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Food News Clipping

June 27, 2011

2011.06.27

FAS/Seoul Monitoring of Media Reporting on Agricultural Issues
Today's Date:  Monday June 27, 2011
For Coverage: June 22 - 27 2011
 
 
1. BILATERAL/MULTILATERAL ISSUES

 

New Amcham chair is optimistic on FTA [English, KJH]

Pat Gaines gives first press conference since attaining post in May

http://joongangdaily.joins.com/article/view.asp?aid=2937935

Full Text: Pat Gaines, the new chairman of the American Chamber of Commerce in Korea, said the Korean government is on the right track in its drive to root out corruption.

¡°There has been a lot of press on corruption issues in Korea especially over the past year. Part of that, I think, there is now much more awareness. The Korean government has made a very aggressive move to try to eliminate any aspect of corruption, of unfair practices,¡± he said during his first press conference yesterday at a hotel in central Seoul.

Gaines is also president of Boeing Korea. He joined the Boeing Company in 1987 as a ground school instructor.
He succeeded former Amcham Chairman Frank Little in May.

His comments come at a time when the government and society come to terms with a string of corruption cases in the public and private sectors. ¡°The public believes the entire government is rotten,¡± President Lee Myung-bak said over the weekend.

Gaines expressed the opinion that Korea must foster an environment free of corruption as a precursor to gaining more global economic power.

Regarding the Korea-United States FTA that is currently pending in both countries¡¯ legislatures, Gaines is ¡°optimistic¡± about ratification. The nation¡¯s largest foreign business group, with more than 2,000 members, is doing everything possible to make the agreement happen, he said. The Korus FTA was signed in June 2007, but the two countries later renegotiated controversial auto tariffs and pork terms late last year.

In March, Gaines led a delegation from Amcham to Washington D.C. as part of its annual ¡°door knock¡± program, where they met with leading members of Congress and the White House to lobby for the ratification of the Korus FTA. A door knock is a term unique to Amcham.

¡°Secretary Clinton emphasized that passing the Korus FTA will be beneficial for both countries, and that it is one of her highest priorities,¡± Gaines said, adding that Secretary of Commerce Gary Locke is also supportive of its ratification.

The accord, if it takes effect, will boost Korea¡¯s economic growth by 6 percent in the long-run and help create 340,000 new jobs, according to the state-run Korea Institute for International Economic Policy. Korea¡¯s trade with the U.S., its second-largest trade partner and the world¡¯s largest economy, came to $84.7 billion last year.

Gaines said the bilateral agreement will enable Korea¡¯s small and mid-size enterprises to become more successful in overseas markets.

Addressing ¡°shared growth¡± between large conglomerates and SMEs, Gaines suggested that the government offer big firms more incentives.

Gaines¡¯ press conference came after Amcham held a meeting for its members, along with Fair Trade Commission Chairman Kim Dong-soo.

With regard to intellectual property rights, an issue that draws keen attention from U.S. companies, Kim emphasized that he will work hard to eradicate ¡°foul play¡± in the area. But he noted that the FTC will intensify its oversight in intellectual property rights abuses.

¡°Intellectual property rights are granted the exclusive use of innovative technologies, but sometimes holders engage in abusive behavior that exceeds the rights rewarded for the innovation¡± he said.

¡°Abuse that brings about anticompetitive effects is subject to enforcement of competition law in Korea, and as I know, this is the same in the U.S.¡±

The antitrust agency chief said that he will set up an intellectual property rights abuse report center this year to make it easier to monitor violations. It will also distribute guidelines to enhance the maintenance of intellectual property rights and prevent possible damage.

2. LIVESTOCK ISSUES

 

Four Local Cheese Processors Charged 10 Billion KRW of Fine for Price Fixing [Korean, OSY]

http://www.ytn.co.kr/_ln/0102_201106270035546563

Summary: Fair Trade Committee (FTC) has charged a total of 10.6 billion KRW of fine to four local cheese processors for price fixing.  According to the FTC announcement, the four companies, which accounted for 95 percent of the total cheese sales in Korea, exercised illegal price fixings in 2007 and 2008.

