Nov 29, 2011

Shutting Down a Company in China

Because of, mainly, the increased cost of doing business in China, many of our SME clients that are operating in industries under tight margins have decided to closes businesses in China and move to what many think will be greener pastures.  Some of these clients include Chinese companies.

The favorite destinations of our clients are Vietnam, Cambodia and Laos. Many find that Southeast Asia is a more difficult place to do business, but allows more healthy margins for their business.

Please, shut down your company in a “legal” manner or you may find yourself at an airport/border crossing with an immigration official informing you that you are not able to leave China before settling lawsuits, tax issues and criminal charges. We have seen and gotten companies out of these matters far too often.

The process of shutting down operations in China for a Wholly Foreign Owned Enterprise/Wholly Owned Foreign Entity (“WFOE”) is most easily done by foregoing the wind-up/dissolution or liquidation procedures in favor of:

1. Terminating all company workers legally under China Labor Law. Few workers are “at-will” workers under Chinese law and procedures will need to be followed and severance will need to be paid in exchange for releases;

2. The continued payment of all government taxes, licenses and other obligations;

3. The continued compliance with Chinese reporting and filing requirements; and,

4. Paying off all obligations including lease, equipment rentals, and outside agents etc.

This procedure is often less costly than the dissolution or liquidation procedure in China. However, in many cases, dissolution or liquidation is required under Chinese law or advisable because of the necessity to obtain approval to export machinery.

I will be writing articles on the dissolution and liquidation procedure in China in the near future.
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SeanHayes@ipglegal.com

Nov 27, 2011

Korea's Fair Trade Commission: All Bark and No Bite?

The Korea Times published an article, last week, on Korea’s Fair Trade Commission (FTC) that sheds light on a business and, also, consumer-friendly program offered by the FTC.

The FTC has been, strongly, criticized by the main-stream for using the powers of the Commission to fight inflation in Korea in order to appease the Administration and the citizens.  Some of the most liberal, now, are even claiming that the FTC is not going far enough.  The FTC has no friends other than the Administration in near sight.

No main-stream antitrust/competition law scholar, international practitioner or Korean lawyer, that I know of, believes that one of purposes of an antitrust enforcement agency is to fight inflation.  I have been quoted, in depth, on this issue in articles in the Global Competition Review.  If you are interested in antitrust law, the GCR is a must have journal.

Even with this fact well-known, many of the more liberal news sources have been at the throat of the FTC.

A Korea Times article notes that:

Newly assigned as the Lee Myung-bak government’s key anti-inflation tool, the fair trade watchdog has been swinging away at corporate Korea, throwing around anti-competitive charges and bullying companies from raising the prices of their products and services.

But following their loud investigation and comments with subdued action, the FTC is quickly developing an ‘all bark and no bite’ reputation.</blockquote>
The article author is a little misguided.  The FTC has a lot of bit.&nbsp; I have many clients worried about the scorn of the FTC.&nbsp; Many "violators" have been fined an forced into accepting price concessions.&nbsp; Most of these violations would have not deemed "violations" in the most advanced economies.

I have advised clients that it is best, in any industries that are the focus or possible focus of FTC investigations, to report to the FTC any potential violations.

The scorn will be mitigated and the press may be less vocal.

This program is a benefit, also, for consumers.&nbsp; The FTC has limited resources and is unable to discover all violations, thus, this program may bring to light violations of law that would have not been discovered.

What do you think?

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SeanHayes@ipglegal.com

Nov 24, 2011

China, Korea, Southeast Asia Law Firm/Lawyer List - IPG Legal's Practice Teams

IPG attorneys and business professionals are proud to be some of the world's most experienced professionals focused on the practice of law in Asia. Our boutique mid-size law firm, through our local connections, six global offices, a leading-edge case management system and real on-the-ground Asia experience, has garnered a reputation for providing effective and efficient legal solutions in some of the most complex international business matters.
 
We are engaged in projects, exclusively, in Bangladesh, Cambodia, China, Korea, Laos, Myanmar (Burma), Vietnam and the United States through the China Practice Team; Dispute Resolution & Litigation Practice Team; Korea Practice Team; U.S. Immigration Team; U.S. Investment & Corporate Law Team; and Southeast Asia Practice Team. We work with both Fortune 500 companies and SMEs.

