November 17, 2024

You are here: Home / Archives for south korea

For Migrants, New Land of Opportunity Is Mexico

September 21, 2013 by

Rising wages in China and higher transportation costs have made Mexican manufacturing highly competitive again, with some projections suggesting it is already cheaper than China for many industries serving the American market. Europe is sputtering, pushing workers away. And while Mexico’s economy is far from trouble free, its growth easily outpaced the giants of the hemisphere — the United States, Canada and Brazil — in 2011 and 2012, according to International Monetary Fund data, making the country more attractive to fortune seekers worldwide.

The new arrivals range in class from executives to laborers; Mexican officials said Friday that residency requests had grown by 10 percent since November, when a new law meant to streamline the process took effect. And they are coming from nearly everywhere.

Guillaume Pace saw his native France wilting economically, so with his new degree in finance, he moved to Mexico City.

Lee Hwan-hee made the same move from South Korea for an internship, while Spanish filmmakers, Japanese automotive executives and entrepreneurs from the United States and Latin America arrive practically daily — pursuing dreams, living well and frequently succeeding.

“There is this energy here, this feeling that anything can happen,” said Lesley Téllez, a Californian whose three-year-old business running culinary tours served hundreds of clients here last year. “It’s hard to find that in the U.S.”

The shift with Mexico’s northern neighbor is especially stark. Americans now make up more than three-quarters of Mexico’s roughly one million documented foreigners, up from around two-thirds in 2000, leading to a historic milestone: more Americans have been added to the population of Mexico over the past few years than Mexicans have been added to the population of the United States, according to government data in both nations.

Mexican migration to the United States has reached an equilibrium, with about as many Mexicans moving north from 2005 to 2010 as those returning south. The number of Americans legally living and working in Mexico grew to more than 70,000 in 2012 from 60,000 in 2009, a number that does not include many students and retirees, those on tourist visas or the roughly 350,000 American children who have arrived since 2005 with their Mexican parents.

“Mexico is changing; all the numbers point in that direction,” said Ernesto Rodríguez Chávez, the former director of migration policy at Mexico’s Interior Ministry. He added: “There’s been an opening to the world in every way — culturally, socially and economically.”

But the effect of that opening varies widely. Many economists, demographers and Mexican officials see the growing foreign presence as an indicator that global trends have been breaking Mexico’s way — or as President Enrique Peña Nieto often puts it, “the stars are aligning” — but there are plenty of obstacles threatening to scuttle Mexico’s moment.

Inequality remains a huge problem, and in many Mexican states education is still a mess and criminals rule. Many local companies that could be benefiting from Mexico’s rise also remain isolated from the export economy and its benefits, with credit hard to come by and little confidence that the country’s window of opportunity will stay open for long. Indeed, over the past year, as projections for growth have been trimmed by Mexico’s central bank, it has become increasingly clear to officials and experts that the country cannot expect its new competitiveness to single-handedly move it forward.

Article source: http://www.nytimes.com/2013/09/22/world/americas/for-migrants-new-land-of-opportunity-is-mexico.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

South Korean Court Tells Japanese Company to Pay for Forced Labor

July 30, 2013 by

The high court in Busan, the port city in southeastern South Korea, ordered the Japanese company to pay $71,800 to each of the five Koreans.

It was the second such ruling this month. On July 10, the Seoul High Court ordered Nippon Steel Sumitomo Metal Corp. of Japan to pay $89,800 to each of four South Korean plaintiffs in unpaid salaries and compensation for forced labor during the colonial rule from 1910 to 1945.

Nippon Steel and Mitsubishi planned to appeal the decisions.

The Busan court said in its ruling that Mitsubishi forced the South Korean plaintiffs to “toil in poor conditions in Hiroshima and yet failed to pay wages,” and “did not provide proper shelters or food after the dropping of an atomic bomb” there in 1945.

The five plaintiffs in the Mitsubishi case were all deceased and their families represented them.

The rulings against Nippon Steel and Mitsubishi were the first in favor of South Koreans in a 16-year-old legal battle waged in Japan and South Korea, and it could trigger similar lawsuits from other victims or their families. At least 1.2 million Koreans were forced to work for Japan’s war efforts in Japan, China and elsewhere, according to historians here.

