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Feb 28, 2012

R&D, Investment, FDI and Free Trade Zone Credits/Benefits in Korea

The Temporary Investment Tax Credit has expired in Korea and other tax liberalization plans have been scrapped by the Korean government because of a reduction in tax receipts by the government and political issues that have arisen because of the the upcoming elections in Korea.  Please see the list of article below.

We suspect, if the conservative Saenari Party controls the National Assembly and the Presidency, after the upcoming elections, the previously promised tax reduction measures will be re-passed by the Korean National Assembly within the next couple of years.

Korea has decided to main the Tax Credit for Investment in Facilities and Industrial Equipment.  The credit equals between 3% to 4% of the amount of the investment in industrial equipment and facilities.  An additional 2% to 3% credit is available based on the number of new jobs created by the investment.

Additionally, Korea expanded the industries available for investment in free trade zones (only available for foreign capital-investment companies) and the scope of activities available for research and development credits.

Recent posts on Korean Tax Law:
IPG will be updating the readers of The Korean Law Blog, The Asian Law Blog and The China Law & Business Blog on updates to China, Bangladesh, Cambodia, Korea the Philippines, Vietnam tax law over the next couple of weeks on IPG's blogs.
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos,the Philippines, Myanmar, Vietnam and the U.S.

Feb 26, 2012

Marketing to the Korean Consumer by Tom Coyner

Interview of IPG Senior Advisor on Selling into the Korean Market.

The following appeared on Nojeok Hill website.  The full interview is available at: Korea Business Central's Website.

Main Points of the Interview on Marketing to the Korean Consumers
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 active and consuming a lot more.”
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

Feb 23, 2012

Selling Traditional Korean Products to the World by IPG Senior Advisor

Even foreigners living in Korea cannot help but notice how makgeolli has taken on a new air of respectability. As a long-time imbiber of the brew - we are dubbed “makgeoholics” - this is good news!

I once was a Peace Corps volunteer who lived on a monthly stipend of 43,000 won for lodging, food and entertainment. That meant beer and other Western beverages were beyond my budget. So, during most after-hours events, my choices were pretty much limited to soju and makgeolli. But after some forgettable evenings and unforgettable mornings after, I soon realized that the soju of the 1970s was not healthy for living things.

Fortunately, I learned that makgeolli was not only cheap but even good for you. As an Irish-American, I have reverently believed that Guinness stout beer is good for you. In fact, the Irish say that Guinness is a meal in a glass. So, I was overjoyed when I heard from Eumseong townspeople that it is possible to survive a full two weeks on nothing but makgeolli. Having imbibed the stuff for over three decades, there is no doubt the creamy, tangy stuff is full of nutrients - and who knows what else.

And as a rural Peace Corps volunteer, I came to respect Korean farmers and small townspeople. These were real people, doing real work and drinking a real beverage. To me, soju was something akin to poison for a quick drunk, but makgeolli was a real man’s drink with which one can enjoy like a real man while not getting so drunk that the rest of the evening is only a hazy memory.

And, I might add, any woman who tells me she, too, loves makgeolli is immediately regarded by me as a superior sort of female. And that leads to my old friend from our shared Peace Corps days, the former U.S. Ambassador to Korea, Kathleen Stephens.

She has appreciated makgeolli for decades, and often served it at her official residence. While I cannot say her high regard for makgeolli is responsible for her success, I will say a woman who drinks it is likely to be up for any job.

All of which leads us back to the current fad, rediscovery and new ideas for exporting makgeolli. Frankly, I’m pretty excited about all of this. First, it opens the doors for further improvement of makgeolli. Back in the 1970s, under the Park Chung Hee regime, the amount of rice used in makgeolli production was curtailed as part of the nation’s efforts for grain self-sufficiency: a wise move since everyone knew how many Koreans would allocate their limited rice reserves towards the production of makgeolli.

Later on, as Korean agricultural production improved, the controls were removed and pure rice makgeolli became common. That was a major step forward and now makgeolli may be about to take the next important step in upgrading its quality.

When we order makgeolli at a restaurant, usually we really don’t know which type we are drinking. The stuff is served in a generic ceramic pot. In other words, unlike every other beverage on the menu, makgeolli is devoid of branding. As a result, one goes to those restaurants that serve “good makgeolli,” which means a beverage that is made by one of the better brewers and is fresh. Even good makgeolli sours relatively quickly, even when kept at optimum temperatures.