PEER RESPECTED
 Our professionals are often quoted by the New York Times, The Wall Street Journal, CNN, Bloomberg, Financial Times and local news sources. Our Korean Law Blog has been nominated as one of the Top 25 International & Foreign Law Blogs by LexisNexis and our China and Asian law blogs have been extensively quoted by our peers and the news media. Many of our attorneys have been rated Excellent by Avvo and other lawyer rating services and we are, often, consulted by local governments, U.S., British, German, Chinese, Russian and French law firms for matters for their clients.

LOCALLY CONNECTED
Our professionals are proud to have gained over a decade of experience in working with Fortune 500 companies, SMEs and entrepreneurs on projects throughout Asia and the states. Our professional roster includes former politicians, judges, prosecutors, government minsters, senior military officers, in-house attorneys, senior government officers, and directors/executives of multinational companies.

ASIA-FOCUSED PRACTICE
We never, simply, fly someone in for a project. We live and work in Asia. The chairs of our China, Korea and Southeast Asian practice teams were born in America, but have worked in Asia for most of their adult lives and deeply understand the legal systems, business practices and local culture of the local jurisdictions.
 
AMERICAN ATTORNEY/INTERNATIONAL LAWYER LED
The IPG is managed by a group of some of the most known American lawyers in Asia and assisted by local politicians, retired judges, prosecutors, in house attorneys, senior government officials, local attorneys and directors/executives of multinational companies. We strive to provide service to a level equal to the best U.S., British, Australian, German and French firms. This is accomplished thorough a sophisticated case management system, a systematic approach to the practice of law and the active involvement, in all cases, of our American attorneys and senior local partners and consultants.

EXPERIENCED PROFESSIONALS
Our attorneys have significant international experience in: Arbitration, Asset Protection & Management; Corporate Law & Compliance; Dispute Resolution & Compliance; Energy & Mining; International Business Transactions; Infrastructure & Development; FDI & Free Trade Zones; Franchise & Retail; Intellectual Property; Joint Venture Dispute Resolution; Mergers & Acquisitions; Real Estate Development; SME Market-Entry; and Taxation & Customs.

www.ipglegal.com

Nov 22, 2011

The Grey Market Agent Scam in Asia: Don't Forget the Due Diligence.

I just posted this on the Korean Law Blog. The same advice applies to all relationships you have with agents and potential agents in Asia.

Many of my clients operate, in Asia, through relationships with agents. The local agent, normally, holds an exclusive right to sell the client's product in the local jurisdiction.

For example, one of my clients sells medical lasers. The company has relationships with agents throughout Asia. The relationships guarantee the agent an exclusive right to sell the lasers in the nation the agent is located in. The agent, also, is responsible for managing technical, warranty and other after-sale matters in the jurisdiction.

One Korean company approached my client and noted that they are a Korean company with an office in the Philippines. My client has no agent in the Philippines. The client, thankfully, smelled a rat and called me. If you hear of a Korean, Chinese, Vietnamese, Thai or other nationality doing business in a country, other than their own, please smell a rat.

After doing a little investigating it became clear that this company was simply going to import the product into the Philippines and then transport the product to Korea.

Some may be saying - who cares. The client will still get the sale.
The client, the agent and the end-user will care.

First, the price in the Philippines was cheaper than in Korea, since no on-the-ground technical and after-sale support were to be provided with the purchase. The less than scrupulous Korean company may be promising the same technical and after-sale support as they would, normally, receive in Korea. The Korean company would, also, expect this support even without the promise.

Secondly, the local agent would be not too happy to receive a call from the Korean end-user requesting support, warranty services and technical assistance, since the authorized Korean agent would realize that they were cut out of a sale.

Lastly, brand image is important. An agent, that you have not built a relationship with, may be misrepresenting your product or making promises that can never be fulfilled.

Beware the Grey Market Trap through due diligence, street smarts and a demand to know the end-user. It is often better to lose the sale than to lose your reputation.

Engage in no agency agreement with any agent in Asia without a review of the agreement and the agent by an attorney experienced in the jurisdiction.

Other Articles that may be of interest:
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SeanHayes@ipglegal.com

The Korean National Assembly Passed the U.S.-Korea FTA Today: Implemented January of 2012

Great News. The Korea-United States Free Trade Agreement (KOR-US FTA) passed the Korean National Assembly today. The Agreement, previously, was passed by the U.S. Congress.

The Agreement will be implemented on January 1, 2012.

