PROLOGUE

...... > A Study on Economics & Industrial System in KOREA 한국의 경제와 산업시스템에 관한 연구

LG Global Challenger 2014

1 1 A Study on Economics & Industrial System in KOREA CONTENTS PROLOGUE

Prologue Part 1. About Our Topic 1.1 Background Story 1.2 Getting to Know Mongolia, Nepal, Kyrgyzstan & Thailand Part 2. Our Expediton 2.1 Expedition Plan 2.2 LG Electronics, Changwon Plant 2.3 POSTECH 2.4 POSCO Museum 2.5 Busan Port Authority 2.6 LG Science Hall (Busan) 2.7 Hyundai Heavy Industrial Corp. 2.8 Hyundai Motor 2.9 Renault Motors 2.10 Museum References Epilogue

2 PROLOGUE PROLOGUE

Korea is considered to be one of the countries that has the most shockingly fast pace when talking about the country’s economic development. It is really fascinating to see how much Korea has grown when comparing to the last six decades. Our team shares a common interest which is contributing to our own countries de- velopment. And since everyone in our team come from countries so-called “developing or underdevelopment country” (Mongolia, Nepal, Thailand, Kyrgyzstan), we all agree that in order for our home countries to become economically successfully, we need to set Korea as the role model.

We are really interested in how Korea becomes financially influ- ential not only in Asia but also in the World. We assume high development of today’s Korea is related to the result of heavy industry which played as the back bone of powerful financial and economics. And through some initial research, our assumption is proven to be true.

But research through secondary materials alone was not enough. That is why we chose A Study on Economics and Industrial Sys- tem in KOREA as our topic for LG Global Challenger program so that we can fully explore this topic.

In order to study more about this topic we visited the factories, companies and museum, located all around Korea, to get in order to experience and study about the history, ideas, concept and system directly.

2 3 Part 1. About Our Topic

1.1 Background Story 1.2 Getting to Know Mongolia, Nepal, Kyrgyzstan & Thailand

4 1.1 Background Story

Mongolia

Kyrgyzstan

Nepal

Thailand

Korea is considered to be one of the countries that has the most shock- ingly fast pace when talking about the country’s economic development. It is really fascinating to see how much Korea has grown when compar- ing to the last six decades. Our team shares a common interest which is contributing to our own countries development. And since everyone in our team come from countries so-called “developing or underdevel- opment country” (Mongolia, Nepal, Thailand, Kyrgyzstan), we all agree that in order for our home countries to become economically successful- ly, we need to set Korea as the role model.

We are really interested in how Korea becomes financially influential not only in Asia but also in the World. We assume high development of to- day’s Korea is related to the result of heavy industry which played as the back bone of powerful financial and economics. And through some initial research, our assumption is proven to be true.

But research through secondary materials alone was not enough. That is why we chose A Study on Economics and Industrial System in KOREA as our topic for LG Global Challenger program so that we can fully explore this topic.

In order to study more about this topic we visited the factories, com- panies and museum, located all around Korea, to get in order to expe- rience and study about the history, ideas, concept and system directly.

4 5 1.2 Getting to Know Us We have four members in our team and each member on our team come from different countries: Enja from Mongolia, Bakulya from Kyrgyzstan, Bom from Thailand and Era from Nepal. Even with different language in culture background and different mother tongue, we all share the same interest and love in Korea and . And through this opportunity from LG Global Challenger Program, we would be able to learn more about Korea’s Industry and Economics and hope that some day we could use the knowledge to help develop our country and Korea altogether.

ENJA ERA BAKULYA BOM

MONGOLIA Mongolia transferred into a market economy in 1992, the beginning of industrialization, after dem- ocratic revolution in early 1990s. Factories are rel- atively in their young stages, with a huge potential to expand. Processing of animal products, cash- mere and natural fiber manufacturing business are becoming very productive recently. Specially, Mon- golian cashmere is widely known for its quality and durability. Moreover, among extensive mineral de- posits in the country, gold makes the most indus- trial production, a leading copper and coal. Major domestic privatization programs have

6 1.2 Getting to Know Us

been undertaken, as well as fostering of foreign direct investment through international tender of the oil distribution company.

NEPAL

Nepal is a small developing country whose economy largely depends on agriculture. Nepal is famous for its cottage industries like baskets, woollen clothes, and carpets. The manufacturing industries are soap, jute, sugar, cigarette, bricks, and cement.

Concentrating in export and import, Nepal has been exporting woollen carpets, pashmina and has been importing the products like petro-

leum products, machinery and equipment, auto mobiles etc. which is comparatively very ex- pensive to the amount they re- ceive from exports which lead to trade deficit.

According to past geological study, Nepal has major metallic and industrial mineral deposits, but a poor infrastructure, po- litical instability, lack of equip- ment and skilled work force in- hibited further development of the mineral industry. Similarly, many of manufacturing indus-

tries have been shut down due to load shedding problem which has led to high rate of unemployment. Many of Nepa- lese have been migrating to developed countries like U.S.A, Korea, Arab countries in search of better opportunities.. As a result, Nepal is in more lack of skilled manpower since the people who went to developed countries never wish to come back. Because of the above problems, Nepal has not been able to develop its economy.

6 7 1.2 Getting to Know Us KYRGYZSTAN

Kyrgyzstan is a beautiful country with plenty of re- sources and people ready to work. But behind the beautiful scenery, it is hidden with the serious political situations and painful history.

After the collapse of Soviet Union, one of the most developed countries of central Asia, Kyrgyzstan had faced tremendous amount of challenges. As a new born coun- try, Kyrgyzstan had neither experience nor reliable government. Since then it has been struggling both politically and economically. Once very developed economy with large amount of factories and agrarian villages, Kyrgyzstan became one of the most cor- rupted and weak. Time passed by and the country condition has got worse. Despite having so many resources, the country was not able to develop as much when compar- ing to Korea whose resources are very lim- ited. THAILAND

Thailand is a country at the center of the Indochina pen- insula in . It is a coconut rich with natural resources such as tropical forest, rubber forest, coals etc. Thailand is an emerging economy and is considered a newly industrialized country. Thailand has experienced exception- al economic growth over the past several decades and is rapidly entering the ranks of the newly industrialized coun- tries. While the agricultural sector continues to experience significant growth as Agriculture provides many -raw ma terials for Thailand’s industrial sector. Rubber for latex, sugarcane for refined sugar, cassava for processed livestock feed, and fruit for canning and juices are examples of manufacturing industries that process agricultural commodities into intermediate prod- ucts or consumer goods for domestic use and exports. A significant share of Thailand’s industrial sector is based on processing agricultural commodities.

