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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. 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 facade 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 is 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-à-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 information sharing 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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