Interview: Mr. Christian Schindler, General Manager Korea, Lufthansa German Airlines,

Lufthansa German Airlines' representation in Korea began in 1966 with the signing of a General Sales Agency agreement between Lufthansa and Hyopsung Shipping. However, it was not until November 1984 that Lufthansa commenced its own flight services, flying from Seoul via Anchorage to Frankfurt.

Since then, as noted by Mr. Christian Schindler, General Manager Korea, Lufthansa German Airlines, the company has grown as a major partner in Korea's air-travel sector. Currently it offers a total of 11 weekly flights between Korea and Europe with six weekly flights on the Seoul-Frankfurt route and five weekly flights on the Busan-Munich route (via Seoul).
“Today, we are the largest European airline on the Korean market and are enjoying a growing number of Korean customers. We are also the only European carrier to operate from Busan, he told Infomag.
It also helps that Lufthansa is a founding member of the world's largest aviation network, Star Alliance, which has 28 international airline partners including Asiana Airlines, connecting six continents.
Mr. Schindler joined Lufthansa in 1991, being assigned the networking planning manager for domestic and Benelux passenger services, and as network planning manager and coordinator for the Munich Hub. In 1998, he became business partnership manager and in 2001 was promoted to global corporSince then, as noted by Mr. Christian Schindler, General Manager Korea, Lufthansa German Airlines, the company has grown as a major partner in Korea's air-travel sector. Currently it offers a total of 11 weekly flights between Korea and Europe with six weekly flights on the Seoul-Frankfurt route and five weekly flights on the Busan-Munich route (via Seoul).
“Today, we are the largest European airline on the Korean market and are enjoying a growing number of Korean customers. We are also the only European carrier to operate from Busan, he said.
It also helps that Lufthansa is a founding member of the world's largest aviation network, Star Alliance, which has 28 international airline partners including Asiana Airlines, connecting six continents.
Mr. Schindler joined Lufthansa in 1991, being assigned the networking planning manager for domestic and Benelux passenger services, and as network planning manager and coordinator for the Munich Hub. In 1998, he became business partnership manager and in 2001 was promoted to global corporate key account manager. Since 2004, he was general manager of Morocco until being assigned to Korea last year.
The airlines' success can be largely attributed to the fact that it has localized its operations to cater better to the Korean customers, he said.
Lufthansa provides a choice of Korean cuisine, including bibimbab, cup noodles with kimchi and red-pepper paste as well as a wide selection of beverages including beer and wine.
First and Business Class passengers can indulge themselves in the new Star Chef menus created by Chef Park Hyo-nam of the Millennium Seoul Hilton with wines specially selected by the World's Master of Sommeliers, Markus Del Monego.
Other amenities include various Korean magazines and video/audio entertainment offerings, all tailored for Korean travelers. Upon arrival at Frankfurt and Munich Airports, a ``Korean Welcome Service'' is provided with Korean personnel on hand to meet and greet travelers and assist them with all their needs and information.
We are considered to be the most Korean of all European carriers that fly from here. Moreover, our strong brand and large network of connections makes us the preferred choice of flight,he said.
While the economic slump last year did affect operational revenues, 2010 is expected see a strong rebound. More so, since the Korean economy has displayed an amazing recovery on the back of strong exports.
Speaking on the challenges that foreign carrier face in Korea, he noted that language is a major issue. It is very important to cater to the local needs to meet the various demands of korean customers. For this reason, Lufthansa has deployed many websites and link sites in Korean offering specialized services and has been providing a variety of online promotions for the Korean and foreign customers.
“We see the Internet as the future. Within the next five years, 3 out of every 4 passengers will use the Internet for their travel. The market is seeing a big shift, with more and more people moving towards web portals. This is the worldwide trend, and we hope to doubled our share of web presence.
The strategy is to offer competitive pricing, with attractive high end products. The airline is therefore averse to scaling down its services. It guarantees that economy class pasenger can book seats, special meals with alcoholic drinks all for free and at very competiitve prices.
In this context he noted that the budget carriers do not offer any competition to Lufthansa's operations in Korea.
“The long-haul business has always been low cost, so there is no scope for further price cuts by the budget cariers. It is only in short-haul routes that the budget carriers can prosper. This has been very much evident in Europe, where carriers like Ryan Air and EasyJet have a 40 percent market share in short-haul routes. The same is the case in Asia,he said.
Lufthansa passengers on long haul routes have access to a comprehensive program of entertainment with the extended Lufthansa Media World, 65 video options with 30 cinema films in up to eight languages, 25 TV programs and 10 music magazines from all over the world, 100 CD's, a selection of audio books, 24 radio programs with many international channels, games of skill, action-, board and strategy games as well as 11 language courses. So naturally, passengers prefer these premium services for long trips.
He was also full praise for the quality of services offered at Incheon Airport and said that most of the foreign carriers are appreciative of the facilities. Recent talks of privatization of the airport are welcome
The government announced recently, as part of its budget proposal to sell a 49 percent stake in the airport operator next year. Incheon International Airport Corporation is assessing the share value and sales price with investment bank advisers who will manage the initial public offering. However, an amendment to a related legislation that would authorize the privatization is still pending in the National Assembly after it was introduced last year. A majority of opposition party lawmakers are against the plan.
The Ministry of Strategy and Finance and the Ministry of Land, Transport and Maritime Affairs justify the privatization by arguing that the airport must be supervised by an agency with operating expertise and the ability to attract more financial and capital support so Incheon International Airport can develop further as a leading global airport hub..
“Overall privatized infrastructure is the way to go for the future. It will be a triple win situation for the airport, carriers and passengers. One can expect reduced prices and improvements in services, he said.

