Apple, once called a “symbol of U.S.-China cooperation,” is expected to suffer great damage in the “high-tech war” between the two countries. “Apple is the king of the tech industry, but it is only a piece of game in the economic war between the world’s two major powers,” he said. “The market value has been hit hard by increasing signs that businesses in China are threatened.”Recently, the Chinese government banned central government officials and employees of state-run companies from using foreign-branded smartphones for business purposes. This seems to be due to concerns that sensitive information from the Chinese government could leak to other countries through overseas smartphones. Currently, iPhone is the only foreign smartphone that has secured a meaningful market share in China. For this reason, this measure is actually understood as an iPhone ban.China’s ban on Apple is symbolic. According to China’s National Bureau of Statistics, there were about 56.3 million workers working for state-owned institutions as of 2021. For Apple, which sells the world’s most expensive smartphones, it is painful for Chinese officials to leave the market.
In addition, public figures and ‘celebs’ who are attracting attention in China will also hesitate to use iPhones in the future. Those who always have to pay close attention to the intentions of the Beijing leadership have no choice but to follow the silent order to “not use iPhone” even if they are not public officials. For this reason, Bank of America predicted, “This measure could eliminate up to 10 million out of annual iPhone sales (about 50 million units) in China.”Huawei, which is considered Apple’s competitor in China, is gaining huge popularity by releasing the 5th generation (5G) smartphone “Mate 60 Pro” despite all-round U.S. Some interpret the move as the Chinese government’s “push Huawei.” Apple, which will unveil the iPhone 15 series on the 12th, may feel pressured. Apple’s stock price has fallen about 7% since the report of the iPhone ban, with its market capitalization losing about USD 200 billion (about KRW 268 trillion).
China is the largest manufacturing base for Apple’s iPhone. The iPhone, designed by the U.S. and manufactured by China, seems to have paradoxically degenerated into a “long-term horse on the chessboard” in the U.S.-China economic war. WSJ analyzed, “If Apple cannot avoid bullets between the U.S. and China, which company will avoid them?” and “If Apple does not survive the U.S.-China war, no company will survive.”

JENNIFER KIM

US ASIA JOURNAL

BALMUDA, called the “Apple” BALMUDA a Japanese home appliance manufacturer, released its first smartphone in November 2021. Dubbed the “Apple” of the home appliance industry for its

sophisticated designs, Balmuda had been receiving heightened attention surrounding this launch. In a press conference leading up to the release, CEO Gen Terao had pointed out that other smartphones were rather uniform in design. He said, “We will unveil new devices based on our experience in the home appliance business so far.”

I was actually half-confident about this launch. But now that the phone is out, I wanted to see how it compares to others on the market, such as the Samsung smartphones that currently occupy more than 10% of market share in Japan.

Balmuda’s phone is a “bar-type” smartphone. What distinguishes it from other phones is its markedly rounded corners and thick bezel. For example, Apple’s iPhone 13 (released in 2021) has only marginally rounded corners for grip enhancement and maintains an angled design. The same goes for Samsung’s Galaxy phones, which have rounded corners but are rectangular overall. Balmuda’s smartphone is different. With perfectly round corners, its design is more reminiscent of Samsung’s “Kobiphone ” released in 2009.  Furthermore, the bezel on Balmuda’s phone is noticeably thick on all four sides – a sharp deviation from the current market’s tendency to minimize bezels as much as possible for a full-screen appearance.

Though the product was not entirely visible in the teaser photos released by Balmuda, GAPSIS, a Japanese Android media outlet, adjusted the brightness of these photos to reveal its design further. Unlike other smartphones, Balmuda’s product has a thick back and is designed with curves. Would it tilt when placed on a desk? Perhaps. At the very least, it is round enough to make you want to try.

The back of the phone consists of a matte material. The brand’s name is engraved in large, cursive letters in the center. A camera, LED flash, and speaker are located at the top. A part of the phone is elevated, but it is not yet known what function this serves.

Though Balmuda appeared to promise a release of stylish products in its announcements, the phone’s design does not appear to be that special. Rather, it is similar to the design of smartphones released by Apple and Samsung some five to ten years ago. IT media GIZMODO said, “It feels a little tacky.” On the other hand, GAPSIS referred to it as an “independent design”. “The fact that a Japanese company has appeared in the Android smartphone market is very precious and happy news,” they said.

Balmuda also announced a new brand along with the teaser for the phone – Balmuda TECHNOLOGIES. It will announce smartphones and other IT devices under the brand name.

