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  • Posts Tagged ‘korea’

    Socrates v. Confucius: How Asians and Westerners Use a Different “Negotiator Lens”

    August 27th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Socrates v. Confucius: What a Difference a Culture Makes–and How it Shapes East-West Negotiators
     
    The Western (Socratic-based) Negotiator Lens:
     
    Many negotiators from the West were raised in an individual-based environment, which is relatively “flat” compared to many collective-based “vertical” social structures. Strange from the perspective of many Confucian, collective-based societies, many parents from individual-based groups will indirectly, and often unknowingly, begin the informal negotiation training from a very early age. This reflects the Socratic approach to teaching, which is much more prevalent in individual-based societies than collective-based societies, and is reinforced by a barrage of assignments, which tests the ability to question, such as the requirement to write critical essays. Such tasks require the person (and future negotiator) to think independently, question assumptions, and then come to a personal conclusion based on the evidence. In other words, a person in this type of Socratic-based “flat” environment reinforces the use of rationality over emotion.
     
    The Asian (Confucian-based) Negotiator Lens:
     
    in many collective-based negotiation settings, this rationale approach is at times seen as a cold, calculating and detached process, counter to their basic instincts and training. In stark contrast, the typical collective-based individual is raised by parents typically (but not always) set in a strict vertically based structure, in which dominant parent figures effectively lay down the “law of the land” in the household. The collective-based future negotiator, as a young person, is usually told, not asked, what to do. This goes from small things like what to eat, to bigger-ticket items like what to study, who to date, and when to go home. If the child in such Confucian-based structure questions what the parent says, this is interpreted as a very egregious act.
     
    Such an act is viewed as one of the more shameful in a collective-based society, in which obedience and trust is a virtue, while being branded with a betrayal mark is tantamount to a “scarlet letter” and later societal banishment (known in Korean society as wangda (왕따) and in Japanese society as murahachibu). The collective-based Confucius friendship structure is primarily also a top-down, command-and-control structure based on those with seniority (선배, sunbae in Korean, senpai in Japanese) and those who are junior (후배, hubae in Korean, kohai in Japanese). The only rare exception to the general rule is with the small band of friends in the same class year (동갑, dong-gahp in Korean). In short, the collective-based social, academic, and working structures share one commonality – they are all vertically-based top-down operating structures. This is a very important missing factor in terms of why many collective-based groups are not instinctual negotiators. For this reason, yes of course, the collective-based negotiators can negotiate, but they find it unusual and awkward, and often do it grudgingly.
     
     
     
     
    This blog is a partial excerpt from the published academic article, Mitigating Partisan Perceptions between Individual and Collective-based Groups (by Jasper Kim, International Studies Review, 2009)
     

    The Kaesong Negotiations: Why the two Koreas succeeded in getting to yes (and its implications)

    August 15th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    This blog post is based on an earlier version of a Wall Street Journal (WSJ) post and video interview that can be viewed here.
     
    After seven rounds of meetings and 133 days, the ongoing Kaesong Industrial Complex negotiations between the two Koreas culminated into a five-point agreement. The agreement’s key provisions included language to not disrupt operations within the complex unilaterally, provide for the guarantee of safety of Kaesong assets and workers, restore customs and telecommunications operations, maintain and promote the complex to attract international investments, and the creation of a joint Kaesong Industrial Complex committee
     
    What led to the bargaining breakthrough? The first six rounds of talks were mainly fruitless efforts of what negotiation analysts refer to as “positional bargaining,” in which each party states and restates its positions on a particular issue. Such positional jockeying can often lead to impasse, and even at times, a strategy of purposeful strategic non-cooperation in a form of “prisoner’s dilemma” (a simulation game in which two parties have a choice to cooperate or betray one another). This seemed to be the case with North Korea, which took the view that elongating and escalating the Kaesong negotiation process would yield a net benefit—the same modus operandi it employs with its ongoing nuclear nonproliferation negotiations.
     