“While we have not confirmed the details of the ruling, we understand that all such claims between the two countries, including compensation for interned laborers, have been completely and conclusively settled under official state agreements,” a spokesman for Mitsubishi Heavy Industries said in a statement.

“A ruling that goes against these agreements has no legitimacy and is truly regrettable,” he said.

South Korean victims first filed compensation lawsuits in Japan in 1997. Japan’s top court ruled against them in 2005, saying that the issue of compensation for forced labor was closed under the 1965 treaty that normalized diplomatic ties between Japan and South Korea. The government in Tokyo maintained the same position.

The victims had suffered setbacks in their lawsuits in South Korea, as the local judges honored the rulings by the Japanese courts. But in a landmark decision in May last year, South Korea’s Supreme Court overturned their rulings and sent the cases back to the lower courts, saying that the Japanese courts’ verdicts went against the constitution of South Korea and international legal norms.

“We have two different rulings on the same cases in two different countries,” said Chang Wan-ick, a lawyer and leading advocate for South Korean victims. “The civilized societies around the world will know which ruling is right: Mobilizing civilians for forced labor for a war of aggression is wrong.”

If the rulings against Nippon Steel and Mitsubishi are upheld by the Supreme Court in South Korea and the Japanese companies still refuse to compensate the plantiffs, the victims could try to have the Japanese companies’ assets in South Korea confiscated — a move that would certainly escalate into a diplomatic spat.

On Tuesday, the South Korean bar association urged the Japanese companies and Tokyo and Seoul to avoid such a confrontation by establishing a foundation to compensate the victims and promote “historical reconciliation.”

The Foreign Ministry of South Korea said it was closely monitoring the civil cases.

About 300 Japanese companies currently in operation were believed to have used forced labor during the colonial period, according to South Korean officials.

Article source: http://www.nytimes.com/2013/07/31/world/asia/south-korean-court-tells-japanese-company-to-pay-for-forced-labor.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

G.M. Workers in South Korea Plan a Walkout

June 27, 2013 by Leave a Comment

The partial walkout would punctuate annual wage talks that began in April. G.M.’s chief executive, Dan Akerson, and other executives have raised concerns about a further increase in labor costs partly because of wage lawsuits filed by G.M.’s South Korean workers.

But G.M.’s South Korean union has said its “cost per vehicle” is half that of Australia and lower than several other peers, including Russia.

The union was also angered by G.M.’s decision not to produce the next-generation Cruze compact in South Korea, which prompted fears about a potential restructuring of the unit.

Last week, 79 percent of union members at G.M. Korea voted in favor of striking. Union leaders decided late Wednesday to hold a partial strike for six hours July 4 and to refuse overtime and weekend work for now, said Choi Jong-hak, a union spokesman.

He said union leaders would decide whether to continue the partial strike depending on progress in the wage talks. “The management did not come up with any concrete proposal during yesterday’s talks,” he said. “It will be difficult to reach a deal, and we are likely to continue the strike.”

From July to September last year, G.M. Korea suffered its biggest strike since it was created in 2002, resulting in lost production of 40,000 vehicles.

G.M.’s South Korean unit makes more than 4 of every 10 Chevrolet-branded vehicles sold globally and supplies almost all Chevrolets sold in Europe.

It also produces vehicle kits for assembly in China and other emerging markets. The unit exports the Opel Mokka sport utility vehicle to Europe and the Chevrolet Spark minicar to the United States and other markets.

Under the annual wage talks, G.M. Korea’s union negotiators have called for a bonus equivalent to three months’ salary and a one-time payment of 6 million won, or $5,300, as well as a basic salary increase of 130,500 won.

The two sides have also locked horns over a new shift system that will eliminate overnight work at the beginning of 2014, with the union demanding that management make up for reduced wages resulting from fewer work hours.

The union is also calling for the company to produce the revamped Cruze as well as other next-generation models in South Korea and to have the unit continue to play a key role in engineering and designing G.M.’s mini- and small cars.

The spokesman for G.M. Korea, Kim Byeong-soo, said: “Wage talks are still under way. We hope to expedite negotiations to reach a deal and avoid production losses.” He added that the annual wage pact was traditionally reached by early August.

On May 28, Hyundai Motor, South Korea’s biggest automaker, and its labor union started their annual wage talks. The union is demanding a bonus equivalent to eight months’ salary and an extension of the retirement age to 61, among other things.

