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Sep 20, 2012

Why won't the Japanese Emperor Apologize to Koreans?

President Lee Myung-bak’s recent demand that the Japanese emperor formally apologize prior to a future visit has been considered belligerent by vocal Japanese commentators. And yet the emperor needs to stand up and do the right thing, if only for the overall welfare of the Japanese.

While Japanese right-wing extremists often attract media attention, most Japanese are eager to put Japan’s differences with its neighbors behind them. In fact, most Japanese are shocked when they realize the latent antipathy the rest of Asia still holds toward them. This shock comes from most Japanese possessing friendly sentiments toward the world in general and towards Asia in particular. I have repeatedly witnessed Japanese individuals and groups sincerely express their remorse on behalf of their country to Koreans – even if they were born after World War II. Last week, some 1200 Japanese women publicly apologized for Japan’s past sexual slavery.

While most Japanese may not feel compelled to make overt apologies to Koreans or anyone else, I dare say most are willing to put a past generation’s sins behind them, even if it means that someone of authority displays the courage to stand up and do the right thing. There is a precedent. The current emperor’s father broke ranks in 1945 and asked the Japanese people to “bear the unbearable” in accepting defeat.

Shortly after MacArthur arrived in Tokyo, Hirohito presented himself to the American general-in-chief, taking full personal responsibility for all that Japan had done. Asking his son to do something less courageous is not out of line. I suspect that he may be willing to do such a thing. Though the emperor is officially the head of Shinto, he was tutored and greatly influenced by two Quaker women after World War II, most notably by Elizabeth Gray Vining with whom he emotionally bonded. The present emperor has been greatly influenced by Western and even pacifist values that place a premium on understanding and respecting others different than oneself.

So, given all of this, one may ask what the hold up has been after all these years? The problem has not been with the average Japanese. Even Tokyo politicians are not truly liable. The problem is with a small number of people who work in the national ministries. Japan’s modern-day mandarins possess all the group arrogance of their 19th century Chinese counterparts. Their primary concern is not for the overall welfare of Japan but their own insular and elitist well-being. To be fair, this group is really not all that out of keeping with the rest of the country.

Contrary to Japan’s highly valued wa, or social harmony, the society actually consists of highly competitive power groups, often denominated by university affiliation and professional organization. At the top is the Tokyo University/Ministry of Foreign Affairs faction or batsu, consisting of the very best university graduates. As much as this group goes through the motions of taking care of the “little people,” their primary mission is to serve and protect their own interests. That includes honoring and protecting their seniors or sempai, who have served before them – including those who made up the Japanese Government during the 1930s and 1940s.

Japanese politicians, including prime ministers, dare not go against the Ministry of Foreign Affairs, given their wide-ranging political influence in Japan’s public and private sectors. Formal statements, including equivocating “apologies” must first be vetted by the ministry. And to date, no statement has even implied dishonor on prior, now long-deceased government leaders, including senior bureaucrats. To do so would potentially weaken the elitism of these government officials and potentially set a precedent that may hold them accountable in the future.

Given this context, a small number of bureaucrats are holding back better relations with Japan’s neighbors. And today, given China’s rising hegemonic power, Korea and Japan can ill afford squabbling over historical matters when they have much more to gain in cooperating more closely. What is needed is for Emperor Akihito, as head of state, to stand above the cynical concerns of an elite few and do what is right and best for the Japanese people.

 He needs to make a short and sincere apology to the victims of World War II once and for all, and then step down to resume his low profile duties. Only he can unilaterally take this action. His father displayed greater personal courage in 1945.

Can the present emperor do even less today? * The author is president of Soft Landing Korea, a business development firm, and an alliance partner of Odgers Berndtson Japan.

by Tom Coyner.  Senior Adviser for IPG.
Korea JoongAng Daily August 21, 2012

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.

Sep 13, 2012

Korean Criminal Case Judgments to be Public Record from Next Year

The Korea Times has reported that all court rulings in criminal cases, starting next year, will be disclosed to the pubic in writing.  Civil cases will, all, be reported starting in 2015.  The Korea Times notes that:
All courts here, including the appellate and highest courts, will be obliged to provide access for citizens to the texts of their rulings in all criminal cases via online or offline, the top court said, noting the system will be expanded to civil cases from 2015.

