Making Joint Ventures Work in Korea (Part-II)
Making Joint Ventures Work in Korea (Part-II)
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  • 승인 2006.08.01 12:01
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In last month's article, we covered the background and relevant cultural issues for setting up a partnership. This month we will look at some of the approaches and ideas needed for a successful joint venture.... Ed. This essay is the fifth in Tom Coyner's series of six articles. Understanding Korean management can be a full-time occupation. Tom Coyner briefly explores one aspect that directly impacts on how things are done. A fuller exploration of this and related matters will be published later this year in a book co-authored by SH Jang and Tom Coyner on doing business in Korea....Ed. PERSONAL RELATIONS Extra-Curricular Activities One very important way to develop harmonious working relationships is to share and develop a common interest outside the office. A shared interest in some sports activities like tennis or golf can contribute a great deal to building understanding, relaxing tension and resolving conflicts. A great deal of business has been transacted and negotiations achieved while walking an 18- hole course in a relaxed, pleasant atmosphere. Mutual Family Interest Showing interest in each other's families will go a long way toward easing tensions and bridging barriers. Sharing discussions about children and discovering common problems and concerns elicit empathy and understanding which will likely transfer to business relationships. Mutual Respect An indispensable ingredient in conflict prevention is for all partners to have an unshakeable, mutual respect for each other. In a business partnership where there are conflicting interests, it may not always be easy to maintain that respect. If there is to be a working relationship, nothing must be allowed to interrupt this inter-flow of confidence and understanding. If partners start to slander each other, the effect on the business venture's operations can be very serious. As important as personal relationships are, consideration for the joint venture's effectiveness and productivity should demand the discipline required to maintain a healthy mutual respect between partners. When that respect is threatened, begin looking for the positive, strong points in the other partner, which will begin to outweigh the weaknesses or shortcomings. From there, respect can be rebuilt. Any relationship is bound to encounter differences in opinion and occasional misunderstandings that could result in conflicts. But many such problems could be prevented by anticipating possible conflict areas and by taking preventive measures. RESOLVING CONFLICTS When there are conflicts, we must find ways to resolve them, relieve the pressure, and defuse potentially explosive situations. Since the circumstances surrounding partner conflict can vary greatly, and since the personalities of the involved parties play a major role in the confrontation, there is no single resolution method. If there is any advice for resolving the differences, it must be tailored to the particular situation. There are, however, some general concepts that may help resolve local environmental conflicts. Personal Considerations Western logic alone is not usually sufficient to influence a Korean counterpart. Referring to the exact contractual stipulations is often not desirable. A factual confrontation will only raise the defenses of the Korean partner, and may even block any attempt at resolution. Once again, the matter of kibun plays a subconscious role in conflict resolution. Try to appeal to the partner's emotional common denominator. Control of Emotions Showing one's emotions . particularly anger . can only exacerbate the situation; the foreign partner must always keep his own emotions under complete control, while appealing to the local partner's emotions. Just as wise parents go to great lengths to avoid bickering in front of the children, it is even more important that the top executives representing the two companies maintain at least a faade of being positive and pleasant for the benefit of the other employees. They still can - and should - let their hair down off site or behind closed doors to get conflicts out onto the table for resolution while they're still small. Compromise Diplomacy In difficult confrontations, the use of some give-and-take may prove productive in resolving conflicts. It may require some innovation to generate alternative ideas for achieving a resolution. A Korean joint venture partner once agreed to concede the majority share in the company to the foreign partner on condition that he be granted veto power over the foreign partner's appointment of the first executive vice-president. Though perhaps not ideal, it is an example of such a trade-off. The "tit-for-tat" procedure may never create a win/win situation. One wins only the battle and not the war. However, if a deadlock arises, a valid solution may be to consider possible trade-off areas in search of a compromise. Home Office Support A very important requirement for expatriates representing a foreign company is to secure the full support of the head