8 Part 2. Our Expedition

2.1 Expedition Plan 2.6 LG Science Hall (Busan) 2.2 LG Electronics, Changwon Plant 2.7 Hyundai Heavy Industrial Corp. 2.3 POSTECH 2.8 Hyundai Motor 2.4 POSCO Museum 2.9 2.5 Busan Port Authority 2.10 Ulsan Museum

8 9 2.1 Expedition Plan

Purpose of Visits

In order to study more about Korea’s economic and industrial system, we decide to visit three types of places: the factories, companies and museums. Each visits are aimed gain information and to experience and study about the history, ideas, concept and system directly. Objectives for Each Destination

LG Electronics Since LG is well known for its electronis devices exporting to all over the world. Our objective is to observe the fac- (Changwon Plant) tory environment and its management system.

Hyundai Hyundai Heavy Industrial Corporation is considered to be Heavy Industrial one of the world’s largest shipyard operated in Korea. Our Factory objective is to observe the factory environment and its Corporation management system.

Renault Samsung Renault Samsung Motors is one of the most important automobile factories in Korea. Our objective is to observe Motors the factory environment and its management system.

Busan port is the world 5th ranked container port and the Busan largest transshipment port in Northeast Asia. Our objec- Port Authority tive is to first-handedly observe and enhance our under- standing of the port operations. Since POSTECH is Korea’s first science and technology re- POSTECH search- oriented university that was established by POS- Company CO, our objective is to see the university campus and facilities provided and interact with its students is considered to be one of the world’s largest automobile assembly plant operated in Ko- Hyundai Motor rea. Our objective is to observe the factory environment and its management system.

LG Science Hall Our objective is to learn about the vision, observe the (Busan) factory environment and management system.

According to World Steel Association, POSCO is regarded POSCO Museum as 3rd biggest producer of crude steel in 2010. Our ob- Museum jective is to study more about the history of its success.

Since Ulsan is considered to be Korea’s heart of industrial district, through Ulsan museum, our objective is to see Ulsan Museum the exhibitions the archive of the history, andunderstand everything about Ulsan in the aspect of industry.

10 2.1 Expedition Plan

Destinations

POSCO Museum Museum

POSTECH University

Ulsan Museum Ulsan Museum Museum

Hyundai Heavy Industries Ship Assembling Plant

Hyundai Motor Car Assembling Plant

Renault Samsung Motors Pohang Museum & Car Assembling Plant

Busan Port Authority Ulsan Port

ChangwonBusan LG Science Hall Museum

LG Electronics, Changwon Plant Electronic Product Assembling Plant

Schedule

7/16 LG Electronics, Changwon Plant 7/22 LG Science Hall (Busan) 7/17 Busan City Tour 7/23 7/18 POSTECH & Hyundai Motor 7/19 POSCO Museum 7/24 Renault Samsung Motors 7/20 Meeting 7/25 Ulsan Museum 7/21 Busan Port Authority 7/26 Arrive in

10 11 2.2 LG Electronics Inc, Changwon Plant

LG Electronics Factory in Changwon produces dif- ferent kinds of advanced and qualitative refriger- ators, air conditioners, television, cleaner, washing machine etc meeting huge demands around the world. Purpose of Visits

> To observe the factory environment.

> To study its management system.

> To study its success key as the one of the world’s largest automobile assembly Changwon plant operated in Korea.

What is LG Electronics Inc.?

LG Electronics Inc. is a Korean multinational electronics company headquartered in Yeouido-dong, Seoul, and a member of the LG Group, employing 82,000 people work- ing in more than 100 locations around the world. The company operates its business through divisions: Mobile Communications, Home Entertainment, Home Appliances, Air Conditioning & Energy Solutions, and Vehicle Components. CEO of LG Electronics is Bon-joon Koo, who assumed the role of Vice Chairman of LG Electronics on October 1, 2010. LG Electronics is currently the world’s second-largest television manufacturer. LG Electronics Inc.’s History

In 1958 aftermath of Korea war, LG electronic was established by Geumsong (금성) to help nation rebuild economies by providing domestically electronic products, mainly home appliances. Such as washing machines, air conditional, radio, TVs and etc. LG electronic archived the highest revenue and rapid growth around 1978 onward, which lead to company globalization and oversea production based in United State. It ac- quired US base TV production company Zenith. Then in 1997 LG develop first CDMA mobile handset also first 60inches plasma TV. LG continue to develop and expand, lead to larger role in global electronic industry. It became top 100 global brand by 2005. In 2012 onward LG also have entered smartphone industry and continue develop various electronic product to consumers.

1212 2.2 LG Electronics Inc, Changwon Plant

Brief Timeline

Establishment of Lak Hui Chemical Industrial Corp (now 1947 Foundation LG Chem) (1947-1958) 1958 Establishment of Goldstar (now LG Electronics)

1959 Production of Korea’s first Radios

1965 Production of Korea’s first refrigerators

An Innovative Start 1966 Production of Korea’s first TVs (1959-1969)

1968 Production of Korea’s first air conditioners

1969 Production of Korea’s first washing machines

1977 Production of Korea’s first color TVs Growth (1970-1979) 1978 Achieved USD 100 Million in exports

1982 Established first overseas production base in the US Globalization (1980-1989) 1985 Opened product testing laboratory in Korea

Rebranded company as LG Electronics. Acquired US TV 1995 Face of the Future maker Zenith Electronics (1990-1999) 1999 Entered joint venture to develop LCD panels

2004 Took the lead in CDMA mobile phone market

2005 Launched LG Chocolate, an instant hit

Global Brand LG 2007 Took the lead in US drum washing machine (2000-2009)

2008 Developed world’s first LTE mobile modem chip

2009 Became the second-largest LCD TV brand worldwide

Launched CINEMA #D TV, LG’s answer to shutter-glass- 2011 Faster and Smarter es 3D TVs (2010-Present) 2012 Launched largest and slimmest 55-inch OLED TV

12 1313 2.2 LG Electronics Inc, Changwon Plant LG Electronics Inc: Findings & Implementation

Upon arrival in the Changwon province, our team welcomed by warm hearted people of LG electronics. We had chance to visit washing machine and air conditioning factories. One of the reasons why LG electronics are considered the best is high qualified products are produced in a very short time in the factories. Moreover, the company differentiate every products into domestic use and overseas use. They are different in many ways such as size, shape, and language settings etc., For instance, overseas use washing machines are convenient for western cultured people. They have also variety types of shapes and capability of quantity; while domestic products are favorable for Korean consumers. It is clear that the company puts consumer’s satisfaction in the first place. Our team was amazed by the usage of advanced technology to manufacture lat- est model of washing machines and air conditionings. It was obvious, LG electronics have been through good experiences to reach this point. As students of fast developing countries, we are willing to learn the right way of conducting successful manufacturing company. In other words, with the know-how of running a company like LG electronics, we could contribute the knowledge to our own nation’s productive capacity.

