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Invisible Barrier
fly D. J. L££ This culture was built on nngcr. After
POSH
N KANGNAM,/\'J'TlIE llUSTI.ING On paper, South Korea's
decades of Japanese occupation ended with

I
heart of Seoul, n lonely Forti denier Japan's defeat in World War II, South Korea .
makes nn odd pitch to shoppers who car market is wide open.
set out to win a respectable place in the
barely glance at his shop. Inside the So why don't imports sell?
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
green Lincoln LS as the car of choice for- of the most open CM markets in the world- factory walls nll over the country. Luxury-
movie stars? Footbnll players? No: govern- on paper. Nevertheless, South Koreans al- import buyers were publicly denounced as
mcnt mlnlsters, SlItC.11lHIIl.Icon Kyeon~ 1110~tnever buy fhreih'" cars. The cornhincd traitors. Unti] the 19RO~. smoking forcig»
Seob snys the Idea Is to convince consumers mnrkcting might 01' the world's great car- 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'
foreign autos. The pitch Isn't working too 4,400 Imports Inst year-a mere 0-4 percent triotic symbol than tll~ car,
well. This is Ford's main showroom in South of the total market. Last week a visiting U.S. That's still true. The Buy Korean cnm-
Korea, and It has sold only about 100 cars so trnde delegation demanded even lower bar- paign tapped into n deep Confucian bins
far this year. Why? "Patriotism," says Jeon, riers. Local importers can only sigh. They 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 governrncnt, corporate and union exhorta- Seoul loudly blamed their currency's
are patriotic people." tions to huy Korean. "It is easy to change reg- plunge on profligate Koreans' buying for-
. The supposedly inexorable force of glob- ulations and t1\'Xsystems," says Son Eul Rae, eign goods. The real problem was that the
alization can't change that. After years of a Mercedes dealer who heads an auto- country's consumers were scared to buy
pressure from the Americans, Europeans Importers association, "But changing a cul- anything. Dut TV news reports on the cri-
and Japanese, South Korea has cut tarifls, ture or a mind-set is not."

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sis routinely showed footage of foreign-
car salcsroorns anyway. Citizen vigilantes
took up the cause, slashing tires and

n A." scratching paint jobs on foreign cars left


Buy Korean, or Be Scared

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unattended in Seoul. "I hcarc so much
.1'n'IOta~. t:.... ..' protll1etlhythCUnitcdStntcsantlEU- about harnssrncnt of import cars or their
\U3 ur:ycrs:' so.ys 0. 41-yco.r-ol\l restaurant

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rope, Scoul cutcar tarifls to S pcrcenthy
~ 1995-below Europe'slevelof10 per- owner who uses only secure ll:ly lots to
cent. Burcustomers stlll fear social and official park her blue BMW. "I actually r.esit:ltcll

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pressure to Duy Korean.As South Ko-
rcan sales in 2000 showed,
buying this car becauseof that"
The harassment decreased as the econo-

• '2.:n~O .~;~. foreignmakesnreg~tting my recovered, but the resentment still


a~ ,.. ,"'" ~d~~It;~;~ clobbered bylocals like lingers. An import dealer says he doesn't :II·
low TV crews in his showroom it' UIC), arc
~ Hyundai. .
from the city desk of a bigSeou\ network, be-
cause he knows the footage will be used to
bash roreign-car buyers, who arc abused
. ~-;;.::.:. ..., enough. In a recentsurveyof200clomcslic .
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luxury-car owners, 70 percent said buying
im~orts would lead to grea:er."social dis-
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panty," n~d nearly half aVOId Imports for II
~ fmot'd,rtr.l?oh" from f,nowKo,."os.
,__, 1'hat hostility IS about more than cars,
. .. It's about economic class and corruption,

