Date: March 1, 2011
Source: Hankyung Economy
The South Korean government is going to lower import tariffs slapped on dairy products and impose zero tariffs on a greater volume of imported pork belly in an effort to stabilize consumer prices.
The government's action is interpreted as its willingness to prevent inflation expectations from rising, as prices of some items show signs of climbing amid the foot-and-mouth disease (FMD) outbreak and high volatility in international commodity prices.
According to the Ministry of Strategy and Finance (MOSF) on Monday, the government voted for applying tariff quotas to 24 items including butter and cheese and expanding the volume of two items including whole milk powder that will be imported with zero tariffs.
The tariff quota system is a means that allows the government to flexibly lower tariffs on imported items temporarily within the range of 40% points to keep prices under check. The government cut tariffs on dairy products significantly in preparation against expected supply shortage of milk due to the FMD crisis.
Items with zero tariffs are mostly dairy products, such as frozen whipped cream, butter, cheese and processed butter. Others include commodities like aluminum ingots, titanium ingots, ferrochrome and ferrosilicon.
In addition, the government decided to lower tariffs even further on eight items that were already imposed with tariff quotas. Seven items including processed corns, soybean cakes, olive oil, sunflower oil and corn oil will be imported with no tariff, while only soybean oil will be imposed with a tariff of 2.5%. To strike a balance in supply and demand, the amount of imported items on zero tariffs will be expanded, too.
The import volume of frozen pork belly will increase from 10,000 tons to 60,000 tons amid rising pork prices due to the FMD crisis. The import volume of whole milk powder and skim milk powder will be 4,000 tons and 26,000 tons, respectively, each growing from 1,000 tons and 8,000 tons.
Date: March 3, 2011
Source: JoongAng Daily
When the free trade agreement (FTA) signed between South Korea and the European Union takes effect, Korean-manufactured automobile parts, televisions and textile products will increase their shares in the European market.
Korea Trade-Investment Promotion Agency (KOTRA) announced on Wednesday that 26 large European buyers from countries like Germany and Italy gave positive responses to increasing purchases of Korean-made products when the Korea-EU FTA goes into effect in an interview conducted by the agency.
According to KOTRA, the interview result suggests that promising export items such as auto parts, construction machinery and equipment and wireless communications devices will see their exports boost by five to 15%.
For the auto part sector considered as biggest beneficiary of the Korea-EU FTA, it was forecast that Korean-produced auto parts will account for 10% of the European market, increasing from 8.45% last year, when import tariffs amounting to 2.7 to 4.5% are lifted under the free trade pact.
A purchasing official from Bosch, the world's largest auto part company said the company will buy five to 10% more auto parts from Korea, when the current 4.5% tariff is eliminated, according to KOTRA.
An official from a large Dutch IT firm Copaco with annual sales of 600 million euros ($826.61) also said that Korean auto parts would still have to compete with Philips' and Sony's products, but the company is planning to increase purchases of Korean-made auto parts by about 15% when Korea's FTA with the EU takes effect.
Apart from the auto part sector, television, textile and ABS resin companies based in Europe confirmed in the interview that they have plans to increase purchases of Korean products by five to 15% after the Korea-EU FTA goes into effect.
Date: March 4, 2011 Source: Hankyung Economy
South Korea's five major import items - copper, aluminum, nickel, wheat and raw sugar - hit a record high in price.
According to Korea Customs Service on Thursday, the price of copper had exceeded $8,000 per ton in last October. However, the figure further climbed, hitting $9,317 per ton last month. The aluminum price set a new record of $2,589 per ton.
The import price of nickel jumped by more than 40% from a year earlier, reaching $26,538 a ton. The price of raw sugar surpassed $600 a ton in two months after breaking the $500 line in last December. The import price of the raw material for sugar in February had soared by a whopping 55% from $436 in last October. The wheat price, which was sold at more than $300 a ton as of November, is about to reach $400 per ton, hovering at $380 as of last month.
Iron ore was priced at $154 per ton until a month ago, almost reaching its previous record of $159 in last October. The price of scrap iron actually hit the highest level of $605 per ton in January, but dropped back to $567 per ton last month.
