Feb 13, 2013

Failure of Yahoo in Korea: Is it the Cranky Korean Consumers?

Having worked in Korea market entry in one capacity or another for the past 15 years, I can assure you that making it in Korea can be more difficult than in many other countries. One can easily – and often correctly – blame foreign companies for giving the market short shrift when Korea needs to be taken as seriously as, say, Japan and China – the two neighbors that consistently, if not always fairly, outshine Korea.

At the same time, there is a complacency among Koreans with that what they see on the peninsula as being probably as good as it gets and there is no real need to change their ways – unless, of course, other Koreans are making changes. While the marketplace is remarkably less xenophobic than thirty years ago, there remains a strong desire to buy Korean. Part of that feeling is based on nationalism, but part of that attitude is premised on the insecurity that there will not be adequate post sales support when buying foreign products and services.

Remarkably excellent post-sales support is key to being successful in Korea. In the past, until Korean products’ QA required massive post-sales support to be credible values. But now, after Korean QA levels have risen, the consumers and corporate buyers have become accustomed to world leading after sales support. And those expectations have become hidden trade barriers for offshore companies which are hard pressed to provide that kind of support infrastructure on their own.

For that reason as well as efficient market penetration, most successful foreign companies in Korea end up partnering with established Korean companies rather than going it alone – at least at the foreseeable short term.

A good article in the WSJ on the issue may be found at: Cranky Consumers Force Yahoo out of Korea?

by Tom Coyner
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SeanHayes@ipglegal.com

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.

www.ipglegal.com

Feb 7, 2013

Happy Lunar New Year: From IPG Legal


IPG Legal is an international Asia-focused law firm and business advisory focused on assisting clients in entering and succeeding in Asian markets, including China, Korea, Hong Kong and the majority of nations in Southeast Asia.

This past year, among other projects, we are proud to have:
  • advocated for a Fortune 500 company on an ongoing trade dispute with Korean conglomerates.
  • advised international franchise companies in expansion in Asia.
  • advised a high-tech agricultural business in a joint venture with a Korean manufacturing company.
  • prevailed in nearly all of our shareholder, international sales, IP, employment and other commercial and contentions disputes.
  • advised a major Korean entertainment company on the majority of its overseas projects.
  • completed a merger between a major Korean technology company and a Chinese government-controlled corporation.
  • successfully raised funds for growing major corporations through traditional lenders and private lenders.
  • been recognized by international rating companies as one of the leading law firms in Asia.

Please feel free to subscribe to our Korean Law Blog and/or Asian Law Blog.
Click Here to Subscribe to The Korean Law Blog
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SeanHayes@ipglegal.com

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.

www.ipglegal.com

Improvement of Korea Tourism Infrastructure: Special Act for the Expansion of Tourism Accommodation Facilities

The Korean Tourism Organization under the leadership of a German-born non-ethnic Korean is the greatest reason for the increase in the number of tourists in Korea. The KTO has been transformed from a government black hole into a vibrant organization with a bold vision.

One of the most significant issues for tourists visiting Korea, because of the drastic increase in tourism over the past few years, has been the lack of adequate accommodation.

Seoul is notorious for having, during peak times of the year, a lack of adequate business class rooms. The situation is even more dire in many of the more remote areas.

The recent implementation of the Special Act for the Expansion of Tourism Accommodation Facilities is intended to help resolve this issues. The Act's most significant benefits includes:
  1. Extending the maximum period for a lease of a hotel facility to 30 years from the present five years;
  2. Decreasing the amount of parking spaces required in a hotel facility;
  3. Increasing, in some cases, of the maximum allowed area of usable building space for hotel projects; and
  4. Decreasing the amount of rent for land leased from the government to private enterprises for the purposes of building a hotel.
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SeanHayes@ipglegal.com

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.

www.ipglegal.com

Finally a Stricter Punishment for Rape in India?

A few weeks ago, there was a brutal crime in India, six  men kidnapped and gang-raped a 23-year-old woman on a bus and threw her onto the streets naked.  Sadly, she passed away in a hospital in Singapore.

The reality, as we well know, is that women, in India, are not treated equally with men.   This fact, often, contributes to a perception by some men that these acts are not so serious.   It is often useless for women in India to even go to the police for serious crimes as the police are, often, reluctant or unable to adequately assist because of the lack of quality human resources.

With a hot debate raging in India over the unfair treatment of women, the President of India, Pranab Mukherjee, agreed to the new rape laws recommended by the government last Sunday. The new laws are stricter and will have harsher consequences for men mistreating women in India. Also, trials will be faster and the sentences will be longer.