Balmuda is struggling with its ambitious entry into the smartphone market. Its phone had been jointly developed in partnership with Kyocera (a home appliance company) and BALMUDA, called the “Apple”  BALMUDA, a Japanese home appliance manufacturer, released its first smartphone in November 2021. Dubbed the “Apple” of the home appliance industry for its sophisticated designs, Balmuda had been receiving heightened attention surrounding this launch. In a press conference leading up to the release, CEO Gen Terao had pointed out that other smartphones were rather uniform in design. He said, “We will unveil new devices based on our experience in the home appliance business so far.”

I was actually half-confident about this launch. But now that the phone is out, I wanted to see how it compares to others on the market, such as the Samsung smartphones that currently occupy more than 10% of market share in Japan.

Balmuda’s phone is a “bar-type” smartphone. What distinguishes it from other phones is its markedly rounded corners and thick bezel. For example, Apple’s iPhone 13 (released in 2021) has only marginally rounded corners for grip enhancement and maintains an angled design. The same goes for Samsung’s Galaxy phones, which have rounded corners but are rectangular overall. Balmuda’s smartphone is different. With perfectly round corners, its design is more reminiscent of Samsung’s “Kobiphone ” released in 2009.  Furthermore, the bezel on Balmuda’s phone is noticeably thick on all four sides – a sharp deviation from the current market’s tendency to minimize bezels as much as possible for a full-screen appearance.

Though the product was not entirely visible in the teaser photos released by Balmuda, GAPSIS, a Japanese Android media outlet, adjusted the brightness of these photos to reveal its design further. Unlike other smartphones, Balmuda’s product has a thick back and is designed with curves. Would it tilt when placed on a desk? Perhaps. At the very least, it is round enough to make you want to try.

The back of the phone consists of a matte material. The brand’s name is engraved in large, cursive letters in the center. A camera, LED flash, and speaker are located at the top. A part of the phone is elevated, but it is not yet known what function this serves.

Though Balmuda appeared to promise a release of stylish products in its announcements, the phone’s design does not appear to be that special. Rather, it is similar to the design of smartphones released by Apple and Samsung some five to ten years ago. IT media GIZMODO said, “It feels a little tacky.” On the other hand, GAPSIS referred to it as an “independent design”. “The fact that a Japanese company has appeared in the Android smartphone market is very precious and happy news,” they said.

Balmuda also announced a new brand along with the teaser for the phone – Balmuda TECHNOLOGIES. It will announce smartphones and other IT devices under the brand name.

Balmuda is struggling with its ambitious entry into the smartphone market. Its phone had been jointly developed in partnership with Kyocera (a home appliance company) and Softbank (a telecommunication company). Toshiba and Fujitsu were highly anticipated by the Japanese people because they were their first smartphones in a long time in the Japanese smartphone industry.

Unfortunately, sales were urgently suspended within a month of its launch due to defects with radio wave certification. The issue was later resolved via software upgrades, and sales recommenced on the 17th; however, the market had already cooled down by that time. Supplies have already begun to be disposed of close to “ddaeng processing” online. Currently, Balmuda phones are priced at 19,000 yen – nearly 90% off the initial store price – and are virtually in stock processing.

The industry evaluates this as a predicted disaster. The biggest reason for Balmuda’s failure was that it entered areas that did not have contact with existing businesses. Balmuda jumped into the market while solely relying on its strong sense of design, but it failed to meet the more important expectations relating to performance. The Balmuda phone uses a Qualcomm Snapdragon 765 processor, which is equivalent to the processor used in the three-year-old Galaxy S10.

Furthermore, Balmuda stuck by its existing strategy when it came to price policy. The plan was to draw royalties from Balmuda fans by setting the factory price high at 1.5 million won. This did not work in the smartphone market.

Balmuda plans to make up for its insufficient sales performance by penetrating such overseas markets as Korea. CEO Gen Terao said, “In the future, Balmuda brands can enter Korea.”

And I’d like to talk about the Japanese industry. In the past, when Japan’s electronics industry was in boom, it was unprofitable to import materials for electronics from abroad. Hence, Japan became committed to investing in the material industry as a core business in the country.

Japan was also inspired by the United States’ shift away from domestic manufacturing. Though there was a time when the United States was home to most of the world’s factories, the country eventually moved production overseas to focus on the material industry instead. Their reasoning was that while anyone could produce goods over time, materials could not be obtained without long-term investment and effort. Japan followed suit.