As a marketing professional, I see these negatives as allowing for future positives to be developed. First, by exporting abroad by brand, more competitive pressures will be placed on makgeolli brewers for consistent quality. Tetra Pak Korea, for example, is providing cartons to be used for the export of makgeolli, but so far, there has been no demand for these containers for domestic distribution. Rather, makgeolli is normally distributed only near the brewer’s facility.

But, when exporters fully master the means to deliver makgeolli abroad and as foreign consumers develop a thirst for the beverage, more Koreans will try to make money by exporting. And in so doing, branding will become more important. Furthermore, as brands become stronger, we may see the best brewers doing wider distribution domestically, taking advantage of new packaging - and possibly applying new refinements in brewing.

And that leads me to the second, likely development of makgeolli - new investments in improving the production of makgeolli so that it sours more slowly. In the past, there was regular soju and superior “tourism soju,” and I believe the Korean economy has outgrown that kind of product differentiation.

But I should add a word of warning. Given this upsurge in the creamy stuff’s popularity, I have been sometimes horrified as the unacquainted (usually female) imbibers shake the bottles to stir up the contents prior to uncapping. Frankly speaking, watching that kind of experience is only one level lower in anxiety than watching a sweet young thing pull out the pin from a hand grenade and ask what’s the purpose of the pin.

Should you see a well-meaning dining mate start shaking the bottle, immediately grab away the makgeolli bottle for everyone’s safety. Rather, hold the bottle by the top and slowly swing the bottle in downward arcs, almost as if you were ringing a chime or bell. The beverage deserves respect and your guests deserve to drink it, not wear it.

So next time you are out with your friends, lift your cup of makgeolli and toast what it once was and what it has become. Then dream of what makgeolli may soon be: a real beverage for real people around the world.

by Tom Coyner. This article appeared in the Korea Joonang Daily.

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, Vietnam and the U.S.

Tax Qualified Mergers in Korea: Amended 80% Rule for Triangle Mergers

Up until a recent amendment to the Korean Commercial Code and tax law, in order to qualify for a "tax qualified merger," at least 80% of the paid consideration must be paid in the stocks of the surviving company to the shareholders of the company being acquired.  This law, thus, precludes the ability to receive this tax benefit in triangle merger situations.

A triangle merger is, in short, when a subsidiary owned by the acquiring company (surviving company) merges with the seller. 

A recent amendment provides an exception for triangle mergers.  The exception will be available from April of 2012.

Recent posts on Korean Tax Law:
IPG will be updating the readers of The Korean Law Blog, The Asian Law Blog and The China Law & Business Blog on updates to China, Bangladesh, Cambodia, Korea the Philippines, Vietnam tax law over the next couple of weeks on IPG's blogs.
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

Feb 21, 2012

Personal Income Tax Rates in Korea for 2012

As with the corporate tax rate, the government passed a law to decrease tax rates in Korea, however, the government has backpedaled and scrapped the law.   The taxes will increase for individuals with adjusted gross incomes over KRW 88mil/year.

TAX BRACKETS                            TAX RATES                
KRW 12mil or Less                          6.6%
KRW 12mil to KRW 46mil               16.5%
KRW 46mil to KRW 88mil               26.4%
KRW 88mil to KRW 300mil             38.5%
OVER KRW 300mil                         41.8%

Recent posts on Korean Tax Law:
IPG will be updating the readers of The Korean Law Blog, The Asian Law Blog and The China Law & Business Blog on updates to China, Bangladesh, Cambodia, Korea the Philippines, Vietnam tax law over the next couple of weeks on IPG's blogs.
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

Hiring Employees for Positions in Asia by Senior Advisor to IPG

“Hiring is your most important task,” said the late Steve Jobs. Considering a wrong hiring decision can be extremely expensive to repair, let’s look at some recruiting options.

Ideally, a succession plan will have an internal candidate ready for promotion: advancing a rising star’s career and providing continuity with minimum controversy and a positive message to the workforce that capable people who do well will be recognized and rewarded.

Often, however, hiring from outside is required. If the company has a competent HR recruiting function, direct ads and in-house screening may be effective for lower and some midlevel positions.

For more important midlevel management or specialist positions, outside assistance may be needed. There are many recruiting companies. By going to any networking event, it is hard not to collect business cards from such firms.

Most recruitment firms offer contingency searches. Usually the process begins with interviewing the hiring managers and agreeing on a job description and compensation range. The recruiter ideally provides a long list of candidates and works with the client in coming up with a short list. In reality, the contingency recruiter usually relies on names from their database, or active job seekers. The recruiter may do some fundamental reference and credential checking before the final offer is made. The success fee is normally in the range of 20 to 30 percent of the first year compensation, including regular bonuses.

