June 2017
Korea Intelligence Risk Management Technology
Legal Analysis Lee & Ko
Interview Svein Tyldum
Korea Voices
Jocelyn Clark Steven B. Mckinney Bryan Hopkins Hank Morris
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In This Month’s Issue
Founders’ Message
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KBLA Community Svein Tyldum
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Marsh Korea In risk management, you have no tangible products or goods to sell, what you deliver are innovative solutions to clients through a process of define, design and deliver.
Korea Intelligence Trade, Finance, & Industry
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Economics
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Technology
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Risk Management
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Real Estate
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Legal Analysis
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Korea Voices Bryan Hopkins
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Jocelyn Clark
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Steven B. McKinney
Is Korea Making A Wise Move By Amending Its Product Liability Law?
Hank Morris
Changes Ahead for Major Korean Chaebol Groups
About the KBLA
Somewhere Under the Rainbow: Exiles Speak by a Digital Stream
The 10 Things That I look For in a Hire
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Founders’ Message
New Riff on an Old Theme I
deas. Ideas are everywhere. Everyone has at least three in their back pocket. Some are new. Some are old. Just because an idea is not new or original doesn’t mean it isn’t valuable. Just because it is new doesn’t mean it is valuable. We’ve been over this before. The world hasn’t changed since then, so I thought I’d reiterate it again. There is a long-held truism in business that the first to market gets the lion’s share of the benefits and market share. This is no longer true, if it ever was. In today’s hyper-competitive marketplace, it isn’t the first to market that wins, it’s the best to market, because the best to market ends up being the last to market. The goal shouldn’t be to get to market first, it should be to get there in such a fashion that no one else wants to follow you. Recent history is littered with examples of companies who got to market first, with an excellent idea in tow, only to fail and be replaced by a late-moving copycat. A number of social media companies (Friendster, MySpace, Cyworld, Orkut, among others) preceded Facebook, only to fail and get left behind, once Facebook, largely by accident, stumbled on the secret formula to finally make social media stick. So, the idea of social media was clearly a popular idea, with many competitors pursuing it, but the key to actually winning in the market was to execute just a little differently. Facebook grew by leveraging existing offline relationships in a new, online venue. It grew university by university, starting with the most prestigious ones, to elevate envy among those not allowed in. Facebook provided a different environment online than the other social media companies did, sure, but it also provided a different “offline” experience as it started by linking people up online as an enhancement to their offline relationships. That little nuance made all the difference.
However, as the Facebook story illustrates, better execution can’t always be forced. The difficulty of foreseeing what will work and what won’t is the main obstacle to delivering what customers actually want. Companies can’t “Just do it.” and expect that it will work. Rather, they must just do it and expect to have to just do it again and again until the mix of benefits customers really want is found. Success in the marketplace can’t be forced, because companies don’t choose what works, customers do. All we as business leaders can do is continue to throw things at the wall until something sticks. Having the organizational fortitude to head off in new directions is not always easy, but it is always critical. We have to expect that failure is going to be a regular and constant companion on our journey. Mere mortals can’t guess what will work and what won’t work ahead of time. We’re not all Elon Musk. Speed does matter. If constant iteration is the key to finding better answers then every company should have fast iteration as a core competency. Minimizing the time it takes us to go through the feedback loop, make adjustments from what we learned and get back out there in the marketplace is the one criteria we should be focusing on always.
