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  • Posts Tagged ‘South Korea’

    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.”

     

     

    Korean War 2?: Heightened tensions on the Korean Peninsula push to the edge

    March 22nd, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    Is the Korean peninsula on the verge of a Korean War part 2?
     
    According to Asia-Pacific Global Research Group founder (and professor at Ewha Womans University in Seoul, Korea), the risks of this are certainly notable. Jasper Kim notes that both North and South Korea are engaging in a “dangerous game of tit-for-tat” at all levels–military, paramilitary, and cyber, which “has the potential to end very badly given that the two Koreas are like two sprung traps, which can be triggered at any time.”
     
    We believe that the two Koreas are engaged in a worrisome form of bilateral, bellicose brinksmanship. The recent cyberattacks against some of South Korea’s major broadcasters and banks are likely just the beginning of a continued series of purposely provocative attacks meant to shore up domestic support in North Korea, especially from its military for Kim Jong-Un, while simultaneously trying to ensure a type of “zone defense” in North Korea in the form of nuclear and non-nuclear missile technology.
     
    Below are recent CNN TV appearances on this issue featuring Jasper Kim:
     
     

     

    Hyundai Motor’s U.S. vehicle exports – 8 million mark (5 Things to Know)

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

    Hyundai Motor’s U.S. vehicle exports – 8 million mark (5 Things to Know)
     
    1. Hyundai Motor’s recent sales environment in the U.S. and related challenges
     
    The post-2008 crisis period had an impact and placed additional competitive pressure on Hyundai Motor Company (HMC), as it did for many other corporates, both Korean and non-Korean. Sometimes, crisis periods can help domestic firms. For example, the 1997-98 Korean financial crisis led to a weakening of the Korean won, making Korean exported goods relatively less expensive, thus, boosting sales. The same export-related economic phenomenon occurred with HMC during and directly after the 2008 subprime crisis. However, the post-crisis so-called series of U.S. debt buybacks known as quantitative easing (QE) has acted to weaken the U.S. dollar relative to other currencies, including the Korean won, making Korean products appear less competitive compared to pre-QE. The average U.S. car purchase price is slightly less than $30,000. Approximately 2.4 million imported cars are sold in the U.S. annually.
     
    2. HMC’s weaknesses and strengths in the market
     
    HMC’s strengths include its ability to provide good value for money from the purview of U.S. consumers (American car buyers). The economic crisis motivated potential buyers to think more economically about their car purchases. So, instead of a well-known domestic (U.S.) or foreign (Japanese/European) car at a relative premium price point, a certain market segment of car purchasers opted to buy relatively lesser-known Hyundai vehicles (such as the Elantra, Sante Fe, and Tucson, to name a few).
     
    HMC’s weaknesses include its reliance on export markets, not only the U.S., but also in the EU, and more recently, in mainland China (where domestic competition is increasing on a daily basis) as well as its relative late entrance into the hybrid vehicle market sector.
     
    3. Hyundai’s post-2008 crisis strategy
     
    One notable strategy by HMC was the creation and implementation of the Hyundai “Assurance Program” (where buyers were able to return their Hyundai car within 1 year if facing unemployment), which linked to an extended warranty that covered vehicles for 10 years or 100,000 miles (above and beyond the market standard at that point). Together, this created a tipping point in terms of the perception of Hyundai and Hyundai cars, specifically, that it was more than just a company seeking to maximize profit, but rather, was a company that treated its customers as real people with real-life concerns.
     
    Much like with Japanese automobile manufacturers before it, Hyundai also began producing higher-end luxury sedans, such as the Equus (which was first introduced in 1999 and redesigned again in 2009). This was strategic since such upper-end luxury vehicles carry with it a significantly higher profit margin relative to other model types.
     
