Tag Archives: USA

Amazon.com in Korea? Unlikely, Here’s Why (Update 1)

Need to find the fair price of ANYTHING?  Look no further.
It isn’t perfect competition, but it is as close as the average consumer can get.  Anytime that I am going to buy anything other than food, I always go to www.amazon.com.  Always.  Why is that?

Comparison shopping done easily
The choices in the U.S. are dizzying.  Dozens of sites for virtually every item.  However, Amazon.com has put together a site which is consolidates other online stores which have partnered with Amazon.  None of this matters to an American consumer: shipping is often free, and a very competitive price can be found on virtually anything that you need to buy.  Shipping?  Free if the purchase is above a certain amount.

Why oh why nawayo.co.kr and gmarket.co.kr Aren’t Even Close
Besides being highly annoying from a visual standpoint, Korean shopping sites are inconvenient at best.  If you are not convinced, look here. Once you get beyond the annoyance factor, there are still reasons why these sites and individual online sellers do not succeed in Korea.  First, fads burst onto the scene and recede into obscurity with blinding speed.  Remember the LG Chocolate?  Neither does anyone else in Korea.  That makes it very risky for online sellers to retain inventory.  Second, it is very difficult to level the playing field against the largest Korean companies.  In other words, small niche companies find it very difficult to evolve into viable entities in Korea.  As a result, the offerings at nawayo.co.kr and gmarket.co.kr are simply the same items from virtually every seller.  Third, import taxes remain a barrier.  The Seoul Gyopo Guide has strongly supported the passage of the KORUS FTA because the effect on everyday Koreans is higher inflation, and fewer choices that result.  Korean retailers also have fewer choices because they cannot afford the risks of carrying more-expensive items.  Those retailers are correct to be afraid, since the FTA should bring down the selling prices after FTA passage.  Those especially at risk are the large department stores that currently carry U.S. brands.  Depending upon the price of shipping, it may actually be cheaper to purchase certain items on Amazon.com and have them shipped to Korea.

Conclusion
Perhaps the Seoul Gyopo Guide should give Korean shopping websites a break.  It isn’t necessarily the sellers’ fault that they have limited access to high quality inventory.  What other way is there to get the attention of the potential buyers for identical products?  Until Korea enjoys a truly competitive marketplace, an all-encompassing website like Amazon.com may be an impossible dream.

Posted in Info for Foreigners Based in Korea, Korean Economy | Tagged , , | 1 Comment

Korea Should Tax Soju to Fund the NPF

The Seoul Gyopo Guide Thanks Everyone for Their Support
First, a huge “thank you” to the readers around the world.  In three short months, many thousands of visitors from every continent, and over 60 countries around the world have visited the Seoul Gyopo Guide.  The Lost Seoul has tried to share its perspective from both a foreigner’s and a Korean’s point of view.  These points of view have been established by many years of education and practical experience.  The bottom line is that people around the world don’t know much about South Korea, and are totally unaware that a city like Seoul has grown into the world’s 5th largest metropolis.  While the views of The Lost Seoul are hardly unbiased, they are views which are being offered as fairly as possible.

Korea Needs to Avoid the Japanese and U.S. Example

It is a well-known fact that the National Pension Fund of Korea faces many challenges.  Investment returns have been, overall, more than acceptable.  The National Pension Fund is a well-respected investor around the world.  Nevertheless, the demographic fact is that the average age of a Korean residing in Korea is increasing.  As a result the needs of the elderly will increase through time.  There are other countries around the world where this is an issue.  The U.S. and Japan are two prime examples.  It can easily be said that one of Japan’s largest problems is that the aging population is restricting economic growth, and its future indebtedness will only grow, and potentially result in a third “lost decade,” when there is limited economic growth, and limited asset price growth.  In the U.S., the Social Security system is in tatters.  While much of this may be the result of the lower tax receipts as a result of a stagnant economy, the underlying fact is this:  in the past there were 8 payors into the Social Security system for every recipient of benefits, and today that number is…3.  Korea is smaller and cannot withstand these shocks.  Various attempts to increase the birth rate have failed, to put it mildly.  In 2009, Korea had the world’s lowest birthrate.   Let’s put aside the other problems this causes, such as no future demand for real estate, and lack of people to populate the army.  The biggest problem of this low birthrate is that personal income taxes collected by the government will inevitably decline.  That is a certainty unless tax rates increase by an amount to compensate for the loss of payors.