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30
• watt ,

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-
.n:l'. ,I:t~',llIng, "We arc ~till in ~
l1' '" ••,I.r::,'" xurvivn] morlc, hut $CC ;\ !:roll'lh
of:1'; '. .~t/--· trend nhcnd."
"' ,"1'\'/; Thc Kim ndministrutinn ixu-,'.
,') . .
:lJ1JI"I'I"'''''''.Jlll1I ing to alln)' the car buyer,' linger-
ing fears ofpll»ishmcnt. 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 au-
dit. lmport dcalers are desperate-
ly trying to lure wary customers,
at times offering zero-interest-
rate 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 Me-
\ ..•....
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tors escalated their protests
Head on: In answer to DM'lvoo strikers (above), importers tout the benefits offoreign capital np;;',inst n I'ossibk General Mo·
tors takeover, the importers were
too. Back In the Pnrk ern, when tax dod~ n~ Japan and 30 percent in the United States. trumpeting thc benefits that foreign c:1pit:-.\
was a nationalsport, one of the easiest ways Seoul is increasingly f()cusing its reform could hrill!-(to the i ndustrv.
to catch rich cheats was to 'audit nnyonc efforts on informal, culturnl barriers. Until South Koreans' rcf\ls~1 to buy American
who traveled abroad or bought pricey for- recently Korean business and government gives GM 1110l'Cincentive to tangle witl:
eign ears. Many of the targets were doctors, lea(lcr~ would never have dared to be ~CCI1 Dncwno's angry workers nnd massive
lawyers anti other profcsslunnls with sub- riclil1!-(in n f[)l'(:i~n car, 1.atcly, thoujrh, Pres- rlchts. I)ac\\'oo CII\lI(1cn:\ble the U,S. fi'rm
stantlal cash Incomes, rather than execu- ident Kim Dac .Ill II/{ has repented I)' lIr!-(cd to slip throllglt lite invisihl'c burricrx. The
tives, whose corporate salaries were caslcr them to start buying imports for ollicia! 1,'l'cnch, nutornakcr Renault managed lite
to trace, Until only n few years ago, simply, purposes. Early this month Hwang Doo same trick last year when it bought n COil'
owning a foreign car was enough to trigger Yun, the Trade minister, bought n Lincoln trolling stake in Sarnsung Motors. Sam-
an audit. Foreign carmakers protested the LS will, much fanfare, "With my action, I sung's cars were originally designed by n
practice as an underhanded form of protcc- would like to convince people that foreign- Japanese maker, Nissan, but the domestic
tionism by intimidation. car owners don't face any disadvantages," brand name is what counts with-South Ko-
'Everything is different now, Seoul in- said Hwang, "In this age of globalization, rcnn consumers. With k ss thnn a decade in
slsts. Formal barriers started eroding in riding n foreign car is not against national the autornaking business, Snmsung sold
the early '90s under former president Kim interests," He went so far as to predict that 28,000 cars ill South Koren last year=com-
Young Sam, who cut auto-import tariffs Korean car buyers would one day embrace pared with only 182 for (;M. "By acquiring
from 20 percent to the.current 8 percent. imports in the same way that "Korean kids Dacwco, Gl\1 can secure easy access to the
'That's lower than tariffs in the European have switched from kimchi to hamburgers" difficult Korean auto market," says J. 1.
Union, Australia, Taiwan and many other One tiny, perhaps. Ford dealers see hints Park, an nuto analyst with Jardine Fleming,
who foresees a wave of foreign investment
wealthy nations, Since then Seoul has re- of change even at Posco, a steel giant and a
in Korean makers, "Eventually, it \vi\! be
vised discriminatory taxes on foreign cars, bastion of Korean export strength. Foreign
cars used to be banned from even entering meaningless to differentiate domestic car-
eased complicated testing requirements
the grounds of Posco's mills, (A company makers from foreign makers," The strategy
and otherwise tried to satisfy foreigners' de-
spokesman denies that such 1\ policy ever is pretty simple: if you can't sell to Koreans,
mands for an open market. Yet the gross
existed.) But Ford officials say they were buy their car companies, II
imbalance of the South Korean car trade
remains-the 4,400 imports Inst year, ver- surprised recently to get a request from
sus 1.5 million exports-keeping alive the Posco's presidential office for price quotes
, suspicion that South Korea is still trying and brochures on Ford cars. "They have
", to export its way to prosperity, The lc.'lS-' not yet placed any orders, but that' ,
than-I percent import share of the South itself was n major shock:' snyll
Korean market compares with (, percent in Ford's Koren IInlc.'1 "';.(I'!!L",._~!!!!!!

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