Tag Archive for Korea consulting franchise

Everything Korea, January 9 Episode, The Three Korea Facing Business “Must Do’s”

Must do #1
Stay informed on the economic and political issues in Korea that will impact business in 2017.  For many of you, I do this in daily updates.  If you are not receiving and would like to be better informed, please let us know and we’ll add you these updates.

Must do #2
Mentoring and coaching has never been as vital. Anyone in your organization that has exposure and interactions with Korean teams and leadership need this support.  This can range from training sessions to one-on -one mentoring.  Assuming teams will “get it” is like throwing someone in the deep end of the pool and expecting them to swim and not sink.  Sadly, the later has been the model, with a few exceptions…frankly this attributes to employee and leadership struggles—for example, trying to second guess Korea HQs perspectives,  or investing time and resources in projects only to have them stalled, postponed or dropped.  The investment in mentoring always offsets the huge costs tied to frustrating and misunderstanding that lead to leadership and staff turnover, not to mention poor performance.

Must do #3
Finally stay flexible and be seen as adaptive to change.  Provide options vs. singular solutions to challenges.  Offer, when appropriate, even an “out of the box” additional option.

All said, look for more “Must do’s” in the following weeks, with this as a good start for 2017.

As always, we open to discussing your needs and concerns. Stacey, stacey@koreabcw.com, my assistant can schedule us a time to meet, or chat by phone.  For urgent matters, Text me at 310-866-3777

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Everything Korea, The New Year Episode: Gazing Back: A Look Forward

2016 in retrospect.  2017 before us.

From a string of weekly trips to OC/ Irvine, California, home to the U.S. HQ offices of Hyundai Motor, Kia Motors, Genesis, MOBIS Parts, Innocean and Hyundai Capital, to somewhat longer trips to a Vegas Dealer Show, NY and LA Auto Shows, HATCI R&D in Ann Arbor, KMMG and the Tier One’s in Georgia and Hyundai in Canada and even longer treks to Seoul, in 2016 I supported leadership across the Korean OEMs and their affiliates.

This said, it was a challenging year for both the western and Korean overseas teams. Bluntly, we all felt the frustration; the common thread—the need to hit steep sales targets. Layered on top was mounting anxiety from South Korea over a declining export economy and a weakening Won. Not to mention, the political scandals touched to the heart of Korean Groups—their Chairman called into the National Assembly and probed if pressured to contribute monies in exchange for special presidential treatment.

Sadly we also saw the abrupt exit of Hyundai Motor America’s CEO Dave Zuchowski, our long time friend who we advised on all things Korea. Still we are honored to support so many in leadership who come to us for advice and perspective—a role we take with utmost seriousness and hold in deep confidentially.

With 2016 also came new clients and a range of projects, among these working on the PyeongChang Winter Olympics.  Equally appreciated were the opportunities to share my thoughts and perspective to a wide audience including groups like KOTRA NYC, and in media– Branding In Asia who both highlighted work in an interview as well as published a number of commentaries.

So what’s before us in 2017…Trump, the Korean Presidential Election and Succession?

“Trump?”—a name and an uncertainty that surfaces often. I constantly field questions from both Korean and American business leadership on the impact of the election and the new administration. Who would know I would be asked to speak in December about Trump to 45 Korea executives.  I also find it interesting that diverse Trump scenarios tied to possible renegotiation of the North American Free Trade Accord by the new administration were mulled at the Hyundai Motor global strategy summit in Seoul.

Looking forward, trade agreements, US military support for South Korea and dealing with North Korea’s nuclear buildup still top the list. On the trade agreement front, my expectation is at some time during the next year it will be looked at deeper by the Trump administration. However, until there is a South Korean president in office, with the impeachment waiting to be upheld by the Courts, we’ll see no Trump-Korean President summit to drill deeper.

Korea’s Presidential Election 2017

What I will be probing for is the “tone” of presidential hopefuls—2017 an election year in South Korea.  One candidate, for example, is already demanding the Chaebol model be dismantled.