    If North Korea viewed the Kaesong bargaining process as a prisoner’s dilemma, then what does it take to break its bad behavior? In prisoner’s dilemma, players betray rather than cooperate mostly out of fear and distrust, viewing the outcome as a zero-sum game in which player A’s gain must come at the expense of player B. But if fear can be mitigated and trust furthered, a greater likelihood towards cooperation exists.
     
    With such agreement leading to other talks related to inter-Korean relations, the one open question now is just how long the Kaesong agreement will last? If precedent is any indicator, it won’t take too long before discord strikes again.
     
    Contact us here at Asia-Pacific Global Research Group to see how we can help.

     
    Below is Jasper Kim’s video interview with the WSJ today:

     
     
     
     

    China’s ‘Smart’ Smartphone Strategy: Being ‘Global’ and ‘Globalized’

    July 24th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    As I mentioned in a 2011 BBC News article, while Samsung and Apple have locked legal horns over a global and costly patent dispute, Samsung (and Apple) should now be pivoted towards the rise of a new generation of Chinese challengers.
     
    Chinese smartphone firms that are not entirely household names today in South Korea, the U.S., and Europe, inevitably will be in the future. This may not happen today or tomorrow, but rising Chinese challengers—Huawei, Lenovo, Coolpad, and ZTE—just to name a few, have the potential to be true dominant global players. This results in two main challenges facing both South Korean and Californian tech firms going forward, especially as it relates to the largest growing smartphone market, mainland China.
     
    The first challenge for such firms is that China’s “Big 4” smartphone players are already localised, while others are less so. As a result, China’s smartphone firms will instinctively and strategically know how to compete with foreign competitors like Samsung on their own home turf (where China has recently displaced the U.S. as the world’s largest smartphone market). This will be critical since Chinese consumers are known to be fickle fast movers, switching to new smartphone models about every six months (compared to every two years in the U.S. market). Thus, such Chinese firms will be best positioned to be where future demand will be, while foreign firms will still be sorting through market research from an outsider’s perspective. Already, one of the Chinese Big 4, Huawei, has introduced the world’s thinnest smartphone with the introduction of its Ascend P6. China’s Big 3 also will be more sensitive to the need for competitive low pricing in a country where the average person earns a mere fraction of those in South Korea and North America.
     
    Second, while the likes of huge firms have focused on being global, such firms may not necessarily be globalised. To be a sustainable dominant player in the current ever-evolving environment, a company needs to be both global and globalised. While South Korean and California-based tech titans are certainly global (in terms of overseas revenue, market share, and branches), they have yet to be fully globalized (in terms of strategic decisions made by a diversified group of senior leaders from around the world based on global standards).
     
    Firms like Lenovo have a senior executive board that boasts a global group of diversified talent who have true decision-making authority for the betterment of the firm. In the case of South Korea’s largest smartphone producers, most or all of the senior management are entirely domestic. Although having an entirely domestic board does not in itself signal not being globalised, it is nonetheless an important and revealing indicator for outside investors. And while having a homogenous board may lead to a higher chance of seamless execution, its downside may be the relative inability to see or do things differently. 
      
     
     
     
     

    Korea’s Next War Will be a Cultural One Within: Clash of the Koreans will occur as the country grapples with its identity

    June 15th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    A revised version of this blog can be found HERE in the Wall Street Journal Asia (WSJ, June 11, 2013), Korea’s Immigration Problem
    Seoul needs newcomers to boost its economy and birth rate. But will they stay?

     
    Today, the number of foreigners (non-Korean nationals who reside in the country for over three months) in South Korea stands at nearly 2.5 percent (1.25 million) of the total population, a relatively small percentage, but one that represents a significant increase in just the past few years. This is a broad category that includes migrant workers, business executives, English teachers, and foreign brides, to name a few. Of such group, foreign brides are playing a pivotal role in the changing demographic landscape of modern day South Korea. In the past when marriages with foreigners were near non-existent, today such marriages account for approximately 14 percent (26, 274, in 2010) of all marriages in the country.
     
