Southeast Asia’s largest online shopping Lazada to beef up Korean section

https://korean-electronics.com//inquiryLazada Group, Singapore-based e-commerce platform operator that runs shopping malls across six nations in Southeast Asia, will beef up Korean section to response to growing popularity of Korean beauty and consumer products in the region.

Because of Hallyu, the Korean Wave referring to popularity of Korean pop culture, there is high interest and demand for Korean brands and culture, said Will Ross, CEO of Lazada Crossborder in a press conference on Tuesday in Seoul.

Lazada, No. 1 shopping site in Southeast Asia which is 83 percent owned by China’s Alibaba Group, will expand strategic partnership with Korean entertainment companies and support Korean merchants in their reach to consumers in the region, he said. In Korea, Lazada already has business alliance with Genieworks, an online to offline service provider, Studio Dragon, a drama production unit of CJ E&M, and artist agency Humap Contents. The shopping site that opened in 2012 displays over 3,000 brands run by 135,000 merchants.

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Korea Trade to back $650 mn Kia Motors’ $1 bn investment in India

https://korean-electronics.com//inquiryState-run Korea Trade Insurance Corp. will back Kia Motors’ $1 billion capital investment in India to build its first manufacturing base in the world’s second most populous market through guarantees of up to $650 million.

Korea Trade Insurance recently inked a memorandum of understanding with Kia Motors to extend payment guarantee of up to $650 million. Backing from a state agency would make it easier for Kia to raise loans for its investment in India as well as recruiting builders and suppliers for the manufacturing facility.

In April, Kia Motors signed an agreement with the Indian state government of Andhra Pradesh in the Anantapur district to build its first auto-making plant in southern India. The company will construct the plant on a site of 2,160,000 square meters at a total cost of $1.1 billion. It aims to complete building the plant by 2019 and churn out 300,000 vehicles a year. The Indian factory reportedly would make smallsized sedans and sport utility vehicles tailored to the Southwest Asian market.

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Sudan as an Emerging New Market

