Tag Archive | "technology"

Will the South Korean Government’s Bet on Linux Pay Off?

By Juni Kim

The open source operating system (OS) Linux, preferred by many in tech circles but rarely used by the typical working professional, may get its biggest chance yet to prove its mainstream capability in a corporate setting. Last month, the South Korean Ministry of Interior and Safety announced plans to switch government workstations from utilizing Windows to Linux. The Ministry will first run a small launch on a private network to test security and compatibility capabilities. If the results prove successful, Linux use will be expanded throughout the government. Choi Jang-hyuk, the Interior Ministry’s Digital Service Bureau chief, indicated that the move is meant to reduce costs and dependence on a single operation system. Still, the Ministry expects the transition to cost about 780 billion won ($655 million USD).

The announcement comes in light of Microsoft’s plan to discontinue free support of its Windows 7 OS next January. While exact number of South Korean PCs using Windows 7 is unknown, it is still widely used globally despite Microsoft’s efforts to push users towards its more current OS Windows 10. The only options for continued use of Windows past the January deadline is to either pay for an update to Windows 10 or pay Microsoft for extended support for Windows 7. Microsoft outlined last Fall that continuing support for Windows 7 would cost $50 per device for the first year, and then increase to $100 and $200 respectively in each successive year.

The substantial costs of updating Windows in 2020 is likely the driving force for the Ministry’s decision to switch to Linux, which is free to use and customize. The Ministry has not yet disclosed a timetable of how Linux will be phased into the government or which specific distribution (the type of Linux-based OS, of which there are many) will be used.

The planned transition would be a significant milestone for Linux’s application as a functional desktop OS replacement. Microsoft’s Windows and Apple’s OS X have largely dominated the desktop market space, both globally and in South Korea. According to the online traffic analytics website StatCounter, Windows made up 88.19% of desktops used in South Korea in May 2019, with OS X following at 7.28% and Linux only comprising 0.55%. Despite Linux being free to use, many typical PC users ignore it due to a number of daunting factors, including the confusing variety of available distributions, perceived lack of support, compatibility issues, and unfamiliarity.

While South Korea plans to cut the Windows cord, the German city of Munich, which made its own switch to Linux in 2003, is planning its own return to Windows with the initial rollout coincidentally occurring in 2020. Munich had used LiMux, a specially designed Linux distribution, on its approximately 29,000 workstations, with a select number of PCs still utilizing Windows for specific tasks. In November 2017, the Munich city council decided to switch the municipality’s computers back entirely to Windows. The council cited compatibility issues and the problematic approach of using both LiMux and Windows side-by-side as major factors in their decision. Critics of the transition back cited that any compatibility issues could have been solved by using virtualization, which allows for a Linux PC to utilize Windows applications, and the unnecessary cost of re-implementing Windows on all workstations, which may cost upwards of €100 million in total.

Munich’s retreat back to Windows highlights the financial and production risks of using Linux, which South Korea would be wise to pay attention to. Adopting a new OS can be problematic for a workforce that is largely used to either a Windows or Mac desktop experience or using common applications like Microsoft Office, which is not available natively on Linux-based systems. Popular Linux distributions (also referred to as distros) like Ubuntu and Linux Mint can provide a user-friendly desktop interface, but whatever choice is adopted will come with its own learning curve and quirks. For an end user that is used to a particular workflow or application, this may be frustratingly disruptive as demonstrated in Munich. Robust training and IT support can go a long way in minimizing these problems, but there will likely be some growing pains during the planned transition.

The thousands of South Korean government workers using the new Linux workstations will be the ultimate judge in determining if the switch is worth it. If South Korea is successful in its implementation, the government will find itself charting new territory in showing Linux’s mainstream and cost-efficient feasibility and perhaps even prompting other large organizations to make the switch to Linux. However, if the new OS proves to be more problematic than government workers can tolerate, South Korea may end up paying a bigger bill than anticipated and even consider rolling back its Linux initiative.

 

Juni Kim is the Program Manager at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone. Graphics by Juni Kim.  

Photo from Findy27’s photostream on flickr Creative Commons.

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South Korea Caught in U.S.-China Crossfire

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

U.S. restriction on Huawei could be a boon to Korea’s struggling export industry, but potential gains may be erased by China’s retaliatory measures.

What Happened

  • The Commerce Department added Huawei to its list of persons and entities deemed to be acting against U.S. security or foreign policy interests. This discourages U.S. companies from selling or transferring technology to Huawei.
  • Analysts suggest that Huawei could increase purchases of Samsung memory chips to substitute gaps in the supply chain created by the U.S. government’s decision.
  • Samsung is also expected to increase its global sales of handsets and 5G network equipment as other countries avoid purchasing Huawei products.
  • Meanwhile, U.S. government officials are reportedly calling on South Korea to restrict the activities of Korean companies that use Huawei equipment.
  • China is preparing its own list of “unreliable companies,” which would include entities that disrupt supplies to Chinese companies for “non-commercial purposes.”

Implications: Although many market commentators see the U.S. government’s restrictions on Huawei as an opportunity for Samsung specifically and South Korea more generally, Korea’s export sector remains vulnerable to retaliatory measures from both the United States and China. Huawei’s search for new chipmakers to substitute U.S. suppliers could boost sales for Korean companies, but Washington may pressure Seoul to limit these transactions. The U.S. government did not officially request that South Korea join its restriction on technology sales to Huawei. Nonetheless, a U.S. State Department official reportedly called on a South Korean counterpart to prohibit LG Uplus, which uses Huawei’s equipment, from participating in “sensitive areas” of the Korean economy. Seoul is still negotiating with the U.S. government on key issues like auto tariffs and cost sharing for U.S. forces in South Korea. In an effort to minimize friction with U.S. counterparts while these talks continue, Seoul may voluntarily take measures to limit trade with China.

South Korea is however vulnerable to potential retaliation from China as well. Beijing could respond to measures limiting business ties between Korean companies and Huawei by strategically punishing Korean firms with significant exposure to the China market.

This comes as Korea’s export sector is under duress. Between May 2018 and May 2019, export shipments dropped 9.4%, exceeding forecasts of a 6.6% decline. Semiconductor exports in particular plunged by roughly 30%. China is South Korea’s largest trading partner, accounting for 26.8% of the country’s exports in 2018 (compared with 12% for the United States). Both the potential retaliatory measures by the Chinese government and any voluntary measures to limit exports to China by the South Korean government present major headwinds for the Korean economy at this time.