 

3. MARKETING ISSUES

 

FTC gives CJ record fine for obstruction [English, KJH]

Agency asked CJ to submit information, but the company refused.

http://joongang.joinsmsn.com/article/947/5679947.html?ctg=

 

 

The Fair Trade Commission slapped CJ Cheiljedang with a fine of 340 million won ($316,573) for interfering with an investigation. It is the biggest penalty ever imposed by the antitrust agency for obstructing an inspection.

According to the antitrust agency yesterday, a number of CJ¡¯s employees attempted to hinder the agency¡¯s probe into its flour prices. The antitrust agency said there was ¡°serious interference¡± during the field investigation conducted between Jan. 10 and Jan. 12.

¡°Most of all, we came across interference and asked for assistance from a vice president surnamed Park, but the executive deleted files and took part in the meddling,¡± the agency said in a statement. More than 170 files were deleted from his portable hard drive, according to the FTC.

The agency asked CJ to submit the erased information, but the company declined the request.

The agency accused CJ employees of hiding the external storage drive it assumed contained information on an illicit plan to raise the price of flour. When FTC inspectors raided CJ¡¯s headquarters in January, its employees hid the device in a flower bed on the first floor of the building. When inspectors asked about its whereabouts, the employees denied it existed.

The company was fined 160 million won; the vice president 40 million won; and four more employees were hit with the remaining 140 million won.

It is not the first time CJ has interfered with an FTC investigation. In August 2003 two employees were fined 5 million won each for submitting false documents. In July 2005, two more employees were slapped with 10 million won fines for destroying evidence.

¡°It is meaningful because it is a tough sanction against what was deliberate, repetitive interference committed by a number of employees,¡± the FTC said in the statement.

Interference with an FTC investigation is subject to a maximum 200 million won penalty and a individual employee fines of up to 50 million won.

Even though CJ was given the biggest-ever fine, critics say the penalty is still too small.

Democratic Party Congresswoman Park Sun-sook proposed a bill in April that would have allowed prosecutors to press criminal charges against those who hinder Fair Trade Commission investigations.

 

Will big companies be squeezed out of tofu trade? [English, KJH]

http://joongangdaily.joins.com/article/view.asp?aid=2937947

Full Text: A tofu war is breaking out between Korea¡¯s conglomerates and its small and midsized enterprises (SMEs).

The simple question is: Should the big boys be allowed to dominate the tofu market, as they do, or should it be reserved for moms and pops?

A close look at the issue shows the answer is not simple at all.

The Federation of Korean Industries (FKI), Korea¡¯s largest business lobby, released a report yesterday demanding that tofu not be designated as a ¡°business suitable for SMEs.¡±

The Commission on Shared Growth for Large and Small Companies, a government body charged with finding ways to help SMEs, is in the process of drawing up a list of businesses it deems ¡°appropriate¡± for SMEs.

The commission is reviewing about 230 businesses - which were proposed by the SMEs in May and include tofu - and it plans to announce its final list in August or September.

When a business gets put on the list, large companies will be discouraged from entering the market for a specific period of time, and the government will offer a package of support measures for SMEs in that business to enhance their competitiveness.

The FKI said sanitation and safety is the key concern when people buy tofu, and since large corporations first ventured into the tofu market in 2006, sanitation has been much improved. It said tofu producers¡¯ violations of food safety standards have decreased significantly in recent years.

Furthermore, the federation, which represents more than 600 Korean corporations, says the quantity and the quality of jobs in the tofu industry have gone up, with increases in hourly pay.

FKI officials also note that tofu could be a key export item for Korea, and that requires the conglomerates¡¯ know-how and resources.

The report said: ¡°We are seeing more demand from abroad, like Japan and China, where tofu consumption is common, and India and Islamic countries, which have many vegetarians.¡±

The big corporations themselves say that given the high customer satisfaction for their tofu products, they should stay in the market. They also say such a restrictive list is an anomaly in a free market.

