EU Chamber of Commerce in Korea (EUCCK) president Frans Hampsink didn’t pull any punches during a press conference yesterday announcing the EUCCK’s annual report on trade barriers in Korea. In his opening address, Mr. Hampsink poured cold water on the government’s “Northeast Asian hub” initiative and its efforts to attract foreign investment. It wasn’t pretty, but he did offer some helpful advice as well:
1. Northeast Asia Hub :
The EUCCK feels that Korea currently lacks a real long-term development project for the future of its economy : we think that the Northeast Asia Hub project which appears to be Korea’s only strategic response to counter the rise of China is an “ad-hoc” initiative. The danger is that the Country is destined to be only a logistics “niche” by taking advantage of Korea’s geographical position between China, Japan and the Russian Far-East, but missing the greater & wider economical opportunities.
EUCCK’s Recommendation
The EUCCK thinks that the piecemeal opening of several localized FEZ within Korea is far from sufficient to make FDI here an alternative option to FDI in China. China itself has FEZs in so many cities with attractive conditions supported by its very strong economic growth and the usual low costs. The only real long-term option for Korea would be to turn the entire country into a free trade zone : this move would transform Korea into the “Free Trade Hub” of Northeast Asia by taking advantage of its value-added hi-tech sectors and first class infrastructure creating a very competitive services platform for the surrounding countries following the examples of Singapore and Dubai. This is a proposal that China can never offer because it is too large to consider such an economic model.
Korea has had a tough time as of late in the investor relations department. Last week, the Financial Times (paid subscription required) blasted — in article and editorial form — “economic nationalism” in South Korea, a charge vehemently denied by the government and local pundits. The FT, apparently on a roll, followed up the next day with another piece on foreign funds that, unfortunately, I didn’t get to read, but judging from this selection, I gather it doesn’t paint the current administration in the best light:
Hardly a day goes by without one of South Korea’s myriad newspapers declaring that the country is on the way to becoming the “hub” of north-east Asia - a logistics hub based around the southern port of Busan, a manufacturing hub centred in the North Korean industrial park at Kaesong, or a financial hub in Seoul.
South Korean officials never tire of detailing ways the country will become pivotal to the region. But to foreigners doing business there, such ambitions seem laughable, even hypocritical.
Well, that doesn’t sound very good. Not entirely sure all the criticism is fair, but I’ll leave the punditry on this matter to more knowledgable minds (such as Brendon Carr, who was quoted in one of the FT pieces).
88 Comments
Interesting piece.
You’d think with all this negative news about Korea, the country would be in the shit tank right now. It can’t be all that bad if it’s still the world’s 9th largest economy. Maybe some balance is needed?
I got to laugh at those FT pieces. Koreas love to sit around and tell each other how great each other is.
Watch the KOrean press start yelling things like “racism” or “cultural imperialism” or some “ism”.
You??d think with all this negative news about Korea, the country would be in the shit tank right now. It can??t be all that bad if it??s still the world??s 9th largest economy.
Nobody said it was all bad. Clearly, it’s not. And, in fact, I don’t believe the pieces make that claim, either. They simply point out that the government “Hub of Asia” initiative is a pipe dream as it is currently conceived, and there appear to be worries on the part of some foreign investors concerning what they consider government designs to keep Korean companies in Korean hands.
Wasn’t the Hub thing supposed to happen, like, 10 years ago? No wonder people are getting sick of hearing about it.
i first heard about the hub in relation to inchon airport, which only opened four years ago.
you might be think of the pub situation, which is really moving along.
It’s like the trash advertising all over the city while the current mayor spends time in Denmark ogling the new opera center there. The mayor wants to build a new opera house in the middle of the Han River — which is very much impractical — yet he will do nothing to improve something so basic as improve Seoul by completely banning illegal advertising and to prosecute those that do it.
There is no will to do such but, if there were the will, Korea could become the “hub of Asia” and a much cleaner place.
I wonder what will happen . . . ?
I have always had a problem with these ??Free economic Zones??. They rely on back linkages to the domestic economy. Basically, to me at least, it seems like a way to protect the domestic economy from truly opening up, while getting some of the benefits out of foreign investment. They seem like a protective bubble in the sense that the local economy with Korean style capitalism can proceed unabated, while these zones operate on a different set of rules.
Foreigners don’t want to live in gettos (free economic zones). It still hasn’t dawned on the guys who are on the top that it takes more than just hardware to become a hub. Korea can’t be a hub, it’s too knee jerk nationalistic and the government is a third rate politicking loons. It’s too bad really because the people have so much potential yet the poor leadership in the government and the media hurts them. Korea’s worst enemy is Korea.
I’d love to see the whole country become a free trade zone. Then I could get a damned G5 tower without having to pay this ridiculous 14% VAT!!! GRRR!!!
Some of the comments and questions that come up at every [name your country] Chamber of Commerce in Korea when they invite some officials include:
* If you want FDI so much, why not easing regulations on visas for our foreign employees?
[ Question usually go unanswered. Feeling is that it has something to do with wanting foreign monies but not the people. ]
* Level of English [oftentimes address to a Minister with a PhD from Podunk, Ohio and a terrible command of English. That usually hurts]
* Independent and contradictory behaviours of government officers when dealing with foreign companies and their problems [read: corruption; "fees" vary but are usually excessive. We foreign companies are not cash cows]. This gets usually answered in a factually correct [if totally bullshitarian] manner: I am under the impression that foreign companies are not treated much differently than local companies [factually true: graft is graft; of course addressing the problem of corruption is something that is usually "forgotten"].
Singapore used to be an all-around hub: financial [and still pretty much is], logistics [other big harbours are now getting a larger chunk of the business], and production by way of nearby countries. Same for HK. Now, and of course Seoul/Pusan/whatever doesn’t compete with these two cities, but if we had to compare living and working conditions, where, as an expat employee of a foreign company would you like to bring your family and raise your kids while working? Certainly not in Seoul…
It’s farcical.
The FSC flies to London to investigate Hermes for shady dealings (basically ‘leaking’ falsehoods to the local press about a potential foreign take over of company X, thus raising the stock price, allowing Hermes to dump the stock at a nice profit - caveat emptor), fair enough; but Chey Tae-won over at SK, the man behind one of the largest accounting frauds ever (involving at least US$5 billion according to their largest single investor), gets caught, does a couple of weeks in jail, gets out on bail awaiting an appeal that doesn’t happened and what’s he doing? He’s back running SK with the blessing of local bond holders - Korean banks, with the nod of the Korean government.