    Of such marriages, nearly a fifth of every marriage in South Korea’s rural areas now are “international marriages”–often in the form of a marriage between a Korean male with an “imported” foreign bride, typically from Southeast Asian countries such as Vietnam, Laos, Thailand, and the Philippines. Many of these countries have or have tried to place restrictions in one form or another on marriages with male Korean grooms due to mounting evidence of marital problems based largely on cultural clashes between the foreign bride and her Korean groom and the groom’s greater family unit. As is apparent, such marriages are not just a cultural issue, but an economic one as well–both the bride (often from an economically disadvantaged family in a lesser developed Asian country) and the groom (often a rural farmer) each represents the unfortunate lower end of their nation’s economic social class.
     
    Now what happens when such winds of demographic change meet head on with centuries old Confucian values-based South Korea? As many Korea insiders already know, behind the country’s “hardware” of ultra-modern landscape, hip music videos, and trendy electronics that many on the outside associate with modern Korea, is a country’s “software” that can at times still resemble the “Hermit Kingdom” of old mentality, in which foreigners are met with suspicion, fear, and uber-nationalistic tendencies.
     
    The children of South Korea’s emerging multiracial cultural class, who numbered 151,154 in 2011, are also facing unwanted discrimination, both innocent and less-than-innocent, at school by peers and within the nation’s greater homogenous societal fabric. In a recent poll of multiracial students by the National Human Rights Commission, 41.9 percent of those surveyed stated that they have been teased or discriminated against by their fellow Korean classmates for their inability to pronounce Korean words properly. 25.3 percent also encountered discrimination due to just their skin color being different generally, and darker specifically, than that of the typical Korean. This should come as little surprise. In a recent late 2012 survey by the Korea Ministry of Gender Equality and Family, 88.6 percent of Korean adults responded that Korean blood ancestry was important to be recognized as a Korean. In a report issued by Ernst & Young several days ago, Korea’s globalization ranking slipped due in part to its extremely low cultural integration score of 2.62 (out of 10).
     
    What do all these cultural and demographic changes mean for South Korea? In Japan, when Korean-Japanese were overtly discriminated against and not accepted into mainstream society (in which Japanese citizenship is only given based on blood lineage), a certain fraction of such mistreated cultural class turned to underground activities for economic sustenance. Even in places like Sweden and France known for their relative acceptance and assimilation of immigrants, recent cultural clashes have emerged. And of course, in the U.S. case, overt and invidious racial discrimination based on race and skin color, among other things, have led to economic disparity, a sense of social injustice, and urban riots, with vestiges still remaining today, despite having Barack Obama in the Oval Office.
     
    Contemporary South Korea is not at the racial boiling point yet. But it’s not far away either. If anything, South Korean society today is akin to the U.S. of the late 1950s Organization Man era on the verge of entering the early 1960s Beatnik era. While soon thereafter, South Korea’s unprecedented tectonic shifts in demographics and culture will challenge South Korea’s core social dynamics.
     
    If the Park Geun-hye administration is willing to face this burgeoning socio-economic issue head on, it will act to pre-emptively and strategically incorporate such emerging cultural diversity into strengths through a plethora of social support programs in the form of educational subsidies and support programs. Such efforts would reflect President-elect Park’s campaign theme of “economic democratization,” and would convert South Korea’s diversity into a strength. After all, with a focus on creative industries, a shrinking workforce, low fertility rates, and a rapidly aging society, South Korea needs all hands on deck—no matter the cultural background—to keep the Korean economy afloat and strong in the twenty-first century.
     

     
     
    Asia-Pacific Global Research Group

     

     

     

     

     

     

    Why North Korea is a risk-taker

    May 23rd, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    The analysis below is an excerpt based on the original piece, North Korea’s Risk-taking Explained (by Jasper Kim, Wall Street Journal, Korea Realtime, May 22, 2013), which can be read in full HERE.
     

    Most commentators who track the country say it would never aim to initiate a war with South Korea and its allies because that would inevitably lead to the end of the Kim Jong Un regime. Self-preservation is something the Pyongyang leadership has been very successful at over the last six decades.
     

    So what explains the North’s apparent affinity for risk in routinely confronting the South, mostly verbally but occasionally with deadly force?
     

