Among Spires

Oxford to east asia

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Fireworks Night

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Payments through Kakao? Daum-Kakao taking off to change online payments.

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Can foreigners benefit from Korea's payment changes?

Finally the outdated payment system is being revamped, but will foreigners be able to use these services without having to deal with tedious sign-ups and ID checks? For many year, foreigners have had problems using their Alien Registration numbers to get Korean bank accounts, credit cars, purchase online shopping and even get a cyworld ID. Hopefully, this all changes soon, and hopefully the government and companies stop using Internet Explorer

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Online Payments Revamped in Korea

From the Wall Street Journal: http://online.wsj.com/articles/online-payments-revamped-in-korea-1414968469

South Korea has long been one of the world’s most advanced countries in information technology, but tough regulations on online financial transactions have made e-commerce development there far more complicated than in competing nations.

Outdated Korean security policies have required online shoppers to take cumbersome authentication steps and install software controls such as ActiveX, a system developed by Microsoft Corp. in the 1990s. Smartphone purchases are similarly complicated. One of the reasons behind the old-fashioned practice, industry officials say, has been privacy concerns which can easily anger the public. In January, dozens of financial company executives offered to resign following a huge data leak on the personal information of credit card holders.

Meanwhile, the global online payment market has grown robust. Chinese Internet giants such as Alibaba Group Holding Ltd. BABA +0.75% and Tencent Holdings Ltd. TCEHY -1.43% have pushed the envelope of payment processing there. Last week Alibaba Executive Chairman Jack Ma suggested his company may partner with Apple Inc. AAPL -0.13% in electronic payments.

Now, riding on a nationwide move to ease regulations in South Korean e-commerce, LG CNS Co. , LG Group 003550.SE -1.26% ’s information-technology unit, is changing the online payment system that has long powered and simultaneously annoyed tens of millions of Internet and smartphone users in the country.

Kim Dae-hoon LG CNS

The company recently partnered with Kakao Corp., now known as Daum Kakao Corp., allowing its new mobile payment software to power transactions made through South Korea’s most-popular chat app, Kakao Talk, which boasts 37 million domestic users. LG CNS says its payment system is more secure and easier to use than those provided by Alibaba’s Alipay and eBay’s PayPal unit. In the first month of the service, 1.2 million users signed up for it.

In an interview with The Wall Street Journal, Kim Dae-hoon, chief executive of LG CNS, talked about the potential scope of change in South Korea’s e-commerce market.

Edited excerpts:

WSJ: How is your new software different from existing ones?

Mr. Kim: It received certification for highest security clearance from the financial regulator, meaning it can be used for transactions without limitations, which is a first in the country. The limit would be a user’s credit-card limits. MPay, as it is called, is the only online payment software in South Korea that has gotten this approval. Without such an approval, the so-called simple-payment systems were—up until recently—required to limit each purchase to levels below 300,000 won (US$284). Anyone wishing to buy something that is more expensive usually has to go through the complicated process of receiving online authentication before the purchase.

WSJ: How was this possible?

Mr. Kim: It took us two years to develop the technology, which we have now patented. Unlike other technologies, we split a user’s card and personal information into different parts, storing some of it encrypted in our servers and other parts with the respective user device. So even if either one of the sides is breached, the customer’s information would remain protected, as the intruder won’t be able to put together the complete information.

WSJ: Why partner with Kakao Corp.?

Mr. Kim: We’ve, of course, tried selling the service on our own. But it didn’t work. People aren’t used to having to download a separate app to use as their mobile payment tool. We needed a big user base to start with, which Kakao Talk had. And now, anyone on the Kakao app will have easy access to our mobile payment service. We’d have to split the revenue continuously with Kakao going forward, but I believe it’ll be a mutually beneficial deal. (He declined to comment on the ratio of the profit split.)

WSJ: What are the challenges?

Mr. Kim: Getting people to make their first move. If they give it a try at least one time, we’re confident that they will continue to use it because it’s much more convenient than existing services. Once a user registers a credit card or two, all they have to do is type in their credit-card password whenever they make a purchase either on their mobile and, eventually, on shopping-mall websites. Security is another key issue. Existing one-click payment services are likely to be prone to security breaches, but those aren’t based on the technology that we’ve built to double-up the security.

WSJ: It seems very mobile. What about for Web-based transactions?

Mr. Kim: We’ll be opening up the service for online transactions soon, starting with several shopping malls—most of the big ones including those operated by GS, CJ, Hyundai and Lotte have decided to partner with us. Most of the card companies—including Samsung, KB, and Hyundai—have also partnered us. The same technology and method will apply for anyone trying to purchase something through the Web using our service. The key is in having your smartphones. When buying something online, users will receive a pop-up message on their smartphones asking for the input of passwords.