    4. Risks on the company’s future earnings
     
    The more notable risks for HMC going forward are several. First, a weakening yen/dollar rate, which could make Hyundai vehicles appear relatively more expensive when compared to similarly situated Japanese vehicle models. Second, Hyundai must continue to focus on quality assurance so that a Toyota brake pedal-type event does not occur. In the event of such occurrence, the reputational capital that HMC amassed could quickly dissipate car sales and market value. Third, increasing capabilities of domestic car manufacturers exist in large developing markets such as China and India, that could one day compete head-to-head with HMC on their home turf at some point in time. In 2012, China exceeded the U.S. as the largest automobile market at over 240 million cars.
     
    5. On HMC’s efforts building more manufacturing plants in the U.S. export market, and global trends of the automobile industry that the company. HMC, should consider
     
    Hyundai has already established manufacturing plants domestically in the U.S. This is a strategic move done to avoid tariffs (import taxes) since tariffs are generally (but not always) placed on non-domestic (foreign) goods and services. In fact, given the relatively weak dollar, some onshore U.S. car manufacturers are seeking to export its vehicles outside the U.S. to offshore markets. Moving forward, HMC should continue establishing not only manufacturing but also research centers in key emerging markets such as China, India and other strategic locations.
     
    Future trends that should be relevant to HMC include the push towards more green and fuel-efficient cars, including electric vehicles (EVs) and smaller model cars. Notably, Hyundai recently introduced a hybrid version of its popular mid-sized car, the Avante, here in Korea. While this is a leap forward, it is also over a decade after Toyota introduced its hybrid car (the Prius). Hyundai could also focus on integrating technology into its vehicle such as with seamless wifi and higher fuel efficiency.
     
     

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    Hyundai Motor Company (HMC) listed stock details (in Korean won):
     
    Open: 210,500 Day’s Range: 208,500 – 212,000 Volume: 343,841
    Previous Close: 208,500 52wk Range: 195,000 – 272,500 1-Yr Rtn: -1.49%
    Stock Chart for 005380
    005380:KS 210,500
    1D1M 1Y
    3/119pm10pm11pm3/121am ET206,000208,000210,000212,000
    208,500
    10:40:00 pm
    210,500
    Interactive 005380 Chart

    Previous Close
    Key Statistics for 005380
    Current P/E Ratio (ttm) 6.6952
    Estimated P/E(12/2013) 6.0974
    Relative P/E vs. KOSPI 0.3465
    Earnings Per Share (KRW) (ttm) 31,515.0000
    Est. EPS (KRW) (12/2013) 34,604.9130
    Est. PEG Ratio 0.8240
    Market Cap (M KRW) 46,478,336.00
    Shares Outstanding (M) 220.28
    30 Day Average Volume 667,378
    Price/Book (mrq) 1.0079
    Price/Sale (ttm) 0.5215
    Dividend Indicated Gross Yield 0.90%
    Cash Dividend (KRW) 1,900.0000
    Last Dividend 12/27/2012
    5 Year Dividend Growth 13.70%
    Next Earnings Announcement 04/26/2013

     

     

     

    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 Nuclear Test – predictably unpredictable (4 Impacts)

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

    1) North Korea’s motivation for the nuclear test
     
    North Korea’s objective with today’s nuclear missile test is to put the international community on edge vis-a-vis its predictably unpredictable acts. By such acts, North Korea will garner the attention, frustration, and fear of the international community, which the DPRK hopes it can convert into diplomatic talks, either bi- or multilateral, which is a forum in which it can solicit economic and non-economic aid, a critically important factor given the dire internal conditions of North Korea today.
     
    2) What to look for now that North Korea has gone through with its nuclear test

    This is North Korea’s third missile test since 2006. There are two things that could be of potential risk going forward. First, whether the DPRK’s nuclear test was based on plutonium or uranium enrichment technology. While North Korea’s plutonium stockpile is relatively fixed and limited–thus placing a potential ceiling on the number of nuclear warheads it can produce with plutonium–a successful uranium enrichment nuclear test would signal that North Korea could continue with producing more weapons grade nuclear material for many years to come. Second, expect the DPRK to continue its saber rattling and brinksmanship, especially in the early days of South Korea’s new incoming president, Park Geun-hye, given the unique history between her father, Park Chung-hee (South Korea’s president from 1962-79) and the DPRK’s leadership in the 1960s and 1970s. In short, North Korea will test President Park’s mettle early.
     