In particular, my thoughts were summed up in Forbes, a timely December Frank Ahrens’ article remarking it was likely an incoming Korean president could ride into office on a wave of populist anger directed at the nation’s elites. Still, says veteran South Korea business consultant Don Southerton, “a new administration will need chaebol support to drive the economy and jobs or quickly lose public support.”

I’d add we have experienced decades of “love-hate” between the Korean Groups and the government. One minute mandating new rounds of regulations such as restrictions on mutual investments and loan guarantees to curtail chaebols—the next minute persuading chaebol leadership to spur growth. The reality is Group support by Samsung, Hyundai, LG, Lotte and SK is needed to create jobs, invest in R&D and support an incoming president’s initiatives to grow the economy.

Less likely considering the emergence of a more cynical generation that may threaten to upend an old system, nevertheless seeing disruptive politics emerging globally, we could even a new president promising change but openly allied with the chaebol as engines of growth.  We’ll have to wait and see.  That said, at least in the short run post-scandal I see Groups coming under pressure in laws and regulations designed to increase financial transparency and accountability of family members.

Finally the Succession issue…

What stood out at the recent National Assembly grilling of the top chaebol Chairman, many men in their late 70s, was the targeting of now defacto head of Samsung, who has assumed his father’s role. With the mantle of Samsung now handed to the third generation of the Lee family, we may see similar at Hyundai and the other top Groups.  In fact, South Korea’s textile giant Hyosung just announced with year-end the ushering in the era of the group’s third-generation management.  I expect more announcements in the weeks to come…

What will this new generation bring forth? For one, Samsung’s successor Jay Y Lee has promised to abolish the conglomerate’s “control tower” the Future Strategy Office in response to criticism about the office’s role in the group-wide business command and control operations. No major decisions such as acquisitions or entering new businesses without the FSO’s scrutiny.   On a side note, Hyundai Motor Group is one of the few groups that doesn’t operate a de facto control tower. Unlike more diversified chaebol, Hyundai core business is automotive with its affiliates already aligned in supporting a common interest.

As for succession at Korea’s second largest conglomerate, Hyundai Motor Group’s heir E.S. Chung continues to take a more visible leadership role. For example, E.S. Chung has sought to break away from the old model of a strictly Korean leadership team to more diverse international team as part of his strategy to better position their brand. More recently he re-structured the annual year-end global strategy meeting of 50 Hyundai and Kia Motors Korean executives from their overseas branches. What stood out was the collaborative, open discussion based structure of the summit vs. an older conservative and hierarchical format in which the head of each overseas branch would give a one-way briefing to the Chairman.

We can assume E.S. Chung will continue to follow his design-loving passion, and consensus-building management style in 2017.

Summing up

2017 may be seen as a year of uncertainties—both domestically in Korea and internationally with the potential for a weakening global economy, more disruptive politics and tightening of budgets and spending.  The later is concerning since cutbacks would only hamper sales in what may be a tough market.

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Everything Korea, December 19th Don’s Year-End Thoughts

Returning from Seoul, I find myself pondering on the remaining days of 2016 as well as the upcoming year. Until recently a hot topic for local news in Korea, I saw less significant concern than I expected for Trump—with most recent focus on Prime Minister Hwang now heading up the government in the wake of the impeachment of South Korean President Park.

In reflecting on my meetings, I found some groups wanting to hold back on discussing new initiatives, their organization tied to the recent president scandal–the mood to lay low until the storm passed.

In other instances I saw annual restructuring underway and teams in a “wait and see” mode.  As is common, restructuring bring with it changes in leadership, management and working teams. More so, on-going programs might be revisited and for the new year may be entirely dropped, downsized, or upgraded… again warranting teams waiting to see what unfolds.

For others, it is business full speed ahead, tight timelines requiring action even before the holiday break. In several instances my meetings centered on plans for 2017, colleagues discussing our next steps and now reporting them to the leadership before year-end.

As for my thoughts on what 2017 will bring, look for my upcoming year-end commentary due out over the holiday break.

Questions, Comments?

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Everything Korea December 12, A Favorite Lesson

I share much on business norms and expectations with Korean, American, and global teams and management.

I, too, have learned much in exchange.

In fact, I’ve been fortunate to have a number of senior Korean leadership share their opinions and thoughts.