Context: There is precedent for South Korea voluntarily restricting trade to advance its foreign policy interests. In response to growing U.S.-Iran tensions earlier this year, South Korea cut its oil imports from Iran ahead of any explicit reimposition of sanctions by the U.S. government. In 1992, Seoul severed ties with Taiwan to establish official diplomatic relations with the People’s Republic of China. As a consequence, Taipei nullified preferential agreements on Korean export of foodstuffs and autos. In both instances, however, the economic cost was considerably smaller than what South Korea is facing today.

Korea View is edited by Yong Kwon with the help of Haram Chung, Yea Ji Nam, Steven Lim, and Haeju Lee.

Photo from Kārlis Dambrāns’ photostream on flickr Creative Commons. 

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Samsung Diversifies into Automotive Chips

By Troy Stangarone

After years of success in designing and producing memory chips for cell phones, data centers, and other memory storage functions, Samsung has taken a step toward supplying processing chips for next-generation vehicles. From 2021, Samsung’s first automotive branded processor, the Exynos Auto V9, will power Audi’s infotainment system.

While the partnership with Audi has been in place since 2017, the announcement could not have come at a better time for Samsung. A few days after announcing that it would supply the Exynos Auto V9 for Audi’s infotainment system, Samsung also announced that its fourth-quarter profits would be down due to slowing demand for semiconductors and increasing competition for smartphones. Operating profits are down more than 38 percent, with memory chip shipments expected down 10 percent for the quarter due to declining demand from data centers.

Slowing memory chip sales are not confined to data centers. As U.S.-China trade tensions continue, the slowing economy in China will also likely be a headwind for Samsung in the coming quarters. According to data by the Korean Customs Service, memory chip exports in November (the latest data available) were only up 2 percent, after having been up more than 40 percent every month of 2018 outside of October when the slowdown in China likely began.

By entering the automotive processing segment, Samsung can diversify away from its dependence on the memory segment, which has largely driven operating profits in recent years but is also a lower value segment than processing.

Samsung’s partnerships in the automotive market aren’t expected to be confined to Audi. Recent reporting indicates that Samsung is scouring for talent in the autonomous vehicles segment. The producer could move into making other automotive processing chips for autonomous systems and is reportedly producing the new Tesla designed chip for the Model 3.

With the market for memory chips slowing, the automotive segment could be a new area of growth for Samsung. The market for automotive chips was estimated to be worth $22.7 billion in 2016 and is expected to grow to $56.2 billion by 2025. These numbers are still small compared to Samsung’s earnings in the memory segment where it had sales of 60.3 trillion Korean won ($53.7 billion), but the move towards both autonomous vehicles and the increasing integration of technology such as infotainment systems into vehicles will lead to increasing demand for high-value chips to manage the complex processes.

However, Samsung isn’t the only chip maker moving into the automotive sector. Intel, AMD, Qualcomm, and Nvidia, which supplied Tesla until recently, are all looking towards the automotive sector to drive demand for high-end chips, as are other chipmakers. If Samsung is going to successfully lessen its dependence on memory chips, it will need to succeed in a much more competitive segment of the semiconductor market.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.

Photo from user Honou on flickr Creative Commons.

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How Marketization Changed Ground Transportation in North Korea

By Yonho Kim

North Korea’s transportation system traditionally centered around the railway, as Kim Il-sung, the founder of the communist state, stated: “Railways are the arteries of the country.” However, with the economic crisis in the 1990s, the railway system was no longer able to properly function due to a lack of energy and deterioration of locomotives and railway tracks, most of which were inherited from the Japanese colonial era. It became common for trains to run as slow as around 20 km per hour and stop frequently, extending a theoretically less than one-day trip to a several-day adventure. Little change seems to have been made so far according to the South Korean inspection team that recently examined North Korea’s railway line along its east and west coasts. With only international passenger trains being on time, domestic merchants no longer depend on railways as a reliable transport service.

As the backbone of the state-run transportation system dwindled, North Koreans who were struggling to overcome the economic crisis began marketization as a survival tactic, which in turn increased the demand of people and product movement. As a result, private road transportation service began to develop and business vehicles called ‘servi-cha’ (The word comes from “service” and car in Korean “cha.”) were introduced. At first, state-run enterprises, military, and state institutions went on to do business with state owned vehicles and imported used vehicles from China or Japan. With the expansion of North Korea-China smuggling market, and the resulting increase in transportation demand, merchants began to pay bribes to state institutions in order to participate in servi-cha business. Since principally the ownership of a private vehicle is banned in North Korea, people must register their cars with state institutions in order to operate their servi-cha.

By the 2000s, the importance of vehicle transport became fundamental especially in the North Korea-China smuggling areas to the extent where sayings such as “the wheels make money” and “the drivers are making a fortune” appeared. The robust vitalization of servi-cha expanded the variety of transportation method from freights, military trucks, to buses, vans, motorcycles, and taxis, satisfying the various demands of the market of operating both short and long distances. With the increase in number of buses, beginning in the 2010s, a nationwide bus network has been created, connecting major cities.

Such changes also gained momentum under Kim Jong-un’s regime with the leniency on market policies. Under Kim Jong-il, Kim’s father, the regime went back and forth between tolerance and regulation over market policies. However, when Kim Jong-un ascended to power, more than just a tacit approval, he switched policy to actively utilize markets. As such, at least since 2014, there is almost no broad scale crackdowns on vehicles for profit. There was even a concern for ‘oversupply’ among the vehicle owners with the revitalized private transport services. On this account, despite the rising gas prices from late 2017 to early 2018, servi-cha owners had difficulty in raising freight rates.

Consumers are also benefiting from the innovation in logistics that resulted from the combination of servi-cha and cell phones whose subscribers are estimated at around 4 million, close to 20% of its entire population. As the merchants are responding quickly to changes in market conditions, product supply to jangmadang has been smooth, and regional price differences and sharp increase in prices have been greatly reduced. In particular, the prices of Chinese industrial products have been significantly reduced to the extent that their Pyongyang general market prices are almost the same as their actual prices in China. As a result, sales strategy aimed at regional price differences no longer lead to a big profit, and this has led to a ‘small profits and quick returns’ policy emerging as the new sales strategy. In this new competitive environment, merchants with the capacity to trade in bulk are more likely to survive.

Proliferation of bulk sales require an enlargement of cargo transfers. The distribution of large cargo trucks in North Korea with the development of the servi-cha market made this possible.