According to data from the Ministry of Economy, Industry and Energy of Japan, there are around 30,000 businesses in the Japanese material industry, with around 1.2 million employees and 56 trillion yen’s worth of product shipments (about 600 trillion won). The Japanese government is creating a project to develop and highlight the size of its material industry. The material industry accounts for 17% of employees and 18% of product shipments in the entire manufacturing industry. Within the material industry, the chemical industry comprises the majority. The material industry is massive in Japan, though the general public may not feel it directly.

It is further worth noting that Japan is home to an education system where science and engineering students can truly flourish. Owing to many professor recommendation systems, science and engineering students attending top Japanese universities often do not engage in employment activities. There is a great demand for science and engineering graduates, with 68 trillion club companies in the chemical sector alone listed in Japan. (The scale itself is different from Korea.) Hence, talented students do not flock to only medical schools. It could even be said that students entering Tokyo National University of Engineering and Natural Sciences could very well enter any medical school in Japan. Advancements in science and engineering, along with growth of companies and industries, help form the foundation of the country.

According to Japan’s Shinetsu Chemical Industry Co., Ltd., sales are about 12 trillion won, but about 600 billion won is spent on research. In other words, research funds account for about 4.2% of total sales. Asahi Kasei has about 20 trillion won in sales, about 900 billion won in net profit, and 900 billion won in research funds. It is a company that invests its net profit in research funds. It is a scary part of Japan’s material industry and how much money the private sector has invested in the country and invested for a long time.

According to LG Chem’s research funds, 130 billion won, or 2.7% of sales, was used for research in 2015, while 260 billion won, or 4.0% of sales, was used for research in 2019. Lotte Chemical’s research expenses are 0.4% and Hanwha Chemical’s 1.8%. Large Korean companies are also gradually increasing their R&D expenses. However, it is still lacking a lot. Trade disputes with Japan arise and people focus on semiconductors, but materials are used everywhere besides semiconductors. It is regrettable that such a material industry shows a huge gap with countries in trade disputes.

Sam kim

Asia Journal

“Google and Facebook make good money here but don’t pay taxes and create no jobs,” Naver founder Lee Hae-jin said, as he was responding to criticism from lawmakers concerning the company’s own alleged abuse of its market dominance.

He was effectively diverting attention away from Naver’s influence on news circulation to reverse discrimination against Korean firms, saying stricter regulations are imposed on local firms while foreign firms enjoy tax pass-through advantages without the social and economic responsibilities here.

Lee’s offensive against Google soon lost steam as the counterpart chose to stay out of the fray, but it has brought, once again, into light the operating status of global firms conducting successful business in Korea.

Many of the global firms here now are registered as limited liability companies, a form of business organization without obligation to external audits or disclosure of financial information. They include the Korean arms of Google, Apple, Facebook, Microsoft, HP, Louis Vuitton, Gucci, Pizza Hut and Coca-Cola.

They file their taxes to authorities, but no one knows whether their reported information is accurate to a tee because they do not have to undergo an external audit.

Lawmakers have long demanded “better transparency” for the global firms. They passed a revision of the external audit law last year to force limited liability companies into external audits and disclosure of financial information such as sales, operating profits, net profits, dividend and taxes. The revised law is expected to take effect in November 2019.

“Things will change as the revision of the external audit law is implemented. With the revised law, global firms will be have more eyes watching them,” said Park Yoon-jong, CEO of local accounting firm Anse.

Experts, including Park, have called for tougher regulations, citing there is still room for companies to exploit legal loopholes.

But the revision, whose scope and range are not yet fixed, may provide exceptions for companies based on sales or the number of employees.

For instance, the local arms of Google, Apple and Facebook, whose workforces are relatively small compared to their sales generated here, may be excluded. Or the firms can simply change their entity type. These form, to some hard-line observers, too large a loophole.

“The revision of the law can be makeshift. The best way is to make all companies have external audits regardless of their entity type and then grant an exception if necessary (to small firms for instance),” said Choi Min-sik, a professor lecturing in intellectual property rights at Sangmyung University.

Currently, companies subject to external audits follow a positive list approach, which means the subjects include only listed companies, stock companies with more than 12 billion won ($11 million) in assets or stock companies with more than 300 employees. Choi contended such a positive list approach should be changed into a negative list approach to include all companies doing business activities and to prevent companies from exploiting any legal loophole.

Korea’s taxation of foreign firms is more lax compared to its bigger rivals in the US, the EU and Japan, according to the professor.

The limited liability firms were originally designed to protect firms’ partners from personal liability for the business’s debts. It was initially confined to companies with less than 50 employees.

