Reaching for the Eurasian dream Inter-Korean strain remains beggest stumbling block for ambitious initiative

As Seoul’s concrete jungle fades into the background, the train slowly slides into an unusual landscape that blends pristine, lush forests and strips of barbed-wire fences in the lead up to an iron bridge over the Imjingang River. 

The DMZ Peace Train ends at Dorasan, South Korea’s northernmost rail station just 17 kilometers from the North Korean city of Gaeseong. Aboard were some 150 passengers who recently completed a 20-day, 14,400-kilometer journey on the “Eurasia Express” linking Asia and Europe. The journey last month started from Vladivostok and Beijing and ended in Berlin, Germany, capped off with celebratory events longing for peace and prosperity throughout the Eurasia continent.
 

The Eurasia Express runs on the track near Novosibirsk, Russia, July 22. Yonhap

Designed primarily to celebrate the feat, the special 80-minute DMZ trip Monday epitomized the blankness that kept reoccurring throughout the Eurasia itinerary in which North Korea remained absent, increasing the awareness of the need for unification of the two Koreas. With Pyongyang abstaining, the participants had to fly to Russia and China to board trains there. 

“Being not of the Korean War generation and with no family members living in the North, I had never really felt in earnest why we had to be reunited, but the Eurasia Express offered me a chance to change my understanding about North Korea and the unification,” Lee Soo-hyun, a makeup artist who took part in the project, said at the ceremony at Dorasan Station in Paju, Gyeonggi Province. 

The train program came as South Korea sets its sights on the Eurasian continent as it seeks to broaden its diplomatic and economic horizons and facilitate its future unification with the North through international collaboration. 

It was a centerpiece of President Park Geun-hye’s “Eurasia Initiative,” a package of projects, such as to connect railways, roads and ports to Europe via North Korea, China, Russia and Central Asia, as well as an integrated Eurasia power grid and a logistics hub. 

For Seoul, the continent is a treasure trove of opportunities for energy supplies, economic growth and cultural exchange. 

The Park administration sees the ambitious scheme as being able to cater to not only its own proposed vision to boost peace and trust in Northeast Asia, but also Beijing’s so-called One Belt One Road plan that envisions “land and maritime silk roads” all the way to Europe and even Africa, and Moscow’s drive to reinforce relations with Asia Pacific nations chiefly to revamp the underdeveloped Far East. 

Yet the initiative will have to tackle daunting hurdles in order to take off. With protracted cross-border gridlock, North Korea remains aloof toward the rail and other industrial partnerships, while tension persists across the continent amid Russia’s standoff with the West over the Ukraine crisis. 

The outlook for what Seoul envisions as “one Eurasia” is darkening further in the wake of Pyongyang’s land mine attack and artillery exchanges that have pushed up cross-border tension to a new high. 

On a weekday afternoon, Dorasan Station appeared hollower than ever, highlighting the irony of a large welcome sign reading, “Not the last station from the South, but the first station toward the North.” 

By Shin Hyon-hee (heeshin@heraldcorp.com)

China says military parade will involve 12,000 troops, 200 aircraft

About 12,000 Chinese troops and soldiers from more than 10 nations, including Russia, as well as 200 aircraft will take part in a huge military parade next month marking China‘s victory over Japan in World War II, Chinese organizers of the parade said Friday. 

The Sept. 3 event is expected to demonstrate China’s fast-growing military capabilities, while highlighting a rivalry between China and Japan. 

It also comes as neighboring countries of China keep a wary eye on Beijing‘s increasingly assertive actions in disputed waters, including the South China Sea, sparking a series of diplomatic rows with neighbors like the Philippines and Vietnam. China is also engaged in a bitter dispute with Japan over disputed islands in the East China Sea. 

Announcing military assets that will be on display during the parade, Qu Rui, deputy director of the Office of the Parade Leading Team of the Chinese People’s Liberation Army, told reporters that the Sept. 3 event will “represent the new development, new achievements and new images of the building of the Chinese armed forces.” 