So far, the Supreme Court makes public the verdicts of “major cases” online on a case-by-case basis, and those who want to have details of a case need to make a separate request, causing inconvenience to the public and controversy over rulings’ transparency and the public rights to know.

The highest court said it will devise relevant rules within the year for the official launch of the system next year.

From 2014, details about evidence and relevant documents for a criminal case ruling will also be available both via online and offline, it added.

“The decision follows last year’s law revision to disclose all details about the rulings,” a court official said. “We are pushing to open all court rulings on civilian cases starting in 2015.”

To protect the privacy of those directly involved in a case, names in the judgment will go anonymous, he added.

“The disclosure will allow the public to see how judges rule differently over each case, which is expected to boost transparency in the legal system and better protect victims’ rights and interests,” said Roh Young-hee, a spokesman of the Korean Bar Association.

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.

Sep 12, 2012

Korean Distribution/Agency Agreement Basics

Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor.

We see too many distribution agreements that are mere spun U.S. agreements.  Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea.  We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.

Issues to consider for your Korean Distribution Agreement:
  1. Will your distributor in Korea be your agent?  If the distributor is an agent, generally, you will, only, be paying your agent a commission and you will be directly invoicing the client.  Liability and other issues to consider.
  2. Will you Korean distributor be your exclusive distributor?  How long will the relationship last?  How can the relationship be terminated?  Territory?  Scope?
  3. What occurs after termination of the relationship with the Korean distributor?  Return of products, buy back inventor etc.?
  4. Dispute resolution mechanisms? Venue? Arbitration?
  5. Have you created a franchise?  If so, we have some more talking to do.  The requirements for franchising in Korea is much more cumbersome than a mere distribution relationship.
  6. Have you registered your trademarks?  Korea is a first-to-file nation.  If you have an agreement with a distributor - you may be protected even without registering your trademarks - however- register and avoid issues with others. 
  7.  Did you conduct a thorough due diligence on the distributor?
  8. Who handles warranty claims, distribution, support, marketing etc.? 
  9. Is the party signing the agreement authorized to sign the agreement?  Make sure the agreement is properly executed.
We see too many distribution agreements that are mere spun U.S. agreements.  Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea.  We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence. 

Other articles that may be of interest:
Sean Hayes, IPG's Co-Chair of the Korea Practice Team, may be contacted at:
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.

Sep 10, 2012

Vetting Out a Korean Distributor

Too often we deal with clients looking to collect on unpaid invoices to distributors/customers in Korea and resolve IP and other disputes between these distributors/customers because of clients rushing into relationships without vetting out the anticipated distributor or having a very poorly drafted distribution agreement.

Many distributors in Korea are fantastic, while, others are nothing more than order processors -they, simply can't or don't want to sell.   Additionally, in these tough economic times, too many companies, in Korea, are struggling to stay afloat.  If your distributor doesn't know the market, you will find yourself with unpaid invoices from customers and issues with your distributor.  

Do yourself a favor and consider the following before engaging a local company to distribute your products.

10 Ten Things to Consider Prior to Doing Business with a Distributor in Korea

  1. Has the Korean distributor worked with other foreign companies?  If not, you are dealing with a very inexperienced distributor.  Ask for references.
  2. Has the Korean distributor worked with major Korean companies?  If not, you may be talking to the wrong distributor.   Ask for references.
  3. Is the Korean distributor solvent? Does he/she have an office and staff? Too many distributors in Korea are nothing more than a man with a briefcase and a mobile phone.  A successful distributor, normally, has an office with staff.
  4. How long has the distributor been in business?  Sometimes you can find distributors with, only, a few years experience with access that you may need, however, this is the exception and far from the rule.  This exception is, normally, in products that may be new to Korea. 
  5. Has the distributor provided you with a marketing and distribution plan?  If not, he may be just an pamphlet pusher and order taker.
  6. Does the Korean distributor have a capable sales force?  Don't just talk with the company's CEO - talk to the day-to-day sales staff.
  7. Did the Korean distributor provide sales targets for the short, intermediate and long-term? If not, he may, again, be just a order taker.
  8. Have you conducted a background check on the distributor and the distributor's management?  This should be performed by someone who is intimate with the realities of doing business in Korea.
  9. Have you drafted a distribution agreement that is tailored to the Korean market?  Yes, your overseas agreements are not good enough for Korea.
  10. Have you done a market study by a professional in Korea and does the distributor seem to understand the market that you now understand from the study?  Get the market study done by someone on the ground in Korea and coyly review the market study with the distributor in order to gauge his understanding of the market. 
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.