For example, I was asked by a Korea client to find out if a successful and high profile American brand was interested in the Korean market. If so, the Korean firm would like to be considered as a potential partner.

After talking to the American brand’s Founder and CEO, a legend in the QSR industry, he politely shared that their plans were to focus on the US market. Any Asia expansion would not be for at least years away.

A few months later while they were visiting the US, I hosted the Korean client’s Chairman and his wife at a VVIP lunch meeting with an iconic American restaurant.

Over the meal, the Chairman’s wife quizzed me on my progress with the American brand. I explained that the US brand’s Founder and CEO was polite, but they were not currently looking at Asia and Korea.

Pausing a moment, the Chairman’s wife expressed that their Group was still very interested in the brand for Korea.

She then hoped I’d keep trying and not take “no” for an answer; adding firmly that sometimes we need to “Knock on the door a 100 times!”

My Korean client’s success was evidently rooted in their perseverance and not taking “no” for an answer. A trait we find in many of the leadership the top Korean Groups.

Take away

When challenged with an issue, situation, or problem…we need to “Knock on the door a 100 times, “ not give up at the first impasse.

Questions? Comments?

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Everything Korea, December 5 Episode: ‘tis the Season, the EOY Shuffle

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Year-end Promotions, Re-structuring, and New Assignments: Korea’s Corporate Culture 2016


Year-end organization wide promotions, re-structuring, and new assignments for teams are part of Korean corporate culture. Top to bottom within Korean companies they occurs sometime between early December and early January, with the changes to senior leadership happening first, and team level changes as a norm made known the week just before or between Christmas and New Year’s Day.

After the Holidays, teams then report back to work. Some assume new roles frequently in departments they have little experience–requiring employees to acquire new skills–sink or swim. Meanwhile others are en-route to assignments in overseas operations; a challenge for those working outside Korea for the first time. In the days that follow those shuffled brief their replacements, as staff remaining in their jobs update new management teams on the status of projects and issues.

Some years we do see less re-organization of the teams, departments, and division—some years more. The later can be driven by leadership looking to “shake up” the organization to spur growth.  All said, change is commonplace and an accepted side of Korean business.

This year’s concerns in the Korean economy had prompted the major Korean groups to initiate a November early start to the year-end re-structuring…. But no sooner than announced, the Korean Presidential scandals has required the Groups to re-consider, pushing off the early annual move. This said, LG, CJ and Kolon have finally started their annual shifting of staff…… Media reports Samsung and SK to do so very soon, too… with the Hyundai Motor Group planning to announce promotions of executives at the end of the month

So what to look for later this month.

The top Chaebol will post their promotions and provide some insight on trends.  For example, we’ll see public announcements in the Korean language business media on a total number of the leading chaebol executives promoted–those advancing from General Manager (bujang) to Director (e-sa), and above. The Chaebol usually also comment on whether this year’s promotion number is more or less than in the past and “why.”

More recently the number of female employees who are made executives with a Group has been highlighted, a gradual move upward by women in the ranks. This is in contrast to a time when they were considered temporary staff and not long-term staff on track to be considered for management.

Finally, for teams below Director, time in rank promotions follow a model of 3-4 years for each of the first tiers up to Manager.  For each upper managerial level—Deputy General Manager and General Manager– 5 years in a common tenure between each grade level.

For global teams, I suggest you congratulate those promoted, but also be sensitive to team members who were passed over… time in grade just one criteria for promotion.

Questions? Comments?  Just ask

 

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Everything Korea: November 28 Episode, South Korean Impeachment, a Growing Likelihood?

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Commenting on the impact of the Trump election on Korean trade for the past weeks—Korea-facing trade an area of my expertise– I have been hesitant as a Westerner to offer my views on the indictments against South Korean President Park.

Nevertheless, impeachment seems a growing likelihood. Politicos now predict the National Assembly will secure the required two-thirds majority vote needed to pass an impeachment bill. To this point, I feel the compelled to share what “next steps” we may see unfold. Pouring over scholarly updates including my longtime friend Professor Steph Haggard’s insightful “ Park Unraveling” series https://piie.com/blogs/north-korea-witness-transformation, I present a number of “If’s,” in short of President Park stepping down and resigning.