Rodney J. Johnson President, Erudite Risk Co-Founder, KBLA
Steven B. McKinney President, McKinney Consulting Co-Founder, KBLA
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New KBLA Members This Month Mr. Baek Seungjae Sollers Partners Partner Mr. Jim Clark Erudite Risk Advisor Ms. Jorgeany Di Trani Keyrus Business Executive Ms. Mariana Hebborn IBM Korea Data Scientist Mr. Scott Burton Hunton & Williams, LLP Partner
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KBLA Community
Svein Tyldum
Helping corporations and clients find opportunities in a world full of uncertainty In risk management, you have no tangible products or goods to sell, what you deliver are innovative solutions to clients through a process of define, design and deliver. Thank you for doing this interview. Tell us a little about your back-ground and yourself. I was born in Denmark to Norwegian parents and spent my early childhood in Norway. My father was in the ship building business and moved to Kobe, Japan in 1964. He spent 20 years in Japan and so I grew up in Kobe and Yokohama and graduated from high school there. I majored in Economics, graduating from the University of San Diego, and obtained my MBA at Thunderbird School of Global Management in Arizona. From there I was recruited by Johnson & Higgins (J&H) New York, which at the time was one of the largest insurance brokerage firms in the world, and I have never looked back. J&H was acquired by Marsh & McLennan in 1997. My career has been an international one, starting in New York and then transferring to Rio de Janeiro and Sao Paulo in Brazil. I spent eleven years in Brazil. My next move was back to the US and Atlanta for a few years, then onto Tokyo, Japan for seven years and I am now based in Seoul coming up to four years. I am responsible for two areas. I am currently the Chairman of Marsh & McLennan Companies, Korea which compromises, Mercer (People), Marsh (Risk and Insurance Solutions), Guy Carpenter (Reinsurance) and Oliver Wyman (Strategy). In addition, I am the CEO of Marsh Korea. I enjoy living in Seoul, it really is a dynamic place to be, the people, the
city and what it has to offer in terms of business, social life and sports. I enjoy cycling especially along the Han River and golf although it is a sport that challenges my ability and is frustrating at times. You have a long history with Marsh, what brought you to this company and to risk management?
When Korean companies put their mind on a goal, their level of determination and speed of development is second to none. A few months out from graduating from Thunderbird, I had the chance to interview on campus with the Partner of International Operations at Johnson & Higgins. This company had a strong international network at the time in the insurance and risk management field. Working in the international arena intrigued me and so when an offer to join their management training program in New York came up I grabbed the opportunity. After an almost 28 year career in risk management, so far it has been an interesting and rewarding career.
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KBLA Community
In risk management, you have no tangible products or goods to sell, what you deliver are innovative solutions to clients through a process of define, design and deliver. We are a people-focused organization, and this is what I have enjoyed the most through networking and relationship building with people from multiple countries, cultures and business norms. As the Chinese general, military strategist and philosopher Sun Tsu, once wrote, “In the midst of chaos, there is also opportunity�. It is being in a business of helping corporations and clients find opportunities in a world full of uncertainty that makes risk management so interesting.
Are there any specificities or difficulties in doing risk management in Korea? There are always various challenges in practicing risk management anywhere in the world, so for Korea, I would say that these are just different rather than more difficult. During the past 30 years, Korea has focused on asset creation. The trend now is a move into a more mature phase of focusing on asset preservation. So whereas companies in the US or Europe, as an example, may have had an earlier head-start in terms of their focus on risk management, Korean companies are rapidly catching up to their global peers.
KBLA Community What this means is that although Korean companies may have started with a lower level of sophistication in risk management in the past, they are now in many cases very motivated to learn and adopt cutting edge global standards for risk management. And as you may expect, when Korean companies put their mind on a goal, their level of determination and speed of development is second to none. Korea has such an export oriented economy with often more international business dealings than domestic business. Therefore, business and risk issues naturally have global implications compared to only dealing within Korea.
How do the Korean social and political environments influence your work? In terms of the social environment, it does have significant influence as it would clearly be impractical and in many cases detrimental to completely disregard basic Korean social structural themes which may not be as prevalent in other western countries, particularly in a business environment. An example would be greater recognition in Korea of seniority whether it is by position, age, or school year. Although this social aspect is not
as dominant as in the past, it does still remain an aspect that I am mindful of. Although I am not dogmatic in this area of social sensitivity, I do believe that there are many positive aspects of this tradition. As for the political environment aspect, I am not sure that it has had much real impact on my work here even with the political turmoil we have had in the past and more recently. Although developments on both Korean local politics and North Korea geopolitics dominated the news and generated concern from friends and relatives abroad, I have to say that it has not had a major impact on my work.