European Union Chamber of Commerce Not Longer Doing Business in Korea by Tom Coyner

This has not been a good year for foreign chambers of commerce in Korea – particularly for their executive employees. This spring the Korea German Chamber of Commerce & Industry conducted a forensic self audit and found its senior executive employee had been regularly using moneys for his personal use without prior approval of the president and board. That led to that employee’s immediate dismissal.

The Korea European Union Chamber of Commerce, often regarded as being more of a private consulting company in that it did absolutely nothing without charging a fee, not to mention the irregularities in not paying value added tax on its magazine advertising, found itself in such tax difficulties for itself and for its top executives’ personal taxes that it had no choice but to shut down. Abusing metaphors, there may be other shoes to drop, given the overall environment. The long unspoken suspicion among long-term business professionals in Korea has been that the larger and wealthier chambers have been corrupt as they have developed increased budgets with insufficient oversight and disregard of their own constitutions when it come to financial transparency.

Huge amounts of membership fees have been collected, executive employees’ total compensations have met and often surpassed those of their largest member representative directors’ levels, and what one may call “interesting” expenditures have been made annually to lobbyists – all without transparent accounting to their members. This situation has continued since the chambers roles, while important, have been in the overall context much less significant than what they claim to be for their members.

Consequently, for good reason, when individual expatriate members eventually start putting “one and one together,” the rational conclusions have been not to blow the whistle, since risking the political blow backs have not been worth it, and in a few months, the newly aware executives would be transferred out of Korea. So none have been motivated to shake their hornet nests. What changed this year has been a major personality clash between an elected president and his executive employee and the Korean tax authorities deciding to look into the finances of a chamber.

I have no idea if there have been any whistle blowers involved, and if there were, I have no idea what may have been their motivations. But the first two shoes have fallen – and dramatically. So, how may this phenomenon be prevented? I have two or three simple suggestions:

 First, the chambers of commerce need get out their constitutions, take long hard looks and enact their articles in terms of the letter and intent, with a special concern on financial transparency to the memberships. The glossing over annual public statements of accounts has been providing too much cover for both real and imagined shenanigans.

Second, develop and maintain proper relationships between the elected presidents and the hired executive managers that is cooperative and yet not too buddy-buddy, along the wink, wink, nudge, nudge variety. These cordial relationships must also serve as check-and-balance functions and not allowed to be perceived as possible partners-in-crime fellowships. Third, the boards of directors should consider conducting discreet forensic audits.

Yes, there are annual audits being conducted, but one wonders about the auditors’ distance from those he or she is auditing and whether the past audits’ criteria have been sufficient. In the case of the German and European chambers, proper, preemptive audits would have prevented much of what has happened this year. The other chambers could well be sitting on their own time bombs.

by Tom Coyner.  Senior Commercial Adviser to IPG.  

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.

Sep 5, 2012

Korean Constitutional Court Declares Privacy Protection Law Unconstitutional

The Korean Constitutional Court, unanimously, declared Clause 5 of Article 44 of the Act on the Promotion of Information and Communication Network Utilization and Protection implemented in 2007 unconstitutional.  The law was declared unconstituional in late August of this year.

his Korean law was passed in reaction to suicides of Korean celebrities. These celebrities were criticized online for various alleged improprieties. The law required, on certain websites, the logging into the website with one's national identification number, thus, limiting the ability to speak anonymously.