Tax Soju Directly, and Remit the Funds to the National Pension Fund Directly  

Soju is the national alcoholic drink of Korea.  The Seoul Gyopo Guide proposes a 200 KRW tax on every bottle of soju, and that every won is sent to the NPF directly.  A bottle of soju at 7-Eleven or GS24 costs 1,100 KRW.  That is less than USD $1.  Now, we could enter into a whole discussion about how consumer goods are strangely priced in Korea, but don’t get me started (a phrase that The Lost Seoul has taught in a previous “Slang of the Day.”)  Let’s just stop at a couple of examples:  a bottle of Coca-Cola, or orange juice, and a bottle of water are all (or can be) more expensive than a bottle of soju.  Drinking is a well-known problem in Korea.  In fact, there is a even a weblog dedicated to displaying drunk, passed-out Koreans on the street.  A 200KRW tax can then serve two purposes.  First, it can be used to discourage excessive drinking.  Second, it can also be used to finance the impending stress on the National Pension. 

The Potential Objections No Longer Apply

This tax has been proposed in the past.  During the Korea-IMF crisis (known in Korea as IMF 시대), a similar proposal was suggested to fund South Korea’s debt to the International Monetary Fund.  At that time, there were many, many makeshift food stands on the road (포장마차) where unemployed men and women would basically sell food in temporary restaurants.  Jinro, the largest soju brand in Korea at the time, went bankrupt (it has now been re-established).  There were complaints that soju was the one of the only respites from the economic turmoil in Korea.  In addition, there was the notion that men and their sons shared soju as a rite of sorts, a tradition between men and their sons which would be jeopardized as a result of this tax.  Well, times have changed, and the prices of essentially every other beverage in Korea has continued to rise, with the exception of soju. If we need a bottle of soju, then KRW200 is a small price to pay.

In the U.S., taxes (and tobacco such as cigarettes) is a called a sin tax.  That is, if you want to drink or smoke, then you are charged for it.  In the U.S. a pack of cigarettes is at least $5.50, or over KRW6000 (and don’t ask Manhattanites how much a pack costs).  In Korea, a pack of cigarettes is KRW2500.  A KRW200 tax to fund the NPF is not only justifiable, but it goes to solve an inevitable, long-term problem.

A very important aspect of this proposal is the direct remission of all receipts to the National Pension Fund.  This avoids pointless political wrangling.  Usually, when there are budgetary changes, there is a lot of wasteful, politically-driven debate about where the funds would be used.  A direct deposit to the NPF would avoid all of that.  Politicians that object would be easily identifiable to be those against a proposal that would unequivocally help Korea in the long run.  In other words, if Koreans wanted to know who to vote out of office, this could easily be determined.  While identifying selfish politicians is not the main objective of this proposal, it would be a welcome, needed side effect.   

Things Change, and Korea Must Adjust

The demographic dynamics can change, but the benefits of a tax on every bottle of soju would remain.  The birthrate of Korea could increase.  Koreans may stop drinking (doubtful).  A higher corporate tax rate might result in massive over-funding off the NPF.  The Lost Seoul highly doubts that any of these will occur.  It is potentially the case that a tax on every bottle of soju sold will result in a great deal of revenue to be remitted to the NPF.  That would only result in positive side effects.  For example, if there were a large surplus, then the NPF could increase disbursements to aid aimed at the poor and homeless.  It could invest in infrastructure projects to reduce Korea’s dependence on foreign sources of energy.  The elephant in the room is the need to plan for a much, much larger, non tax-paying population, if North and South Korea were suddenly united once again.  In short, a 200KRW tax on every bottle of soju would help solve inevitable long-term issues, and potentially help if certain, sudden events occurred in the short run.

