Last month GM-Daewoo (the corporate entity that received so much grief for what many thought would be massive loss of Korean jobs) has overtaken Kia as Korea's #2 automaker in terms of sales. Hyundai (which owns Kia) is still #1. The International Herald-Tribune article even says that growth in the "fertile ground" of Korea and other parts of Asia helps make up for GM's losses in North America.
At any rate, with foreign car sales growing dramatically, it appears more and more consumers are again scrapping nationalistic consumerism for better quality (in some cases) and more diversity of choice (it is a little boring if everyone has a Hyundai Sonata).
Yippee!!!. I'll run out and buy some GM stock.
ReplyDeleteFor years, Korean headlines have been screaming, "Foreign imports up 700%!" When imports of a finished product are so low to begin with, there's no place to go but up. I noticed that the story did not provide any data about foreign car sales as a percentage of total sales. I had to google to find out that foreign cars grabbed a whopping 2.6% of the car market in 2005. That's even less than Japan's 5%. Korean cars alone make up 6% of the US market.
I don't think the failure to include this statistic was an unintentional oversight. The article, like many press releases spun into news stories, has a hidden agenda of countering foreign criticism that the Korean car market isn't a level playing field.
Sonagi wrote:
ReplyDeleteYippee!!!. I'll run out and buy some GM stock.
What you should do is go back in time and buy some GM stock.
For years, Korean headlines have been screaming, "Foreign imports up 700%!" When imports of a finished product are so low to begin with, there's no place to go but up.
Um, yes, but when Korea imports $256 billion worth of goods (15th in the world) that's nothing to sneeze at.
The car market can't flood open over night...
I noticed that the story did not provide any data about foreign car sales as a percentage of total sales.
I noticed that, too. And I had trouble finding the stats I needed (total car sales in Korea, or total domestic sales of Korean cars).
I had to google to find out that foreign cars grabbed a whopping 2.6% of the car market in 2005.
Do you have a link for that? I thought it was 4 or 5 percent.
That's even less than Japan's 5%. Korean cars alone make up 6% of the US market.
Several points. First of all, if it really is only half the level of that in Japan, some of that reflection is from the fact that Japanese on average have more buying power than do Koreans. The imports are expensive.
If GM, for example, were to bring in its cheaper cars, it would be bringing in Korean cars. The Daewoo Lacetti is GM's inexpensive, practical offering.
I'm just pointing this out because it's not simply a matter of reducing or eliminating trade barriers.
I don't think the failure to include this statistic was an unintentional oversight. The article, like many press releases spun into news stories, has a hidden agenda of countering foreign criticism
You may be right. I'm not sure. But from what I know having worked in "journalism" in Korea (or what passes for it these day), I think there is often either (a) a lack of space in what was to be a compact article, and/or (b) a lack of strong understanding of what constitutes good journalism in a case like this.
Point (a) would not apply in this case, but (b) might. The journalist may simply not have thought that that bit of data was as important as all the other stats. And looking at things from, say, an Apple user perspective, it seems normal to focus on the positives of sales going up thanks to new models rather than how small things still are (Apple has dismally low market share).
I'm not dismissing the idea that agenda-supporting may be at work here because it often is a factor in news reports.
that the Korean car market isn't a level playing field.
What are the factors still preventing a level playing field? A lot of things have changed, but what things still need to be removed. Marmot's (?) pointed out an article that referred to the audits of foreign-car buyers as if it still happened, even though that practice supposedly ended in the 1990s. What factors are there now?
I do want to also add that even in the absence of any barriers, there is the issue of how fast things can actually grow. 76% growth is break-neck speed. Dangerously break-neck speed. Even with the floodgates opened wide, prudent business practice might be to take things slow and steady. One of the Volvo dealerships near my place of work closed up shop, even though the Lexus, Honda, and Infiniti dealerships are all thriving. The absence of barriers is not a guarantee of success, and so a careful business model for entering the market may itself be a bottleneck.
Excuse the disjointed nature of this note. I'm writing this on the fly.
a. foreign imports in Korea
ReplyDeleteI had to sift through a few pages of results to find the article I quoted stats from and wasn't able to find it again. I did find this from Business Week (http://www.businessweek.com/globalbiz/content/feb2006/gb20060222_401265.htm?chan=autos_autos+index+page_news)
which quotes a figure of 3% for 2005. As I recall, the 2.6% number was for 2004.
Foreign automakers have complained about numerous barriers from import taxes to expensive testing to meet domestic product standards. All the major auto manufacturing countries have some barriers to imports. Probably the biggest barrier is simply that a middle-class Korean doesn't want to be the first to own a non-Korean car. I am from Michigan. My grandfather and three uncles worked all their adult lives building Oldsmobiles, so I felt guilty when I bought my first Japanese car - a 10-yr. old tiny, rusting Toyota corolla - back in college. Twenty years later, I still felt sheepish about choosing a Hyundai while the Big Three were offering employee pricing this summer.
The irony is that Uncle Sam isn't usually the main beneficiary when he manages to get Korea to unlock the trade door. Two perfect examples are rice imports, dominated by Thailand, and car imports, mostly from Japan and Europe. I remember reading a story in which Japanese and European car execs were chuckling that their strategy was to lead Uncle Sam take the lead in the trade war, and they would just quietly move in once the barriers were removed.
As for Korea's 15th ranking in imports, I believe Korea imports more from Japan and China than any other country. Japanese imports are mostly invisible technology and value-added parts. While I was there, the Korean media had launched a war against Chinese agricultural imports. Every summer there was a Chinese fish scare. One year it was lead pellets in blue crabs. Every day that summer, newscasts featured inspectors breaking open wooden crates and indignant reporters waving crabs like they were bags of cocaine. Like technology, food imports are somewhat invisible since a lot of it is sold to restaurants, so media attacks and appeals to patriotism don't work.
Korean media professionalism:
While I was living in Korea, I and many foreign colleagues and friends kept notebooks of clippings of poorly written stories from the KT and KH. One story I recall bore a headline like "False Accusations of Sexual Harassment on the Rise." The body of the story contained three specific examples. That's it. No stats. No numbers, no percents, no nothing. Another example was a story about a Korean man murdered in Vladivostok. The two papers carried nearly identical stories except for one detail about the suspect's identity. One paper said the man looked North Korean while the other paper said he looked Russian. Every other word in the story was identical. The story obviously came from a news agency like YTN and was doctored by one of the papers. I could go on with more examples of deliberately biased reporting like coverage of the infamous subway brawl of '95 or the stabbing murder of the military doctor, but I won't burn up your bandwidth. To be fair, the US media slants coverage to fit a certain viewpoint.
My OP was aimed more at the story itself than at the issue of fair trade in Korea.
As for Korea's 15th ranking in imports, I believe Korea imports more from Japan and China than any other country.
ReplyDeleteI'll answer the rest later, but for starters I wanted to clarify where the $256 billion of Korea's 2005 imports (mostly machinery, electronics and electronic equipment, oil, steel, transport equipment, organic chemicals, and plastics) was coming from.
According to the CIA World Factbook, Japan is way out at #1 with 20.6% of Korea's imports coming from there in 2004, China is #2 at 13.2%, and the US is a very close #3 accounting for 12.9% of all Korea's imports.
I don't know that things changed all that much for the US's picture, though Chinese imports have likely gone up in percent. So we're talking about some $30 billion in American imports coming into Korea each year.
Korea is something like America's #5 or #6 trading partner, but I can't find the statistic off hand. By the way, if you follow these links, on the United States page in the Factbook, it says there are four US Merchant Marine ships registered in North Korea! In fact, that's the only mention of "Korea" on the US page.