Hopefully this relative stability continues that way! Anything else you would like to share? I enjoy reading the KBLA Magazine’s Community section. From a fellow member Alex Jun’s interview I took away the saying “No matter how big the stakes are, or the pressure to win, winning right is everything”. This is so true and if followed it is the mantra to personal and corporate success. I now keep those words in my office.
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Korea Intelligence | Trade, Finance, & Industry
Industry 4.0: Opportunities and Risks to Korea On April, the Korea Institute for Advancement of Technology (KIAT) published a report on Industry 4.0 trends based on National Academy of Science and Engineering (ASATECH) 2015-2016 survey of 150 experts from six major economies (Germany, US, China, Korea, Japan and UK). According to KIAT, Industry 4.0 - the current trend in manufacturing technologies that includes cyber-physical systems, the Internet of Things, and cloud computing to create smart factories - brings various opportunities and risks to Korea. Experts name production optimization and better customer service as the biggest opportunities, while data security and standardization issues were named as the biggest risks.
Out of perceived economic opportunities of Industry 4.0, Korea scored relatively high on production optimization (73%).
Data ASATECH via KIAT, Chart and Translation KBLA
As for the economic risks of Industry 4.0 to Korea, experts named data security (75%) and standardization issues (63%) as the greatest risks.
Data ASATECH via KIAT, Chart and Translation KBLA
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Korea Intelligence | Trade, Finance, & Industry
Foreign Medical Patient Figures in 2016 On April 27, the Ministry of Health and Welfare (MOHW) issued a report on foreign patient figures in 2016. According to MOHW, between 2009 and 2016, the number of foreign patents increased roughly six times, while income collected from foreign patients increased almost sixteen times. In 2016, the average per capita treatment cost spent by foreign patients accounted to 2.36 million KRW per year. Slightly more than a third of foreign patients originated from China. The most common treatments undergone by foreign patients were internal diseases (20.3%), followed by plastic surgery (11.4%) and dermatology (11.3%). In 2016, the number of foreign patients increased by 23% to 360,000 people*, while income from foreign patients increased by 29% to 860.6 billion KRW.
Data MOHW, Chart and Translation KBLA
In 2016, Chinese nationals accounted for roughly 35% of all foreign patients. Roughly 23% of Chinese patients received plastic surgery treatment, while 44% of Japanese nationals received dermatology treatment. *Multiple visits and treatment in medical institutions by same person are not included.
Data MOHW, Table and Translation KBLA
Korea Intelligence | Trade, Finance, & Industry
Recent Labor Union Trends On May 2, the Korea Labor Institute (KLI) published a report on recent labor union trends.
According to KLI, in recent years, the number of workers in labor unions increased slower than total number of workers, resulting in a decrease in the labor union participation rate. In 2015, industries that had the highest labor union participation rates included utilities, hotels and restaurants, public administration, defense and social security administration, and finance and insurance. At the same time, the transportation, construction, and real estate industries had the lowest labor union participation rates at around 1-2%. There has been no significant change in the absolute number of workers in labor unions since the 1990s, but the labor union participation rate dropped by roughly 8.2% points to 10.2% due to a rising number of total workers.
Data MOLIT via KLI, Chart and Translation KBLA
Between 2009 and 2015, the hotels and restaurants industry recorded a sharpest labor union participation drop (6.3% points).
Data Statistics Korea via KLI, Table and Translation KBLA
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Korea Intelligence | Trade, Finance, & Industry
Export Business Conditions in 1Q 2017 On April 27, the Export Import Bank of Korea (KEXIM) published a report on export conditions in 1Q 2017. According to KEXIM, exports recorded double digit year-on-year growth in 1Q 2017, the second consecutive quarter showing an increase, following a decrease of seven straight quarters. The Korea Export Conditions Index* has been gradually improving since its low point in 1Q 2016, although it is still below 100 index points (indicating weakening export conditions). In 1Q 2017, export conditions were the weakest in the shipbuilding and overseas construction industries, while export conditions for Japan-bound goods and services also saw a sharp drop.
In 1Q 2017, the value of exports increased by 14.9% to 123.4 billion USD, the greatest year-on-year increase since 3Q 2011.