“The number of troops participating in the parade is about 12,000,” Qu told reporters during a press conference. 

“At the same time, more than 500 pieces of 40-odd types of equipment, and nearly 200 aircraft of 20-plus types will be demonstrated in the parade,” Qu said.

“All weaponry and equipment displayed are Chinese made main equipment, 84 percent of which are shown for the first time.” 

Such a display of new military assets will “represent new development, new achievements and new images of the building of the Chinese armed forces,” Qu said. 

About 10 countries, including Russia and Kazakhstan, will send their troops to march together with Chinese troops during the military parade, Qu said. (Yonhap)

Girls’ Generation tops charts with new LP

K-pop girl group Girls’ Generation topped local music charts with its new LP “Lion Heart.”

On Wednesday, eponymous lead track “Lion Heart,” which was released at noon on Tuesday, ranked No. 1 on five charts -- Genie, Bugs, Soribada, Naver Music and Monkey 3. Another lead track “You Think,” which was released at midnight, ranked No.1 on two other charts -- Mnet and Olleh Music -- while following a close second place on four charts. 

Girls` Generation (SM Entertainment)

The eight-member group’s fifth studio album contains 12 songs with double lead track. Girls’ Generation will perform onstage Friday on KBS music program “Music Bank.” Following the appearance, the group will continue its promotion on MBC’s “Show! Music Core” on Saturday and SBS’ “Inkigayo” on Sunday. 

Earlier in July, Girls’ Generation released the single “Party” ahead of the full-length album, topping local charts and music ranking programs.

By Ahn Sung-mi (sahn@heraldcorp.com)

More firms adopt wage peak system

More and more business groups are adopting the wage peak system in South Korea, as sought by the government in a bid to create new jobs by slicing existing payrolls. 

Doosan Group, the country’s 13th-largest business conglomerate, Thursday announced that all its 22 units will implement the new wage peak system next year. It has become the first conglomerate to introduce the program in all affiliates under the agreement between management and unions. 

The wage peak system refers to the gradual reduction of salaries after a certain age in exchange for extending the retirement age. Severance payments, based on the average wage of the last three months from retirement, will naturally be lower, thus saving costs for employers. The Korea Employers’ Federation claims that the adoption of the program at all workplaces will enable companies to create 182,339 jobs for young people in four years. 

“We have adopted the wage peak system since 2013 at some of our affiliates and have gradually extended the program to nearly all our affiliates. Recently, we received the document of consent from all workers at the remaining four subsidiaries,” a Doosan spokesman said. 

Under the program, the retirement age of all workers is being extended to 60 years old. In return, salaries will decrease by 20 percent when employees turn 58 and by 30 percent when they reach 59. 

“The wage peak system has its benefit of not only guaranteeing job security for a longer period of time for individual workers, but also creating new jobs with reduced labor costs. This was welcomed by both workers and the management,” the spokesman said. 

The adoption of this system has been the main focus of the Park Geun-hye government in order to tackle the high youth unemployment rate. Progressive lawmakers have been suggesting bills mandating youth employment at large corporations, but have faced resistance from businessmen reeling under the economic slowdown. 

About 47 percent of the top 30 conglomerates in the country have partially adopted the wage peak system, including global powerhouses such as Samsung, Lotte, POSCO, GS and others, according to the Segye Ilbo newspaper.

However, some of them implemented the system in haste, without the workers’ consent, which could lead to management-labor rifts in the upcoming negotiation season.

Hyundai Motor Group, the country’s second-largest conglomerate, announced last week that it will implement the wage peak system in all its affiliates next year, boasting that this would lead to more employment, thus contributing to the nation’s economy. 

But it was soon revealed that the plan was unilaterally delivered, and it created a stir among the unionists who said the company has already introduced a de facto wage peak system by freezing the wages of aged workers.