I will write more on the specifics of the Agreement over the next few weeks.
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SeanHayes@ipglegal.com

Nov 21, 2011

LexisNexis Designated Korean Law Blog as Top 25 International & Foreign Law Blog

IPG Legal is proud to announce that IPG's sister blog The Korean Law Blog has been designated by LexisNexis as one of the Top 25 Blogs in International & Foreign Law.

Additionally, AVVO's Blog List consistently ranks The Korean Law Blog as one of the Top 25 Legal Blogs in the World and many of our attorneys receive their highest designation - Excellent.  We are proud of these accomplishments and hope you will visit LexisNexis to see the other nominees and winners HERE.

We hope next year The Asian Law Blog and The China Law Blog will also have the opportunity to be nominated by LexisNexis and be placed on the AVVO Blog List.  

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SeanHayes@ipglegal.com

Nov 20, 2011

Korean Adoption May Get Easier

Korea has one of the highest populations of orphans in the OECD because of an unwillingness, in large numbers, of the local Korean population to adopt non-blood related children and a new policy that limits the number of overseas adoptions.  The majority of local adoptions are the adoption of the children of family members. 

The good news is the government may be changing its policy because of its plan to join the Convention on the Protection of Children and Cooperation in Respect of Intercountry Adoption (Hague Adoption Convention) and realization that its present policy is harming the psychological health of children. 

In 2005 over 2100 overseas adoptions were granted in Korea, while in 2010 a little over 1000 adoptions were granted.  The reason for the decrease was the decrease in the overseas adoption quota in favor of a policy of supporting domestic adoptions.  The policy failed to the detriment of needy children.

The quota was pushed for by a nationalistic minority and politicians wishing to get Korea off lists that show that Korea has one of the highest rates of international adoption in the world.  Both groups should be ashamed. 

The adoptions agencies are beginning to fight back, but are reluctant because of the possibility that their agency quota may be reduced.  The Korea Times reported that a local adoption agent noted that “Sometimes, parents have to wait for more than a year to meet their children though they have already decided which child to adopt. The government should consider what the best is for the children.”  She said foreign parent-candidates have filled up the next year’s quota already.

55.9 percent of parent-less children are housed at orphanages and nursing homes.  I have visited numerous orphanages. The orphanages, overwhelmingly, do a wonderful job of taking care of the children with very limited funds, but the facilities are less than adequate and are largely unable to place children in families. Only 16.2 percent of parent-less children are adopted.  This dismally low number is a reflection on failed Korean government's nationalistic and face-saving adoption policy.

IPG has successfully concluded Korean, Chinese and Southeast Asian adoptions for American and European parents. We are proud that all families stay in touch with the IPG by way of sending holiday greeting cards and visiting our offices.

Come on Korea, overseas adoption is great for these children.  The few stories you hear of are far less in percentage than the abuse inflicted on children by their own parents in Korea.

What do you think?
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SeanHayes@ipglegal.com

Do you Have a Buggy Whip Factory in Asia?

In many ways, the 19th century continued until the outbreak of World War I. The 20th century ended with the fall of Lehman Brothers.

In confusing times such as these, it is natural for people to draw parallels as a way to understand current events surrounding us. They hope to gain some insight on an uncertain future. Here are some examples: A recent issue of BusinessWeek suggested that America of 2009 may learn from Japan of the 1990s. In Korea, journalists, businesspeople and even some economists refer to the 1997-98 Asian financial crisis as a case study from which they may forecast a future.

But America is not Japan.

In so many cultural and political ways, such comparisons defy making accurate projections. And the "IMF Crisis" was a regional event. It was relatively isolated from the global economy, compared to the worldwide crisis we face today.

Today, several public figures in Korea amaze me. Some continue to suggest the tough times we are facing will be followed by a V-shaped recovery, similar to what Korea experienced in the Asian financial crisis. When I recently challenged one such speaker, the well-respected economist backpedaled. He stated his V-shaped Korea recovery model was premised on the Chinese stabilizing their chaotic economy within this year.

But anyone following the mass factory closures in China, with the growing threat of political instability there, is not likely to count on the Chinese economy being substantially on the mend within the coming 12 months. And yet one frequently hears this kind of siren song.