14 PROLOGUE2.3 POSTECH

POSTECH is Korea’s first science and technolo- gy research- oriented university that was estab- lished by POSCO, one of Korea’s industrial back- bone company, Purpose of Visits

> To observer how it has been training its students in the world of science and technology

> To see the university campus Pohang and facilities provided

> To interact with students about its teaching methods etc.

What is POSTECH?

In 2011, QS World University Rankings ranked POSTECH 98th overall in the world. It remains third best ranked in Korea, after Seoul National University and KAIST, in the QS Asian University Rankings.

Located in the city of Pohang, the 400-acre, park-like campus is home to the Pohang Accelerator Laboratory and minutes away from POSCO, the fourth-largest steel- making company in the world. POSTECH has come a long way in its short history to become globally recognized as one of Asia’s premier universities and among the most selective, highly ranked research universities in Korea.

Founded in 1986 as the first research-oriented universi- ty in Korea, POSTECH is a young university with only 27 years of history. However, with the wholehearted support from POSCO and the POSTECH Foundation and the tire- less efforts of our students, staff, researchers, and facul- ty, POSTECH has risen to become a leading Korean and Asian university in a short time. The founding principle

14 15 PROLOGUE2.3 POSTECH

behind POSTECH’s establishment lies in providing a student-centered education in a highly collaborative and intimate academic community. The university is made up of 11 departments and 22 graduate programs. POSTECH’s student-to-faculty ratio is 6:1, allowing students to work closely with outstanding and award-winning faculty. Support on all levels ranging from infrastructure to management and finances have resulted in many distinguished research achievements. POSTECH is guided by the university’s motto of Integrity, Creativity, and Aspiration as it strives to become a top 20 world uni- versity by the year 2020. POSTECH’s History

POSTECH was established in 1986 in Pohang, Korea by POSCO, one of the world’s lead- ing steel companies, for the purpose of providing advanced education for budding en- gineers and laying the groundwork for future technological development. The founder of POSCO and the founding chairman of POSTECH, Park Tae-Joon realized the need for Korea to educate their youth in science and technology to ensure Korea’s position in the high technology arena. Park wanted to use the Institute of Technology as a model for POSTECH and visited the university on a business trip to Los Angeles in 1985. He noted characteristics of CALTECH and requested to the POSTECH founding team to establish a contemporary research university that had; a low student-faculty ratio, a greater proportion of graduate students Brief Timeline to undergraduates, a low net education cost, student on-campus housing, and POSTECH founded by Founding Chairman Tae- 1986.12.03 a high-quality campus environment. Joon Park and First President Hogil Kim These features represented a drastic de- parture from the Korean universities of 1991.02.20 Conferment of first B.S. degrees the 1980s.

Asia Pacific Center for Theoretical Physics relo- 2001.08.23 On February 21th, 1984 made up of POSCO em- cates to POSTECH ployees selected by the company established the university in a very short time. Construction Graduate Institute of Ferrous Technology (GIFT) work began on August 17, 1985. The first ma- 2005.09.09 established triculation ceremony was held on March 5, 1987. A group of 249 freshmen were selected from the top one percent of all graduating seniors in Korea 2010.03.02 Bilingual campus declared to be taught by an international faculty recruited by POSTECH founding president Hogil Kim and Ranked 28th in the World University Rankings by POSTECH task force head manager Dai Kong 2010.09.16 Lee. The first degree awarding ceremony was Times Higher Education on February 20, 1991. Diplomas were awarded to 146 graduating seniors, 123 (84%) of whom Graduate School of Engineering Mastership es- 2012.08.20 went on to pursue graduate studies. The remain- tablished ing 23 graduates were employed by the nation’s major corporations including POSCO, Samsung, Four research centers of Institute for Basic Sci- 2013.06.13 LG, and Hyundai. ence established

16 PROLOGUE2.4 POSCO Museum

Posco Musuem, Pohang is the famous musuem which has been preserving and sharing the proud and inspirational history of POSCO steel company which is world’s fourth largest steel making compa- ny (according to 2011). Purpose of Visits

> To learn about history and the factors that led POSCO company to establish itself as one of the leading steel companies in the world.

> To learn how to utilize limited available resources and explore the hidden creativity of Pohang people.

> To learn how POSCO Steel company contributed for the economic development of Korea. What is POSCO Museum?

POSCO Museum is a museum preserving and sharing history and development of POSCO Com- pany, world’s fourth largest steel making compa- ny (according to 2011). It is located in Geong- dong, Nam-gu, Pohang-si, Gyeongsangbuk-do. The main objective of POSCO museum is to share POSCO steel’s influencing development episodes with people and to encourage people to take an initiative for country’s development with a pow- erful statement, Resources are limited; creativity is unlimited. Several visitors around the world who have been interested in Korea’s economy visit POSCO museum, since it clearly describes role of POSCO for the economic development of a country.

History: Posco Museum was built on July3, 2003 with an objective of sharing the history and de- velopment of POSCO Company.

