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Korea Business Success eZine – Spring 2005
Welcome to the Spring 2005 issue of the Korea Business
Success eZine of Korean Consulting & Translation Service, Inc. We trust
that you had a pleasant Easter break and hope you find this information
helpful to your business in Korea and with Koreans everywhere.
Table of Contents
- Free Trade Zones in South Korea
- Feature Article: Understanding Korean Society -
Part One
- Korea-Related Terminology
- What is BK21?
- Korean Events and Festivals
- Brief History of Korean Chaebol (Business Groups)
1. Free Trade Zones in South
Korea
In an attempt to attract foreign investment and develop itself as an
economic, financial and logistics hub in Northeast Asia, the South
Korean government has established and is developing three free trade
zones, referred to as free economic zones (FEZ). The government is
offering various incentives and concessions, has and continues to modify
laws and regulations and is investing in the necessary infrastructure to
make the zones attractive to foreign investors.
The three FEZ are located near Incheon on the NW coast, Busan/Jinhae
on the SE coast and Gwangyang on the south coast. See
http://www.fez.go.kr/english/ for further details.
2. Feature Article:
Understanding Korean Society - Part One
In this series of articles I will introduce and provide background
information on different aspects of modern Korean society. I hope they
give you insight into life in modern Korea in order to better
understand, build relationships with Koreans and possibly allow you to
identify new business opportunities.
The topics presented in this series would make suitable topics for
conversation with Koreans. Some of the topics might be complex or
controversial but there is no need to avoid them; just adjust the level
of the conversation depending on the situation and person you are
talking to. However, be aware that the person with whom you are speaking
may not express an opinion on some topics either because he or she
doesn't have an opinion due to the complexity of the problem or is
unwilling to express it because Koreans are oftentimes reluctant to
express strong opinions to people they don't know well. Nevertheless, he
or she will agree that it is a serious issue, describe the issue in more
detail and perhaps relate some of their own personal experiences.
· Education
This is quite possibly the biggest social issue in Korea. The subject
is multifaceted and provides quite a few topics for discussion.
Getting into a prestigious university and finding a good job are very
competitive in Korea and rely heavily on the results of a series of
written tests. One historical reason for the large number of tests is
the Confucian belief that suitability for holding office depends on
one's proficiency as a scholar. The other reason is that universities
and companies are simply being pragmatic in using tests to reduce the
thousands of applicants down to a more manageable number before
assessing the applicants individually. (Previously, entrance to
university depended only on the results of the "high school leaving
certificate" and possibly the entrance exams administered by individual
universities, but now a small number of universities have introduced
other admission criteria based on interviews and achievements.)
Much of what is studied at high school for the leaving certificate and
in preparation for any subsequent tests is learned by rote, so many
students never develop a deep understanding of it and quickly forget it.
It is not uncommon for people to devote one or more years to preparing
to take an admissions test for university or job at a company, or
retaking the high school leaving certificate in subsequent years.
Because the purpose of all this education is more about gaining
admission rather than learning things deeply, critics argue that this
misdirected expenditure of time, effort and money is harming the
country's productivity. And the flip side of the system is the human
cost. All this high-pressure study causes enormous stress and hardship
and even a significant number of suicides.
The expectation of society and most parents is that children will
finish high school, obtain the high school leaving certificate, go to
university and then eventually find a well-paid professional job.
However, the reality is that a significant number of young people are
not really cut out for or interested in taking this path and may be
better off leaving school and finding a job or pursuing training leading
to a job as a skilled tradesperson. Forcing children who shouldn't be
there to stay on and take the high school leaving certificate is said to
create numerous problems, including low self esteem, depression,
suicide, family conflict and disruptive and antisocial behaviour.
Gaining admission to a prestigious Korean university is the crucial
issue since university coursework in Korea is very easy and graduating
is not hard. The name of the university one graduates from (was admitted
to) determines in a large way one's fate in life. Employment, promotion,
transfer, social standing and even marriage prospects (for both sexes)
depend very much on the name of the university one graduated from.
Tuition fees at Korean universities are quite low, so the quality of
the education provided may not be excellent and the financial position
of some universities is shaky. Several years ago, it was proposed that
universities should be allowed to admit students without requiring them
to take an admission test or obtain a certain score on the high school
leaving certificate if their parents made large donations to the
university. The proposal was strongly opposed by many because they
argued that it was equivalent to buying a university degree. They also
argued that people willing to make large donations to universities in
exchange for the admission of their children would only donate to
prestigious universities, whose financial positions are already sound.