    Mathematical modeling helps explain the counter-intuitive marriage of risk-taking and rationality at the heart of decision making in North Korea.
     

    Consider you have one of the two choices:
    A: Receive $80 guaranteed; or
    B: Receive a 90% chance to receive $100
     

    Which option should a rational decision maker chose? Studies show that most people would decide to take option A, the sure thing. The thinking is that it is generally better to receive a guaranteed return even if it means receiving less.
     

    But the rational choice is actually option B. Getting to the answer requires what’s called a standard expected value calculation. The expected value of option A is $80 (100% x $80 = $80). The expected value of option B is $90 (90% x $100 = $90). So, because $90 (option B) is greater than $80 (option A), option B would be the rational choice even though it involves taking a risk. 

     
    In the above example, the expected higher gains in option B — equivalent to regime survival — have incentivized risk-taking by North Korea, especially if it doesn’t believe an option A exists.

     
    * The U.S., South Korea and Japan are defensively postured and risk-averse because the aspiration point is primarily maintaining their current position (in terms of preserving military and economic interests);
     
    * North Korea is offensively postured and risk-seeking because its aspiration point is gaining more than its current position (in terms of actively pursuing economic and non-economic assistance and diplomatic recognition).

     

    Given the current incentive structure from North Korea’s view, the Stalinist state sees only incentives to take further risks. As a result, the DPRK’s provocation cycle will only continue, unless the current incentive scheme is changed.
     

    South Korea-China trust process needed: Why the two countries are mutually dependent

    April 16th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Below is an article by Jaeho Hwang, PhD of the Asia-Pacific Global Research Group.
     
    In the article, Jaeho Hwang argues for closer ties between South Korea and China.
     
    Original title : Korea-China trust process needed: Why the two countries are mutually dependent (신뢰프로세스도 필요)
    Date :March 03, 2013 (Kyunghyang Shinmun; 경향 신문)
    Written By : Jae-Ho Hwang, PhD (황재호): Professor, Hankuk University of Foreign Studies (HUFS); Asia-Pacific Global Research Group
     
    [English summary translation below]:
     
    There should be a trust process as it relates to Korea-China relations.
     
    Recently, in both China and South Korea, new leaders have been chosen for each respective country. From China’s perspective, South Korean president Park Geun-hye is viewed as a good partner who considers stability of critical importance. If South Korea sets a good geopolitical strategy for the Korean Peninsula, the relationship between South Korea and China could go forward in a credible manner.
     
    However, as China is less likely to change its policy on North Korea, South Korea should not force China to change its stance on Sino-DPRK relations. If South Korea attempted such move, it would worsen Sino-South Korean relations. Instead, South Korea should initiate a credible-based approach towards the proposed confidence and trust building process.

     
    ————
    [Original Korean language version below]:
     
    강성대국(强盛大國). 강대하고 번영하는 나라를 건설하는 것이 북한의 오랜 염원이다. 그러나 한자 두 개를 바꾸어보면 전혀 다른 뜻이 된다. 강한(强) 성격(性)의 짝퉁(代) 국가(國)가 바로 북한이다. 국가보다 정권의 생존을 최우선시하며 이를 위해서라면 일부터 저지르고 본다. 외부와의 커뮤니케이션에 서투르고 욱하길 잘한다. 그런 북한이 지난 2월12일 제3차 핵실험을 감행했다. 핵무기의 소형화와 경량화에 좀 더 다가섰다는 평가가 지배적이다.
     
    이런 북한을 불안하게 바라보는 국가가 있다. 화가 나서 한 대 쥐어박고 싶지만 그럴 수도 없고, 한숨 쉬는 중국이다. 지난 한 주 국내 언론들은 중국의 대북정책 변화 가능성에 대해 많은 보도를 하였다. 중국의 광저우와 선양에서 벌어진 반북 시위, 환구시보의 북한 비난 사설에 이어 북한 포기를 주장한 중앙당교 기관지 부편집인의 영국 파이낸셜타임스 기고문을 집중 보도하였다. 중국의 웨이보(트위터)에서는 지금도 중·북관계의 미래와 관련해 격론이 벌어지고 있다.
     