For lower-level positions the contingency approach is preferred, since a wrong hire is not likely to be a strategic setback. However, a hire of the wrong senior manager can be costly in terms of negative impact on the organization and lost time.

Some recruiting companies claim they do both retained and contingency searches. In reality, these are contingency recruiters that are thrilled to be paid up front - but still deliver a contingency-class service.

There is also a small number of retainer-only search consultancies that focus on identifying, evaluating and attracting “C-suite” executives (CEO, head of region or country and positions reporting directly to the region/country head) - and sometimes accept engagements one level lower. These senior professionals partner with the client in a consultative process aimed at selecting organizational leaders. Success in these partnerships depends upon a shared focus built on trust, candor and responsiveness throughout the process.

The search is conducted through an exclusive engagement with fees billed at the start and throughout the process. Consultant and client collaborate in determining leadership needs and defining executive positions. The consultant leads in identifying well-qualified individuals, selecting those best suited through a comprehensive evaluation process, and convincing them that the company/opportunity is a proper step in their career progression. Meanwhile, retained search consultants provide employers regular, detailed progress briefings.

This methodology proves to be the wisest option for senior leadership and other strategically critical hires. Some employers avoid retainer search due to the perceived costs, although in reality the total amount is not significantly higher than a contingency fee, and the risk of lost opportunity cost or reputation damage is greatly reduced. Most retained search firms are paid the equivalent to 33 to 35 percent of the total annual compensation, or in some cases a fixed fee not linked to compensation.

According to the Association of Executive Search Consultants, “Retained executive search consulting is a specialized form of management consulting. In addition to locating high-quality candidates, the retained search firm should provide information and feedback that not only helps direct the client’s search for executive talent but can also be used to run the client’s business more effectively. This feedback may include general market research regarding how the client’s organization is perceived in the market, competitive intelligence, and what kind of recruiting strategies may or may not be working at any given point in time.”

Retained searches most commonly take place when one or more of the following conditions apply:

Replacement of incumbent: There are times when a very high level of confidentiality must be maintained. As with other professional services firms - attorneys, accountants and strategic consultants - disciplined senior executive search professionals fully understand how to work with total discretion.

Difficult to find individual: Access to high-level executives who are not on the job market is fundamental, as is capability to invest time and resources thoroughly researching the target universe to identify key players.

Difficult internal promotion: Shareholder compliance (or internal debate) may necessitate a thorough look at external candidates in conjunction with independent evaluation of internal candidates.

The retained consultant will invest much more time than a contingency firm in understanding the client’s corporate culture, key executive personalities, vision, strategy and business objectives, and will be able to communicate this effectively to qualified individuals. Out of this process may emerge the “compelling story” critical to attracting a star executive.

A retained search firm will rigorously conduct reference checks with a broader range of people than those suggested by the candidate. It is in the best interest of the consultant as well as the client to flag concerns before an offer is finalized.

Most companies say “people are our most important asset,” yet often default to hiring friends of friends, applicants from newspaper or Internet ads, or resumes thrown at them from many sources. This may work for lower/midlevel positions, but tossing the dice when filling any key leadership role isn’t acceptable in today’s corporate environment.

In summary, there are a broad range of situations requiring different hiring strategies. The hiring executive has several options, and one recruiting strategy rarely fits all needs. 

IPG is not engaged in the executive recruiting business.  We have advised clients on the use of headhunting firms in Korea and China and have found, only, two companies we have worked with satisfactory.   Please choose carefully. 
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, Vietnam and the U.S.

U.S.-Korea Trade Pact to be Implemented in March of 2012

The Korea-US FTA (KORUS FTA) will be effective as of March 15, 2012 according to a recent agreement by the two nations.

Bilateral trade between the United States and Korea reached, according to Korean government statistics, over USD 90billion in 2010.  Most mainstream commentators expect the deal to increase trade between the nations immediately.  Korea, in recent years, has had difficult in attracting foreign direct investment (FDI), because of the financial crisis and an impression among many investors that Korea is far from friendly to foreign capital (i.e. Lone Star).  Many expect, also, an increase in FDI into Korea.

Liberal parties, in Korea, have vowed to repeal the implementation law if they win in the April general elections.

What do you think?

