Previous month:
May 2011
Next month:
July 2011

June 2011

An Example of Long-Term Business Networking in Korea

I'm often a little surprised how easy people think doing business in Korea is going to be as a foreigner. Sure, teaching English is a piece of cake. But to move beyond this takes a long-term time-horizon and hard work. 

I was contacted by a member on KBC asking about getting connections in a specific Korean industry last week and I suggested he post his comment to one of our online discussions about business networking. Here's the advice I gave him:

"Koreans are great at organizing groups, seminars and online forums for specific interests. Accessing them without Korean-language ability can be tough, but with persistence, shouldn't be impossible. I understand from your email this week which you sent, you're looking for connections in the Korean film and television industries. As a first step, I'd encourage you to visit our next meeting of the Brand and Culture Forum, which will probably be the last week of August. We have some people in that group working in the Korean TV industry; you should definitely share your business card with them.

However, networking in Korea is about more than just meeting people and exchanging business cards. One of these days, I'm going to write a piece describing every link in the multi-year chain leading to some of the opportunities that have come my way. They came from establishing and maintaining long-term relationships that were based on more than just a specific objective in mind and from giving as much as getting. To move past the easy stuff (English teaching, for example) takes a lot of hard work over a long period of time. If you put in the effort, adapt to the Korean approach, and stick around long enough for the rewards, you'll eventually find yourself moving up."

In fact, this discussion got me thinking a bit more about business networking in Korea and I put together the following video this morning for our KBC Community Soapbox about just how long-term a networking process can take, and I'm sure in a few years, I'll be able to add yet more links to this chain, which will likely continue through to the end of my career:

 

   


A Recap of Mark Minton's Interview on Korea Business Central - "Helping the World Understand Modern Korea and Korea’s Place in Asia"

Author_book_mm Understanding Korea and Koreans from the wider geopolitical context yields important insights into the newly confident nation we find today. Anyone doing business in this dynamic economy can expect to increase their effectiveness by learning about recent Korean history and its position in the region.

Mark Minton boasts of a long history in E. Asia, as a US diplomat in Japan and Korea, and later in Mongolia as US Ambassador. In this discussion with KBC host Tom Tucker, Ambassador Minton shares deep insights about modern Korea and doing business there.

Click here 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 English-language discussion link.

Click here for the full list of interviews in the 2011 Korea Business Interview Series, or here for the 2010 interviews.

I also tried something new this time, which was to prepare my own short video synopsis of the interview:

 

Main Points of the Interview

Topic #1 - Ambassador Mark Minton and The Korea Society, An Overview

  • In between stints in Asia, Ambassador Minton also spent long periods of his career in New York City, with the Foreign Service, as well as the US Mission to the United Nations, and now with the Korea Society. He notes that in the short period of time between his previous time in NYC and now, the profile of Korean culture films and arts has risen dramatically.
  • The Korea Society is the foremost and oldest non-profit private organization in the US dedicated to expanding understanding of Korea in the US and promoting exchange between the American and Korean people. It was established by General Van Fleet, who had been a US general in the Korean War. The Society has grown along with the increasing success of Korea.
  • Lately the Society has been active in promoting Korean film with the Museum of the Moving Image in New York though a large, annual film festival.

Topic #2 - The Korea-Japan Relationship

  • The relationship between Korea and Japan has been difficult, perhaps because the two countries are so close in proximity but have distinct cultures. This historical friction is dissipating quickly with the younger generations in each country extremely interested in each other. Tourism is rising fast.
  • The interests of the two countries, being successful economies and democracies, are converging in the modern era. The current administration of Korean President Lee Myung-bak has handled relations with Japan with a mature, sophisticated and sensitive approach.
  • The Japanese have looked at the Korean achievements of the last 25-30 years and truly respect it and have been impressed by it. 
  • Japan was the first East Asian country to successfully modernize and as Korea was a late-comer to this development, Korean President Park Chung-hee, explicitly folled Japanese models, though he used them with Korean characteristics. Today, Korea is increasingly innovating on its own.
  • It is clear that there's still a symbiotic relationship between Japan and Korea, but Koreans will expand even further to take on other partners, especially as Korea signs FTAs with more and more other countries and sells its products around the world.

