Group 2B

Class Presentation

Week 7- CSEB3102

Aziza Zaldarriaga Z(CEA100708)- Phillipines

Cian W’O Brien (NEE130235)- Denmark

Chaymae Samir (NEC130215)-Morocco

Dominik Wagner (NEC130217)-Germany

Firmansyah Shidiq W(CEB110723)-Indonesia

Haya Shadab Ali (CEB110702)-India

Introduction about South Korea

Economic Transition & Business-Industrialization Stage in South Korea

Political Administration, Public Policy, Society & Culture In South Korea

Geopolitics to Geo-Economics in South Korea

Emergence of Chaebols Industry in South Korea

Foreign Investment Climate in South Korea

South Korea Business Culture & Etiquette

• Population: approximately 48

million

• Seoul is ranked 8th in the Global

Cities Index for 2012 and is

considered to be a leading global

city.

• A great number of international

companies are located in Seoul.

• Hosted the 1986 Asian Games,

1988 Summer Olympics, 2002 FIFA

World Cup and the 2012 G-20 Seoul

summit.

• Using Republic System with mixed

legal system combined of

European civil law, Anglo-

American law, and Chinese

classical thought.

• Led by President in Executive

Branch.

1945-1950

The transition from a colonial to

independent economy

1950-1959

The Korean War and Reconstruction

1960-1969

Transition from low to high growth

(Park Chung Hee)

1970-1977

Five Year Plan & Export-Led Growth

1978-1982

Unstable Growth and Recession

1983-1996

High and Stable Growth, Economy

Development & Low Inflation

1997-1998

The Asian Financial Crisis

1998-2005

KEF (Korea Economic Reforms) – Financial

Restructruring

2005-Present

Development of Creative Economy,

Tourism & Expanding MNC-SMEs- PPP

1945-1950. COLONIAL TO

INDEPENDENT ECONOMY.

Two senses of economy

separation sectors: SOUTH

(Agriculture & light industry)

and NORTH (Energy & Heavy

industry).

1949-1960. POOR FINANCIAL

CONDITION. Republic of

Korea GDP was very low. GDP

per capita around $100, poorer

than Philippines after Post

World War

1949. AGRICULTURE BASED

COUNTRY. Republic of Korea

(South) considered as an

agricultural nation exporting

rice, tungsten & fisheries.

1955-1960s. INITIAL

TRANSTION from PURE

AGRICULTURE to

INDUSTRIAL ENTERPRISE.

Industry mostly operated as

textile industry.

1950-1951. REVAGED BY

KOREAN WAR. It caused the

high inflation, conflict of

price stabilization policies,

unstable trade structure

especially import and export

balances

1951-1956. OVER AMOUNT

IN BIG AID VOLUME by US

& IMF given in post-war

which caused local

agriculture business to be

depressed

EPB (Economic Planning Board)

Five Year Development & Economic Planning

MoF (Ministry of Finance)

state-owned banks & LAND

REFORM POLICY

MTI (Ministry of Trade + Industry)

industry/business associations/Chaebol

FKTU (Federation of Korean Trade Unions)

(gov’t-controlled) industrial unions

Businesses

Top-down Leadership, (General Headquarter style)

Park himself made major decisions to control South Korea economy.

National Budget (Per capita income rises

17x) Coopted labor

• Harvest Failure in

1981

• Slower Pace Growth

• Negative Growth Rate

into negative 1

• Radical Reappraisal of

Economy Management

• Unstable growth of

export-led industries

(highly creditable in

1981 but sluggish

performance in 1982)

FAILURE,UNSTABLE

GROWTH &

RECESSION

(1979-1982)

ASIAN FINANCIAL

CRISIS (1997-1998)

HIGH GROWTH, &

RECOVERY IN

SOUTH KOREA

(1983-1996)

• The collapse of Some

Chaebols Industry –

Hanboo Steel in 1997

• More than 1 Million

People were out of work

• Bail out from

government controlled

bank credit didn’t work

• Bail Out & loans in

amount of USD 57 billion

from International

Monetary Fund

• Money supply was

tightened to keep

inflation under control

• Devoted to reduce

government

involvement into the

economy.

• Inflation was lied around

3-4 percent.

• Known as Second-Take

off stage into high and

stable growth in South

Korea until 1996.

Leading in K-POP Entertain

ment Industry

World’s 4th Oil

Refinery

World’s 3rd

largest steel

producer

World 5th Automob

ile Producer

World Leading

in Science

& Techno

World’s

largest

ship

builder

US, Japan, HK

as strategic

export partner

China as largest export partner

Export on

Computers, chip

Export on

Petrochemicals

Export Semiconductors,

USD 466

Billion in

Export

Value

Japan and US as

Import Partners

Import Partners:

Saudi Arabia & Aussie

China as largest import partner

4th largest

oil importer

Import oil,

organic chemical

USD 417

Billion in

Import

Value

• Achieving more with less-toward

world class efficient

government

Government Reform

• A world class economy ? Only with world class

companies (Chaebols expansion)

Corporate Reform: Chaebol

• Setting free South Korea’s Labor Force for the next several strategic years.

