Tesco buys 36 stores in South Korea for £1bn

http://www.ft.com/cms/s/0/13c3d76c-2216-11dd-a50a-000077b07658.html
By Elizabeth Rigby in London and Song Jung-a in Seoul

Published: May 15 2008 03:00 | Last updated: May 15 2008 03:00

Tesco is breaking its decade-long pursuit of overseas organic growth, with a record cash purchase of a chain of hypermarkets in South Korea.

Britain’s biggest chain is acquiring 36 stores owned by E-Land Group in and round Seoul, where 11m potential Tesco customers live, for just under £1bn, including the assumption of existing debt.

This deal is the first time Tesco has spent anywhere near this kind of money on an international acquisition. Until now, it has preferred to grow from the ground up, through joint ventures with local partners and store-by-store growth.

But Phil Clarke, international director of Tesco, stressed that this did not herald a more radical era of expansion for the grocer.

He said: “We prefer organic growth, that is always our priority and will remain so, but these 36 stores give us two and a bit years of growth in one hit. In four and a half years in this job I have done two deals [the other one being an asset swap with Carrefour]. I don’t see an acceleration of deals at all”.

It does show that Tesco is determined to gain pole position in chosen markets. Korea is the retailer’s biggest market outside the UK, with £2.7bn of sales coming from 66 hypermarkets and 72 convenience stores. That turnover will be closer to £4bn once the deal goes through.

Tesco said the Korean deal would have a neutral impact on earnings in the second year of ownership and boost earnings beyond that. About half the price was the assumption of debt. Tesco will fund the deal from existing facilities.

Mr Clarke tried to buy the stores back in 2006, when Carrefour, the then-owners, decided to exit Korea, eventually selling the stores to E-Land for €1.5bn( $2.3bn).

JPMorgan said the acquistion gave Tesco a chance to close the gap on Shinsegae’s E-mart, which has sales of Won9,000bn (£??bn), against Tesco’s Won5,900bn. “Korea is a very interesting market long-term as the sector has become a two-horse race,” it said.

Elsewhere, Mr Clarke is still working on India, and hinted that Tesco could be warming to Russia, a hotspot for rivals Wal-Mart and Carrefour. “Russia is not never. You know how long we looked at America. But we have more than enough to keep us busy in the markets we are in,” he said. The shares closed 1.7 per cent down.

Jon Lusk on Korean traditional music

OK, world music buffs … how many Korean traditional musicians can you name? Without sneaking a look at The Rough Guide to World Music, you’ll probably have a tough time coming up with even one artist from Korea. Even so, this little known far eastern peninsula has a distinctive musical culture with a long, well documented history.

If you’ve been lucky enough to have attended any of the sporadic DANO ‘Korean Breeze’ concerts staged in London, Oxford and Sheffield over the last couple of years, you’ll know that Koreans have a unique suite of instruments, music and dance genres – as well as exquisite traditional clothing with a striking and instantly recognizable pastel-toned palette.

The spectacular Korean group Dulsori were an eye-catching highlight of last year’s WOMAD festival in Reading, with their thunderous drumming, swirling ‘ribbon dance’ and the dramatic, almost a cappella ‘pansori’ song story, which was accompanied by frenzied onstage calligraphy. Yet, without the benefit of a translation or contextualising visual clues to add meaning, this last genre can be a trying – even harrowing – experience on CD. Dinner guests at my flat will often make faces and head for the door at the mere suggestion of a ‘Korean opera’ session. Even much instrumental Korean music rubs many western ears up the wrong way, with its slithering microtones, exaggerated vibratos, asymmetrical rhythms, disregard for harmony, sparse arrangements and often extremely slow tempos, which can create an illusion of almost metreless music.

As Nigel Williamson observed in his recent Songlines feature on the BBC Radio 3 Awards for World Music (sorry, ‘The Planets’), Asian music is a chronically under-represented area. Given that many world music fans take Africa as their point of reference – ¬and of course the ubiquity of African American popular music – this is hardly surprising. But why exactly is it that so much Asian music (and specifically, Korean) is outside our comfort zones? Are we searching for things that aren’t there, and missing out on what is, by listening in the ‘wrong way’?

Travelling to South Korea’s capital city of Seoul to meet some of the next wave of Korean artists who will be visiting London between May and December for the ‘Korean Encounters’ season, my first port of call is the home of Byungki Hwang, who actually played a rare London gig in February 2006. As Korea’s leading master of the kayagum (a plucked zither related to the Japanese koto and Chinese zheng), he seems like a good person to shed light on such questions.

I’m not disappointed when we meet at his elegant and substantial home on a hill in west-central Seoul. Below us, the central business district looms through blue-grey pollution haze, and the walls of his lounge are lined with books and dozens of kayagum, ranging from the old fashioned 12-stringed model to the huge 25-stringed version popular in North Korea since the early ’90s.

Mr. Hwang has a delightfully curious manner, and a youthful sparkle in his eyes, which defies his seventy years. He speaks heavily accented but remarkably poetic English. Referred to as ‘a green bud on a firmly rooted tree’ for his fresh and broadminded approach, his slim but eclectic back catalogue dates back to 1965 and ranges from a 70-minute sanjo (a folk genre pioneered in the 19th century) to the jarringly avant garde The Labyrinth, which is not for the faint-hearted.

