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Korea’s Coupang hands cash to bereaved families at workers’ funerals

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When Park Mi-sook held a funeral ceremony for her late son Jang Duk-joon in Daegu, South Korea, last October, managers from his former employer Coupang gave her an envelope containing Won3m ($2,600) in cash.

According to handwritten funeral registries, the ecommerce company, which listed in New York last month with a valuation of $80bn, also handed cash to the families of at least two other recently deceased workers.

The payments have done little to assuage the families’ grief over the deaths, which they attribute to overwork. The bereaved families of the three people, who previously worked at logistics centres owned by Coupang, are considering suing the company and its subcontractors. 

“We are seeking an apology, preventive measures and compensation for my son’s death but have been unable to have talks with the company in earnest,” said Park. “We are considering a lawsuit in the US.”

Her son Jang, 27, was found dead in his bathtub in October after finishing his night shift at Coupang’s warehouse in Daegu.

Coupang initially denied responsibility for Jang’s death but an official investigation by the Korea Workers’ Compensation and Welfare Service (KCOMWEL) found that he died of a heart attack because of overwork. 

“We were devastated by his sudden death but there was no word of apology from them, let alone admitting that my son’s death was due to overwork,” Park told the Financial Times. 

Labour lawyers and union officials allege that eight Coupang workers, including two subcontractors, have died from overwork over the past year. 

The ecommerce company, which is backed by investors such as SoftBank, Sequoia and BlackRock, vehemently denies responsibility for the deaths, saying only one has officially been acknowledged as work-related. But it is facing increasing political pressure over the incidents.

The family of Park Hyun-kyung, 37, who died in June after working as a subcontractor at a cafeteria in Coupang’s facility in Cheonan, has filed a criminal complaint with the labour ministry against the ecommerce group and two other contractors for allegedly violating the country’s industrial safety law.

Her husband, Choi Dong-beom, said the companies had rejected his requests for meetings. Choi has filed a claim with KCOMWEL for compensation. The state-run Occupational Safety and Health Research Institute is looking into the cause of the death, according to KCOMWEL. 

South Korean companies pay insurance fees to KCOMWEL, which then compensates workers if their injuries are recognised as work-related.

“She had suffered from constant headaches and coughing for months before her death,” said Choi. “But the companies have shown no interest in her death, passing the buck to each other.”

Coupang has countered that a police investigation determined the company was not responsible for Park Hyun-kyung’s death. It said she worked for Dongwon Homefood, a food services conglomerate that provided goods and services to 7,000 companies nationwide, including Coupang. 

Park Mi-sook, the mother of the deceased worker Jang, accused Coupang of not being co-operative in providing work-related information needed to file compensation claims. “I felt humiliated in the process of seeking information from the company,” she said.

According to data provided by ruling party lawmaker Im Jong-sung, workers at Coupang Fulfillment Services, Coupang’s logistics arm, filed 239 claims of work injuries to KCOMWEL for compensation last year. 

Im said Coupang denied 28.5 per cent of claims as work-related, a rate three times higher than the average for Korean companies. However, KCOMWEL has said only 15 of these cases were not work-related.

“If the employer doesn’t admit to work injuries, claimants have to experience a lot of difficulties and pain to prove their injuries are work-related,” said Im.

When asked by the FT about the Won3m in cash payments at the funerals and potential compensation claims, Coupang said it offered support for bereaved families of employees regardless of the cause of death, “including group accident insurance, financial support for the funeral, and condolence money”.

“Any death is a tragedy, regardless of the reason,” Coupang said. “As is customary in Korea, it is our practice to visit the funeral of former workers, give condolences and provide support for families.” 

The company said that of the eight deaths, two were not Coupang employees but on-site contractors and these were not accident-related.

Of the other six deaths, Coupang said, three occurred at home or during vacation and three at work. The three on-site deaths were heart attack-related and none were due to accidents. All of the workers in question worked under 52 hours a week, it said.

