality. They have made an enormous effort to become a top player in the U.S. market. As a result, “Hyundai and its affiliate Kia Motors Corp now command a combined 7.5 percent market share, making them larger on that basis than Nissan Motor Co.”, according to Reuters. Washington Post reported on September 1st that “globally, the Hyundai-Kia Automotive Group has jumped to fourth in sales, climbing ahead of Ford this year, according to the Automotive News Data Center.”
Hyundai’s strategy for building technological competence symbolizes Korea’s technological capacity accumulation process in a way. They started as an assembler of Ford cars and surged to become a formidable automaker in the global market through intensive technological learning from foreign entities.
China has followed similar path to build their automobile production and design capabilities: for instance, China’s Shanghai Automotive bought Korea’s troubled Ssangyong, then abandoned it. Hyundai is well aware that the Chinese are catching up fast.
Hyundai has localized their production worldwide to serve local customers better. Over 50% of their sales were made with cars manufactured at their plant in Alabama. Kia is also reportedly setting up a new plant in Georgia.
Hyundai is turning the recession into a golden opportunity to expand their market share and step up their brand recognition. They have pursued aggressive marketing strategy for taking full advantage of the U.S. government’s cash for clunkers program.
Hyundai has provided customer with values of good quality and service for less money. Moreover, they are eager to build their brand identity as a first-tier company. They have promoted a pricey sedan, the Genesis which won North American Car of the Year at the Detroit auto show, claiming to be an alternative to Mercedes, Lexus and Cadillac.
Hyundai’s growth trajectory is quite similar to that of Samsung that is now regarded as a top-tier firm in the U.S. market. For Samsung, the Asian financial crisis was the turning point to make a leap from a cheap, hardly-known brand to a high-end contender in global IT market, as discussed in the previous posts.
Monday, September 21, 2009
Is China’s Seeming Recovery Sustainable?
China has garnered much interest during the current financial crisis for several reasons. Among them, China is one of the largest creditor nations. On the surface, China seems to be rebounding quickly. Many media outlets report that the Chinese economy is recovering, citing their rising GDP (up 7.9% in Q2 from a year earlier), booming stock market (up around 60% this year) and soaring car sales (up 70%).
In order to answer whether the China’s recovery is sustainable (or their economy is really recovering to begin with), one might have to look at how they got where they are in historical contexts.
China watched the devastating impact of financial Tsunami during the Asian financial crisis. They learned the importance of foreign reserve and political ties with the U.S. It was their strategic choice to peg the yuan. China has depended on their exports to the U.S. to earn the hard currency, becoming the largest holder of U.S. treasuries. In other words, The Chinese has developed a complex interlocked relationship with the U.S.
China had grown fast until the U.S. financial crisis hit by pursuing export-driven economic development to build the industrial base, following the footsteps of Japan and Korea. They have accumulated their technological capacity by employing several modes: for instance, acquiring financially-distressed Korean high-tech companies and car maker.
China’s recent rebound has stirred some concerns. For one, the Chinese government’s stimulus measures and overseas capital inflows have been the major drivers for real estate and stock speculations, raising concerns for equities and asset bubbles. The Chinese government has tried to boost domestic consumption; China’s private consumption takes up only 35% of GDP. As a result, retail sales rose 15.4% year on year. However, according to Asia Times, retailers’ profits don’t look rosy: for instance, Chinese electronics retailer, “Gome’s first half net profit plunged just short of 50% from a year earlier”. In addition, China’s exports dropped 23.4% in August year on year.
The Chinese seem to be fully aware of what the U.S. government has been doing to keep the U.S. banking system from collapsing. Yes, their financial sector is controlled by the central government and has a problem of non-performing assets, but most of economies are in the same boat in terms of bad debt. It is also true that they have employed the stimulus interventions similar to that of the U.S. to induce the ordinary citizens consuming. Of course, the government’s stimulus package will dry up at some point. And yet, some argue that China is the creditor nation, not the debtor nation, although they are in a dollar trap. Accordingly, they are in the process of decoupling from the Dollar Zone, converting their USD into physical assets.
Even if the Chinese government may argue that maintaining employment and social stability is extremely important from political perspective, if they follow the West’s boom and bust cycles, their seemingly recovery would not be sustainable. For any economy, if there are private sector job growth and corporate profit increase with public and private debts descending, then one could say its economy is recovering in a genuine sense.
