• Korean small business review
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• v.31 no.2
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• pp.85-102
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• 2009

With the continued globalization of world markets, transfer pricing has become one of the dominant sources of controversy in international taxation. Transfer pricing is the process by which a multinational corporation calculates a price for goods and services that are transferred to affiliated entities. Consider a Korean electronic enterprise that buys supplies from its own subsidiary located in China. How much the Korean parent company pays its subsidiary will determine how much profit the Chinese unit reports in local taxes. If the parent company pays above normal market prices, it may appear to have a poor profit, even if the group as a whole shows a respectable profit margin. In this way, transfer prices impact the taxable income reported in each country in which the multinational enterprise operates. It's importance lies in that around 60% of international trade involves transactions between two related parts of multinationals, according to the OECD. Multinational enterprises (hereafter MEs) exert much effort into utilizing organizational advantages to make global investments. MEs wish to minimize their tax burden. So MEs spend a fortune on economists and accountants to justify transfer prices that suit their tax needs. On the contrary, local governments are not prepared to cope with MEs' powerful financial instruments. Tax authorities in each country wish to ensure that the tax base of any ME is divided fairly. Thus, both tax authorities and MEs have a vested interest in the way in which a transfer price is determined, and this is why MEs' international transfer prices are at the center of disputes concerned with taxation. Transfer pricing issues and practices are sometimes difficult to control for regulators because the tax administration does not have enough staffs with the knowledge and resources necessary to understand them. The authors examine transfer pricing practices to provide relevant resources useful in designing tax incentives and regulation schemes for policy makers. This study focuses on identifying the relevant business and environmental factors that could influence the international transfer pricing of MEs. In this perspective, we empirically investigate how the management perception of related variables influences their choice of international transfer pricing methods. We believe that this research is particularly useful in the design of tax policy. Because it can concentrate on a few selected factors in consideration of the limited budget of the tax administration with assistance of this research. Data is composed of questionnaire responses from foreign firms in Korea with investment balances exceeding one million dollars in the end of 2004. We mailed questionnaires to 861 managers in charge of the accounting departments of each company, resulting in 121 valid responses. Seventy six percent of the sample firms are classified as small and medium sized enterprises with assets below 100 billion Korean won. Reviewing transfer pricing methods, cost-based transfer pricing is most popular showing that 60 firms have adopted it. The market-based method is used by 31 firms, and 13 firms have reported the resale-pricing method. Regarding the nationalities of foreign investors, the Japanese and the Americans constitute most of the sample. Logistic regressions have been performed for statistical analysis. The dependent variable is binary in that whether the method of international transfer pricing is a market-based method or a cost-based method. This type of binary classification is founded on the belief that the market-based method is evaluated as the relatively objective way of pricing compared with the cost-based methods. Cost-based pricing is assumed to give mangers flexibility in transfer pricing decisions. Therefore, local regulatory agencies are thought to prefer market-based pricing over cost-based pricing. Independent variables are composed of eight factors such as corporate tax rate, tariffs, relations with local tax authorities, tax audit, equity ratios of local investors, volume of internal trade, sales volume, and product life cycle. The first four variables are included in the model because taxation lies in the center of transfer pricing disputes. So identifying the impact of these variables in Korean business environments is much needed. Equity ratio is included to represent the interest of local partners. Volume of internal trade was sometimes employed in previous research to check the pricing behavior of managers, so we have followed these footsteps in this paper. Product life cycle is used as a surrogate of competition in local markets. Control variables are firm size and nationality of foreign investors. Firm size is controlled using dummy variables in that whether or not the specific firm is small and medium sized. This is because some researchers report that big firms show different behaviors compared with small and medium sized firms in transfer pricing. The other control variable is also expressed in dummy variable showing if the entrepreneur is the American or not. That's because some prior studies conclude that the American management style is different in that they limit branch manger's freedom of decision. Reviewing the statistical results, we have found that managers prefer the cost-based method over the market-based method as the importance of corporate taxes and tariffs increase. This result means that managers need flexibility to lessen the tax burden when they feel taxes are important. They also prefer the cost-based method as the product life cycle matures, which means that they support subsidiaries in local market competition using cost-based transfer pricing. On the contrary, as the relationship with local tax authorities becomes more important, managers prefer the market-based method. That is because market-based pricing is a better way to maintain good relations with the tax officials. Other variables like tax audit, volume of internal transactions, sales volume, and local equity ratio have shown only insignificant influence. Additionally, we have replaced two tax variables(corporate taxes and tariffs) with the data showing top marginal tax rate and mean tariff rates of each country, and have performed another regression to find if we could get different results compared with the former one. As a consequence, we have found something different on the part of mean tariffs, that shows only an insignificant influence on the dependent variable. We guess that each company in the sample pays tariffs with a specific rate applied only for one's own company, which could be located far from mean tariff rates. Therefore we have concluded we need a more detailed data that shows the tariffs of each company if we want to check the role of this variable. Considering that the present paper has heavily relied on questionnaires, an effort to build a reliable data base is needed for enhancing the research reliability.

