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Success eZine – Spring 2010
Korea Business Success eZine – Spring 2010
Welcome to the Spring 2010 issue of the Korea Business Success eZine of Korean Consulting & Translation Service, Inc. We hope you find this information helpful to your business in Korea and with Koreans everywhere. Table of Contents
Breaking News: The Korea Business Interview Series Korea Business Central, the premier networking site for everything related to Korea and specifically business in Korea, has started a Korea Business Interview Series. Already, the series includes the following interviews that would be of strong interest to anyone doing business in Korea:
[ top ] South Korean Naval Ship Sinking On the night of March 26, a 1,200-ton South Korean Navy patrol ship called the Cheonan sank near the disputed western maritime border with North Korea after suffering serious damage to its hull. Eventually, fifty-eight sailors were rescued with some 46 sailors left missing. And while the cause of the sinking remains unknown and the North has denied any involvement, surviving crew members have already gone public saying that they are convinced that the explosion came from outside the ship. Hence, the incident has brought back memories of previous naval skirmishes between the North and South Korean navies with the last known incident occurring on November 10 when patrol boats from both countries engaged in a two-minute firefight near the disputed maritime border. To stay updated about the investigation surrounding the sinking and the potential implications should it be determined that the North was involved in it, be sure to check out Korea Business Central’s Korea Business News page for the latest news feeds. In addition, we encourage readers to post their thoughts in an online discussion (Concerns over the Sinking of the South Korean Naval Ship?) about the incident in the Korean Business Central’s Discussion Forum page. [ top ] Lotte Group on an Acquisition and Spending Spree Despite the global downturn that has left many retailers struggling, Korean retailer Lotte has increasingly become a conspicuous investor and spender. Last October, Lotte acquired Times, a Chinese retailer, for US$630 million and then in January, they acquired Korean convenience store chain Buy the Way for US$235 million. Lotte has also purchased the liquor-making division of Doosan for about US$400 million and they have rescued a struggling US$2.7 billion Universal Studios theme park project near Seoul by taking a 27% stake in the project. For 2010, Lotte plans to increase overall investment by 50% to US$4 billion. The funds will be used to make more acquisitions, recruit more staff and build the world's second-tallest skyscraper in Seoul to use as its headquarters.
[ top ] Seoul: The Next Fashion Capital? A recent article in the Financial Times noted that if you were to ask an American to name an Asian fashion capital, Seoul would unlikily be named as an answer. However, the Financial Times article then noted that Korea represents a US$28 billion fashion industry and that its one of the fastest-growing markets in the world for western brands. Moreover, Korean-American designer Doo-Ri Chung was quoted as saying that Koreans love fashion and she further noted that Korea has its own fashion week and celebrity designers plus the country has immense fashion talent. In addition, a recent article in the Wall Street Journal profiled Korean businesswoman Sung Joo Kim (whose personal drive and ambition has earned her the nickname "Genghis Kim") and her attempt to turn Korea into a fashion powerhouse. Sung Joo Kim had already earned a fortune licensing European luxury lines in Asia when she invested US$40 million into relaunching MCM – a brand that was popular in the 1980s but had lost favor among consumers in the West. However, her efforts at turning around the brand has largely succeeded as 2009 sales topped US$250 million compared with only US$100 million in 2005 and US$250 million when the brand peaked back in 1993. [ top ] Korea's National Pension Service to Go Global Korea's National Pension Service (NPS), already the world's fifth largest pension fund with US$240 billion in assets, is planning a global investment spree. In fact, the NPS will quadruple its current US$24 billion in international investments to US$100 billion of a US$400 billion portfolio by 2014. This comes on the heels of Korean President Lee Myung-bak’s efforts to push Korean companies and institutions to play a more international role which he feels their size should merit. Already this year, the NPS has taken a 12% stake in Britain's Gatwick airport plus it purchased the HSBC tower in Canary Wharf for US$1.3 billion in cash last year and there are plans to further diversify deeper into equities and property. The NPS also plans to focus much of its new international investments into raw materials and energy resources. [ top ] Your Turn to Participate: Korea – No Longer the Underdog?