While Chinese Dongfeng trucks with a load limit of 5~10 metric tons were heavily smuggled in the 2010s, trucks with a load limit of 20 metric tons have been preferred in recent years. (According to a defector who frequently communicates with North Korean sources, Chinese trucks with a load limit of 20 metric tons are traded at $45,000 for a new model and $35,000 for a used model that had run about 100,000 miles.) Indeed, the operation cost of a truck of 20 metric tons is cheaper than that of two 10 metric ton trucks. Therefore, some owners of servi-cha responded to rising gas prices by enlarging the load limits.

However, trucks over 20 metric tons are difficult to operate in the poor road conditions of North Korea. For example, although coal delivery from Sunchon, South Pyongan Province, one of North Korea’s coal-mining centers, to Nampo port in the same province is a very profitable business, the load limit cannot exceed 20 metric tons. In some cases, donju, the new class of rich entrepreneurs, invest in renovating bridges and roads if the projects are related to businesses as profitable as the Sunchon-Nampo coal delivery. (It is well known that many of the regime’s flashiest construction projects, including ski resorts and luxury apartments, were conducted under partnerships with donju.) However, it was reported in 2006 that less than 3% of North Korea’s roads were paved and the situation has not improved dramatically.

Marketization and proliferation of servi-cha will inevitably necessitate large scale investments in the maintenance and development of road infrastructure in North Korea. Although the railways have become less popular thanks to servi-cha, a majority of North Koreans still rely on railways for their long-distance travels. The partnership between donju and the state institutions is also seen in the rail passenger and freight transport, although not as active as in the servi-cha business. Revitalizing the railway system in North Korea has a potential to lead the traditional system of economic regional ‘self-sufficiency’ to a more open and inter-regional/nationwide system that would expand regionally segmented and localized marketization. It is time to start reviewing North Korea’s railways and roads in terms of marketization.

 

This article is based on an excerpt from “North Korea’s Mobile Telecommunications and Private Transport Services in Kim Jong-un Era” by Yonho Kim (US-Korea Institute, Johns Hopkins SAIS, May 2018).

Yonho Kim is a Non-Resident Fellow at the Korea Economic Institute of America. The views expressed here are the author’s alone. 

Photo from NVictor’s photostream on flickr Creative Commons.

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Looking Beyond the Playbook

By Yong Kwon

There is a perception that the Moon administration’s adoption of heterodox policies has made it more difficult for South Korea to overcome the current economic downturn. In particular, the minimum wage increase has been singled out as evidence of the government’s untested approach to tackling low growth and unemployment. However, this is a mischaracterization of the government’s outlook and actions. A key factor holding back the recovery may actually be President Moon’s faithfulness to the policy tools that preceding administrations have used to address economic challenges.

An overview of the administration’s recent policy measures reveals that they are not out of sync with past efforts.

In response to weak global demand, the Korean government has acted as a buyer of last resort to keep exporters afloat, notably shipbuilders. With the glut of container vessels in the market reducing the number of new orders, the government has extended financial support to Hyundai Merchant Marines to purchase new megaships from domestic companies. Although this subsidy created frictions with the European Union and Japan, Seoul considered these measures essential to ensure the survival of local parts makers. This is reminiscent of measures that South Korea undertook during the oil crises of the 1970s and 80s to sustain the operations of national champions until global demand recovered.

Seoul is also proactively engaging with foreign governments to expand export opportunities. In addition to successfully renegotiating the Korea-U.S. Free Trade Agreement, the Korean government has been particularly focused on the Middle East. There were concerns early in President Moon’s term that his pledge to phase out domestic nuclear power plants at home would jeopardize the landmark nuclear energy project in the UAE that was secured under the Lee Myung-bak administration. However, by reaffirming commitments to broaden ties with the UAE, the Blue House assured that the project would not only proceed, but also potentially grow. Moreover, using this project as a benchmark, the Moon government has also been forward leaning on opportunities in Saudi Arabia.

Meanwhile, the government is also actively shaping regulations and providing financial resources to assist domestic firms striving to become first movers in innovative sectors. The Korean government’s long-standing support for enterprise application of Artificial Intelligence is beginning to bear fruit with the country’s nuclear reactor exporters adopting the technology for supply-side controls. This innovative solution to proliferation concerns received praise from the Bulletin of Atomic Scientists. More recently, the Moon government has turned its attention to blockchain technology. In addition to upholding the ties that cryptocurrency exchange markets have with traditional banks, Seoul is actively considering permitting Initial Coin Offerings to take place to further encourage investment in this new field. This comes despite concerns from financial regulators earlier this year that such moves may destabilize the market.

Moreover, the government is actively supporting innovative companies by showcasing their products in public institutions. Myongji Hospital, which has collaborated closely with the Ministry of Health and Welfare in the past, partnered with the technology company BICube to integrate blockchain technology in its medical exchange system. This mirrors past efforts undertaken by the government to bolster the robotics industry by integrating smart robots in classrooms, generating domestic interest and demand for the nascent industry.

As evidenced by these measures, policies undertaken by the incumbent Korean administration do not diverge greatly from those advanced by past governments. However, the problem may be that these toolsets are insufficient to jumpstart economic growth today.

The Korean government has yet to find a corrective for the country’s overexposure to global demand. More specifically, it has not found a way to transform the dependent relationship that local parts suppliers have with conglomerates that might reduce shocks that are currently transferred to small and medium enterprises when flagship exporters underperform abroad. This remains a particularly acute problem as SMEs employ most of the country’s workforce.

And while the administration continues to rely on conglomerates to act as champions of the Korean economy, not all of them have been proactive in embracing innovative sectors. For instance, the steel giant POSCO recently announced plans to retrench in their traditional industries rather than expand into emerging technologies like lithium and biopharmaceuticals. Indeed, it might not be wholly appropriate either for the government to expect companies in established industries to overextend.

Even the government’s approach to increasing the minimum wage seems misaligned with the challenges in the labor market, not necessarily because it imposes an undue burden on the private sector as is often claimed – but because institutions and processes built to adjudicate management-labor disputes remain fragile. If the administration aims to make sure that wage growth keeps pace with increases in domestic productivity, workers need stronger collective bargaining positions.

Structural reform is a daunting task. Nonetheless, these underlying conditions have to be addressed for the economy to experience a truly transformative outcome. President Moon may need to become as radical as he is often accused of being.

Yong Kwon is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone.

