War talk may be targeting South Korea's economy

North Korea's saber-rattling appears to be an attempt to disrupt important supply chains and scare away foreign investment.

By Bruce Kennedy Apr 5, 2013 1:46PM

Some long-time Korea-watchers are wondering if this latest round of war talk by North Korea is a novel attempt to inflict economic damage on rival South Korea.

South Koreans, their businesses and their markets have been able to shrug off years of previous threats by North Korean leaders to turn their cities into a "sea of fire." But this current round of saber-rattling is apparently different.

General Motors (GM) has five plants in South Korea, facilities it considers the lynchpin of its Asian operations, and it is watching the situation very closely.

"We are making contingency plans for the safety of our employees [in South Korea] to the extent we can," GM Chairman and CEO Dan Akerson told CNBC. "Anything that goes on in Korea is critically important to our global production and how we view the world."

Inautonews says Ford (F), which has several dozen suppliers in South Korea, is also monitoring the Korean situation.

"Whatever we get out of Korea is going to be put in jeopardy," George Magliano, senior principal economist with IHS Automotive, tells Inautonews, "and we have very little leeway in the short-run of getting around it."

General Motors Corp. headquarters in Detroit (© Paul Sancya/AP Photo)Analysts say just the heightened threat of hostilities on the Korean Peninsula can hurt the global supply chain essential to the auto industry.

But Magliano notes South Korean automakers have learned valuable supply-chain lessons from both the 2011 earthquake/tsumani/nuclear reactor disaster in Japan, as well as the crippling floods in Thailand. They've moved a lot of their production away from home and are building essential components where they are sold.

And despite the tensions, work on a new $360.7 million bridge link between North Korea and China is apparently continuing on schedule.

Some experts believe Kim Jung-un's bellicose rhetoric has a specific target: to damage foreign direct investment in South Korea.

In a sense, North Korea is "winning in an asymmetrical psychological warfare," Tom Coyner, a member of the American Chamber of Commerce in Korea and author of "Doing Business in Korea," told The New York Times, "[by] attacking the economic strength of South Korea."

More on moneyNOW

Apr 6, 2013 12:04AM
Apr 5, 2013 3:43PM

Hmmmm. Kim Jong-Un has some type of unresolved insecurity issues and sounds as if he doesn't feel his dad was tough enough on enemy nations.



Is "Un" Korean for "Dubbya"?...

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