Columnist David Pilling has recently written an interesting and thought provoking opinion piece in the Financial Times where he noted that Korea’s status as an underdog is “wearing thin” and that the country has even had a “good crisis.” Moreover and besides noting that Korea in the 1960s had an economy with a per capita income on a par with sub-Saharan Africa and is now “snapping at the heels of Britain and France,” Pilling pointed out that:
Pilling ended his piece by still saying that although Korea has achieved enormous successes, it still faces a number of challenges which he also outlined. Nevertheless, his column does make an interesting case as to why Korea is no longer an underdog nor just a shadow of its neighbors, China and Japan. [ top ] Diaspora: Koreans in the United States After China, the United States is home to the second largest Korean community in the world outside of Korea. In fact, the Korean-American community is now the fifth largest Asian-American community in the USA with around 1.5 million members according to estimates by the US Census Bureau while the Korean Ministry of Foreign Affairs and Trade (MOFAT) has estimated that there are over 2 million Koreans living in America. Moreover, Los Angeles’ Koreatown district is now home to the largest population of ethnic Koreans outside of Asia while California itself along with the states of Georgia, Illinois, Maryland, New Jersey, New York, Pennsylvania, Texas, Virginia and Washington boast increasingly large Korean populations. However and despite their numbers today, Koreans are a relatively new immigrant group to the USA. After coming into contact with American protestant missionaries in Korea in the late 19th century, small groups of Koreans began migrating to Hawaii in 1903 to fill labor shortages and from there, some migrated to the West Coast of the USA. After Korea’s annexation by Japan in 1910, Korean migration to the USA virtually ceased while the Immigration Act of 1924 (also known as the Oriental Exclusion Act) set limits on the numbers of Koreans who could move to the USA. It would take the Korean War and the Immigration and Nationality Act of 1952 to open the door for more Koreans to come to the USA as students, professionals or the wives of USA servicemen. In fact, it’s estimated that nearly one in four Korean immigrants in the USA can trace their ancestry to the wife of a USA service member. With the passage of the Immigration and Nationality Act of 1965, Koreans became one of the fastest growing Asian ethnic groups in America and Korea became one of the top five countries of origin for new immigrants. Koreans in particular would become known for starting churches and small businesses that were often located in abandoned inner city areas. However, emigration to the USA would become less attractive after the Los Angeles Rodney King riots when many Korean-American immigrants had their businesses destroyed by looters. The riots along with the often harsh conditions and long working hours faced by immigrants to the USA were also widely reported in the Korean media at the time. Moreover, the economic rise of China and other East Asia nations have created more and often better economic opportunities for Koreans closer to home. In addition, an increasing number of aspiring Korean American entertainers who have found it difficult to achieve success in Hollywood have instead turned to Korean talent and modeling agencies to try their luck back home in Korea. Some prominent examples of Korean-Americans who have returned to Korea to find success in entertainment include actor Daniel Henney and singer Brian Joo. Nevertheless, Koreans continue to come to the USA seeking business, professional and educational opportunities while Korean-Americans continue to achieve success in all walks of American life.
[ top ] Culture: Generational Differences The following is an excerpt from our free 30-day Korea Global Business training series. For more information about the training series, visit any of our sites or contact Steven directly at sbammel@koreanconsulting.com. Korea has some unique generational divides. In discussions with western management and teams about their interactions with Korean leadership, I stress the need to recognize that generational differences exist. For example: On a recent visit to one of BCW's clients, an American executive noted that the younger Korean expats were great and worked well with the American team whereas in the past, there were many conflicts between the Korean and foreign team members. I shared that the newly assigned expats were shinsedae - the so-called “New Generation.” Roughly between the ages of 26 to 35, many members of this group have studied abroad, worked most of their careers on overseas projects or in support of such initiatives, are fluent in English (and often another language or two) and have a global perspective. In addition, it should be noted that this Shinsedae generation was proceeded by a so-called “386 generation” that was named after the 386 computer. This term was coined in the 1990s to describe those in their late 30s and 40s who were born in the 1960s and attended university in the 1980s. It is the 386 generation who spent much of their youth fighting for democracy during authoritarian rule and they were really the first generation in Korean history to have a shared generational experience and a common culture. However and while members of the 386 generation are considered progressive and some have even reached levels where they are now in decision making roles, shinsedae expats are still not the key decision makers. In Korea based firms, ALL key decisions are made by those who are at the Director level