Article source: http://www.nytimes.com/2013/06/28/business/global/gm-workers-in-south-korea-plan-a-walkout.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Economic View: Emerging Markets, Hitting a Wall

June 22, 2013 by Leave a Comment

A GROWTH slowdown in the so-called BRICS nations — Brazil, Russia, India, China and South Africa — could be impeding the expansion of the global economy. That’s serious enough, and indeed we are seeing unrest in Brazil over stagnant living standards. Yet a graver problem may be lurking behind the headlines — namely, that sustained, meteoric growth in emerging economies may no longer be possible.

The disconcerting truth is that the great “age of industrialization” may be behind us, a possibility that has been outlined most forcefully by the economist Dani Rodrik, who is leaving Harvard for Princeton next month. And evidence for this view is coming from at least four directions:

THE RISE OF AUTOMATION First, machines can perform more and more functions in manufacturing, and sometimes even in services. That makes it harder to compete via low wages.

Say you run a company in a developed nation and have been automating many of its processes. Because your total bill for employee wages would be low, why not choose the proximity and familiarity of investing in labor in or near your home country? This change would help the jobs picture in the United States and probably countries like Mexico, but could hurt many other lower-wage nations.

GLOBAL SUPPLY SOURCES Supply chains are now scattered across many countries. Think of the old development model as a nation, such as South Korea, trying to build a nearly complete domestic supply chain for its automobile and other industries. The newer model is more distributed, as reflected by the iPhone, with the bounty from the investment spread across many locations, including the Philippines, Taiwan and mainland China. As for cars, Thailand has courted automobile factories with success, but the parts usually come from outside the country and the benefits for the Thai economy are limited.

Richard Baldwin, professor of international economics at the Graduate Institute in Geneva, refers to the internationalization of the supply chain as “globalization’s second unbundling.” He sees the new world as one of “development enclaves,” in which parts of countries will stand out as advanced or wealthy, without fundamentally transforming the entire economy.

WIDER ECONOMIC GAPS Another barrier is the difficulty of sustaining a cultural vision for catching up economically. South Korea was a poor nation in the 1960s, and its economic rise required sacrifices from millions of people in work hours, savings and investment in education. But within 20 years or so, one could see that South Korea would most likely join the ranks of economically developed nations. Indeed it has, so these sacrifices yielded satisfaction within a reasonable time. Many of today’s poorer nations seem to be more than 20 years away from competing with the global leaders, which are now themselves more advanced, and that slower and longer path to the top may discourage some countries from even trying.

AGING POPULATIONS Finally, many lower-income countries will be old before they are rich. China’s population, for example, is aging rapidly, given the government’s one-child policy and the decline in birthrates that accompanies rising income. It is less well known that fertility rates in much of the Middle East and North Africa are also falling rapidly. In Iran, for example, it is now estimated at 1.86 per woman, which over time would mean that families are not replenishing themselves. And shrinking and older populations, of course, limit future economic growth.

BY no means do these arguments mean that the living standards of poorer nations must stagnate. A country can improve the lot of at least some of its citizens by selling services, as seen in the relative prosperity of Bangalore, India, which, among other activities, runs call centers and sells many programming services online. Many African nations are marketing their resource wealth, and may also improve productivity in local agriculture. Virtually all poor nations eventually benefit from the innovations of wealthy nations, which they often receive at much lower prices, as seen with cellphones and medications, for example.

So the chances for progress remain, but those poorer nations might never “become like us.” There was something special about the 20th-century mix of widespread, well-paying manufacturing jobs, which enabled the rise of a middle class that would take significant control of government, through its roles as voters and taxpayers. Those manufacturing jobs also created strong incentives for many people to pursue traditional education, whether in Toronto or Tokyo.

The best guess is that the idea of economic catch-up has changed, which means that politics in developing nations could change, too. Just as inequality in income and wealth has been rising in the United States, newly growing nations find themselves in a more stratified world, without developing their own strong egalitarian histories to undergird political institutions or economic expectations. Many of the wealthy may produce their public goods — like secure streets and clean, beautiful parks — in gated communities.

In some countries, there may be a de facto “rule by consent” from abroad — if, for instance, you are an African working in a Chinese-owned mine and living in a company town, while receiving your vaccines from a Western nonprofit organization. Those phenomena might not fit our current notions of national pride very well — and might mean further splits within developing nations.

