This summer I visited Seoul for the first time in 20 years to report an article about Samsung and its 47-year-old leader, Jay Y. Lee, whose incapacitated father effectively has left him in control of the country’s most powerful conglomerate.
Samsung is massive. I visited a handful of its most dynamic businesses and barely scratched the surface of this mighty company. Seoul, South Korea’s capital, is massive too, a gargantuan, complicated city. What blew my mind about Seoul was how beautiful it has become, especially compared to how I remembered it in the mid-1990s. What was a dreary city with chockablock architecture and undistinguished cuisine has become a dynamic, vibrant, fascinating and downright delicious cosmopolitan world capital. (The New York Times recently wrote a love letter to the best of old and new Seoul.) With its lovely mountains, fashionable inhabitants, and easy-to-use subway, I came to think of Seoul, once I city I never wanted to visit again, as a place I’d like to return as a tourist.
South Korea is beautiful, to be sure, and confounding too. Despite the obvious success of what has become the 14thlargest economy in the world, I can’t recall visiting a more pessimistic place. Samsung, for example, is simultaneously a story of epochal accomplishment and a big bundle of insecurity. As I explained in my article, the company badly wants to be known as more than a copier. And yet, wanting to be like one’s neighbor—or even admired adversary—is deeply ingrained in the Korean culture. After returning home I happened across this delightful, if troubling, article in the New Yorker about why South Korea is the plastic-surgery capital of the world. Journalist Patricia Marx, who has a new book out, describes the desire by many modern Koreans to look like someone else. She might have been describing a Korean smartphone maker whose gadgets look a lot like those sold by the competition in California.
As for the pessimism, Koreans have many concerns. Where I saw a vibrant economy of some 50 million people, Koreans see a sluggish growth engine overshadowed by neighboring China. (I tried out a line with several businesspeople that if Canada can thrive as an appendage to the U.S. economy surely South Korea can happily do the same with China. I was met with shrugs.)
Even the symbol of South Korea’s industrial success, the conglomerates known as chaebols, have gotten a bad rap of late. Koreans blame the chaebol for holding back the entrepreneurial economy, a widely held opinion nicely captured in a recent NPR report from Seoul.
Here’s hoping your travels today take you someplace exciting.
• China devaluation hits Wall Street
U.S. stocks dropped on Tuesday as China’s surprise devaluation of the yuan currency sent shares lower for firms with big exposure to the Chinese market. Apple’s shares dropped 5.2%, the biggest drag on all three major indexes, while Caterpillar, Yum Brands and General Motors all traded lower as well. And as Fortune reported, luxury brands that have in recent years counted on China as a key source of growth will be hurt as their foreign goods become pricier for Chinese consumers. Reuters
• Fed rate plans complicated by China
Another take on the China devaluation news: while the Federal Reserve has said conditions are ripe for the first rate hike since 2006, China’s central bank decision could complicate the Fed’s plans. As explained above, cutting the value of China’s currency versus the dollar could put even more pressure on an already strong U.S. dollar, which can hurt growth and profits at U.S. companies that do business in China. USA Today
• $100 million hacking plot exposed
Federal authorities have charged 32 international traders and computer hackers who allegedly reaped millions in illegal profits by obtaining early access to pending corporate announcements and trading before the news became public. Members of the group allegedly hacked into services that store and issue news releases about pending earnings results, merger plans and other corporate news. It is the latest sign that hacking has gone beyond stealing credit cards at retail stores – sophisticated attacks are targeting governments and now, crossing into insider trading. USA Today
• Firms pull back on ‘failure parachutes’
Here’s an interesting stat from WSJ: nearly 60% of publicly held companies in the Fortune 250 have policies to pay cash severance to top bosses ousted for poor performance. There are indications the policy of such generosity appears to be changing. Toy maker Mattel and car-rental company Hertz, for example, both gave their recently ousted CEOs lofty exit packages. But there was no mention of a severance package in the pay deal disclosed for Mattel’s new CEO, and Hertz negotiated a relatively modest exit package for the company’s new leader. WSJ (subscription required)
• Ellen Pao files appeal
The former venture capitalist who lost a gender-bias trial against her former employer, investment firm Kleiner Perkins, is appealing the judge’s decision that she should pay $276,000 of Kleiner’s legal fees. After losing the case on all counts, Ellen Pao had been ordered to pay some of the firm’s legal expenses. Legal filings show that Kleiner has offered to drop its request for legal fees if she agrees to not appeal the case. Pao, meanwhile, has said she will wave her appeal in exchange for $2.7 million. Fortune
Around the Water Cooler
• Google’s strategy has been done before
Often times when a company embraces a new name, it is to promote awareness, not create confusion (example: when Research in Motion became BlackBerry). But Google’s decision to name itself Alphabet to become a house of brands has also been done. It is the same strategy utilized by firms like Unilever, which owns hundreds of consumer goods brands, and United Technologies – parent to Pratt & Whitney, Otis and Carrier. Firms under this strategy can easily acquire and spin off brands, and can also achieve more success building different brands with distinct positioning. Fortune
• Uber drivers could earn thousands in benefits
A new analysis aims to address a question that is sure to vex Uber and the startup’s investors: how much money would it cost the company to pay drivers benefits if it were required to do so? The question has been top of mind ever since June, when the California Labor Commission ruled that a former Uber driver should be considered an employee – not a contractor. Uber is appealing. But one analysis estimates that if drivers in six major U.S. cities were deemed full-time employees, it would cost Uber $5,500 on average annually in holiday and health care benefits, plus thousands more for mileage reimbursement. Fortune
• The 61-year-old hotel without a single guest
A story about a decades-old hotel in Italy that still hasn’t opened for business is a compelling standalone story. The hotel in question – the Grande Hotel de Calogero in Sicily – has had four “openings” though the 300-room inn has never had a guest. But Fortune points out this doomed property isn’t alone. There are roughly 670 partially completed, never-opened buildings across Italy. Those properties are worth an estimated $2.8 billion, though they require $1.5 billion in additional investment to complete construction. Fortune