South Korea’s Downturn Felt in Southland
South Korea’s economic ills are rippling throughout the Korean immigrant community in Southern California, causing widespread financial and emotional distress in the nation’s largest concentration of Korean Americans.
The pain is palpable at Korean American churches and businesses, in Los Angeles’ large Koreatown as well as in remote areas of Southern California. Korean Americans are wiring money to relatives in South Korea; they are voicing a mix of sorrow, anger and hopes. Some Korean American entrepreneurs who export to South Korea say that they are close to bankruptcy, and others that cater to the once-ubiquitous Korean tourists are bracing for a slowdown as severe as the one that followed the Los Angeles riots in 1992.
“This is the worst I’ve seen since I started 19 years ago,” said Gilbert Gil, 43, owner of Dae Ruk, a Koreatown department store long favored by Korean tourists. Just two months ago, he said, 1,000 to 1,500 tourists moved through his store daily, eagerly swooping up Burberry coats and Calvin Klein jeans.
“But since then, the tourist business has completely stopped,” Gil said, adding that he is preparing to slash prices and lay off a third of his 25 employees.
The turmoil abroad has spurred an outpouring of emotional support and a host of gestures, private and public, that Korean Americans hope will lift up their motherland.
Jason Kim, 30, was one of thousands of Korean Americans who wired money to relatives since South Korea’s deep economic troubles emerged late last month. Kim, a Los Angeles real estate broker, sent $300 this week to his grandmother in Seoul for her 81st birthday. In years past, he had often sent her vitamins and food.
“With Korea’s economic problems, it’s better to send cash,” he said, standing at a counter in Hanmi Bank, a Korean American bank that, along with other organizations, has been encouraging people to do so by waiving the usual $15 wire fee.
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This weekend the Korean American Grocers Assn. (KAGRO) and the Korean American Food Marketing Institute are sponsoring a Koreatown food fair touting products from the Choong Chun province of South Korea. Mindy Cho, executive director of the association, says she hopes to generate dollars to send back to South Korea, but the event is also to promote Korean food products among non-Koreans, with the ultimate goal of helping that country’s ailing economy.
The crisis abroad, however, has not been all bad news for Korean Americans.
In Koreatown, Bak Youk Chung, a retailer of Korean imports, is enjoying unusually robust sales. He attributes it to a “Buy Korean-made” campaign that has spread from Seoul to Los Angeles to New York.
“Be a patriot, buy Korean goods,” chanted the owner of Chung’s Appliance. It hasn’t hurt that he has been running ads daily on Korean-language radio and television--ads in which the balding middle-aged Chung pumps his fists as he exhorts his compatriots: “Let’s save Korea’s economy.”
But for Henry Cho, owner of Las Vegas Express, it is the local Korean American economy--and his business in particular--that worries him. Who, he asks, is going to fill his 11 buses that are usually packed during Christmastime?
“Ninety percent of the Korean tourists are canceling their winter trips here,” Cho said, adding that even Korean Americans in the Southland do not want to spend money because of the situation abroad. “It’s had a tremendous psychological effect.”
Indeed, the ache felt by Korean Americans is far more emotional than economic. Most of the estimated 250,000 Korean Americans in Los Angeles and Orange counties rely on the U.S. economy for their livelihoods. Korean Americans operate about 30,000 small businesses in Southern California. Leading the list are groceries, dry cleaners, house painting and garment shops, according to Pyong Gap Min, a sociology professor at Queens College and author of “Caught in the Middle: Korean Communities in New York and Los Angeles.”
Still, about 80% of the Korean Americans in Southern California are immigrants, most have family in South Korea, and they remain socially, politically and culturally attached to their motherland.
But although Korean Americans widely share in the humiliation felt by residents of South Korea, those in the Southland also voiced anger and frustration. In sermons and call-in radio shows, Korean Americans sharply criticized South Korea’s government for mismanagement and its citizenry for undue excesses.
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And although many South Koreans appear to be resentful about the International Monetary Fund’s $57-billion bailout of the world’s 11th-largest economy, many Korean Americans believe that Koreans should swallow their pride, accept the aid quietly and restructure and rebuild what was widely considered a miracle economy.
“I view it as a kind of correction,” said Ernest Dow, a partner at Koreatown’s largest accounting firm, Choi, Dow, Ian.
Like many other Korean immigrants, Dow believes that the economic collapse was inevitable. He says that Korean corporations held too much debt, received undue support from the government and were dictated by family and personal considerations rather than market factors.
“This is an opportunity to restart, to rebuild,” said Dow, a 48-year-old Glendale resident who has been in the United States since 1967.
Eui-Young Yu, director of the Center for Korea American and Korea Studies at Cal State L.A., compared South Korea at the moment--with its currency falling and investors pulling out--to the United States in 1929 when the market crashed. “Right now, there is a panic,” Yu said, his voice filled with emotion.
But Yu expects the situation to calm down soon after the national presidential elections next Thursday, when a new leader will take over the duties of powerless lame-duck Kim Young Sam. Yu has no doubts that South Korea, with its educated labor force, manufacturing capability and work ethos, can reform and restore its place in the world economy. Yet like many Korea experts here and abroad, Yu thinks that will probably take a couple of years.
Some Korean Americans, however, can’t wait that long.