China has a huge domestic market potential. After all, they have 1.2 billion people yearning for better standard of living. Hence, they’ve got a lot of building and goods producing to do domestically, which can offset sluggish spending around the globe. They should also take away the right lessons from the U.S. financial crisis and Japan’s last 18 years of deflation: In the U.S. case, asset inflation has instigated the appetite for debt; in Japan’s case, they have also tried to reinflate the economy, but still mired in economic difficulties. History is no short of the dangers of big government especially in the communist regime. The China’s real recovery may boils down to their political will to care about the real welfare of the common people.
One thing is for sure: we live in interesting times as we may witness shifts not only in the global economic order but also in geopolitics. We have not seen concerted governments’ interventions of this magnitude to fight off recessionary forces. We are in uncharted waters. China may suffer, but they may adjust like they have done so throughout their long history of civilization. As China is leading the Asia pack – For Korea and Japan, China is the largest trading partner out there - and could become the possible locomotive of the global economy, we don’t seem to take our eyes off China.
In order to answer whether the China’s recovery is sustainable (or their economy is really recovering to begin with), one might have to look at how they got where they are in historical contexts.
China watched the devastating impact of financial Tsunami during the Asian financial crisis. They learned the importance of foreign reserve and political ties with the U.S. It was their strategic choice to peg the yuan. China has depended on their exports to the U.S. to earn the hard currency, becoming the largest holder of U.S. treasuries. In other words, The Chinese has developed a complex interlocked relationship with the U.S.
China had grown fast until the U.S. financial crisis hit by pursuing export-driven economic development to build the industrial base, following the footsteps of Japan and Korea. They have accumulated their technological capacity by employing several modes: for instance, acquiring financially-distressed Korean high-tech companies and car maker.
China’s recent rebound has stirred some concerns. For one, the Chinese government’s stimulus measures and overseas capital inflows have been the major drivers for real estate and stock speculations, raising concerns for equities and asset bubbles. The Chinese government has tried to boost domestic consumption; China’s private consumption takes up only 35% of GDP. As a result, retail sales rose 15.4% year on year. However, according to Asia Times, retailers’ profits don’t look rosy: for instance, Chinese electronics retailer, “Gome’s first half net profit plunged just short of 50% from a year earlier”. In addition, China’s exports dropped 23.4% in August year on year.
The Chinese seem to be fully aware of what the U.S. government has been doing to keep the U.S. banking system from collapsing. Yes, their financial sector is controlled by the central government and has a problem of non-performing assets, but most of economies are in the same boat in terms of bad debt. It is also true that they have employed the stimulus interventions similar to that of the U.S. to induce the ordinary citizens consuming. Of course, the government’s stimulus package will dry up at some point. And yet, some argue that China is the creditor nation, not the debtor nation, although they are in a dollar trap. Accordingly, they are in the process of decoupling from the Dollar Zone, converting their USD into physical assets.
Even if the Chinese government may argue that maintaining employment and social stability is extremely important from political perspective, if they follow the West’s boom and bust cycles, their seemingly recovery would not be sustainable. For any economy, if there are private sector job growth and corporate profit increase with public and private debts descending, then one could say its economy is recovering in a genuine sense.
China has a huge domestic market potential. After all, they have 1.2 billion people yearning for better standard of living. Hence, they’ve got a lot of building and goods producing to do domestically, which can offset sluggish spending around the globe. They should also take away the right lessons from the U.S. financial crisis and Japan’s last 18 years of deflation: In the U.S. case, asset inflation has instigated the appetite for debt; in Japan’s case, they have also tried to reinflate the economy, but still mired in economic difficulties. History is no short of the dangers of big government especially in the communist regime. The China’s real recovery may boils down to their political will to care about the real welfare of the common people.
One thing is for sure: we live in interesting times as we may witness shifts not only in the global economic order but also in geopolitics. We have not seen concerted governments’ interventions of this magnitude to fight off recessionary forces. We are in uncharted waters. China may suffer, but they may adjust like they have done so throughout their long history of civilization. As China is leading the Asia pack – For Korea and Japan, China is the largest trading partner out there - and could become the possible locomotive of the global economy, we don’t seem to take our eyes off China.