16 17 PROLOGUE2.4 POSCO Museum POSCO Museum’s Today

POSCO museum has been successfully operating its objective of preserving and shar- ing the proud history of POSCO Company. It is opened every day except Sunday and national holidays. The worker facilitates free and clear explanations to visitors; English explanation to foreigners is also available. POSCO museum beautifully displays several historical pictures which captures memorable and important moments of POSCO histo- ry. The museum also contains several historical pictures of Korean President Park Chung Hee and Park Tae Joon displaying strong relationship between them and the reason why Park Chung Hee appointed Park Tae Joon as the president of POSCO Company. The KISA agreement picture where POSCO signs an agreement with KISA composed of 8 countries for financial support but due to Korea’s poor financial background it hesitated to make an investment in it. Despite the rejection President Park Tae Joon did not give up but instead utilized his Japanese learning and negotiated with Japanese government got the fund from them for the reconciliation of damages during their wars and also learnt the techniques from Japan and implemented in Korea which can be seen in one of the pic- tures.

There are several pictures showing how Park Tae Joon’s leadership and strict principle of perfectness led POSCO to develop and main- tain its high quality.

Similarly, museum also preserves the POS- CO Company’s first building named Rommel House which was named after World War II German Field Marshall Erwin Rommel. In or- der to make visitors understand the basics of steel making process, POSCO museum facilitates artificial blast furnace which provides real blast furnace feeling. It also interestingly displays the video explaining how iron is made from ore. On the other hand it also displays several raw materials required for making steel such as iron ore, soft coal, lime stone etc. imported from several countries. POSCO museum also focuses to make the visitors understand that although POSCO has been producing large amount of steels producing large quantity of wastages, it is also environmentally conscious and has been trying its best to protect the environment. For example: Waste water treatment. Apart from sharing the history, ideas and visions of POSCO, museum also fascinates its visitors by displaying unique steel art pieces.

1818 PROLOGUE2.4 POSCO Museum POSCO Museum: Findings & Implementation

Through Posco Museum, we came to know how POSCO developed itself despite several challenges on its way with the very powerful slogan, “ Resources are limited, creativity is unlimited” Although POSCO was in shortage of raw materials for making steel, it did not give up hope instead worked harder to find resource that Korea was rich at, that is water resources. Korea utilized every water resources by building steel company near- by it, which would reduce large amount of cost of production. Although POSCO imports raw materials but saves huge cost of production by utilizing water resources. With the practical example of POSCO, we also need to focus on which resources we are abundant at and explore different creative ideas for the maximum utilization of resources.

On the other hand the idea of President Park Tae Joon against the corruption also played vital role for development of POSCO. Since, it provided equal opportunity to people ir- respective of people social classes. Many developing countries have not been able to develop due to high level of corruption. Hence, we should develop strict law against the corruption which would help to prevent injustice and provide equal opportunities to all the citizens of a country which is very important for development of a country.

The success of POSCO Company is also due to workers who always worked harder with a motive to POSCO as the best. We can feel the zeal, enthusiasm in POSCO workers to work each day better which led POSCO Company to establish as one of the largest steel companies in the world. Hence, we should also always carry enthusiasm, positive thoughts and work harder with high objective of developing our respected company which would ultimately lead to development of our countries.

18 1919 PROLOGUE2.5 Busan Port Authority

Busan port is the world 5th ranked container port and the largest transshipment port in Northeast Asia. There are responsible for the maritime and seaport trade and is the leading seaport in the country. Purpose of Visits

> To observe first-hand the port operation

> To enhance of our understanding of the port operations.

> To stidy about the role of the port and its relation to the development of Busan Korea’s economic system

What is Busan Port Authority?

The Busan Port Au- thority (BPA), founded in January of 2004 as the first port authority in Korea, has made a great effort to devel- op the Busan Port into a leading world-class port. The Busan Port, the world’s fifth ranked container port and the largest transshipment port in Northeast Asia, is located on a main trunk route handling more than 17 million TEU annually, and is positioned as a super hub port through dynamic exchange with 500 ports in 100 countries. The Busan Port offers remarkable depth to accommodate oversized vessels with over 10,000 TEU capacities, and provides top-notch service to customers with state-of-the-art facilities, and skilled labor force.

20 PROLOGUE2.5 Busan Port Authority

In addition, the BPA has established an excellent feeder network connecting ports in China, Japan, and Russia, and implements transshipment incentives to attract greater volumes of cargo. Furthermore, competitiveness of the Busan Port has been strength- ened, driven by the BPA’s efforts in developing technologies such as prompt customs’ procedure, screening systems, and the U-Port system. The BPA is moving forward in the North Port Redevelopment Project, the first domestic port redevelopment project, which will make significant contributions not only to the nation’s economic develop- ment, but to making the Busan Port a world-class marine tourism brand. Moreover, the BPA is proceeding with the Busan New Port Development Project, also called ‘Opening of the 2nd Busan Port’, and the Port Hinterland Development Project, sparing no effort to create the most ideal business region for global conglomerates. Busan Port Authority’s History

In 2003, the Korean central govern- Brief Timeline ment decided to hand over the man- agement of Busan Port to a newly organized port authority to develop 2003.05.29 Port Authority Act established (law No.06918) Busan Port into one of the world’s leading ports, planning to take full The enforcement ordinance of Port Authority Act 2003.11.29 advantage of port authority system established (presidential order No.18147) : quick decision-making, flexible and independent organizational manage- 2004.01.01 Busan Port Authority founded ment and self-supporting finance. To achieve this goal, Port Authority Act was established by law; hence Busan Port Authority (BPA) was founded on Jan 1st 2004.

20 21 PROLOGUE2.5 Busan Port Authority Busan Port Authority: Findings & Implementation

As being one of the huge ports in the world Busan Port Authority contribute the development of port facility and port operation by seeking key activities for port development, port operation and human resources in port. The employers work their best to the operation and management of the integrated logistics terminal and port distribution facility.

It is clear that Koreans know how to use their ad- vantages in the best level. They are surrounded by the three sea sides which brought the country to high development in a very short period of time. If we put Korea as the role model for the development, there is an important point to understand. No matter your country is located in area of wide lands or sea sides, you always have to pursue ways to interact with out- side of the country. This is because we are integrat- ed financially, economically, and culturally more than ever before.

22 PROLOGUE2.6 LG Science Hall (Busan)

LG Science Hall, Busan is an innovative science hall opened primarily focusing on kids to give several knowledge about science, robotics, ener- gy, universe, movies etc in an interesting way.t. Purpose of Visits

> To observe how conscious LG is towards their future generation.

> To study about the creative ways to educate kids about several complex topics in an interesting way

Busan > To learn how important it is to educate the kids about the environmental problems.