He explains that Korean traditional styles can be broken down into ‘court’ and ‘folk’ music, both of which he has trained in. Court music is easily recognisable for its very slow tempos, whereas folk music is livelier and often has more immediate appeal. But both generally have a pervading sense of space, a result of the high value placed on individual tones, which is why there is no real place for harmony.

“Traditionally, Korean musicians especially dislike harmony. Comparing with Chinese or Japanese music, Korean music especially emphasises the beauty of sound, like a calligraphy line. So usually the calligraphy must be done on white paper. Otherwise it has no meaning. So like that, one tone is perfect. One tone has its own musical value …so important Korean melody instruments can change in pitch microtonally.”

This means that instruments with fixed tones like the yanggum (hammered dulcimer) or even piano are considered minor instruments, not worthy of solo parts. And chords are naturally an anathema, as they combine tones. Just as important as the tone is the concept of yeo eum, roughly translated as ‘after-tone’:

“If you see a beautiful calm or quiet lake, sometimes we put a stone to the lake. Then there make a ripple. And a ripple was created by myself. But it exists in its own way, by itself. You cannot change it. You can only appreciate the beauty. Like that in kayagum, if you pluck one string, the remaining tone is like a ripple. And Korean people like that after-tone very much. [It’s] like with Korean tea, they usually have as much interest in the aftertaste. So, for example, sugary tea is very tasty but the aftertaste is very bad. Usually the bitter one has better aftertaste.”

And because yeo eum is best achieved with plucked instruments, they are considered more important than bowed ones. With harmony, counterpoint and chords absent, a large Korean court ensemble with ten, twenty or more melodic instruments makes music fundamentally odd to western ears.

“In that case, they use heterophony. All the melody instruments follow the same melodic line, but not in unison.”

What results is a loosely swaying matrix of overlapping microtones, with startling vibrato and other effects differentiating each element. Mr. Hwang acknowledges it’s an acquired taste.

As for his own music, the ‘less is more’ philosophy rules. Not only is his sound incredibly sparse, but his output too. He gives no more than a handful of concerts each year in Korea and his fifth album came out in 1994; he is now preparing ‘number six’. He agrees with my suggestion that his work is something of an antidote to the high speed world modern Koreans find themselves in.

“Just the opposite! My hope is to create some music like a fountain of water from the mountainside. Even though I know modern people like Coca-Cola, cider or Fanta, I like no taste! Just pure water! But the interesting thing is, in peoples’ minds, they have some unconscious hope to drink pure water,” he chuckles.

The following day, my translator and cultural chaperone (also the organiser of DANO ‘Korean Breeze’) Justina Jang accompanies me to The National Center for Korean Traditional Performing Arts, (NCKTPA) housed in a rather monolithic late ’80’s building on the other side of town. Founded more than 1400 years ago, it employed up to 1750 people at its peak during the early years of Korea’s illustrious Josun dynasty (1392 –1910). The current staff of 500 represents a huge recovery from the chaos of the early 20th century, when Japanese occupation (1910-1945) was followed by the Korean War. Funded entirely by the Korean Ministry of Culture & Tourism, the present site houses an excellent museum and a 24-hour radio station (Gugak FM 99.1) dedicated to Korean traditional music. There’s also a dance troupe and a school for training music teachers. The centre holds regular public concerts at their 1200-seat theatre and they have produced more than 100 CDs, ranging from ancient ceremonial court music to east-west fusion and new experimental material as radical as anything by Byungki Hwang.

With no little ceremony, director Chul-Ho Kim presents us with copies of their wonderful 4CD sampler A Selection of Korean Traditional Music (SBCD-4380- 1–4). He explains that Koreans treat sounds ‘like living souls’, the importance of ‘harmonising with nature’ in the ancient court music, and how a full understanding of Korean music really requires knowledge of Confucianism and Taoism. He acknowledges that much of what they do is a recreation of now-extinct traditions, so I ask Justina about this as we walk among the fabulously decorated chingo drums and pyeongyeong stone chimes of the museum.

“Because of Confucian philosophy we have to learn the tradition that we had in order to develop into a new culture,” she explains.

A good place to hear a wide cross-section of court and folk music is the Chongdong Theatre near City Hall station. ‘It’s your turn to feel it’ promises the brochure somewhat ominously as I take my seat for the fragmented but entertaining 70-minute show.

It begins with sinawi folk music and dance of Southern Korea, which is associated with shamanist rituals. The first ensemble includes a kayagum, a seven-stringed bowed zither called an ajaeng, a taegum (tranverse flute) and the ubiquitous changgu (hour-glass drum). The dancers use their long sleeves to graceful effect; based as it is on the breath rather than the heart beat, most Korean traditional court and folk dance is slow, so there’s no jumping about. Next, there’s a little taste of pansori. A commanding female singer gestures with fan and hands while singing a short story from Korean folklore, acccompanied by a seated puk drummer, whose non-verbal exhortations (‘chu im se’) and beats are analogous to the jaleo of flamenco. The tempo heats up with a samgomu drumming group – seven immaculately dressed women who literally bend over backwards to beat out synchronised triple-time rhythms on 14 drums mounted in beautifully decorated stands. A short ‘chamber music’ duet between a two-stringed haegum fiddle and a piano follows, and the climax is a thrilling and thoroughly acrobatic farmers’ ribbon dance. Each performer beats a gong or drum while dancing, using small head movements to create mesmerising cyclical patterns with ribbons attached to their hats, accompanied by the raucous wailing of the shenai-like taepyeongso.

