How Not to Enter Korean Market (I)
Soft Landing Consulting
While it may be wonderful to use a case study as a tool of how to do something well, in business school we also studied case studies of failures. Recently I came across a Western company who seems to be willing to fail in Korea to fulfill other more important objectives. This company, like any other, wishes to succeed, but apparently other priorities weigh in making it likely they will fail in Korea. I am focusing on this particular corporation because they have made a series of classic errors from which many other companies may learn.
Needless to say, I'll be disguising the identities to protect both the innocent and the guilty. But I will say this company is an international services company that is generally well respected in its market niche.
This week, I will go over the background and wrap this column up next week with my analysis and conclusion.
Acme Services (a pseudonym we will use from here on) has at least two major divisions that have shown interest in Korea. Division One has been here and has done some minor business. Division Two, recognizing the Korean market potential, decided to hire its own Korean market development manager, since they felt that Division One had not adequately tapped into Korea.
Division Two's Asia regional manager (let's call him Mark), who had prior Korean work experience, came to Seoul from their regional headquarters and hired a bilingual Korean man (we shall refer to him as Mr. Kim) who had just turned 60 years old, though he looked and acted much younger. Mr. Kim was given the artwork for his business cards and told to produce bilingual cards in Korea.
A few weeks later, Mr. Kim was sent to Acme's regional office for orientation. During that time, Mr. Kim showed Mark his business cards. To Mark's chagrin, Mr. Kim's card depicted him as president of Acme Services Korea. Mr. Kim's real position was that of local business development manager ― a euphemism for salesman. Mark ordered Mr. Kim to recreate the cards with the correct business title.
Back in Korea, during the following three months, Mr. Kim worked hard to get his foot through the door of several of his prospects' key decision makers, including CEO level. Mr. Kim's personal network included those whom he had known since childhood, with many now holding executive positions in both government and private sectors. Partially due to his many friends' help, Mr. Kim was making significant progress in closing his first deals. But all of that came to a stop on a Friday afternoon when a Korean attorney at the behest of Acme regional management called a meeting with Mr. Kim.
The attorney informed Mr. Kim that he was terminated without official cause since his employment contract contained an "employment termination at will" clause. Actually, this was a serious violation of Korean labor law that stipulates the reason for termination must be clearly stated. Naturally Mr. Kim objected. A full day later, and after several phone calls and email messages, he learned that his termination was due to his misuse of business cards with the Acme Services Korea President title, though the infraction took place some months prior to the termination.
From what I can gather, there was a power struggle between the heads of Division One and Division Two. The Division One director triumphed and thereby sought to diminish the power of Division Two by removing Division Two employees whenever possible ― including Mr. Kim.
(To be continued next week)