South Korea

Intelligence for Better Decision Making

Starbucks Korea Alters Beverage Prices Amidst Rising Costs and Currency Depreciation
Jan. 22, 2025 | Indirect Indicator

Starbucks Korea has announced a price increase for 22 of its coffee and tea beverages, effective Friday, driven by rising ingredient costs and a weakened local currency.

A tall Americano will now cost 4,700 won, and Today's Coffee will be priced at 4,500 won. In contrast, prices for ten beverages, including Dolce Cold Brew and certain tea bag drinks, will stay the same. Notably, prices for grande and venti iced brewed coffee will decrease by 200 won, bringing them to 5,100 won and 5,900 won, respectively. This marks the third price adjustment in five months for the company, even though these specific items had maintained stable prices for the past three years.

In a broader economic context, South Korea experienced a rise in producer prices for the second month in a row in December, largely attributed to the depreciation of the Korean won. The producer price index saw a 0.3 percent increase from November, following a 0.1 percent uptick the preceding month, and rose 1.7 percent over the year, continuing a 17-month trend with implications for future consumer prices. This increase was primarily fueled by a 2.8 percent rise in agricultural, livestock, and fisheries goods. Similarly, industrial products and utility costs experienced increases of 0.3 percent and 0.4 percent, respectively. The domestic supply price index reflected these changes with a 0.6 percent month-over-month rise, influenced by higher import costs linked to the weak won.

The won depreciated to 1,434.42 against the US dollar in December, from 1,393.38 in November, due to a stronger dollar and political unrest following President Yoon Suk Yeol's declaration of martial law. Consequently, consumer inflation climbed to 1.9 percent year-over-year in December, up from 1.5 percent in November. The Bank of Korea maintained its benchmark interest rate at 3 percent after two prior cuts, aiming to address the currency's depreciation.

The recent rise in producer prices was significantly impacted by poor harvests and increased demand, leading to the noted 2.8 percent increase in agricultural, livestock, and fisheries goods. Industrial product prices rose by 0.3 percent, utilities by 0.4 percent, while service prices nudged up by 0.1 percent. Global oil prices also rose, with Dubai crude averaging $73.23 per barrel after a 0.9 percent increase.

Growing concerns surround import costs amid the persistent price rise and currency devaluation, although the overall impact on inflation remains uncertain. As January approaches, expectations lean toward continued currency weakness and rising global oil prices, potentially exacerbating import costs. Despite these challenges, the Bank of Korea has opted to keep its benchmark interest rate steady at 3 percent to help counteract the currency's decline.
Xiaomi's Strategic Entry into Korea with AI-Driven Smartphone Innovations
Jan. 21, 2025 | Indirect Indicator

Xiaomi is making a strategic move into the Korean smartphone market with the launch of the Xiaomi 14T and the Redmi Note 14 Pro 5G.

The Xiaomi 14T, developed in collaboration with Leica, is a premium device featuring a Leica lens and the MediaTek Dimensity 8300 Ultra processor, offering advanced camera technologies and AI capabilities, including real-time call translation. Its pricing is attractive, with the 256GB model starting at 599,800 won and the 512GB model at 649,800 won, positioned to undercut Samsung's flagship models. The Redmi Note 14 Pro 5G is priced at 399,300 won for the 256GB version and 499,400 won for the 512GB version. This model is part of a successful series with over 420 million units sold globally and boasts a reinforced aluminum frame for enhanced durability. It integrates seamlessly with Xiaomi's AI ecosystem, promising an enriched user experience across various smart devices.

In the competitive landscape of the Korean smartphone market, Samsung currently leads with a 19% market share, followed by Apple at 18% and Xiaomi at 14%, according to Counterpoint Research. Xiaomi aims to capitalize on affordability and AI-driven experiences to boost its standing in this challenging environment.

Looking forward, Samsung Electronics plans to unveil its Galaxy S25 series at the 'Samsung Galaxy Unpack 2025' event on February 22, 2025, in San Jose, California. The event will showcase new AI features under the theme 'The Next Big Leap in Mobile AI Experiences.' These innovations include YouTube Notes for summarizing video content in Samsung Notes, a Music Search feature for identifying songs, and Homework AI for aiding students with math problems. Additionally, major updates in the One UI 7 operating system will introduce the 'Now Bar' for real-time notifications on the lock screen concerning music, health, and travel and the 'Personal Data Engine' for secure data storage through the 'Samsung Knox Vault' platform.