What is LG Science Hall?

LG Science Hall was built in 1987 as a means of promoting the importance of science education for young students and has become a science playground where young students come to play and learn about science.

This facility is designed to encourage students to engage in playful activities while learning about how science works to make lives better and how they can use science to preserve the environment.

In this Busan LG Science Hall London, children are able to explore the museum under the con- cept ‘green energy’ and ‘environment • Future energy’. There are many attractions which allow the kids to participate in. For instance, finding the criminal by analyzing the DNA of suspects, and making drug discovery by matching proteins etc. LG Science Hall is considered to be the elementa- ry science classroom where you can find interest- ing science exhibitions.

22 23 PROLOGUE2.6 LG Science Hall (Busan) LG Science Hall’ History

Jul. 1987 First opened as Yonam Science Hall

Apr. 1995 Renamed as LG Science Hall

Registered with Korea’s Ministry of Science & Technology Jun. 1996 as Korea’s first private-sector science museum

May. 1998 LG Science Hall, Busan opened

Dec. 1999 The first LG Life Sciences Idea Contest held

Designated as an official field trip destination by the Apr. 2001 Seoul Metropolitan Office of Education An essay on “A Visit to LG Science Hall” included in a Ko- Mar. 2002 rean elementary school textbook The 20th anniversary of the opening of LG Science Hall Jul. 2007 celebrated Received the Korea Science Culture Award in the Corpo- Dec. 2009 rate Category (Minister’s Award)

Aug. 2011 Number of accumulated visitors exceeded 5,000,000

Won the Grand prize at the “Korean Donation for Educa- Dec. 2012 tion” (Minister’s Awa

24 PROLOGUE2.6 LG Science Hall (Busan) LG Science Hall: Findings & Implementation

During our visit to LG Science Hall, we get to know that how much LG group consider science as an important role of sustainability. Investing significant amount of budget and time to build up number of science halls for children is one of the proofs. In 21th century technology and science growth is replacing international power rapidly. For developing countries, it is essential to have a plan for the further growth. The plan can make their development last longing over any circumstances. Thus, establishing few important science research centers such as LG Chemical will contribute a lot potential for the developing countries.

We believe that, through this kind of facility, children would be able to develop their interest in science and they could make tremendous amount of inventions. We need to encourage youth by means of inviting them to learn not by force and LG is making great job by providing such an opportunity for children to discover the world and themselves. More than two-hundred thousand students visit this Hall every year and discover the exciting world of science. Most of the students who visit this place will raise their curios- ity to the environment around them. They learn to dream. LG science hall grows future architects of the World.

24 25 PROLOGUE2.7 Hyundai Heavy Industrial Corp.

Hyundai Heavy Industrial Corporation is considered to be one of the world’s largest shipyard operated in Korea. Purpose of Visits

> To observe the factory environment.

> To study its management system.

> To study its success key as the one Ulsan of the world’s largest shipyard operated in Korea.

What is Hyundai Heavy Industrial Corp?

Hyundai Heavy Industrial Corporation is the world renowned heavy industrial cor- poration which has been manufacturing and exporting huge units of ships, elec- trical machineries, cars, green energy machineries, con- struction equipment etc. to different parts of the world. It is re- nowned as world’s largest shipbuilding company. Its head- quarters is located in Ulsan, Korea.

26 PROLOGUE2.7 Hyundai Heavy Industrial Corp. Hyundai Heavy Industrial Corp.’s History

Hyundai Heavy Industrial Corporation was founded by late Chung Ju Yung. Despite the insufficient capital, lack of advanced technology, human resources, HHI initially started its business by producing ship since 1972. With its continuous hard efforts and pioneering spirit, HHI overcame difficulties and started manufacturing and exporting huge amount of different types of advanced ships and today it is the world’s largest ship building company. Although it started its business from building ships, today it has diversified its business activities by dividing into seven divisions namely Shipbuilding, Offshore & Engineering, Industrial Plant & Engineering, Engine & Machinery, Electro & Electric Systems, Construction Equipment, and Green Energy. HHI plays a vital role in development of Korean economy and society. Hyundai Heavy Industrial Corp.’s Today

Hyundai Heavy Industrial Corporation has been widely operating its business activities by dividing into seven divisions fulfilling demands from worldwide namely: Shipbuild- ing, Offshore & Engineering, Industrial Plant & Engineering, Engine & Machinery, Electro & Electric Systems, Construction Equipment, and Green Energy.

>>>> 01 Industrial plant and engineering: With 30 years of experience in in- dustrial plant and engineering, this division provides advanced and trustworthy industrial power plant projects which are carried out on a turnkey ba- sis. Turnkey basis is the form in which contractor completes the whole design without buy- er’s any consent or ideas and sells directly to the buyer after its completion. Turnkey basis includes all phases of project implementation including en- gineering, procurement, fabrication, construction, commissioning, operation and train- ing. Division’s major services are as follows: • Power Plants: Combined-Cycle, Cogeneration, and Thermal Power Plants • Process Plants: Oil and Gas, Refinery, Tank Farm, GTL, and LNG Facilities • Plant Equipment: Industrial Boiler, Heat Recovery Steam Generator(HRSG), Circulating Fluidized Bed Combustion(CFBF) Boiler, Regenerator & Reactor

26 27 PROLOGUE2.7 Hyundai Heavy Industrial Corp.

>>>> 02 Engine and Machinery: The engine and machinery division is the world’s largest marine engine diesel engine builder holding approximately 35% global market share. It is also a leading manufacturer of propellers, cargo oil pumps and side thrust- ers contributing for the shipbuilding industry. There was an order of 5,342 units of Hyundai HiMSEN, Korea’s first independently designed in house machine which shows remarkable growth in the medium- speed engine market and confirms Hyundai as a leader in the medium-speed engine market as well. The division’s major products are as follows: • Marine Engines and Propulsion System : 4- Stroke “HiMSEN” Engines, 2- Stroke Engines, Propeller and Shafts • Steam Turbines and Turbocharger: LNG Carrier and industrial turbines etc. • Marine Eco Machinery • Diesel and Gas Power Plant Engines • Industrial and Marine Large Pumps • Hi/ Eco Ballast Water Management Systems, Side Thruster, Marine/ Industrial Reduction Gear and Air/ Gas Compressor • Industrial and Medical Robots • Presses, Conveyor Systems, Steel Strip Process and finishing lines