This image originally posted to Flickr by SarahTz and licensed by Wikimedia Commons

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The Jig Is Not Yet Up: Kim Jong-un Turns to Cyber Crime

By Linnea Logie

Kim Jong-un and his inner circle have since the beginning of 2018 professed their ardent desire for peace on the Korean peninsula.  Yet however impassioned their rhetorical allusions to the prospect of peacefully reunifying the Korean peninsula and integrating North Korea (DPRK) into the global community, North Korean leaders are keenly aware that attempting a major pivot would undermine the ideological and theoretical basis of regime legitimacy.  Fearful that relinquishing nuclear weapons and seeking out alternative means of regime security would precipitate their downfall, Kim and company remain intent on developing alternative means of not only defending elite activities against external interference, but also inflicting damage on so-called foreign “enemies.”  Continued nuclear-weapons development, for all the attention it receives from the outside world, is only part of this broader strategy.

The regime has not survived on the threat of nuclear terrorism, alone.  Contrary to popular belief, North Korea is rapidly amassing capabilities with arguably greater destructive potential than nuclear or ballistic missiles.  Pyongyang’s elaborate licit and illicit financial networks grow more sophisticated and its army of cyber warriors grows more adept with each passing day, posing fearsome threats to Northeast Asia, the United States, and the entire international system.  This has become increasingly evident under the leadership of Kim Jong-un, who has overseen a dramatic expansion of criminal activities into the vast realm of cyberspace to bolster the economic security of the ruling class, as well as threaten the national interests of foreign adversaries.  These malicious activities belie the appearance of civility and openness crafted so carefully by the North Korean leadership since it launched a pre-Olympics charm offensive in early 2018.  Add to this Pyongyang’s recent recriminations of the U.S. negotiating posture, and the prospects of Kim adopting a radically new tact seem slim.

Focusing on North Korea’s nuclear-weapons development at the exclusion of other ominous regime objectives neither diminishes the North Korean cyber threat, nor renders it more easily contained.  With the time already won through the ongoing charm offensive, this threat is now even more disquieting, demanding extreme vigilance from the United States and its allies.  As the revenue-generating activities of regime cyberwarriors rapidly gather steam, Kim will almost certainly remain recalcitrant.

Fighting the Next War

The international community made a critical error in reducing the threat posed by the North Korean regime to one of a strictly nuclear nature.  That the Kim dynasty is first and foremost a “nuclear conundrum” remains the prevailing view, underlying the strategic thinking of key policymakers around the world and virtually institutionalizing a preference for diplomacy in addressing the North Korean threat.  Meanwhile, behind a veil of nuclear belligerence, the ruling Kim family has been quietly and painstakingly preparing to fight the next war: a “Secret War” waged not with guns and bullets, but with information and network access.

Former NSA deputy director Chris Inglis describes cyber as a “tailor-made instrument of power” for the North Korean regime, offering a relatively anonymous, low-cost means of both procuring financial resources and threatening foreign public and private-sector infrastructure.   The rapid escalation of malicious North Korean cyber activities over the past decade seems to confirm the utility of hacking operations for the ruling elite, indicating that cyberwarfare has become a core survival tactic of the current regime.

Pyongyang’s cyber program took root decades prior to Kim Jong-un’s rise to power, however.  The experiences and observations of scientists returning to North Korea from abroad in the 1990s sparked a realization within the regime that programming skills could help the domestic economy recover from the ravages of famine, while concomitantly amplifying the regime’s ability to spy on and attack the United States and South Korea (ROK).  This catalyzed the still-continuing process of identifying and recruiting promising talent for specialized education in elite North Korean or Chinese computer-science programs.  Some North Koreans posted to the UN in the mid-1990s even enrolled in New York-based computer-programming courses.

By the time the U.S. invaded Iraq in 2003, Kim Jong-il was ostensibly convinced that information, rather than conventional military power, would define the future of warfare.  He impressed this conviction upon his son, who, after navigating an uncertain transition of power in the early 2010s, found himself armed with an increasingly potent weapon only just beginning to be taken seriously by outside observers.

Surveying an interconnected globalized landscape with an expanded 21st-century understanding of cyberspace, Kim Jong-un came to regard cyber capabilities as more valuable than his father likely ever dreamed possible: a new asset to be leveraged in conjunction with the tools already in the regime’s arsenal.  With support from Offices 39 and 91, he expanded the modest ranks of programmers serving his father’s regime into an army of cyberwarriors perhaps 7,000-10,000 strong (ROK Defense Ministry estimates from early 2015 placed this figure at 6,000).  These hackers have carried out increasingly sophisticated attacks on targets in South Korea and around the globe, graduating from “distributed denial-of-service” (DDoS) assaults in 2009, 2011, and 2013; to the infamous Sony hack in 2014; to sensitive data-collection campaigns in 2016; to socially disruptive attacks in 2017; and, increasingly, to digital bank and cryptocurrency-exchange heists.  Indeed, decades-long investments in the grooming of North Korean talent have given rise to a range of malicious North Korean cyber activities known by authorities in the United States and around the world as “Hidden Cobra.”

The third ruling Kim allegedly believes he now wields a fearsome “all-purpose sword” comprised of offensive cyber capabilities, nuclear weapons, and ballistic missiles: a mighty arsenal to be employed not only as a weapon, but for revenue-generation, harassment, and geopolitical retribution.  His efforts to cultivate a robust cyber army have only just begun to pay real dividends for Pyongyang, yielding the advanced technical capabilities necessary for the regime to shift the focus of its cyber strategy from espionage to money-making.

Cashing In

Cybercrime has emerged as a new means of extending the lifespan of the North Korean regime amid punishing international sanctions, whose deleterious effect on Sino-North Korean trade threatens regime economic security and, in turn, legitimacy.  Current estimates place the value of North Korean cybertheft as high as $1 billion annually, and with continued advancement in North Korean programming and cyberinfiltration skills, this already massive sum is poised to balloon rapidly, providing a financial lifeline for the regime while undermining regional and global stability.

Since 2015, North Korean hackers have hit banks in Mexico, Nepal, the Philippines, Poland, Taiwan, and Vietnam, pulling off an $81-million theft in February 2016 from a Bangladesh Central Bank account managed by the U.S. Federal Reserve.  And though some of these banks managed to protect at least a portion of targeted accounts, security experts are sounding the alarm that with improved North Korean computer skills, Hidden Cobra is becoming broader in scope and increasingly sophisticated, designed to successfully perform critical data-collection and revenue-generating functions.