As the smartphone industry continues to evolve, all eyes are on Samsung's strategies to maintain its market lead. While its global market share stands at 19%, it reflects a slight decrease from the previous year. Apple trails closely at 18%, with Xiaomi, Oppo, and Vivo holding 14%, 8%, and 8% of the market share, respectively.

Monitored Intelligence for South Korea - Jan. 22, 2025


News
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395

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26

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87

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0
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Service
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0
Academic/
Think
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5


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0


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0

Social
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0

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0

Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.

The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.

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3
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Operations Categories Reported on Today

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Items Reported On
Asset Price Change
5
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2
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1
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4
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5
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11
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2
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13
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3
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4
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2
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3
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3
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최상목 "이른 시일 내 美 트럼프와 통화…고위급 소통 본격 전개"

Choi Sang-mok: "I will speak with Trump in the US soon... High-level communication will begin in earnest"

Money Today | Local Language | News | Jan. 22, 2025 | Shifting Geopolitical Alliances

Acting President Choi Sang-mok, also Deputy Prime Minister and Minister of Strategy and Finance, announced plans for high-level communication with the U.S., including an upcoming phone call with President Trump. He emphasized the importance of engaging with U.S. ministers to foster cooperative relations with the new administration.

Choi congratulated Trump on his inauguration, expressing hopes for improved Korea-U.S. relations. He acknowledged the implications of Trump's America First policy on South Korea's economy, particularly regarding protective measures and trade restructuring. Choi outlined the government's proactive approach to prepare for U.S. policy impacts and support the business community.

Moving forward, Choi stated that the government would reassess the economic impacts of the new U.S. administration's policies, aiming to maximize opportunities and minimize risks. He highlighted plans for economic cooperation in sectors like shipbuilding and reaffirmed the commitment to strengthening the Korea-U.S. alliance based on mutual trust.

Political uncertainty to hinder Seoul's diplomacy toward Washington, Beijing as Trump 2.0 begins

Joongang Ilbo | English | News | Jan. 22, 2025 | Geopolitical Conflict and Disputes

Seoul is experiencing political uncertainty as Donald Trump begins his second term, complicating its diplomatic relations with Washington and Beijing amid ongoing U.S.-China competition. Both leaders, Trump and Xi Jinping, are navigating a phase of cautious interaction rather than direct confrontation. Trump's planned visit to China within his first 100 days and the postponement of a TikTok ban suggest a potential thaw in relations, bolstered by China's decision to send a high-ranking envoy to Trump's inauguration.

This uncertainty could hinder South Korea's response to U.S.-China developments, especially as Japan engages in high-level diplomacy with both powers. Japanese Foreign Minister Takeshi Iwaya is actively meeting with U.S. officials and plans to communicate South Korea's interests. However, this could disadvantage Seoul if diplomatic ties weaken amid its political turmoil.

Experts caution that a stronger U.S.-Japan alliance under Trump might shift the balance of power against South Korea, whose political instability has raised concerns within the Trump administration. The Korean government's diplomatic efforts, including a potential foreign ministers meeting with the U.S., are complicated by the absence of an ambassador to China, creating additional challenges in managing Beijing relations.

In light of this diplomatic vacuum, a bipartisan group of Korean lawmakers visited the U.S. to discuss bilateral relations and reinforce the Korea-U.S. alliance ahead of Trump's inauguration. Despite representing South Korea at the inauguration, ongoing political uncertainties could limit Seoul's influence amid the evolving U.S.-China dynamics.

S. Korea says will continue to push for NK denuclearization after Trump calls N. Korea 'nuclear power'

Korea Times | English | News | Jan. 22, 2025 | Geopolitical Conflict and Disputes

The South Korean government reaffirmed its commitment to North Korea's denuclearization following U.S. President Donald Trump's remark labeling North Korea as a "nuclear power." This comment came shortly after Trump's second-term inauguration and highlighted his positive rapport with North Korean leader Kim Jong-un. South Korea's defense ministry emphasized the necessity of persistent denuclearization efforts for global peace and stability.

In reaction to Trump's statement, a spokesperson from the South Korean defense ministry reaffirmed the nation's dedication to collaborating with the international community on denuclearization. The unification ministry indicated that South Korea and the U.S. share a unified stance, promising close cooperation with the new U.S. administration to tackle North Korea’s nuclear capabilities.

Trump's characterization aligns with language used by his Defense Secretary nominee, Pete Hegseth, who also referred to North Korea as a "nuclear power." This shift in rhetoric, typically avoided by U.S. officials to prevent legitimizing North Korea's ambitions, acknowledges the reality of its nuclear status.

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