Data MOTIE and Bank of Korea via KEXIM, Chart and Translation KBLA
In 1Q 2017, Export Business Conditions Index dropped by five index points to 92 points; but still remained seven points higher comparing to the same period last year.
Data KEXIM, Chart and Translation KBLA
Korea Intelligence | Economics
Current Account Surplus in 2016 On April 6, the Korea International Trade Association (KITA) published a report on exchange rate volatility impact on current account, including structure of current account surplus in 2016. According to KITA, in recent years, the trade balance surplus has almost doubled, due to imports dropping more than exports. Even though trade surplus increased, total trade volume decreased, resulting in a so called “surplus of recession.� The current account surplus increase was caused by a number of factors (savings-investment gap, manufacturing orientated economic structure, business cycle, oil price drop) rather than by foreign exchange rate fluctuations. In 2016, roughly three-quarters of the trade surplus was invested in foreign markets, while only one-fourth was invested in the domestic market.
Between 2014 and 2016, the trade balance surplus increased by 4.2 billion USD (roughly 89%). The drop in imports was mainly caused by decreased oil prices.
Data KITA and KNOC, Chart and Translation KBLA
In 2016, Korean current account amounted to roughly 98.6 billion USD, 78.5 billion USD of which went overseas as FDI and non-direrct investment, while 21.9 billion was invested domestically.
Data BOK via KITA, Table and Translation KBLA
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Korea Intelligence | Economics
Household Credits in 1Q 2017 On May 23, the Bank of Korea (BOK) issued its figures on household credits in 1Q 2017. According to BOK, in 1Q 2017, total household credits increased by 17.1 trillion KRW to 1,359.7 trillion KRW; roughly 17% slower household credit growth compared to the same period last year.
In 1Q 2017, household loans accounted for roughly 94.6% of household credits, while merchandised credits accounted for the remained.
Data BOK
As for household loans change in 1Q 2017 by lender type, BOK stated that: - “Household lending by commercial and specialized banks increased by 8.4 trillion won, after having grown by 27.0 trillion won in the previous quarter.” - “Household lending by non-bank depository corporations grew by 7.4 trillion won, following its increase of 13.5 trillion won in Q4 2016.” - “Household loans extended by other financial corporations rose by 8.4 trillion won, after the previous quarter’s 14.2 trillion won increase.”
Data BOK
Korea Intelligence | Economics
Regional Economic Trends in 1Q 2017 On May 18, Statistics Korea issued its figures for regional economic trends in 1Q 2017. According to Statistics Korea, in 1Q 2017, Chungnam and Chungbuk provinces recorded double digit growth in mining and manufacturing production, while Seoul and Busan recorded sharp decreases. As for retail sales, Jeju recorded the largest increase, while Ulsan retail sales index decreased the most. Retail sales in Seoul stayed sluggish. All of the regions experienced positive change or no change in employment, except for a slight decrease in the numbers of employed people in Busan and Daejeon. At the same time, construction orders in Daejeon, Gyeongnam, and Chungbuk provinces more than doubled. Seoul recorded the largest population outflow, while Gyeonggi province recorded largest population inflow.
In 1Q 2017, the nationwide mining and manufacturing production index increased by 3.6% year-on-year, impacted by weak metal working and shipbuilding industries, and strong semiconductor, machinery and chemical industries.
Data Statistics Korea, Chart and Translation KBLA
In 1Q 2017, nationwide retail sales increased by 2.0% year-on-year, impacted by sluggish department store sales and strong performance in large super markets, as well as automobile and fuel sales.
Data Statistics Korea, Chart and Translation KBLA
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Korea Intelligence | Technology
KFTC Corrected Contracts of Online Real Estate Business Operators On May 15, the Korea Fair Trade Commission (KFTC) issued a corrective order to three online real estate business operators*. According to the KFTC, it corrected allegedly unfair service terms and conditions of three online real estate business operators “Zigbang”, “Dabang” and “Bangcall”.** KFTC corrected six terms and conditions related with mobile real estates business operators exemptions from liability, attribution of copyrights, sales/transfer of member’s personal information to third parties, and revocation of contract.