• Proceedings of the Korean Institute Of Construction Engineering and Management
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• autumn
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• pp.35-41
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• 2002

This research introduces the development of a project-level cash flow forecasting model in construction stage based on the planned earned value and the cost from a general contractors view on a jobsite. Most previous models have been developed to assist contractors in their pre-tendering or planning stage cash flow forecasts. The critical key to cash flow forecasting at the project level is how to build a cash-out model. The basic concept is to use moving weights of cost categories in a budget over project duration. The cost categories are classified to compile resources with almost the same time lags that are based on contracting payment conditions and credit times given by suppliers or venders. For cash-in, net planned monthly-earned values are simply transferred to the cash-in forecast, to be applied there with billing time and retention money. Validation of the model involves applying data from on-going 4 projects in progress for 12 months. Based on the results of the comparative analyses through the simulation of the proposed model and the existing models, the proposed model is more accurate, flexible and simpler than traditional models to the employee of construction jobsite who is not oriented financial knowledge.

• International Commerce and Information Review
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• v.16 no.3
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• pp.225-251
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• 2014

This study was intended to confirm a positive correlation between a understanding and utilization and performance results of the FTA in Gangwon-do. To this end, eighty-six companies(90% SMEs) which participate in both import and export were surveyed regarding their understanding and utilization of the FTA, and current performance was analyzed. The research results are as follows. First, we found a positive correlation between 1) a company's global orientation (as measured in export density as a percentage of profit) and 2) its competitiveness (as measured in annual sales), and a company's degree of utilization of FTA provisions. Second, we found that increased awareness of the provisions of Korea's FTAs was positively correlated with the degree to which companies were able to benefit financially from Korea's FTAs. Third, however, at the time of this study's completion, FTA utilization was not yet positively correlated with statistically significant performance results. Therefore, to increase the utilization and performance of FTA, the Korean government have to make a efficient business models for each industry and support the small and mid-size businesses including Gangwon province's SMEs.

• Proceedings of the Korean Society of Dyers and Finishers Conference
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• 2011.11a
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• pp.48-48
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• 2011

국내 염색가공업에 종사하는 중소기업은 약 1,700여개 업체로써, 평균 50억/년 매출을 하고 있으며, 생산의 대부분을 임가공에만 의존하고 있는 실정이다. 이들 염색가공업체들은 섬유제품의 품질 향상 등을 위해 전처리, 염색, 가공이라는 섬유습식공정을 행하게 되는데 그 공정이 따로 분리되어 있어 임가공 업체 입장에서는 시간과 비용 차원에서 비효율적인 면이 존재하여 왔다. 따라서 공정합리화, 원가합리화를 위해 따로 분리되어 있는 위 공정을 통합하려는 시도를 많이 했지만 전처리/염색 공정의 통합에서 일부 성과가 있었을 뿐 효과면에서는 아직 미흡한 실정이다. 또한 가공이란 공정은 그사용 약제의 특수성에 따라 기존 Padding-Drying-Curing이라는 3 step process를 반드시 필요로 하고 있기 때문에 가공 공정의 통합은 시도조차 이루어지지 않고 있는 것이 현실이다. 따라서 염색공정과 가공공정의 통합을 시도하기 위해서는 관련 약제 개발이 출발이라 할 수 있으며 그 첫 대상은 염색 공정의 소핑과 가공공정의 유연처리를 동시에 행할 수 있는 소핑유연제로 선정하려 한다. 즉 셀룰로오스계 섬유의 반응성 염색 후 소핑 공정에서 일액형 소핑유연제, 한가지 제품만을 간편하게 사용해도 소핑효과와 유연효과를 동시에 얻어 후속 유연처리 공정을 생략할 수 있는 것이다. 그렇게 되면 시간적으로나 비용적으로 큰 절감 효과를 가져와 임가공 업체의 부담을 덜어 줄 수 있을 뿐만 아니라 공정 통합을 통해 배출되는 폐수의 양도 상당량 감소시킬 수 있을 것으로 기대된다. 본 연구 결과, 폴리옥시에틸렌 트리데실 에테르 타입의 계면활성제와 개질된 디메틸폴리실록산 계열의 실리콘 오일, 그리고 이들의 상용성을 확보하기 위한 특수 용제 및 첨가제를 최적의 비율로 배합하여 안정한 일액형 복합 소핑유연제를 제조할 수 있었다. 제조된 소핑유연제는 유백색 반투명 액상의 외관을 가지며 pH(10%solution)는 $7{\pm}1$, 고형분은 $13.5{\pm}0.5%$이었다. 이 소핑유연제의 성능 평가결과, 소핑력은 기존의 소핑제와 동등 수준으로 세탁견뢰도 4급이상의 성능을 보였고, 유연성 면에서도 기존의 유연제와 동등 수준으로 평가되었다. 이로써 기존의 분리된 소핑 공정과 유연공정을 개발된 제품을 이용하여 통합할 수 있어 염색현장의 비용절감, 공정단축의 효과를 기대할 수 있게 되었다.