Labor Market Reform

• Expansive Foreign Direct

Investment as a new growth catalyst and

driver

Opening Up to Economy

• Humboldt (Germany) and Harvard (US) Replications in South Korea

Universities’ Reform

• Utilizing Korea’s largest untapped human resource in regards of developing strategic sectors

Emergence of Women Power

• Building trust, empathy and emotional relationship in long term-basis

Social Capital

• Shining Koreans through by expanding Chaebols & Entertainment sectors

Land of Opportunities, Trading & Business

SOCIETY AND CULTURE IN SOUTH KOREA

Status system was replaced by modern democratic social system

Broad range of political opinion

Large influence of neoliberal capitalist system to society

Confucian values became less viable

High level of education

Relatively homogeneous society

SOCIETY AND CULTURE

• Gender disparity

• Income inequality tends to increase

• Longest conscription period behind

Israel and Singapore

Gini coefficient (OECD) 2011

Germany 0,30

Japan 0,33

South Korea 0,32

United States 0,38

OECD average 0,31

Gender wage gap (OECD) 2011

South Korea 37,47%

Japan 27,40%

United Kingdom 18,23%

United States 17,79%

Norway 7,78%

POLITICAL ADMINISTRATION & PUBLIC POLICY

Before 1988: Capitalist developmental“

state Economic development

was systematically led by government

1988: Sixth Republic of Korea - Democracy and prosperity became primary concern of

government leadership - Ideas of Modernization,

Democratization and Globalization

POLITICAL ADMINISTRATION & PUBLIC POLICY

Transition Process

from 1993-1997

• Flexible labor market

• Open financial and capital markets

Period in1997-

1998

• Asian financial crisis and bailout by IMF

POLITICAL ADMINISTRATION & PUBLIC POLICY

Presidents of South Korea

1988 – 1993 Roh Tae-woo

1993 – 1998 Kim Young-sam

1998 – 2003 Kim Dae-jung

2003 – 2008 Roh Moo-hyun

2008 – 2013 Lee Myung-bak

2013 – 2018 Park Geun-hye

• Geopolitics: the combination of politics and geographical matters (natural resources, territory)

GEOPOLITICS

• Geo-economics: the combination of , geographical matters and economics/private business

GEOECONOMICS

A Scrimp Among The Whales (China, Russia,

and Japan) Influenced by these powers

Few Natural Resources but savings and

education for development

Bad position for efficient geopolitical

strategy

MOVING AWAY FROM PENINSULAR KOREA

(GEOPOLITICS) THROUGH FREE-TRADE

AGREEMENTS

ASEAN, USA, EU AND INDIA

INVESTMENT IN RESEARCH AND DEVELOPMENT

SUBSIDARIES TO PRIVATE COMPANIES SUCH AS SAMSUNG & HYUNDAI

GEO-ECONOMIC

• Strategic relationships with China and Russia, Japan, and USA

• Afraid of dependence of China (50% of export), looking west

GEO-POLITICS

• President Park Geun-hye is converting economical power to political power Geopolitics:

Chaebol business conglomerate multinationals

1940-1950Favourable

treatment fromthe government

1960's Militarytakeover and

clean-up

1970'sOligapolization.

Opening ofchemicalindustries

1980'sExpansion of

business1990's Asian

Economic Crisis 2010 Economicbackbone

Time Line

Chaebol Development

1st Type

• Owner Monopolization

2nd Type

• Core Company Control

3rd Type

• Mutual Ownership

Concentration of economic power and ownership

Collusion between politics

and business

Perspectives on Chaebol efficiency

Issues of legal discipline

Distortion of the market

order (SMEs)

After 97-98 crises, ROK FDI reforms which aided

in positive development.

Financial Institutions

Capital Markets Competition

Policy

Allowing Non-Korean to own land & property

Reformed Labour Law

Improvised intellectual

property laws

Transparency

EU has total stock of 34.6%

Followed by USA 24.6%, Japan 15.1%

& Netherlands

11.2%

The 1999 Foreign

Exchange Transaction Act (FETA)

Inbound FDI 13.7 billion & Service

industry up by 15.4%

FETA is fully liberalized all current-account transactions by business firms and banks

• Further aims to attract more foreign investment by promoting 6 Free Economic Zones

• 6 Free Econ Zons are Incheon, Busan/Jinhae, Gwangyang Bay, Yellow Sea, Daegu/Gyeongbuk, Saemangeum/Gunsan

• The FEZs differ from other zones designated for foreign investment in their focus on creating a comprehensive living and working environment

• Such as biotechnology, aviation ,logistics, manufacturing, service and other industrial clusters

• As well as international schools, recreational facilities, and international hospitals

« Etiquette is what you are doing and saying when

people are looking or listening. What you are

thinking is your business »

Virginia Cary Hudson

South Korean unique business etiquette mainly exhibits

in six aspects , which are :

Bear in Mind that the Cultural and Societal

aspects are very important to consider

Introduction Greeting Business

Cards

Business Meeting &

Negotiations

K-Type Management

Style Gift Giving

Introduction and Greeting

The usual Greeting in South Korea is a

bow followed by a handshake

Business Card

It is recommended that foreigners obtain bilingual

business cards with Korean on one side and

English on the other side

K-TYPE

• K-Type management, consists of top down decision-making, paternalistic leadership, clan management, personal loyalty, compensation based on seniority and merit ranking, high mobility of workers

INHWA KIBUN

• Inhwa and Kibun are two key principles of South Korean Business Culture

GIFTS

• Gifts help secure favors and build relationships

AGREEMENT

• A signed agreement will not always be considered an obligating agreement but a starting point for further negotiation

Bibliography

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Corporate Governance, 4-17.

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governments/

Nam, I.-S. (2013, July 13). Seol takes closer look at chaebols. Retrieved from Korean Real Time:

http://blogs.wsj.com/korearealtime/2013/07/03/seoul-takes-closer-look-at-chaebols/

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http://www.atimes.com/atimes/Korea/NH22Dg01.html

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