The crude oil price has already spiked to $95 a barrel, although it hasn't yet reached the $100 line as it did in 2008.
Corn is selling at $277 per ton, being forecast to approach $300.
Date: March 5, 2011
Source: Mail Business Newspaper
At the bustling shopping district of Myeong-dong, central Seoul, last week, a burst of primary colors seemed to chase away the remaining vestiges of the drab winter at the launch party for the new "fast fashion" brand Spicy Color and its flagship store.
The local start-up brand, in the midst of Seoul's fashion central, showcased whimsical decor and models dressed at the height of mix-and-match chic.
"[Spicy Color] is a new concept in fast fashion that combines fashion with elements of pop culture," said CEO Kim Hae-ryeon. "It's our goal to grow it into a global brand that represents Korea."
"Fast fashion" refers to brands that sell clothes with a fast turnover to keep up with the pace of cutting-edge fashion by consolidating design, production and retail operations within one firm.
Korea's fashion scene has become a battlefield for "fast fashion" brands. The runaway success of global brands such as Uniqlo in the local market has prompted other multinational brands to join the fray.
Meanwhile, domestic fast fashion brands, launched by conglomerates, local fashion mainstays and startups alike, are racing to catch up to global powerhouses like H&M and Zara in their own backyard.
The history of fast fashion in Korea began in 2006 when Japan-based Uniqlo entered the market. This was followed by U.S.-based Forever 21 and Spain-based Zara in 2008 and Sweden-based H&M in 2009.
And the field is about to become even more crowded, as global casual brand Abercrombie & Fitch has recently decided to enter the Korean market. Britain's Topshop is reportedly in final negotiations with local partner Cheil Industries for a Korean launch.
Local experts say that the reason global fast fashion brands are flocking to Korea is the soaring performance of brands already here. "Brands that have launched in Korea have been successful," said a local fashion industry insider. "This has led other global brands to positively assess the local market's potential for growth."
In fact, Uniqlo has seen its revenue in Korea explode from 30 billion won ($26.88 million) in 2006 to 250 billion won last year, with a goal of 350 billion won for this year.
Zara's outlet at COEX in Samseong-dong, southern Seoul, recently became first in sales among all Zara shops worldwide - and 10 of its 50 highest-grossing outlets are in Korea. Forever 21 is reportedly raking in monthly sales of more than 2 billion won from its single outlet in Myeong-dong.
And now, domestic fashion brands are going on the attack. Codes Combine, a local fashion company, launched a new lineup called Codes Combine Hiker on Feb. 24.
The new line is a fast fashion brand with an outdoor flair. "We are planning to add a children's clothing lineup soon to become a megafast fashion brand with nine categories under our belt," said company official Lee Mi-sook.
Lotte Department Store is also getting in the action, with plans to launch its own fast fashion brand after its private label Kuss Kuss is established.
Fashion industry bulwark E-Land Group has been pursuing a strategy of releasing clothes designed to fit Korean physiques at a lower price. After launching fast fashion brands "SPAO" and "Mixxo" in 2009 and 2010, respectively, E-Land said that the latter will "open 15 more outlets this year on top of the 12 opened last year to reach 100 billion won in revenue."
"More customers are seeking out products with better quality and good prices, and fast fashion brands can save costs by eliminating the middleman, which is why they are dominating the industry," said Yoo Hye-kyung, a fashion professor at the University of Incheon.
Date: March 7, 2011 Source: Samsung Economic Institute
For the past 10 months, the won and yen have strengthened in tandem against the weakening U.S. dollar, reversing a five-year period in which the won/dollar and yen/dollar exchange rates moved in opposite directions. Now, conditions are gravitating back to a decoupled won and yen again, which would pressure the price competitiveness of Korea's exporters, who have benefited significantly from a friendly currency environment.
The inverse relationship of the won/dollar and yen/dollar exchange rates from 2005 to 2009 was due to the yen carry trade, which involved borrowing cheaply in Japan and investing in countries with higher interest rates.