Sunday, September 20, 2009
Can We See a Monumental Change in Japan?
The economic challenges and structural problems Japan is facing are enormous, as the economic indicators paint a grim picture: The Japanese debt to GDP ratio is 174%; The Japan’s exports fell 36.5% in July from the year-earlier period; The unemployment rate was an all time high of 5.7% in last July.
In this context, the newly elected prime minister of Japan, Hatoyama has vowed a fundamental reform, as mentioned in the previous post.
Among them, he has promised to trim the powerful bureaucracy, which made the Japan’s economic miracle possible.
In an interview, Hatoyama says “The Democratic Party is, in some sense, jumping into uncharted territory and we want to create the kind of politics in which the politicians take the lead for the people without relying on bureaucrats.”
The Telegraph is echoing his thoughts, as saying the new administration in Japan is targeting the powers of the bureaucracy.
From Telegraph:
http://www.telegraph.co.uk/news/worldnews/asia/japan/6206159/New-Japanese-government-declares-war-on-powerful-civil-service.html
If he turns his promises into reality, we might see a real sea change in Japan. It would be also interesting to see how geopolitics would unfold in the Asian region. Hatoyama knows Japan’s power in the Asian region is waning as China has taken center stage in the region and in the world.
In this context, the newly elected prime minister of Japan, Hatoyama has vowed a fundamental reform, as mentioned in the previous post.
Among them, he has promised to trim the powerful bureaucracy, which made the Japan’s economic miracle possible.
In an interview, Hatoyama says “The Democratic Party is, in some sense, jumping into uncharted territory and we want to create the kind of politics in which the politicians take the lead for the people without relying on bureaucrats.”
The Telegraph is echoing his thoughts, as saying the new administration in Japan is targeting the powers of the bureaucracy.
From Telegraph:
http://www.telegraph.co.uk/news/worldnews/asia/japan/6206159/New-Japanese-government-declares-war-on-powerful-civil-service.html
If he turns his promises into reality, we might see a real sea change in Japan. It would be also interesting to see how geopolitics would unfold in the Asian region. Hatoyama knows Japan’s power in the Asian region is waning as China has taken center stage in the region and in the world.
Tuesday, September 15, 2009
A Year after Lehman’s Demise
A year has passed since Lehman’s collapse. The U.S. economy as well as other economies has experienced the hardships since then.
Among the numerous indicators that one has to keep an eye on, the U.S. debt keeps rising: the U.S. federal deficit hit 1.38 trillion dollars in August. This is the worst debt crisis in the U.S. history. The U.S. unemployment rate reached a 26-year high of 9.7% in August.
In essence, at a time when Lehman filed bankruptcy, the root cause of the economic debacle lied in a lack of morals and accountability both at the public and corporate levels.
Have these underlying problems been fixed to some extent?
I think not.
The U.S. financial crisis has jeopardized not only capitalism but also democracy.
Among the numerous indicators that one has to keep an eye on, the U.S. debt keeps rising: the U.S. federal deficit hit 1.38 trillion dollars in August. This is the worst debt crisis in the U.S. history. The U.S. unemployment rate reached a 26-year high of 9.7% in August.
In essence, at a time when Lehman filed bankruptcy, the root cause of the economic debacle lied in a lack of morals and accountability both at the public and corporate levels.
Have these underlying problems been fixed to some extent?
I think not.
The U.S. financial crisis has jeopardized not only capitalism but also democracy.
Monday, September 14, 2009
Tariff Dispute between the U.S. and China
The U.S. announced its plan to place tariffs on imported tires from China last Friday. In response, China announced they were investigating American auto parts and chicken products. Tariffs in China are nothing new
Countries tend to engage in protectionism, one way or the other. One of the biggest concerns underlying protectionism is the unemployment issue. The Chinese government has criticized the Obama administration's plan as protectionist and a violation of global trade rules, saying that the tariff will eliminate 100 thousand jobs in China.
The whole world is watching how the relationship between the U.S. and China is evolving not only in terms of tire tariffs but also in terms of other matters. For example, the U.S. owes China $1.7 trillion.
Countries tend to engage in protectionism, one way or the other. One of the biggest concerns underlying protectionism is the unemployment issue. The Chinese government has criticized the Obama administration's plan as protectionist and a violation of global trade rules, saying that the tariff will eliminate 100 thousand jobs in China.