https://korean-electronics.com//inquiryIt is the company’s first priority to target promising fields based on consideration of government policies and the current market situation in order for Korean companies to advance into markets like Sudan, which is expected to emerge as a new market. The Sudanese government is executing a five-year economic development plan by promoting manufacturing industry and attracting foreign investment after difficulties following the independence of South Sudan in 2011 and low oil prices. Currently, Korea’s major exportation items include construction heavy equipment and automobile-related products such as parts, cars, trucks and batteries. And as expectation on demand for consumption material and base material increases, promising items in future are considered to be medical devices, mechanical equipment for agriculture and stockbreeding, fertilizer and cosmetics.
Macroscopically, after oil exports taking a hit due to the independence of South Sudan that took over 75% of overall oil deposits, Sudan has been unable to overcome its reform of economic structure completely.
Microscopically speaking, due to undeveloped Internet or statistical data, it is necessary to pay close attention to the current market situation and business capability of buyers through business trips to the sites.
KOTRA revealed that it quick action would be needed to capture a share of the Sudanese market, focusing on automobile related items, medicine, mechanical equipment for agriculture and stockbreeding and cosmetics as the U.S. State Department announced its lifting of economic sanctions on Sudan, which lasted for the past 20 years.
The U.S. government announced that it would lift economic sanctions on Sudan from 12th based on its positive evaluation for their cooperation with the United States to resolve regional conflicts and the war on terror, stop hostile activities, and improve human rights. Since 1997, the United States had been pressurizing Sudan with economic sanctions focusing on restricting trading and financial transactions and freezing assets based on reasons such as terrorism support, violation of human rights and religious persecution.
However, Sudan − along with Iran and Syria − is still included in three terrorism-supporting nations designated by the United States, so exporting of weapons to Sudan is still prohibited. The possibility of exempting Sudan from the list will be separately examined.
Meanwhile, this sanctions lifting is designed to isolate North Korea diplomatically. And it is reported that Sudan has broken offdiplomatic relations with North Korea beforehand. Also, to keep Iran in check, Saudi Arabia and Israel have requested this sanctions lifting, which is positive.
Sudan has a population of 40 million according to UN DESA. And it is one of three large African markets, after Nigeria and South Africa, with 95.6 billion dollars in GDP, according to the World Bank. With its size (1.89 million km2) being No. 15 in the world, it is a strategic point connecting the Middle East and Africa. Sudan shares its border with three countries such as South Sudan and Central Africa along with the Red Sea in the south. Even though it is located in Africa geographically, its religion (Islam), culture (Islam) and trade (depending on the Middle East) show more characteristics of a Middle Eastern country. In reality, Sudan is one of few nations that have joined AD and AL simultaneously.
With this sanctions lifting, Sudan is expected to vitalize imports and exports due to restrictions on finance and foreign exchange being eased in the short run. In the longer term, foreign investment and infrastructure project development are expected to expand. For a long time, Sudan has faced difficulties such as extremely low foreign exchange, price spikes and depreciation of its own currency.
As foreign remittances become possible through financial institutions, trade invigoration is expected with transaction costs and time saved and convenience improved. So far, Sudanese companies with settlement cooperating companies in third countries such as Dubai have been able to import products because dollar remittances (in & out) through U.S. banks were impossible except for a few exceptional cases.
Foreign exchange rates and price stabilization are expected to play a role in trade invigoration. Most of major buyers of Sudan that are in KOTRA’s database have suspended their importation due to depreciation of its currency against the dollar and inflation at estimated 30% in 2017. Some buyers have postponed their settlement even after signing a purchasing contract, which gave our companies a hard time. It is expected that this sanction release will liberalize foreign exchange so that depreciation of its currency against the dollar can be stabilized. Recent rebound of its currency against the dollar reflects its expectation of sanctions lifting.
Despite recognition of the potential of the Sudanese market, overseas companies who have deferred or withdrawn their investment are expected to expand the investment focusing on promising fields. Also, as the Sudanese government is relieved from financial pressure, it is expected that investment restrictions of MDB will be released, which means vitalization of infrastructure investment in the fields of airports, roads, bridges, water resources and energy. So far, the infrastructure development within Sudan has relied on loans from China and some Arabic countries, but lately, even this has been insufficient due to low oil prices, etc.
Seong-joo Lim, the chief of trade at KOTRA in Khartoum, explained, “The Sudanese market is not unfamiliar to our companies as Daewoo group had paidattention to the value of the Sudanese market and established a firm position in wide areas such as medicine, hotels, finance, fiber and tire manufacturing with large-scale investment.” He added “Currently, Korean automobiles occupy 60% of market share while electronics and mobile phones (No.1 or 2) are doing well as major products. So even small and mediumꠓsized companies that want to advance into new markets should be encouraged to pay attention to Sudan as the recognition of Korea and Korean companies is high with influence of Hallyu, the Korean Wave, which has become popular recently.”

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Korean trade chief confident of $1tn trade this year

https://korean-electronics.com//inquirySouth Korea’s gross domestic product (GDP) in the second quarter ended June 30 grew 0.6 percent against the previous three-month period, losing steam from the surprising pickup of 1.1 percent in the first quarter as overall manufacturing activity stayed subdued except for semiconductors and petrochemicals.

According to second-quarter preliminary data recently released by the Bank of Korea, the country’s GDP totaled 386.6 trillion won ($344.3 billion) in the April-June period. The figure was unchanged from the headline number released in late July.
Against a year-ago period, the GDP grew 2.7 percent in the second quarter, slowing from 2.9 percent gain in the first quarter.
The string of data released recently – the biggest jump in inflation in more than five years, still-robust exports and slowed growth – underscored instability in the recovery pace.

Overseas shipment in the second quarter contracted 2.9 percent on quarter, reversing from 2.1 percent gain in the previous quarter as automobile shipment to China sharply dropped due to Beijing’s retaliation against Seoul’s installation of a powerful U.S antimissile battery. The figure was revised up slightly from 3.0 percent fall in July.

