Korean IT Firms Benefit from the Won's Decline

Korea's leading IT exporters are benefiting from the recent decline in the value of the Korean Won.  According to an article in today's Korea Times, the Won this week fell to as low as 1,062.6 per dollar, the weakest since December 2004.  A source at Samsung Electronics estimated that "if the exchange rate drops 10 won, we expect won-denominated sales to rise 300 billion won."  Exports account for 80 percent of Samsung's sales. In the second quarter, the electronics giant reaped an additional 300 billion won in sales thanks to the weakening won, sources say. LG Electronics benefits in a similar fashion.  "When the won-dollar rate drops 10 won, then we expect to gain some 70 billion in won-denominated sales," an LG spokesman said. 

However, the changing value of the won is a double-edged sword.  South Korea's airlines, steel makers and oil refiners, are suffering from the weaker won in the wake of surging prices for imported raw materials.

Kenichi Ohmae on Dodkdo 독도는한국땅 입니다!!

I read with great interest in yesterday's Chosun Ilbo English edition that Kenichi Ohmae, Japan's well-known management expert and futurologist suggests Japan should recognize Korea's effective control of Dokdo. In a Japanese weekly publication, Omae said no nation which failed to occupy territory effectively has obtained it through dialogue between parties concerned or UN arbitration. Everybody knows that a war, the only means possible, is not suitable as a way to solve the Dokdo issue. For a moment, I thought that this was going to be an enlightened statement on the issue by a well-known person from Japan. Then I read that Ohmae had stressed Japan should "continue claim" over the islets, while recognizing Korea's effective occupation, but without criticizing or irritating Korea. He further suggested that, in the future it was necessary “to expand the East Asian economic sphere by skillfully pulling China and Korea into it." Japan, he wrote, "should build a hypothetical great power in the future, when the meaning of national territories will become blurred." What this amounts to, in part, is that Ohmae is suggesting Japan can lay claim to Dokdo in cyberspace. What else will Japan lay claim to in the future? What about the future of history? In one sense the information age may blur the meaning of national territories or boundaries, but at the same time it will offer an opportunity to preserve and protect the memories and history of what actually happened over the past several centuries and more.

South Korea Ranks 3rd Among OECD Countries in "Readiness for Globalization"

Ready for Globalization?  Global Benchmark Report 2008 is the fourth in a series of reports giving the Danish Confederation of Industry's annual assessment of the development in the business environment and the performance of the individual OECD member countries.  I must admit that I was somewhat surprised that South Korea, overall, ranked third among the countries studied.  The report includes 84 international benchmarks and provides a picture of the strengths and weaknesses of the OECD countries in the global economy.   On balance it is quite a laudable accomplishment for The Republic of Korea and a closer look at the report is quite revealing.  The report compares the performances of 29 OECD countries and their business environments.

The comparison is based on 84 indicators divided into six main sections as indicated in the accompanying graphic (click to see a full-size version of the graphic).  Across all of the benchmarks, South Korea had more top-3 rankings than all other countries, except for Switzerland and Iceland.  This is shown in the second graphic to the left.  One can read through the entire report to get a sense of where Korea ranked high and where it was low.   It ranked high on measures of growth and development, but low, for example on labour productivity.  Korea came out number one among the 29 countries in the benchmark of knowledge and competence, based on average rankings using 23 separate indicators. This is shown in the third accompanying graphic.   As the report explains, The strengths of South Korea include a large share of youth completing a secondary degree, a large share of students in science and engineering and a high patent productivity.  One interesting measure shows that South Korea led all OECD countries in the share of 25-34 year olds with an upper secondary education as of 2005.  It ranked number three in the share of 25-34 year olds with a tertiary education.

And, it ranked second to the United States in terms of expenditure on educational institutions as a percentage of Gross Domestic Product.  Notably, South Korea ranked in the bottom five in terms of Labor Regulations as of 2007.  The assumption of the report being that a low degree of labor regulation helps business adapt to changes.  Not surprisingly, it ranked at or near the top in measures of broadband and internet use.  Finally, it is of interest to note that South Korea ranked last on the measure of "Cultural Openness" as shown in the final graphic below, and next-to-last on a measure of "Discrimination Towards Race, Gender, Etc." in 2007.   There is much more in the full report, which can be downloaded as a pdf file using the link at the start of this post.

Google Translate Tool Added to This Blog

For the convenience of many Koreans who view this site, and other visitors from around the globe, I've added the Google Translate tool in the right-hand navigation area. Just choose 한국어 or another language from the pop-up menu and the page will automatically be translated for you. As you all know, machine translation is far from perfect and has a long way to go. However, it seems to be improving, and it offers a useful starting point for translating any of these posts into Korean. I hope you enjoy using this service and would appreciate any comments.

China Biggest Threat to Korean Intellectual Property

In a prior post dealing with Korea, Patents, Shift in Innovation Hubs I noted South Korea's growing interest in its own intellectual property.  Now, an article in this morning's Chosun Ilbo notes that China is the biggest threat to Korean intellectual property.  A survey was conducted by Gallup Korea for the Korean Intellectual Property Office (KIPO) on the overseas intellectual property cases of 1,202 domestic firms. Some 65 percent of all cases happened in China, and 12 percent each in Taiwan and in the United States. By sector, 24 percent of breaches happened in electrics and electronics, 22 percent in machinery and 21 percent in textile and clothing.  A KIPO official noted that “While the number of intellectual property infringement cases of Korean products is decreasing in other countries, it is rising in China."