    중국 인민들의 반응이 예전과 다른 것은 일정 부분 사실이다. 그러나 중국이 당장 한반도정책을 바꿀 것이라고 믿는 것은 섣부른 기대이다. 중국의 대북 인식이 변하고 있지만 여전히 제한적이다. 일부의 불만을 중국정부의 대북정책 전환으로까지 연결시키는 것에는 무리가 있다.
     
    북한에 대한 불만은 중국정부도 당연히 크다. 중국이 주중 대사를 외교부에 초치하는 등 무형의 압력을 가했지만 보기 좋게 무시당했다. 그럼에도 중국의 대북정책은 그대로일 수밖에 없다. 중국은 향후 10년을 전략적으로 중요한 시기로 본다. 자국이 실제 G2로 부상하기 위해서는 국내경제 발전에 집중해야 한다. 따라서 주변 안보환경이 안정적이어야 한다. 북한이 자생력만 있다면 그대로 안고 가고자 한다. 섣부른 결정으로 불확실한 낭패를 보고 싶지 않다.
     
    중국은 북핵문제에서 미국과 공조하는 데 불신을 갖고 있다. 북한의 제1차 핵실험 직후 북한을 제멋대로라고 즉각 비난하면서 미국의 입장에 동조했지만, 미·북은 베를린에서 따로 만나 2·13 합의를 도출했다. 중국의 입장에서는 미국만 믿고 따라가서는 손해 볼 수 있다는 인식이 강하다. 이 때문에 국제사회의 결정에 반보 늦은 행보를 보이고 있다. 중국은 여전히 냉정한 대응과 대화를 강조하면서 군사적 개입 등 강도 높은 제재는 반대한다.
     
    이제 한·중 양국은 새 지도자를 맞이했다. 안정감을 중시하는 중국 지도자들에게 박근혜 대통령은 좋은 파트너이다. 박 대통령은 3·1절 기념사에서 북한이 추가적 도발을 중지한다면 대화를 시작할 수 있다는 긍정적 메시지를 보냈다. 신정부의 대북정책에 기대를 가지고 있는 중국은 북핵 국면이 끝나는 대로 한국의 건설적인 대북 접근을 기대하고 있다. 한국의 한반도 신뢰프로세스가 합리적인 것으로 판단된다면 북핵을 계기로 양국은 더 큰 협력적인 관계로 나아갈 수 있다.
     
    단 중국의 대북 입장 변화 가능성이 매우 낮은 상태에서 중국에 입장을 바꾸라고 요구해서는 안될 것이다. 성사도 되지 않을뿐더러 감정만 상하게 된다. 오히려 향후 5년 동안 한국의 대중외교는 한국의 전략적 가치에 주목하게 하고 신뢰를 구축하는 데 집중해야 한다. 한·중 간 신뢰프로세스도 동시에 진행해야 한다.
     
    첫 5년 시진핑의 대북정책은 신중하고 수세적으로 갈 가능성이 크다. 그러나 시진핑의 후반 5년부터 중국의 대북정책은 공세적이고 선제적일 수 있다. 북한에 끌려가기보다는 북한문제에 전향적인 결정을 할 수 있다. 이때 우리가 원하는 방향으로 중국이 결정을 내리도록 하려면 신뢰를 확실히 구축해야 한다. 강한(强) 성격(性)의 짝퉁(代) 국가(國) ‘북한’보다, 의연하고 굳건한(剛) 성격(性)으로 큰 일을 준비하고 기다리는(待) 국가(國), 즉 또 다른 강성대국 ‘한국’과 한반도 대사를 논할 수 있겠다는 믿음을 심어주어야 한다.

     

     

     

     

    North Korea’s “war” declaration: made for domestic consumption but potential for “black swan”

    March 30th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    North Korea has just declared “war” on South Korea.
     
    This is the latest in a streaming series of increasingly bellicose statements from the DPRK and its 20-something leader, Kim Jong-Un.
     