In the weak dollar period of 2005 to 2007, a widening gap between interest rates in Japan and the U.S. fueled the robust yen carry trade, weakening the yen's value against the dollar. Meanwhile, the won appreciated sharply against the dollar due to selling of shipbuilders' forward exchanges and continued current account surpluses. From the autumn of 2008 to early 2009, as the global financial crisis unfolded and there was a flight to the safety of the dollar, the won/dollar exchange rate soared while the yen/dollar exchange rate plunged.
To resuscitate the U.S. economy, the U.S. Federal Reserve has implemented quantitative easing, buying up government bonds to push down their interest rate in hopes of stimulating business investment. Amid the dollar's weakening and the absence of the yen carry trade, the yen/dollar and won/dollar exchange rates fell at a similar speed, creating a won-yen coupling from June 2010 until now.
According to an econometric analysis using the Foreign Exchange Rate Determination Model, the yen carry trade had a statistically significant influence on the won/yen exchange rate. The econometric analysis proved that if the yen carry trade expands, the won/yen exchange rate falls and if the yen carry trade unwinds, the won/yen exchange rate rises. Other variables such as the real income gap between Korea and Japan, short-term interest rate differentials and the gap between the two countries' expected inflation were also found to have a statistically significant effect on the won/yen exchange rate.
If the global financial markets stabilize and the U.S. economic recovery spurs speculation of a rate hike, the won/yen exchange rate could slide further. A U.S. rate hike also would put the yen carry trade back in play and eventually weaken the yen against the dollar.
In fact, better-than-expected results in some segments of the U.S. economy are spurring speculation of a Fed rate hike. Supported by both favorable exports and consumption, the U.S. economy grew 2.8 percent (quarter on quarter, annualized rate) in the fourth quarter of 2010. On top of that, the U.S. inflation rate is creeping upward.
Factors other than the yen carry trade seem to support the fall of won/yen exchange rate. In the short to mid-term, the won's value is expected to strengthen further thanks to Korea's current account surplus and additional rate hikes by the Bank of Korea.
As for the yen, rising concerns over Japan's fiscal deficit and the possibility of government intervention in the foreign exchange market to secure price competitiveness of exports are likely to weaken the yen. Still, there are factors that could limit the weakening of the yen, such as Japan's continued current account surplus and low inflation.
Korea needs to prepare for weak export competitiveness stemming from a fall in the won/yen exchange rate. Since Korea's main export items are similar to those of Japan, a drop in the won/yen exchange rate could deal a serious blow to Korea's exports.
In fact, changes in the yen/dollar exchange rate have a greater impact on Korea's exports than changes in the won/dollar exchange rate. Due to the increased regional trade among Asian countries, the government needs to consider the won's exchange rate with major Asian currencies such as won/yen and won/yuan to be as important as the won/dollar rate.
Date: March 7, 2011 Source: Ministry of Economy & Knowledge
The Ministry of Knowledge Economy has released its trade figures for January. The nation's trade balance is back in the black after three years in the red, recording $2.96 billion. Year on year, exports hit an all-time high in January.
On the back of strong outbound shipments of semiconductors and ships, exports rose 46 percent compared with January 2010 to reach $44.89 billion. The average value of all exports per day climbed 42.9 percent to $1.95 billion. Most of the major export items showed a notable increase; in particular, ship exports displayed three-digit growth.
Exports to most of Korea's key trading partners increased during the first 20 days of January, with outbound shipments to Latin America jumping 137.7 percent. Exports of ships to China and Latin America went up dramatically, posting respective increases of 872.1 percent and 1,324.9 percent. Outbound shipments of steel to the United States (70.7 percent) and the European Union (63.9 percent) also surged.
Meanwhile, imports shot up 32.9 percent to $41.93 billion. The average value of all imports per day increased 30.1 percent to $1.82 billion. Inbound shipments of raw materials went up 29.1 percent, while imports of capital goods and consumer goods rose 25.6 percent and 68 percent, respectively. Imports from major trading partners increased.
Office of Commercial Affairs, Royal Thai Embassy in Korea
Source : http://www.depthai.go.th