The Sarbanes-Oxley legislation enacted in response to massive fraud at Enron and World Com (those involved are getting real jail time) is in place now around the world, so any CFO attached to an American firm operating in Korea must maintain the same level of transparency in the accounts of their Korean holding as is required now in the US - it’s very strict. But a CFO would be mad to sign off on the books in Korea given how creative accounting (fraud) is condoned there.
Just one of a myriad issues that will have to be addressed before Korea has any hope of achieving its hub dream.
Hubcap.
I took a recent casual poll at an Amcham function and the number of people desiring to live in the Incheon foreigners’ ghetto was nil, nada, nunca. The “build it and they will come” philosophy may not work too well. That and the non-spontaneous, planned “Chinatown” shows that they really, really don’t get it. And, “Hi Seoul???” WTF, over? These guys would learn something playing Sim City for chrissakes.
If they want to impress the weigooks, why not start with Itaewon? I heard there’s an excellent plan to make the street a regular Champs Elysees (well, maybe not that far). At least they could shitcan the sidewalk merchants and allow you to actually walk around.
On the plus side, I have to admit the green in front of City Hall is good and Namdaemun seems to be shaping up better. The Ulchi-ro stream may turn out OK, but the fact that it’s still concrete-bedded shows they learned from the Japanese.
It’s a little early to be naysaying what’s getting started in Songdo. It’s not meant to be solely a “foreigners’ ghetto”. It’s expected to attract mainly Korean residents (drawn by the availability of a foreign school(s) and hospital) and hopefully international firms.
Expats already living in Korea and working in Seoul will of course have little desire to live in Incheon. However, newly-arrived employees/managers/etc. of foreign firms that locate in the FEZ may well enjoy living there.
koreans just dont have the rational thought process to become a hub of anything
as soon as you tell a korean how to do something
they say
but in korean we do it this way
they never want to change a damn thing
theres no middle ground with a korean
Dogbert - You’re right about Songdo. If it happens it will attract a lot of Koreans trying to get foreign education and expat newbies may like it. I stand behind my other comments, though.
-_- I just cant stand the Roh administration when they ‘talk’ so boisterous about independant defense, hub economy, balance of North East Asia, but dont ‘do’ anything what they say. Gah, I would really appreciate if Roh just shuts up and does what he always says he will do.
Bottom line for me? Make some pragmatic and realistic long term goals, and that applies to other things than economy as well.
As for the new Songdo City, what Korea can hope for is that it become successful role model for the rest of the country in liberalizing. Once Koreans see how things like internationalized schools and businesses are run, they’ll be lot more open to changes to the rest of the country. I think that’s very do-able.
One thing that should be remembered about New Songdo City is that while it has the support of the Korean government to some extent, its developer is an American firm. Hence, it’s not all “Hub of Asia” b.s., but people actually doing their best to make a profit by building something much the way they would back in the U.S.
To be a “hub” is to be a leader… to be at the forefront of change. Korea always must dragged, kicking and screaming, toward the future.
When it rains it pours - from today’s Joong Ang:
“Korea is seen neither as a financial hub nor a country with rapid growth potential in the Asia-Pacific region, a survey of 456 chief executive officers from the United States, Europe and Asia, excluding Japan has found…Korea was not mentioned in any part of the report as an attractive investment destination. George Pohle, who heads the institute, said CEOs see Korea as caught between developed and emerging market status.”
Maybe if they redesign “hubby” the Incheon mascot.
ducky … touche!
koreans are the first to scream racism, while being one of the most ignorant and racist countries i’ve ever been to *and i’ve been to a lot of countries*
korean business practice is a nightmare. the only reason they have any economy is because of the extremely low minimum wage in the unskilled labour market and the consumer nation they’ve developed.
how many other countries have virtually zero second hand supply and demand. koreans don’t like buying anything used. they’ve been conditioned to buy new, and replace it regularly. consume, consume, consume. handphones are a perfect example.
so people open businesses based on the fact that they have money. they don’t research, they don’t do marketing, they don’t advertise. they open a store and wait for business to magically happen.
the dumbest thing is that they’ll open a galbi restaurant right next to another galbi restaurant. like having 15 beef restaurants in 2 square blocks is a good idea.
then when they don’t make money, they’ll spend money to completely renovate the store. then hope that will attract customers. they’ll keep renovating until they go broke. then they’ll move to the country because they can’t afford a city apartment. or end up trying to sell windshield wiper blades at a rest stop.
or the smart business people who build a 4 storey building and only rent the bottom floor.
korean business practices are scary. very very scary … the eu knows this. there’s no way the eu wants korea in charge of any business venture that’s meant to compete with china. it’ll end up an unused area of buildings like so many vacant or unfinished buildings in korea.
in sokcho population 100,000 there are 5 unfinished buildings that i know of. all of which are bigger than 5 stories. 3 of them are resorts. all are unfinished because the financers ran ou of money.* all of the buildings have been sitting for up to 10 years, untouched! one of those buildings is in the MAIN STREET!
but that’s ok … korea can blame the eu for being racist … because, i mean, everyone’s racist … except korea!
The USA is going to be displaced by the mighty Asians who are highly educated math and science geniuses, hard workers, and cutthroat competitors.
Bulls**t.
Korea and Japan have both proven through their idiotic economic policies that they are their own worst enemies economically. Chinas prolly gonna be the same! Bureaucracy, corruption, cronyism, and xenophobia are the rules, not the exception in East Asia.
Yay America. Thank goodness our competitors are total morons.
Sadly, Korea will not change by having Koreans view and experience foreign schools and hospitals in FEZs. Koreans view and experience lots of foreign stuff by going abroad in college and taking business trips or vacations. They all know, for instance, that Korea’s featureless concrete apartment buildings are eyesores.
They still build them.
A EU bureaucrat lecturing other countries about free trade. Am i the only one that finds this incredibly funny?
I think what’s positive about Korea is that when things look pretty bad, they always somehow rise to the occasion. I remember few years back when the Inchon airport was getting to be ready to open. There were so many negative responses to the airport, that it was a white elephant in middle of nowhere built by clueless Koreans. Well look at it now, it’s voted the second best airport in the world by the air travelers. Look what happened before the 2002 World Cup. I remember the predictions that Korea was going to miserably fall on their ass handling foreign visitors. What happened? They did alright, no major international embarassments. I think harsh foreign criticisms are what exactly Korea needs. It forces and motivates their highly competitive spirit. The hub ideal may not fly, but I think Korea may end up surprising everyone and end up being a strong competitive open economy. As evidenced by their Free Trade Agreement plans with number of countries, it’s not that they lack desire to change. It’s the beauracracy and the isolated small country mindedness that are holding back real change.
“Watch the KOrean press start yelling things like ?橫racism?? or ??cultural imperialism?? or some ??ism??.”