The Korea Economic Research Institute, the federations¡¯ research unit, described the list last week as ¡°anti-capitalistic¡± and ¡°an intrusion into the conglomerates¡¯ property rights.¡±

But to SMEs the issue is about survival - and a right they once had but were forced to surrender.

In 1983, tofu was designated a business for SMEs and it remained that way for 23 years.

That is why many Koreans remember the days when they bought tofu in chunks from a neighborhood store, not today¡¯s fancily packaged products.

In the old days, TV didn¡¯t have commercials that featured actors and actresses who insinuate their gorgeous looks are the result of eating bean curd.

In 2006, that protection was lifted and big corporations entered the trade, transforming it. The number of small and midsized tofu manufacturers plunged to 66 in 2009, from 188 in 2006, according to industry sources. Conglomerates soon enjoyed market share of more than 80 percent.

Choi Seon-yoon, the CEO of Gangneung Chodang Tofu, a midsized tofu maker, told a local daily, ¡°Japan consumes much more tofu than Korea, but large conglomerates don¡¯t enter the tofu market there. SMEs cannot compete with corporations that use their massive capital to engage in large-scale promotions.¡±

Choi has been in the industry for 29 years.

In fact, tofu may be just the first shot in a broader war between big and small companies. Earlier this month, the FKI released a similar report on concrete mixer trucks, and it plans to do the same with some other businesses under review, like desktop PCs, the molding business and others.

And there are doubts from on high about the work of the shared growth commission and its upcoming list.

Knowledge Economy Minister Choi Joong-kyung said in a radio interview last month that ¡°[the designation] wouldn¡¯t forcibly kick out conglomerates when they have already made hefty facility investments.¡±

4. OTHER MISCELLANEOUS ISSUES

 

Key Dishes on Korean Dining Table Are Made of Products from 26 Countries [Korean, OSY]

http://news.donga.com/Economy/New/3/01/20110627/38330703/1

Summary: According to an analysis by the Donga Daily Newspaper, ingredients of 16 key local dishes (brazened beef rips, spicy fish stew, fried fish, Kimch, Spinach bean paste soup, acorn jelly salad, etc.) enjoyed most by the Koreans were from a total of 26 countries, including Korea.  Korean origin products were in general minor contributor of the dishes.  For example, fishery products and fresh fruit ingredients of the dishes were dominantly foreign origins.  Imports of agricultural products into Korea increased four times between 1992 and 2008.  Implementation of free trade with EU in July this year is likely to further expand imports of agricultural products into Korea.

 

More Commercial Buildings in Seoul to be Turned into Business Hotels [Korean, OSY]

http://news.donga.com/Economy/New/3/01/20110626/38329653/1

Summary: It is reported that many commercial buildings in downtown Seoul, particularly in Myung-dong area, are renovated into business hotels.  About 20 plans for new tourist hotels have earned approval from the city government as of May 2011.  Some of the new hotels will be located in buildings that have been renovated from old commercial buildings.  According to the city government, annual demand for hotel rooms in the city from over 9 million foreign visitors is 51,000, which far outnumbers the total number of existing hotel rooms, 27,000.  As a result, hotels in the city currently maintain almost full booking status through out the year.

 

 

The information in this report was compiled by the Agricultural Trade Office (ATO) at the U.S. Embassy in Seoul, South Korea. The press summaries contained herein do NOT reflect USDA, the U.S. Embassy, or other U.S. government agency official policy or view point. U.S. food exporters can learn more about market opportunities in South Korea by reviewing ATO Seoul¡¯s Exporter Guide and other reports available at www.fas.usda.gov by clicking on ¡°attaché reports¡±.

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Agricultural Trade Office, U.S. Embassy - Seoul
Tel: 82-2-6951-6848 Fax: 82-2-720-7921
Email: atoseoul@state.gov