The “If’s.”

1. If the National Assembly moves forward and passes an impeachment bill, the Constitutional Court is then responsible for deliberating the case. In addition, President Park’s powers would be suspended with the Prime Minister charged to lead the nation during the interim.

2. The Court then has 180 days to make a ruling on whether charges against the president warrant impeachment. If the Constitutional Court upholds the impeachment bill, the South Korean Constitution stipulates a presidential election must be held within 60 days. That means if the Court takes the full six months to rule on the case, the election would be held in August 2017.

3. If the Court rules in favor of impeachment, President Park would be stripped of her post and could face criminal and civil charges.  Under Korean law, presidents while in office are immune from prosecution short of treason or insurrection.

4. It is worth noting, the next South Korean presidential election is scheduled for December 20, 2017. In the event, the Court rules in favor of President Park, incumbent Korean presidents are limited to a single 5-year term in office, and President Park could not seek re-election.

5. With no clear favorite yet for 2017 presidential election along with if President Park is impeached triggering an earlier election, pundits do feel the current United Nations Secretary-General Ban Ki-moon, a former Korean Prime Minister, positioned well as the front-runner amid a field of opposition party hopefuls.

All noted, with the situation subject to change and fluid, we’ll have to take a wait and see approach to what unfolds next.

Comments and questions welcome.

 

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Everything Korea: November 14 Episode: Trump and South Korea Trade

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I would not be fitting without sharing my thoughts on the recent US presidential election and its potential impact on US Korea global business. To many in Korea the election results are troubling… another layer of stress and concern amid a downturn in Korean exports.

Trade agreements, US military support for South Korea and dealing with North Korea top the list.  On the trade agreement front, I was a supporter of KORUS FTA both prior to its ratification and contributing a number of high profile articles on the benefits of the treaty.

From 2012: https://bridgingculturekorea.blogspot.com/2012/05/korea-facing-business-2012.html

From 2013: http://www.uskoreaconnect.org/blog/2013/04/trade-in-ideas-a-hidden-benefit-of-korus-fta/

From 2014: http://www.uskoreaconnect.org/news-events/newsletter/newsletter-3-2.html

More so, I’ve commonly referred to KORUS FTA is news articles, interviews and speaking engagements.

My clients Hyundai Motor America, Kia Motors America and well as Mobis Parts America benefit from the treaty…  although I’m told 60% of the two OEMs finished product sold in America are made in US plants. (Some engines and a number of Tier 1, 2 and 3 components are still imported, but much less than when the plants were established).

Frankly, I am more concerned with trade agreements with Mexico. Korean Groups, Hyundai, Samsung and LG operate plants across Mexico for local demand and export to America.

As an example, a new Kia Motors Mexico plant opened earlier in 2016 with plans to supply up to 80% of their capacity for export. A heavy trade tariff on Mexican goods exported to the US would be troubling not only to Kia, but a growing wave of Korean Tier providers. On a side note, opening a plant in Mexico for an OEM is not only about labor costs and savings, but eliminates a heavy tariff on vehicles the brand also wishes to imports into Mexico.

In addition and less know as another example is Hyundai Motor Group affiliate Hyundai Translead, who I have also supported. First developed under the maquiladora program, trailers made in the Mexico plant currently are sold in the US—check out the back of a Wal-Mart trailer you see on the highway for the Hyundai logo… or this Hyundai Translead video.

As for Samsung Electronics, since the 1980s, with the construction of an electronics complex (SAMEX) in Tijuana, where TVs, color monitors, and mobile phones are currently being produced. Samsung Electronics Mexico (SEM), a local sales subsidiary, was established in 1995, and now the operation has been expanded to include refrigerator and air conditioner production. Samsung Electronics also has local production of side-by-side refrigerators, front-loading washing machines and other high-end appliances.

All said, Detroit’s Big Three automakers — GM, Ford and Chrysler — all have production plants in Mexico, and any hefty tariff would impact them as well. In addition, GM’s Korea plants produce cars for the US market.

With more questions that answers, I’ll be revisiting the impact of the elections as it unfolds over time. So stay tuned.