The whole world is watching how the relationship between the U.S. and China is evolving not only in terms of tire tariffs but also in terms of other matters. For example, the U.S. owes China $1.7 trillion.
Sunday, September 13, 2009
IMF Chief Argues Global Crisis Poised to Continue
The major media outlets around the globe scramble to paint a rosy picture of the global economy, but the IMF head thinks otherwise.
From Reuters:
The global economic crisis will continue and countries must do more to adopt financial market regulations, International Monetary Fund Managing Director Dominique Strauss-Kahn told a German magazine on Saturday.
"The global economic crisis will continue, even if Germany and France had some good figures in the second quarter"
Governments needed to develop 'exit strategies' from the stimulus packages introduced to boost economies, said Strauss-Kahn, adding, however, that it was dangerous to think the crisis was already over.
Asked by the magazine how liquidity that had been pumped onto the markets would be withdrawn, Strauss-Kahn said a combination of higher interest rates and ending direct intervention of central banks would be needed.
www.reuters.com/article/ousivMolt/idUSTRE58B0K620090912
From Reuters:
The global economic crisis will continue and countries must do more to adopt financial market regulations, International Monetary Fund Managing Director Dominique Strauss-Kahn told a German magazine on Saturday.
"The global economic crisis will continue, even if Germany and France had some good figures in the second quarter"
Governments needed to develop 'exit strategies' from the stimulus packages introduced to boost economies, said Strauss-Kahn, adding, however, that it was dangerous to think the crisis was already over.
Asked by the magazine how liquidity that had been pumped onto the markets would be withdrawn, Strauss-Kahn said a combination of higher interest rates and ending direct intervention of central banks would be needed.
www.reuters.com/article/ousivMolt/idUSTRE58B0K620090912
Thursday, September 10, 2009
China’s Worrisome Move into Nationalization through Consolidation
Amid much debate over the Chinese economy (e.g., generating another bubble, which is not restricted to China, of course), China’s move into nationalization is worrisome.
State-run Shandong Iron and Steel Group in China, the world’s eighth largest steelmaker, is reported to take a two-thirds stake in China’s leading privately-owned steel maker. This merger seems to signify a China’s backward move toward nationalization. China has privatized state-run enterprises since the late 1990s in an effort to become more globally competitive. This move also needs to be understood in the context of China’s political economy.
State-run Shandong Iron and Steel Group in China, the world’s eighth largest steelmaker, is reported to take a two-thirds stake in China’s leading privately-owned steel maker. This merger seems to signify a China’s backward move toward nationalization. China has privatized state-run enterprises since the late 1990s in an effort to become more globally competitive. This move also needs to be understood in the context of China’s political economy.
Rising Stock Market
The benchmark KOSPI soared to a 14 month high owing to strong buying by foreign and institutional investors amid global stock market rallies. Korean shares rose by 2.3 percent to close Thursday.
The rise of the stock market this year is not restricted to Korea: for example the Shanghai composite index rose by 56%.
The question is: what are driving forces behind these rising markets.
According to the Bank of Japan Thursday, the Japanese government might have to buy stock market shares in order to boost share prices and help out Japanese banks and investors. This is nothing new.
The rise of the stock market this year is not restricted to Korea: for example the Shanghai composite index rose by 56%.
The question is: what are driving forces behind these rising markets.
According to the Bank of Japan Thursday, the Japanese government might have to buy stock market shares in order to boost share prices and help out Japanese banks and investors. This is nothing new.
Wednesday, September 9, 2009
Food Prices Surged by 9.5 percent
According to the Bank of Korea, food prices rose by 9.5 percent during the first eight months of the year recording 11 year-high. This is more than double the increase seen in the same period last year.
Monday, September 7, 2009
Google’s ex-China Head Set to Fund Chinese High-Tech Start-Ups
Amid speculation over China’s role in the global economic downturn and its economic and geopolitical positioning, China’s aggressive move into high-tech investments is alarming. The New York Times is reporting that Google’s Ex-China head, Kai-Fu Lee has started a new firm, Innovation Works and is poised to finance high-tech start-ups in China. Given Korea’s prior records of nurturing high-tech start-ups, it is enviable that the Chinese not only raise the necessary capital but also mustered up the appropriate people and networks to help start-ups grow in managerial sense.