Ducky and dave, do tell us when this actually happens. Until then, it’s just projection on your parts.
You need to have big dreams to achieve big things. You can??t advance by sitting on your ass and being satisfied with what you got.
Yep, big dreams and a big guard dog like the US Army who will sit on your borders and watch your back for fifty years–and pay for the privilege–while you are out working to build up your economy with the loans and grants provided by others.
Then, when you become the 9th, 10th, whatever richest economy in the world you can tell the whole world how you brought yourself up from poverty all on your own and how hard-working Korean culture was the key to your success.
Right.
And as for the FT article regarding new regulations that are angering foreign investors (they were being told they had to report their financial sources/backings to the goverment by last Friday), what confuses me is that when investing in places like the US, one has to do the exact same thing and tons more. Fair enough, such measures are an inconvenience to foreign investors and perhaps shows a lack of trust on the host country??s part, but then again, it??s not just Korea here. From what I understand, by doing this, Korea is simply protecting itself. Also from my understanding (and a news report done on this topic by was it MBC? last week in the midst of this fury) one would have to do the exact same thing in the west.
The reason foreign fund investors are anxious about the new reporting rule is that it sets up the next move: Taxation of funds based on the nationality of the “actual” investor, rather than the nationality of the investment vehicle. This is foreshadowed in the FT articles where a Korean government official (don’t have the story handy) says these measures are necessary “in case it [the investment vehicle] is a paper company.” Corporations don’t exist — they’re ALL paper companies. This continues to perplex me that Korean government officials don’t understand this fundamental characteristic of the company system.
We are worried about the campaign against “paper companies” and “foreign speculators” because it seems to be another instance where the Roh clique is preparing to set aside the laws (tax treaties become the law of the land once ratified) in pursuit of its righteous agenda.
Ariwrong is correct about the maddening interference of petty bureaucrats at the Bank of Korea. Meddling with mutually-agreed investment terms (particularly judging the “fairness” of put and call options) is something we encounter almost every day in one new and surprising form after another.
Re: the Hub pipe-dream and whether the U.S. has similar regulations. It’s true — the U.S. has similar regulations, but in the U.S. there are effective checks and balances on administrative abuse. In Korea there are not. Also, it’s instructive to note that no matter how oppressive the financial regulations may be in America, capital will still come to America. There is no national effort underway to attract foreign capital, and indeed no need to do so.
By way of analogy, did Las Vegas become a boomtown (i.e. attract capital) in the middle of the Nevada desert by adopting “the same regulatory environment” as other places in America, or a “more permissive regulatory environment”?
Hi Ziggy;
Is this better?
“Then, when you become the 9th, 10th, whatever richest economy in the world you can tell the whole world how you brought yourself up from poverty all with the help of the hard working US military sitting in the DMZ to watch over, while hard-working Korean culture was allowed to create success”.
Of course the other popular prevalent thinking is that the US all by itself built up S.Korea to what it is today, despite the handicap named Korea Inc. But I think the above paragraph is more accurate and balances out things better, don’t you?
Brendon, I think this is also cultural. Koreans culturally can’t think beyond the fact that if somebody is a winner then you must be the loser. I don’t know what it is, it could be the over competitiveness that Koreans learn early on. But Koreans can’t seem to fathom that there can be winners from both sides, with both sides benefiting. It always must be about winners and losers. I think that’s why the Free Trade with Chile is such an important event. It demonstrates to the doubters that Free Trade can work, and that both sides can win.
Someone metioned that Korea must do somethings well enough since they have somewhere around the 10th largest economy in the world.
The problem for SK is they aren’t happy with where they are at. They aren’t happy being the 10th or 9th or 11th. They aren’t happy with the level of democracy they have now (compared to many other nations and compared to their past) so they have to beat themselves up by having state run official witch-hunts on their past. And so on.
SK looks back and tears itself up. It looks forward and set “goals” —- and actually believes in them —- that are so unrealistic, other people around the world — in many nations — look at SK like they are on crack. And they aren’t happy in the present.
SK should find a way to really believe in 1/10th of what they say when they are talking as nationalists. Take some real pride and joy in what they have achieved and work from that.
I’m not good on economic issues, but one thing seems clear. If South Korea’s future rise as hub or key player in NE Asia requires them to move their financial sector and industrial opening along the lines of Hong Kong and Singapore, it will absolutely never happen. There is no chance over the next 20 years South Korea is going decide to embrace free flows of money and investment in the Korean economy or give foreign company’s pretty much free reign in SK. And on the longer term, with unification with the extremely more closed NK someday in the future, there is no hope Korea will open as much as this foreign expert says it must if it wants to fill the shoes it claims.
So again, I want to tell SK to learn to appreciate what you have and work with it. Pie in the sky dreams might be OK sometimes, but SK seems to be able to put them out for public consumption in a way that damages Korea’s reputation among people Korea currently needs for good economic prospects.
The idea of opening several resturants (or other types of businesses) all in the same area didn’t make much sense to me either, but I was eventually told this: the idea is that if you have a lot of similar businesses in one area, it will become known for possessing those businesses in abundance, and it will attract people for that reason. I can think of areas where it seems to work (off the top of my head, all the galbi joints near the railroad tracks between Sinchon and Hongdae have been there for over 4 years - so the idea seems to work in some cases. Also, does that idea not inform the idea of red light districts? I certainly don’t know for sure, but as brothels have been technically illegal, I doubt zoning bylaws determined the development of these districts! Perhaps, like the maps in the subway stations where the top is the direction you are currently facing, concepts like opening a plethora of similar businesses in one area are, once you learn the idea behind them, actually pretty smart.
“Yay America. Thank goodness our competitors are total morons. ”
Hah, I have not yet seen a people so generally ignorant as Americans…
“I think harsh foreign criticisms are what exactly Korea needs.”
“I think what??s positive about Korea is that when things look pretty bad, they always somehow rise to the occasion.”
Yup. Which is why I feel Korea is so interesting
“The problem for SK is they aren??t happy with where they are at.”
Exactly. That IMHO thats how SK got there in the first place. indeed, SK has more potential, its growth hasnt stopped yet. I dont see exactly when Koreans will be satisfied with what they have, but you can never succeed if you are satisfied with what you have.
“it will absolutely never happen”
I wont ever label things as ‘never’ (
A EU bureaucrat lecturing other countries about free trade. Am i the only one that finds this incredibly funny?
Comment by madne0 from Portugal
Frans Hampsink is many things, but definitely not a bureaucrat. As President of the EUCCK, he is a corporate member of this association, and was elected [for lack of other candidate, I might add] to this mostly ceremonial position. The guy holding the strings does not appear in South Korean papers [but has appeared in the Rodong Shinmun, next to KJI, among others].