WSJ: What kind of changes can we expect?

Mr. Kim: Multilayer payment practices (like Active X) will likely disappear in a year or two, or maybe even faster. Surveys show that in Korea, one out of every five people end up giving up on their online purchases because the process is so complicating. With a simplified method, both the mobile and online payment market in Korea will grow at a significantly faster rate than is currently forecast. This will be beneficial for any party trying to sell their merchandise online, giving them enough reason to try our system, leading to a faster adoption nationwide.

WSJ: What’s your take on a potential Alibaba-Apple tie-up on mobile payments?

Mr. Kim: The fact that the possibility of a partnership is being raised between the two shows how important the mobile payment market has become and how big the potentials are for growth there.

WSJ: What do you think about the adoption of NFC NFC.LN +3.31% (near-field communication) technology, like Apple Pay?

Mr. Kim: The technology itself isn’t hard to adopt. But the thing with NFC is having the infrastructure ready. There have been attempts by others to have NFC implemented as payment methods, but they found little success due to the difficulty in having NFC terminals ready at various retail shops and vendors. Korea has previously had debates over which parties will be in charge of setting up all the NFC-enabled devices at shops. In Korea, iPhone users can still opt for our mobile payment service through Kakao Talk, which is supported in iOS and Android.

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Kia and Hyundai fined $100 million in the US

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Kia and Hyundai fined $100 million

From the VERGE: http://www.theverge.com/2014/11/3/7151725/hyundai-and-kia-fined-record-100-million-for-clean-air-violations

The US government has fined South Korean automaker Hyundai and its subsidiary Kia a record $100 million total for misrepresenting the greenhouse gas emissions and fuel economy on 1.2 million cars the companies sold to American customers. The $100 million fine is the largest ever administered under the Clean Air Act, the landmark 1970 law that requires the US Environmental Protection Agency (EPA) to regulate air pollution nationwide.

The EPA found the violations in some of its routine tests of 2012 model Hyundai and Kia cars. After that, the agency conducted further tests, leading it and the Justice Department to filing a complaint. It accuses the automakers of overstating gas mileage by one-to-six miles and understating emissions on six different 2012-2013 car lines total: the Hyundai Accent, Elantra, Veloster and Santa Fe; and the Kia Rio and Soul. As the EPA acknowledges, that includes the majority of the automakers' vehicles for these model years. Not only did Hyundai and Kia's own tests produce inaccurately higher gas mileage and lower emissions, but the companies deliberately chose the most favorable results. In total, the government estimates that Kia and Hyundai's cited cars will produce 4.75 million metric tons more greenhouse gas emissions over their vehicle lifetimes than the companies originally reported.

These cars aren't being recalled, nor discontinued or tweaked in any way, but the companies are publishing updated, correct mileage and emissions estimates, which means that dealers will have to relabel all the affected 2012-2013 cars on their lots. The government is also imposing stricter measures on Hyundai and Kia for the near future. The companies have agreed to revamp their own internal emissions testing groups to prevent violations in upcoming vehicle lines. They've further agreed to have their 2015 and 2016 car models audited. While none of that is going to fix the additional pollution that's coming from the offending vehicles on the roads now, it does send a clear warning sign to automakers that the government can and will force them to pay for environmental lapses.

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South Korea and the Netherlands Agree to Upgrade Small Reactor: A first for Asian Companies

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South Korea to upgrade Dutch powerplant for paltry $23 million

In a bid to diversify their exports and redevelop their economy, the South Korean government has been pushing for the export of nuclear power technologies for many years. After a $20 billion contract to build four reactors in the UAE, the Fukushima nuclear power plant exploded and covered the Japanese countryside in the remnants of the reactor.

It is not surprise that demand for new reactors around the world tanked. Many new projects came to a halt, and Germany announced that it would shut down all nuclear reactors before 2023. Alternative energy and fracking have driven down the cost of energy, and LPG can be exported further than before. At the same time, there are still no permanent silos for nuclear waste, and safety measures have not improved.

But South Korea doesn't have to deal with reality. They want to deal in cash, and make money no matter the political insanity or environmental problems. After shutting down their own nuclear reactors in South Korea due to buying illegal power switches for the power plants (someone wanted to pocket some money), they are busy trying to find new markets for their Korean (with American technology) reactors.

After the failure of the NARO rocket project to deliver commercial satellites into space, Korea has been looking for other sources of money, and nuclear power and technology sharing is the only project that has worked...for the moment.

Although Korea has signed a deal with the Dutch, it is only $23 million dollars. They still have to compete with the influential French power companies, and a Europe that is (mostly) hostile to nuclear power projects. The only other large reactor project in Europe is being financed by the Chinese, but uses French reactor technology.