>>>> 03 Shipbuilding Division: HHI’s ship building division is the world’s number one ship builder occupying 15% of global market share. Hyundai Heavy has delivered more than 1,590 ships to 253 ship owners in 47 countries since 1972. This division has been producing large number of different modern, advanced and reliable kinds of ship as per client’s demand. Division’s major productions are as follows: • VLCCs, Tankers, Product Carriers, Chemical Tankers • Containership, Bulk Carriers, OBO Carriers • Ro-Pax ships, Ro-Ro Ships, Pure Car Carriers • LNG Carriers, LPG Carriers • Drill ships • Submarines, Destroyers, Frigates

28 PROLOGUE2.7 Hyundai Heavy Industrial Corp.

>>>> 04 Offshore and Engineering: This division operates the world’s largest offshore yard which covers 215 acres. Since 1991, this division of HHI has been developed as world’s leading EPIC contractor providing services such as Engineering, Procurement, Construction, Transportation, Installation, Offshore Hook- up and Commissioning and Project management. HHI also combines onshore process plant expertise with offshore module fabrication experience to provide high-quality services for the oil & gas indus- try. Division’s major production are as follows: • Floating Units: FPSOs, FLNGs, FPUs, TLPs, Semi-Submersible Units • Fixed Platforms: Topsides, Jackets & Piles, Jack-ups, Modules & Quarters • Pipelines & Subsea Facilities: Subsea Pipelines • Offshore Installations: Platforms, Pipelines • Land-Based Modules

>>>> 05 Electro Electric System: This division has been producing highest quality electric equipment which includes transformers up to 800kV, low and medium Volt- age Switchgear, Circuit Breakers, Motors, Generators, Power Electronics and Integrated Control and Monitoring Systems for the customers.

>>>> 06 Green plant: This division is responsible for producing environment friendly equipment considering global environmental issues. It focuses on sustainable benefits for everyone. These division major products are solar power system, wind turbine sys- tem and tidal current generation.

>>>> 07 Construction equipment: This division produces world class construction equipment which is economical and superb in performance. It has capacity to produce 22,000 units per year. It has established its subsidiary plants in U.S.A, China, India, Eu- rope as well as offices in Chile, Columbia, Panama, Turkey, U.A.E and Russia. Its major products are: • Excavators • Wheel Loaders • Forklifts • Skid Loaders

28 29 PROLOGUE2.7 Hyundai Heavy Industrial Corp. Findings & Implementation

Hyundai Heavy Industrial Corporation is a corporation filled with all positive vibes. As we go back to , it is amazing how devastated Korea boomed and proved herself as one of the leading industrial power house around the world. It is a perfect example for any developing countries to believe impossible is nothing.

The founder of HHI, respected Chung Ju Yung has immensely played vital role to give HHI such position. During our research on Hyundai Heavy Industrial Corporation, we were very impressed by such great ideologies of Chung Ju Yung. He was a man of pos- itive thoughts who believed there was nothing called impossibilities in this world em- phasizing positive attitude can conquer the world. Despite lack of resources, advanced technologies and skilled man power, he pulled Korea from dark to golden circle of econ- omy. He always valued people more than capital or technology as he always believed that the success is for the people since it is by the people. He always supported and encouraged every worker to believe in themselves and not to be afraid of failures since he believed there is no failure, only trial and he proved that to the world. Because of his true motivation and his positivity, Hyundai has been successful in establishing itself as one of the world’s leading heavy Industrial Corporation.

We can implement respected Chung Ju Yung’s inspirational and positive thoughts in or- der to develop our country. In our country’s context, we tend to focus on more capital and technology in order to develop industrial sectors ignoring the human resources. As a result, many laborers go to developed countries and do not want to come back. The more the migration of laborers, the less the probability of developing industrial sectors. Here, we can implement respected Chung Ju Yung’s inspirational and positive thoughts in order to develop our country. We should empower the labors, listen to their prob- lems and help them solve it. Friendly environment with positive thoughts is the most for development of any industries, of our country. Similarly, we should never be afraid of any attempts, we should let our creative ideas flow freely. Even if we do not succeed we should not give up as there is no any failure but only trials. We should always be- lieve in ourselves and try our best to achieve our objective till the end and one day we will succeed.

30 PROLOGUE2.7 Hyundai Motor

Hyundai Motor Company is considered to be one of the world’s largest automobile assembly plant operated in Korea. Our objective is to observe the factory environ- ment and its management system. Purpose of Visits

> To observe the factory environment.

> To study its management system.

> To study its success key as the one Ulsan of the world’s largest automobile assembly plant operated in Korea.

What is Hyundai Motor?

Hyundai Motor Group is a multinational con- glomerate automo- bile producer which is headquartered in Ul- san, Korea. As Hyun- dai owns 33.99% of motors. Plant Currently Hyundai is the fourth largest automobile produc- er around the world. It produces different styles of advanced, safe and qualitative automobiles meet- ing large number of demands around the world.

30 31 PROLOGUE2.7 Hyundai Motor Hyundai Motor’s History

Hyundai Motor Group was initially Hyundai Motor Company which was founded in 1967 by Chung Ju Yung and later it collaborated with Kia Motors and named as Hyundai Mo- tor Group. In 1968, Hyundai Motors cooperated with and devel- oped its first model named CORTINA. In 1975, it produced its own independently made vehicle named Pony and exported to Canada in 1984. Pony got very famous in Canadian market, as a result Pony demand started to grow from different countries. As years passed by, it started to produce different models of car like Accent, Elantra, Sonata, Azera, Tucson, Genesis, Equus etc. Currently, Hyundai motor has three plants in Korea and seven oversea plants in US, India, Turkey, The Czech Republic, Russia and Brazil.

Hyundai Motor’s Today

Concentrating in Korea, Hyundai has three manufacturing plants in Ulsan, Asan and Jeonju. For our LG Global Leadership trip, we went to Hyundai Motor Ulsan Plant which is also the headquarter of Hyundai Motor Group.

Ulsan Plant is the world ‘s single largest automobile plant covering 1,200 acres, em- ploying over 34,000 workers ( 800 women workers) capable of producing 5,600 vehi- cles each day.

It comprises five different plants for manufacturing fa- cilities namely 01 Stamping, 02 Welding, 03 Paint, 04 Assembly and 05 Inspection.