The concept of a “sin tax” is common, and in this case, Korea can learn from other nations.  There are other examples where Korea can follow positive examples to upgrade its practices and laws.  For example, the Seoul Gyopo Guide will begin, in 2011, a new series to focus on Korea’s backwardness with respect to international Family Law, as evidenced by Korea’s non-participation in the Hague Convention on International Child Abduction.  As Korea’s economy advances well into the world’s highest echelon, its social and legal structure must meet the responsibilities that accompany that progress.

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Korea Should Tax Soju to Fund the NPF

The Seoul Gyopo Guide Thanks Everyone for Their Support
First, a huge “thank you” to the readers around the world.  In three short months, many thousands of visitors from every continent, and over 60 countries around the world have visited the Seoul Gyopo Guide.  The Lost Seoul has tried to share its perspective from both a foreigner’s and a Korean’s point of view.  These points of view have been established by many years of education and practical experience.  The bottom line is that people around the world don’t know much about South Korea, and are totally unaware that a city like Seoul has grown into the world’s 5th largest metropolis.  While the views of The Lost Seoul are hardly unbiased, they are views which are being offered as fairly as possible.

Korea Needs to Avoid the Japanese and U.S. Example

It is a well-known fact that the National Pension Fund of Korea faces many challenges.  Investment returns have been, overall, more than acceptable.  The National Pension Fund is a well-respected investor around the world.  Nevertheless, the demographic fact is that the average age of a Korean residing in Korea is increasing.  As a result the needs of the elderly will increase through time.  There are other countries around the world where this is an issue.  The U.S. and Japan are two prime examples.  It can easily be said that one of Japan’s largest problems is that the aging population is restricting economic growth, and its future indebtedness will only grow, and potentially result in a third “lost decade,” when there is limited economic growth, and limited asset price growth.  In the U.S., the Social Security system is in tatters.  While much of this may be the result of the lower tax receipts as a result of a stagnant economy, the underlying fact is this:  in the past there were 8 payors into the Social Security system for every recipient of benefits, and today that number is…3.  Korea is smaller and cannot withstand these shocks.  Various attempts to increase the birth rate have failed, to put it mildly.  In 2009, Korea had the world’s lowest birthrate.   Let’s put aside the other problems this causes, such as no future demand for real estate, and lack of people to populate the army.  The biggest problem of this low birthrate is that personal income taxes collected by the government will inevitably decline.  That is a certainty unless tax rates increase by an amount to compensate for the loss of payors.

Tax Soju Directly, and Remit the Funds to the National Pension Fund Directly  

Soju is the national alcoholic drink of Korea.  The Seoul Gyopo Guide proposes a 200 KRW tax on every bottle of soju, and that every won is sent to the NPF directly.  A bottle of soju at 7-Eleven or GS24 costs 1,100 KRW.  That is less than USD $1.  Now, we could enter into a whole discussion about how consumer goods are strangely priced in Korea, but don’t get me started (a phrase that The Lost Seoul has taught in a previous “Slang of the Day.”)  Let’s just stop at a couple of examples:  a bottle of Coca-Cola, or orange juice, and a bottle of water are all (or can be) more expensive than a bottle of soju.  Drinking is a well-known problem in Korea.  In fact, there is a even a weblog dedicated to displaying drunk, passed-out Koreans on the street.  A 200KRW tax can then serve two purposes.  First, it can be used to discourage excessive drinking.  Second, it can also be used to finance the impending stress on the National Pension. 