The Ulchi-ro stream may turn out OK, but the fact that it??s still concrete-bedded shows they learned from the Japanese.
Comment by Wedge from Korea (South)
??[??], ??????[?], Ch’??nggyech’??n[no], not ????, ???????, ??lchiro, which is one street below…
Thing is, I actually believe the country could be a NE Asian hub if it played its cards right. I don’t think Korea needs to be pulled in any particular direction by foreigners — there are enough smart guys in the country who know exactly what needs to be done. The problem is that, like Mr. Hampsink said, it seems like these grandious themes — the NE Asian hub and NE Asian “balancer” come immediately to mind — are more ad hoc concepts than well thought-out plans.
korea should simply say thanks for the observations and then quickly forget them. foreigners always get it wrong about korea because they can’t shake their racism when comtemplating korea and koreans. let’s look at some examples, shall we?
’south korea announces it will promote korean dramas overseas.’
the ‘expert’ expat reaction?
‘that’s a god damn stupid idea! nobody in the world wants to see korean dramas! they’re all garbage (even though i can’t speak korean so i can’t really understand them). once people find out how racist koreans are, nobody’ll be interested!’
paraphrased from a recent nyt article:
‘asia laps up korean drama’
here’s some more:
in 97, we heard: ‘that’s the end of korea.”now, we’ll see korea go back to being third world!”bye bye korea inc.”in ten years, they’ll probably be no hyundai (said by a german official from bmw)’. well, now, it’s 2005, uh, you were saying?
in the late sixties or early seventies, korea said it wanted to build ships but no western bank would lend them money because they believed korea didn’t have what it took to build ships. korea now number one.
the list could go on and on because you ‘expert’ expats are always wrong. ships, dramas, electronics, high tech goods, cars. all things build by koreans that many of you said could not and would not be built by them. and let’s not forget all the disasters you predicted for the world cup. again, you were saying?
now, let me show you the truth about koreans because many of you are just too emotional about them to see the real truth:
the koreans are survivors who hate and resent poverty. they’re a people who dare to dream big and as a result, reap big rewards. koreans don’t want foreigners to do for them since they believe they can do anything a foreigner can do and of course, they’re right and always have been right in this regard.
and you expat, have always been wrong. tell me, what major economic prediction have you made about korea that has actually come to pass?
you were saying?
noolji maripkan,
Nice straw man argument. You knocked it down well. The problem is, there are too many of us with experience in Korea who you can’t dismiss as racists.
Unlike Marmot, I believe the idea of SK becoming the hub of NE Asia is pie in the sky talk because South Korean society, not just its leadership, is not willing to take the steps even its own experts say it would need — like opening up service and investment sectors.
You might find it easy to dismiss the criticism of the foreigns doing business in South Korea as just racism, but that just points to another reason South Korean society doesn’t have it within them to become the hub.
Take the KIA (or was it Daewoo?) bankruptcy in the late 1990s when Korea was in shock during the economic collapse. Ford motor company in the US already owned a big chunk of the company and wanted to take on more as the company collapsed, but every time the open bidding would fall to Ford’s favor, the Korean government would step in an squash it and open the negociations up again
Sigh~~~ (shakes head) I try not to get trolled into posting but, I will answer some questions:
Someone wrote,
“koreans are the first to scream racism, while being one of the most ignorant and racist countries i??ve ever been to *and i??ve been to a lot of countries*” I won’t answer this one, because I actually agree that a vast bulk of Koreans are indeed ignorant and racist. But I think the statement “koreans are first to scream racism” to be rather… puerile.
“korean business practice is a nightmare. the only reason they have any economy is because of the extremely low minimum wage in the unskilled labour market and the consumer nation they??ve developed.” Your understanding economics and industrial organization is trully astounding. I won’t do your homework for you, but I suggest you start your research with the topic, “Industrial Revolution.” You should be thinking in terms of what spurrs increased productivity.
“how many other countries have virtually zero second hand supply and demand. koreans don??t like buying anything used. they??ve been conditioned to buy new, and replace it regularly. consume, consume, consume. handphones are a perfect example.” ?? I don’t understand what this proves. But I assume this person never went down the countryside in Korea? There are still people in Korea who use patched up disposable products in everyday use. In fact, Koreans probably don’t have second hand market because they actually use old items. Koreans, even of my generation, wore a lot of hand-me-downs. Even though we didn’t have Salvation Army. I mean, let’s put 2 and 2 together. Korea used to be a very poor country even recently. This distaste for 2nd hand stuff is an after-effect of what used to be the norm only a few years ago.
You also claim that opening up a store next to each other is stupid. This displays your lack of knowledge in business strategy. Let me explain, since you don’t seem familiar with similiar tactics employed by Hollywood Videos to Blockbusters. The reason why they open up right next door to each other, is because of location. Any small businessmen knows that location is key to business. When you open up right next to an established business, you are essentially getting free publicity. People who go to eat Kalbi at Store A will notice that there is a also a Kalbi Store B next door. They might decide to go there instead. If there is a finite number of customers in the given geographic area, Store B might destroy Store A’s business given that Store B runs a better business overall. This is also why Hollywood videos opened up right next to blockbusters-and fought Blockbusters client per client—and Hollywood was popular because people already associated Blockbuster as an evil company that jacked up prices after they killed off the mom and pop video stores.
“korean business practices are scary. very very scary ?? the eu knows this. there??s no way the eu wants korea in charge of any business venture that??s meant to compete with china. it??ll end up an unused area of buildings like so many vacant or unfinished buildings in korea.” That’s kind of funny, because from that statement you seem to allude that Chinese business ethics/practices are somehow better? I hope you aren’t a businessmen… Actually Koreans have a very good understanding of Chinese business practices. One of the main reason is that Korea used to be at the same level of corruptocracy that China is in now.
“all of the buildings have been sitting for up to 10 years, untouched! one of those buildings is in the MAIN STREET!” Good god man, you are going to point to real estate bubble in Korea to prove the foolishness of Korean investors? Ever heard of Dot-Com burst? Actually the Euros are the ones who invented this with their crazy love for Tulips back in the good ol’ days in Amsterdam. Or what about South Sea Bubble? Ahh… I’ll let you do your own homework.
“but that??s ok ??? korea can blame the eu for being racist ?? because, i mean, everyone??s racist ??? except korea!”
Well, let me apologize for every Korean a$$hole that accuses EU but refuses to look at itself objectively. But I hope that you aren’t applying the same logic and bias on Korea as a sort of “tit for tat” measure.