Although the new laws will not go into effect right away, a bill with the new amendments will have to pass parliament - may not be too difficult if the protests continue.  The parliament has six weeks to pass the bill and we hope that they do for the sake of mistreated women in India and others worldwide.

For more information regarding the new laws, regarding mistreatment towards women see: "India president approves tough rape laws" by BBC

 by Andrew Yun
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SeanHayes@ipglegal.com

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.

www.ipglegal.com

Feb 5, 2013

Making a Cake in China: Insanely Complicated and How your Business and Legal Advisors can Assist

Most of the time I prefer to write about the cultural differences in the Jungle and how they impact foreigners doing business here. Sure, I can write about the law and it’s changes and provide a list of things that you must do if attempting to do business here.   As I have said before, there are many other websites that do this and at the end of the day you probably don’t want to know or don’t care and in fact should leave this to your lawyer and concentrate on your business.

With that in mind, I had an interesting experience recently when I went to buy a birthday cake for the 237th birthday of the United States Marine Corps. As a former Marine, it is a tradition to celebrate the birthday each year and I thought I would have a cake made and share it and some drinks with some friends here in the Jungle.

So I marched into the cake shop with my assistant, who is a very competent translator (I can speak and understand Chinese, but not cake Chinese as it’s not something I usually need to talk about) and a detailed diagram of the cake that I wanted. You would have thought that I wanted them to make a nuclear reactor or enrich uranium.

They immediately said no. So I asked why and they said “we don’t have a box that big.” I was asking for a plain white sheet cake with some writing on top. "So, you don’t want my money because you can’t figure out what to put the freakin cake on? I’ll bring my own box" and that led to “okay go get your own box and come back and then we will make the cake.” "How about you make the cake and then I’ll bring the box when I pick it up?" “No, we need the box now.” "How about if you take two of your boxes and put them together and then you will have one box?" The look they gave me was the same look I get from my clients when trying to explain the intricacies of cross border mergers and acquisitions and the impact of the Internal Revenue Code.

Okay forget about the 30 second chore of putting two boxes together, I’ll bring a box tomorrow when I come. “Okay.” Whew, crossed that hurdle. “Now what kind of cake do you want?” It says right there on the intricate diagram that I drew. HAPPY 237th BIRTHDAY and then the Marine Corps Logo below it. “Okay?” So, I stood there for a few minutes because when they say “Okay” in the Jungle, you should be nervous. Then they did nothing but just stand there staring at me like I had three heads. Okay, so do you want to write this stuff down? “Okay” Nervous. So, I started telling them how to do their job. I will pick up the cake at 4 pm tomorrow, is that okay? “Okay” Nervous. How much will it cost? “68 RMB per pound.”

And, would you like to tell me how many pounds it’s going to be? “Oh, about seven pounds”. So, I’m paying the equivalent of $70 dollars to get a 14×14 sheet cake? “Yes, that is the price”. Okay, nervously. So, they proceeded to write everything down and then we moved over to speak with the actual baker, who was within three feet of us during the entire 1 hour conversation to make sure he understood. I provided him with the diagram and a color copy of the logo. Here we go again. “We can’t do this.” Why? “We don’t have a box big enough” I’ll bring my own box. “Yes, but I don’t have anything to put the cake on after I bake it.”

How about you put two of those flat pieces of cardboard together and then you can put it on that. “Grunt, okay” “Now where do you want the writing?” Exactly how it is shown on the diagram. “Okay, I can write it in black” Okay. What about the logo? “I’m going to cut out the piece of paper you gave me and put it on top of the cake, where do you want it?” You gotta be kidding me, you need to make the logo out of that edible writing stuff that cake makers use. Haven’t you seen the Cake Boss? “I can’t make the logo.” Why not? “Too difficult.” Well just make it close. “Okay” Nervous. “I can make it in black only.” Why? “It’s the only color we have.” You gotta be kidding? “No.” Okay just don’t put a logo on there and I’ll figure out something later. Well, this went on for another hour, and fortunately I was joined by a Chinese-American friend who has infinitely more patience than me and figured out a way to make the logo out of chocolate from a local friend of his.

If it wasn’t for his help I would have never got the cake and in the end it turned out awesome. So, this story isn’t about the law or how to structure a cross border acquisition or even how to comply with the confusing tax regulations in the Jungle.