If one were to find a meaningful historical parallel relevant to what we are now facing, it would be Sept. 15, 2008 and June 28, 1914. We can easily recall when Lehman Brothers filed for Chapter 11 bankruptcy. That in effect announced the beginning of this global recession. And as any schoolboy can recite, it was in 1914 when a Bosnian Serb assassinated the heir to the Austro-Hungarian throne.

Both dates, in real terms, triggered the beginnings of their centuries.

In many ways, the 19th century continued until the outbreak of World War I. The 20th century ended with the fall of Lehman Brothers. Both 1914 and 2008 were major watersheds.

And we, having just entered this Brave New World, are just beginning to realize what has happened.

Now that we have been thrust into a major historical shift, we may find our greatest difficulty comes from not adapting.

Our real challenge could lie in letting go of anything that becomes an impediment to future survival.

We often cite buggy whip manufacturers as iconic representations of the 19th century. I am sure many buggy whip companies were thrilled by the initial explosion of sales orders with the outbreak of the First World War. All the armies were still largely dependent on horsepower. In other words, most buggy whip manufacturers didn't realize their market would soon disappear.

My point is this: our best survival strategy may not be trying to survive a short- or medium-term downturn only so we can continue to make our buggy whips.

We may be better off by pondering two considerations. First, this economic recovery is global and is likely to be U-shaped, if not L-shaped.

Look at the current issue of Foreign Policy. There, the highly regarded NYU economist, Nouriel Roubini, who correctly foresaw the current crisis over a year ago, warns of the U.S. facing a 24-month, U-shaped recovery that could well extend into being more L-shaped in reality. Many people think Roubini will be proved right yet again.

Given this and other economic indicators, business managers may be better off planning for the long haul. They probably should not base their business plans on the relatively rosy projections of consultants and politicians.

The second consideration is determining what survival strategies and tactics may be necessary to get through the following two years and beyond. Up until this point, many companies have already done the obvious. Primarily cutting costs and searching for new means of finance. Some are restructuring, to maintain profitability while doing essentially the same kind of business. And some companies are going on buying sprees to pick up the fire sale bargains that pop up at times such at these. All of this may be fine for strengthening an existing business strategy.

But remember those buggy whip manufacturers who must have done well at the beginning of World War I. Ultimately, the most important, long-term consideration a business planner may need to factor in, is what kind of business will be viable five years from now.

We don't have space in this column to go into detail about the future. But Bob Dylan once sang, "You don't need a weatherman/ To know which way the wind blows." The reader can probably imagine where we are going.

I will give one scenario. Consider that we will be living in a world of more independent energy sources. Governments and buyers will demand products and services that generate smaller carbon footprints. Both consumer and industrial consumption behavior will be less disposable and more value centric. Even the defense industry will be ?greener? as nations become increasingly concerned about contamination.

Regardless of how you view the future, the ultimate question facing you right now may be this: How relevant will your business be in a very different world of 2015?

The time to start planning for long-term survival could be now.

*The writer is the president of SoftLanding and a Senior Commercial Adviser for IPG.
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SeanHayes@ipglegal.com

Nov 19, 2011

Doing Business in Cambodia: Incentives, Stable Government, and Low-Cost Labor

1.  Competitive investment incentives
The promulgation of new investment laws in Cambodia means that Cambodia now offers the best business incentive package in Southeast Asia; making the Kingdom's outward-looking economy a very attractive place to invest. The following are the highlights of the new Cambodian investment laws:  
  • 9% corporate/income tax
  • Tax holidays of up to 8 years
  • 5 year loss carried forward
  • Full import duty exemption
  • No withholding tax on dividends
  • Free repatriation of profits
  • No nationalization and price controls
  • No discrimination between foreign and local investors
  • Land leases of up to 70 years 
2. "Fast-track" investment approval
The establishment of the Council for the Development of Cambodia (CDC) allows investors to deal with just one government body, a "One Stop Service" investment center that provides the speediest approval response in the region.

The CDC provides information and application documents, evaluates and processes investment applications in less than 45 days. The CDC also grants customs duties and tax exemption, registers the company, issues visas and work permits, and facilitates other downstream administrative procedures.  

3. Special Promotion Zones
Industrial Zones are being developed in the capital, Phnom Penh and the main deep-water port, Sihanoukville.  Investment in these zones in Cambodia will qualify investors for additional incentives.  

4. Plentiful supply of labor and natural resources
Cambodia has a population of 9 million people, of which 51% are in the "working age" group.  The labor force is young, high school educated, highly literate, English speaking, hard working and motivated. 