    3) What to expect from North Korea now that it has conducted its third nuclear test?
     
    Expect North Korea to follow-up its nuclear test with further provocative acts, up to the very limit of what it thinks can be done without military repercussions. North Korea’s confidence in this respect is based on the international community’s interest in keeping the Northeast Asian region peaceful and stable. After all, if socio-political conditions deteriorate, international security as well as economic conditions can spiral downward quickly and rapidly, given that the Asian markets could turn into another “Asian contagion” effect based on such “black swan” event. The risk of North Korea’s stance is that things may go over the edge, purposely or accidentally, since the two Koreas are on high alert, akin to two sprung traps ready to snap at any given moment.
     
    4) More sanctions against a super-sanctioned state
     
    Several UN resolutions have been enacted against North Korea with little effect. This is not entirely surprising given that North Korea is a super-sanctioned state–that is, one of the world’s most sanctioned states. So more sanctions on top of a plethora of already existing sanctions will not likely be effective. As a Stalinist state, North Korea is seeking legitimacy and respect among its neighbors. Yet it also harbors a deep fear and suspicion of such neighbors. A carrot and stick approach of, for instance, a Reaganesque ramping up of military defense spending along with strategic carrots in the form of performance-based incentives and aid through verifiable and sustainable calibrated expected future behavior, for the benefit of both Koreas, among others, could be one step in the right direction.
     
     
     

    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).

     

     

    South Korea’s “lost generation” of youth? – 6 socio-economic challenges

    January 29th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    *(Q&A below is taken from a recent interview with a local South Korean broadcaster as of the date of this upload)
     
    1) Last year there were over 300,000 Korean college graduates, but only 18,500 jobs for them, what sort of impact is this having on the younger generation?
     
    It’s a case study where supply vastly trumps demand. So it’s a big hit economically for the younger generation trying to secure employment after graduation. This is especially impactful since typically it’s the first job after graduation that can often define a person’s career trajectory. What this statistic does not show is the “invisible” overlapping demand for the same types of jobs with the same bandwidth of companies and organizations. In Korea, there’s a singular mindset that being “successful” in terms of securing a job means working for one of the large conglomerates (Hyundai, Samsung, LG) or to become a government official (공무원). Since many young people still live with their parents until marriage or other event, this means that they are not as “economically squeezed” as compared to those seeking jobs in the US and Europe where independence is considered a relatively greater virtue.
     
    2) Due to the difficulty of securing entry-level jobs, many young South Koreans are giving up their dreams, taking low-paying temporary jobs and postponing marriage, how is this going to reshape the economy?
     
    South Korea’s youth employment challenges have led to a “lost generation” – which accounts for a sizable portion of the nation’s economy. Take the statistic that South Korea’s youth unemployment (those seeking jobs between the ages of 15-29) has more or less hovered around the 7% mark, nearly twice the number for the general population. What’s also interesting is the unique Korean cultural aspect to this equation, that many of the most qualified talent in Korea are not actively engaged in the labor markets since they are in “near constant test preparation” as a default, career in and of itself. This comes in the form of taking several years from employment to study and sit for either a company-specific or government entrance exam. As an example, the former Korean bar exam was notorious for its excessively low passage rate of 3-5%. Even successful bar exam passers had to sit for the bar three years on average. Japan has a similar “lost generation” phenomenon. In short, for contemporary South Korea, its youth will earn less, in a more volatile and changing job market, which will dramatically change South Korea’s socio-economic landscape in the near future.
     
    3) Many are unable to save up for their own house, let alone saving for retirement, how can the Korea, government continue to support an aging population which will no longer be able to support itself?
     