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Interview: Mr. Lee Sang-min, Fund Manager, FRM/ Alternative Global Investments Team, KFCC

On June 10th, this year, 333 Market Street, a 33 storey San Francisco office tower occupied by Wells Fargo & Co. sold for $333 million, the city's biggest commercial property deal in three years. San Francisco-based Wells Fargo occupies 100 percent of the rentable space and has a lease that runs to 2026.
The deal was put together by Goodwin Gaw, a Hong Kong-based investor and developer who recently bought 550 Montgomery St. in San Francisco for $12.65 million. The seller was Des Moines, Iowa-based insurer Principal Financial Group Inc., which bought the tower from Wells Fargo for $370 million in 2006 before a collapse in commercial property values. The last single San Francisco office building to change hands for a comparable price was 650 California St., which sold for $300 million in July 2007.
The buyers included Korean Federation of Community Credit Cooperatives (KFCC)
which along with the Korean TeachersCredit Union (KTCU) surprised other bidders by coming on top, to pay about $507 a square foot from the prime office building in the financial district.
By all accounts, this was an excellent foray for the Korean funds, as the Market Street high-rise combined with a long-term lease with Wells Fargo makes this an extremely attractive asset.

As noted by Mr. Lee Sang-min, Fund Manager, FRM/ Alternative Global Investments Team, KFCC, the 657,115-square-foot Market Street high-rise is expected to provide stable cash flow. More than 7% average dividend rate is expected during the investment period.
However, Mr. Lee, who played a key role in finalizing the transaction and putting in place the club deal said it was not an easy win for the Korean funds, especially since it was his first foray in overseas real estate markets.
He pointed out that KFCC has traditionally had a very small footprint in overseas real estate investments and has concentrated on other alternative investments including hedge funds. However, as a result of the financial crisis, the institutional investor has been actively rebalancing its protfolio in order to enhance its returns.
KFCC is a major financial institution in the Korean market, and was established by the Community Credit Cooperative Act to realize the goal of developing Community Credit Cooperatives (CC) as a solid financial organization as well as to take a supervisory role in the promotion of mutual growth with CC. The major responsibilities of KFCC include supporting the development and improvement of local communities through local financial cooperative activities and through various means such as credit business, protecting savings of CC members, educating and training executives and members of CC as well as promoting
friendship and cooperation with international cooperative societies.
Mr. Lee said that the real estate market is a challenging sector for the organization as it offers stable and steady returns especially in the case of prime office building which is located in CBD are with tenants who has high credibility .They are now awaiting the first cash flow from 333 Market Street.
“We are very interested in diversifying our portfolio of investments and have big plans to step into the real estate market, not just in Korea, but also selective advanced markets. The next year promises to be very exciting and challenging for us.”
Most Korean institutional investors, he noted, do not have sufficient experience to invest in real estate overseas. It is not just the complexity of the foreign legal systems but also the lack of familiary with the local business codes.
For this reason, he was very cautious, when he first heard about the sale of the 333 Market Street building. The first serious concern was how to wrap fund effectively. There were a lot of issues to tackle with to launch the fund, most importantly, how to guarantee deal security and follow the bidding process. With as many as 12 other participating bids, the possibility of success was very low.
He however worked hard to get long term credit line and putting together a group of core investors whose credit would be acceptable. Having realized that is important to have credible partners to close any foreign property deal, he worked with the Korean TeachersCredit Union (KTCU) to put in the winning bid, and was able to obtain a 5 years CRS from Korea Exchange Bank.
“Korean institutional investors do not have adequate knowledge on each country’s customs, market convention and legal systems. Moreover, everything is different, even among advanced countries. So what is acceptable in New York may not be acceptable in London. We have to study very hard each time we look at anew market.”
Unlike bigger institutions like National Pension Service, which have a much larger cash flow and diversified investments, KFCC does not have a dollar account  so that currency hedging is one of the most important issue and faces more barriers including market convention ,legal and tax systems to buy core property in foreign country. For these reasons, he favors a club deal with similar institutions like KTCU. He also emphasized that club deals also give more opportunities to reduce risks and burdens than an independent account deal by only one institution and it makes more strong relationship between the institutions that participated in the same clubs for future investments.
Mr. Lee noted that he is now preparing for a real estate deal in London and also looking at other advanced markets.
Most Korean investors do not consider other emerging markets, because the legal and regulaltory systems are not credible. They prefer focusing on more transparent cities.
“However, even that kind of opportunities are quite quickly disappearing. The US retail residence market is still faced with the foreclosure problem, but, prices of prime office buildings which is located on CBD areas in major cities are rapidly increasing. That makes us hesitate to invest.”
Speaking on the Korean office market, he stated that there is still unstability in relation to vacancy rate. Moreover, since 2008 the central bank has kept the base rate relatively low, so even as the economy is getting better, interest rates are low.
Korea's Finance Minister Yoon Jeung-hyun reaffirmed recently that 5 percent growth should be attainable for the next year, as strong business investments and outbound shipments will support the economy. At the same time, the Monetary Policy Committee of the Bank of Korea decided to maintain the Base Rate at its current level (2.25%) for the intermeeting period.
“In the global economy, emerging market economies have sustained their favorable performance, and the economies of major advanced countries have largely continued their moderate recovery trend, even though the pace of the recovery in the US economy has slowed somewhat. Looking ahead, there exists the possibility of the heightened volatility of economic activity and exchange rates in major countries acting as a risk factor for the global economy.it noted
Mr. Lee said that the office market is also lagging behind the real business cycle and vacancy rate is high in the case of US market. Sometimes, if there is a liquidity squeeze, a lucky chance to buy with reasonable price may exist.