It’s an instrument I hear a lot more of the following day when we visit a shamanic ceremony at the temple run by Kim Gum Wha. Designated as a ‘National Living Treasure’ by the Korean government, she is probably the country’s most renowned shaman, in demand for her blessing ceremonies said to bring good fortune. Her ‘performances’ abroad have included a blessing for New York City, and at home she conducts both public and private events. January is her busiest month, when fishermen and farmers hopeful of a good harvest beat a path to her quiet retreat at Incheon, near Seoul’s airport.

Today, she’s doing a private ceremony for an old woman and her family. It’s a colourful and sometimes tearful affair conducted with the help of relays of apprentices, who spin and mutter incantations in archaic Korean before an altar decked with edible offerings. They don and shed layer after layer of clothes, wielding knives, bells and gongs, and even puffing the occasional cigarette –¬ if the spirit that posseses them happens to be a smoker – accompanied by four seated musicians. There’s a changgu drum, two gongs (the medium-sized ching and a smaller kwaenggari) and the gnarled shrieks of taepyeongso and the oboe-like piri. Afterwards, Ms. Gum Wha explains in her calm manner the central place of shamanism in Korean culture.

“This shamanic music is the roots of Korean music in general. It all comes from there. We didn’t have Christianity or Buddhism before. Shamanism was like the main religion.”

Though there was a time when shamans were revered advisors to the royal court, organised religion, and later repression during the Japanese occupation have meant that they now have low social status. “But there are also lots of people who realise the importance of our own culture,” Ms. Gum Wha adds.

My next stop is the Korean National University of the Arts, another important centre for music students. The music department was only established in 1998, but its professors have recorded a wide range of Korean styles, perhaps with more emphasis on fusions with western classical traditions than at the NCKTPA. I meet three who have all performed in the UK and will do so again in late May– taegum and tanso (Korean recorder) player Park Yong Ho, and kayagum maestros Min Eui Sik and Kim Hae Sook. The latter has a fervent pedagogical manner, but also a ready laugh. On one of the CDs she has recorded with her colleagues, it says: ‘If we see the history of harmony in western music, we see the history of rhythm in Korean traditional music’. She elaborates thus:

“Because western music is based on chords, the rhythms are more restricted. In Korean music we play with one tone, so we have more freedom to use different types of rhythms. Western music is typically binary, but Korean music typically uses triple time.”

When we adjourn to a rehearsal later that day, I’m amazed to see a succession of large ensembles of young players. Among others, there’s a 12-piece kayagum group, one with 15 haegum, a six-piece ajeang ensemble and even one with 15 komungo (a 6- stringed zither plucked with a short stick). There’s plenty of counterpoint, western scales and even harp-like caressing of the kayagum, which flies in the face of everything Byungki Hwang told me. Afterwards Min Eui Sik reassures me that these new compositions imitating western styles are experimental works in progress, largely aimed at improving the students’ technique and artistic scope – as well as broadening their employment prospects. One of the albums he gives me (Masterpiece of Korean Music Vol. 18) has an excruciating arrangement of Bizet’s Carmen Suite and Tchaikovsky’s Nutcracker Suite, but I’m reassured they won’t be playing any such things in the UK. It should also be said that his own Yeongsan Hoesang CD (AKCD-0022) is wonderfully minimal and old school, as is Park Yong Ho’s Pyeongjo Hoesang (TOPCD-024).

On my last full day in Seoul, I visit Chungmu Arts Centre to meet Kim Duk Soo, whose story encapsulates the last half-century of rapid transition in Korean society. As the founder of the percussion ensemble SamulNori, he is now a household name in Korea, and has collaborated with a wide array of jazz, classical and popular musicians on over 20 CDs. SamulNori have taken his adaptation of Korean farmers’ music around the world since 1978, generating a folk revival at home epitomised by the iconic ribbon dancers I saw at the Chongdong theatre.

This short, chain-smoking man with a piercing gaze is a formidable and charismatic presence, like a loaded spring. Born in 1952, he started performing in his father’s group of ‘wayfaring male entertainers’ called Namsadang at the age of five. It was a gruelling lifestyle, going from village to village performing traditional puppetry, tightrope walking, acrobatics, juggling, mask dancing and nongak or pungmul (farmers’ music) from dawn to dusk with as many as 45 artists and as few as four.

“You have to remember that this was just after the Korean War. It was a very harsh situation for Koreans to survive in, and as artists it was even harder”

They were in fact the last representatives of an art form heading for extinction by the end of the 1950s as the traditional town squares (madang) they used disappeared.

“Namsadang always performed in such places. However, once we became more industrialised, all these madang became occupied with other buildings. So obviously we lost our performance space! But also you had things like television coming along and also the western religions which immediately disregarded Korean culture … so things like shamanism and Korean traditional culture had to take second place.”

By the time the Korean government had woken up to the plight of their vanishing culture and designated Namsadang a ‘Living Human Treasure’ in 1964, the group had done its last performances. However, Kim Duk Soo soon applied his skills to a new career, first with the Korean Folk Singing and Dance Arts Troupe, with whom he made his international debut at the Tokyo Olympics. Then, from 1966 –1976 he was a member of the Little Angels Art Company. Such experiences abroad gave him plenty of perspective on what was happening at home.