“The union is trying to portray as work-related all heart and coronary-related incidents including those that occur at home or on vacation,” the company said. “Cardiac and cerebrovascular disorders are the second and fourth leading causes of death in Korea, and Coupang’s rate of both disorders are lower than the national average in Korea.”

Coupang is not legally obliged to compensate the families of deceased workers unless it loses lawsuits filed by the bereaved, according to South Korean labour laws.

Labour researcher Jang Kwi-yeon said the offer of cash at funerals did not mean the company was admitting legal liability. But she added: “It should be seen as an expression of their moral responsibility.”



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Emerging Markets

Tech-heavy Taiwan stock index plunges on Covid outbreak

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Taiwan’s stock market, home to some of the world’s biggest tech companies, suffered one of the largest drops in its history as investors were rocked by a worsening Covid-19 outbreak.

The Taiex fell as much as 8.55 per cent on Wednesday, the index’s worst intraday fall since 1969, according to Bloomberg. It finished down 4.1 per cent.

Construction, rubber, automotive and financials — sectors retail investors had been shifting into from technology in recent months — were the worst hit in the sell-off.

The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Company, which has a 30 per cent weighting in the index, fell as much as 9.3 before recovering ground to be down 1.9, while Apple supplier Hon Hai Precision Industry, also known as Foxconn, dropped 9.8 per cent before paring losses to be down 4.7 per cent.

While Taiwan’s sell-off was related to domestic Covid-19 problems, it followed recent declines in global markets as investors worried about possible inflationary pressures.

The falls came as Taiwan’s government was expected to partially close down public life to contain a worsening coronavirus outbreak — something the country had managed to avoid for more than a year.

“The reason that triggered the escalated sell-off during the trading session is the new [Covid-19] cases to be reported this afternoon, and probably the raising of the pandemic alert level,” said Patrick Chen, head of Taiwan research at CLSA. “On top of that, the market before today was already at a point where the index was at an inflection point.”

Taiwan’s strict border controls and quarantine system and meticulous contact tracing measures had helped it avoid community spread of Covid-19 until recently.

That success, which allowed Taipei to forego lockdowns, helped boost the local economy, which grew about 3 per cent last year and 8.2 per cent in the first quarter of 2021.

But health authorities announced 16 locally transmitted confirmed cases on Wednesday, for three of which the infection source was unclear — a sign of widening spread in the community. Authorities had confirmed seven untraced cases on Tuesday, and domestic media reported that the government might introduce partial lockdown measures.

President Tsai Ing-wen called on the public to be vigilant but avoid panicking.

Taiwan’s stock market rose almost 80 per cent over the past year, peaking at a historical high late last month. It is now down 8.5 per cent from that mark.

Retail investors have increasingly moved out of technology stocks in recent weeks, reducing the sector’s weight in trading volume from almost 80 per cent at its height to just over 50 per cent.

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China factory gate prices climb on global commodities boom

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The price of goods leaving factories in China rose at the fastest pace in more than three years, on the back of a rally in commodities supported by the country’s economic recovery.

The producer price index rose 6.8 per cent in April year-on-year, beating economists’ expectations and surpassing March’s increase of 4.4 per cent.

The rate was driven in part by comparison with a low base last year in the early stages of the pandemic. But it also reflects a global surge in the prices of raw materials that was first stoked by China and now incorporates expectations of recovering global demand.

While PPI prices in China have leapt, economists suggested there was limited spillover into consumer prices and that the central bank was unlikely to react. China’s consumer price index added just 0.9 per cent in April, the National Bureau of Statistics said on Tuesday, although it touched a seven-month high.

“It tells us that demand at this moment is super strong,” said Larry Hu, head of greater China economics at Macquarie, of the PPI data, although he suggested policymakers would see the increase as “transitory” and “look through it”.

“We’re going to see some reflation trends,” he added.

Signs of tightening in China’s credit conditions have drawn scrutiny from global investors eyeing the prospect of higher inflation as the global economy recovers from the pandemic, especially in the US, which releases consumer price data on Wednesday.

China’s PPI index remained mired in negative territory for most of 2020 following the outbreak of coronavirus, but has started to gather momentum this year. Gross domestic product growth in China returned to pre-pandemic levels in the final quarter of 2020.