Indeed, Pyongyang only recently embraced cryptocurrency theft and mining as new preferred mechanisms for raising the hard currency it so desperately needs.  Within the first few months of 2017, North Korean hackers pulled off a $7-million heist from Youbit that ultimately shuttered the platform, in addition to a 3,931 Bitcoin (BTC) theft from Yapizon.  Other online exchanges in East Asia, including Coinis in South Korea and Coincheck in Japan, have suffered similar North Korean attacks of various magnitude and frequency.

Undaunted

Evidence suggests that rather than stopping or slowing in the wake of the historic April meeting between Kim Jong-un and President Moon Jae-in of South Korea, Pyongyang’s cyberassault on the South has gathered momentum.  In the weeks following the inter-Korean dialogue in April (and subsequent talks in May), North Korean hackers struck out at the South in a quest for sensitive information that could help the regime prepare for and control the optics surrounding Kim Jong-un’s June 12 summit with President Trump.  Hidden Cobra actors targeted financial companies and organizations known to focus on North Korea, including an independent think tank and a non-governmental group with a history of sending food and material aid to the DPRK.  The use of spear-phishing emails in this attack allegedly yielded strategic gold for Pyongyang, granting hackers access to information detailing U.S.-ROK expectations and ongoing preparations for the Trump-Kim summit.

Meanwhile, the hundreds of North Korean hackers tasked with infiltrating cryptocurrency exchanges continue to flex their growing muscles.  Over a forty-minute period in the wee hours of Monday, June 11th, 2018, they stole tokens with an estimated value upwards of $36 million from Conrail, the seventh-largest cryptocurrency exchange in South Korea.  Their successful theft represented roughly thirty percent of the total coin owned by the online service, and news of the breach sent the trading value of Bitcoin into a tailspin, driving the global price down more than seven percent by the time markets closed on Monday.  Then came Bithumb, which had already suffered a July 2017 breach that caused over $1 million in losses.  On Wednesday, June 20, representatives of the Seoul-based cryptocurrency exchange—currently the sixth-largest in the world—revealed that hackers had stolen nearly $31.6 million-worth of digital currency overnight, prompting a temporary freeze on withdrawals and deposits.  Fortunately, Bithumb managed to recoup nearly half of its losses by the end of June through a collaborative recovery effort with various worldwide exchanges.

Conclusion

The fact that brazen North Korean cyberattacks on South Korea and other foreign targets have not merely continued unabated but actually accelerated in the weeks since recent meetings with U.S. and ROK leaders belies Kim Jong-un’s repeated allusions to peace, while also suggesting that economic sanctions and the firm messages communicated through direct diplomatic engagement have yet to chasten North Korean leaders.  Instead, hubris appears to remain a prominent feature of Pyongyang’s self-image and worldview.

Kim Jong-il seemingly recognized roughly fifteen years ago that technology was once again transforming the nature of warfare, and the next battle would be surreptitiously waged over information and access.  His son had little choice but to incorporate this conviction into his asymmetrical survival strategy.

While keeping the international community preoccupied with the dangers posed by his ever-improving nuclear arsenal, Kim Jong-un has overseen a thriving network of criminal activity and accelerated the development of robust domestic cyber capabilities.  He now appears confident that he can have his cake and eat it, too: winning time and possible concessions through diplomatic engagement, while quietly ratcheting up a malicious cyberwarfare campaign that is proving increasingly profitable for the regime.

Ultimately, the question is whether the Kim regime recognizes that rebuffing a one-time offer of cooperation from the United States may elicit a devastating response from the Trump administration.  Pyongyang’s diplomatic track record, unceasing activities at major domestic nuclear sites, and continued misbehavior in cyberspace suggest the ruling core has yet to accept the necessity for a dramatic strategic shift.  Events unfortunately seem to be building toward an unsavory breakdown in comity, leaving observers only to wonder how negotiations may founder, and when.

Linnea Logie is an incoming graduate student with the Security Studies Program at Georgetown University.  She is currently an Intern at the Korea Economic Institute of America. The views expressed here are the author’s alone.   

Image from Prachatai’s photostream on flickr Creative Commons.

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The Evolution of Mobile Telecommunications and Private Transport Services in North Korea

By Yonho Kim 

North Korean leader Kim Jong-un committed to complete denuclearization of the Korean Peninsula at the June 12 summit with U.S. President Donald Trump. Whether Kim has made a shift in his strategic calculus will become clearer depending on the sequence of concrete steps he takes. One of the critical factors in his calculus should be his strong desire to develop the North Korean economy. It is notable that his public commitment to and policy focus on domestic economic development have been consistent, especially since he declared completion of the state nuclear force at his 2018 New Year’s address. In this sense, Kim may have made calculated remarks when he admitted to the embarrassing condition of the roads and railways in his country at his first summit with South Korean President Moon Jae-in.

Since Kim Jong-un took power in late 2011, unprecedented market activities are emerging thanks to the expansion of state-run mobile telecommunications and spontaneously formed private transport services. North Korea’s cell phone subscribers are now estimated to count around 4 million, close to 20% of its entire population, facilitating timely communication of market trends. This allows the merchants to determine quantities and prices of products to trade, as well as shipping and delivery methods over the phone. Merchants can no longer compete in the markets without a cell phone. In addition, Kim Jong-un’s tolerance of private enterprise within North Korea, and the creation of a de facto public-private collaborative operation have helped to foster private transport service enterprises, also known as “servi-cha.” Beset by economic difficulties and poor electricity supply, the railway system has become unreliable, leaving a fleet of vehicles imported mainly from China to rise as the main mode of commercial transport.

The combination of servi-cha and cell phone during the Kim Jong-un era have given birth to a North Korean style innovation in logistics. Assisted by the rapid exchange of information, the system is evolving to create close ties between servi-cha owners and drivers, wholesale and retail merchants, brokers, fuel traders, checkpoints, and other associated actors in the chain. Bringing in new servi-cha customers, pricing freight charges, transferring money, trading fuel, and situations at checkpoints are all being managed efficiently through communications via cell phones. The combination of servi-cha and cell phones has even made possible North Korean style parcel delivery services. Gradually disappearing “door-to-door” merchants who used to travel long distance to make profitable trade, the ability to operate a supply chain through a phone call, connecting traders, drivers, and even checkpoints, has opened up a new business era of “stay-at-home merchants.”

