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August 2010

A Recap of Rob Everett’s Exclusive Interview on Korea Business Central – “Transforming Lives, Shaping the Future; Innovation in Korea and Beyond”

 

Author_bookRob Everett is Managing Director of Kimberly-Clark’s Innovation Center Asia located in Korea, and the company’s Global Director of Discovery Research.

To listen to the interview, download the .mp3, subscribe in iTunes, read the transcript and/or discuss this interview and this topic with other members of Korea Business Central, visit the following discussion link:

http://www.koreabusinesscentral.com/forum/topics/korea-business-central-10

The full list of interviews in the Korea Business Interview Series is maintained here: http://www.koreabusinesscentral.com/page/interviews-2

Main Points of the Interview

Topic #1 - About Kimberly-Clark and the Company’s Presence in Korea

 

  • Kimberly-Clark is a global company in the fast-moving consumer goods industry. 2010 sales are expected to reach US$20 billion across four business segments: personal care, consumer tissue, “Kimberly-Clark Professional”, and health care. The company has 53,000 employees and sells into 150 countries.
  • Kimberly-Clark’s Korean joint venture is Yuhan-Kimberly, a successful and leading company in Korea.
  • Kimberly-Clark’s markets are generally fairly mature, with low barriers to entry. So innovation is important in order to remain differentiated and build brand awareness.
  • The company’s research was traditionally North America-based but with global expansion, it became important to build innovation capabilities overseas, particularly in Asia.
  • Korea was chosen because of: 1) the availability of technical and scientific talent, 2) the existing brand recognition in the markets of Yuhan-Kimberly, 3) the fast-moving marketplace of Korea and 4) proximity to technology resources in the greater Asia-Pacific region. This has allowed Kimberly-Clark to work with Yuhan-Kimberly to develop and test products for the Asia market in general.
  • Kimberly-Clark’s Innovation Center Asia is located about 25 miles south of Seoul and opened in March 2007. There are 40 people working at the center but Rob Everett is the only expatriate on staff.
 

Topic #2 – Insights Into Team-Based Project Work at the Innovation Center Asia

 

  • Innovation Center Asia works with the company’s other two innovation centers in the Chicago and Atlanta areas through two global organizations: 1) corporate research and engineering and 2) the innovation design group. Teams in Korea work very closely with teams in the US on cross-functional teams; the intersection of these ideas often results in the best ideas.
  • Korean team members are particularly strong in technical abilities, which is the result of the Korean university system. Meanwhile, Korean staff receive training on how to relate to a low hierarchy corporate structure and the need for ideas to come from everyone in the organization regardless of rank. This is reinforced by a performance-based compensation and promotion system.
  • Since the traditional Korean company is hierarchically based and the educational system doesn’t emphasize project-based work, it is particularly necessary for Kimberly-Clark to re-align cultural expectations in Korea to match the company’s global culture. This situation is further supported by hiring staff with graduate-level training in the US or Europe.
 

P1000865Topic #3 – Activities of the Innovation Center Asia

 

  • Work at the Innovation Center Asia is carried out in close partnership with Yuhan-Kimberly, the company’s joint venture in Korea. This helps to establish an understanding of the market and find technology opportunities. These are then transitioned to business teams for commercialization. This same approach is taken with partners around the globe.
  • Most teams at Innovation Center Asia are working on global, long-term projects which are not region specific. About 20% of the projects are region-specific.
  • Work of Innovation Center Asia has lead to more than ten patent applications, and about ten different products on the market globally and in Asia.
  • The photo above is of the campus on which Innovation Center Asia is located south of Seoul.
 

Topic #4 – Innovation in Korea

 