32 PROLOGUE2.7 Hyundai Motor

>> Stamping Plant is the plant where the process of placing flat sheet metal in either blank or coil form into a stamping press where a tool and die surface forms the metal into a net shape. It includes punching, blank- ing, embossing, bending, flanging, and coining processes. STAMPING

>> Welding plant is the plant which coducts sculptural process which joins materials, usually metals or thermo- plastics by causing coalescence. Dif- ferent energy sources can be used for welding, including a gas flame, an electric arc, a laser, an electron beam, friction and ultrasound. WELDING

>> Paint plant where different car parts are painted.

>> Assembly plant where different parts are assembled in sequence until final assembly is produced.

>> Inspection plant is the plant PAINTING where the final products are checked if they are in good condition or not, if they are ready to sell in the market.

The Hyundai Ulsan Motor produces Equus and Genesis sedans , one car every 12 seconds. It maintains order, cleanliness inside the factory. Hyun- ASSEMBLING dai Ulsan Plant also operates its own hospital, a network of roads, fire and emergency services and a port that can accommodate three 75,000-ton ships at a time. It also fulfills its environmen- tal responsibility by hosting more than 500,000 trees and own sewage and waste water treatment plants. INSPECTION

32 33 PROLOGUE2.7 Hyundai Motor Hyundai Motor: Findings & Implementation

Environmental Pollution has been the most concerned global issue around the world. One of the main factors responsible is that many factories have been irresponsibly throwing their waste products into water which has been causing several environmental pollutions. But Hyundai’s effort for protecting environmental pollution is commendable. The management of sewage and waste water treatment plants has been helping to pro- tect the environment from get- ting polluted on the other hand helping the industry to utilize even waste water. We can also utilize this brilliant concept in our country too, different facto- ries just throw away their wast- ages into the river, polluting the river as well as harming the life of aquatic animals. We should manage our own sewage sys- tem. Similarly, we should also adopt the waste water treatment plant which would also help to conserve the water.

Despite many production process going through different greases, oily substances, Hyundai proud- ly manages to keep the factory environment ordered and clean. This is the merit point for Hyundai because it assures to its custom- ers that it is not only careful about its product image but also care- ful about hygiene. The cleaner, the healthier, the better. We can utilize this concept in our country too which will help to gain public confidence in our products.

34 PROLOGUE2.9 Renault Samsung Motors

Renault Samsung Motors is one of the most important automo- bile factories in Korea. It has been exporting various models of automobiles to different countries even since before Korea was hit by the Asian financial crisis. It plays an important role in the aspect for the economic development of Korea. Purpose of Visits

> To see the factory and working environment

> To learn more about company’s history

> To learn about management policy of factory. Busan

What is Renault Samsung Motors ?

Renault Samsung Motors is a South Korean automobile manufacturer headquartered in Busan. It was first established as Samsung Motors in 1994 by the Samsung and started selling cars in 1998, just before was hit by the Asian financial crisis. Since September 2000, it has been a subsidiary of Renault, although Samsung maintains a minority ownership.

34 35 PROLOGUE2.9 Renault Samsung Motors Renault Samsung Motors’ History Beginnings: Samsung Group era (1994–2000)

Renault Samsung Motors Busan Factory In the early 1990s Samsung’s Chairman Kun Hee Lee recognized the automobile in- dustry as the culmination of several others. For the Samsung Group this would allow to leverage resources and technologies from the entire group including Samsung Electrics and . He initially tried to take control of Kia, but competition from other bidders and legal restrictions made him to drop the idea. The car-maker was eventually purchased by Hyundai.

Lee decided to create a new car-maker, Samsung Motors (also known as SMI) and a manufacturer, Samsung Commercial Vehicles Co., Ltd. the latter through Sam- sung Heavy Industries with Diesel’s support. SMI was established in 1994 and Daegu-based Samsung Commercial Vehicles in 1996. Unfortunately for Samsung short- ly after SMI started its operations the Asian financial crisis hit. Samsung divested itself of SMI as well as other non-core subsidiaries. SMI was put up for sale, with Motors being one of the first interested companies but as the crisis deepened was itself bought by GM. Hyundai Motors was also considered as a possible buyer, but corporate politics and strife between the Samsung Group and the made this im- possible. Negotiations with Renault started in December 1998 and in September 2000 the French automaker bought a stake for $560 million.[14] Samsung Commercial Vehicles was kept by Samsung, but finally it failed for bankruptcy at the end of 2000.

Coupled with his personal affection for cars, Lee’s dream of building SMI as a global force started out with technical assistance from Nissan, a company which at the time of SMI’s early stages was in dire financial straits. SMI’s affiliation with Nissan could have been one of the reasons for Renault buying a major share of the company, as Renault had become a major shareholder of Nissan by then. One of the very early planners for SMI has stated that technical affiliations for SMI were initially considered with Volkswa- gen, BMW or Honda. However, its financial situation had forced Nissan to disclose its technology and engineering expertise to SMI. Also, Nissan has supplied SMI with its engines, one of them being Nissan’s famed V6 engines the VQ23DE, currently replaced by the VQ35DE.

Since 1998 Renault Samsung Motors has been selling cars in Chile when the company introduced the SQ5 (the current SM5). As of 2013, Chile is the only country that RSM sold some of its cars under the Renault Samsung Motors’ marque and not as rebadged Renaults.

36 2.9 Renault Samsung Motors Renault Samsung Motors’ Today Later developments: Renault era (2000–present)

Product and market expansion After the 2000s acquisition, Renault renamed Samsung Motors as Renault Samsung Motors (RSM).That year the company’s results began to improve. Some journalists attribute this to the success of the first car manufactured at Busan (the SM5) in taxi fleets, which led to increased confidence for the model within the rest of the customers. During the next years, the company introduced a new vehicle range, including the SM3 in 2002, the SM7 in 2004 and the QM5 in 2007. Over time, RSM changed its products from a Nissan based architecture to a Renault based one. As part of the Re- nault group, Renault Samsung became basically an export-oriented manufacturer.

In 2005, Renault increased its stake by acquiring an additional 10% share from the company’s creditors. On 26 June 2009, Renault and Samsung agreed to renew the right of the former to use the “Samsung” trade mark on its products until 2020.