Considering the great increase in the mobility of the North Korean people and products off the regime’s radar, and rapid expansion of market information dissemination through mobile telecommunications, the aforementioned “combination” is a core element in determining the changing direction of North Korean marketization. First of all, the new system in logistics has brought specialization to the process of distribution. Moving away from the previous method of the merchants self-delivering, the actors have divided each step of distribution by roles such as shipping, transporting, receiving and selling. As a result, it has created cost reduction, risk distribution, and the enlargement of cargo transfers, which made possible the quick response of product supply to changes in market conditions. While these structural changes benefit consumers through the stable price of goods, since a sales strategy aimed at regional prices differences has lost its competitiveness, a new sales strategy has emerged where sellers attempt to quickly turnover goods but profit margins are squeezed. In such circumstances, the influence of donju known as the ‘red capitalists’ continues to grow, widening the gap between the rich and poor among merchants.

The combination of servi-cha and cell phones has facilitated long-term and stable trade relationships, and developed a credit-based logistics system. The enlargement in the scale of trade has also increased the risk of business failure, and as a result, it is difficult to guarantee the operation of the new logistics system without credibility. In fact, in order for the market to develop, fulfillment of a contract must be ensured, and the predictability of trade relationship secured through legal and institutional arrangements. However, as evidenced by people’s deep-rooted distrust in the parcel delivery system of Ministry of Post and Telecommunications and the official banking system, the state is unable to properly support its markets with law and the necessary institutions. Instead, ironically enough, declining functions and corruption of the state, such as state institution’s involvement in smuggling and trafficking fuel, and bribery at checkpoints are promoting marketization. The predictability of trade relations in the North Korean market has been made possible through the awakening of the self-interested market participants who realized the importance of credibility in the trade relationship cycle and pressured prevention of fraud using rapid informational exchange via cell phones.

The new logistics system has also greatly improved the mobility of people, products, and information, and unlike in the past, has made possible the sharing of information on the movement of people and products in real-time between average citizens. At least in this respect, North Korea can no longer be seen as an underdeveloped and closed country where freedom of movement and expression is completely suppressed. Certainly, corruption is rampant in North Korea to the extent that there is a running joke, “you have to bribe to move around.” However, ironically, the disadvantages of a failed state are fostering the circulation of people, products, and information. A defector’s statement that ‘to the one who has the ability to purchase freedom,’ North Korea guarantees freedom is full of suggestions.

The specialization in the distribution chains and proliferation of bulk sales will inevitably require the maintenance and development of road infrastructure in North Korea.  The private fuel supply system, which is heavily dependent on smuggling and trafficking from state institutions, will eventually have to be replaced by a legal supply system. As time passes, fuel demand will continue to rise, and as a result, the increase in vulnerability of North Korea to oil sanctions is highly probable. On the other hand, it would be reasonable to assume that increased mobility of people, products, and information has already reached an irreversible level. Kim Jong-un’s regime may be able to take measures against the market in the short-run. However, it is probably aware of the truth that doing so is not sustainable.

The dramatic shift in the geopolitics in Northeast Asia sparked by the PyeongChang Winter Olympics thaw earlier this year has created a new context for economic engagement with North Korea. The international community will have to start considering new economic strategies to facilitate progress on the denuclearization negotiations. In doing so, rather than stereotyped views of the North Korean economy, careful observations of the changes of North Korean marketization on the micro level will have to be adopted.

This article is based on an excerpt from “North Korea’s Mobile Telecommunications and Private Transport Services in Kim Jong-un Era” by Yonho Kim (US-Korea Institute, Johns Hopkins SAIS, May 2018).

Yonho Kim is a Non-Resident Fellow at the Korea Economic Institute of America. The views expressed here are the author’s alone. 

Photo from Lawrence Wang’s photostream on flickr Creative Commons.

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Taking Quick Delivery for Granted in South Korea

By Jihyun Joung

Even if you are surrounded by hundreds of people in the middle of nowhere near the vast Han River, there is no need to worry—the chicken delivery man will spot you. Widely known as the “Delivery Nation,” South Koreans enjoy high speed delivery services in almost every product, you name it. You can have all sorts of food delivered from locally owned restaurants to large franchises. You can also save time going grocery shopping and conveniently have your groceries delivered to your home with few clicks, which is especially useful for single or double-income households. Recently, deliveries of grooming products such as razors, shirts, and shoes have expanded so that individuals can keep up with their overwhelming workload. If you don’t speak the language or are too shy to call, you can simply download one of numerous Korean delivery Apps such as Yogiyo and Baedal Minjok. The best part of it all is that you can get all of these goods delivered within a few hours through South Korea’s renowned “Rocket Delivery.” With the burgeoning of mobile and online services and applications delivering a wide range of products to your doorstep, South Korea saw a record high for online purchases in March. Although the country has benefited from overall economic growth and consumer satisfaction through this expansion, there has been a failure to recognize the sufferings of the employees, the delivery men who are coerced into working extensive hours for minimum wage to meet the ever-growing demands from consumers.

Due to the harsh working conditions of delivery men in the country, they were driven to take extreme measures. Over the past year, there have been multiple deaths of delivery men and postal workers. Either by succumbing to diseases incited by stress or by committing suicide. Evidently, the main cause of death was overworking. A 47-year-old Asan-based mailman, Gwak Hyung-gu, was found dead in April 2017. An autopsy revealed that Gwak died from arteriosclerosis, a sickness highly correlated to both physical and mental stress. Gwak had to deliver at least 1,200 letters every day, working 12 more hours than an average Korean worker. His work normally extended to the weekends, where he was refrained from spending any time with his family. Some postal workers even took their own lives, leaving behind suicide notes that accentuated their resentment towards the unbearable work schedule.

Besides these dire consequences, postmen and delivery men have expressed their frustration through protests as well. Most recently in April 2018, a shocking picture exposed hundreds of delivery boxes stranded in the parking lot of an apartment complex. This incident occurred in Dasan-dong, where delivery trucks were prohibited from entering an apartment complex due to its exclusiveness. The owners of the apartment complex claimed that these delivery trucks would place the residents, particularly the children in harm. This meant that these delivery men had to hand carry heavy packages to each and every house, which was an arduous task. Not only was this a physically laborious duty, but also unfair because their wages and working hours did not differ based on their workload. Unable and unwilling to do the absurd job required of these delivery men, the packages delivered to this particular apartment complex were often delayed or lost. Unfortunately, all complaints were directed towards them. On one side, business owners scolded them for their incompetence. On the other, the apartment residents were furious that their packages weren’t delivered on time. Subsequently, they rudely demanded that postmen place the packages in a cart and deliver them to every household personally. This ridiculous request led to the aforementioned protest.