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Interview: Mr. Raj S. Inamdar, Principal, Red Fort Capital

PDF Copy of Magazine which includes the Interview Available HERE

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Interview: Mr. Kim Jong-hoon, Minister of Trade

South Korea and the EU formally signed a free trade agreement in Brussels on October 6th and both sides agreed they will aim to ratify the agreement by July 2011. The deal, which has been negotiated starting in May 2007, will lower tariffs, boost trade and investment, and create jobs for both Korea and the 27 EU countries.
The agreement was signed by Korea's Minister for Trade Kim Jong-hoon and European Commissioner for Trade Karel De Gucht and others. President Lee Myung-bak took part in the ceremony after he met with Prime Minister Yves Leterme of Belgium at the Egmont Palace and said the two sides should work hard to meet the ratification deadline.
In an exclusive interview Minister Kim speaks about the implications of this agreement and also the various other FTA's that are being negotiated with other countries.

>>When officially signing the Korea-EU FTA on October 6, 2010 in Brussels, Korea and the EU agreed upon the date of provisional application of July 1, 2011 for the Korea-EU FTA.
The respective domestic procedures in Korea and the EU, namely an approval from the Korean National Assembly and an approval from the European Parliament, should be completed for the Korea-EU FTA to be provisionally applied on the agreed date.
I do not forsee any big difficulties in proceeding domestic procedures in either Korea or the EU. I think, however, that during the process of internal processes both in Korea and in Europe it is very important for both sides to put their best efforts to offer the stake-holders an explanation on the benefits the Korea-EU FTA will bring to the overall economies of these parts of the world in a balanced manner beyond its impact on certain industries or sectors.
>>The Korea-EU FTA is a comprehensive and high-quality trade agreement between Korea and the world's largest economy. Trade opportunities in the EU market for Korean companies in all different sectors are expected to be enhanced as the Korea-EU FTA is implemented.
Once the Korea-EU FTA enters into force, Korean consumers will also have better access to leading brand European goods with good quality at affordable prices and will enjoy a wider range of choice.
-In particular, the elimination of tariffs on major imported European goods, such as cosmetics, garments, wine and whiskey, will bring a huge welfare increase. A recent study by the KIEP(Korea Institute for International Economic Policy), a leading research institute in Korea, suggests that the welfare increase will amount to as much as 3.84% of the GDP (equivalent to $32 billion) in the long run.
The Korea-EU FTA, by enabling Korean domestic manufacturers to import the EU's high-tech parts and materials at a lower price, is also expected to contribute to stabilizing prices of goods and reinforcing competitiveness of the Korean products in the world market.
-In case of parts and materials, the current tariffs center around 8% and are to be eliminated within 3 years under the Korea-EU FTA. It is to be noted that these benefits will be attainable in a relatively short amount of time.
>>The implementation of the KORUS FTA has been delayed for more than three years, due to various factors, including the stagnant American economy and political schedules such as the forthcoming mid-term election.
During the Summit meeting held between the two countries last June, President Obama told President Lee that it was time that the USTR worked closely with its counterpart to make sure that we set a path before the G20 Summit in November and that President Obama intended to present the Agreement to the U.S. Congress for approval in the following few months.
Based on the strong commitment shared by the two leaders, both governments are making concerted efforts to move the Agreement forward.
-There are various voices in both countries regarding the Agreement, including those urging for renegotiations. However, since the KORUS FTA reflects the balance of interests between the two countries, I believe that reopening the texts is not an option.
