The Screaming Pen

Providing Global Insight, Context, and Perspective

Buying Korean

The Trouble with Entering the South Korean Market

There is perhaps no country with such loyal devotion to its homegrown companies as South Korea. Domestic all-stars Samsung, Hyundai, LG, and others have easily maintained dominance due to the fealty of Korean citizens and, also importantly, favorable relations with government, while foreign darlings from Apple to Hollywood’s movie industry have run up against tremendous difficulty penetrating the market.

While even conservative estimates of the worldwide market share controlled by Apple’s iPod put the figure around 25%, in Korea this plummets to 1.8%; Korean firms iRiver, Samsung, and Cowon are the clear mp3 industry leaders here. In cinema, government regulation mandates that movie theaters run only Korean movies for 146 days a year. From July this number will drop to 73 days per year, yet the reduction will be brooked due to robust demand for domestically produced movies.

 
Not Seoul Tasty

Allegiance to things Korean is found in sports too – from soccer to ice skating – and in health care, with many Koreans living abroad in the United States and Europe preferring to return home for complicated surgeries. Moreover, many Koreans question whether last year’s cloning scandal involving Hwang Woo-suk of Seoul National University, despite his own admission of falsification, was truly worthy of international opprobrium or merely an attempt by foreigners to undermine the nation’s scientific achievement. Foreign brands looking to enter the Korean market should be fully aware of this national mindset, which additionally doesn’t appear to be changing with the generations: young Koreans routinely preoccupy themselves with a firm’s nationality and prefer to “buy Korean.”

Difficult, but not Impossible

American brands looking to make inroads in Korea can take solace, however, in the success made by at least one foreign firm. With over 50 locations in the country as of May 2006, Outback Steakhouse – an American-based (Tampa, Florida), yet Australian-themed concept restaurant – is viewed as fine dining by many Koreans. Outback’s prosperity clearly may relate to its identification with “the lucky country,” a place better liked in Korea than is the United States. Next: Kangaroo-inspired iPods?

– DML

 2006. All rights reserved.

Advertisements

May 7, 2006 Posted by | Asia, Author: DML, Business, Country Profiles, Korea, World Markets | Leave a comment

Oil, Gold, ETFs, Oh My!

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die in euphoria.”

– Sir John Templeton
The financial media’s obsession du jour of rising commodity prices has resulted in a frenzy of investing by amateurs seeking the high returns that they cannot seem to capture in the current lackluster American equity market. A recent article in the Financial Times mentions that pension funds in the United Kingdom have been pouring record amounts of money into the commodities markets. ETFs that allow investors to bet on the price of oil and gold have been opening at a record pace, as news conscious investors are afraid that they will miss the boat on the commodities boom.

While it is possible that long term factors such as rising world demand for commodities, along with shorter term factors such as the current situations in Iran and Nigeria will cause increases in the price of oil and other commodities over time, it is foolish to believe that the current bull market for commodities, especially oil, will continue forever without experiencing a price correction. There is a distinct possibility that we may be in for a short term bear market within a secular long term commodities bull market , especially for oil. For today’s discussion we will focus on oil prices, as it is a topic receiving heavy attention in the American media right now.

source: Oilenergy.com

Graph: Notice that the current bull market for light, sweet, crude is longer in duration and greater in magnitude than other historical booms, most notably the one that occurred in the mid 1970s.

Smart investors are aware that the time to buy into an asset class is when that asset class is out of favor with other investors, not when it is experiencing record returns. Logic tells you that the time to invest in an oil ETF would have been in the late 1990s, when oil prices were low. It is apparent that the global herd of investors are acting illogically and this is where the smart investor will recognize and seize opportunities. It is possible that the same people who saw opportunities at the height of the tech bubble in 2000 and lost money, are some of the same people who are buying into Oil and Gold ETFs right now. Although past performance is not indicative of future results, we may be experiencing a price ceiling right now, which would be negative for those who recently bought into oil, but good for the price of gasoline at the pump.

-JPL

 2006. All rights reserved.

thescreamingpen.com is not liable for any loss resulting from any action taken or reliance made by you on any information or material posted by it. You should make your own inquiries and seek independent advice from relevant industry professionals before acting or relying on any information or material which is made available to you pursuant to thescreaminpen.com’s information service, as it may not prove accurate. You rely on this information at your own risk. thscreamingpen.com is not for profit.

May 7, 2006 Posted by | Author: JPL, Oil, Uncategorized | Leave a comment