Topic #3 - The Korea-Mongolia Relationship

  • Ambassador Minton served as US Ambassador to Mongolia from September 2006 until September 2009. 
  • Mongolia is the only true democracy in central Asia, making it politically and culturally unique in the region. It is located between China and Russia and so its foreign policy is to reach out to the broader world, economically, policically and diplomatically, so that it has options beyond just China and Russia.
  • Mongolians consider Koreans to be the closest people in the world to them. History shows there has been some migratory connection between Mongolia and Korea in the past, and the two countries share cultural characteristics, which makes Mongolians feel comfortable dealing with Koreans.
  • Going forward, we will be hearing more and more about Mongolia as world-class mineral assets in uranium, coal, copper, gold and others come online. Major mining companies are just now beginning to develop these assets, which are some of the largest undeveloped deposits in the world. It is expected that the Mongolian economy will start growing at around 10% per year over the next decade.
  • Korea is looking to Mongolia as a source of raw materials, but Korean construction companies are also well-placed to build the infrastructure that Mongolia is going to need for its new economy.
  • Mongolia may also become an attractive tourist destination for Koreans, as it's only two and a half hours by plane from Seoul. There is a lot of open space and beautiful scenery.
  • China is the 800-pound gorilla in the living room for Mongolia, which dictates that China will be the major customer for Mongolian resources. But Mongolia is also looking to develop other partnerships, and Korea has a major role to play in this.

Topic #4 - Significant Events in Modern Korean History

  • The Korea Society recently held a seminar to discuss the new book "The Park Chung Hee Era". President Park is the modern figure who transformed the Korean economy and created the foundation for what the Korean economy has become today.
  • There is a lot of debate even today about the extent to which the policies of the Park era may have retarded political developments of the country. 
  • Looking at the major events of modern Korean history, we can see that each led to the next. The Park Chung Hee coup d'etat of 1961 fired the trigger, but its success in raising the living standards of Koreans lead to protests for more freedoms with the Gwangju Uprising in 1980 and the June Democracy Movement of 1987, and ultimately to democracy.

Topic #5 - Korean Viewpoint on the Signing of FTAs

  • By signing FTAs with the US and with the EU, as well as other countries, Korea is looking to draw itself closer to these major Western economies, which will have all sorts of positive payoffs and benefits for the relationship as a whole, including as a counterweight to China as Korea's trade with China increases.
  • In addition, the US-Korea FTA is so complex and well-considered that it reaches into so many regulations, laws and practices, that when it is implemented, it will have an effect of enhancing the efficiency and transparency of the Korean domestic economy and the way it is managed, bringing Korean activities up to international norms.

Topic #6 - "The Hub of Korea"

  • Korea has considerable assets to become a hub. It is geographically positioned this way in northeast Asia and is complemented by the marvelous Incheon Airport, as well as Songdo city, which is an attempt to create virtually a complete new city oriented towards international commerce and business.
  • Korea also has a role to play as a hub in the politcal dimension, too. As host of the G20 meeting last year, as of the Nuclear Nonproliferation Summit next year, Korea is increasingly becoming a kind of honest broker in international politics, as well as diplomacy. This is reinforced by the symbolism of the re-election of Korean Ban Ki-moon as Secretary General of the United Nations.

Topic #7 - Wrap-Up

  • When we think of "Korea" these days, we inevitably think of something contemporary first. A good keyword to use to describe Korea would be "successful innovation", not only in economics, but also in political, cultural and international diplomacy, too.
  • Going forward, The Korea Society is looking to capitalize on "Hallyu", or the Korean Wave, which is beginning to take hold in the United States as well. There's a growing awareness of the world of arts and design in Korea, particularly Korean film and literature. 