* “Online real estate business operators” are online platform services which connect property owners/managers with those seeking to rent or buy said property. **These three companies together occupy around 90% of the domestic mobile real estate market.
Data KFTC, Table and Translation KBLA
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Korea Intelligence | Risk Management
ACRC Whistleblower Compensation in 1H 2017 On May 18, the Anti-Corruption and Civil Rights Commission (ACRC) published a statement on whistleblower compensation awarded during the first five months of 2017. According to ACRC, between January and May of 2017, it paid compensation totaling 1.7 billion KRW to 332 individuals for reports of corruption and harm to public interest. Cases reported included damages to public health, safety, environment, violating consumer interest and fair competition, public officials’ corruption on duty, and damages to public institutions’ property. Out of total 332 individuals compensated, 28 individuals were paid 213 million KRW for reporting corruption and 304 individuals were paid 1.52 billion KRW for reporting harm to public interest. Compensation can be paid if the reported act directly results in a public institution’s income increase, property recovery, or cost savings.
Data ACRC, Table and Translation KBLA
*According to Protection of Public Interest Reporters Act, term “public interest report” means to provide information about the conduct detrimental to the public interest or to provide a lead for investigation into any conduct detrimental to the public interest
Korea Intelligence | Risk Management
Hyundai Steel Fined for Allegedly Obstructing KFTC Investigation On May 8, the Korea Fair Trade Commission (KFTC) issued fines to Hyundai Steel and its employees for systematically obstructing its investigation and noncooperative behavior. According to KFTC, between December 2016 and February 2017, during its investigation of Hyundai Steel for alleged violations of the Fair Trade Act, Hyundai Steel and eleven of its employees allegedly interfered with a KFTC investigation by refusing to submit required documents. The company and said employees were fined a combined amount of 312 million KRW. Obstructing actions during investigation process: - First round of investigation: Two Hyundai Steel employees allegedly deleted their emails and electronic documents without possibility to restore them, during an on-site investigation by KFTC officials. - Second round of investigation: Hyundai Steel head office allegedly concealed the actual number of employees who were approved to use external storage device (USB) as two employees, even though later investigation showed that actual number totaled at least eleven employees. -Third round of investigation: Hyundai Steel board members and company directors refused KFTC demands to stop obstructing actions by company employees and refused to cooperate with investigation. Fines to Hyundai Steel and eleven of its employees totaled 312 million KRW.
Data KFTC, Table and Translation KBLA
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Korea Intelligence | Risk Management
KFTC Regulatory Activities in 2016 On May 11, the Korea Fair Trade Commission (KFTC) published a report on its regulatory activities in 2016. According to KFTC, in 2016, it processed 3,885 cases, down 11% (482 cases) compared to the previous year. While the number of cases in which penalty surcharges were levied (111) dropped 45% year-on-year, the total amount of surcharges levied increased by over one-third, to 803.8 billion KRW. The number of cases which charges were recommended amounted to 57 cases. Most processed cases were related with public bid rigging, oligopolistic concentration of economic power, unlawful advertising, unfair contract clauses, consumer deception, and unfair trade practices with subcontractors and affiliates. In 2016, of 3,885 total cases processed, 2,279 (58.7%) resulted in consequences (regulatory action).
Data KFTC, Table and Translation KBLA
In 2016, KFTC processed 111 cases that imposed penalty surcharge for a total amount of 803.8 billion KRW.
Data KFTC, Table and Translation KBLA
Korea Intelligence | Risk Management
KFTC Issued Fines to Six Large Retail Business Operators for Unfair Practices Towards Suppliers On April 4, the Korea Fair Trade Commission (KFTC) issued a corrective order to six large retail business operators for allegedly unfair practices towards their suppliers. According to KFTC, AK Plaza, Galleria, NC, Hyundai, Lotte, and Shinsegae department stores allegedly violated the Act on Fair Transactions in Large Franchise and Retail Business and were fined a collective total of 2.2 billion KRW. Three smaller retail business operators (NC, Galleria, and AK Plaza) were under less surveillance than their larger competitions (Lotte, Hyundai, Shinsegae) and have allegedly committed more violations. Alleged unfair actions towards suppliers included: - Delayed delivery of required contract documents - Violating obligations to split the cost of sales promotion - Increasing sales commission rates during the contract period - Demanding that suppliers provide sales and business performance information - Using suppliers’ employees without prior written consent Large retail business operators are required to immediately deliver documentation clarifying contract conditions, after entering into a contract with supplier, but the below mentioned department stores allegedly delivered the required documents after the beginning of contract term or after the contract term had ended.
