Korean Economy

ONE NATION, UNDER THE CHAEBOL

by Third Bass

Aweek ago a friend passed on an intriguing post from the Global Voices website about a new piece of proposed legislation seeking to strike back at Korean consumers taking their business overseas. It appears that,  in order to skirt the significant markups on consumer electronics, younger consumers are increasingly utilizing overseas internet retailers such as Amazon, and this is creating quite a bit of consternation among the denizens of Korea Inc. For those that reside in the ROK, the atmospheric prices―relative to those in the U.S. at least―of computers, smartphones, speakers, autos, clothing, etc., is hardly shocking news. However, those unacquainted with shopping in Korea may be puzzled to learn that even Samsung, LG and Hyundai products sell at prices often two to three times greater than those charged in the U.S. market. In fact, one disgruntled Korean consumer cited in the story points to a Korean brand TV selling for roughly $5,900 in Korea and $1,550 in the U.S. This difference is stark. 

Toldya

This blog has taken some grief for its analysis regarding the Korean Won, the Japanese Yen, and the fact that Korean chaebol have done well in no small part due to the incredible Yen strength.

Let’s take a look, shall we?

The KOSPI hasn’t moved over this last two years.

Now, this is the Nikkei (Japanese stock market), which is now at a 5-year high.

And now, the punchline:  this is the KRW/JPY exchange rate.  The lower the number, the stronger the Korean Won, compared to the Japanese Yen.

Giving Credit Where Credit is Due
Those who have read this blog in the past know this fact: the Seoul Gyopo Guide is no apologist for the Korean government. However, you should make no mistake, the Bank of Korea deserves an A PLUS for its behavior and prudence under the strangest confluence of internal and external factors influencing its economy, and therefore, the Korean people. I repeat: the Bank of Korea has had the right, the obligation, to maintain its wait-and-see approach with respect to interest rates. Today, surprisingly, the Bank of Korea moved, and reduced interest rates by 25 basis points, from 3.25% to 3.00%.

This Is NOT An Personal Vendetta Against Japan, Nor The Japanese
Let’s get this straight. Japan has accomplished the near-impossible. No natural resources, surrounded by no allies to speak of, and thousands of miles away from the largest developed markets, Japan had, at one time, grown to the second largest economy in the world, with less than half the population of the U.S., the world’s largest economy. But things change, and the decline of Japan is akin to the train wreck that no can help but to watch. The Seoul Gyopo Guide has pointed this out on many occasions. And while the Japanese language is easy for native Korean speakers to learn, this blog has stated that learning Japanese is a huge waste of time.

Charged With Embezzlement? Meh, Move Along…
You have to laugh, or else you will cry. The mK Business Daily reported that SK Group Chairman Chey Tae-won has been appointed to the Hynix board of directors. HUH? Now, as the largest shareholder of Hynix, there is no doubt that someone from SK Group deserves a place on the board. Zero doubt. However, does it need to be SK Group Chairman Chey, the same one that is being charged with embezzling almost USD 90,000,000 from SK, and its shareholders? By the way, those shareholders? Koreans, and most likely also Korea’s National Pension Fund. Just to get this straight: a person being prosecuted by the police, which is supposed to protect the inhabitants of Korea, are being laughed at by a company owned by the citizens of Korea. Looks contorted right? That is because it is.