A Recap of Peter Bartholomew's Interview on Korea Business Central - "Promoting the Value of High-Tech Shipbuilding and Traditional Architecture in Korea"

Author_book_pbThere are few people more qualified to discuss the Korean economic miracle than Peter Bartholomew. Having arrived as a Peace Corps volunteer, he has remained in Korea almost continuously since 1968. Peter worked in a Korean company for almost a decade in the 1970s, and for the last 28 years, he has run IRC, Ltd. in Seoul, specializing in the shipbuilding and construction sectors.

In this interview, Peter shares deep insights about Korean business, including techniques for negotiating with Koreans, as well as about efforts to preserve traditional hanok homes, an area on which he is particularly passionate. He believes that a modern Korea should be compatible with maintaining the natural and historical assets of the past.

Click here 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 English-language discussion link.

Click here for the full list of interviews in the 2011 Korea Business Interview Series, or here for the 2010 interviews.

Main Points of the Interview

Topic #1 - Personal Background in Korea

  • Peter arrived in Korea in January 1968 with the US Peace Corps and spent five years along the northeast coast of the country. He started working for a Korean company in 1972 and stayed there for eight years. In 1982, Peter founded IRC with some partners and is still operating the company today.
  • The biggest change in Korea over the last forty years is the economic development of the country. Even in the 1970s, there were virtually no paved roads in the countryside and even electricity wasn't widespread. Cars shared the road with oxcarts. There were no highways and very little manufacturing; it was primarily an agro/fisheries economy.
  • Koreans today can be described with words like persistence, hardworking, impatient, aggressive and hungry for knowledge. Friendships in Korea last a long-time.

Topic #2 - Shipbuilding in Korea

  • The three big shiyards in Korea are Hyundai (80-85 ships per year), Daewoo (40-50 ships per year) and Samsung (40-50 ships per year). 
  • STX's shipyard in Korea is small but they have built a new shipyard in Dalian, China. Hanjin's is the oldest Korean yard, located in downtown Busan, but they've also got a huge shipyard in Subic Bay, Philippines, too.
  • The Korean majors are notable for their diversification, having expanded into offshore oil and gas structures, as well as drilling ships.
  • Peter's role at IRC is to organize custom shipbuilding programs for vessels that have never been built before. He identifies the best Korean resources (not just shipyards, but also specialist services and products) and helps in negotiating the deals, having completed over 100 projects in the last thirty years. 
  • Koreans shipbuilders have a diversified spectrum of products, not just ordinary container ships and bulk carriers, but also sophisticated L&G carriers and others, such as the new types of structures for the offshore industry, as well as industrial structures build in modular form to be assembled on-site. This diversification gives Korean makers longer-term stability.
  • The core speciality in Korea is production engineering and productivity. This has been achieved by taking the industry to a new level of high tech, with exensive automation, excruciatingly sophisticated computerized control of production and scheduling. They are at least as good as the Japanese, but much better than the Europeans and Chinese in this regard.
  • The Chinese can be expected to take more and more of the low-cost/low-tech business from the Koreans, but the Koreans are moving up the value chain quickly.
  • The Koreans also benefit from a strategic mistake the Japanese made many years ago where they decided to emphasize pre-designed standardized ships. This limits the Japanese' ability to produce new designs.
  • It should be remembered that shipyards are really just huge, multi-disciplined industrial structure manufacturing facilities. Among those structures, some float and some don't. As the Koreans are strong in this aspect of finding new ways to excel, we can expect them to keep diversifying, including into the green energy industrial structures, such as large turbine windmills. The Koreans are also expanding overseas, as mentioned above, and STX even owns yards in Europe. 