Indeed, the future path of developing countries could be much different from that of recent, high-growth success stories. The next set of emerging-market winners, for example, may retain very large pockets of poverty. And as the expectation of a single, common path for economic development fades, governments may need to rethink what they can accomplish — and how.

In any case, we should be prepared for the possibility that, while Seoul now looks a fair amount like Los Angeles, perhaps La Paz, Accra and Dhaka will never look much like Seoul.

Tyler Cowen is a professor of economics at George Mason University.

Article source: http://www.nytimes.com/2013/06/23/business/emerging-markets-hitting-a-wall.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

North Korea Pulls Workers at Plants It Runs With South

April 8, 2013 by Leave a Comment

The Kaesong industrial complex, in the North Korean border town of the same name, operated for eight years despite political and military tension, including the North Korean artillery attack on a South Korean island three years ago. North Korea’s decision to withdraw its workers, although it called the move temporary, presented the most serious challenge to its viability.

North Korea “will temporarily suspend the operations in the zone and examine the issue of whether it will allow its existence or close it,” the country’s official Korean Central News Agency quoted Kim Yang-gon, a secretary of the Central Committee of the North’s ruling Workers’ Party of Korea, as saying after visiting Kaesong on Monday. The North’s final decision will depend on the Seoul government’s attitude, he said, making it clear that Pyongyang was using the future of the factory park to pressure Seoul for political concessions.

South Koreans had hoped that the North’s growing dependence on the complex as an important source of hard currency would provide Seoul with leverage on the North’s recalcitrant leadership and a possible buffer against military conflict. But the North’s decision on Monday indicated that Pyongyang was subordinating financial gains to political and military priorities in the crisis, analysts said.

Hours earlier, South Korea said it had no intention of talking with North Korea. Doing so amid a torrent of North Korean threats to attack Seoul and the United States with nuclear weapons would be tantamount to capitulation and would only embolden the North’s brinkmanship, officials here said. “If the Kaesong project is stopped and we have to pull our workers completely, it will be a tremendous setback to South-North relations,” Unification Minister Ryoo Kihl-jae of South Korea said during a parliamentary hearing. “If we can bring about concrete results through dialogue, perhaps we will swallow our pride and start dialogue, but this is not such a time.”

“We don’t need photo-ops or talks for talk’s sake,” he said.

North Korea has blocked South Korean managers and cargo trucks from crossing the heavily armed border to Kaesong for six days to protest United Nations sanctions and joint military drills that the United States and South Korea are conducting on the Korean Peninsula. The blockade quickly dried up the fuel, food and raw materials for 123 South Korean factories there, forcing 20 of them to stop operating as of Monday, even before the North’s decision to pull out its workers.

More than 470 South Koreans remained in Kaesong on Monday, hoping that the North would lift the blockade. Long lines of South Korean trucks loaded with supplies for the Kaesong factories were stalled at the border on Monday, waiting in vain for the North to let them cross.

For nearly a decade, the complex, where South Korean factories hired North Korean workers and the North’s Communist authorities experienced the first taste of South Korean capitalism, has been held up as a test case for how reunification of the two Koreas might look. The factories, near the western edge of the border, produced $470 million worth of textiles and other labor-intensive products last year.

As relations deteriorated in recent years, however, the factory park has also become controversial in South Korea. Some conservative South Koreans argued that the complex, which generates $90 million a year in wages for the 53,000 North Koreans employed there, helped undermine the impact of United Nations sanctions by extending a lifeline to the North Korean regime, which the South blamed for the island attack and the 2010 sinking of a South Korean warship that killed 46 sailors.

North Korea’s threat this month to close the complex was met with skepticism from some news media analysts who indicated that the North’s leader, Kim Jong-un, would not want to risk an important source of hard currency. North Korea was enraged, claiming on Monday that it “gets few economic benefits from the zone while the South side largely benefits from it.”

Mr. Kim “is not accountable to his people, and thereby can afford to raise tension almost indefinitely at a great cost to his own people,” said Lee Sung-yoon, a North Korea specialist at the Fletcher School of Law and Diplomacy at Tufts University in Massachusetts, recalling that the government did not change its policy even after a famine killed an estimated 10 percent of its population in the mid-1990s.