The Potential Objections No Longer Apply

This tax has been proposed in the past.  During the Korea-IMF crisis (known in Korea as IMF 시대), a similar proposal was suggested to fund South Korea’s debt to the International Monetary Fund.  At that time, there were many, many makeshift food stands on the road (포장마차) where unemployed men and women would basically sell food in temporary restaurants.  Jinro, the largest soju brand in Korea at the time, went bankrupt (it has now been re-established).  There were complaints that soju was the one of the only respites from the economic turmoil in Korea.  In addition, there was the notion that men and their sons shared soju as a rite of sorts, a tradition between men and their sons which would be jeopardized as a result of this tax.  Well, times have changed, and the prices of essentially every other beverage in Korea has continued to rise, with the exception of soju. If we need a bottle of soju, then KRW200 is a small price to pay.

In the U.S., taxes (and tobacco such as cigarettes) is a called a sin tax.  That is, if you want to drink or smoke, then you are charged for it.  In the U.S. a pack of cigarettes is at least $5.50, or over KRW6000 (and don’t ask Manhattanites how much a pack costs).  In Korea, a pack of cigarettes is KRW2500.  A KRW200 tax to fund the NPF is not only justifiable, but it goes to solve an inevitable, long-term problem.

A very important aspect of this proposal is the direct remission of all receipts to the National Pension Fund.  This avoids pointless political wrangling.  Usually, when there are budgetary changes, there is a lot of wasteful, politically-driven debate about where the funds would be used.  A direct deposit to the NPF would avoid all of that.  Politicians that object would be easily identifiable to be those against a proposal that would unequivocally help Korea in the long run.  In other words, if Koreans wanted to know who to vote out of office, this could easily be determined.  While identifying selfish politicians is not the main objective of this proposal, it would be a welcome, needed side effect.   

Things Change, and Korea Must Adjust

The demographic dynamics can change, but the benefits of a tax on every bottle of soju would remain.  The birthrate of Korea could increase.  Koreans may stop drinking (doubtful).  A higher corporate tax rate might result in massive over-funding off the NPF.  The Lost Seoul highly doubts that any of these will occur.  It is potentially the case that a tax on every bottle of soju sold will result in a great deal of revenue to be remitted to the NPF.  That would only result in positive side effects.  For example, if there were a large surplus, then the NPF could increase disbursements to aid aimed at the poor and homeless.  It could invest in infrastructure projects to reduce Korea’s dependence on foreign sources of energy.  The elephant in the room is the need to plan for a much, much larger, non tax-paying population, if North and South Korea were suddenly united once again.  In short, a 200KRW tax on every bottle of soju would help solve inevitable long-term issues, and potentially help if certain, sudden events occurred in the short run.

The concept of a “sin tax” is common, and in this case, Korea can learn from other nations.  There are other examples where Korea can follow positive examples to upgrade its practices and laws.  For example, the Seoul Gyopo Guide will begin, in 2011, a new series to focus on Korea’s backwardness with respect to international Family Law, as evidenced by Korea’s non-participation in the Hague Convention on International Child Abduction.  As Korea’s economy advances well into the world’s highest echelon, its social and legal structure must meet the responsibilities that accompany that progress.

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The American Envy of the Korean Education System (Part 4): Why Do Koreans Stop Studying?

Note:  This is Part 4 of a series.  Parts 1-3 can be found here.

Why Do Koreans Stop Studying When Entering University?

There are many, many possible explanations.  If you go to Seoul National University or nearby Yonsei University in Seoul, as well as the subway stations that surround the various universities in Korea, you will find the identical scene everywhere you go.  Lights, lights, and more lights which are illuminating shopping, restaurants, and PC rooms.  What do you not see?  Tired students carrying books.  If you go to the top universities in the U.S. (except Stanford which The Lost Seoul still contends is like fantasy-land), you cannot find those scenes.  That is quite remarkable:  even New York University, right in the middle of Manhattan, is strikingly quiet except on one street (8th Street).  In England, Oxford is deadly silent.  Why the striking difference?  In Korea, the students are PLAYING, not studying.  This part of The American Envy of the Korean Education System looks for a partial explanation.