Imports also shrank by 1.0 percent due to reduced crude oil import. Manufacturing output fell 0.3 percent on quarter. The domestic demand showed improvement amid expectations for the new government’s promise to increase income and hiring.

Private consumption rose 1.0 percent on quarter in the biggest gain in six quarters. Facilities investment surged 5.2 percent on quarter and 17.3 percent on year due largely to expansion in chipmaking facility.

Construction investment also edged up 0.3 percent, compared with 6.8 percent gain in the first quarter.

Gross corporate investment rate was 31.5 percent, up from 30.5 percent in the first quarter and highest since the second quarter of 2012.

 

 

By sector, agriculture and fisheries output fell 1.1 percent, manufacturing 0.3 percent, and construction 1.3 percent. Service output accelerated by 0.8 percent, reflecting a slight recovery in consumer demand.

Gross national income in the second quarter after seasonal adjustment shrank 0.6 percent from the previous quarter to 401.6 trillion won due to a sharp rise in dividend payment made by local firms to offshore investors. The final figure was revised down from 403.5 trillion won in July.

The share of gross saving against GDP slightly declined to 35.7 percent from 36.9 percent in the first quarter as private expenditure grew 2.3 percent, faster than an increase of 0.4 percent in disposable income.

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Exports by Eight Major New Industries Hit US$ 31.47 Billion in 1st Half, Proving Their Value as Driving Forces behind Exports

https://korean-electronics.com//inquiryExports by new industries are growing at a higher rate than total exports. The proportion of new industries’ exports in total exports is on a gradual rise, turning heads toward eight new industries including electric cars, robots and bio-health products.
According to the Ministry of Trade, Industry and Energy, exports by the eight new industries in the first half of the year amounted to US$31.47 billion, accounting for 11.3% of Korea’s total exports. Except for solar power generation exports, they shot up 20% from the previous year.Exports of the seven items, excluding robots, showed increases.
Next-generation semiconductors and next-generation displays took the lead in driving up overall performances while new energy, bio-health and aerospace exports contributed to a spike in exports by new industries.
Exports of electric vehicles in the first half of the year boomed by 90.9% thanks to strong sales in Europe, which boasts of good charging infrastructure, and the launch of Korean automakers’ main electric car models in the United States.
In the aerospace sector, Corporate Korea delivered six Korean-made T-50s and 8 FA-50s, and exports rose due to an increase in exports of aircraft parts in the first half.
Next-generation displays posted record-high biannual earnings, driven by rising demand for OLEDs for smartphones and increased TV sales at home and abroad.
A hike in prices of next-generation semiconductor NAND flash semiconductors and a rise in demand for them significantly elevated MCP exports and exports of system semiconductors switched to an increase from a drop in the previous year.
Exports of high-tech fiber and high-priced synthetic resin rose thanks to an increase in demand for cutting-edge new materials sparked off by a global economic recovery
Exports of finished drugs and biopharmaceuticals edged up in emerging markets of bio-health products and exports of medical devices such as ultrasound imaging devices inched up.
Exports of EVs, batteries for electric vehicles, and smart meters, which are features of the new industry energy, increased sharply in the first half.
Since the first introduction of the solar power HS code this year, the solar power industry exported US$1.26 billion in the first half of the year. Among total exports, PV modules and polysilicon accounted for 55% and 37%, respectively.
Exports of batteries for electric cars and ESSs rose in the first half of the year as demand for electric vehicles grew among major automakers in the EU and the United States.
On the other hand, despite the increase in exports of production robots to India and Vietnam, robot exports recorded a slight decrease in the first half of the year due to the delayed launches of new products and intensifying competition in Europe, the main market.
Among the eight new industry items, six new items –- electric cars, aerospace, new energy industry, nextgeneration displays, next-generation semiconductors and advanced materials –- enjoyed double-digit export growth and all items except for robots posted increases.
“Also in the second half of the year, exports are expected to climb, led by next-generation semiconductors and displays. It is also forecast that the launches of electric cars and service robots will play a positive role in exports by the new industries,” said Lee Min-woo, an assistant manager of the Import and Export Department at the Ministry of Trade, Industry, and Energy. “The Ministry of Trade, Industry, and Energy announced that the ministry will check Korean industries’ international competitiveness fields related to the 4th industrial revolution through the eight new industries’ export statistics and utilize them as basic statistics for new industrial policies.”