Labor costs are low compared with other Asian countries and natural resources-especially oil and minerals-are only now being discovered.  

5.  Southeast Asia's burgeoning markets are on the doorstep
As part of the Greater Mekong Sub-regional Economic Group, Cambodia is ideally placed to take advantage of the area's fast-developing consumer markets. 

Cross-border movement of goods will further boost trade when Cambodia becomes a member of the Association of Southeast Asian Nations (ASEAN).   

6. International financing for Infrastructure projects
Promises for one billion US dollars in foreign aid have already been made.  Other countries have also vowed aid.  This vote of confidence by the international community has placed Cambodia into the class of one of the more stable nations in the region.

But, just as importantly, since the new government came to power in September 1993, the Kingdom has attracted over 200 million US dollars in private sector investment. 

Build-Operate-Transfer (BOT) projects in Cambodia have been approved for a second international airport and a new power generation plant to serve Phnom Penh. The telecommunications network is being upgraded to meet international standards. Roads, too have been imp roved...the bridge connecting the capital with Highway Six-the road that leads to the Thai border-has been rebuilt and Highway Four connecting Phnom Penh with the main port of Sihanoukville is currently being repaired.   

7. Preferential Trading Status
Cambodia qualifies for the GATT, Generalized System of Preferences (GSP) and this status has already been granted to the Kingdom by the European Union, Japan, Scandinavia, Canada and Australia.
We are also discussing Most Favored Nation Status (MFN) with the United States of America.
We believe Cambodia's free market economy has enormous potential for far-sighted investors. The new investment law is the first step to realizing that potential.  

Nov 16, 2011

Enter Hong Kong - then China

I have been advising anyone who would listen, and for quite a few years, that Hong Kong was the place to structure both outbound (from China) and inbound (to China) investment, whether via China public equity markets, private debt or equity, joint-venture or merger or acquisition.  As I referenced in an earlier posting Register your Company in Hong Kong and then Enter the Chinese Market: Hong Kong Phooey Way has one of the most reliable legal systems in the world, low and flat corporate and personal tax rates at 16.5% and 15% respectively, no taxes on capital gains or dividends and no death or inheritance tax – just to name a few benefits.   

In fact, Hong Kong was rated number one by the Heritage Foundation and the Wall Street Journal in their 2011 Indicator of Economic Freedom with the United States lagging behind (and slipping) at number 9.  Hong Kong has been ranked in the top spot for the past 16 years.

I was explaining to a new associate lawyer why we use Hong Kong law for cross border (into and out of China) corporate structuring and investment.  While the tax advantages are obvious, one of the most important is the reliance on Hong Kong law which is based upon British Common law and similar to the legal systems in most developed countries in the world.  Not only is the law clear, simple and reliable, but, more importantly the courts are independent and can generally be counted on to produce fair results.  

This is different than in China where the law is relatively clear and straight forward, although at times probably not broad enough, but, the courts cannot be relied upon to produce fair results.  There are many reasons for this one of which is the development of the legal system and the education and frame of reference of judges.  Another is the overriding obligation of mainland lawyers and judges first to the State and the Party, then to ensure a “harmonious society” and then finally to the litigants.  This is not meant to be a criticism of the legal system, but, in fact this is the way it is in many Socialist systems.

The new associate understood my lesson and then asked what is the most difficult thing for foreign (non Chinese) clients to understand about the legal system in China.  Well, in addition to what I mentioned before, the most difficult is the unwritten practice of deciding cases based upon comparative responsibility.  Judges in China will most often apportion fault, liability and damages, even where one party is clearly in breach, based upon comparative terms. 

I have seen too many cases where a Chinese factory or supplier is sued by a Western company for breach of contract (and the Western Company is clearly deserving of a 100% recovery) and after lengthy arbitration and litigation the judge determines that the Chinese company is 60% liable and the Western Company 40% liable.  The reasoning astonishes most Western lawyers and company executives as it is often based upon maintaining a “harmonious society”.  It can leave a bad taste in their mouths and perhaps deter them from further investment in what is the fastest growing economy in the world.  


by Frank Caruso
Chair, China Practice Team
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info@ipglegal.com

Nov 14, 2011

No Sweetheart Deals in Asia: Play the Due Diligence Card

I just received a phone call from a prospective client with a wonderful product that has been offered a sweetheart deal.  Whenever I hear that someone has received a no risk or sweetheart deal in Asia, a red flag immediately goes up in my head and I immediately request the client to let me do a couple of weeks of due diligence.