I also think Korea could become a hub(copy the Singaporeans), if it wasn’t for the fact that Korean government is anti-business currently.
my point is to the prediction that korea will be a failure. something many of you expats have predicted time and time again.
never seems to happen.
i’ll take note that you can’t really argue with what i’ve written because it’s the truth. telling me it’s straw man argument is convienient though.
Bravo virtual wonderer
I hate to agree with Noolji on this one (minus the racism complex which he seems to possess). I remember the 1997 Financial crisis when everyone was gleefully heralding the end of Korea inc. It never happened. They bounced back stronger than ever and amassed a world’s fourth largest coffers in only several years. This, from having virtually 0 dollars left. The moral of the story is I wouldn’t bet on S.Korea going down the tubes because they will change and improve if they have to change or they are forced to change. They have the talent but the problem is the political will and the fragmented national unity competing with each other to be on the top. Koreans rally around only when there is a crisis, which is really too bad. The country can achieve so much more in better time.
Never say never, you may end up eating your words again. Who was the US general who said back in 1948 that Korea will always be a starving basketcase beggar country? Could any of the people back then believe that Korea can have the 9th largest economy in the world? They would have laughed and written you off as a crazy if you told them what would happen. Same thing with this hub thing. I think it’s a stupid ideal on the surface, but in the back of my mind, Koreans have been told time and time again, what you’re trying to do is impossible, yet they do it. I disagree with USinKorea. You need to have big dreams to achieve big things. You can’t advance by sitting on your ass and being satisfied with what you got.
South Korea survived the late 1990s collapse in large part due to a massive bailout!! Yes. They did not squander the money and made some reforms and the money was enough to get them past the scare. SK was noteworthy in paying the bailout off. But still, it was the bailout that gave them the ability to climb out.
And who is arguing about Korea’s collapse? I’m not. I’m arguing against damaging today by making moves based on some vague “dream.” I’m also arguing for Koreans to really feel better about themselves than what they actually do. People looking at South Korean nationalism might not understand how just under the surface, South Korea feels like crap. Their boasts about what they have accomplished are predicated on a (false) sense of shame about their past and an unhealthy envy toward richer nations which they use to make these dreams about the future.
What I mean is that Korea’s dreams about being a #1 or #2 economy are way to predicated on SK feeling it is inadequate right now —- Korean society is really unhappy with itself to an unhealthy degree — and I think that is why they feel the need to make bad moves too fast or react too negatively toward the outside world.
“Korean society is really unhappy with itself to an unhealthy degree ”
That’s because it is a sick society. They need to change it. How is it that feeling better about itself make things right again? You can’t improve yourself if you stand pat.
One thing I’ve gotta grudgingly admit is that these Koreans keep running on the wheel enthusiastically like marmots… err… I mean hamsters.
They may look extremely foolish at times, but they’ve suprised me more then once.
And one characteristics about Koreans that balance their often uber-nationalistic outlook is their ability to rip themselves apart. They can be really hard on themselves when it comes to self-criticsm.
Enthusiastic energy is of less value when it is employed in a reactive program such as the ‘hub’ concept. Korea simply doesn’t recognize that companies are already making their choices. As businesspersons here have noted (and are in an excellent position to comment), non-economic limitations in Korea weigh against relocating here, relative to other places. An important element of the hub construction is simply not being addressed adequately - if it were, there would be much less debate.
Sa Hwa Dong had it right, “Korea’s worst enemy is Korea,” in the sense that it pursues grandiose schemes while overlooking the mundane but essential elements that make quality of life — for Koreans — better and ultimately draws investment and business. Too many politicians here want to build pyramids, while they should just concentrate on picking up the garbage.
I can assume that all the comments being expressed here have been heard before by those in charge of these FEZs but nonetheless it’s good to hear Mr. Hampsink remind ROK officials about these issues. And of course things like FEZs are hard to get off the ground and of course there are lots of people out there with their own ideas on how to do this kind of stuff. And that’s fair. I have read that the FEZs are always fielding comments from concerned or opinionated people everyday but as with any initiative lead by any democratic government that does not have a blanket grip on the nation and its operations, there will always be numerous complications in getting these things started: political agendas/conflicts, restrictictions and regulations, etc. And yes it’s unforunate and harmful but it’s not just Korea.
If you take a look at some of the other similar projects in the world that have successfully launched Free Economic Zones, you will see that they too started off in the exact same position as Korea with the exact same problems. This stuff doesn’t happen over night and understandably it is frustrating for foreign investors.
But for all the frustrations the government may create, let’s give them a little credit here. They aren’t completely stupid. They do know their limitations and are taking steps to solve them. For example:
Yes English is a big concern. That is why they are hiring bi-lingual officers (and in some cases native English speakers) from the private sector to help the government in these projects.
And as each year in the project goes by, more and more progress will be made.
Should we be skeptical? Well it’s normal and healthy to have a little cynicism when talking about these things. But should we completely write it off as a failure?
I think that would be an even bigger mistake.
You have to remember that investment is long term and projects such as these are never going to happen immediately without flaws.
Judging by how other FEZs in the world started out, I think Korea is doing just fine. It’s just the nature of this kind of business. You won’t see the results until years in advance and of course there will always be obstacles in the way, wherever you are, not just Korea.
And as for the FT article regarding new regulations that are angering foreign investors (they were being told they had to report their financial sources/backings to the goverment by last Friday), what confuses me is that when investing in places like the US, one has to do the exact same thing and tons more. Fair enough, such measures are an inconvenience to foreign investors and perhaps shows a lack of trust on the host country’s part, but then again, it’s not just Korea here. From what I understand, by doing this, Korea is simply protecting itself. Also from my understanding (and a news report done on this topic by was it MBC? last week in the midst of this fury) one would have to do the exact same thing in the west.
JK - You seem to be greatly misunderstanding the FT article (as the Korean press has). Many countries have anticompetitive laws or goofy business regulations in place. That does not mean these laws are good things that should be emulated. Most of the countries that have regulations on foreign investors (such as the kind Korea is trying to implement) have their regulations grandfathered in from the past. International trade agreements often allow a country to continue certain bad practices. Trying to introduce those bad practices after signing your international trade agreements is quite different.
In addition, the United States, Canada, England, etc., have a long history of protecting and emphasizing shareholders rights. In Korea, shareholders rights are weak and certainly do not need to be watered down further.
If you were to make a top-10 list of business reforms that Korea needs, FEZs and ownership restrictions would not be on many economists’ lists.