• Journal of the Korean Institute of Gas
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• v.24 no.6
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• pp.34-46
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• 2020

In order to supply stable natural gas in the future, it is necessary to forecast the demand in advance and secure the quantity of supply. In this paper, we propose a method of estimating the demand function of industrial natural gas, which is the core of the increase of domestic natural gas demand in the future. The cross-sectional data of 304 domestic industries were used to estimate the demand function of the industrial natural gas, and the effect of industry specific characteristics such as capital investment, manufacturing cost. Finally, the least absolute deviation estimation method which is robust to outliers and does not assume the homogeneity of the error term and the normality, And the results were derived. In addition, the economic value of industrial city gas was estimated using the price elasticity of industrial city gas. Therefore, it can be seen that the continuous expansion and supply of city gas to the industrial sector is beneficial at the national level, and the government needs to promote expansion through the industrial city gas support policy.

• Asia Marketing Journal
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• v.11 no.3
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• pp.185-203
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• 2009

Yuhan Kimberly, a joint-venture company of Korean Yuhan Company and American Kimberly-Clark, opened a premium diaper market in Korea by launching Pull-Ups which was pants-typed diapers in 1993. Pull-Ups was imported as finished goods from Kimberly-Clark. However, in spite of its huge market share in United States, it failed to land down in Korean market because of wrong positioning strategy which did not consider domestic customers' tastes. In 1996, Yuhan-Kimberly brought out a pants-typed diaper, Huggies-Toddler, to Korean market again. This paved the way for the combination of Kimberly-Clark's production power and Yuhan-Kimberly's marketing power and led to launch new product superior to Pull-Ups. However, this product was unsuccessful in the market because of wrong positioning which did not catch domestic customer's life styles such as cultural, environmental and habitual differences in toilet training, the cost increase coming from IMF crisis in Korea, weak trust within the company, weak trust within the company, and too much higher price than regular diapers. In 2005, Yuhan-Kimberly redeveloped new pants market business strategy. It was organically combined with winning product development plan, winning communication strategy and the market structure change through the pants market creation. Customer's habit, usage and attitude were studied with total 55 times market investigations. Also, all processes from planning to designing were executed in the customer's view by investigating product research, positioning research and advertisement research. Yuhan-Kimberly repositioned new product as a wearing diaper not as a toilet training diaper and launched Huggies Magic Panty as a premium product which had 25% higher price than previous Huggies. Huggies Magic Panty was recognized as a great hit product in domestic diaper market and the sales recorded 37.6 bill won in 2006, 57.2 bill won in 2007, and 90 bill won in 2008 since launching in 2005. The reason of Huggies Magic Panty's success was the repositioning strategy deduced from the precise check of customer's usage habit. It was the winning strategy of Huggies that were market investigation in order to survive in domestic baby goods market where a lot of companies struggled intensively, the exact positioning based on its market investigation and aggressive 360 degree communication strategy to give customers impressions efficiently.