The, ubiquitous, sweetheart deal is ownership of shares in company in exchange for some benefit from the foreign partner.  Too often, the Chinese, Korea, Cambodia etc. company is a shell.  The shell is broke with liabilities that far exceed assets.  The shell, however, is paying his management handsomely through a variety of interested transactions and access to the expense account.  In one case I regrettably saw, the company was under investigation of the prosecution.

Thus, you sweetheart deal may lead to unexpected liabilities, the deterioration of your brand image, the eyes of investigative bodies and additional legal fees and lost future opportunities. 

Do yourself a favor, engage a professional to engage in a little due diligence.  I wrote many article about due diligence in Korea and China.  A few are below.

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SeanHayes@ipglegal.com

Nov 12, 2011

The U.S. Korea FTA may be dead.

I mentioned in a recent post at our sister Korean Law Blog that if we see protests in the street we will see the death of this agreement.

The protests in Yoido included a couple of hundred well-dressed farmers and the ubiquitous radical liberals (and likely many paid protestors).

The rally was not as big as I expected, but lets see if my prediction comes to be.  Why was the KOR-EU FTA passed in Korea only after a short argument over translation errors, while this agreement is being held up?  The agreements are similar and the EU is a larger trading partner with Korea than the U.S.  What's up?

Is this simply anti-American sentiment led by the same groups that claim that an American submarine sunk the Korean warship off the west coast, the risk of mad cow disease was hid by the U.S. government, American military is engaged in a consistent effort to pollute the Korean environment via dumping toxic waste,  and the American military maintains nuclear weapons on the Korean peninsular?

What do you think?  Simply anti-Americanism or a legitimate concern for SMEs and farmers?

I believe if a significant appropriation is not made to the farmers and labor unions, then, the agreement is dead.

Other articles on the KOR-U.S. FTA that may be of interest:
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SeanHayes@ipglegal.com

Nov 9, 2011

Clearing Korean Customs Just May be a Little Easier.

Many of my clients doing business in Korea have complained, over the years, that the Korean Custom Service is much slower in clearing goods than other Asian custom departments.

I have, also, run into instances where certain products were delayed significantly by the Custom Service of Korea because of the inexperience with particular products.

In the not so distant past, the KCS and other agencies were notorious for delaying clearance in order to allow Korean-made products to get to market first.

Good news for companies and consumers. The Commissioner of the Korean Custom Service (KCS), Joo Yung-sup,  has vowed to make the customs clearance process move much quickly. I have heard this from other commissioners, but I actually believe this man, since he has a great reputation. The Commissioner has vowed to:

  1. Adopt more Mutual Recognition Agreements (MRAs) with other nations. At present, Korea only has MRAs with the U.S., Canada, Singapore, Japan and New Zealand; and,
  2. Increase the number of companies that may be designated as authorized economic operators (AEOs). The companies designated are the exclusive companies that can avail themselves of the simplified clearance process. I have dealt with a number of these companies and most are troubled by poor staffing and a poor understanding of the needs of clients. I recommend bringing in foreign AEOs to teach best practices. I work, now, with one of these agencies and if I stay on them, things goes smoothly. In the more complex of matters, it is best to involve, actively, a persuasive attorney.
The anti-FTA fervor that is spreading (Seoul mayor, liberal politicians and the ubiquitous crowd) may lead to the next administration (if a liberal government is appointed) to influence the future commissioner of the KCS and other agencies to stymie Korea's new opening-up policy.

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SeanHayes@ipglegal.com

Nov 6, 2011

Korea may be Damaging its Image by Not Passing the US-KOR FTA

The US-KOR FTA has a great likelihood of not passing the Korea National Assembly this year, because of the resistance of radical liberals and the inactivity of the GNP and the Administration.   The GNP fears that pushing the bill onto the floor of the National Assembly will cause an election defeat in the elections next year.