As for how great Korea is vs. its failings (of Nooli Noodl and others)… Yes, Korea can make some impressive reforms and successes and whatnot. However, these reforms and things only seem to happen when Koreans’ backs are against the wall. When the Korean government starts getting proactive is when I get worried. How did Korea’s great Visit Korea campaign work out? Did Korea become a Thailand-like tourism Mecca? Nope. Tourism has gone up recently, but that is due to “Winter Sonata” and the Korea Wave… i.e., private enterprise, not government. Koreans can do some really impressive things… but only if the government gets out of everyone’s way first.
jk,
It doesn’t matter that you would have to do the exact same thing in the West, it’s KOREA that’s xenophobic, it’s KOREA that’s racist! If you’re not on the same page, you’re against us!
The idea that Korea can become a ?橫hub?? is a complete JOKE. Becoming a ??hub?? means opening your economy up to foreigners come what may. Koreans run Korea for the benefit of Koreans period (and they like it that way). Becoming a hub means sharing the wealth with waygooks and I just don??t think Koreans are willing to do that. Given the choice of having a smaller pie and eating all of it or having a larger pie and sharing with waygooks, I think Koreans would rather have a smaller pie.
Korean foreign investment laws and financial regulations will never be liberalized enough so that Korea can become Hong Kong or Singapore. The Korean economy is remarkably closed to outsiders. For example, American law firms have branch offices in Hanoi. Meanwhile, U.S. and U.K. firms are still not allowed to open offices in Seoul. Bottom line Koreans are still mercantilist in outlook. Becoming a hub requires the exact opposite mentality.
I suppose things could change but I think its unlikely unless Korea goes through another real economic crisis. The fact that the Korean economy is as open as it is now is because of the IMF crisis. Koreans are good at rising to a challenge when put in desperate straits and DJ did a good job at opening up the economy just enough to pull Korea out of the crisis (and the crisis gave him the cover needed to do it).
This is not to say that Korea can??t remain a prosperous country and continue to grow its economy. You don??t have to be a ??hub?? to become relatively prosperous. Japan is RICH and it certainly ain??t Singapore (although it??s relatively more open to foreigners than Korea). However, the hub talk is complete non-sense unless Koreans completely change their worldview regarding foreigners in relatively short order.
j/k
Can you be more specific? There are very few regulations in the U.S. regarding foreign investment. When I was working in the U.S. for a dot.com back in the glory days of the tech bubble, we got venture capital money from Europe and South America and these investors didn??t have to get any government approvals. From personal experience, I know in Korea you have to deal with Bank of Korea foreign exchange regulations on every investment made in Korea by a foreigner. Petty bureaucrats at the BOK (who generally don??t have a clue what they are doing) can object to certain provisions in an investment agreement that sophisticated financial parties have already agreed to. It??s a real goofy system. (This was a few years ago and things may have changed.) Even the Japanese don??t have anything like thi
Thanks for your explanation, Brandon. (As I said earlier, the whole situation seemed to confuse me and I’m still not sure I 100% fully understand it but I do understand it more than I did before, at least.)
While I think it was important that EUCCK spoke out about these things, I personally don’t think (as some readers seem to feel) that the Korean government is completely ignorant of all these issues that have been brought up. I can assume that as the Marmot said, there are some very smart guys working on these concerns from the Korean end who are very aware of Mr. Hampsink’s frustrations and have been all along and who are internally working on improving the current FDI situation in Korea.
Sorry, I mispelled your name Brendon.
sa hwa dong,
fta is quite important, i agree. and given your explanation of korean culture that there is no win-win in korean culture, i agree more than 1000%.
fta with chilie works only because there is no competing industry in chile. not semiconductor nor car nor tv…
(good thing is i can enjoy chile wine bit cheaper than before)
so i guess its is extremely difficult for korea to have fta with japan, china, other s.e.asian countries where the industry structure are similar.
About Chile,
With one exception, agriculture - it’s been far more protective than any other industry anytime. I think it’s breakthrough even to defy and break through the grips of farmers who almost staged a revolution last year.
Korea First Bank, as of today, is officially the sole property of Standard Chartered Bank.
A specific problem I have personally experienced with regard to Korea and FDI are with Korea??s government laws/bureaucrats. These are anecdotal so take them for what they??re worth (but both seem to be a rather common phenomenon from having talked to others doing business in Korea.)
There are a couple of problems with Korean law. One the fundamental idea under Korea commercial law seems to be that if it is not specifically permitted under a government regulation, it??s not allowed. In the U.S., it??s the exact opposite (assuming there is no fraud) the general idea is that anything not specifically prohibited is allowed. The Korean approach at first amazed me. It means it??s difficult to do the simplest things. For example, you can??t issue warrants in Korea unless they come with bonds for some crazy reason and you have to twist yourself up in knots if you want to issue simple stock options. (It also stifles innovation but that??s a whole nother issue). Second the laws that are on the books are way too vague. The length of govt regs are a joke and my understanding is that court cases have little precedential value.
Both of these factors have the consequence of giving government bureaucrats way too much arbitrary power. The vagueness allows bureaucrats to interpret laws however they like and the fact that most things are prohibited means the burden is on you to prove something is allowed rather than on the bureaucrat to prove something is forbidden. Combine this legal system with (i) the arrogance of a lot of these guys (many of whom are Seoul National grads), (ii) their suspicion of foreign capital, (iii) their inability to process rather than memorize information and (iv) their petty corruptness ?? and t can be a real pain for anyone that wants to do business in Korea. Some of the most frustrating moments in my life have been spent in meetings with Korean government officials. Just a note on corruption, my understanding is that things have gotten better. (It??s been a few years since I??ve had to deal with the Korean bureaucracy so this is second hand info.) Apparently, the days of room saloning with officials and simple cash handouts are apparently gone (which is progress). I hear that what remains however is the common practice of officials insisting that a foreign company wanting to do business in Korea has to get a joint venture partner (regardless of what the law actually says). Invariably, the officials will suggest a few partners and of course, they are all run by Seoul National buddies of the government guys suggesting the partner.
Brendon what are your recent experiences like? Are things getting better? Any change in the attitude of Korean officials that you??ve observed or overhauls in commercial/securities laws and regulations?
Warrants are a good example. The laws are now in place to allow them to be issued, but without a green light from the relevant bureaucrats, it can’t be done.
Things here are better than ever before in the history of Korea. There has been so much progress in the post-1997 era that in all frankness, it’s amazing.
Petty corruption by officialdom has all but been extinguished — there are times when we wish a W50,000-and-up “urgent handling fee” or a trip to the room salon could sort out problems, but it seems that public officials now take pride in cleanliness. There is still grand corruption to be found from time to time (every time I run into public-procurement lawyers from Texas or D.C., for example, it seems like every one of them has direct experience of million-dollar bribe demands from Korean military or government officials) but in fairness Americans are not immune to corruption. Ask Eliot Spitzer.