and above and these key decision makers are older and often from the “old school.” In other words, they are much more conservative in their outlook. If you want to learn more about the generational differences that exist in Korea, there is an article by Park Sun-Young from the International Affairs Desk at Hankook Ilbo that is particularly insightful. [ top ] Etiquette: Korean Negotiating Style The following is an excerpt from our free 30-day Korea Global Business training series. For more information about the training series, visit any of our sites or contact Steven directly at sbammel@koreanconsulting.com. I couldn’t help thinking about the Korean negotiating style when recently, it was noted by the Korean media that many details about relocating US military bases are still pending. On one level, this is no surprise. In fact and with Koreans, once a general agreement is reached (that is, an agreement in spirit), getting a final and detailed agreement is often a huge challenge. This upsets many Westerners and this is a problem I often run into (Remember: Koreans prefer quiet and reserved interactions over loud and boisterous conversation). In fact, the usual reaction of Westerners is to either “blow a fuse” so to speak which then kills the deal or to give in and give the Korean party whatever they want. However, there may be three reasons while your potential Korean business partners are not signing a final agreement:
Moreover and in the conversations I often have with non-Koreans sent to negotiating tables in Korea, I have found that some, although savvy and experienced business people, often lack a real understanding of the negotiating tactics used in Korea along with the working norms and expectations of their potential clients or partners in Korea. And most often those new to Korea acknowledged their own inexperience, while the actions of “veterans” often show a gap in understanding – even when they are at the negotiating table. These cultural gaps in understanding are deeper than issues of where to eat, find lodging, shopping or even business card protocol. For example: They include meeting dynamics and the discussion of sensitive issues during a meeting or at the negotiating table (In Korea, some issues will never be discussed in a formal meeting). Moreover and remember: Koreans will attempt to put all business relations on a very personal level and this may leave the non-Korean party with little room for maneuvering without appearing arrogant or worst - anti-Korean. Hence, the non-Korean party should set absolute limits at the negotiating table beyond which it will not go and they should hold that line firmly but diplomatically [ top ] Knowing a few basic phrases or words will go a long way in aiding one’s stay in Korea and help to build the personal relationships and rapport required for successful business and personal relationships in Korea. Below are some common terms for public officials that an expatriate or a business traveler may encounter while doing business in Korea. Recognizing the appropriate character and knowing its correct pronunciation will certainly go a long way in helping a visitor find what he or she needs while in an office in Korea:
Source: LifeinKorea [ top ] Samsung has posted 2009 sales of US$117 billion, US$3 billion more than Hewlett-Packard. Samsung is also expected to surpass its US rival again this year with a sales forecast of US$127 billion compared with US$120 billion for HP. (1) Samsung is now the world's leading maker of memory chips and liquid crystal displays and they are second only to Nokia for mobile handsets. (2) Samsung is also closing in on a 20% global market share in TV unit sales – a market share unheard since the early days of the industry more than 60 years ago. Currently though, Samsung has a 17.2% market share, up from 16.5% a year earlier; while LG Electronics has a 14.8% market share, up from 12.3%. (3) Samsung shipped 38 million TVs in 2009, up from 33 million in 2008; while for 2010, Samsung aims to sell 45 million TVs. (4) The Lotte Group already owns the Seven-Eleven convenience store franchise in Korea with about 2,000 outlets and 16% of the market. The acquisition of Buy the Way will give them another tenth of the market and 1,400 more outlets. Meanwhile, competitors Family Mart and GS25 have more than 3,500 outlets each. (5) The Lotte group is planning a 555-meter tower as its headquarters in Seoul and if they are able to overcome environmental objections, the US$2 billion project will be completed by 2014. (6) Korea is Tesco's biggest market outside the UK. In fact, Tesco Homeplus has more than 110 supermarkets in Korea. (7) Koreans worked an average of 2,316 hours in 2007, the latest year for which data is available. Although this is less than the 2,592 hour average a decade ago, it’s still well above the worker average of 1,768 hours for the 30 countries who are members of the OECD and 1,794 hours for Americans. (8) SK Telecom says its workers take an average of 5 to 15 of their available 22 days off per year while workers at LG Electronics take an average of 10 days off. (9) For 2010, Korea has set aside US$12 billion for acquisitions in the global raw materials sector. (10) After citing the Korean economy's resilience to the global crisis, Moody's has raised Korea's sovereign rating by one notch to the pre-Asia crisis level of A1. The Bank of Korea has also just raised its 2010 economic growth forecast to 5.2% from a previous projection of 4.6%. (11) [ top ]
* “South Korea Country Report.” EIU. April 1, 2010 [ top ] 1) "Samsung Overtakes HP as the World's Largest Tech Firm." Daily Finance. January 29, 2010. |
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