As owner of Torrance-based Jade Inc., Byung Ok Song exports recycled jeans and other apparel to South Korea and Japan. But in recent weeks, his orders from South Korea have all but stopped and his customers there aren’t paying their bills. Song, who is 27 and emigrated from South Korea seven years ago, fears that he will have to file for bankruptcy. Already his income has plunged 80%, to barely $500 a week.
“They wasted dollars needlessly, now average citizens like myself are in this bind,” said Song, blaming the Korean government and the vast, family-run conglomerates, called chaebols, for its profligate activities.
Even if South Korea’s financial problems stabilize, Song doesn’t see his sales improving any time soon because many in South Korea, as in the Southland, are campaigning against imports to support Korean-made goods and prop up ailing Korean companies.
“Those who buy imports are now seen as social pariahs selling off the country,” Song said.
Such attitudes have repercussions far beyond the small number of Korean American exporters. Last year the Los Angeles area shipped more than $7.3 billion worth of electronics, food and other products to South Korea, second only to Japan. Given the shaky nature of their economy, currency and jobs, Korean consumers probably will not snatch up as much of the higher-priced U.S.-made goods, which could pinch thousands of companies throughout the state.
All the major Korean conglomerates also have subsidiaries in California, and there are signs that they have begun to pull back their operations and holdings in the United States. Ssangyong Group has agreed to divest its struggling automotive unit and is selling its Residence Inn hotel in San Diego.
Greg Warner, head of Irvine-based Kia Motors America, a unit of Kia Motors Corp., which fell into financial crisis in July and had to be taken over by the government, says that the problems abroad have made it difficult to recruit managers. But he says Kia has posted record U.S. sales in recent months.
“Kia and Korea will both bounce back, recover and in the long term be better off by this kind of restructuring,” he said.
South Korea’s problems have dealt a more serious blow to subsidiaries of Korean banks. Although these agency banks don’t take deposits, they provide credit lines and loans to U.S. affiliates of Korean companies. Some have stopped taking loan applications, and others have sharply curtailed their lending.
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“I can’t say we’ve eliminated all lending, but the [Korean economic crisis] has had a great impact on our business here,” said a deputy general manager at the Korea Exchange Bank in Los Angeles.
Ted Kim, 44, a businessman in Pomona, recently wired $2,000 to his parents in Seoul instead of sending presents.
“We should all chip in,” said Kim, who came to California nearly 20 years ago as a student. “Korea is in dire need of dollars. We should send dollars.”
That is a mantra being sung loudly by the Korean American Chamber of Commerce in Los Angeles and many other Korean groups. Not since the Los Angeles riots has an issue captivated and brought together so many in the large and often factious Korean American community.
Yi Yong Oh, manager of Hanmi Bank’s international department, says that in recent weeks about 200 people have come into his bank to wire money to South Korea. That’s a fourfold increase from the same period last year, he said. The dollar volume being wired, though, is about twice last year, which to Oh indicates that people are sending smaller amounts because Hanmi has temporarily waived its wire transfer fee. (Wilshire State Bank and other Korean American financial banks, although they haven’t waived the fees, also report a recent surge in wire activity.)
“Although we’re here in the U.S., we want them to know we care about the motherland,” Oh said, citing an old Korean saying, Shib-shi Il-ban, which means that if 10 people join together, they can help feed one person.
Of course, no one thinks that the amount of money being wired by Korean Americans will itself do much more than help some individuals and provide moral support. Economically, it is a drop in an ocean, given the magnitude of South Korea’s financial problems, which have been pegged at $100 billion.
Korean American bankers, though, have also noticed a decrease in the amount of money being wired from South Korea to Southern California. That, they say, means cash-strapped families in South Korea are sending less money to support relatives and foreign students at universities such as UCLA, where there are more than 900 students of Korean ancestry, including 211 Korean nationals.
“This is a serious problem,” said Gi-Wook Shin, a sociology professor at UCLA, noting that he has seen his colleagues, visiting scholars, forced to drastically adjust their lives. “It used to cost about $50,000 on average to come and spend a year here. Now it is as if it cost $100,000.”
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Given the difficulties, many in South Korea, including professors, may seek a permanent home in California or elsewhere in the United States. Chang Kee Sung, a South Korean consul in Los Angeles, says he has not yet seen evidence of a flight of South Koreans.
“But it is only natural,” he said. “If they don’t see economic prospects improving, they will go where things are brighter.”
At the moment, the dearth of Korean tourists has many in Koreatown deeply worried. For Gil, the owner of Dae Ruk department store, the cruelty is that just four months ago he invested $250,000 to remodel his Wilshire Boulevard store, putting in new lighting and wooden floors so it would look just as posh and elegant as any on Rodeo Drive.
“At that time, everything looked great,” he said, recalling that Koreans, prodded by the South Korean government to broaden their horizon, were traveling around the world and spending freely.
That sudden turn of fortunes has caused anguish and reflection among many Korean Americans in Southern California.
In a sermon last week that had many of the 400 Korean American listeners nodding at Canaan Presbyterian Church in Bellflower, the Rev. Dae Soon Kim recalled how just a year ago, South Korea had been invited to join the exclusive Organization for Economic Cooperation and Development, a group consisting of the richest nations in the world.
“The headlines spoke of how Korea had finally entered the ranks of the wealthy,” Kim, 63, said in Korean. “It was said: ‘Now we have plenty of dollars. Spend freely and don’t hold back while traveling abroad.’ ”
The reverend went on: “But now look at us. In utter humiliation, Korea’s economic power has been turned over to outsiders. This is what we have come to.”