    Our Group has seen clear evidence that South Korea is one of the world’s fastest aging societies. Soon the demographic structure will be top heavy with senior citizens who are seeking public funds rather than contributing to them. As a result, the country will be hard pressed to figure out how to pay for such public benefits with a shrinking workforce, low fertility rates, and a super aging society. Ultimately, if no other solution is found, South Korea will simply have to go into debt (through the issuance of Korean government bonds in the open markets). But such funding scheme will only delay, not resolve, its fiscal woes.
     
    4) Students who study overseas are finding success in starting-up their own businesses abroad, is this a sustainable direction for the younger generation to follow?
     
    This would in essence mean a net outflow of South Korea’s best and brightest offshore. Many countries, including India and China, have benefitted from so-called “boomerang” talent–those who left the country to live and/or for education, but then return for one reason or another. The challenge in South Korea is that its culture is not a “risk taking” culture, rather, it’s defensively postured for secure “permanent” jobs with the largest corporations or the public sector. But having a critical threshold amount of boomerang talent could change this pivot towards a more offensively postured one that is more geared to making modern day South Korea a start up nation similar to the US and Israel (to name just a few).
     
    5) Considering South Korea’s e-commerce is the sixth largest in the world, why is the market so difficult for domestic start-ups to penetrate?
     
    The main, but not only, factor is the lack of true venture capital (VC) firms onshore in South Korea today. VCs exist in name, but in substance, the true “high risk, high reward” risk-taking, long-run spirit is still lacking. Also, a notable portion of start-up capital is sponsored (subsidized) through the government. As the former Harvard president and US Treasury Secretary, Larry Summers, once quipped, “The government makes a terrible venture capitalist.” This is because most start-up funding is based on the mindset that the invested company must go public (IPO) as soon as possible, so that the investor can be profitable in the short run. Maybe South Korea has a different interpretation of how to create a start-up nation, but our Group’s view is that the VC/angel investor must be patient and adhere to the “99 strike-outs for 1 home run” investment mindset.
     
    6) Are the economic difficulties for the younger generation, which was once the backbone of the Korean economy, likely to continue or is there hope ahead?
     
    Nobody knows for sure. But in a slow growth era, where governments are highly indebted, it looks like economic difficulties for the younger generation will continue. The one silver lining is that South Korea is highly tech-savvy, at least in terms of the products and physical landscape of Seoul. Further, its mindset, the nation’s operating system, has a chance to convert from the “Chosun Corea” mindset to the globally competitive “Global Korea” mindset, as more and more of the nation’s youth live, study, and work overseas and bring such perspectives back to their native ecosystem.
     
     

    re: North Korea and cyberattacks – 4 Factors

    January 17th, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    The Q&A below is taken from a radio interview with a local South Korean broadcaster (interview date: Jan. 17 ’13).

     
    1) How come North Korea is frequently accused of targeting South Korea’s cybersphere? What have been some of the major online attacks
    so far and what?

     
     For North Korea, engaging in cyberattacks represents a greater strategic advantage compared to traditional military or paramilitary attacks using armed military personnel, bombs, and aircraft.
     
     Today, South Korea’s JoongAng Daily (JAD) newspaper concluded that the hacking of its servers was in fact linked to North Korea. This was the fifth time an alleged North Korean cyberattacks were detected, following distributed denial-of-service (DDoS) attacks on websites of government agencies and financial institutions in July 2009 and March 2011; the hacking of Nonghyup’s banking network in April 2011; and additional hacking of email accounts belonging to students at Korea University in November that year. There were also alleged cyberattacks from the DPRK targeting South Korea’s Incheon International Airport that could have potentially caused confusion with the airport’s heavy air traffic as well as a relatively recent cyberattack on the GPS systems many Seoulites depend upon to navigate Seoul’s busy and often complicated street ways. More concerning, cyberattacks were also aimed at the Blue House and National Assembly. One estimate by the Hyundai Research Institute puts the loss value for FY 2009 alone at $33.7-50.5 million.
     
    2) How big of a threat is it to be attacked by North Korean hackers, assuming that their internet technology is far behind that of South Korea’s? Describe North Korea’s internet culture.
     