An industrial frenzy in China has stoked demand for commodities such as oil, copper and iron ore that make up a significant portion of the index and have helped to push it higher. 

Policymakers in China have moved to tighten credit conditions, as well as attempted to rein in the steel sector. Ting Lu, chief China economist at Nomura, said the relevant question now was “whether the rapid rise of raw materials prices will dent real demand, given pre-determined credit growth”.

Retail sales in China have lagged behind the growth rate of industrial production, putting downward pressure on CPI, which has also been weakened by lower pork prices that rose sharply on the back of African swine fever. Core CPI, which strips out food and energy, rose 0.7 per cent in April 

Julian Pritchard-Evans, senior China economist at Capital Economics, said that producer prices were feeding through into the rebound in consumer prices, but also suggested that pressures on the former were “likely to be mostly transient”.

He added that output prices for durable consumer goods were rising at their fastest level on record.

China’s rapid recovery has been driven by its industrial sector, which has churned out record quantities of steel and fed into a construction boom that policymakers are now trying to constrain. On Monday, iron ore prices hit their highest level on record, while copper prices also surged.



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Iron ore hits record high as commodities continue to boom

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The price of iron ore hit a record high on Monday in the latest sign of booming commodity markets, which have gone into overdrive in recent weeks as large economies recover from the pandemic.

The steelmaking ingredient, an important source of income for the mining industry, rose 8.5 per cent to a record high of almost $230 a tonne fuelled by strong demand from China where mills have cranked up production.

Other commodities also rose sharply, including copper, which hit a record high of $10,747 a tonne before paring gains. The increases are part of a broad surge in the cost of raw materials that has lasted more than a year and which is fanning talk of another supercycle — a prolonged period where prices remain significantly above their long term trend.

The price of timber has also hit a record high as US sawmills struggle to keep pace with demand in the run-up to peak homebuilding season in the summer.

“Commodity demand signals are firing on all cylinders amid a synchronised recovery across the world’s economic powerhouses,” said Bart Melek, head of commodity strategy at TD Securities.

Strong demand from China, the world’s biggest consumer of commodities, international spending on post-pandemic recovery programmes, supply disruptions and big bets on the green energy transition explain the surge in commodity prices.

Commodities have also been boosted by a weaker US dollar and moves by investors to stock up on assets that can act as a hedge against inflation.

The S&P GSCI spot index, which tracks price movements for 24 raw materials, is up 26 per cent this year.

Strong investor demand pushed commodity assets held by fund managers to a new record of $648bn in April, according to Citigroup. All sectors saw monthly gains with agriculture and precious metals leading the way, the bank said.

Agricultural commodities have had an especially strong run owing to rising Chinese demand and concerns of a drought in Brazil. Dryness in the US, where planting for this year is under way, is also adding to the upward rise in prices. Corn, which is trading at $7.60 a bushel and soyabeans at $16.22, are at levels not seen since 2013.

“From a macro economic environment to strong demand and production concerns, the ingredients are all there for the supercycle,” said Dave Whitcomb of commodity specialist Peak Trading Research.

Rising copper and iron ore prices are a boon for big miners, which are on course to record earnings that will surpass records set during the China-driven commodity boom of the early 2000s.

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JPMorgan reckons Rio Tinto and BHP will be the largest corporate dividend payers in Europe this year, paying out almost $40bn to shareholders. Shares in Rio, the world’s biggest iron ore producer, hit a record high above £67 on Monday.

Brent crude, the international oil benchmark, has crept back up
towards $70 a barrel, which it surpassed in March for the first time in
more than a year, recovering ground lost as the pandemic
slashed demand for crude and roiled markets.

Supply cuts by leading oil producers have helped to bolster the market
as consumption has begun to recover around the world.

While some Wall Street banks have hailed the start of a new supercycle, with some traders talking of a return to $100 a barrel oil, others are less convinced. The International Energy Agency said oil supplies still remain plentiful meaning any talk of a supercycle is premature.



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