Unfortunately, that addresses only one of ariwrong’s four deficiencies cited. A lot of Korean public officials are still astonishingly overbearing, arrogant, arbitrary, lazy and most of all rude. Sometimes we are pleasantly surprised, usually by a woman. Generally it is impossible to engage these guys in substantive discussions about the laws they are supposedly enforcing (frustrating if you need to try to understand the vague statutory language and the current attitude of the relevant regulators). The attitude is “I passed the exam therefore I rule over all” — very much an attitude of ruling rather than serving the public.
On Bank of Korea, we recently had to advise a client who wanted a Korean company to acquire a foreign corporation by issue of shares (i.e. share-swap transaction). Sounds great, right? Korean business buying up foreign assets with scrip instead of precious foreign currency. But although there is no regulation against it, Bank of Korea refuses to “accept” the required foreign-currency transaction report, thereby vetoing the transaction.
The major improvement in Korea’s business environment since 1997 has come from deregulation getting the government out of more and more of the business sphere. The more of that, the better.
Koreans culturally can??t think beyond the fact that if somebody is a winner then you must be the loser.
Sa Hwa Dong…
You nailed it. That is probably the most insightful single line posted on this site in a long time, and a feature of Korean culture that really needs more attention from both foreignors and from Koreans.
Well said.
‘the us military made korea rich.’
did the us military make japan and germany rich? did the marshal plan make france the wealthy country it is today? you mean only in korea? sorry but you got the wrong answer. korea’s now relatively wealthy because of many factors. sure, the presence of us troops helped korea economically. but the main factor in korea’s success are the koreans and their culture, which, btw, is similar to japanese and chinese culture. is it an accident those countries that have caught up with the west are centered in ne asia? is it a coincidence that the people of those nations happen to be closely related to each other physically and culturally? i don’t think so. Kongja would be proud.
the fact of the matter is that korea’s culture has prepared the koreans well for the western world’s game. they seem to be good players. count them out at your own risk.
***
MUGUNGHWA by noolji le shakeespere
oh mugunghwa, though the vultures pick at your pedals
survive you can as survive you do, mugunghwa, you rose of sharon
Well, noolji, the North Koreans also have Korean culture in spades, yet have failed spectacularly. I’m all for giving the R.O.K. lots of credit, but if one is to talk about “Koreans” and Northeast Asia, one can’t forget our buddies above the 38th Parallel.
Yes, noooooolji, the US DID in fact make Germany and Japan rich.
And Korea.
Is it just coincidence that the three countries that received untold billions of dollars injected in foreign aid, AND had US troops sitting on the border minding the neighbors are the three countries that now describe themselves with such grateful phrases as “Miracle on the Han”?
The fact that the yankee soldiers you love to disparage sat on your border watching out for you all those years not only allowed democracy to flourish to the point that koreans can freely sit there and rag on them day and night, but importantly allowed the ROK government to free up tons of resources to apply to other projects such as industry and infrastructure.
Deny it all you want, but the US guard dog allowed Dangun’s hardworking descendants the breathing room and the spare cash to build this country into what it is today.
What would you have accomplished guarding your own border? For that matter, what would Korea have accomplished under Juche?
What other nation on earth has an angry million man army facing them down almost within artillery range and still gets off spending only 2.7% GDP on its own defense?
Time to wake up and smell reality.
Brendon: Thanks for your insights. Encouraging news on the corruption front. Not so much on everything else.
Noolji and Ziggy. The factors you point out are obviously NOT mutually exclusive so I think you can??t stop arguing now. Being under the U.S. security blanket obviously helped Korea develop economically but other countries in similar situations failed. The Philippines is probably the best example. So Koreans get some of the credit. On the other hand, without U.S. loans/grants and free access to the U.S. market would Korea have become the 10th largest economy in the world? Personally, I doubt it.
In any case, growing the economy from here on out will take different skills then what has brought Korea this far. You can??t reverse engineer innovation. Hopefully, Korea is up to the challenge but as has been discussed in this thread, the country has got a lot of ?橫issues?? to work out.
The reason Korea has developed so dramatically is pretty simple: Good government, hard as that is to believe. Korea has been blessed with corrupt public officials who recognized that stealing everything would be counter-productive, in that it might kill the golden goose, and so they stole “just enough.” This can’t be overstated — the real kleptocracies like Nigeria and the Philippines, have languished or regressed, while Korea has been enjoying more-or-less a 35-year boom.
Maybe there is some room for the yangban rulers in the government to be so smug.
But one other reason Korea has done so well is its legal system and accurate records allowed land to be used as collateral for loans. Korea was able to bootstrap off not only U.S. aid, market-access, and security guarantee, but also Korea’s own land-title system, and the rudimentary credit created thereby. Landowners could start businesses. Many other desperately poor countries have completely screwy land-title records and accordingly there is very little credit in their economies.
If you ask me (the IMF and World Bank have), the absence of additional security interests in properties other than real properties in the Korean Civil and Commercial Codes creates a major drag on the potential performance of the country as we try to transition to a service-based economy. Small businesses and non-landowners can’t get credit here once the land and buildings are pledged or mortgaged, whereas in Western countries there are effective ways to collateralize all kinds of non-tangible assets.
Brendon, that’s fascinating.
I understand your idea on the accurate property records, but what about the Korean legal system impresses you?
My experience in that system [roughly 5 years] has led me to believe that 90% of the ROK attorneys I work with are in fact professionally incompetent and lack the basic anaytical skills to be called attorneys.
They aren’t dumb and they aren’t lazy, just not good lawyers.
I attirubte some of that to a civil code system, where they seem to expect every question to already be answered for them, and part of it is because of the legal education and JRTI. I think it encourages rote memorization at the expense of problem solving, but Im just flabbergasted at some of the memos and court decisions I read.
I was fascinated by Brendon’s outlook also.
Justpassinthru about the Korean lawyers, I will have to agree with you on many parts. I absolutely agree with you on the educational pitfalls. The biggest problem I see is that the Korean lawyers do not have enough competition, its not really a free market. Korean bar exam has been seen as ticket to a better life. The government controls the bar exam and has operated it in a form that does not make real competition possible. Once you pass the exam you live in relative comfort and comfort leads to atrophy. I’ve always criticized my Korean friends who were studying the SaShi (bar exam) for the sole reason to have a one way ticket to wealth and comfort. Well Korea finally seems to be waking up. It is going to open up the legal market to foreign competition and it will start loosening the bar exam restrictions to allow more people to pass. (I don’t know about privitization yet) If competition steps up, the Korean lawyers better shape up or they are going to end up as those ambulance chasers back in the U.S.