Korea will get some science related exchange with the Dutch, but the Koreans should really be looking into expanding research centres with Europe. Both the EU and Korea are facing increased competition with Chinese energy companies, and a bilateral agreement to strengthen cooperation, development and economic ties could benefit both Korea and the EU.

But Korea is marching ahead with its plans for nuclear power around the world without looking at the larger consequences. While we look at North Korea develop a few nuclear weapons, we become scared at the prospect of a war beginning at any moment. But when South Korea creates dozens of small time-bombs in politically unstable areas of the world, we say that is progress.

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Peking University’s Yenching Academy: Fully funded Masters degree in China Studies

Peking University’s new Yenching Academy 燕京学堂 is offering full fellowships to a small number of Oxford students for an interdisciplinary twelve-month program of classroom and field study of Chinese history and culture, as well as contemporary issues in China’s development, leading to a Masters degree in China Studies. Courses are offered in English; those students with advanced Chinese may select courses in Chinese. Chinese language instruction is a part of the program.

The application deadline is January 31, 2015. Candidates will have completed their undergraduate degree, will be 25 years of age or younger on August 31, 2015, and will have demonstrated outstanding academic and personal achievement. Professor John Holden, Yenching Academy Associate Dean, will introduce the program and talk about life on the campus of China’s leading university and centre for intellectual debate and exploration.

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Beautiful red maples at Deoksugung Palace.

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An economic Battle Looms over East Asia: President Park of South Korea, Prime Minister Abe and President Xi.

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Currency in East Asia: South Korea looks towards China as Japan inflates away massive debt

At over 200% of its GDP, it is difficult to believe that Japan has a higher public debt than Greece. In fact, it has the highest public debt in the world and it might rise to 250% of GDP next year. Facing economic stagnation and falling prices, the Japanese government will now purchase $700 billion (US) worth of assets every year in order to try and inflate their debt away and increase prices.

If the plan works then Abe is a genius. But it could leave US, Chinese and Korean companies pressuring the Japan government to stop its buying spree.

In the 1980s, at the Plaza Hotel New York, the Japanese government promised the American government that it would allow US companies to become more competitive in Japanese markets. The Japanese Yen fell from 250 yen to the dollar in early 1985, to 90 yen in 2013. Needless to say, export prices went up, Japanese manufacturing went overseas, and imports became cheaper. Still, this did not alleviate the US trade deficit with Japan and some products remain protected in Japan (ex. Rice and Automobiles).

The decline of the yen was a boon, first to American and Korean manufacturers, then to the Chinese market.To Japan, it signalled the end of its economic growth and the lost decade(s) began. The property market bubble burst, and manufacturers faced increased competition abroad.

Now the yen is falling to its lowest levels in seven years (112 to the dollar), but the Japanese government might want it to go even lower to increase exports. In fact, this might be their only option.

As soon as the US halted its quantitative easing program, Japan began its plan to purchase assets, inflate away debt, and drive down the yen. Abe could only see 'Abe-nomics' working if enough other countries (US and EU) would continue to pump money into their economies. Now Abe and his economics advisers are clutching at straws. They need the American government  to let the Yen depreciate, and at the same time not anger China and Korea, their largest markets.

Korean companies such as Samsung are in global competition with Japan firms such as Sharp, but Korea still maintains a trade deficit with Japan due to the importation of high-price manufacturing products for the Korean assembly lines at Samsung and LG. The Korean economy could lose billions if the Yen falls. China would also see its exports come under threat. Higher prices for solar-voltaics and manufactures in China and lower costs for superior products in Japan could undercut Beijing plans to move from primarily a textile, raw material and second-rate manufactures exporter to a market innovator and leader.

Korea would side with China and demand that Japan halt this asset buying. After Japan announced its measures, the Korean government stated that it would become a regional 'Yuan-hub' for the Chinese currency in order to strengthen its ties with China, and perhaps weaken the strength of the Japanese Yen.

But the Chinese market is still a threat to Korean companies. Xiomi and Huawei are racing ahead with their plans to dominate the Chinese cell phone markets, and then take on Samsung for the global market crown. Korean cell phones, televisions and computers have been pushing their way into higher priced markets, but still face fierce competition from Apple in the US and Sony in Japan. A sudden decrease in Japanese product prices could hurt Samsung's place as the world's largest cell phone producer with increased competition from both Japan and China. Faced with competition from both sides, Korea will side with the larger and stronger market of China.

This will affect the relations between Japan, China, South Korea and the US. But South Korea, the US and Japan are tied with a mutual defense agreement which the US still controls. Japan, China and South Korea are more economically intertwined, but the US, the regional power without being in East Asia, might have ultimate control over the Abe government's decisions to devalue its currency.