Category: news, biz and economy

A Summary of Dr. Victor Cha’s Interview on Korea Business Central

The Korea Business Interview Series continues at Korea Business Central (KoreaBusinessCentral.com). 

The latest interview was held with Dr. Victor Cha, former Director for Asian Affairs in the White House's National Security Council and current Director of the Asian Studies Program at Georgetown University. Dr. Cha is author of Beyond the Final Score: The Politics of Sport in Asia.

Here is the link to the interview audio:

In addition, the discussion and transcript can be found on Korea Business Central at the following link: https://www.koreabusinesscentral.com/forum/topics/korea-business-central-3

(The full list of interviews can be found here: https://www.koreabusinesscentral.com/page/interviews-2)

Main points of the interview:

Topic #1 – KORUS and the Korean Economy

  1. The Korean economy is improving thanks to the current Korean government's expansionary fiscal policy, which sets the administration up for good results in the June local elections.
  2. The Korea-US Free Trade Agreement (KORUS) will lead to increased economic activity in both the US and Korea. 
  3. The Obama administration is starting to say the right things about trade and passage of KORUS will ultimately depend on a big push by the White House.
  4. In addition to being the largest bilateral free trade agreement negotiated by the US, KORUS is also important in terms of the template it offers for future free trade agreements.
  5. It is unlikely that the US Congress will do anything on KORUS until after the US mid-term elections in November.
  6. The main sticking points to passage of KORUS by the US Congress include trade terms for beef and automobiles. These will likely be dealt with through side agreements, rather than renegotiation of the main agreement text
  7. Passage of KORUS is expected to benefit US automakers, citrus growers and various service industries, among others.

Topic #2 – Economic Engagement Between South and North Korea

  • North Korea is not taking up the Lee Myung-Bak government's "3,000 Proposal", which promises North Korea a per-capital income of $3,000/year within ten years if North Korea will denuclearize and improve its human rights record with South Korea. Therefore, economic engagement between North and South Korea has gone into reverse under the current administration.

Topic #3 – Sports Diplomacy in Asia

  1. Dr. Cha's idea for his book Beyond the Final Score: The Politics of Sport in Asia came after seeing the newsworthiness of sports on a visit to Australia with US Secretary of State Condoleezza Rice.
  2. The seminal case of sports diplomacy was "ping-pong diplomacy" which lead to China's opening to the United States in the 1970s.
  3. Since then, Korea has been very successful in promoting diplomatic initiatives through sports, such as the Seoul Summer Olympics in 1988, where Korea's efforts eventually led to the normalization of relations between the Soviet Union and South Korea in 1990.
  4. Korean success in the recent Vancouver Winter Olympics positions Korea well to host a future Winter Olympics in Korea.

Toyota’s Despicable Contempt for Korean Consumers

The Koreans are thrilled silly about the Toyota quality problems. They're trying not to gloat but their glee is barely concealed, especially as Hyundai and Kia auto sales increase so rapidly in the US. But this isn't really what my post is about today and I'm going to depart a bit from my normally Korea-friendly perspective.

3-3-2010 8-52-44 PM In an editorial in the Jungang Daily yesterday (유교가 '아시아의 세기' 감당할까), columnist Hwan-Yeong Kim (in photo at left) talked about the way Toyota is apologizing for their quality problems. Apparently the president of Toyota showed up at a press conference with American journalists and only bowed 70-degrees when he apologized the first time. He then had to come back and do it again at 90-degrees. But when he got to China, he bowed 90-degrees the first time. And it seems he hasn't bothered to show up in Korea to apologize at all.

So Mr. Kim is irked that Japan's paying so much attention to keeping the Chinese happy but is ignoring the Koreans. He backs this up by pointing out that when Toyota started selling their Lexus models in Korea, they sold at higher prices here than anywhere else in the world and that this showed contempt for the Korean consumer.

But just today, the Jungang Daily ran another article with this title: "Why do Automobiles for Export Have Safety Devices but the Ones for Domestic Consumption Do Not?" (수출 차엔 기본인 안전장치, 내수 차엔 없다?). Apparently the Korean car makers are willing to outfit their cars with less value for Korean consumers than they are in overseas markets. 

Or how about this? When Hyundai first sold its Genesis model in the US, the prices were so much lower there than in Korea, people were buying the car in the US, importing it back to Korea and still saving money. In early 2008, we bought our Kia Pride (called a "Kia Rio" in the US) in Korea for much more than it would have cost back home.

My point, of course, is to ask whether anybody could blame Toyota for selling their cars expensively in Korea when the Korean car makers themselves are doing the same thing. Rather than moan and groan about being slighted by the Japanese, perhaps it would be more appropriate to ask what can be done to create a more consumer-friendly car market in Korea.

And BTW, I sure hope the Korean makers are prepared for the day that the US media and Congress, goaded on by the US automakers, decide to turn some quality issues into another "perfect storm" of a media circus.