  • Innovation becomes important in a market once the market starts to mature and the market growth rate slows. In Korea, growth traditionally came by importing ideas from other markets, such as Japan. But as this approach is becoming less effective, there is an erosion of margins and prices, and this is something we are seeing in Korea. The key to successful innovation is understanding what motivates customers in each market segment and responding to that.
  • A focus on design is a strong part of innovation in Korea and Innovation Center Asia has been able to leverage this Korean strength on several projects.
  • Korean business has spent decades playing catch-up; now that companies like Samsung have caught, and even surpassed, the competition, the focus has to change toward bringing new ideas to the marketplace as a leader. This is the position at which Korea finds itself in a variety of markets.
  • Global innovation leaders, such as Kimberly-Clark, 3M and GE, have succeeded by moving beyond where they started. This “DNA” of recognizing the markets around, identifying the dynamics of the company and then changing successfully for the future is common to global leaders who succeed for generation after generation. A great Korean example here is Samsung, which started out importing sugar and trading in textiles, but is now identified with high technology.
  • Multinational companies will succeed in Korea based on the quality of the labor force and government support of foreign direct investment. Though a lot of this is focused on manufacturing, there is an opportunity to focus more on R&D organizations in Korea. Leading Korean universities should develop curriculum to target students hoping to work in multinational organizations in orderto promote skills in open-ended projects.
  • Korea has the capabilities to be a global leader in innovation even though it may not be fully recognized for this yet.
  • Innovation pattern in Korea are different than those in other parts of Asia, such as Japan, China or Taiwan, mainly because of differences in markets. Japan is a mature marketplace, so innovation is extra important. But in China, sales can be achieved more easily just through penetration-based approaches that don’t focus on innovation. This is changing fast though, particularly in cities such as Shanghai and Beijing. Korea falls somewhere in the middle between Japan and China.
  • The essence of innovation in the marketplace is not much different in Asia than in the West. However, approaches may be different. For example, there is more out-of-the-box thinking in the West and ideas are tried quickly and failure is common. In Korea, there is more of a focus on understanding the marketplace before executing.
  • Kimberly-Clark’s experience in the diaper market is a good example of how Korea can be a test-bed for innovation before applying good ideas to other markets. Kimberly-Clark’s current China business strategy for diapers was first developed in Korea. Based on that success, it is being rolled out in China, now. However, the test-bed approach assumes selling to the same level of the pyramid. You can’t apply Korea-originated strategies to low-income consumers in China.
  • Korea is an innovation leader in industries such as electronics, ship-building and automobiles. But rather than innovation being primarily an “industry thing”, it’s more of a “company thing”. Some companies are innovative, others are not, and this doesn't necessarily depend on industry.
  • Korean knowledge workers are particularly strong in technical training and work ethic. At the Innovation Center Asia, this has allowed local staff to get up to speed quickly on working in cross-functional teams and understanding performance-based promotion and compensation
  • There is a big opportunity in Korea for global R&D centers to be located here and the Korean government should focus on encouraging more companies to come and set up R&D centers in Korea.
 

Article About Korea Business Central in The Korea Times

Here's an article from the August 13, 2010 issue of the Korea Times:

Website offers info on Korean businesses

 

100813_p09_website

Steve Bammel
By Cathy Rose A. Garcia 

Trying to find information about doing business in Korea just became a bit easier, thanks to the Korea Business Central website. 

The website (www.koreabusinesscentral.com) is a source of information about how one can do business in Korea and build a network of contacts. 

Steven S. Bammel founded the website in September 2009, with a long-time colleague Don Southerton, with the goal of creating a community for non-Koreans who are doing business in Korea and Koreans doing business with non-Koreans. 

``This is a place where they can get information about how to be successful in Korean business. Being successful means understanding the Korean mindset in business,’’ he said in an interview with The Korea Times in downtown Seoul.

The website offers interviews, podcast discussions and reports on the ins and outs of doing business in Korea. 

Several prominent business experts and figures have been featured as part of the Korea Business Interview Series. Amy Jackson, president of the American Chamber of Commerce in Korea, talked about the efforts made to promote American business interests in Korea. Tom Coyner, president of Soft Landing Consulting, discussed marketing strategies for the Korean consumer, while international branding expert Martin Roll spoke about how Korean companies can better promote their brands overseas. 

Another section is the KBC 9.9 podcast, hosted by Daniel Lafontaine and usually joined by four other KBC members to share their thoughts on a particular topic. Korea Economic Slice is a weekly financial report written by independent analyst Robert Eberenz. 

``Creating content serves as an anchor for the community. Every piece of content we have comes with a discussion forum. The discussions take the content and give it a dynamic dimension... Every time we have an interview, you can listen to it and you can also download the transcript,’’ Bammel said. 

The discussion forums allow members to talk about various topics, share information, ask questions and post announcements. 

While the main focus is business in Korea, Bammel understands that it is also helpful to include non-business-related topics. ``Once, a former American GI, who was in Korea in 1961, contacted me about some 500 photos he had taken during his stay in Korea. He asked me if I could translate some of the Korean signs... So every week from January to May, I uploaded 10 to 20 of his photos.

“The idea is that to understand Korean business, it is good to see how far Korea has come over the last 40 to 50 years,’’ he said. 

Korea Business Central has been slowly gaining ground, thanks to social networking sites like LinkedIn, Facebook and Twitter. In less than a year, it has attracted over 600 members, but Bammel hopes to hit 1,000 by the end of the year. 

The members are a mix of Americans, Koreans and other foreigners living in Korea. ``The most active members are the American English teachers who would like to move into business. Getting a job that does not involve teaching English is the number one priority of the active members... What I would like is to get more companies who want to enter the Korean market and learn about doing business in Korea,’’ he said. 

Around 30 to 40 percent of the members are Koreans, but the level of participation is still quite low perhaps due to the language barrier. So Bammel is planning on including more Korean content, including a Korean-language podcast about doing business with foreigners. 

``My goal is not for (Korea Business Central) to be just an expat community, but I’d like it to be a community where expats and Koreans can communicate,’’ he said.

 

cathy@koreatimes.co.kr

 

Link to original article posting.