But, when the limitation on the number of employees was abolished in 2011, many foreign firms changed their entity type into limited liability to benefit from not disclosing financial information. The number of limited liability firms rose 122 percent from 12,091 in 2005 to 26,858 in 2016.

Many global firms, however, have long faced criticism for being elusive in paying taxes, even though most of their dividends and royalties are flown out of the nation, which critics say could otherwise lead to local investments and jobs.

The foreign firms paid dividends twice that of local firms, but invested at half the rate last year, according to corporate information provider CEO Score.

“Korea gives handsome benefits with relatively lax regulations to global firms to attract them. However, many of them were found to enjoy the benefits only and give less social contribution such as donation, hiring or investment,” said Park Ju-gun, head of corporate analysis firm CEO Score.

Despite the country’s relatively small population, global tech firms are reportedly generating handsome revenues in Korea, taking advantage of its advanced technology infrastructure and tech-savvy consumer base. Korea came in third in Google Play and fifth in Apple’s iOS in terms of sales generated in the global mobile app market.

By Ji-hye Shin

(Korea Herald)

On Monday afternoon, the store was still packed with visitors, testing out phones and tablets or trying on various smartphone watch straps.

The air was abuzz with excitement, with more than a dozen employees in matching navy shirts wandering around the store to help customers with questions and purchases.

While there appears to be no doubt that the opening of Apple Garosugil came as a big event for Apple fans, it remains unclear whether Apple — whose market share in the premium smartphone market flags behind its global rival Samsung — will be able to harness the symbolism of its offline branch to increase its presence here.

A customer (right) tries out an Apple Watch at Apple Garosugil on Saturday. (Apple Korea)

One of the main complaints of Apple users in the past had been that not having physical Apple Stores in Korea had blocked conveniences such as detailed explanations of products and official Apple troubleshooting or repair services enjoyed by users in other countries.

Apple users speaking with The Korea Herald were divided on whether the new store would alleviate these existing concerns.

One user said that she probably would not even attempt to reserve services at the Genius Bar after her experiences trying to receive repairs through one of Apple‘s Korean partner companies.

“It was so hard to find a reservation that fit my schedule, and eventually I became so angry that I just went to an unofficial private repair shop,” said Kim Ji-ah. “There must have been a lot of others like me, because there are always a bunch of private repair shops around an official repair store. Apple Garosugil will probably not be much different.”

Park Jin-young also said that she had received repairs at private repair shops.

“It’s true that Garosugil is not the ideal location for receiving repairs, but I‘m definitely willing to make the trip…I could never be sure that I’m getting proper service or the right price quotes when I go to private shops.”

To the avid Apple fans, convenience is far down their list of reasons for favoring the product, industry watchers said.

“Apple consumers are fiercely loyal, and waiting for Genius Bar services is considered to be just part of the experience,” said an industry official. “The Apple Store is more of a marketing channel that allows the brand to communicate directly with its users than a place for convenience, and users know that. Apple users will happily make the trip to Garosugil. Non-Apple users, not so much.”

On Monday, stools at the back of the store were occupied by customers waiting to be helped by one of the engineers on site.

“I thought I could just walk in for a repair, but apparently they’re fully booked for the day,” said one customer as he walked towards the exit. “They said I have to try to make a reservation for another day.”

Apple Garusogil, which became the first offline branch in Korea since iPhones hit the market here in 2009, offers consumers the chance to browse and test out products, attend workshops about how to best utilize products and consult with Apple engineers, dubbed “Geniuses,” for repairs.

However, the store is not yet able to sign up new data users on iPhones or iPads.

“The system for allowing Apple to register new data plan users is still being created,” said an official with a wireless carrier. “Although the exact date has not yet been determined, we expect the system to be operational in March or April.”

Meanwhile, Apple‘s latest flagship phone iPhone X is struggling to drive sales in Korea. According to reports, the model sold about 400,000 units in the first two months since its release in late November 2017, falling sharply after the first week of sales.

In addition to stagnant sales of the iPhone X, Apple also faces lawsuits in Korean courts over the software upgrades on its older iPhone models that slowed down operations to handle battery problems.

In addition to two group suits filed by a consumers’ rights group and local law firm Hwimyung earlier this month, local law firm Hannuri is gathering plaintiffs for a third suit. According to reports, over 400,000 iPhone users have expressed interest in becoming plaintiffs in the case.

The first suit represents 122 plaintiffs asking for 2.2 million won ($2,065) in damages per plaintiff, while the Hwimyung suit represents 403 consumers asking 300,000 won per plaintiff.

By Ho-jung Won

(Korea Herald)