    No one really knows for sure, but as far as we can tell, there’s not much internet technology to speak of in North Korea, apart from a couple of universities, which are most likely closely monitored by the North Korean government. North Korea, much like South Korea, actively recruits top students to become part of the governments’s military cybercommand units. So it seems, in a sense, that all those hours of video gaming could actually pay off, since some overlapping skill sets exist.
     
    3) Cyberattacks are perceived by some to be less harmful than conventional military attacks. So should the public be fearful?
     
    Yes, since cyberattacks can often inflict just as much damage as attacks using “kinetic” weapons such as missiles, bombs, and bullets. For instance, a cyberattack could be aimed at an electric grid, which could then cut off the power source for hospitals in a city or country, wreaking havoc on the system.
     
    4) How does the global community or the international law under the UN Charter, specifically, properly address such cases of cyberattacks and cyberwar?
     
    As of now, little legal infrastructure exists to reflect the burgeoning capabilities of cyberattacks and cyberwar.
     
    Article 51 of the UN Charter, originally drafted right around the end of WWII, states that a state has the right to collective self-defense if “an armed attack occurs.” But this language was written when PCs and the internet did not exist. So the question becomes: Does a cyberattack inflicting military and/or non-military personnel constitute an “armed attack” under Article 51 of the UN Charter? If yes, then a state can in theory preemptively attack another state for purposes of collective self-defense, as was the case in the Middle East in the past when one state pre-emptively attacked another state
    s nuclear weapons production facilities, claiming self-defense.
     
    Expect more cyberattacks in the Korean peninsula for 2013–leading to greater potential economic and non-economic losses – it is the future of warfare in the 21st century, for better or worse.
     

    Business Law: Social Co-Op Law (South Korea) – 5 Things to Know

    December 6th, 2012  by  Asia-Pacific Global Research Group - Jasper Kim

    1) Can you explain what this new law that aims to help Korea’s social co-operatives is all about?
     
    Korea’s new social co-operative law allows certain non-profit organizations to register as social co-ops. Under Korean law, 2 types of cooperatives exist: general and social. Social co-ops operate as non-profits, in which 40% of the social co-ops business must be for the “public good.” Korea’s new law took effect on December 1, 2012.
     
    2) How does the system of operating social co-operatives work in Korea? How large of a system is it?
     
    Social co-ops is a business structure in which the entity’s employees (workers) are also its owners (as opposed to outside shareholders for public stock corporations in South Korea). The Korean government expects up to 10,000 of such new co-ops to be formed in the next 5 years, resulting in 40,000-50,000 new jobs.
     
    3) Do you believe that this law that supports social co-operatives will gradually resolve Korea’s mounting unemployment?
     
    The rise of social co-ops could only help, not hurt, the Korean economy. Social co-ops will particularly help at the bottom-up level, since most social co-ops in terms of employees and capital will be small and medium-sized firms. One socio-cultural and economic factor that represents a policy challenge is that the majority of Koreans still much prefer to work at Korea’s mega-comglomerates (chaebol), at times even forgoing employment opportunities with smaller firms in a country that still has the mindset of “bigger is better.”
     
    4) What do you think is behind government efforts to protect small and medium-sized businesses? Do you think that the government is favoring small merchants because of increased concerns created by wholesale monopoly?
     
    The current socio-political buzzword in South Korea today is “economic democratization.” One interpretation of this is redistribution of profits more towards smaller firms. This is where social co-ops and Korea’s new social co-op law can play a role. The social co-op law also provides the following for recognized social co-ops: 1) possible receipt of government benefits (subsidies) 2) can participate in government projects; and 3) avoids regulation of Korea’s fair trade law (although as small economic entities, this issue would arguably not be highly problematic). In essence, the social co-op law is one (of many) legislative efforts by the government to “flatten the economic playing field.”
     
    5) Can you give us a comparison with co-operatives in other countries? What is their agenda and how do they work? And do you think their system can be applied to Korea?
     