“Obviously, I had lots of questions about what I was supposed to do as a traditional artist. I had the experience of looking at all these different cultures, so I had to think about what another way might be to express myself. I felt that we had actually thrown away our traditional culture.”

In response, he created SamulNori, whose impact on Korean culture has been described as ‘shocking and irresistible as the force of a sudden gust of wind’. They took the basic ensemble of four percussion instruments from the pungmul/nongak farmer’s music (changgu, puk, ching and kwaenggari) and other elements of traditional theatre and shamanist rituals and adapted them to the modern stage, sparking a folk revival in the process. As a result of their influence, there are now SamulNori–style groups in virtually every school, village and city throughout Korea. When I ask if he knows the group Dulsori, his eyes light up in recognition.

“Ah! That’s one of our student groups – from the south west!”

True to his word, when I venture down to the southern province of Yeongam the next day to witness the first few hours of a four-day folk festival, I’m greeted by the gaudy spectacle of 300 hefty farming women in paramilitary outfits with psychedelic tradi-modern mega-pom poms. They represent the eleven towns of the province, each with its own wildly distinctive colour scheme. Tang-ul-lim (‘rumbling of the earth’) is what they call the ritualised racket they make by thumping ching and kwaenggari gongs as well as puk, changgu and sogo drums as they parade around ‘pressing the misfortune into the ground’. It’s the tenth year of this festival, which commemorates the life of Wang In, a local hero revered for taking Chinese script and the teachings of Confucius to Japan in the 4th century AD.

Retreating from the sound and fury with my travelling translator Park Joo Chan, I visit the nearby Wolchusan National Park. It’s cherry blossom time in the countryside below, but up here in the serenity of the mountains, wild camellias and azaleas are beginning to splash the bare woods in crimson and mauve. We pause for a moments’ reflection at the marvellous Dogapsa, a Zen Buddhist temple where a monk is chanting prayers, beating out naturalistic rhythms on a hand-held wooden moktak bell. Eventually he gets up and sounds an intricately wrought metre-high cast iron bell. In the still morning air, the aftertone lasts for well over a minute.

Gamsa hamnida to: Justina Jang (KCPA), Park Joo Chan, Korean Air, the Korea National Tourism Organisation and all the people at NCKTPA and KNUA. For more Korean traditional music than you can shake a stick at, check out www.gugakfm.co.kr and the Korean Cultural Promotion Agency (KCPA) www.kcpauk.org

‘The point was to be part of nature’

By Mark Ellwood
Published: May 10 2008 01:50 | Last updated: May 10 2008 01:50
http://www.ft.com/cms/s/0/6d0193fa-1ca3-11dd-8bfc-000077b07658.html

Businessman Kim Chang-il accrued a billion dollar fortune in restaurants, real estate and retail in Cheonan, Korea, then used his wealth to build one of the world’s top private contemporary art collections. He also opened his own gallery, Arario, which has three sites across Korea and China; its fourth outpost, a 20,000 sq ft space designed by architect David Adjaye, recently opened in Manhattan, New York.

How many homes do you own?

Two – one in Cheonan and the other in Jeju Island, at the southern end of Korea. It’s still very rural down there. Migrating birds often pass by in front of my house and iIt’s located in front of a small pond and right after that is the ocean, so you can see both from the house. As my business is getting bigger, and as I need more time away to look atthink about the future, I go to Jeju Island. It’s also where I make my artwork.

You are as much a creator as a collector of art.

Yes. I have a studio in Cheonan, but it’s on the top floor of the [Arario] gallery, so I can only work there from 9am to 5pmbecause the building is closed after hours. But in Jeju Island I can work at 2am in the morning if I want to. But I didn’t want to have a work place in my home, so I have a separate studio that is connected to the main house.

Tell me about that house.

I built it two years ago. The main point was to be a part of nature. From the outside you can’t see in but from the inside you can really see out.

You grew up in Seoul. What was your childhood home like?

It was in a traditional wooden house. I was always scared because the winds would go through the house and when I walked, the floors would creak. I kept asking my mother to let us move.

But she never agreed?

Well, I moved to Cheonan from Seoul in 1978 after I graduated from college. And I lived in the same apartment for 30 years; I moved for the first time to a new home in Ssang Yong-Dong [Two Dragons] last July.

That suggests you’re a creature of habit.

I don’t like change: my work takes up so much of me. Home is just somewhere I’m comfortable and I don’t want to waste energy on that.

It must have been the perfect apartment to stay that long.

I’ve always dreamt of having a home near a school; when I first purchased my home I was going to have children and wanted them to be able to walk to school; it was safe and convenient. But I feel like being close to a school is very healthy too; in Korea, schools open up their courtyards to the public, so I go there in the morning to exercise then play basketball with my son. I’ve never needed to join a gym.

Can you describe your dream home?

If I were to build another home, I would pay a lot of attention to the kitchen. I want to start inviting a lot of people round and I was thinking about building [another] home in Jeju Island. I want an all-glass kitchen with an island in the center where you can cook, and a table round it where I can serve people, like in a restaurant.

Is the kitchen your favourite place at home?

Actually, in Cheonan, it’s my library; everything I want to read or think about is very accessible. But in Jeju Island my favourite place is a duplex in the art studio, on the second floor, where I can sit overlooking the pondand everything. I have two dogs, Chinese chow chows, and I’m happy when they are there next to me.

How do you choose what art to put on show at home?