Data KFTC, Table and Translation KBLA
Large retail business operators are not allowed to change the rate of sales incentive during a contract period, but the below mentioned deparment stores increased their sales commission rate.
Data KFTC, Table and Translation KBLA
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Korea Intelligence |
Real Estate by Cushman & Wakefield
Korea Intelligence |
Real Estate by Cushman & Wakefield
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Korea Intelligence |
Real Estate by Cushman & Wakefield
Korea Intelligence |
Real Estate by Cushman & Wakefield
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Legal Analysis
The Amendment of the Product Liability Act: New Developments and Implications W
ith the recent widely publicized product defects cases, there has been discussions that the Product Liability Act should be amended for the better protection of the consumers’ interests. As a response to the needs for addressing certain product liability issues through legislative initiative, the amended Product Liability Act (the “PLA”) was passed at the National Assembly on March 30, 2017 and was published on April 18, 2017. The amended PLA has strengthened the liabilities of both manufacturers and distributors and lowered the burden of proof applicable to claimants in product liability suits. The amended PLA will be implemented as of April 19, 2018, after one year anniversary of its publication date. This article will provide the overview of the notable changes included in the amended PLA and discuss the potential implications of the amended PLA. Introduction of Punitive Damages (Addition of Article 3(2)) Under the pre-amendment PLA, if (i) a product defect (i.e., manufacturing, design or labeling defects) exists; and (ii) any damage to life, body or property is incurred due to defects in the product (except for damage incurred only to the product), (iii) compensation of damages is required the extent of actual damages, thereby limiting the extent of product liability to actual damages incurred. The amended PLA introduces punitive damages where (i) if the manufacturer had knowledge of the defect and failed to take the
necessary corrective measures and (ii) the product caused serious injury to life or body of the consumer. In fact, the manufacturer can be held liable for up to three times the actual damages. In order to assert a claim for punitive damages, the claimant must be able to prove that “the manufacturer had knowledge of the defect and yet failed to implement the necessary corrective measures” and the punitive damages are not applicable for property damages incurred by the consumer. There have been some criticisms that limiting the punitive damages to the cases of a manufacturer’s willful act and the damages only to life and body may unduly restrict the applicability of punitive damages. However, considering that the punitive damages are an exceptional system under Korean law and introduced to “punish” those who commit illegal acts and prevent similar future acts, limiting the applicability to cases where the plaintiff can prove that the defendant failed to take any action with the knowledge of the defect appears to be justified. The wording of the amended PLA is similar to the Model Punitive Damages Act, 1996 of U.S. which requires the plaintiff to establish by clear and convincing evidence that the defendant maliciously intended to cause the injury or consciously and flagrantly disregarded the rights or interests of others in causing the injury for find the defendant’s liability for punitive damages. As for the limiting the applicability of punitive damage to harm caused by serious injury to life or body, the rational is that property damages can be sufficiently compensated by the compensation of actual damages.