I fear that Korea will be greatly harmed by the peculiar behavior of the liberals and cowardliness of the GNP leadership and conservative presidential candidates.
  1. Korea is an export country and without the benefits of exports the country will be relegated to the ranks of the less-developed world.  Most Korean exports are products that are bought because of no negative impression of Korean products, competitive efficiencies and the impression that the product is of a high quality.  Increasingly, competitors, including China, Vietnam, India, Indonesia, and Malaysia are catching-up with Korea.  In many cases, China and Vietnam can make an equal quality product at a much lower cost.  The Korea-US FTA will allow for more focus on Korea, while increasing its competitive advantage.  Will Korea be competitive in the near future?
  2. Korea is one of the most nationalistic nations in the world, but this is only realized by foreigners living in Korea.  Recent bad press caused by the Lone Star fiasco, SSangyong Motors riots and other acts that demonstrate the nationalistic fevor will lead to consumers and investors to reconsider Korea.  Is this the last straw? -Will this lead to the media writing on Korean nationalism?  Will this lead to the scorn of consumers and investors?
  3. Korea has a very vocal, but small, anti-American presence as evident in numerous and often violent protests against American interests.  Some believe that this small group of radical liberals has been infiltrated by North Koreans.  If the information is not true, most will contend that Korea has a small portion of the population that is sympathetic to North Korea and despise capitalism.  Why was the Korea-EU FTA passed, but not this agreement?  Is this an indication of North Korean sympathies and anti-American tendencies and thus increased risk in doing business in Korea?
I will be adding to this list - please assist.   If you post your name - I will add your name to the post above if you so wish.
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SeanHayes@ipglegal.com

Nov 3, 2011

IPG Quoted by Stars & Stripes on US-Korea SOFA and Crimes by GIs in Korea

Sean Hayes (NY attorneys-at-law) the Chair of the Korea Practice Team at IPG and one of the hosts of this blog was interviewed and quoted by Stars & Stripes.

“However, a New York attorney working in Seoul said the fact that Flippin was an American played a crucial role in his receiving what is an “exceptional” sentence in South Korea.

“It’s kind of a political statement, and I think the judge probably was influenced (by politics),” said Sean Hayes, who represents mostly non-Koreans.

Foreigners typically receive longer sentences than South Koreans for violent crimes, he said, and the Flippin case was seen as especially outrageous because of the woman’s age, the fact that the attack lasted for several hours, and because she sustained injuries not seen in a typical rape.

But there were other factors at play, such as South Korea’s “fervor over sex crimes,” he said. The South Korean press followed the case closely, and, especially with national elections approaching in 2012, any issues involving the U.S. — including servicemember misbehavior — are being turned into political issues, he said.

“The media is looking strongly at these cases because politicians have spoken out,” he said.”

The full article may be found at: Korea rape sentences: Each case has ‘unique set of circumstances’
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SeanHayes@ipglegal.com

Nov 1, 2011

Korean Mergers and the Obligations to Employees of Acquired Company

Korean employers have, attempted, through mergers, to reduce the statutory severance obligations of a Company through a company acquiring a Company with a workforce with large outstanding severance obligations.

The acquired company, in most cases, is strapped with debt and an inefficient workforce.

The acquiring company, inter alia, often alleges that as a separate legal entity it owes no duties to the employees of the acquired company.

The acquiring company, thus, alleges that the employees of the acquired Korean Company are not obligated to receive the accumulated years of severance, thus, reducing vested employee obligations.

The Korean Supreme Court has ruled, on numerous occasions, that if an employee has continued work with the new acquiring company that the duties owed to the employees by the acquired company in Korea is owed to the employees by the acquired company, thus, often negating the benefit of the merger.

Some companies have creatively structured deals that have allowed for the reduction in the workforce. I will post on how to structure these deals in the near future.

Korea National Assembly to Kill the KORUS FTA?

This past Monday, the liberal opposition parties forcefully occupied the meeting room of the National Assembly Foreign Affairs, Trade and Unification Committee, the Committee authorized to vote on the KORUS FTA deal.   Some opposition members have vowed to forcefully oppose the vote.

In this situation, the ruling party and Grand National Party (GNP) have two viable options:
  1. The Committee can open a "special committee session" with the entire Korean National  assembly; or
  2. the Speaker can call a plenary session of the National Assembly. 
If either occurs, expect brawls at the National Assembly.  If either measure is not adopted by the GNP, then, the bill may be dead.

The bill will be enacted into law 60 days after an affirmative vote. The GNP has vowed to have the bill effective by January 1 of 2012.

Enough time?

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SeanHayes@ipglegal.com