Other posts that may be of interest:
 IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

Feb 20, 2012

Corporate Tax Rates in Korea

The Korean government passed a law to decrease the corporate tax rate in Korea, however, the government has backpedaled and has increased the corporate tax rate for companies with earnings over KRW 20bil through a recent amendment to the Korean corporate tax law.  We receive many requests from clients to compare the corporate taxes, general investment environment, and benefits in doing business in free trade zones in Asian countries in order to determine the most feasible location for a regional headquarters.  Increasingly, Korea is becoming less competitive in these type comparisons in most areas that concern multinational companies.

TAX BRACKETS                       TAX RATE
Under KRW 200mil                      11%
KRW 200 mil to 20bil                   22%
Over KRW 20 bil                          24.2%

Recent posts on Korean Tax Law:
IPG will be updating the readers of The Korean Law Blog, The Asian Law Blog and The China Law & Business Blog on updates to China, Bangladesh, Cambodia, Korea the Philippines, Vietnam tax law over the next couple of weeks on IPG's blogs.

Feb 19, 2012

Salaries in China on the Rise According to Recent Chinese Salary Survey: Beijing, Shanghai and Guangzhou Salaries

A Chinese salary survey conducted by J.M. Gemini which I noticed on Danwei, lists Chinese salaries in the Beijing, Shanghai and Guangzhou areas.  All sums are in RMB and refer to monthly salaries.  The monthly salaries are based on a 13-month per year gross payment basis.  Thus, the monthly payment includes severance in the monthly calculation.  

The following list was compiled by Danwei and includes a selection of listed jobs in the survey.  The complete survey lists  hundreds of jobs from junior positions to senior positions.  As of 02/19/2012, 1USD = 6.2 RMB (Chinese Yuan Renminbi)
Junior Secretary: 2,500 – 3,500
Executive Secretary / PA: 13,000 – 21,000
Accountant: 10,000 – 15,000+
Finance Director: 65,000+
Quality control manager: 14,000 – 24,000
HR Manager: 20,000 – 35,000+
Translator: 8,000 – 18,000+
News editor: 5,000 – 8,500
Web Editor: 6,000 – 19,000+
IT Programmer: 5,000 – 9,000
CEO Advertising Agency: 70,000 – 100,000
Regional Sales Manager: 26,000 – 36,000+
Mechanical Engineer: 10,000 – 16,000
Senior Architect: 25,000 – 45,000
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, Vietnam and the Philippines and the U.S.

Feb 16, 2012

China's Proview Takes a Bite out of Apple: The Proview v. Apple Saga

Most of our readers have probably already heard about Apple’s latest hurdle here in China, a costly mix up over the trademark ownership of the “iPad” name.

While one can easily see how Apple’s lawyers were confused as to which trademarks they were purchasing in 2006, it is ultimately inexcusable that America’s largest company, with arguably the world’s most valuable collection of patents, trademarks, and intellectual property, could have made such a costly legal oversight. This doesn’t appear to be a case of a sneaky Chinese company front running a predicted future Apple product name in hopes of a payout. The company is a legitimate manufacturer of LCD screens and registered the name in 2000, six years before the first iPhone. It was possibly their intention to suggest a nonexistent affiliation between their products and the reputed apple iMac, but there are plenty of other companies around the world, including the largely successful iHome, which successfully exist inside the Apple economy, without popular criticism.

Apple’s arguments have been weak in this case, especially knowing that they should be extra prepared when addressing Chinese courts against a local company. They contend of course that they were under the impression that they had purchased these patents in 2006, and that their lack of Chinese language skills has left them without the proper trademarks.

There is evidence that Apple’s attorneys uncovered the separate Chinese trademarks in 2006 after closing the $55,000 deal for the rest of the global trademarks, but rejected the then $10 million asking price. Now, after having launched iPad sales at their 4 China Apple Stores and 1,000 Chinese resellers, Apple’s strategy was to sue Proview for the iPad rights. Unfortunately, China operates under a first to file, not first to use, trademark basis.

This protects Proview’s ownership of the iPad name even if they haven’t brought a product called the iPad to market in the 10 years since they registered the trademark. Chinese courts found in favor of Proview and Apple is currently appealing. Poorly handled is an understatement.

Some are wondering why Proview would have sold the international trademarks to Apple for a measly $55,000, but at the time, Proview thought they were dealing with a small British company called IP Applications Development (IPAD), not knowing that IPAD was a wholly owned subsidiary of Apple Inc. The sneaky tactics seemed to be played on both sides, and in this case Apple has been outplayed.