    While many commentators are taking a bet (position/view) that North Korea will not do anything that will provoke war on the Korean peninsula, we believe that a certain amount of attention must be focused on a possible “black swan” event in which a small foreseen or unforeseen event can trigger retaliation by the other side per the responding country’s rules of engagement. Unlike recent skirmishes and attacks along the inter-Korean border region, this time both Koreas are on extremely high levels of military alert akin to two sprung traps in which even a small event can trigger a larger-scale conflict.
     
    We also believe that most of North Korea’s rhetoric is for the public consumption of North Korea’s military brass and general public, in that order. Such acts are in part an effort, perhaps even a desperate one, to secure domestic support, implying that Kim Jong-Un may be losing support at home. Because of Kim Jong-Un’s age (under 30), and inter alia, that he is the nation’s 3rd-generation ruler from the Kim dynastic clan (a “3-3” risk factor), North Korea’s leader has to take a constant “hyper-hawkish” stance to dispel any notion that he may be weak and dovish towards the nation’s historic enemies. Within a Korean cultural context, even one day difference between two people can vastly change relational dynamics.
     
    Below is a quote from a recent CNN story and video clip related to North Korea’s increasing threats, featuring Jasper Kim of the Asia-Pacific Global Research Group:
    “First and foremost, it’s for his domestic audience,” said Jasper Kim, founder of the Asia-Pacific Global Research Group in Seoul, South Korea. “Because without the support of the military, he won’t be around for much longer. And so he has to bolster his support with the brass.”

     

     

    PRC v. DPRK? – Will the China-NK alliance remain stable?

    February 19th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Will the China-NK alliance remain stable?
     
    Global Times | 2013-2-17
     
    By Jasper Kim
     
     
    Given the recent bilateral and UN-based diplomatic discourse between North Korea and China on North Korea’s third nuclear test last week, could Pyongyang and Beijing’s relationship be switching from friends to foes?
     
    The once staunch alliance between North Korea and China has historically been based on shared mutual political interests.
     
    For North Korea, from an economic standpoint, an alliance with China translated into fuel aid and trade revenue, since China provides most of North Korea’s fuel supplies and is its top trading partner.
     
    For China on the other hand, in years past, from a socio-political standpoint, North Korea represented a sought-after strategic buffer zone from thousands of US and South Korean troops and any other military presence, above and beyond the Demilitarized Zone along the 38th parallel that has separated the two Koreas since 1953, the year of the armistice ending the Korean War (1950-53).
     
    From the US perspective, as per its stated Asian pivot, the US-South Korea alliance represents a much needed opportunity to maintain a military presence up to the 38th parallel, above and beyond its military presence in nearby Japan, Guam, the Philippines, Australia, and other strategic locations.
     
    From South Korea’s perspective, maintaining a strategic, albeit shrinking, troop-level presence onshore also represents a not so subtle US and UN military defense security guarantee in the event of a major incursion against South Korea’s sovereign borders or national security interests by North Korea.
     
    Relating to the recently evolving Sino-North Korean diplomatic dynamic – and specifically, how China should treat its Stalinist state neighbor – several perspectives can be taken.
     
    First, there is the traditionalist view which dictates that the Sino-North Korean relationship is one that should continue forward as it has in the past – in terms of economic and geopolitical support – primarily based on the history of alliance between the two countries and their respective leaders.
     
    Second, there is the absolutist view, which states that the Sino-North Korean relationship should be disentangled, given the fact that North Korea’s actions are increasingly unpredictable, and perhaps just as importantly, are increasingly embarrassing to Beijing’s leadership as it is seen as being unable to assert its leadership over the secretive Stalinist state.
     
    Third, there is the cost-benefit calculus view which oscillates between the traditionalist and absolutist views, specifically, that the Sino-North Korean relationship can either be one of an outright alliance or not, based on a multi-factor cost-benefit analysis.
     
    In other words, China should continue to support and outright align itself with North Korea if, but only if, the benefits of supporting North Korea outweigh its related costs, China’s benefits being the aforementioned geopolitical factors.
     