Well, there are places you need to accentuate with a work of art but I don’t do it to excess. One of the walls in my bedroom is designated just for my own work; my photography. I have a studio in Jeju; I built a residence for artists with seven studios and nine apartments. People can’t come and just rent out the place – the artists have to be invited – but I wanted them to experience what I’ve experienced. A lot of artists enjoy the chance to be with nature and they choose to stay for up to six months. I’ve been to many artists’ studios and I realise how important the space is. And I feel like I’m providing something that takes them away from their regular studios. Being in nature and seeing the pond is a really good environment. I have lunch, which my chef prepares, with the artists at the cafeteria – though for dinner I usually cook at home myself.

No wonder you want that chef’s kitchen. Are you a cordon bleu cook?

Not really. Just egg fried rice, kimchi, broth and fish barbecue.

Leading executives quit in Samsung upheaval

By Song Jung-a in Seoul
http://www.ft.com/cms/s/0/0572e31c-10d0-11dd-b8d6-0000779fd2ac.html
Published: April 23 2008 03:00 | Last updated: April 23 2008 03:00

Samsung, South Korea’s largest conglomerate, suffered the biggest upheaval in its corporate history yesterday when four of its top executives, including the chairman, suddenly resigned after a year of allegations of financial wrongdoing.

Lee Kun-hee, group chairman, said he would take “full responsibility” for his indictment last week for tax evasion and breach of trust by resigning immediately.

“I will step down from the Samsung chairmanship today,” Mr Lee, 66, said in a televised speech. “I am saddened as there is still much to do and a long way to go, but I am leaving with all the faults of the past.”

The decision is unprecedented in corporate Korea, where tycoons usually continue to run business groups even after being convicted of serious white-collar crimes. It comes as Samsung faces rising competition from emerging Chinese rivals.

With no replacement named, there is a power vacuum at the top of Korea’s biggest chaebol, a $150bn family-run conglomerate with business units involved in everything from shipbuilding and electronics to credit cards and hotels.

Mr Lee had been trying to pass group control to his son, Lee Jae-yong, who yesterday resigned as chief customer officer of flagship Samsung Electronics, although he will continue working for the company. The chairman’s top lieutenant, vice-chairman Lee Hak-soo, and the group’s president, Kim In-joo, will step down within two months.

The chairman’s wife, Hong Ra-hee, accused of buying expensive artworks with Samsung’s secret funds, quit as head of Samsung’s Leeum art gallery yesterday.

Samsung will be run by “professional managers”, the group said. Lee Soo-bin, the chairman of Samsung Life Insurance, will represent Samsung for external relations. The group said there would be no replacement for chairman Lee on the business side.

The upheaval comes after Samsung’s former chief lawyer made allegations of widespread financial improprieties at the group, becoming Korea’s first whistleblower.

After months of investigating, a special prosecutor last week concluded that Mr Lee, the chairman, had breached his financial duty by letting his children buy bonds of Samsung’s affiliates through irregular financial transactions, incurring losses at the companies.

He found Samsung managed about Won4,500bn ($4.5bn) in borrowed-name accounts, and that Mr Lee had evaded Won112.8bn of income taxes.

Nine other Samsung executives were indicted on various charges. Mr Lee was cleared of more serious allegations that he was involved in Samsung Group’s efforts to bribe the country’s powerful figures including politicians, government officials and prosecutors.

The affair coincides with the global market turmoil threatening Korea’s export-dependent economy and is likely to alarm the new government of President Lee Myung-bak, who took office two months ago. He pledged to boost growth to 7 per cent, partly by encouraging chaebol such as Samsung to invest and expand.

Samsung Electronics shares yesterday rose 0.2 per cent to Won675,000. Shares in most other companies in the group fell.

Lee’s resignation rocks Samsung

By Song Jung-a
http://www.ft.com/cms/s/0/2d89f85c-108c-11dd-b8d6-0000779fd2ac.html
Published: April 22 2008 18:07 | Last updated: April 22 2008 18:07

The emperor bows out - Lee Kun-hee leaves Samsung, which is responsible for a fifth of Koreas exports, facing its biggest challenge

The emperor bows out - Lee Kun-hee leaves Samsung, which is responsible for a fifth of Koreas exports, facing its biggest challenge

It has long been an unwritten rule in South Korea that a few criminal convictions need not stand in the way of running the country’s biggest companies.

In recent years, Koreans have grown used to seeing the chairmen of leading conglomerates on trial for fraud or bribery one day, and back in the office the next.

So Tuesday’s surprise announcement that Lee Kun-hee, Korea’s most powerful tycoon, would immediately resign as chairman of Samsung, sent shockwaves through corporate Korea.

The reclusive Mr Lee was last week indicted on charges of tax evasion and breach of trust after a special prosecutor found that he managed billions of dollars in borrowed-name accounts and incurred losses at Samsung units by allowing his children to buy bonds in Samsung’s divisions at below-market prices.

But, as has so often been the case in Korea, many analysts, cynical about the prospects for real corporate change, expected Mr Lee to be given a slap on the wrist and then sent back to work.

Instead, Mr Lee resigned, saying he would take all responsibility for the scandal.

Even Samsung insiders were taken aback. “His resignation is shocking, totally unexpected,” said James Chung, a spokesman for Samsung Electronics. “We have some fear about whether we can do as well without him.”

Samsung is now facing the biggest challenge in its history.