These radical examples demonstrate how quick delivery services are pushing both delivery men and postal workers to do the impossible. As the delivery services become more convenient, wide-ranged, and quick, there will be a limit to how much the employees can tolerate, especially with the consumers and business owners pressuring them even further on both sides. We should acknowledge the fact that there is so much that one person can do in a given time. Though swift delivery services are prevalent and growing in the country, people should never take this for granted.

 

Jihyun Joung is an incoming Masters student in Economic and Political Development at Columbia University. She is currently an Intern at the Korea Economic Institute of America. The views expressed here are the author’s alone. 

Photo from Hoks photostream on flickr Creative Commons.

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Korea’s Ambitious Smart Water Grid Initiative

By Hwan Kang

The word “Smart Grid” became popularized when the energy industry thought applying sensors and having comprehensive control over the whole cycle of generating and consuming electricity was a good idea. Some people thought it would be even better if they could do the same with water, coining the term, “Smart Water Grid (SWG).” South Korea is one of the pioneers in this area as it tries to combat the country’s chronic water shortage stress.

South Korea the “Water-Stressed” Nation

South Korea experiences extreme cases of drought and flood each year, which means that the country has too much water and too little water at the same time. More than half of the total precipitation is concentrated during the summer while it becomes dry rest of the year. The country also experiences wide variance in precipitation by the region as well. Some provinces face water shortages even during the monsoon season because the rain comes down in only concentrated areas. What is worse is that yearly variance in precipitation is also big, ranging from 950 mm per year to 1600 mm per year. Such wide unpredictability forces South Korea to formulate a better water management system.

In terms of consumption, South Korea has been facing an increase in water usage along with economic growth over the years, while the available water source remained pretty much steady. Such a gap in supply and demand of water drove the country to deplete its water sources, with 33 percent of total available water presumed to be depleted according to OECD research. Such a state is represented by high level of water stress, placing Korea 50th out of 167 countries in terms of Water Stress Index, which is just behind severely stressed countries in Middle East and Southeast Asia.

Smart Water Management Initiative by K-water

Instead of staying stressed out about water withdrawal, Korea decided to use internet technology as a solution to build its own SWG. Dubbed as the “Smart Water Management Initiative (SWMI),” the Korean Water Resources Corporation (K-water) revealed its ambitious plan to use the ICT (Information & Communications Technologies) to control the whole cycle of water consumption. Similar to smart electricity grid, the initiative aims to put sensors on every part of the water distribution process to keep track of it on a real-time basis and manage facilities to efficiently recycle the water and re-distribute it.

The purposes of building SWG are to maximize the limited water resources and deal with uncertainties that arise with subsequent draught and flood. K-water expects that the successful operation of the SWG will eventually reduce the need to construct additional dams, leading to much cheaper solutions. The system also plans to communicate with the consumers through an online application by showing them real time information on the quality of water they use and provide assistance if they need it.

The SWG has gone through a trial period in selected regions such as Paju, where it has brought up the percentage of residents who drink tap water to 19.3 percent from 1 percent, improving confidence in the safety of the water, with an 80.7 percent satisfaction rate. In case of Seosan, a region which suffered from water leakage, the system was able to bring up the flow rate up to 90 percent from 60 percent, saving a significant amount of water and money. SWG is widely expanding its area with applications pending for Naju, the Korean Airforce, and Sejong city.

Growing Global Smart Water Management Market and Pioneering Korea

Water management is now considered as a prospective market with water shortages looming as a major problem in the future. According to the OECD, the water management for urban areas will become increasingly important because 86 percent of the OECD population will live in cities, while demand for water will increase by 55 percent by 2050. What is worse is that urban areas are more susceptible to pollution as well as environmental disasters, which calls for preventative water management plans. According to Ecolab, water management is also becoming an important part of corporate strategies by the companies, too. As the cost of acquiring necessary water rises, they are looking for ways to stably supply water for their industries. Such combined demand is becoming more realistic as industries are investing more in the smart water management market, pushing the market to grow on the average of 17.2 percent every year.

Amid all these changes, it is not surprising that Korea is not the only one trying to develop SWG. In fact, United States was the first country to coin the term with the launch of the Smart Water Grid Initiative back in 2009. Germany, France, Israel and Singapore are also developing their own methods of managing water with ICT either from their need to control water related disasters or recycle it for re-use. IBM is leading the management market as a private company by providing software called IBM Intelligent Water for rivers such as the Hudson River and the Amazon River and in countries such as Amsterdam and Ireland.

Korea is striving to acquire a position in the global market and is in fact showing some progress. Along with its future plans to expand its SWG program domestically, it has signed several memorandums of understanding (MOU) with the Asian Development Bank (ADB), Jordan and Vietnam, where they all suffer from severe water shortages. In the case of the ADB, K-water has promised to send its SWG experts to four South Asian countries and provide the necessary education and assistance to fix the developing nations’ inefficient water supply systems. For Jordan, on the other hand, the SWG developed by K-water will consist of desalination plants that will filter the sea water from the Dead Sea. Lastly, the MOU with Vietnam is about managing the drinking water in the country which is a fast growing market in the region. In addition to various forms of SWG cooperation, Korea is planning to hold the 2017 Smart Water Grid International Conference, which has been held annually in Incheon.

Problems

Although the Korean Smart water management initiative looks promising, it is not without its problems. The OECD report on enhancing water use efficiency in Korea lists the problems comprehensively. A major flaw in these endeavors is the funds for these projects. Currently, K-water depends heavily on government funding rather than its own revenue for their operation, which was half of its total spending of 17.9 trillion Korean won (15.9 billion USD) in 2013. The report also points out that the K-water spends less efforts on improving the water distribution efficiency on the demand side by adjusting the fee for the consumers.

K-water also needs to work harder to raise the awareness of its initiative, both with the public and elites. K-water may have announced MOUs with other countries in the media, but it is not enough to demonstrate to the public the potential and how successful SWG development is. Fora project requiring significant investments, there is little information on the progress of the initiative other than from K-water sites and foreign reports written in English. In terms of elites or academics who want to develop the SWG further in Korea, there are academic societies dedicated to researching the SWG in Korea specifically. However, they do not seem to be updating publications or events in a timely manner to support interest. For K-water to really go for the global market it needs to work on how to build domestic support, so it will have a firm footing from which to pursue the initiative with stable funding and acknowledgement.