From the New York Times:
Three days after announcing that he was resigning as the head of Google’s China operations, Kai-Fu Lee said Monday that he had raised $115 million to create a company that would finance high-tech start-ups in China.
That company, Innovation Works, will search for talented Chinese engineers and entrepreneurs and help them develop the next generation of Internet and mobile computing technologies, Mr. Lee said in a telephone interview. …
In a telephone conference call with Peter Liu, chairman of WI Harper, one of the lead investors, Mr. Lee said part of the logic behind forming the company was the lack of early-stage financing of high-tech start-ups in China: angel investors who could provide financing and coaching of young companies.
Talented managers now working for technology companies in China are primed to leave those companies to become great entrepreneurs, he said.
“Our experience is in company building,” he said. “I can coach them with my many years of experience.”
China is already a hotbed of high-tech growth, with fast-growing Internet companies like Baidu, Tencent, Shanda and Alibaba already worth billions of dollars. Venture capital funds are aggressively scouting out new companies that can capture share in what is already the world’s largest Internet market, with over 300 million users…
Despite the economic downturn, Mr. Liu of WI Harper said he had no trouble raising the money for Innovation Works.
“We raised the money in less than 30 days,” he said, and called the hiring of Mr. Lee “a miracle.”
www.nytimes.com/2009/09/08/technology/08google.html
From the New York Times:
Three days after announcing that he was resigning as the head of Google’s China operations, Kai-Fu Lee said Monday that he had raised $115 million to create a company that would finance high-tech start-ups in China.
That company, Innovation Works, will search for talented Chinese engineers and entrepreneurs and help them develop the next generation of Internet and mobile computing technologies, Mr. Lee said in a telephone interview. …
In a telephone conference call with Peter Liu, chairman of WI Harper, one of the lead investors, Mr. Lee said part of the logic behind forming the company was the lack of early-stage financing of high-tech start-ups in China: angel investors who could provide financing and coaching of young companies.
Talented managers now working for technology companies in China are primed to leave those companies to become great entrepreneurs, he said.
“Our experience is in company building,” he said. “I can coach them with my many years of experience.”
China is already a hotbed of high-tech growth, with fast-growing Internet companies like Baidu, Tencent, Shanda and Alibaba already worth billions of dollars. Venture capital funds are aggressively scouting out new companies that can capture share in what is already the world’s largest Internet market, with over 300 million users…
Despite the economic downturn, Mr. Liu of WI Harper said he had no trouble raising the money for Innovation Works.
“We raised the money in less than 30 days,” he said, and called the hiring of Mr. Lee “a miracle.”
www.nytimes.com/2009/09/08/technology/08google.html
Sunday, September 6, 2009
Can We Expect Some Substantial Shifts in Japan and the Asian region?
Can we expect some change in Japan after a sweeping victory by its opposition Democratic Party? How would Japan’s new leadership affect the Asia’s economic and geopolitical landscapes?
The liberal opposition Democratic Party of Japan defeated the conservative party that had ruled for almost all of the past half-century, or the entire postwar period.
Their victory seems to be driven by rising public discontent over many economic and social issues including rising unemployment, public debt, and a rapidly aging population. The leader of the opposition Democratic Party, Yukio Hatoyama who is poised to become new Prime Minister has pledged to respond to the needs of ordinary people, stressing social values and wealth redistribution.
It is intriguing to see how a political shift in Japan such as a change of government in Japan and incoming leader’s pledges resonate the political situation and promises delivered by the Kim Dae-jung who won a narrow victory in the Korea’s presidential election in late 1997.
Can this bring some major shifts not only in political landscape but in economic situation in Japan?
Hatoyama seems to be up for a comprehensive overhaul of Japan’s political systems, as he wrote in his essay "Resolving our fiscal problems is impossible without comprehensively rebuilding Japan’s political systems."
Hatoyama pledged to rescue the Japanese economy from 20-years of ongoing recession by introducing some measures such as provisional acquisition taxes.
He argued for breaking ties between the Japanese government and big businesses, pledging to put the interests of the people before those of corporate Japan. For instance, his promises included banning political contributions from large corporations. The DPJ only received one-thirtieth of about 300 million USD donated to the LDP from Japan’s top business lobby Nippon Keidanren.