Topic #3 - Korean Business in General

  • The Korean conglomerates ("chaebol") are moving from strength to strength and this success can be expected to continue. But what the Japanese have that the Koreans don't have is a strong small- to medium-sized company community. The Koreans are too dependent on the chaebol and this is a major weakness of the Korean economy.
  • Korean business is weak in services and in many aspects of management. There's high productivity on the shop floor, but low productivity in the office and in software.
  • When comparing Korea with Japan, it's also helpful to remember that Japan started industrializing nearly 100 years before Korea and so the Korean economy is like a cake that's grown too fast; it's all full of holes. Now Koreans are going back and filling those holes, one-by-one, but it takes time. 
  • Korean young people are going overseas to study in record numbers and they're bringing back new and innovative ideas. Once the generational shift kicks in and and the new generation moves into positions of power, the shift to a stronger small/medium-sized company sector, as well as better software and management capabilities, will take place.
  • Changes in Korea won't come from hiring in foreigners to positions of management authority but through an evolutionary, incremental process, developed within the crucible of Korea's own cultural persona and psychology.

Topic #4 - Negotiating with Koreans

  • When negotiating with a top-end multinational Korean company, the people there will have broad, international exposure and experience so negotiations can take place on international terms and conditions.
  • Koreans are price buyers and so if you're trying to sell to Koreans, once the basic qualifications are set, the Koreans are really only interested in price.
  • Unsophisticated small/medium industry companies get upset when they see a Western contract. Contracts between Koreans are often shockingly short, naming what the product is, how much and that's it. It's a totally different concept toward documentation and legal contracting.
  • So what the foreigner has to do to achieve his ends is to do adequate advance research. What kind of entity is the Korean party which whom he's negotiating? What previous contracts or negotiations have been accomplished? Which are successful and why? The Western company should approach the negotiations based on this.
  • When dealing with a small/medium industry company, a full-blown 25-page contract is a non-starter. The contract must be boiled down to basic, fundamental, can't-live-without-it terms and conditions. Everything has to be done in Korean, with some kind of legal and language assistance along the way.
  • A good way to bring a drawn-out negotiation to a close is to offer to split the difference 50/50.
  • When negotiating, make sure to always ask yourself "Do they really undderstand the points I'm trying to get across?". Continuously summarize in simple form. List clear, short options. This is because there aren't just language problems, but also cultural psychology difference problems. 60-70% of the major contract disagreements are caused by a failure to understand at the beginning.

Topic #5 - Hanok and the Korean Land Development Model

  • Peter has lived in the same Korean traditional style house ("hanok") for the last 35 years. Recently, the city government tried to demolish it to make way for a new development but Peter and a group of neighbors joined forces to successfully block this in court.
  • Koreans don't put value on old buildings. In the US and Europe, we can find many old style homes that are more than 100 years old. But in Korea, after 20 years, a building doesn't have any value; only the land has value.
  • Even restoration projects often involve tearing down old and replacing with new construction, such as the current "rebuilding" of the traditional south gate to the city of Suwon.
  • The years of rampant development, destroying old neighborhoods and natural beauty, to build new cities and developments is finally coming to an end. Ultimately, the government must stop deciding and planning these things without consideration for the market and environment.

Topic #6 - Wrap-Up

  • The position of Korea between China and Japan is absolutely ideal for Western companies looking for a base in north-east Asia. IRC is actively seeking companies whose services and/or products would be valuable in Korea, in order to support them in this process.
  • The key factor of doing business successfuully in Korea and in Asia is to do your homework about the companies or government entities with whom you need to interface to achieve whatever business aims you have. Don't assume that business is done everywhere the same or that there's going to be a magic bullet.

Korean Translation Project Kick-Off Questionnaire

When working with direct clients, I make it a point to get a few matters clarified in advance, since I've found that the answers to certain questions are important in deciding on a project workflow that delivers the best work in the most efficient manner and meets client expectations. 

The following is the questionnaire I share with prospective clients and I offer it here for others to use also. If you work in languages other than Korean, just change the language and you'll be ready to go!

7-17-2011 4-25-14 AM 

 Click here to download Korean Translation Project Kick-Off Questionnaire in Word file format.