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Invisible Barrier
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This culture was built on nngcr. After

decades of Japanese occupation ended with
heart of Seoul, n lonely Forti denier
Japan's defeat in World War II, South Korea .
makes nn odd pitch to shoppers who
set out to win a respectable place in the
barely glance at his shop. Inside the
world. "Nation building through exports,"
nearly deserted showroom, a dlsplnyof
the rallying cry of President Park Chung
flowers anti pink ribbons presents n taxes, rules nnc1 regulations, becoming one
Hee in the early 19605, was emblazoned on
of the most open CM markets in the worldgreen Lincoln LS as the car of choice forfactory walls nll over the country. Luxuryon paper. Nevertheless, South Koreans almovie stars? Footbnll players? No: governimport buyers were publicly denounced
as
mcnt mlnlsters, SlItC.11lHIIl.Icon Kyeon~
traitors. Unti] the 19RO~. smoking
forcig
1110~tnever buy fhreih'" cars. The cornhincd
mnrkcting might 01' the world's great carSeob snys the Idea Is to convince consumers
cigarettes
was 1\ crime punislt:tblc
by jail,
th~1 will no longer be punished fOI' buying
makers persuaded South Koreans to buy
Dut no luxury itcm had morc power as n 11:1'
4,400 Imports Inst year-a mere 0-4 percent
triotic symbol than tll~ car,
foreign autos. The pitch Isn't working too
of the total market. Last week a visiting U.S.
well. This is Ford's main showroom in South
That's still true. The Buy Korean cnmtrnde delegation demanded even lower barKorea, and It has sold only about 100 cars so
paign tapped into n deep Confucian bins
riers. Local importers can only sigh. They
far this year. Why? "Patriotism," says Jeon,
against displays of wealth. During the
gazing out on a street filled with Korean cars
say no edict from Seoul can undo decades of
1997 hsinn financia! crisis. officials in
made by Hyundal, Kla or Daewoo, "Koreans
Seoul loudly
blamed their currency's
governrncnt, corporate and union exhortaare patriotic people."
tions to huy Korean. "It is easy to change regplunge on profligate Koreans' buying forulations and t1\'Xsystems," says Son Eul Rae,
eign goods. The real problem was that the
. The supposedly inexorable force of globcountry's consumers
were scared to buy
a Mercedes dealer who heads an autoalization can't change that. After years of
Importers association, "But changing a culanything. Dut TV news reports on the cripressure from the Americans, Europeans
sis routinely showed footage of foreignand Japanese, South Korea has cut tarifls, ture or a mind-set is not."
car salcsroorns anyway. Citizen vigilantes
took up the cause, slashing tires and
scratching
paint jobs on foreign cars left
unattended
in Seoul. "I hcarc so much
about harnssrncnt
of import cars or their
t:....
..'
protll1etlhythCUnitcdStntcsantlEUur:ycrs:'
so.ys 0. 41-yco.r-ol\l restaurant
\U3
rope, Scoul cutcar tarifls to S pcrcenthy
~
1995-below Europe'slevelof10 perowner who uses only secure ll:ly lots to
cent. Burcustomers stlll fear social and official
park her blue BMW. "I actually r.esit:ltcll
pressure to Duy Korean.As South Kobuying this car becauseof that"
."
0
~.
rcan sales in 2000 showed,
The harassment decreased as the economy recovered,
but the resentment still
foreignmakesnreg~tting
lingers. An import dealer says he doesn't :II
~d~~It;~;~
clobbered bylocals like
low TV crews in his showroom it' UIC), arc
~
Hyundai.
.
from the city desk of a bigSeou\ network, because he knows the footage will be used to
bash roreign-car buyers, who arc abused
.
~-;;.::.:.
...,
enough. In a recentsurveyof200clomcslic
.
~ .
-.
i ~ "~.',
luxury-car owners, 70 percent said buying
im~orts would lead to grea:er."social dispanty," n~d nearly half aVOId Imports for
POSH
N KANGNAM,/\'J'TlIE

On paper, South Korea's

car market is wide open.
So why don't imports sell?

llUSTI.ING

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Buy Korean, or Be Scared

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from f,nowKo,."os.