It would be interesting to see how he would put his pledges into practice. I wouldn’t hold my breath though; Korea’s Kim Dae-jung administration neither changed the political landscape that much nor fixed structural economic problems.
Furthermore, he is proposing the creation of an East Asian community including regional currency union, similar to EU, strengthening bonds with Asian neighbors such as China and South Korea.
He claims the demise of US-led globalism, as he said “As a result of the failure of the Iraq war and the financial crisis, the era of the US-led globalism is coming to an end and…we are moving away from a unipolar world led by the US towards an era of multipolarity.”
The 1997 Asian financial crisis taught Asian countries several lessons. China started to form a serious economic tie with the U.S., exporting their goods to the U.S. and buying U.S. treasuries. Japan wanted to launch Asian-led rescue initiative during the 1997 Asian crisis, but it didn’t happen.
With the U.S. economy deteriorating, although the status of USD as the world reserve currency and the U.S. military power remaining, will we see some real shifts in regional ties? Will there be substantial changes in dynamics of economic and security alliances?
The liberal opposition Democratic Party of Japan defeated the conservative party that had ruled for almost all of the past half-century, or the entire postwar period.
Their victory seems to be driven by rising public discontent over many economic and social issues including rising unemployment, public debt, and a rapidly aging population. The leader of the opposition Democratic Party, Yukio Hatoyama who is poised to become new Prime Minister has pledged to respond to the needs of ordinary people, stressing social values and wealth redistribution.
It is intriguing to see how a political shift in Japan such as a change of government in Japan and incoming leader’s pledges resonate the political situation and promises delivered by the Kim Dae-jung who won a narrow victory in the Korea’s presidential election in late 1997.
Can this bring some major shifts not only in political landscape but in economic situation in Japan?
Hatoyama seems to be up for a comprehensive overhaul of Japan’s political systems, as he wrote in his essay "Resolving our fiscal problems is impossible without comprehensively rebuilding Japan’s political systems."
Hatoyama pledged to rescue the Japanese economy from 20-years of ongoing recession by introducing some measures such as provisional acquisition taxes.
He argued for breaking ties between the Japanese government and big businesses, pledging to put the interests of the people before those of corporate Japan. For instance, his promises included banning political contributions from large corporations. The DPJ only received one-thirtieth of about 300 million USD donated to the LDP from Japan’s top business lobby Nippon Keidanren.
It would be interesting to see how he would put his pledges into practice. I wouldn’t hold my breath though; Korea’s Kim Dae-jung administration neither changed the political landscape that much nor fixed structural economic problems.
Furthermore, he is proposing the creation of an East Asian community including regional currency union, similar to EU, strengthening bonds with Asian neighbors such as China and South Korea.
He claims the demise of US-led globalism, as he said “As a result of the failure of the Iraq war and the financial crisis, the era of the US-led globalism is coming to an end and…we are moving away from a unipolar world led by the US towards an era of multipolarity.”
The 1997 Asian financial crisis taught Asian countries several lessons. China started to form a serious economic tie with the U.S., exporting their goods to the U.S. and buying U.S. treasuries. Japan wanted to launch Asian-led rescue initiative during the 1997 Asian crisis, but it didn’t happen.
With the U.S. economy deteriorating, although the status of USD as the world reserve currency and the U.S. military power remaining, will we see some real shifts in regional ties? Will there be substantial changes in dynamics of economic and security alliances?
Saturday, September 5, 2009
Korea's IT Exports Fell in August
According to the Ministry of Knowledge Economy, Korea’s IT exports declined by 8 percent to 11 billion USD in August from a year ago.
While exports of display panels rose by 8 percent, semiconductors and mobile phone fell by 7 and 18 percent, respectively.
While exports of display panels rose by 8 percent, semiconductors and mobile phone fell by 7 and 18 percent, respectively.
Thursday, September 3, 2009
GNI (Gross National Income) Turns Positive
According to the Bank of Korea, Korea’s GNI turned positive in the second quarter for the first time in a year, posting a 21-year high growth rate. In the meantime, Korea’s GDP rose a 2.6 percent during the same period.
Korea’s GNI rose 5.6 percent during Q2 compared to the previous three months. This is the highest figure after Korea posted a 6.2 percent expansion in 1988.