Oh one more thing-

Regarding North Korea, I see with President- elect Trump’s unpredictable, and aggressive way of thinking it may make Pyongyang more cautious about its military provocations.

Questions and comments welcome.

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Everything Korea, October 24 Episode: Deconstruction

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As I have shared before, supporting clients and their challenges requires getting to the core issues. It’s distinguishing between what may be, for example, a local organizational, or what may be tied to the Company in Korea. It then requires probing for any cultural impasses before providing a practical solution and a work through.

Much of this work is first listening carefully to clients and their challenges.  Equally valuable is walking around the corporate offices, observing and capturing multiple viewpoints.  Nothing beats being onsite. Nothing beats getting face to face.

Too often, I find challenges as murky, complex and layered with frustrations, so a deconstruction is needed.

In most cases, I bring a fresh perspective—one rooted in years working with Korea-facing business.  I’d like to share that in addition to mentoring, my work also involves directly supporting specific and very select high profile projects with clients.

Next Steps

As a next step, I suggest we set a time to discuss how we can work together. My personal assistant Stacey at stacey@koreabcw.com can coordinate a time for us to meet or chat by phone.

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Everything Korea October 17 Episode: “That wouldn’t work in Korea”

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This remark can be heard often.  I personally have experienced it pop up in discussions while at working for Korea companies. It surfaces often in chats with my Korea facing international clients.  In particular, it’s an issue when Korean firms promote themselves as “global, “ but push back with few wanting to move beyond the standard response “That wouldn’t work in Korea” or the caveat “That’s not how we do things at [insert company name] – most often this is when international teams seek to share their global approach to business.

Frankly they are right–things do work well in Korea, but this is the very root of the problem for a list of reasons.  For one, if global brand or company enters the local Korean market with a new product or service they bring an international model, which needs to be followed A-Z.

I’ve seen brands and projects falter when they do not embrace fully or the local partner picks and choices what they see fitting well, dismissing what they see as “different.”  At times one has to question the motive behind this pick and choice, especially when drilling deeper –Control or Openness to Change– becoming the real issue.

On another level, asking global team to follow Korean corporate norms outside Korea is a huge and growing concern. Policy developed in Korea which works well in Korea, rarely translates internationally. More so, when this means decisions for what should be local have to come from teams Korean HQ.

Of course working through these issues is where I come in… mentoring, giving perspective, providing context, sharing workarounds and facilitating the change we seek.

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Everything Korea, October 10 Episode: Just Back from Seoul

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I’m just back from Seoul. With “Meet and Greets,” more than once casually bumping into few longtime friends in the hotel and at the airport, a number of high level presentations, a VIP tour of Hyundai Card’s two newest venues—the Music Library and the Vinyl and Plastic retail store, and an even a day trip to PyeongChang, home to the upcoming 2018 Winter Olympics, the days and nights stayed busy.

Amid all the travel, I study the corporate Korean workplace.  It’s the sub-culture within the different Groups and their affiliates—nuances– that capture my attention.  Marketing teams, for example, dressing ever more casual, ties less and less commonplace, meetings in coffee shops adjacent to corporate offices, not to mention many teams working Remote in the cafes with easy to access Wi-Fi.

Still often we see some constants—older senior executives in their company car, usually black Mercedes, BMWs or Hyundai Equus (now Genesis G90, but badged in Korea as EQ 900), the exchange business cards, although less formal in how they are presented, the dominance in the local market of the top Groups—Samsung, Hyundai, SK, LG and Lotte, as well as annual strikes underway—on this trip Hyundai Motor Company’s union and the subway and railway unions.

All said, what continues to linger in the workplace is rigid canons in the Day to Day — hierarchical top down management and communications, risk avoidance and zero-sum mindsets, and although companies boasting their globalism, few wanting to move beyond the standard response “That wouldn’t work in Korea” when international teams seek to share their global approach to business.

Of course this is where I come in… giving perspective, providing context, sharing workarounds and facilitating change.

Care to discuss?

My personal assistant Stacey at stacey@koreabcw.com can coordinate a time for us to chat by phone, meet or handle by email.

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