It’s about the difficulty of doing business here and how something as simple as ordering a birthday cake can be a huge ordeal. Imagine purchasing custom products from a manufacturer or entering into a Joint Venture with a Chinese company or bringing your products into this market.

A great deal of patience along with competent advisors to help you will save you time and money, but most of all sanity.

By Frank Caruso.  Chair, China Practice Team
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SeanHayes@ipglegal.com

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.

www.ipglegal.com

Protests in Shenzhen, China: Rumble in the Jungle - Have an Exit Plan?

I have been writing for many years on the changes that have occurred here in the Jungle.  I have seen China  and specifically the Pearl River Delta undergo dramatic changes since I first arrived ten years ago and counted 80 construction cranes outside of my hotel room window.

Many of the changes have been positive and I often congratulate the government here for the work they have done in improving education, infrastructure and of course the rule of law.   I leave the criticizing for the pundits and observers who don’t have to operate here and travel freely in support of their clients.

However, the Jungle continues to develop and at the governments’ behest it is moving from a manufacturing economy to a consumer economy, much like its Western predecessors, and with that change comes growing pains and tidal waves. This week has seen some big waves that have affected some of our clients whose government is at odds with the government here (we’ll let you figure that one out) over island and territorial disputes.

It seems that while the governments do their thing to resolve the matter, the inhabitants of the Jungle have taken matters into their own hands and destroyed their businesses, attempted to destroy their brands and forced them to close just because their government is at odds with the Chinese government.

At least eight cities here in the Jungle have seen not so friendly behavior which includes the destruction of private property and looting. We have been called on to help their management and employees deal with the threats and the stress involved and will undoubtedly be asked to help clean up the aftermath and deal with the various governments and the police as we are often asked to do when foreign companies in the Jungle run into angry inhabitants.

While your company or operation is chugging along and your business is operating without any problems, this is a good time to start thinking about what you will do when there are problems – and there will be problems. I don’t know how many times I have come across prospective clients who are shocked that the people they are doing business with in the Jungle don’t share the same morals as they do.

Now is the time to review your risk management plan, your exit strategy (if you have one) and to review your overall business and short and long term objectives here in China. We understand business first and we know how to help your business survive and profit here in the Jungle and we also know how to help you exit.   Better to be safe than sorry.

By Frank Caruso
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SeanHayes@ipglegal.com

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.

www.ipglegal.com

Feb 3, 2013

How to Protect Trade Secrets in Korea: 5 Things to Make Sure Before Subjecting Your Business Secrets to the Korean Market

We receive emails, regularly, requesting advice on the protection of IP rights in Korea and China. Most of the issues I addressed in this blog come from these questions. I realized, after writing over 900 posts on this blog, that I never drafted a post on trade secrets. Don't blame me, blame my paralegal. :)

Definition of Trade Secret
As you probably know, a trade secret is, simply any design, process, formula or the like that is not known or readily ascertainable by a third party that may provide an economic benefit to the individual possessing the trade secret. Notwithstanding, non-compete and non-disclosure agreements, Korea and most countries, typically, only protect trade secrets against an alleged violator when the alleged holder of the trade secret makes a "reasonable effort" to protect the trade secret and is able to establish that it has made this reasonable effort to protect the trade secret.

Protection of Trade Secrets in Korea
1. Identify your Trade Secrets. Draft a document in English and Korean identifying the trade secrets of your company. This does not mean you need to write down the specific details of the trade secret. Example: Formula for the Manufacturer of a Black Carbonated Beverage better known as Classic Coke.

2. Non-Disclosure & Non-Compete Agreements. Have all that you do business with sign detailed and Korean-specific Non-Compete and Non-Disclosure Agreements. Include a liquidated damages clause in these agreements. These agreements should be executed by all suppliers, employees, directors and others in Korea that you are doing business with.

3. Put in Place a Trade Secret Protection Scheme. Before creating a trade secret protection scheme please consider how your trade secret is likely to be misappropriated by others - think, at a minimum, employees, vendors, suppliers and customers. After the analysis, write down the scheme and integrate the scheme into your business. We strongly advise discussing the scheme with a business or legal consultant.

4. Due Diligence. Due Diligence in hiring, firing, engagement with outside business partners and vendors.

5. Enforce Your Rights. If you are not willing to enforce your rights in a Korean court - you will, likely, become known as a company with softball managers and will, thus, likely be the victim again in the future. Don't forget even the large Korean conglomerates are engaged in litigation to protect their IP - some of this litigation is, simply, to defer future violators.

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SeanHayes@ipglegal.com

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.

www.ipglegal.com