Possibility 1.  Korean students are burned out.  It is true that the average student that has entered a college in Korea has studied much more than a student that has entered the same-caliber college in the U.S.  An American student has endured 3-4 years of high pressure, high-intensity preparation.  In Korea, that student has been doing this since the 6th grade, at the minimum.  That means 2-3 extra years of high-intensity studying.  

Possibility 2.  No Hagwons Means No Need to Study.  Korean students have been used to the hagwon system for more than 10 years each.  All of a sudden, there is no hagwon drill master wtching the performance of a Korean student.  There are no drills which supplement classroom lessons. 
It is a fact that many top hagwons are more difficult than the school a student attends.  It is no wonder that a Korean student may feel liberated when entering college, and uses that freedom to…do anything else except study.

Possibility 3.  There is no “next step” in Korea. For American students, the path to a top graduate school, like Harvard Law, or the University of Chicago MBA program, will require very good grades while in college.  If you want to become a medical doctor in the U.S., not only do you need good grades, but you need to be involved in extra-curricular activities like laboratory work or volunteer work.  Importantly, there are separate, high-competitive entrance exams such as the GMAT and LSAT to enter graduate programs in the U.S.
In Korea, you apply to a college which may automatically qualify a student to the graduate school.  For example, a student can apply to Catholic Medical School in Korea at the age of 19 before entering university.  That means that there is no additional pressure to perform in college for Korean students.  Now, this system is currently under review.  For example, entry into law school in Korea is being transitioned to a system similar to the U.S., which means that a person needs to graduate from college first, and then apply to law school separately.  Whether this system becomes universally accepted in Korea is yet to be determined.  In short, the lack of a “next step” with a new application process in Korea may lessen the need for Korean students to perform at the undergraduate level.

Possibility 4.  Males are “Preparing” for Military Service.  The Lost Seoul believes that the mandatory military service, while it may be necessary, services as a barrier to progress in other areas for certain males.  That is not to say that the military is not valuable.  Korean men form unbreakable bonds with one another by collectively going through the difficult times during their military service.  Certain men, who lacked personal responsibility traits, can mature and gain those traits during military service.  Nevertheless, other males, who already possess these qualities, could use their time more productively by pursuing their personal and professional goals, at the very time in life when both physical and mental capacities are at their height.  Knowing that military service awaits, one reason that Korean men don’t study during college is because they all know that their freedom will soon be suspended for 2 1/2 years.

Possibility 5.  The “Mrs.” Degree.  There is no doubt that this is fading away in Korea, and quickly.  Given the fact that there is no mandatory military service, the fact is that the women of Korea can use this time to develop themselves personally and professionally.  However, certain schools such as Ewha Women’s University (이대) still have that lingering reputation as being a wife-preparation college.  In the past, perhaps this was true, but now, The Lost Seoul doubts that this is a serious reason for the lack of studying by college-age students in Korea.

Final Answer?  The Lost Seoul’s best guess is that it is Possibility #1 and Possibility #2 explain most of the reason.  Korean students have already studied for 3 extra years when compared to American students in order to enter into a highly competitive university.  No hagwons are available to apply additional pressure upon students.  Some of this is changing now, as hagwons also exist at universities.  Nevertheless, these hagwons are not nearly as prevalent at college as they are during a Korean students’ high school years.  These two possibilities also explain Korean students’ relative failure at Ivy League schools, after graduating from Korean high schools.  Perhaps some of this is due to English, but there are other foreign students from other countries that do not have the same failure rate at American universities. 