University is considered a time for young people to let their hair
down for a short time between the tough demands of high school and
employment in a company. Korean universities are not very rigorous and
rank quite poorly internationally for this reason. This is likely to
have an adverse effect on the competitiveness of the nation and
universities are starting to lift their game in response. But the
downside to this is that, in the future, university may no longer
provide a break from the intense pressures of Korean life that they have
in the past.
Furthermore, increasing numbers of young Koreans are studying overseas
- generally in the US, Canada, Australia, New Zealand or UK. Studying
overseas is an easy, but expensive, way to attend a good university
compared to the difficulties of getting into a prestigious Korean
university. Koreans studying in English-speaking countries gain
proficiency in English and understanding of the countries they stayed in
- things which will increase their value to potential employers.
However, the downside is that employment and promotion in Korea can
depend heavily on networks and the university one graduated from is one
such network. So Koreans who go to university overseas are shut out of
this important resource.
A growing number of Koreans studying overseas commence their studies
in high, middle or even elementary school before later going on to
university in that country. One reason for this is the desire of parents
that their children become completely fluent in English. Another reason
is that it may provide a means for their children to obtain permanent
residency and perhaps citizenship in that country. Depending on the age
of the children, this can result in the family being split up for
several years with the mother and children living overseas while the
father remains in Korea earning money to support the family. Fathers
that remain in Korea working to send money to their families overseas
are called "wild goose dads".
Private individual or small group tutoring (gwa-wei) and private
academies (hak-won) providing extra tuition in school subjects were
discouraged by the government until several ago in Korea because they
were considered to provide an unfair advantage to the wealthy. However,
the laws have been changed and many students make use of them. (Except
for holders of E1 visas working for a single private academy they are
contracted to, foreigners are not legally permitted to do any teaching
or tutoring work in Korea. Being caught could mean fines, deportation
and being prohibited from entering Korea for a period of several years.)
The private academies cover the same syllabus as the schools but do it
in advance, which can cause the students to be inattentive and
disruptive at school. Allowing children to obtain extra tuition raises
the bar and forces other parents to send their children for extra
studies in order to give them the same opportunity, which can be a large
financial burden for many families. Korean children have often little
time for play or exercise because their afternoons and evenings are
taken up with tuition and homework.
Most in Korea accept that the Korean education system needs to be
reformed and each successive government promises to reform education and
makes an attempt but, so far, little has changed. Things may improve in
the future, but it is certainly a very difficult problem to solve.
Perhaps this is because the attitude of Koreans to education shapes and
constrains the education system.
3. Korea-Related
Terminology
In the Fall 2004 issue of this eZine, I explained a number of common
terms by Koreans when writing or speaking English, and in this issue I
will explain several more.
By the way, if you ever have a simple question or request for
information related to Korea then you should use our website set up to
handle such inquiries -
http://www.askakorean.com
IMF - IMF stands for International Monetary Fund but Koreans more
commonly use the term as an abbreviation for the "Asian currency crisis"
of the late 1990s. The International Monetary Fund is a lender of last
resort that lends money to countries unable to repay their foreign
debts. However, the IMF mandates certain economic and legal reforms as a
condition of providing the loans. In 1997, the Asian currency crisis
occurred and South Korea was forced to turn to the IMF for a series of
loans in order to prevent it defaulting on its foreign debts and, as a
result, was forced to adopt the reform measures demanded by the IMF. It
was a time of hardship for many Koreans but the country was able to
repay the IMF obligations ahead of schedule.
Minister/Ministry - The Korean government has established different
departments to carry out the various functions of government but in
English these are generally called ministries and the head of each
ministry is called the minister. Examples are the Ministry of Justice,
the Ministry of Environment, and the Ministry of Education. Each
minister is appointed by the president and may be drawn from inside or
outside politics.
KBS, MBC, SBS - the three major free-to-air television broadcasters.
KBS is government-owned but the other two are privately owned.
FSS - FSS stands for Financial Supervisory Service. The FSS is the
Korean company and stock market regulator.