< Source: KITA>

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Hyundai and Kia’s Green Car Sales around the Globe Gain Traction

https://korean-electronics.com//inquirySales of environmentally-friendly cars by South Korea’s top automaker Hyundai Motor Co. and its sister company Kia Motors Corp. around the globe so far this year have nearly tripled from a year-ago period.

The two Korean carmakers sold 72,787 units of green or eco-friendly vehicles during the first four months of this year across the world, up 203 percent from the year-ago record of 23,976 units, the companies said recently. They have already shipped out more than half of last year’s volume of 128,376 units in the first four months.

Hyundai Motor Group that runs the two automakers has set a goal to become the world’s second biggest eco-friendly carmaker by 2020 by selling more than 200,000 clean vehicles this year. The carmakers had ranked fourth in the world category by elbowing out Ford Motor in 2015 and climbed up another notch to the third last year by outpacing Renault-Nissan Alliance in terms of sales. The next target, however, is tougher as No.2 Honda Motor was ahead by more than 70,000 last year. The world’s top-seller in clean vehicle category is Japan’s Toyota and its luxury brand Lexus with combined sales topping 1.2 million units in 2015.

Kia Motors ascended fast in the rank with its compact hybrid SUV Niro. Sales of Niro Hybrid totaled 34,361 units over the January-April period this year, accounting for 47 percent of Hyundai Motor Group’s entire sales of ecofriendly cars. Niro became the fi rst green car of the group that achieved 10,000 monthly milestone last month with sales reaching 13,017.

Hyundai Motor’s IONIQ Hybrid has also seen its sales surging around the world since exports to the European market began in August last year. Its global sales amounted to 4,091 units last month alone, far exceeding domestic sales of 3,629 units in the same period last year when the car was only available at home. Hyundai sold 1,438 units of IONIQ Hybrid in Europe last month, 40 percent greater than 1,055 units sold in Korea.

Global sales of IONIQ Electric totaled 4,691 units for the fi rst four months this year. The car boasts high cost-effectiveness as it can run up to 191 kilometers (119 miles) on a single charge, according to the Ministry of Environment. The United States Environmental Protection Agency (EPA) identified its fuel efficiency at 136 miles per gallon equivalent (MPGe), 12MPGe higher than that of BMW i3. MPGe is the EPA’s measure to calculate electric vehicles’ fuel economy and compare it to conventional internal combustion on motor vehicles.

 <Source:KITA>

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Some Korean Firms to Benefit from Trump’s Presidency

https://korean-electronics.com//inquiryMost Korean companies have worried about U.S. protectionist measures after the inauguration of President Donald Trump. But a few expect benefits from his administration that plans to increase investments in infrastructure.

LS Cable & System said recently it will start producing 10.3 kilometers of submarine cables in April to supply the the New York Power Authority (NYPA). The company said it also plans to expand its investment in the U.S. market to keep up with the potential growing demand in tandem with the U.S. government’s expansionary policies.

“We expect that the Trump administration’s policy to expand investment in infrastructure will boost power cable demand in the United States to replace obsolete ones,” an LS Cable official said. “Accordingly, we are considering more investments in the U.S. market.”

According to the company, its submarine cables will replace old cables laid at the bottom of Lake Champlain, which is between New York State and Vermont. The old cables were installed in 1958 and 1970.

LS Cable reached a deal with the NYPA to join the $47 million project in January 2016. The new cables will be installed between September and December this year. LS Cable in 2006 became the first Korean company to provide extra-high-voltage cables for the U.S. market.