    The concept of co-ops has existed for years. The large US hotel chain, Best Western, and ACE Hardware are examples of certain types of existing co-ops that also represent highly recognized brands worldwide. South Korea also has existing co-ops involving a wide variety of goods and services such as chauffeur-drivers and foundations offering discounted/free lunch programs.
     
     
    The author is book editor of: Korean Business Law: The Legal Landscape and Beyond
     
     

    Education: The Rise of South Korea’s “corporate colleges” (Asia-Pacific Global Research Group – blog report)

    November 28th, 2012  by  Asia-Pacific Global Research Group - Jasper Kim

    1. LG Electronics as well as Hyundai Department store, two of the most prominent Korean conglomerates, opened their so-called “corporate colleges” last month. And I’m sure this sounds pretty foreign to many of us… Could you tell us a little bit about what these are?

    Students attending these so-called “corporate colleges” typically spend half of their day studying regular subjects and the other half working or receiving specialized job training. Accepted students are promised to have a full-time job at the company when they graduate. Most if not all of the programs are highly subsidized, sometimes free of charge.
     
    As one example, Hyundai Department Store will offer up to 450 hours of classes a year focused on teaching knowledge and skills necessary for retail workers. Hyundai’s corporate college has already accepted 31 high school graduates and has promised to hire them on a full-time basis after they complete the two-year program, which starts next year. The corporate college also offers a graduate-school-level program specializing in marketing, setting a new precedent. LG Electronics has decided to run 14 programs for 1,500 trainees a year.
     
    2. Are these corporate college programs linked to private sector Korean corporates backed by the government? What’s the government’s response to these novel institutions of education?
     
    South Korea’s Ministry of Employment and Labor is very supportive and cooperative. . Labor Minister Lee Chae-pil has stated: “Schools like these will help recruiters focus more on the practical abilities of job applicants [rather than just looking at their educational background]… We encourage large companies to build a quality labor force through operating such educational facilities.” The same Ministry plans to cover at least 80 percent of the education fees. It has also given the companies the freedom to weight the content of their curricula in favor of their specific industry or niche. The government is preparing to open up to eight more corporate colleges this year. “We want to show job seekers who only have a high school education that they can still pursue higher education while working,” said Park Sang-yoon, an official at the Labor Ministry’s human resources department.
     
    3. Are there other examples of models resembling ‘corporate colleges’ in different countries that are trying to deal with similar problems of unemployment and underemployment? Or is this a unique case?
     
    Corporate colleges outside of South Korea are still the exception, rather than the norm. But examples still exist. For instance, Pearson, the parent company for the Financial Times newspaper will launch Pearson College beginning September 2013. Admitted students will be given internships and a mentor, which will most likely link with Pearson’s many subsidiaries. Students still must pay tuition, but they are granted a final degree, validated by the University of London.
     
    4. What are some potential practical problems that you foresee with an alternative education system like this?

    Corporate colleges do not award an official degree, so it is no guarantee of getting a job at companies outside the one sponsoring the school. The education will also be very industry and company specific. So the skill sets learned will probably not be very transferable to other companies in and outside the industry. Still, a subsidized education linked with internship and job prospects will be very appealing for many, but not all, parts of the population.
     
    5. Do you think the attention and governmental support that corporate colleges are receiving, in conjunction with the bad rap traditional universities are getting for low employment figures among graduates, etc, will pressure those standard universities to take on reforms? If so, what kind?

    For many South Korean universities, the perception will be that corporate colleges are not a threat, namely for the reasons stated earlier, particularly that no degree is conferred to students. However, many local universities are becoming more focused on practical training. But this can be a challenge since many faculty are theory-based, rather than practice-based. The challenge is to blend both together for the benefit of the student (and future member of the global working population).
     
    6. As an educator and as someone who writes and speaks about education, does this give you cause for concern — the corporatization of education? Education being, in a way, defined and subsidized by moneyed interests?
     
    It does not. Rather, it gives hope to those who may not normally be able to receive education beyond high school, especially for the economically disenfranchised. In our free market system, the more choices the better. If the system of corporate colleges don’t work, then it can be eliminated later on.
     
     

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