Decline in sales, electric vehicles and recovery attempts The pressure from Hyundai and Kia, dominant automakers in the Korean market, in- creased during the 2010s, pushing RSM sales down by 27% in 2011. In the first half of 2012, they fell 41%. In August 2012, a personnel reduction of about 80% of employ- ees was presented by the management. Finally, Renault reduced its Busan personnel by 15% (about 800 employees). With the aim of reviving the company, it will invest (together with Nissan) US$160 million to make Nissan cars for export in order to im- prove the production output and also presented revised versions of the SM3 and the SM5. During 2013 it started to market a new compact crossover, the QM3, based on the Captur.

In 2012 RSM introduced an electric version of its SM3 car known as the SM3 Z.E., im- ported from Turkey. In October 2013 the car started to be assembled at the Busan plant and in the same year it became the leader by sales in South Korea with a 58% market share

36 37 2.10 Ulsan Museum Since Ulsan is considered to be Korea’s heart of indus- trial district, it has a very long history of its contribution as the backbone role in helping develop the economics Ulsan Museum of Korea. And there in Ulsan museum, it exhibits the archive of the history, present, and future of Ulsan City. Purpose of Visits

> To learn about Ulsan’s history as the industrial city

> To study and understand Ulsan’s role and its contribution as heart of industrial district Ulsan from past, in present and also its role in the future

What is Ulsan Museum?

Ulsan Museum is an archive of the history, present, and future of Ulsan City. The mu- seum facilities include a history hall giving a general outline of the city from the pre- historic to the modern times, an industry hall showing Ulsan as the industrial capital of Korea, and a children’s experience hall for educational purposes. This eco-friend- ly museum equipped with advanced exhi- bition and education facilities is a model cultural space to help establish the visi- tors understand Ulsan’s identity.

38 2.10 Ulsan Museum Ulsan Museum’s History Brief Timeline Ulsan Museum, the long cherished dream Establishment of a detailed execution plan for city 2003. 08.23 of Ulsan citizens, finally opened its door on museum construction 22 June, 2011.At Ulsan Museum, we have Process change of project method (Budgetary History Gallery, which exhibits history and 2005. 04.26 project → BTL project) culture of Ulsan from prehistory to mod-

ern times, and Industrial Gallery, which 2006. 01.03 Completion of site land compensation introduces various industries of Ulsan the Children’s Museum, is the place where our Passed through Ulsan Metropolitan City Private 2006. 11.29 children can learn history and the indus- Investment Review Committee

tries of Ulsan through experience. Consent from the council on BLT type private in- 2006. 12.15 vestment project

Completion of studies by Korea Culture and Tour- Ulsan Museum’s Today 2006. 12.18 ism Institute on Feasibility, Eligibility and Busi- ness Plan on facilities.

To Inherit and preserve history, culture 2006. 12.27 RFP on Facility Project Master Plan and to present image of the future. Pro-

vision of high quality exhibition and stor- Selection of Galleria as the preferred party of ne- 2007. 07.13 age space. Museum with emphasis on gotiation.

research, learning and education. Envi- Completion of negotiation and execution of con- 2008. 06.25 ronmental friendly museum in liaison with tract Ulsan Grand Park. Establishment of Galleria Ulsan Co. Ltd. and 2008. 07.23 changed its name to Ulsan Museum Co. Ltd. Whilst the existing city museum only ex- Completion of Development (Construction) ap- 2008. 10.31 hibits history & culture of a limited period, proval negotiation. Ulsan museum will be a comprehensive urban history museum, recapturing the 2008. 12.26 Approval and Notification of the execution plan city’s history from prehistoric to modern

times. 2009. 01.02 Construction commencement

Ulsan Museum, with its themes on past, 2011. 01.31 Completion of construction present and future, will consist of History Gallery, exhibiting the footprint of Ulsan from its prehistoric to modern times, In- 2011. 02.01 Commencement of Management and Operation dustrial Gallery, exhibiting industrial sites, which made the city today to stand tall as 2011. 06.22 Opening of Ulsan Museum the Industrial Capital of Korea and Chil- dren’s Museum, offering a place of educa- tion on everything about Ulsan city. It will be a time machine of the city’s culture and the place of establishing the identity as a citizen of Ulsan.

38 39 2.10 Ulsan Museum Ulsan Museum: Findings & Implementation

In that museum we have noticed how accurate they are in all details. They show everything from the beginning till the modern time and we can observe how Ulsan was growing as an industrial city. We think that the history is very important. In the muse- um they showed us everything as if it was family album from first steps till the end. In case of our country we think it would be very useful to describe the history of the cities and show every detail so all of the citizens would see. And this kind of museums should be widely spread in every country to show others and remind themselves of what we begun as and how far we have come.

40 REFERENCES

http://english.visitkorea.or.kr/enu/SI/SI_EN_3_1_1_1. jsp?cid=1764920

http://www.lge.co.kr/lgekr/company/about/about/history.jsp

http://en.wikipedia.org/wiki/LG_Electronics#Historyhttp://www. lg.com/global/about-lg/corporate-information/at-a-glance/histo- ry

http://www.renaultsamsungm.com/main.jsp

http://en.wikipedia.org/wiki/Renault_Samsung_Motors

http://ko.wikipedia.org/wiki/LG_%EC%82%AC%EC%9D%B4%E C%96%B8%EC%8A%A4_%ED%99%80

http://en.wikipedia.org/wiki/Busan_Port_Authority

http://english.visitkorea.or.kr/enu/SI/SI_EN_3_1_1_1. jsp?cid=1799687

http://www.ship-technology.com/projects/hyundai-heavy-indus- tries-ulsan-korea/

http://en.wikipedia.org/wiki/Hyundai_Heavy_Industries

http://english.hhi.co.kr/main/

http://www.lge.co.kr/lgekr/company/about/about/history.jsp

40 41 EPILOGUE PROLOGUE

For 11 days and 10 nights, it has been a really fun and educational expedition for all of us. We learned about so many things and met a lot of nice people. Now that we acheived our goal for the expe- dition, we wil try our best to apply the knowledge to help develop our country in the future.

Of course we have a lot of people to thank to for the help help and support. Our expedition trip would not happen if it is not for LG Global Challenger Program. And this very same expedition trip would not be this successful if it is not for the help of our group’s mentor, the person in charge of Global team, and everyone. Thank you

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