15 December 2010

A tour and a view on Korea

I've just concluded a whirlwind tour, holidaying in Korea, traversing across Incheon, Seoul, Cheju and Daegu.  It was not without trepidation given the situation at the border. But it would seem that Koreans were generally nonplussed about the whole affair.  The view was one of "don't care, leave them alone".

With the threat of North Korea always on their mind, defence spending will continue to be a constant burden and a drain on government coffers.  Interestingly, South Korea has switched from giving rice to giving barley to North Korea, and there is an interesting logic to this.  Rice can be stored, but barley cannot.  Therefore, doing so is to force the North Koreans to distribute the barley to its people, rather than to store it to support the military.  There is much logic amidst the madness.

In so far as unification is concerned, it is most definitely not on the cards under present circumstances. One school of thought is that only if the North develops its economy and becomes more prosperous, will unification possibility become more realistic.  The thinking is that if the people of the North starts to enjoy a life of wealth, will it still ever want to go to war?  Therefore, the best bet is for the North to be influenced by China as the later becomes increasingly affluent.

Having experienced early winter in North Korea, I must attest that it is really unbearable to be out in the open.  Even with four layers of cloth on, headgear, glove and scarf, I was still freezing cold.  With temperature swinging from 0 degrees celsius on one day, and -10 the next, the extremeties are really severe.  Let alone going to war under such drastic conditions. Not anybody can operate in such conditions. The North-South situation today is very different from that of the Korean War, when South Korea had nothing but 50,000 troops then.

The welfare system in Korea seems to be one that takes care of the ageing populance. But government spending on education is probably low, consequently, the cost of education burden on the typical family is high.  That explains why many Koreas choose to study overseas. Afterall, if studying at home is just marginally cheaper than studying overseas, why not consider studying overseas and pick up Mandarin or English? 

I've often heard that Koreans send their girls for complete plastic makeovers when they graduate from high school, and apparently this is not a fable.  In fact, it is apparently common coffeeshop talk among Korean girls to talk about the latest plastic surgery that they have done.  They are so advanced in this respect that FaceShop even offers a wrinkle removal cream containing botox substance.  Wrinkle-free guaranteed, for a given duration.  No more painful botox injections on a six-monthly basis. Simply apply the cream whenever needed!  It seems like there's much worth thinking about from an investment viewpoint on beauty care companies in Korea.

With the social belief that "man in front, woman follow behind", it seems that for the same fresh graduate seeking a job, given the same academic background and results, the man gets twice the salary expected from that of the woman.  The reason for this dichotomy lies in the belief that woman will get married, give birth and stop working.  Therefore, there is little reason to invest in their training and career development therefore.  Korea appears to suffer from the same problem as Singapore, being perpectually short of workers.  With the social expectations creating an unbalanced environment for its women, I think this is going to be a challenge and impediment to their development.  Their birth rate also compares similarly poorly as Singapore, at 1.2x birth per family, and is probably going to result in an increasingly aged population and the social burden in healthcare and social needs.

On our very first day in Incheon-Seoul, we were greeted by snowfall. What a wonderful experience!  They should invite their Northern neighbours to visit Nami Island for a sojourn during winter. I've never watched "Winter Sonata", which was filmed here. But, if you've been there, you'll realise how beautiful it really is.  Peace and bliss.

I am remaining vested in LionGlobal Korea, an equity unit trust fund, and I remain positive about the future of Korea, despite its many challenges that it has yet to overcome, and the ever present threat of conflict with its Northern brothers.

Disclaimer: This is not a sales pitch. It is merely my own views and is not based on any economic, fundamental or technical analysis.

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