Conclusions.  Korea caters to the mean, while the U.S. caters to the extremes.  While the average student in Korea may test better, the top students in the U.S. have almost unlimited resources at their disposal.  This is largely explained by the need for Korea to elevate an entire nation since it has many limitations:  lack of geographical size, lack of energy/natural resources, history of subjugation.  The U.S. knows none of these limitations.  The U.S. has the resources to attempt the extreme, and champions individual rights.  In general, Korea does not know these concepts.  This may change as Korea has risen from one of the world’s poorest nations to one of the richest.  We cannot know this.  We also cannot suggest changing Korea to mimic the U.S. would be a positive for Korea as a whole.  It would be convenient to pick and choose the best aspects of each system, but each system, its strengths and its weaknesses, reflect the nation’s history and political influences.  In short, there are small aspects in which the Korean system can and should be emulated, but the entire system cannot be duplicated.
However, there is no doubt that students in the U.S. would perform better if not ingrained with attitudes such as “I am no good at math” as if that was a blessing or gift:  Korean students know and have proven that just practicing more diligently will largely compensate for any slight differences in natural ability.  American students give up well before they will ever know if they could have attained any goals. 
On the other hand, Korean students need to learn the American saying “It is not how you begin, but how you finish.”  Those Korean natives who know this are currently trailblazers in their fields.  Hopefully, Korean students will learn from their example in the future.

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Amazing! Logic Reigns, The S. Korea – US (KORUS) FTA Finally Resolved

Korea-US Free Trade Agreement, At Last
A few hours after the Seoul Gyopo Guide’s third post regarding the necessity of the S. Korea – US (KORUS) Free Trade Agreement, an agreement was reached, as the impasse regarding auto tariffs was resolved.  The Seoul Gyopo Guide has argued, on multiple occasions, that the FTA would benefit Korean citizens who are suffering due to inflationary pressures in Korea.  Any extra measure to reduce this pressure would be welcome.

Korean Government Acted Wisely by Conceding Insignificant Points
Korea’s concessions were proper in the larger context, given that the country is suffering from a higher cost of living than is necessary, due to tariffs on all types of imports.  In addition, it was refreshing that Korea’s delegation properly pointed out that there are many levels and stages of international cooperation.  Korea rightly gave concessions in on the very smallest points in the interest of its people as a whole.  If you want to iterate with cooperation, then give-and-take is necessary.  

Time to Remove the Fakers
Now, it is time for the politicians in Korea and the U.S. to pass the FTA in their respective legislatures.  The Seoul Gyopo Guide will identify all those in either country who oppose the passing of the KORUS FTA.  It is quite simple, really.  For those that oppose, the citizens can return that legislator to the private sector.  In other words, both Americans and Koreans can, and should, vote any legislator that opposes the KORUS FTA out of office The voting records of legislators in both countries are a matter of public record.  Citizens of both countries should make it very clear to those legislators that their futures in public office depend on their vote of the KORUS FTA.  You will be able to find those that cater to special interests instead of the well-being of their constituents as a whole.  This is especially true for Korean legislators: members of the General Assembly should vote unanimously.  Korean citizens should watch the General Assembly carefully.  Protesters and activists who suggest that the KORUS FTA should not be ratified will be revealing themselves as narrow-minded parties that are looking for publicity only, and not to serve the Korean citizens.

Ignore the Korean Press Coverage Regarding Protests
In the coming months, there will be the inevitable protests, and potentially, there will be news on the internet reporting that Korea (or Koreans) do not approve of the KORUS FTA.  That is fiction created by those who want greater viewership or sponsorship.  Everyday Koreans understand that they will want to purchase American-made products as soon as they are available in Korea.  Many, many of the American brand names that are popular in Korea will be affordable to everyday Koreans, as opposed to only the privileged. In the coming days, the Seoul Gyopo Guide will explain that there will be some resistance for the KORUS FTA, but that will be from the largest deluxe department stores, like Shinsaegae and Hyundai Department Store, because the “designer” boutiques of American brands will be revealed to be massively over-priced. The pictures and footage of Korean protesters is entertaining, maybe, but will not reflect the sentiment of the Korean population. Do not be led to believe otherwise.

The Sooner, The Better
For the suffering Americans in the midst of an anemic economic recovery, and to everyday Koreans where inflation is high (and rising rapidly in many areas), the KORUS FTA cannot be passed soon enough.  The Lost Seoul hopes that both sides can proceed quickly and finally ratify the agreement.  Delays are unwarranted and those causing delays should be punished by voters at their next possible opportunity (i.e. election).

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