Unionists at Kumho Tire on Monday held a strike over a slew of issues including the management’s unilateral decision to adopt the wage peak system. 

“There needs to be a lot of communication from both sides to smoothly adopt this system,” a labor union insider said. 

By Bae Ji-sook(baejisook@heraldcorp.com)

LG, Samsung battery-powered Audi EV aims to take on Tesla

Audi, together with Korean battery makers LG Chem and Samsung SDI, aims to take on Tesla with its new full-electric sport utility vehicle that drives 500 kilometers on a single charge. 

The German marque is set to unveil a preview of the e-tron quattro concept at the upcoming Frankfurt auto show in September. It plans to put the car into production in 2018 as its first mainstream electric car.

Exterior sketch of the Audi e-tron quattro

The car’s 500-kilometer driving range is more than triple that of other mass-market EVs on the market. 

Except Tesla’s Model S sedan that drives 420 to 560 kilometers depending on trims, top-selling cars like Nissan Leaf and BMW i3 drive some 160 kilometers when fully charged.  

The Audi EV’s key rival is expected to be Tesla’s new Model X SUV, which is scheduled to hit the market next month. The car’s driving range is also 500 kilometers. 

In a rare partnership, LG Chem and Samsung SDI, two of the world’s top three battery makers along with Japan’s Panasonic, have teamed up to develop big storage batteries for the Audi project. 

The two companies declined to elaborate on how they work together and who would take the lead in the whole product development process. 

“An EV with a 500-kilometer driving range is a revolution that would help jump-start the still nascent EV market,” an industry source said. “And this is also a competition between the two battery makers. They would try to show off their battery prowess and appeal to other global carmakers for future deals.”

The two companies have poured resources for years into developing smaller but higher capacity batteries for electric cars, because an electric car’s driving range is largely dependent on battery size. 

Samsung SDI is the sole supplier for BMW’s first full-electric car i3 as well as the i8 plug-in hybrid sports car, while LG Chem is supplying EV batteries to carmakers like GM, Ford, Daimler and Volvo.

According to the research firm B3, the world’s electric car market is expected to surge from this year’s 2.3 million cars to 6 million by 2020. 

During the same period, the market for EV batteries is projected to more than triple from $6 billion to $21.1 billion, the firm said. 

Seoul employs brisk diplomacy over N.K. attack Geopolitical obstacles complicate Korea's diplomacy in the region

South Korea revved up its diplomacy Friday to secure international cooperation in deterring North Korean provocations, as tensions flared anew due to Pyongyang’s rocket attack and warning of “military action.” 

Seoul explained the facts of the North’s rocket provocation to major countries and the United Nations, and discussed with them ways to fend off additional provocations that could include a rocket launch disguised as a satellite launch.
 

North Korean leader Kim Jong-un holds an emergency military meeting in Pyongyang on Thursday evening, ordering his troops be fully ready for any military operations at any time from 5 p.m. Friday. Yonhap

Earlier in the day, South Korea’s chief nuclear envoy Hwang Joon-kuk held telephone talks with his U.S. counterpart Sung Kim to ensure close diplomatic coordination in responding to the communist state’s provocative behavior.

“Hwang and Kim held in-depth consultations over the overall security situation concerning the North’s recent provocations and agreed to continue close coordination among the diplomatic authorities to remain vigilant and thus fend off additional provocations,” a Seoul official told The Korea Herald on the customary condition of anonymity.

Such diplomatic efforts by Seoul are expected to help draw international attention to the North’s unceasing provocative acts and secure cooperation from the international community if the issue of North Korean provocations should be referred to the UN Security Council again, observers noted.

With regard to Pyongyang’s provocation this week, the U.S. expressed concerns and urged the North to stop provocative actions.

“Such provocative actions heighten tensions, and we call on Pyongyang to refrain from actions and rhetoric that threaten regional peace and security,” U.S. State Department spokesperson Katina Adams said.