Numerous Constitutional Law scholars and free speech advocates emphatically argued that the law was nothing more than an attempt to stifle political speech. Since, naturally, posters would fear the wrath of the government if criticism was levied against the government or heads of Korean corporations.

The Constitutional Court, in striking down the law, noted that: "Restriction on freedom of expression can be justified only when it is clear that it benefits the public interest." This vague tests, inter alia, was applied to strike down the law.

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.

Sep 2, 2012

Seonbei-hubei and Greying Radicals: Why it Matters for your Business in Korea

As an American who has spent half my life in Northeast Asia, it has taken me some time to get my head around why we see so many more graying radicals on the left and the right in this part of the world than we see in the West.

Last week, I was reminded about this widespread political phenomenon while reading an article about Kim Young-hwan in this paper’s companion, the International Herald Tribune. Kim Young-hwan was an iconic student leader of the 1980s who essentially embraced the juche, or self-reliance, ideology. He jumped at the opportunity to secretly visit North Korea, where he met Kim Il Sung. What should have been the highlight of the trip unexpectedly turned out to be the nadir.

What the student leader encountered was an old dictator remarkably unfamiliar with a political philosophy purported to summarize his wisdom. Disillusioned, young Kim returned to South Korea. Unlike a number of leftists who have visited North Korea and simply come back home greatly disappointed, Kim Young-hwan has publicly repudiated his earlier politics and actively criticized the North. If he had been a prominent American making a similar reversal, this would not have been quite so remarkable. But as a Korean, he has done what many would consider to be unthinkable. Given that this is a South Korean presidential election year, that article had some additional important, if latent, meanings for observers of Korean politics.

Westerners may scratch their heads as South Korean leftists continue to act as unabashed apologists for the Pyongyang rulers given the plethora of evidence that has steadily arrived in Seoul from many sources over the past years. The previously referenced newspaper article gave some insight in that most of South Korean leftists have never been to North Korea.

But there is another, perhaps even greater, factor at play that is not unique to Korea, but one many say is endemic to various societies in this part of the world. That is the vast and interlocking webs of seonbei-hubei (or in Japanese, sempai-kohai) relationships. These master-follower relationships make it remarkably difficult for a master, such as Kim Young-hwan, to do a 180 given his obligations - political, psychological, social and otherwise - to his followers. The fact that he reversed himself - and kept active in politics - is simply incredible. It takes real guts and tremendous gumption to make a flip-flop like this in East Asian culture. Normally, the aftermath of this kind of reversal is a loss of face for the entire group and often has much worse consequences for the master. So one can imagine the thousands of hangers-on associated with far left legislators and political activists in South Korea.

When they eventually realize they have made a gigantic wrong turn, many have - or will - opt to quietly drop out of sight. Others, such as professional politicians, usually do not have that option. They must go blindly forward, hoping against all the evidence that they may somehow eventually be proven right. In their wake trail their “true believer” followers. And over time, many of these followers develop their own cadres of followers.

This is the very dangerous flipside to the many positive attributes of the Asian master-follower relationship. When the relationship is based on virtue and reality or whatever constructive paradigm, these relationships can be extremely valuable to both society and the directly concerned individuals. However, even when such relationships are discovered to be essentially anchored to lies and ignorance, it is nearly impossible to change if the relationships have become established over the past decade or more. The concerned parties are pitifully roped into fallacies that most East Asians cannot expect to escape.

All they can do, such as with South Korean leftists, is to gather for drinks and ineffectually sing revolutionary songs, pretending they are protectors of an imaginary flame. It’s all very sad - and it is also much more common than many folks care to recognize, on both the left and the right. But more importantly, this kind of social inflexibility can have a significant impact on the political process. All of this makes it particularly difficult for East Asian societies to have responsibly functioning democracies.

The fact that South Korea probably has the best operating democracy in this part of the world is a real achievement given the cultural foundation. Why is this posting appearing on a law blog? How does this seonbei-hubei relation affect your business in Korea? by Tom Coyner. Senior Commercial Adviser for IPG.

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.