Mr Lee has run the Samsung empire since 1987, taking over the reins after the death of his father, who founded the group as a small trading firm more than 70 years ago.

Mr Lee transformed the group from a copy-cat manufacturer into the global brand it is today.

Koreans have taken to calling their country the “Republic of Samsung” and referring to Mr Lee as its “emperor” – neither of them meant as compliments.

But, as he entered his late 60s, the chairman started preparing to pass the company to his only son, Lee Jae-yong – moves that landed him in hot water.

Although their ownership is tiny, the Lees have been able to control the group through a complex web of cross-shareholdings.

Lee Jae-yong is the biggest shareholder, with 25 per cent of Samsung Everland, the group’s de facto holding company, which in turn controls Samsung Life Insurance, which in turn controls Samsung Electronics.

Lee Jae-yong yesterday resigned from his specially created role as chief customer officer at Samsung Electronics – a position viewed as preparation for the chairmanship.

But Samsung said he would continue to work for the company.

Samsung also said it would dismantle the strategic planning office that advised the chairman and pledged to sell credit card group Samsung Card’s 24 per cent stake in Everland within five years, as part of efforts to reduce cross-shareholdings.

The changes failed to impress investors yesterday. Shares of most Samsung group units fell yesterday, as analysts expect that process of clearing up cross-shareholdings would take a long time.

But some analysts said the changes would allow Samsung to embark on real reform.

Mr Lee’s resignation could mark an “epoch-making” moment for corporate Korea, said Young Soo-gil, an influential economist who heads the National Strategy Institute.

“With his departure, Samsung can accelerate internal renovation and enhance its corporate competitiveness to become a truly global company,” Mr Young said.

“Now that every problem is exposed, social pressure has become unbearable for Samsung. It is bound to change, given potential negative repercussions it would face if did not accommodate the changing needs.”

Others, however, doubted that there would be fundamental improvements.

The fact that Samsung did not appoint a new chairman – instead saying Lee Soo-bin, the head of an affiliate, would represent Samsung externally – led to suggestions that Samsung would still try to install the younger Mr Lee as chairman in a few years.

“I don’t see any big change,” said a market strategist who did not want to be named.

“Mr Lee can exert his influence behind the scenes as long as he remains the major shareholder.”

Heir apparent

http://www.ft.com/cms/s/0/2d89f85c-108c-11dd-b8d6-0000779fd2ac.html

As Lee Kun-hee’s only son, Lee Jae-yong has long been considered the heir apparent at Samsung, a view solidified last year when he was appointed to the specially created role of chief customer officer of Samsung Electronics, writes Anna Fifield.

Mr Lee, 40, is easy-going and candid. All his life he has been groomed to inherit the company, completing an MBA at Keio University in Japan before entering Harvard Business School.

His father instructed him to play golf with Samsung executives and study their personal styles.

In one of his first tasks at chief customer officer last year, Mr Lee Jr showed News Corp’s Rupert Murdoch around the Samsung showroom at the Las Vegas consumer electronics show.

Stalwart aide

http://www.ft.com/cms/s/0/2d89f85c-108c-11dd-b8d6-0000779fd2ac.html

Samsung has not named a replacement for Lee Kun-hee, its chairman, but said yesterday Lee Soo-bin would be its representative for “external relations”, writes Woo Jae-yeon.

Lee Soo-bin has been a staunch “Samsung man” for more than 40 years since he entered Cheil Jedang (now CJ Corp), a food-processing Samsung affiliate, in 1965.

The 69-year-old has served in the top job at several Samsung affiliates, including Samsung Techwin, CJ and, most recently, Samsung Life Insurance.

He served as Lee Kun-hee’s chief of staff in 1991 and has worked as chairman of Samsung Life Insurance since 1995.

He briefly filled Lee Kun-hee’s role when the latter left for the US for a medical check-up.

Trading up

http://www.ft.com/cms/s/0/2d89f85c-108c-11dd-b8d6-0000779fd2ac.html

Samsung was founded in 1938 when Lee Byung-chul opened a trading company. It expanded in the wake of the 1950-53 Korean War, adding a textiles business, building the country’s first large sugar refinery and forming a powerful trading network.

The founder added more businesses in the 1960s and 1970s, including Shinsegae department store, the JoongAng Ilbo newspaper, a shipbuilder, a chemical company and Samsung Electronics, which became the group’s crown jewel. Some businesses were spun off.

Samsung and other family-owned conglomerates known as chaebol thrived under the 1961-79 protectionist rule of President Park Chung-Hee.

Lee Kun-hee officially took over in 1987 when his father Lee Byung-chul died. The new chairman has shifted the group’s focus from quantity to quality, developing a renowned global brand. Under his leadership, Samsung became South Korea’s biggest conglomerate with about 60 divisions, accounting for about 15 per cent of the country’s economic activity.

Samsung’s exports totalled $70bn last year, more than 20 per cent of South Korea’s total.

Braving the elements

Rural HanokBy Paul Miles

Published: March 22 2008 01:25 | Last updated: March 22 2008 01:25

In South Korea, as worldwide with vernacular architecture, the style varies across the country according to extremes of weather.

In the north, where winters can be severe, the homes have walls made of mud bricks or logs and roofs of clay tiles. Sometimes there is an outer wall of reed-like sticks to keep snow from blocking doorways. Rooms are laid out in a rectangular back-to-back floor plan, huddled together to keep warm.