office vis--vis the local partner. If such support is not firm, it will be more difficult to resolve differences. Consultation to elicit approval from the head office has several benefits. First, it offers the opportunity to receive ongoing counsel. It can also get the foreign partner off the hook when things get sticky, since a proposal will not have been his idea alone. Finally, head office support strengthens the foreign partner when presenting his case to the local partner. The wider the support, the better one's position when dealing with knotty problems. Confidential Negotiations Korea's business world is a relatively small community. Word spreads fast, especially if it is bad news. And the problem of "blab" is not confined to any one segment of society. So it is important to keep one's mouth shut everywhere when partners are trying to resolve a conflict. In Korea loose lips can sink a business partnership. Neutral Moderator When the going gets tough in dealing with the local partners, who in most cases have a definite advantage as well as a vested interest, it may be wise to seek professional help from a consultant or a prominent figure, preferably in the local industry. Often a neutral third party can bring the two principals to common ground. When a deadlock resists compromise even after bringing in a moderator, replacing the moderator with another may lead to a solution. ADVICE FROM A FOREIGN JV EXECUTIVE The following suggestions are from a very experienced European executive who has worked most of his career in joint ventures. After representing his company in Korea for a number of years, he offered these tips: Top 10 Pointers from an Experienced Foreign JV Director: 1. Whenever possible, make sure your firm has the CFO position, and try by all means to avoid giving it up. No matter how sorely circumstances may tempt you to negotiate away that position for some other advantage, you will regret it in the end if you do. 2. The Korean CEO is likely to be a god in the eyes of the Korean employees. Never underestimate your counterpart's power, and be extremely careful not to cause him to lose face. It is not easy, but you must determine how to walk the line . to avoid being belligerent without being a pushover. 3. Wrong motivations for entering into a JV in Korea include forming a partnership simply out of necessity or for ease in entering the market. There needs to be a genuine, ongoing and reciprocal interest in maintaining the JV with the Korean partner. 4. The expatriate director must have a clear-cut mission and genuine backing from his head office to be successful. Too often the head office loses interest in the Korean operations, and the local expat director lapses into an attitude of resignation for being unable to make a real contribution. This sort of situation often arises in JVs created out of convenience rather than a shared purpose with the Korean firm. When that attitude sets in, it often marks the beginning of the end of any chance for a successful joint venture. 5. It takes at least 18 months . even for a fairly experienced and competent foreign director . to become truly effective, since it so difficult to understand the game. 6. As soon as a new guy arrives to become the foreign JV representative, the Korean partner will almost certainly try to restructure the relationship by, for example, eliminating a number of regular meetings, reports and/or other informationsharing procedures. It's therefore very important that the new representative director arrive with a clear statement of his role and what information he is to receive. There must also be a clear delegation of authority to approve spending, corporate investments, etc. 7. Most Westerners want at least a month to ease into a new job before flexing their muscles. In Korea, one is not normally given that luxury. Rather, it is much better to approach the job as representative director with even a dogmatic sense of authority. Otherwise, the Korean organization is apt to marginalize the new director, and he or she will endlessly be trying to chase down critical information. 8. It is essential in Korea to establish your authority immediately, which means being privy to important - and particularly negative - information. By culture, Koreans are loath to speak up - particularly if there is bad news. It must be made clear from the beginning that one needs . and welcomes . bad news, rather than waiting until a situation festers into a full-blown crisis. 9. Networks of relationships are critical. Often the real communication, including the sharing of secrets, takes place over beers after work. 10.Consider hiring a bilingual . and if possible, bicultural . Korean, perhaps an experienced gyopo (overseas Korean) who is on your payroll alone, but works within the JV. This person can be much more than an interpreter. A bilingual Korean with a relevant degree (preferably an MBA) or experience, for example, could function well beyond his or her official responsibilities by offering invaluable reports on what is really happening in the company below the surface, insights on cultural issues, and advice on how to rebuild damaged bridges.

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