1'hat hostility IS about more than cars,

.. It's about economic class and corruption,

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Head on: In answer to DM'lvoo strikers (above), importers tout the benefits offoreign capital
~',

.n:l'. ,I:t~',llIng, "We arc ~till in ~

xurvivn] morlc, hut $CC ;\ !:roll'lh
trend nhcnd."
Thc Kim ndministrutinn ixu-,'.
.
ing to alln)' the car buyer,' lingering fears ofpllishmcnt. In April
n senior tax officer proclaimed
th:\t import owners are no longer
to be targeted for audits. lanv
people remain skeptical, 1 'birl)'
two th ircls of the luxury-car 0111"
crs in the poll said they still think
import buyers are inviting an audit. lmport dcalers are desperately trying to lure wary customers,
at times offering zero-interestrate loans and two or three years
of'frce maintenance. Foreign-car
dealers are even starting to ba c
the nationalists head on. L'\.St
week, as workers at Dacwoo Metors escalated their protests
np;;',inst n I'ossibk General Mo
tors takeover, the importers were
trumpeting thc benefits that foreign c:1pit:-.\
could hrill!-(to the i ndustrv.
South Koreans' rcf\ls~1 to buy American
gives GM 1110l'Cincentive to tangle witl:
Dncwno's
angry workers nnd massive
rlchts. I)ac\\'oo CII\lI(1cn:\ble the U,S. fi'rm
to slip throllglt lite invisihl'c burricrx. The
1,'l'cnch, nutornakcr
Renault managed lite
same trick last year when it bought n COil'
trolling stake in Sarnsung Motors. Samsung's cars were originally designed by n
Japanese maker, Nissan, but the domestic
brand name is what counts with-South Korcnn consumers. With k ss thnn a decade in
the autornaking business, Snmsung sold
28,000 cars ill South Koren last year=compared with only 182 for (;M. "By acquiring
Dacwco, Gl\1 can secure easy access to the
difficult Korean auto market," says J. 1.
Park, an nuto analyst with Jardine Fleming,
who foresees a wave of foreign investment
in Korean makers, "Eventually, it \vi\! be
meaningless to differentiate domestic carmakers from foreign makers," The strategy
is pretty simple: if you can't sell to Koreans,
buy their car companies,
II

too. Back In the Pnrk ern, when tax dod~ n~ Japan and 30 percent in the United States.
Seoul is increasingly f()cusing its reform
was a nationalsport, one of the easiest ways
efforts on informal, culturnl barriers. Until
to catch rich cheats was to 'audit nnyonc
recently Korean business and government
who traveled abroad or bought pricey forlea(lcr~ would never have dared to be ~CCI1
eign ears. Many of the targets were doctors,
riclil1!-(in n f[)l'(:i~n car, 1.atcly, thoujrh, Preslawyers anti other profcsslunnls with subident Kim Dac .Ill II/{ has repented I)' lIr!-(cd
stantlal cash Incomes, rather than executhem to start buying imports for ollicia!
tives, whose corporate salaries were caslcr
to trace, Until only n few years ago, simply, purposes. Early this month Hwang Doo
Yun, the Trade minister, bought n Lincoln
owning a foreign car was enough to trigger
LS will, much fanfare, "With my action, I
an audit. Foreign carmakers protested the
would like to convince people that foreignpractice as an underhanded form of protcccar owners don't face any disadvantages,"
tionism by intimidation.
'Everything is different now, Seoul in- said Hwang, "In this age of globalization,
slsts. Formal barriers started eroding in riding n foreign car is not against national
the early '90s under former president Kim interests," He went so far as to predict that
Korean car buyers would one day embrace
Young Sam, who cut auto-import tariffs
imports in the same way that "Korean kids
from 20 percent to the.current 8 percent.
have switched from kimchi to hamburgers"
'That's lower than tariffs in the European
One tiny, perhaps. Ford dealers see hints
Union, Australia, Taiwan and many other
wealthy nations, Since then Seoul has re- of change even at Posco, a steel giant and a
vised discriminatory taxes on foreign cars, bastion of Korean export strength. Foreign
cars used to be banned from even entering
eased complicated
testing requirements
the grounds of Posco's mills, (A company
and otherwise tried to satisfy foreigners' despokesman denies that such 1\ policy ever
mands for an open market. Yet the gross
existed.) But Ford officials say they were
imbalance of the South Korean car trade
surprised recently to get a request from
remains-the
4,400 imports Inst year, verPosco's presidential office for price quotes
sus 1.5 million exports-keeping
alive the
and brochures on Ford cars. "They have
, suspicion that South Korea is still trying
", to export its way to prosperity, The lc.'lS-' not yet placed any orders, but that' ,
itself was n major shock:' snyll
than-I percent import share of the South
"';.(I'!!L",._~!!!!!!
Korean market compares with (, percent in Ford's Koren IInlc.'1

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