On Jeju island, 64km off the coast of South Korea, however, homes are built to take a mild but windy climate into account. There are a few hundred traditional and simple homes, or saetjip, once the abodes of farmers, on this volcanic speck, now a popular honeymoon and diving destination for Koreans.

Walls are made of local volcanic rocks – which studies have shown offer better insulation than concrete – and the low, rounded thatched roof is lashed down with twine. Surrounding garden walls protect from the island’s strong winds.

A typical Jeju island dwelling has an open courtyard in the middle of the floorplan; a central open-sided area called a sangbang where families worship ancestors, welcome guests and eat, usually sitting on the stone or clay floor.

Korean homes are famed for their traditional underfloor heating system, ondol, which dates back over four centuries. The warmest spot to sit on the floor, nearest the fire, is reserved for honoured guests. Heat comes from a wood-fired stove in the kitchen and the warm smoke swirls under the masonry floor, drawn across by the upright chimney on the other side of the house.

This underfloor system, or hypocaust, serves a dual purpose as, in summer, it cools the house by allowing for air circulation. Made of clay, it also absorbs humidity from the air.

Traditional floor coverings on the ondol would be made from oiled paper or, in wealthy households, from fine silk. Today they are more likely to be modern laminates.

Temperature control is a recurring theme in South Korean architecture and decor. In the grand houses of royalty and government officers, large doors hinged back to turn closed rooms into open courtyards and at night men would sleep cuddling a chukpuin, or “bamboo wife”: a woven cylinder of split bamboo allowing air to circulate near the body.

Other factors have influenced the evolution of Korean vernacular. The strictures of Confucianism and its belief that men and women should live separately played an important part in house design. Homes had distinct areas for men and women and, in some grander houses, the eldest son had the best room.

The principles of feng shui were also important, both in siting villages (they should have sheltering mountains around them and water flowing nearby), and applied to interior décor. Keen proponents used it to determine where to place their bed.

According to the authors of the book Hanoak: Traditional Korean Homes, your head should be in the east for riches, west for poverty, south for long life and north for short life.

“Needless to say, most people slept with their head in the south and east,” says the author.

paul@paulmiles.co.uk

For more information on South Korean homes, see ‘Hanoak: Traditional Korean Homes’, by J.S. Choi, Hollym International, £49.95.

http://www.ft.com/cms/s/0/7c3f6616-f625-11dc-8d3d-000077b07658.html

A new soul, and style, for Seoul

By Michael Fitzpatrick
Published: March 22 2008 00:40 | Last updated: March 22 2008 00:40
http://www.ft.com/cms/s/0/7daae0d4-f625-11dc-8d3d-000077b07658.html

Heyri Artists' Village

Heyri Artists' Village

It was only a trip to the local shop but Park Danbi had quickly donned a cocktail dress, Cleopatra earrings and full warpaint. “Style is everything in Seoul, especially in fashion-conscious Hongdae,” explains the 23-year-old art college student and interior designer, referring to the area where she studies and works.

It is also where South Korea hatches and develops much of its creative talent – architects, interior designers and product designers.

Park is very much of her milieu. With her steely determination for money and desire for a more “beautiful life in a more beautiful Seoul,” she represents a generation of Koreans keen on distinguishing themselves from their parents, who sought, on the whole, a more mundane life with functional buildings and interiors to match.

“Koreans are the most hard-working of all the countries belonging to the Organisation for Economic Co-operation and Development [OECD],” suggests Park Seong-Tae, editor of South Korea’s leading architecture magazine, Space. “As a result, urban structures are not so important. Instead, people have traditionally valued convenience, not lifestyle.”

The results are plain to see in the incoherent, unlovely mess of signage, concrete and utility poles that makes up much of urban South Korea.

However, it was not always thus. Korea did have style, says Park, but it was largely swept away in the rush to mimic America.

The post-Korean war period was marked by deep poverty. Bulldozing the country’s heritage to build tawdry, western-style homes certainly helped boost the economy and quickly housed its people, but sadly, it was done at such breakneck speed that much of Seoul verges on slum dwelling.

Lee Ansoo's House

Lee Ansoo's House

The younger generation says it would do things differently. Its members want money, yes, but they also want beauty and style, which is why ambitious art student Park works for one of the country’s now booming interiors and architect firms.

“Everybody wants homes like film stars these days, so we are very busy,” she says. Tired of the shambles that is the result of war and unrestrained economic development, today’s Koreans look to their past, to Japan and to the west’s best architects for inspiration.

What is emerging is a new vernacular – a hybrid style that is sparse and lucid like the best Japanese contemporary architecture, but also marked by renewed interest in the peninsula’s own cultural heritage.

Kim Jong-ho, director of Design Studio and one of the country’s top architects, says this is an important step towards South Korean design gaining worldwide recognition.

“To compete on an international level, we need to develop our own design language that has distinctive cultural elements,” he says.

He argues that South Korea has been the Cinderella of north-east Asia’s architectural and cultural renaissance for too long. But he suggests that thanks to a plethora of savvy designers and architects who, like himself, have studied abroad, the country is starting to punch – in design terms at least – more in line with its economic weight.

Like Tokyo, Seoul is rethinking its philosophy of building cheaply, quickly and unimaginatively. Instead it is re-evaluating past design triumphs and producing – albeit on a small scale so far – works that stand out boldly, such as the Leeum Samsung Museum of Art, which comprises three outstanding buildings rising out of suburban Itaewon.