Given the economic and strategic benefits the KORUS FTA could bring to both countries, it is my strong hope that the Agreement will be implemented in the near future.
>>Although the multilateral trading system continues to play a pivotal role in international trade, the DDA negotiations do not seem to be making much progress. Under these circumstances, FTAs are increasingly becoming a major instrument of trade liberalization and economic reform in the world of global trade and economy.
-To respond to the rapid proliferation of regionalism throughout the world, Korea has been actively pursuing an ambitious FTA policy.
Due to the comprehensive and high-level trade liberalization eliminating tariff and non-tariff barriers through FTAs, Korea has expanded trade with its FTA partners, ensuring increased mutual market access and providing exporters with a competitive edge.
More importantly, Korea's FTAs provide opportunities to enhance economic efficiency through external competition, thereby increasing competitiveness of domestic industries. There are always sectors vulnerable to foreign competition, notably agricultural sector. Through FTA negotiations that involve a painful structural adjustments in its economy while taking care of sensitivities in those vulnerable sectors, Korea has so far been successful in upgrading its economic systems. Through this process, transparency in Korea's economic system and predictability of the nation's regulatory regime has been enhanced.
>>Since the first conclusion of the Korea-Chile FTA in 2003, Korea has actively engaged in FTAs with more than 60 countries as follows:
5 FTAs in effect
- The Korea-Chile FTA entered into force in April 2004.
- The Korea-Singapore FTA entered into force in March 2006.
- The Korea-EFTA FTA entered into force in September 2006.
- The Korea-ASEAN FTA entered into force in June 2007(Goods), in May 2009(Services) and in September 2009(Investment) separately.
- The Korea-India CEPA(Comprehensive Economic Partnership Agreement) entered into force in January 2010.

3 FTAs concluded

- The Korea-US FTA was signed on June 20, 2007 and is currently under ratification procedures.
- The Korea-EU FTA was signed on October 6, 2010 and is currently under ratification procedures.
- The Korea-Peru FTA was concluded the negotiations on 30 August, 2010.

7 FTAs under negotiations

- The Korea-Australia FTA negotiations were launched in May 2009 and the 5th round of negotiations was held in May 2010.
- The Korea-Colombia FTA negotiations were launched in December 2009 and the 4th round of negotiations was held in October 2010.
- The Korea-Turkey FTA negotiations were launched in March 2010 and 2nd round of negotiations was held in July 2010.
- The Korea-New Zealand FTA negotiations were launched in June 2009 and the 4th round of negotiations was held in May 2010.
- The Korea-GCC FTA negotiations were launched in July 2008 and the 3rd round of negotiations was held in July 2009.
- The Korea-Canada FTA negotiations were launched in July 2005 and the 13th round of negotiations was held in March 2008.
- The Korea-Mexico FTA negotiations were launched in December 2007 and the 2nd round of negotiations was held in June 2008.

Other FTAs under consideration
- Korea-Japan FTA: The 1st Director-General-Level Consultation on the Korea-Japan FTA was held in September 2010.
- Korea-China FTA: The 1st meeting on the exchange of views concerning sensitivities regarding a possible Korea-China FTA was held in September 2010.
- Korea-China-Japan FTA: The 2nd meeting of the Joint Study Committee on an FTA among China, Japan and Korea was held in September 2010.
- Korea-Israel FTA: Korea and Israel finished the joint feasibility study on the Korea-Israel FTA in August 2010.
- Korea-MERCOSUR FTA: Korea and MERCOSUR signed the "MOU for the establishment of Joint Consultative Group to Promote Trade and Investment between Korea and the MERCOSUR" for discussing the follow up action regarding the results of the joint study on the feasibility of a Korea-MERCOSUR Trade Agreement.
- Korea-Vietnam FTA: The 2nd Joint Working Group meeting on a possible Korea-Vietnam FTA was held in October 2010.

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