It has been known that while GDP shows the broadest measure of a country's economic performance, GNI indicates purchasing power of income earned from production activity.
Korea’s GNI rose 5.6 percent during Q2 compared to the previous three months. This is the highest figure after Korea posted a 6.2 percent expansion in 1988.
It has been known that while GDP shows the broadest measure of a country's economic performance, GNI indicates purchasing power of income earned from production activity.
More Expansionary Measure Underway
The Korea government is frontloading 12 trillion won (some 9.6 billion USD) earmarked for the fourth quarter budget. This decision is intended to boost the economy amid sluggish business investments.
How long could this kind of expansionary measures around the world go on?
How long could this kind of expansionary measures around the world go on?
Wednesday, September 2, 2009
Korea’s Investment in IT Sector
According to the Ministry of Knowledge Economy, the Korean government is poised to invest 189 trillion won in further fostering its already strong IT sector in the belief that IT will be Korea’s primary growth engine in the future.
Cho Seok, D said in an interview “In the future, everything will be based on communication networks which will dramatically change people’s lifestyles, and there will be a paradigm shift in which IT and other industries will be consolidated.”
The ministry of Knowledge Economy plans to converge IT with other industries to boost development and nurture the semiconductors needed for such consolidations. It also intends to strengthen the competitiveness of Korea’s major software firms to come up with new technology. It also suggests investing in machinery and equipment for the further development of Korea’s strong sectors – the semiconductor, display and cell phone sectors.
Whenever I hear news about the Korea’s national R&D investment undertaking, I get kind of antsy about it for a number of reasons, which I’ve discussed in the previous posts.
For one thing, Korea doesn’t have a good track record of managing the national R&D programs. The same may go for other developing and developed countries alike.
I’m a little concerned with a government’s direct involvement with business development as shown in the case of the mobile phone business.
The Korean semiconductor industry has made a remarkable stride in memory chips, but it has had some fundamental problems such as lagging behind in specialty logic chips, software, and capital equipments for some time.
The idea of digital convergence has been around for some time, too.
When the Korean government made a major investment in the IT sector in the wake of the Asian financial crisis, the worldwide economic situation was quite different than the current one. Korea went through the crisis while global bubble was booming. Purchasing power in the major economies is dwindling. I’m not sure how they see IT will be the next growth engine again.
I don’t mean to undermine the importance of national innovation initiatives and IT sector in Korean economy. The wise and efficient national innovation management would be a key factor for the further economic development. Hence, careful and solid investments in the appropriate technology area with a good management competence, reflecting on what they have learned from the past, would be another matter in difficult times.
Cho Seok, D said in an interview “In the future, everything will be based on communication networks which will dramatically change people’s lifestyles, and there will be a paradigm shift in which IT and other industries will be consolidated.”
The ministry of Knowledge Economy plans to converge IT with other industries to boost development and nurture the semiconductors needed for such consolidations. It also intends to strengthen the competitiveness of Korea’s major software firms to come up with new technology. It also suggests investing in machinery and equipment for the further development of Korea’s strong sectors – the semiconductor, display and cell phone sectors.
Whenever I hear news about the Korea’s national R&D investment undertaking, I get kind of antsy about it for a number of reasons, which I’ve discussed in the previous posts.
For one thing, Korea doesn’t have a good track record of managing the national R&D programs. The same may go for other developing and developed countries alike.
I’m a little concerned with a government’s direct involvement with business development as shown in the case of the mobile phone business.
The Korean semiconductor industry has made a remarkable stride in memory chips, but it has had some fundamental problems such as lagging behind in specialty logic chips, software, and capital equipments for some time.
The idea of digital convergence has been around for some time, too.
When the Korean government made a major investment in the IT sector in the wake of the Asian financial crisis, the worldwide economic situation was quite different than the current one. Korea went through the crisis while global bubble was booming. Purchasing power in the major economies is dwindling. I’m not sure how they see IT will be the next growth engine again.
I don’t mean to undermine the importance of national innovation initiatives and IT sector in Korean economy. The wise and efficient national innovation management would be a key factor for the further economic development. Hence, careful and solid investments in the appropriate technology area with a good management competence, reflecting on what they have learned from the past, would be another matter in difficult times.
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