A Recap of Tom Coyner’s Exclusive Interview on Korea Business Central – “Marketing to the Korean Consumer and Advertising/PR in the Korean Market”

Author_book_03 Tom Coyner is the president of Soft Landing Consulting. He has twenty-five years of experience in Japan and Korean working for American firms, as well as seven years working for Japanese companies in the US, and he is co-chair of the American Chamber of Commerce in Korea’s SME Committee and Senior Commerical Advisor for Joowon Attorneys at Law in Seoul. Author of Doing Business in Korea, Tom is recognized as a leader in assisting foreign companies wishing to do business in Korea and his book is available online from Seoul Selection.

To listen to the interview, download the .mp3, subscribe on iTunes, read the transcript and/or discuss this interview and this topic with other members of Korea Business Central, visit the following discussion link:

http://www.koreabusinesscentral.com/forum/topics/korea-business-central-9

The full list of interviews in the Korea Business Interview Series is maintained here: http://www.koreabusinesscentral.com/page/interviews-2

 

Main Points of the Interview

Topic #1 – Understanding the Korean Consumer

  • Korean consumers can be surprisingly demanding. One reason this came about is that Korean providers used to make up for inferior service by offering exceptional follow-up service. Today, Korean quality has improved, but immediate after-sales support is still provided. Foreign companies often fail in the area of customer service.
  • To succeed in the Korean market, foreign companies need to be competitively different than local companies, and do so in a way that local companies cannot easily emulate, such as by reputation or advanced functionality or engineering.
  • Koreans in their late 20s and early 30s often havve the highest disposable income in Korea, particularly since many are getting married relatively late and still living with parents until marriage. These people are very Internet-connected and fads and fashions change very rapidly, with word-of-mouth over the Internet driving consumer trends.
  • The iPhone is a good example of a foreign product that has succeeded in Korea by being different and better. The mainstream media, headily dependent on advertising from Korean producers, predicted that the iPhone wouldn’t meet the needs of consumers in Korea. But the young, affluent demographic didn't get its news from the mass media, but through the Internet and was ready for the iPhone
  • Korean women – often, housewives – control the family budget and their influence on family buying decisions cannot be ignored.
  • Koreans today are relatively free spenders and make buying decisions based on getting ahead – or at least, not falling behind – socially. Koreans will spend based on social pressures, at least as much as based on functionality.
  •  A key advertising theme for the Korean market is:  "This is the good life, this is what modern Korea is all about. You should participate in it like everyone else, so don't be left behind because everyone else is moving forward."

Topic #2 – Experiences of Foreign Companies in the Korean Market

  • A key question that determines whether a foreign companies is successful in Korea: “Does home office give the expatriates working in Korea the authority and means to adapt their products and services to the Korean market?”
  • One company that failed to answer the above question adequately was Carrefour; one that has been very successful is Tesco and their Homeplus brands, which they’ve done, in part, by posting very few expatriates in their Korea operation and relying on top local talent. This has allowed them to adapt thoroughly to the Korean market.
  •   The Korean market has, over the last 10-15 years, become very consumer driven, what Coyner refers to as “The tail wags the dog”. The days of limited consumer choice are long gone.

Topic #3 – Marketing Strategy and Market Entry in Korea

  • Korea is less risky than a number of other truly Asian markets. “Truly Asian” means those markets without a legacy of being British or American colonies.
  • Korea is a country ruled by law and the court system is reasonably consistent and fair. The probems lie with the laws themselves, which are often contradictory, but it’s not like China where contracts may be unenforceable.
  • It is relatively easy to invest in Korea, and to repatriate profits.
  • There are a lot of English-speaking business professionals and most market opportunities and resources are centralized around Seoul.
  • Korea is a good place to learn how to do business in Asia, before going into China or Japan. If you cannot succeed in Korea, you’re probably not going to succeed in China or Japan, either.
  • One challenge of business in Korea is the mindset, “Well, we don’t do this in Korea” as a catch-all for opposing a foreign approach. This retort needs to be taken with a grain of salt and not as a blanket reason not to do something different, which may in fact be an opportunity. You’ve got to do your homework in the Korean market and it takes maturity to know when to take risks in the Korean market.

Topic #4 – Advertising and PR in the Korean Market

  • The selection of advertising media depends a great deal in Korea, as elsewhere, on the product and demographic. Don’t overlook the power of Internet advertising though for many products and demographics since even Koreans in their 40s, 50s and 60s really do make purchasing decisions based on what they see on their PC screens or cell phones.
  • When selecting a local Korean advertising company, make sure your account manager isn’t just the best English-speaker person on-staff; insist on someone who’s more mature and has credentials with publishers and editors.

Closing Thoughts

  • Two reactions when people first come into the Korean market for the first time: 1) “I had no idea that Korea is so developed” and 2) “Compared to other markets, consumers are much more acctive and consuming a lot more.”