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Sep 24, 2009

Back to Park Chun-Hee

Korea Times

September 18, 2009
by Sean C. Hayes (Host of this blog)

This past week, Korea and my practice group lost a large multinational company to Hong Kong.

The client, who first hired a business consultant to conduct research on where to establish a regional headquarters, chose Hong Kong primarily based on the Index of Economic Freedom and its mention of Korea's: ``burdensome labor regulations'' and ``non-transparent rule making and law formulation; exclusionary social, political and business structures; and insufficient institutional checks and balances.''

Other negative implications included ``piracy of copyrighted works''; ``contracts … considered a matter of consensus''; and a ``justice system [that] can be inefficient and slow.''

These were contrasted, by the consultant, with Hong Kong's: ``flexible labor regulations''; ``foreign firms not seeing corruption as an obstacle to investment''; ``strongly protected'' contracts; a ``legal system [that] is transparent''; and the emphatic mention that ``foreign capital receives domestic treatment, and foreign investment is strongly encouraged.''

The consultant, based in the United Kingdom, advised the company to establish the regional headquarters in Hong Kong and forgo Korea and Japan. I don't agree with the consultant's conclusion, but most of his and the indexes comments are sound.

The company, surprised by the ``labor inflexibility'' and ``anti-foreign capital sentiment,'' requested an overview of Korean labor law and basic investment climate. The conference call led to a mention of the Ssangyong Motors fiasco ― an embarrassment that will have a lasting impact on investment sentiment for years to come.

Koreans and long-time foreign residents are tired of being held hostage by a radical liberal minority that is dedicated to returning Korea to its pre-industrialized past.

The present administration has proposed a bold step forward for Korea, but it is shackled by an effective, yet very small, radical liberal minority that seems more dedicated to moving Korea back to the ages where it was a sleepy backwater agricultural-based society envious of the wealth of the Philippines.

Back to the time when Korean construction companies were not world leaders, but were so lacking in skills that most major construction projects domestically were performed by foreign laborers and contractors. Back to the time when the largest Korean exports were not electrical equipment and autos, but humans and wigs.

Back to the time when the nation's traditional liquor soju was bought not by the bottle, but by the shot. Back to the time when sleeping on the street was not a Friday pastime, but a necessity.

Many of us that are at the forefront of this fight for foreign direct investment (FDI) are dismayed when we see this radical liberal minority's ability to manipulate the population into believing their anti-American, anti-free trade, anti-foreign capital, and pro-militant labor policies and often wish for a return to the time when the Park Chung-hee administration was not so willing to consider this as a mere sign of a vibrant democracy, but a sign, as it may be, of infiltration by North Korea into these radical liberal parties.


Sep 19, 2009

Koreans Saved Wall Street

Korea Times
September 18, 2009
by Sean C. Hayes (Host of this blog)

Ok, maybe not, but foreign direct investment (FDI) and other investments by domestic and foreign businesses have contributed to saving the American economy.

Woori Finance Private Equity Fund and Kumho Investment Bank led a consortium that bought the AIG Building, the largest building in lower Manhattan and the fifth largest in New York City.

The building, which at the height of the real estate boom was valued at $1 billion, is presently valued, according to industry sources, at around $400 million. The 66-floor-tall Gothic behemoth completed in 1932 is destined to be a profitable lower Manhattan landmark for years to come.

Korean companies have also invested heavily in the U.S. auto and electronics markets through manufacturing and distribution outlets. These and other investments by foreign businesses are stimulated by the business friendly American micro- and macro-economic environment.

This environment is well reflected in most noted economic freedom indexes and the fact that year-after-year America is the number one destination for FDI.

America's economy will be saved by this business friendly environment that motivates the international and domestic community of investors to consider America as a healthy destination for their capital.

Korean companies big and small have changed their mindset with regard to outbound FDI. Korean companies, since WWII have looked abroad for destinations for their products.

In recent years, however, many Korean conglomerates and even small and medium enterprises (SMEs) have shunned Korea investment opportunities in favor of foreign investment, thus, diverting their focus from export destinations to FDI destinations. Many of these Korean businesses have chosen the U.S. and other business-friendly destinations.

Foreign investors have also decreased their exposure to the Korean economy in favor of more business-friendly, lower-cost, and higher-growth economies.

The present astute Korean administration has realized this phenomenon and, thus, has vowed to increase FDI and stimulate growth through business and foreign capital friendly initiatives, but because of a vocal and powerful radical-liberal minority most of the reform efforts have either stalled or been amended to the point of uselessness.

All that is left is an administration hell-bent on stimulating growth through infrastructure spending and exports.

The administration must return to its bold roots and cut taxes, streamline government, decrease the regulatory burden on businesses, and implement its other noted progressive initiates that will allow this nation to grow through local and foreign investment.

However, the only way for this administration to get its initiatives off the ground is to motivate the mainstream to fight this radical liberal minority.

It's a minority, we all realize, that is mobilized by Marxist radicalism and is determined not to work within the political system, but to destroy the very system that created our present prosperity.

America is being saved by the world and American investors; I fear that if Korea doesn't change to become friendlier to foreign and domestic capital no one will be left to save this once proud and vibrant Asian Tiger.


Sep 2, 2009

IPR Protection in Korea

I recently was directed to an excellent source for information on intellectual property rights under Korean law. The U.S. Commercial Service Korea, a part of the U.S. Department of Commerce, has created and "IPR Toolkit" for Korea.

The Toolkit contains the best basic explanation, in English, available on Korean IPR. The pages can be found HERE.

The U.S. Commercial Services, correctly empathically states that "registering your IPR is your best strategy" and notes that "[f]oreign applicants are required to retain a licensed local attorney in order to prepare applications in Korean and to conduct necessary follow-up correspondence locally."

Word to the wise, checkout the site and contact an attorney (preferably my firm) to register your IPR and if you are engaged in a Joint Venture make sure your attorney also contractually protects your IPR within the JVC.