During Trump’s presidential election campaign, he pledged to pour $1 trillion into reinforcing national infrastructure such as highways, bridges and tunnels. Doosan Group, which has suffered liquidity problems in recent years, would be happy with this news.

Doosan Bobcat is expected to be one of the biggest beneficiaries as the world’s leading small-sized construction equipment maker is already generating about 70 percent of its sales in the North American market. Market expectations are that the policy, once realized, will generate extra demand worth more than $17 billion for Doosan Bobcat.

In addition, Trump has promised to drop the federal corporate tax rate to 15 percent, down from 35 percent as it is now. Doosan Bobcat and its parent company Doosan Infracore will benefit further if his election pledge comes true.

Besides its global headquarters in Korea, Doosan Bobcat operates its main manufacturing base in North Dakota in the USA. It was acquired by Doosan Infracore in 2007, helping Doosan expand its manufacturing and sales channels to North America, China and Europe. Doosan Bobcat posted 4.4 trillion won ($39.2 billion) in sales and 385.6 billion won in operating profit last year. Doosan, however, remained cautious about the rosy expectations as it is uncertain if the Trump administration will keep all its pledges.

Korea Aerospace Industries (KAI) is also expected to benefit from Trump in its bid to provide its T-50A trainer jet for the U.S. Air Force, thanks to its partnership with Lockheed Martin. The U.S. firm has been friendly with Republicans. It is known to have paid $1.88 million in political support for Trump during his presidential election campaign.

The U.S. Air Force is pushing for an advanced pilot training project, investing more than $15 billion to replace its 350 T-38 trainer aircraft. The Lockheed Martin-KAI consortium is competing with the Boeing- Saab alliance in this bidding.

<Source:KITA>

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Sales of Seven Out of 10 Domestic Car Models Decline Last Year

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The sales of seven out of 10 domestic car models in Korea declined in 2016 despite the domestic car market growing 0.6 percent last year from a year earlier.

A few popular models led the market growth, but most other models suffered sharp declines in sales year-on-year.

According to data released by the five domestic carmakers, sales of only 18 car models out of 60 increased last year. Commercial vehicle models such as busses and trucks were excluded in the data. The sales of the remaining 42 models, or 70 percent, declined.

For Hyundai Motor, only the G80 and the EQ900 sedan enjoyed growth in sales last year at 10.3 percent and 310.9 percent, respectively. Some 11,148 Ioniq sedans – introduced last January – were sold. The carmaker’s remaining 15 car models saw sales decrease.

The Avante sedan, one of Hyundai Motor’s bestselling models, had a 6.6 percent decrease in sales while the Sonata sedan and the Santa Fe decreased by 24.2 percent and 17.2 percent, respectively. Introduced in September, the i30 hatchback also suffered a 25.9 percent decline in sales.

Hyundai Motor’s sister brand Kia Motors had a 1.4 percent increase in sales last year, but only four models out of 14 enjoyed sales growth.

Last year, sales of the Morning, K3, K5, K9 sedans and the Sportage SUV declined by 15.1 percent, 14.1 percent, 23.9 percent, 40.5 percent and 5.4 percent, respectively. Only, the K7 sedan and the Mohave SUV led Kia Motors’ sales growth last year, marking a 169.5 percent and 73.6 percent increase respectively.

201702e_%ed%8e%98%ec%9d%b4%ec%a7%80_53_03GM and Renault Samsung also showed their dependence on a few popular models in sales. GM Korea, the U.S.-based carmaker’s local sales unit, had its best performance in sales last year since it started business operations in 2002, but the glory was led by a few models.

The Malibu, Spark, Impala, Trax and Camaro had a 123.8 percent, 32.3 percent, 64.1 percent, 9.9 percent and 1,287.5 percent increase in sales, respectively. The remaining seven models in the carmaker’s lineup, however, suffered declines.