Jang Sung-min, a North Korea expert at the World and Northeast Asia Peace Forum in Seoul, noted that the decision to pull out North Korean workers was announced not by the hard-line military but by Kim Yang-gon, who is in charge of relations with Seoul.

“This is a shocking way of forcing South Korea to offer dialogue with the North,” Mr. Jang said. “I don’t think Kim Jong-un wanted to lose the project.”

South Korea “deeply regrets” the North Korean move, the Seoul government said in a statement.

“North Korea will be held responsible for all the consequences,” it said. “We will calmly but firmly handle North Korea’s indiscreet action, and we will do our best to secure the safety of our people and the protection of our property.”

North Korea has issued a daily barrage of bellicose language since early March, denouncing the United States and South Korea for the joint military drills and for spearheading the United Nations’ sanctions after a nuclear test in February, its third.

In the past week, North Korea appeared to move beyond just talk. It told foreign embassies in Pyongyang to consider evacuating their personnel because of rising tensions, and it moved one of its medium-range missiles to its east coast for a possible test launching, which South Korea said could happen as early as this week.

Article source: http://www.nytimes.com/2013/04/09/world/asia/north-korea.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Tensions With North Korea Unsettle South’s Economy

April 5, 2013 by Leave a Comment

The development magnified the challenge Seoul and Washington face. The two powers are trying to show the North’s novice leader, Kim Jong-un, that they will not be blackmailed by his bluff and bluster. But at the same time, they do not want to escalate the tensions to an extent that they hurt the South Korean economy, the pride of the local population here, and Park Geun-hye’s political standing at home.

“In the past, North Korea-related events had little impact or the markets recovered quickly,” the South’s vice finance minister, Choo Kyung-ho, told a meeting of top finance officials on Friday. “But recent threats from North Korea are stronger and the impact may therefore not disappear quickly.”

His comment came hours after General Motors’ chief executive, Dan Akerson, underscored the increased worry by saying that his company was making contingency plans for employee safety at its South Korean plants and that further increases in tensions would even prompt GM to look at moving production elsewhere long term. In an interview with CNBC, he said, “If there were something to happen in Korea, it’s going to affect our entire industry, not just General Motors.”

South Korean stocks slumped 1.64 percent on Friday in a selling spree among foreign investors that analysts attributed to jitters over North Korea. The Korean won also sank against the U.S. dollar.

Although South Koreans have become almost nonchalant after decades of on-and-off threats from North Korea, they believe that when things get ugly with the North, their globalized economy has much more to lose than the North’s isolated and already highly sanctioned economy.

“The North Koreans are now using the propaganda in an extreme form to try to damage foreign direct investments into South Korea,” said Tom Coyner, a member of the American Chamber of Commerce in Korea and author of “Doing Business in Korea.” “They are in a sense at this point winning in an asymmetrical psychological warfare, attacking the economic strength of South Korea.”

War cries from North Korea have been factored into the stock market for decades. Still its threats have grown in their intensity and frequency since the country upheld Mr. Kim as its top leader in late 2011, and especially after the United Nations imposed sanctions against the North following its nuclear test in February. The sanctions took direct aim at North Korea’s Achilles’ heel by targeting cash transfers and luxury items which the Kim regime uses to buy the loyalty of the elite.

North Korea has since called the Korean Peninsula “back to a state of war” and declared that it would launch “pre-emptive nuclear strikes” at the United States and its allies. It also said it would never bargain away its nuclear arsenal but rather expand it.

What made the situation different too was the way Washington and Seoul responded. South Korea matched the tone by declaring that if provoked, it would target the North Korean military leadership, and revised the rules of engagement to let its military respond more swiftly, forcefully and “without political consideration.” Meanwhile, the United States flew nuclear-capable bombers over the peninsula on training sorties and signed an agreement with Seoul to respond jointly to any North Korean provocation.

“The relentless show of force on a daily basis by not just North Korea, but also the U.S. and South Korea as part of their annual military exercises has captured the attention of the world, and made the Korean Peninsula a place associated not with ‘Gangnam Style’ but with nuclear weapons and stealth bombers,” said John Delury, an American scholar who teaches at Yonsei University in Seoul.

“Markets hate risk, even if it is the perception rather than reality of risk,” he added. “This poses a serious challenge to President Park, who was elected on the basis of promises to keep growing the South Korean economy and improve relations with the North.”