Family register - There is no system of birth or marriage certificates
for individuals in Korea. Instead, all births, deaths and marriages are
recorded official family record books maintained by local government
authorities. The family register will generally not concern Americans
except in the case of marriage to or adoption of Koreans.
SOFA - SOFA stands for Status of Forces Agreement. It is an agreement
between the US and Korean governments concerning the regulation of US
forces stationed in Korea.
Workout - In the wake of the Asian currency crisis, the Korean
government imposed compulsory measures and targets on highly indebted
Korean chaebol (Korean business groups) to lower their debt ratios from
the dangerously high levels at the time. The plans and processes devised
to achieve this were referred to as "workouts". Workouts involved things
such as mergers and acquisitions, sale of assets, issuing new stock and
converting short-term debt to longer term debt. The workouts were
completed several years ago.
DMZ - DMZ stands for demilitarized zone. The DMZ is a narrow strip of
land separating the border between North and South Korea that neither
side is permitted to enter. You can visit the South Korean side of the
DMZ and look across the border into North Korea. See the Summer 2004
issue of the eZine for details.
Panmunjeom - Panmunjeom is a village located within the DMZ and sits
right on the North-South border. This village serves as a place for
inter-Korean negotiations and prisoner exchange. You can visit the
village and observe North Korean and South Korean guards facing off
against each other. See the Summer 2004 issue of the eZine for details.
4. What is BK21?
BK21 (Brain Korea 21) is a major initiative of the Korean Ministry of
Education ($1.2 billion over seven years) aimed at reforming Korea's
education system (mainly the tertiary sector) with the ultimate goal of
enhancing the country's international competitiveness.
BK21 is a buzz word at the moment in academic circles and universities
are in the process of adapting and restructuring to satisfy the
requirements of it. According to the Ministry of Education, the goals of
BK21 are to:
· Nurture R&D HR and enhance research capability
· Build systems to support the commercialization of R&D
· Launch international collaboration programs and benchmark
against leading foreign universities
· Improve standards of education and research in Korean
universities by:
- Reforming the university admission system
- Centralizing management of research funding
- Linking performance of academics to remuneration and tenure
For more information refer to
http://www.moe.go.kr/en/down/BrainKorea21.ppt
5. Korean Events and
Festivals
There are numerous events and festivals in Korea. The following sites
will give you more information.
· List of events and festivals in Seoul -www.visitseoul.net/jsp/english_new/culturalevents/index.jsp
· List of events and festivals in Busan -
http://english.busan.go.kr/busan/02_06.jsp
· List of events and festivals in Gwangju -
http://visit.gwangju.kr/english/html/02_0301.php
· List of events and festivals in Daegu -
http://english.daegu.go.kr/Tour/Culture/list.asp
· Gwangju Biennale -
www.gwangju-biennale.org
· Busan Biennale -
www.busanbiennale.org
· Media City Seoul - website no longer active
· Pusan (Busan) International Film Festival
www.piff.org
· Pucheon (Bucheon) International Fantastic Film Festival (PiFan)
- www.pifan.com
· Busan International Music Festival (BMF) -
www.busanmusicfestival.com
· Gwangju Kimchi Festival -
http://kimchi.gwangju.kr/foreign_language/english/body02.htm
6. Brief History of
Korean Chaebol (Business Groups)
Most chaebol in existence today were established by certain wealthy
Koreans after the end of the Korean War at the request and with the
support of the Korean government at the time. The President realized the
need for certain strategic industries to be established if the country
was to develop and the policy of the government has been one of
encouraged expansion. The government pressured Korean banks to provide
cheap loans to the chaebol in order to fuel their expansion, and
rewarded the chaebol for expanding and penalized them for not expanding.
The result was that the chaebol became accustomed to expansion,
diversification and high debt ratios. However, the rapid rise in
interest rates and domestic recession that occurred as a result of the
Asian Currency Crisis in 1997 meant that the chaebol were unable to
service their enormous debts and in real danger of collapse. The
government stepped in and introduced legislation to force them to
stabilise their financial positions and secure their long-term future
through asset divestiture, mergers and acquisitions, refinancing and
other means.
There is little desire within the chaebol to focus on single core
areas but there is acceptance of the need to reduce the number of core
areas, have a reasonable focus within each of the core areas, have
sustainable growth and maintain debt at safe and serviceable levels.
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