* I used to do a freelance job for a school here that brought over Northwestern Univsersity School of Law faculty for a LL.M. program (awarded the NUSL degree) here in Korea. The smart Korean lawyers are realizing that competition is stepping up and preparing themselves with better legal education and by improving their English skills.
Brendon:
Your thoughts about good government remind me of a joke in Thomas Friedman??s The Lexis and the Olive Tree. Don??t remember much about the book but the one thing that has stuck with me is a joke Friedman tells that is supposedly popular in IMF/World Bank circles. The joke goes something like this. An African government official goes to visit a counterpart in Asia. The Asian official has a big lavish house and the African asks how he can afford such a nice residence on a government salary. The Asian points to bridge visible in the distance and says: ?橫See that bridge. 20% (pointing to himself.)?? A year later the Asian visits the African. The African??s house is even bigger and more lavish. The Asian asks what the deal is. The African points to a nearby ravine and says ??See the bridge??? The puzzled Asian replies ??I don??t see a bridge.?? The African says: ??Exactly. 100% (pointing to himself.?? Supposedly, the difference between Asian and African corruption.
Your thoughts about land title and security interests are also pretty interesting. Remember reading stuff about the issue in The Economist a while back.
ariwrong I’m sure it was a typo but a correction for those who might not know the book — “Lexus and the Olive Tree”
I’ve also enjoyed “Longitudes and Attitudes” by Friedman.
While I don’t agree with him always, he does have great insight on many topics.
About petty corruption…
Until late last year, I have been confronted with almost daily occurences of corruption ?? probably to be considered as petty on a corporate level, given the individual. Of course, for the concerned individuals, the amounts demanded were not petty, and the aggregated amount would have been enough to run a small business for a while.
Among these people were a lot of civil servants, but also what I call ?????????, people working in a private entity but doing a job that feels like a government job, with the very mindset of a civil servant. When I complained about this to one of the cleaner guys, he said that he couldn’t be helped, and besides, it was much much worse before (like it helps). I almost reported a guy once, and was told that if I did so, that would be the end of our company’s business in Korea. Then again, not giving bribes did bring the end of our company in Korea… So I would’ve been better off reporting him anyway, I guess…
Thanks Juan.
The inability of a lot of Korean lawyers to spot the relevant issues (nevermind analyzing them) can be breath-taking. Like I said, it??s been a while since I??ve done a Korean deal but alot of times, on deals that I worked on ?橫back in the day?? international counsel would have to liaise with Korean counsel and fix things up to get an analysis on Korean that was at all coherent. It was maddening and expensive.
As mentioned above, I think the problem is that Korean lawyers just aren??t taught to analyze anything. The teacher or sombae is always right so no need to analyze or queston anything I suppose. Plus no Korean students are ever taught how to write in way in an organized way. They can recite Code provisions off the top of their head but they can??t apply it to any real world situations and even if they could, they would not be able to write their thoughts down on paper in an organized way. Of course, I have met some very bright Korean lawyers that are very good at their jobs but they very much the exception. Japanese bengoshi are pretty much the same way.
As for the Korean legal market opening up (I??ll believe it when it happens), I think the concern of Korean lawyers is way overblown. The Hong Kong offices of foreign firms do a ton of work on Korean deals already anyway. The restriction on foreign offices just means that the deal team has to live at the Lotte, Hyatt or Shilla for a months at a time. Even after foreign offices open, foreign lawyers won??t be able to go into court or advise on Korean legal issues. It just means they??ll be able to run the cross-border deals they already work on from a Seoul office. I assume that the legal market in Korea will be a lot like Japan after foreign firms hit the ground in Seoul.
I understand your idea on the accurate property records, but what about the Korean legal system impresses you?
My experience in that system [roughly 5 years] has led me to believe that 90% of the ROK attorneys I work with are in fact professionally incompetent and lack the basic anaytical skills to be called attorneys.
They aren??t dumb and they aren??t lazy, just not good lawyers.
Don’t get me wrong — I didn’t say Korea has a great legal system. But the legal system here is better than most of the world and possibly one of the best in Asia. It’s like being the best Thai restaurant in St. Louis.
As for whether “90% of ROK attorneys [you] work with are professionally incompetent and lack basic analytical skills to be called attorneys”, have you considered that maybe you’ve had bad luck? My own experience has been that only maybe 60% of the ones I’ve worked with are useless (and some are really good). But consider this: In the United States most of the lawyers are bad too, including many at the largest and most-successful corporate law firms. There have been many times I’ve been surprised at sloppy work out of “great” U.S. law firms; my guess is they were doing it at 3:00 a.m. on Friday night.
I think to hold Korean attorneys to the same standard as analytical thinkers as you would apply to U.S. lawyers is unfair. They are not trained and selected for the same abilities. The Judicial Training and Research Institute has only lately begun to address these topics. And there is essentially no market demand domestically for lawyers-as-advisers — Korean enterprises hire lawyers once there is a writ on their desk, and usually not until the night before the deadline to respond. Thus there is little opportunity to develop the skillset most in demand by all these foreign investors who’ve shown up suddenly since 1997.
Heart surgeons and psychiatrists are both medical doctors, but I wouldn’t ask the surgeon for counselling.
Now, this doesn’t really answer why the large Korean law firms — who have been working with foreign investors for a long time before 1997 — pretty well suck. How can this be, when those firms all employ US-trained lawyers as “foreign legal consultants”? Shouldn’t those lawyers have helped develop a service culture better matched to the needs of the foreign clients? In my opinion, this is where the Korean pride factor undermines the transfer of knowhow. When I worked at two large firms here there was a strong element of “shut the fuck up and type out what I dictate” (markedly more so at one firm than the other) to the so-called collaboration between American and Korean attorneys. Since the Korean lawyers presume that the U.S. lawyers who come here are all losers who wouldn’t have “made it” in their home jurisdictions, there is a built-in predisposition to reject suggestions from these hired hands.
Dda: ” what I call ?????????, people working in a private entity but doing a job that feels like a government job, with the very mindset of a civil servant.” Wow–that exactly describes the outfit I work for in Seoul…people who are totally incompetent, but have a strong union and managers just like them, so they are able to go on doing almost nothing, like potted plants, for years on end. It’s a huge drag on the company, but maybe Korea’s form of social welfare? I don’t know. The few bright, ambitious ones always move on, and the useless ones of course stay. It’s been a real “culture shock” to be in a work environment of soju lunches followed by afternoon naps (not allowed for the waegook, though…). And for Mr. Carr’s “Korean pride factor” disallowing the transfer of know-how from (very) experienced foreigners…don’t get me started.