    In contrast, related costs in the calculus are ever-changing, which may tilt the cost-benefit calculus conclusion from a yes to no, in terms of whether Beijing should continue to support Pyongyang.
     
    Related costs could include, but not be limited to, North Korea’s actions potentially or actually negatively impacting China’s increasing rise as a global socio-political and economic superpower, loss of geopolitical legitimacy for supporting an increasingly rogue state from the viewpoint of the international community, embarrassment by being seen as being rebuked or ignored by North Korea, straining of the Sino-US relationship which may trigger a political or economic backlash in various forms, and the cost of providing fuel and economic aid which could instead be used to support other actual or potential future allies within and beyond Asia.
     
    Pyongyang has so far relied on the singular premise that Beijing’s leadership holds the traditionalist view.
     
    But even if the traditionalist view is one that China’s leadership harbored throughout the Cold War period, this premise fails to account for the possibility that Beijing’s leadership at some point may consider and implement the absolutist or cost-benefit calculus views as a matter of policy to North Korea’s possible detriment.
     
    Such a change may occur if the Sino-North Korean relationship continues to deteriorate with more provocative acts by Pyongyang.
     
    For these reasons, the Sino-North Korean dynamic in the 21st century – what I refer to as the “Chimerica century” – is in flux, unlike in years before, which may unexpectedly reconstitute China’s pivot sometime in the future from “China with North Korea” to “China versus North Korea.”
     
    The author is the founder and CEO of the Asia-Pacific Global Research Group.
     
    To view the article in the Global Times website, click here.

     

    North Korea’s missiles & markets – why DPRK defiance dips are market opportunities

    February 13th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    North Korea’s underground “mini” nuclear test may have rattled the financial markets. But financial history has shown that short term market dips directly following the defiant DPRK’s provocative acts often lead to buying opportunities.
     
    This is assuming that a “black swan” event does not occur in which a small provocation can escalate, purposely or accidentally, into a larger-scale conflict.
     
    Shares of defense companies skyrocketed by the daily limit of 15 percent at the news of the North’s test. Shares of Speco jumped by 15 percent and closed at 3,795 won. Victeck surged by 14.94 percent to close at 2,500 won and Firstec closed at 2,495 won, up 13.41 percent.
     
    Here’s a recap of North Korea’s recent provocative acts, and how the financial markets have dipped and then strengthened (based on publicly available sources).
     
    DPRK’S NUCLEAR TESTS:
     
    – North Korea’s third nuclear test yesterday (2/12/2013): had a minimal impact on the South Korean stock market. South Korea’s Kospi closed at 1,945.79 at 3 p.m. yesterday, down 5.11 points from Friday. (The market was closed on Monday for the Lunar New Year holiday.) During the day, the Kospi slipped slightly by 0.08 percent to 1,949.39 at 12:10 p.m. after news reports that the South Korean government detected man-made seismic activity in North Korea’s North Hamgyong Province at 11:58 a.m. The test also had meager influence on the local foreign exchange market as foreign dealers said the Korean won depreciated to 1,095,8 won against the dollar at 12:17 p.m., but rebounded to 1,091.25 won at 1:11 p.m. and closed at 1,090.80 won yesterday.
     
    – North Korea’s second nuclear test on May 25, 2009: the Kospi plummeted as much as 6.31 percent during trading hours but it recovered to 1,400.90, down 0.2 percent from the previous day. In the three months after that test, the Kospi jumped by 20 percent and reached the 1,600-something level.
     
    – North Korea’s first nuclear test on October 9, 2006: KOSPI fell 2.41% but was up 0.96% ten days afterwards;
     
    DPRK MISSILE LAUNCHES:
     
    – Launching of Kwangmyongsong-3 on April 13, 2012: KOSPI gained 1.12% on launch date, but was down 0.57% ten days after the launch (relative to the KOSPI on launch date)
     
    – Launching of Kwangmyongsong 3-2 on December 12, 2012: KOSPI fell 0.55% on launch date, but was up 1.65% ten days after the launch (relative to the KOSPI on launch date)
     
    OTHER EVENTS:
     
    – Death of Kim Jong-il, former DPRK leader, announced in December 2011: the Kospi shed 4.86 percent during trading hours but finished at 1,776.93, down 3.43 percent. The Kospi subsequently gained 10 percent and reached the 1,915 level just a month after Kim’s death, market observers said.
     