The latest developments show just what Apple is up against. After winning the case in December and verifying their ownership, Proview filed a $1.3bil countersuit for trademark infringement that has since increased to $1.6bil. That number may have been set excessively high to attract press, but Proview does mean business. It is rumored that Proview is struggling financially, making a prolonged legal battle in Apple’s interest. Rather than wait for the outcome of the appeal, Proview has taken to the offense.

This week Proview convinced the local Administration for Industry and Commerce in Shijiazhuang to seize iPads from the shelves of resellers across the city. The resulting press led Apple resellers across the country to take down iPad advertisements and hide remaining stock for fear of having their own confiscated.

While the Apple stores in Shanghai and Beijing, as well as Apple’s online store continue to operate as usual, the uncertain future for resellers will likely hurt orders, as they fear future inventory seizures. Proview has announced that they intend to pull iPads from shelves in 30 more cities across China, and on Wednesday succeeded in having iPads in Zhengzhou at least sealed if not seized. Proview can legally resell the seized iPads domestically for now to fund their legal battle.

Proview admits that it is unlikely they will be able to convince customs officials to seize exports or halt production at Foxconn, but the latest jab should encourage Apple to reach a settlement. It is rumored that an iPad 3 will soon be released, China is an important market to maintain sales figures for iPad 2s in order to avoid steep discounts on excess inventory when the iPad 3s come out.

As we frequently remind the readers of these blogs, it is crucial to register your patents and trademarks separately in China, as international patents will not hold up. Let this be a reminder that failure to do so could end up costing you in bad press, halted sales and shipments, and in the worst case up to $1.5 billion.

by Frank Caruso. Chair, China Practice Team at IPG
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, Vietnam and the U.S.

Lessons in Doing Business in Korea by Senior Adviser to IPG

The most important lesson I learned from the Peace Corps was an inner sense of humility.

By my naturally contrarian nature, I have mixed feelings about having once been a Peace Corps volunteer in Korea. For example, I try to focus on being an international business development consultant, but every so often when a newspaper or magazine discovers I served in Korea during the 1970s as a Peace Corps volunteer, too often the reporter wishes to focus on my past rather than what I’m doing 30 or more years later.

Frankly speaking, I want to use the reporter as much as the reporter wishes to use me. The reporter often wants a human interest story, and I want some free publicity for my business. Usually, what is printed does nothing for my business. But free publicity is still free publicity, so I play along. But all of this ends up making me a bit of a curmudgeon when it comes to talking about the Peace Corps.

Unlike most Peace Corps volunteers who later go on to work in some kind of government work such as at the State Department, in education or at a nongovernmental organization, a minority of us pursue careers in business and law. We usually start working for large companies, but in time at least half of us become entrepreneurs. By choice or fate, sooner or later, many of us find our way back to Korea.

Back in Korea, we have a chance to become reacquainted (that is, humbled) by the Korean language while trying to apply to business what we learned in the countryside three decades ago. Of course, Korea has changed incredibly since when we were so young. But fortunately, culture changes a lot slower than politics and economics. So, in spite of our language deficiencies, we do bring value to the marketplace, and in fact, some of the lessons we learned in the Peace Corps often serve us well today.

For example, most people really don’t understand what the Peace Corps is essentially all about. Most folks think the organization is a way for the U.S. government to provide some kind of cheap foreign aid using young people. While there is some truth in that, in fact it is the smaller part of the mission.

Too often, I had to listen to mini lectures on the “Three Goals of Peace Corps” from my director. More than once, I really wanted to scream as I was forced to listen to that mantra yet one more time. But constant reminding of those goals was important, since only one goal dealt with knowledge transfer. The other two goals centered on common Americans being exposed to another country and common people outside of America becoming familiar with common Americans. In other words, the Peace Corps considers its most important mission to be building international human relations.

And building personal relations is ultimately the bedrock for any successful business person. In Korea, personal relations are taken more seriously than in the West, but as a business person anywhere, it is critical to know how to develop and maintain personal relations.

In the Peace Corps, we were taught the importance of trying to build goodwill in our towns and villages. In many ways, as we stumbled through our experiences, the countryside Koreans taught us how to get along with people who were stranger to us than anyone we would regularly meet in our own country. Only decades later did I appreciate what great business training I had received from my co-teachers, the ajumma at my residence and the grandma at my tavern.

We also learned about the importance of nunchi, or quick wit, in dealing with friends and strangers - a skill I have found critical in dealing with Koreans - and it was my big advantage in the U.S. when I was surrounded by many people without nunchi.