Government officials said that the military tensions have so far had only limited impact on the markets. But for the South Korean economy, the North Korean imbroglio is an additional drag that comes at an inopportune time. In the face of the weakening Japanese yen, which hurts South Korean exporters, South Korea recently announced a sharp cut in growth forecasts.

Officials vowed to ensure stability if the situation worsens.

Article source: http://www.nytimes.com/2013/04/06/world/asia/tensions-with-north-korea-unsettle-souths-economy.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Off the Charts: For Markets, a Strong January Is a Good Sign

February 1, 2013 by Leave a Comment

That maxim of the American stock market would seem to bode well for the market this year. The Standard Poor’s 500-stock index’s gain of 5 percent made the month the 12th best January since 1950, and the 19th opening month in that period when the index rose more than 4 percent.

“If history repeats, we would expect a double-digit percentage increase in the upcoming 11 months,” said Richard Peterson, an analyst at SP Capital IQ.

Only once since 1950 has the market fallen in the last 11 months of a year when it rose 4 percent or more in January. That was in 1987, which began with the best January in the history of the index — up 13.2 percent — and ended including the worst single day ever for the index, a 20 percent plunge on Oct. 19.

On average since 1950, January gains of at least 4 percent have been followed by rises of 15.1 percent in the remainder of the year. Gains were lower when January gains were smaller, and on average the market has made no headway in years after prices fell in January.

There is, of course, no guarantee that history will repeat. In fact, during the Great Depression the opposite pattern existed. The market rose sharply during the first month of 1929, 1930, 1931 and 1934, only to plunge the rest of each year. Prices fell in the first month of 1935, which turned out to be an excellent year.

The January gains this year reflected generally strong markets around the world. As can be seen in the accompanying charts, all but two of the 20 largest stock markets in the world rose in January, and six of them — Japan, China, Britain, Switzerland, Sweden and Italy — rose more rapidly than the American market did. The two that showed losses were Brazil and South Korea.

The ranking of markets is based on World Bank calculations of total market capitalization of each market in 2011. More than half the capitalization of those 20 markets is in just the top three, the United States, Japan and China. The top five — Britain and Canada in addition to the other three — have two-thirds of the value.

The United States market is one of 10 that have more than doubled from their credit crisis lows set in 2008 or 2009, the others being Brazil, Germany, India, South Korea, Hong Kong, South Africa, Russia, Sweden and Mexico.

The only three countries in the group that are not at least 50 percent higher than their lows are all in the euro zone, where economies have been stumbling. They are France, Spain and Italy.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/02/02/business/economy/for-markets-a-strong-january-is-a-good-sign.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

South Korean Executive Imprisoned for Embezzlement

January 31, 2013 by Leave a Comment

SEOUL — The head of SK, one of the largest South Korean conglomerates and owner of the largest mobile carrier and biggest oil refiner in the country, was arrested in a Seoul courtroom Thursday after he was sentenced to four years in prison for embezzlement.

The court’s decision to have Chey Tae-won, 53, detained and dispatched to prison from the courtroom, pending his appeal, was highly unusual in South Korea, where judges have a reputation for being lenient toward powerful tycoons convicted of white-collar crimes.

Until recently, such tycoons rarely spent any time in prison, as courts most often not only did not arrest them but also suspended their prison terms, citing their “contribution to the economy” and fears that their absence from management might hurt their corporate empires, and by extension, the national economy.

Mr. Chey was convicted of embezzling 49.7 billion won, or $45.6 million, from the mobile phone company SK Telecom and another SK subsidiary, SK CC, in 2008. SK is the third-largest South Korean corporation by assets, after Samsung and Hyundai.

“I didn’t do it,” Mr. Chey said in the courtroom. “I only learned about this in 2010, and that’s all I can say.”

South Korean courts’ attitude toward white-collar crimes has begun changing recently amid mounting public calls for “economic democratization.” During the presidential election campaign in December, all major candidates, including Park Geun-hye, who is now president-elect, championed the political catchphrase. They vowed to stop the country’s conglomerates from squeezing smaller businesses through unfair business practices, fight a widening income disparity and ensure that tycoons convicted of corruption will be punished properly.