    – North Korea firing of artillery shells at South Korea’s Yeonpyeong Island on Nov. 23, 2010: the Kospi managed to rebound just three days after the attack and it jumped by 8 percent a month later.
     
    So as a possible investment strategy, when the “herd mentality” and “group think” of the markets are exiting (selling), one low risk strategy would be to buy i.e., be greedy when others are fearful.
     
    For a clip of Jasper Kim (founder, Asia-Pacific Global Research Group) featured on Bloomberg TV on this topic, see below:
     
     

     
     

    Samsung Electronics – Silicon Valley “innovation centers” (6 Things to Know)

    February 12th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    (The questions below are partially based on a related interview today with a local Korean broadcaster)
     
    1) What is the motivation behind Samsung’s innovation centers?
     
    By creating innovation centers–Samsung Strategy and Innovation Center (SSIC), which includes a $100 million Samsung Catalyst Fund–Samsung’s objective is to secure the best talent in Silicon Valley. This may say signal increased confidence that it has the ways and means to go head-to-head with the likes of Apple right in Apple’s own backyard.
     
    2) Will Samsung earn a title, “an innovator,” by creating innovation centers? How soon would it happen?
     
    Samsung has publicly stated that its aspiration is not to be a game-changing “innovator.” Instead, it believes that its best strategy is to be a “fast follower.” This means, first, canvassing existing market demand and micro/mega-trends from region to region, and second, adapting technology to in essence “wrap around” such existing market demand. Steve Jobs, Apple’s former CEO, famously stated that “It’s not the customer’s job to know what they want.” Samsung has a polar opposite view–that it’s Samsung’s job to give the customer what they know they want. So far, both have been effective, with the momentum favoring Samsung than Apple in recent weeks, based on Apple’s falling share prices.
     
    3) Why is Samsung looking to create them outside Korea (in Silicon Valley) and not Korea?
     
    Samsung could be creating innovation centers outside of Korea for one of two reasons. First, it could be simply adding to its already existing creative capital as an offensive strategy. Or second, Samsung could be seeking creative talent that it views as lacking onshore in South Korea as a defensive strategy. What is sure is that South Korea’s human capital, and the education of such domestic human capital, does not promote or incentivize thinking outside the box (as of this writing, although efforts and trends may change going forward). As one example, Apple’s “think different” acclaimed marketing slogan in the U.S. cultural context is viewed as a potential good thing, but in South Korea, it is viewed generally as a net negative.
     
    4) Does this mean that Korea lacks creative class talent?
     
    This could certainly be the case. An added consideration is that the corporate culture of South Korea generally has a “do as you’re told” modus operandi. That is, to do your assignment, but not to question it. This is a bit ironic given the nature of the industry, high tech, which has generally been predicated on questioning the status quo and creating and thinking in an unorthodox and different way. One could say that such approach is a Western-Socratic mindset, not entirely fitting of South Korea. Only time and results will tell.
     
    5) Why does Samsung plan to increase investment in the U.S.?
     
    Samsung is essentially trying to maximize it’s ROI (return on investment) by creating a fund for future tech start-ups in the U.S. Silicon Valley has a population of approximately 3 million, whereby 17,000 new start-ups are created every year, which are then followed by 12,000 failures of such start-ups. Samsung may now be understanding that, much like many Silicon Valley VCs, it may take both a good eye of the next big thing, patience, mentoring, and a “wait for the mega home run” mindset by trying to find the next Facebook (although the next big thing most likely is a known unknown start-up that may appear at any given moment).
     
    6) What does this say about Samsung’s global strategy?
     
    Samsung is asserting itself on the global stage through its aggressive Silicon Valley strategy. But according to one source from the KITA, Samsung Electronics and other similarly situated firms have only a few years before it loses its competitive advantage to Chinese firms (which will, in essence, be the next wave of dominant high tech firms).

     

     

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