The movement, kickstarted by Seoul’s design elite, has political converts, too. The country’s new president, Lee Myung-bak, once nicknamed “the Bulldozer” because of the redevelopment work that made him rich in the 1970s, declares he is now reformed and keen to emphasise preservation and more sensitive town planning.

“Koreans have a tendency to follow the trends in lifestyle matters as well as fashion,” points out Kim. “Although this makes Korea one of the fastest-evolving markets in interior design, it also means architecture tends to be stylish and trendy while lacking in concept.”

But there are changes for the better, says Marcia Iwatate, a Japanese restaurant and design consultant and co-author of Korea Style, a handsome compilation of some of South Korea’s best residential architecture and interiors.

She suggests that, with the return of Korean graduates of top foreign architectural schools, the country is starting to rediscover its distinctive vernacular style – one so potent that elements of it were purloined by the Japanese over a thousand years ago. Iwate says her own interest in Korean architecture and interiors arose from researching the origins of Japanese minimalism.

“I wanted to point out to the world that Zen and the simplistic style is not just Japanese, so I came to Korea 16 years ago to find out more. Now I see it in these returnee architects. They have an architectural nationalism.”

What impresses these former expatriates is the work of past Korean master builders – the buildings all but obliterated by zealous modernisers a generation ago.

Korean contemporary style might still borrow heavily from Japan and the western modernist tradition – employing concrete, glass and high-tech materials – but a Korean character is fast emerging, says Iwatate.

“And what characterises Korean style? Simplicity, modernisation, restraint and a deep respect for all things natural,” she says. It is a style that has its roots in the traditional Korean house, the hanok.

This is strikingly akin to traditional Japanese wooden homes, with latticework doors and paper windows, but a peek inside reveals heated flooring, rather than reed mats and a womb-like, intimate rusticity.

Features include exposed pine pillars rough hewn with a knife, rice-papered walls and, for lighting, the moon reflected in a shallow courtyard well.

“I admire the older Korean traditional style as it is good architecture not just because it is traditional,” says Choi Wook, an architect who builds and renovates hanok-inspired homes for contemporary living.

“The Korean aesthetic is very thick, very heavy; you can really sense weight in these interiors.”

His work has a distinctly luxury feel. “To build like this is very expensive,” he says. But others believe hanoks can be re-invented or renovated in a 21st century setting, even for the non-super rich.

Doojin Hwang is spearheading a hanok revival movement in Seoul. His mission? To rescue and modernise what is left of the city’s ravaged stock of traditional homes on a hill in the city centre.

Yoon Young-Ju, a restaurant business owner, lives in a 70-year-old home renovated to the modern standards expected in ultra high-tech Seoul. The wooden-beamed, six-room, one-storey structure built around a courtyard has lightning-fast wireless, a modern kitchen and a state-of-the-art security system that at first seem at odds with the disarmingly simple living space, with its white-papered walls and calm light diffused through paper windows.

“There is certainly a joy of serenity that these old houses offer,” he says, “but we need our conveniences too.

“These houses teach us a lot. They evolved over a long period of time and whereas modern construction is toxic, you will find hanoks are actually quite healthy,” says Yoon’s architect, Jin Hwang, referring to the unecological nature of many modern building techniques and the use of unhealthy chemicals, plastics and solvents that contrasts strongly with the hanok’s use of natural, renewable materials such as pine wood.

Lee Ansoo

Lee Ansoo

Artist, writer, musician and hanok fan Lee Ansoo goes further, suggesting it is not just the construction methods that promote well-being but the traditional Korean use of space and natural materials that makes for health, tranquillity and harmony.

“It has lot to do with our use of pine. You could say we are a pine culture,” he says, pointing to the heavily cut, low tea table in his otherwise exceedingly modern architect-built home, Motif One.

It is one of many examples of Korean creativity at its best in the hamlet of Heyri – an eight-year-old architectural showcase also known as “The Artists’ Village” near the border with North Korea.

The community exemplifies new Korean style. Despite the village’s thoroughly modern aspect, wood, especially pine, is everywhere. Tree stumps make engaging stools while strips of timber add harmony and elegance to two of the key buildings – the Book House and the award-winning Camerata music studio designed by Jo Byung Soo.

Lee’s six-bedroom house, which he also runs as a bed and breakfast, is another harmonious blend of Korean tradition and western comforts. Externally it is a sleek, boxy ode to modernist style but inside Lee worked with the architect to bring in more Korean elements: the ondol heated floor, a feature in even the most humble of Korean homes, multi-purpose rooms and, through large glazed features, an interplay between indoors and outdoors that pays homage to the hanok and its traditional garden or courtyard.

Lee is something of an ambassador for Korea’s emerging new style. “It is true we have been vastly influenced by the west, where we all seem to have been educated, but there is movement towards a more Korean design and that inspiration comes from the hanok.”

The rooms in Lee’s home are large and filled with paper-filtered light. Tea is taken sitting on the polished oil paper ondol flooring, the immense untreated pine table brimming with Korean earthenware. The rooms fulfil many purposes: clever detailing means bookshelves double as a film screen, a kitchen is tucked behind folding white panels and gaudy mirrors are hidden inside doors.

“Life is good here in Heyri with all its artists and wonderful buildings and of course it all looks very modern and contemporary,” he says.

“But look closer and you will see we still live hanok-style. That is the secret of the Korean way.”