In February last year, Lee Ho-jin, the chairman of a relatively minor conglomerate called Taekwang, was sentenced to four and a half years in prison for embezzlement and was immediately jailed. In August, a Seoul court sentenced Kim Seung-youn, head of the Hanwha conglomerate, to four years in prison for embezzlement and also sent him directly to prison from the courtroom. (Mr. Kim was paroled this month when a court ruled his illness was serious enough for hospitalization.)

Mr. Chey is the highest-profile tycoon yet to have faced the tougher sentences being imposed by courts.

This is the second time he has been ordered imprisoned for corruption. In 2003, he was arrested on charges of bookkeeping fraud, but his prison term was suspended, and he was released.

“He used the subsidiaries under his control as a tool for his crime,” the presiding judge, Lee Won-beom, said Thursday. “We had to face our duty to deal sternly with his crime before considering leniency.”

Former President Park Chung-hee, the father of Ms. Park, the president-elect, nurtured a handful of family-controlled businesses with easy credit, subsidies, tax benefits and protection from foreign competitors during his rule in the 1960s and ’70s.

They soon grew into the conglomerates, known locally as chaebol, and led the rapid economic growth of South Korea. Today, the country’s 10 biggest conglomerates, mostly in the third generation of familial control, make up more than half the total value of the companies traded on the Korea Stock Exchange.

But the corporate behemoths have also faced repeated accusations of bribery, poor corporate governance and shady business deals, often to help the families of their chairmen accumulate wealth. The heads of seven of the country’s top 10 conglomerates, including Lee Kun-hee, chairman of Samsung Electronics, and Chung Mong-koo, the chairman of Hyundai Automotive, have been convicted of crimes like bribery, embezzlement and tax evasion. But none has spent more than a few months behind bars, as their sentences, usually three years in prison, were quickly suspended by judges and their criminal records erased in presidential pardons.

“We fear that the guilty verdict against Chairman Chey Tae-won may further stoke the anti-business sentiment widespread in parts of our society,” the Federation of Korean Industries, which speaks for big businesses, said in a news release Thursday.

Solidarity for Economic Reform, a civic chaebol watchdog, noted that four years in prison for Mr. Chey was hardly a tough punishment. Acknowledging widespread discontent, the Supreme Court recently recommended that a businessman convicted of embezzling about 30 billion won be sentenced to at least four years in prison. By law, a prison term of more than three years cannot be suspended.

“Today’s verdict is positive in that it broke the old pattern of giving a suspended three years’ prison term, but it still is the minimum punishment under the current guidelines by the Supreme Court,” the civic group said in a statement. “Our courts have two faces when it comes to punishing chaebol.”

Article source: http://www.nytimes.com/2013/02/01/business/global/01iht-embezzle01.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

ENI Announces Major Gas Find Off Mozambique

December 5, 2012 by Leave a Comment

Four of the five largest oil and gas discoveries in the world this year have been made off Mozambique, including three earlier finds by Eni, according to the consultants Wood Mackenzie in Edinburgh. These discoveries have the potential to put Mozambique, which previously had little oil and gas production, in the gas-exporting big leagues with countries like Qatar and Australia.

Although Eni is ranked only about eighth among Western oil companies in terms of output, with about 1.7 million barrels a day — about half the size of BP or Royal Dutch Shell — the company is a big natural gas player in Europe. And Eni is emerging as a leader in Mozambique exploration.

The newest finds, from the sixth and seventh wells that Eni has drilled there, add an additional six trillion cubic feet of gas to what the Italian company has already found. That is a large amount of gas but relatively incremental. It raises the total to 68 trillion cubic feet that Eni now says it has found in its Mozambique exploration concession, called Area 4, where Eni has a 70 percent shareholding.

Three other shareholders — Galp Energia of Portugal, Kogas of South Korea and ENH, Mozambique’s national oil company — each hold 10 percent.

The total amount discovered is equivalent to about 12 billion barrels of oil. A high proportion of the gas is likely to be recoverable, Eni said.

According to Eni’s estimates, its share of the Mozambique discoveries so far could be worth around $15 billion.

The Eni finds coincide with an effort by the company’s chief executive, Paolo Scaroni, to focus more on exploration and production, and less on transmission of natural gas in Italy. When you make a business of exploration and are successful, he said, “you make a huge amount of money.”

Eni first found gas in Mozambique last year, closely following a discovery by Anadarko Petroleum of the United States, which right now is Eni’s main competitor in the region.

The two companies are now negotiating with the government on a development plan.