However, China and Russia apparently called on both Seoul and Pyongyang to exercise restraint despite the North having triggered the inter-Korean exchange of fire Thursday, sharply raising cross-border tensions. 

During his lecture to Koreans about the bilateral economic cooperation, Chinese Ambassador to South Korea Qiu Guohong reportedly said that the two Koreas should restrain themselves and seek a resolution to their issues through dialogue.

“We (China) are against any unilateral provocation, whoever may initiate it,” the ambassador was quoted by local media as saying.

In a statement, Russia’s Foreign Ministry also called on both Koreas to exert the “utmost restraint” and refrain from any actions that would aggravate inter-Korean tensions.

For Seoul to gain support from the UN Security Council to condemn Pyongyang’s provocations, cooperation with Beijing and Moscow is crucial, given that they are two of the five veto-wielding countries.

While whether Russia would fully support South Korea’s future course of action at the UNSC is unknown, cooperation with China is expected to be smoother considering that South Korean President Park Geun-hye plans to visit China to attend the 70th anniversary of the end of World War II ― a decision seen as a move by Park to further strengthen strategic cooperation with the emerging power.

By Song Sang-ho (sshluck@heraldcorp.com)

Korean firms eye central Asia for growth, cooperation

Korean companies are fast establishing themselves in the growing Central Asian market as the region undergoes economic development. 

Local construction firms made a name for themselves in carrying out large-scale projects in the Middle East, and they are now proving themselves again in Central Asia. 

Although Central Asian nations are rich in natural resources and manpower, they are only now focusing on establishing basic infrastructure, presenting a huge market for those with the construction capabilities. 

As such, local builders such as Hyundai Engineering & Construction and POSCO Engineering & Construction are hoping to cash in on the construction boom. 

Hyundai Engineering & Construction is currently collaborating with GS Engineering & Construction and Samsung Engineering on a large chemicals plant in Uzbekistan, which in turn laid the foundations for the company winning a $2.01 billion gas treatment project in the country. 

Other firms such as Samsung C&T have also been gaining ground in Central Asia.

Samsung has been working with Korea Electric Power Corp. on a $4.9 billion project in Kazakhstan since 2009. The project is one of the largest to be issued by the Kazakh government and will see the construction of a coal power plant that will generate about 9 percent of the country’s overall electricity output. 

Although large, the scale of projects awarded to Korean firms remains in the shadows of those they carried out in the Middle East.

However, experts say that strategies tailored to the Central Asian markets could allow Korean builders to reap the fruits of the region’s economic development to the fullest. 

“(Korean firms) approach entering these markets from the stance that they are creating jobs and helping local firms grow,” a Korean construction industry analyst said. 

He also said Korean firms could enter the market by investing in indigenous companies. 

Korean firms are also making waves in the burgeoning Central Asian markets in the unlikely field of food and beverages. 

In Russia and associated markets, where global giants such as Nestle failed, Korean products such as canned coffee and milk-based soft drinks have become household names. 

This expansion into Central Asia is also seeing Korea’s financial companies make headway in overseas markets, a feat that had largely eluded local financial firms for some time.

While local banks have established a foothold in China, results from other markets had been lackluster in the past.

However, with Central Asian markets presenting huge potential, local banks are pursuing overseas expansion in a renewed drive. 

Last year, Woori Bank established an office in Vladivostok, laying the foundations for its plans for eastern Russia. 

Shinhan and Kookmin banks entered the Central Asian market much earlier. 

Shinhan set up a subsidiary in Kazakhstan in 2008, while Kookmin bought into that country’s BCC bank at around the same time. For Shinhan Bank, which is part of a larger financial group, its foray into Kazakhstan appears to have served as a bridgehead for affiliates. 

In July, Shinhan Card followed its banking affiliate to the Central Asian nation. 

By Suk Gee-hyun (monicasuk@heraldcorp.com)