Renault Samsung also had excellent sales last year, but the growth was led only by two popular models – the SM6 sedan and the QM6 SUV. Some 57,478 SM6s were sold along with 14,126 QM6 SUVs, but the remaining models suffered a sharp decline.

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Korean gov’t will not ask Japan to Resume Currency Swap Talks

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The Korean government said recently it will not ask Japan to resume bilateral currency swap talks. Tokyo put the talks on hold as part a “diplomatic retaliation” for the placing of a “comfort woman” statue in front of the Japanese consulate in Busan, symbolizing Japan’s wartime sexual slavery.

Deputy Minister of Strategy and Finance Song Inchang said in a press conference that there would be “no big impact regarding the halt of the Korea-Japan currency swap talks,” although the government “will open channels for discussion, but will not ask the Japanese to resume the talks.” “We regret Tokyo’s move regarding the statue. We believe politics and economics should be handled separately.”

The two neighbors have been haggling over resuming a swap deal of their currencies since last year. The bilateral currency swap began in 2001 at $2 billion and increased rapidly to peak at $70 billion in 2011. However, the volume shrank after former President Lee Myung-bak’s visit to the Dokdo islets in 2012 and expired in February 2015.

Dokdo is Korea’s easternmost territory but Japan also claims sovereignty of the volcanic out crop. In August last year, the two countries agreed to resume talks over the swap, but earlier this month Japan placed the talks on hold after civic activists erected the statue in December last year.

A currency swap is an arrangement between two countries to exchange one currency for another at a specific rate of exchange in a bid to use the more powerful currency to soothe volatility in the market.

A currency swap between Seoul and Tokyo has been widely accepted as beneficial to countries. Korea could have an additional safety net to brace for emergencies, while Japan could use the deal to lift the international image of its currency.

201702e_%ed%8e%98%ec%9d%b4%ec%a7%80_52_03Meanwhile, Song said the government is seeking to extend a swap deal with China, which expires in October this year. In March last year, Korea and China agreed to extend their swap deal “in principle.” However, with Seoul’s decision to deploy a U.S. Terminal High Altitude Area Defense (THAAD) battery on its soil, uncertainties still linger over the extension.

“It is true that there are uncertainties including political issues,” Song said. “Due to the uncertainties, it is difficult to predict what’s going to happen.” Korea and China signed a swap deal in 2009 and extended it twice. The volume of the deal reached $56 billion, which accounts for 51.4 percent of all swap deals Korea has inked with other countries.

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Korea’s exports in Oct. dn 3.2% due to Hyundai strike, Galaxy Note7 crisis

https://korean-electronics.com//inquiry South Korea’s exports sank 3.2 percent in October from the year-ago period to reach $41.9 billion with shipments hurt by lengthy strike at auto-making sites and recall and discontinuation of Galaxy Note7 premium phone. Except for August, Korean exports contracted against the previous year since December 2014, the fi rst time exports that drives the economy has been sluggish for so long.
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Refl ecting poor domestic demand, imports in October slipped 5.4 percent year-on-year to $34.8 billion. The nation as result recorded a trade surplus of $7.2 billion last month, a black fi gure for the 57th consecutive month, according to the Ministry of Trade, Industry and Energy on Tuesday.

Exports of automobiles fell 11.8 percent year-on-year and outbound shipments of wireless electronics devices tumbled 28.1 percent, the biggest drop since July in 2012 hit by the exit of Galaxy Note7.

By item, exports of semiconductor, vessels and computers have increased. Shipments in petrochemical and steel products, automobiles, petroleum products and electronic appliances improved.

Shipments of fl at panel displays and computers were strongest for the year, recording $2.38 billion and $790 million, respectively. Exports of cosmetics reached $400 million, the second largest monthly export amount in the nation’s history.

By nation, exports to China came to $11.1 billion, the largest for the year. The fi gure is down 11.3 percent from the same period of last year. Exports to Vietnam have continued to rise and those to the European Union, Southeast Asian countries and the Middle East have turned upward. Exports to the U.S. and Japan remained soft.
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