The most profitable market for the Mozambique gas is likely to be exports to Asia as super-cooled liquefied natural gas, or L.N.G., on special ships. The Web site of the Instituto Nacional de Petróleo, the country’s energy regulator, has a presentation that indicates that as many as 10 L.N.G. conversion plants could be built, which would make Mozambique a significant player in the world gas market.

Mr. Scaroni said there could also be a role for an offshore floating L.N.G. conversion plant, a technology that Royal Dutch Shell is now developing for use off western Australia. Shell recently tried to buy Cove Energy, which had a small position in the Mozambique discoveries, but was outbid by Thailand’s PTT Exploration and Production.

Eni is not currently a major player in L.N.G. and may need help with the huge capital costs for developing the gas, which Mr. Scaroni put in the “tens of billions” of dollars.

Because Anadarko is not an L.N.G. specialist, either, it is widely thought in the industry that both companies will bring in partners.

Mr. Scaroni said he had been talking to potential partners “but we are fairly reluctant to strike a deal with anybody until we finish our exploration.”

A recent report by Bernstein Research says that Mozambique will be “Eni’s most significant project, although we do not expect production until 2019 at the earliest.”

The gas discoveries off Mozambique are contained in sandstone deposits in what were ancient river canyons, similar to those off West Africa and elsewhere.

What makes the Mozambique discoveries particularly rich is that the sandstone layers containing the gas are thick — as much as 300 meters, or nearly 1,000 feet — indicating sizable reserves.

“Mozambique is a very positive exploration story,” Mansur Mohammed, a Wood Mackenzie analyst, said. “We are talking about an unprecedented high exploration success rate that transformed the outlook for the region.”

This article has been revised to reflect the following correction:

Correction: December 5, 2012

An earlier version of this article misspelled the first name of ENI’s chief executive. He is Paolo Scaroni, not Paulo.

Article source: http://www.nytimes.com/2012/12/06/business/energy-environment/eni-announces-major-gas-find-off-mozambique.html?partner=rss&emc=rss

Filed Under: Business News Tagged With: , ,

Honda Cuts Full-Year Outlook Over Anti-Japan Sentiment in China

October 29, 2012 by Leave a Comment

The cut, prompted by a slump in sales amid often-violent protests in a dispute about the ownership of islands in the East China Sea, raises the possibility that Honda’s bigger Japanese rivals, Nissan Motor and Toyota Motor, may follow suit when they report quarterly earnings early next week.

“It’s likely Toyota and Nissan are going to cut forecasts in the same way. A cut was to be expected because the problems with China weren’t factored into forecasts,” said Fujio Ando, managing director at Chibagin Asset Management.

Demand for Honda, Toyota and Nissan cars declined in China in September as tempers flared in the territorial dispute. Hyundai Motor of South Korea and BMW of Germany picked up market share. Toyota has said its sales in China dropped 49 percent in September.

Sales by Honda and its China joint ventures dropped 40.5 percent last month. China is Honda’s second-biggest market after the United States, accounting for 17 percent of 2011 sales.

Honda said Monday that its two biggest Chinese plants would continue to run on one shift, rather than two, until at least the middle of next month, with output then gradually picking up before Lunar New Year in February, a traditional buying season. It cut its full-year forecast for sales in China by 17 percent to 620,000 vehicles but said there would be no change to its investment there. Honda plans to invest $880 million to expand capacity at its plants in Guangzhou and Wuhan over the next few years.

“China is the world’s biggest auto market and there’s no doubt it will continue to grow” Tetsuo Iwamura, the company’s executive vice president, told a results briefing. “We will continue our current” investment plan.

Honda, whose models include the Accord, Fit/Jazz, Civic and CR-V, cut its net profit forecast for the year ending in March to ¥375 billion, or $4.7 billion, from ¥470 billion. Last year, Honda reported net profit of ¥211.5 billion. It also cut its forecasts for annual operating profit and revenue, citing uncertain markets in China, Europe and India.

Shares in Honda — which fell 15 percent to near nine-month lows amid the China protests — ended 4.7 percent lower, at ¥2,399, their biggest one-day fall in nearly five weeks.

Article source: http://www.nytimes.com/2012/10/30/business/global/honda-cuts-full-year-outlook-over-anti-japan-sentiment-in-china.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,
Next Page »