Hwan Kang is currently an Intern at the Korea Economic Institute of America as part of the Asan Academy Fellowship Program. He is also a student of Seoul National University in South Korea. The views expressed here are the author’s alone.

Image from Changjin Lee’s photostream on flickr Creative Commons.

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Should South Korea Join the Transition to All Electric Vehicles?

By Troy Stangarone

The global automobile industry is on the verge of significant changes. Google, Uber, and traditional automobile manufacturers are pushing further into the development of autonomous vehicles and seeking to disrupt how vehicles are used by consumers. While the development of autonomous vehicles may change the way automobiles are used, they are not the only change that is likely to reshape the global automobile industry. Earlier this summer France and the United Kingdom announced that they will be phasing out combustion engines as part of a transition to only allow the sale of electric vehicles by 2040. China, the world’s largest automobile market, followed suit and announced that it was also planning to transition to electric vehicles in the future. While the moves by France and the United Kingdom are significant, the move by China could change the way South Korean policy makers need to think about automobile production and related issues.

In 2016, more than 23 million vehicles were sold in China, which is one of the top markets for Hyundai and Kia, accounting for more than a fifth of their global sales. If China follows through on its pledge to transition to electric vehicles, it will have a significant impact on the types of vehicles that Hyundai and Kia produce.

To date, the spread of electric vehicles has been held back by two issues. The first is what is commonly known as range anxiety. While the initial Tesla models average around 300 miles per charge, most electric vehicles on the market only get around a third of that distance on a single battery charge. With a limited infrastructure to charge electric vehicles consumers have been reluctant to purchase electric vehicles on a mass scale since they are limited in their usage compared to used gas powered vehicles.

The second issue is the ability of manufacturers to scale up demand and production to drive down costs so vehicles are price competitive with traditional combustion engines. Manufactures have tried to address this issue by introducing hybrid vehicles, increasing demand for the lithium ion batteries that power electric vehicles. This also addresses the range anxiety issue, and, in the case of Tesla, focuses on luxury vehicles where consumers are less price sensitive. At the same time, governments have offered subsidies to consumers to make electric vehicles price competitive.

The decisions by France, the UK, and especially China are already having an impact on the production decisions of major automotive producers. Under new regulations in China, automakers will be required to sell more vehicles that run on alternative fuels if they want to continue selling traditional vehicles. In response, global producers are looking to increase the production of electric vehicles in China, while in some cases shifting research and development to the Chinese market. GM and Ford have announced that they will be introducing 20 and 13 new electric vehicle lines over the next five years, respectively.

By mandating that all vehicles in the United Kingdom and France have electric engines, France, the UK, and eventually China are essentially working to address the scale issue by providing a guaranteed market for electric vehicles and signal to the private sector that it should continue to invest in the electric vehicle market. As the industry shifts toward electric vehicles, South Korea will need to consider the current state of the domestic market for electric vehicles, how market shifts abroad will affect the long-term competitiveness of Hyundai and Kia, the impact of the shift to electric vehicles on other South Korean industries, and how a shift to the mass usage of electric vehicles would impact the energy market in South Korea.

The Role of Electric Vehicles in the South Korean Market

The market for electric vehicles in South Korea is still embryonic. In 2016, only 5,914 electric vehicles were sold in South Korea, a market of 1.54 million vehicles. In contrast, 352,000 electric vehicles were sold in China last year and 159,139 were sold in the United States.

As other markets shift, the development of electric vehicles and their adoption in the South Korean market will increasingly become a competitiveness issues for the South Korean auto industry. While Hyundai and Kia have begun producing electric vehicles, they trail U.S. producers such as Tesla and GM, as well as Chinese firms which have dominated the market in China, where Tesla is the only foreign company to have had success.

While South Korea is behind the curve in the area of electric vehicles, the government has taken steps to promote the adoption of the technology through the development of the necessary recharging infrastructure and by providing purchase subsidies. The goal is to have ecofriendly vehicles account for 30 percent of sales in three years, up from 3 percent today. The question is will those steps be enough to jumpstart the industry in South Korea or should South Korea institute a mandate for electric vehicles similar to France and the United Kingdom?

The Battery Industry and Electric Vehicles

The potential future of South Korean auto industry isn’t the only other industry at stake in the shift to electric vehicles. In 20 years, the shift to electric vehicles is expected to create a $240 billion market for batteries. At the moment, LG Chem and Samsung SDI, are two of the leaders in battery market for electric vehicles, with LG Chem supplying the batteries for the Chevy Volt hybrid and Chevy Bolt electric vehicle. However, China hopes to claim this market for its own domestic producers, much as it has done in emerging energy industries such as wind and solar power, by driving down prices and restricting foreign competition. It has also refrained from certifying Samsung SDI and LG Chem vehicle batteries in China, limiting their ability to grow in the world’s largest electric vehicle market.

The Future of Energy Production in South Korea

The shift to electric vehicles is not only about production and the potential export industries it would affect, but also about the supply of power to charge a growing fleet of electric vehicles. Shortly after assuming office, President Moon Jae-in announced that he planned on phasing out coal and nuclear power plants and replacing them with new LNG plants and renewable energy. A commission established to study the issue has recommended pushing forward with plants already under construction, but has also suggested scaling back nuclear power in the long-term.

While the plan was put forward to address public concerns over air pollution, it could impact South Korea’s ability to transition to electric vehicles. While burning LNG is cleaner than coal, there are already concerns that the shift away from coal and nuclear power could lead to power shortages. A significant shift to electric vehicles would require an increase in electrical production and a movement away from nuclear power could reduce any of the benefits of zero emissions from electric vehicles or constrain their growth if South Korea faces power constraints in the future.

The actions by France, the UK, and China have the potential to reshape the global automobile industry. For a country such as South Korea, this has significant implications for the future of automobile production, but also larger sections of the South Korean economy. As a result, South Korean policy makers will need to consider how these shifts will impact not just the domestic auto industry, but how the shift will impact other industrial sectors, along with power generation in South Korea. The policy decisions made now could help to ensure that South Korea maintains a competitive automobile industry and develops the new technologies of the future.

Troy Stangarone is the Senior Director for Congressional Affairs at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from the National Renewable Energy Lab’s photostream on flickr Creative Commons.

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About The Peninsula

The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.