But perhaps the most important lesson I learned from the Peace Corps was an inner sense of humility, since as a Peace Corps volunteer, it was obvious I knew much less about life than I had once thought. And that insight, even 36 years later, serves me well in many facets of life, including never overestimating my understanding of my customers and business associates. Reminding oneself one never has the full picture keeps one mindful and curious at work, at home and at play.

And this sense of curiosity has recently introduced me to a new Korean word, janmeori - or petty tricks - an idea of which I was long aware, but it often takes a single word to crystallize understanding. In other words, I’m still learning, and I still find Korea a great place to keep a young mind and heart in spite of my ageing appearances.

By Tom Coyner. Senior Commercial Adviser for IPG and president of Soft Landing Korea.
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

Feb 9, 2012

Korea Leading the World in Aggressive Regulation of Game Use by Children

Children in Korea, under the age of 17, are prohibited, according to a recent Korean law, to be provided access to online games between midnight and 6AM. This law in Korea has forced online providers of games in Korea to shut their sites to children during these periods of time.

A new law have been proposed restricting the use of video games by these children for more than two hours at one time and four hours in one day. The details and enforcement mechanisms for this proposed law in Korea are not yet known.

Korea is one of the leading nations in sales of online and mobile games. The proposed law has led to a decrease in the stock value of some of the major Korean game companies.

What should be the role of government in regulating the use of video games?
IPG attorneys advise a major Korean game industry foundation and game and other entertainment companies. IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

Korean Corporate Governance: One of Worst Ratings in Asia

What is the cause of the Korean discount? An economist article hits the nail right on the head.
So what is the source of the “Korea discount”, which means that the KOSPI has a forward price-to-earnings ratio of under ten, below most other Asian stockmarkets (see chart)? There are a few possibilities. The national economic model is still built on exports, often in highly cyclical industries such as shipbuilding. The capital structure of South Korean firms has historically been debt-heavy.
In this section

But the prime cause of the discount is more likely to be poor corporate governance at the family-run chaebol conglomerates that dominate the economy. Nefarious schemes to pass on control to sons, avoid taxes and exploit company assets for the benefit of family members are widely discussed in private. They are also lambasted abroad: a 2010 survey by CLSA, a broker, placed the country third-from-bottom in Asia on governance, ahead of only Indonesia and the Philippines.  . .
Other allegations are even more serious. On February 3rd Hanwha Group announced in a regulatory filing that its chairman, Kim Seung-yeon, was among several officials being investigated for alleged embezzlement. Chey Tae-won, the chairman of SK Group, was indicted in January over the disappearance of 99 billion won from company coffers, as part of a scheme allegedly planned by his brother to cover futures-trading losses. Mr Chey denies the charges. The Federation of Korean Industries, a chaebol pressure group, has urged prosecutors to go easy on Mr Chey. They say that punishing him would harm “entrepreneurial spirit”.

Mr Chey has had previous scrapes, having been convicted of a billion-dollar accounting fraud in 2003. He eventually received a full pardon from the president and was also chosen to represent the nation during the 2010 G20 summit, leading a meeting of international chief executives. Lee Kun-hee, the chairman of Samsung, received a similar pardon in 2009, having been found guilty of tax evasion, and was picked to front South Korea’s bid for the 2018 Winter Olympics. Yujeon mujwai, mujeon yujwai—an old expression meaning “money = innocence, no money = guilt”—is enjoying a resurgence in popularity. 
What do you think?
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

Feb 8, 2012

Minimum Wages in China on the Rise: Shenzhen, China Wages

Beginning February 1, 2012 the minimum wage increased in the City of Shenzhen to ¥1,500 (RMB) per month. This is the highest minimum wage in mainland China.

Overtime wages have also increased with the new law stating that overtime pay must be 1.5 times the hourly rate based upon the monthly wage and number of hours. Weekend overtime has also changed to 2 times the hourly rate and holiday overtime to 3 times hourly rate.

In addition, all employees must now contribute 18% of their minimum wage to the Pension Fund (Social Insurance) for a total of ¥270 with the employer responsible for paying ¥150 of the ¥270 and the employing paying ¥120.

Employers caught paying below the minimum wage may be fined ¥30,000 to ¥50,000 and may have their corporate charter suspended. Shenzhen usually increases its minimum wage in April of every year, however, this year Shenzhen, which is one of the most developed and expensive in China, decided to publish the increase early to allow companies to budget after the Chinese New Year.
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, Philippines, Vietnam and the U.S.