Legal analysis provided by Soo Yeon Oh, Lee & Ko
Legal Analysis Codification of the burden of proof applicable to claimants in product liability cases (Addition of Article 3-2) The pre-amendment PLA did not contain an explicit provision addressing the burden of proof for claimants. Instead, the burden of proof imposed on the claimant in tort suits for negligence claims also applied to the claimant in product liability cases, namely the claimant had to prove (i) the product defect, (ii) the nature of the injuries, and (iii) that the fact that the defect was the cause of the injuries incurred. However, within the context of product liability, the Supreme Court of concluded that, if the claimant indirectly proves that (i) the injury occurred while the product was being put to normal use, (ii) the accident occurred in the area under exclusive control of the manufacturer, and (iii) the injury is of a nature that it would not have occurred but for the negligent act of manufacturer, then the product’s defect, as well as the causal relationship between the product and the alleged injuries is presumed. The amended PLA codifies the above Supreme Court ruling. Under the amended PLA, if the claimant proves that (i) the injury occurred while the product was being put to normal use, (ii) the accident was caused by as cause which is under exclusive control of the manufacturer, and (iii) the injury of such nature would not have occurred but for the defect of the product then the product’s defect, as well as the causal relationship between the product and the alleged injuries is presumed; provided that the above presumption is overturned if the manufacturer can prove that the injuries were caused by other factors, such as the claimant’s negligence or intentional misuse. Although it may appear that this amendment lowers the burden of proof applicable for the claimant in product liability case, this addition merely codifies the Supreme Court
precedence on the issue. Strengthening of Supplier’s Responsibilities (Amendment of Article 3(3)) The manufacturer is primarily liable for product defect and the PLA defines “a person who is engaged in the business of manufacturing, processing or importing products or a person who made a misleading indication that he/she is a manufacturer” as a manufacturer. However if the manufacturer of the product is unknown to the injured party, the supplier who is engaged in the business of selling or leasing the product can be also held liable under the PLA. Under the pre-amendment PLA, if the claimant does not know the identity of the manufacturer, in order to bring a lawsuit against the supplier, the claimant was required to prove that the supplier either knew or could have known the identity of the manufacturer. The amended PLA allows the claimant to bring a lawsuit against the supplier regardless of whether the supplier knew or could have known the manufacturer. However, the supplier can be exempted from such liability if the supplier notifies the claimant of the identity of the manufacturer (or another supplier who supplied the product) within a reasonable period after receiving a request from the claimant. For suppliers, the liability is limited to the actual injuries incurred, and the punitive damages introduced in the amended PLA do not apply to suppliers. This amendment addresses the concern that in case where the supplier intentionally denies the knowledge of the identity of the manufacturer or the supplier does not know the identity of the manufacturer due to negligence (e.g., loss of purchase order or contract), it is realistically not possible for the consumer to prove that the supplier either knew or could have known
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Legal Analysis the identity of the manufacturer. Furthermore, considering that (i) the supplier is exempted from liability if the identity of the manufacturer or the another supplier is notified to the claimant, and (ii) it will be rare for the supplier not to know the manufacturer or another supplier of the products if the products are distributed through the normal chain of distribution, potential product liability on the supplier may deter the supplier from selling or distributing those products for which the manufacturer is unknown or questionable. Implications of the Amended PLA During the discussions leading up to the amendment to the PLA, introduction of consumer class action was also considered but it was not introduced in the amended PLA. The main consideration for the amendment of the PLA was to find a balance between the need to prevent willful illegal act of the companies and to strengthen the remedies available to the injured consumers on one hand and to minimize possibilities of the abuse of system and potential negative impact on the industry on the other hand. Based on such consideration, it is deemed that it is premature to introduce the consumer class action as the introduction of the punitive damages can bring the desired effects. Limiting the amount of the punitive damages up to three times the actual damages effectively prevents the possibility of one injured person to claim all the resources of the company when there are multiple injured persons. Such limitation is also consistent with the limitation of liability (up to three times the actual damage) under other laws including the Personal Information Protection Act and the Fair Transactions in Subcontracting Act. Despite the limitations on applicability, the amendment of the PLA and especially the introduction of punitive damages pose certain increased risks for the manufacturers and suppliers. In order to minimize the risk, it is recommended that
the manufacturer should have an effective internal compliance system which enables the company to implement appropriate corrective measures upon receipt of a customer complaint regarding a product defect. Other actions which may be taken to avoid or minimize potential liability include measures such as (i) immediate discontinuance or recall of the product upon the finding of product defect and (ii) addition of the proper warning label for the product.
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Korea Voices
Is Korea Making A Wise Move By Amending Its Product Liability Law? One of the reasons Korea has been a business friendly country is the fact litigation costs, court awards and fees are relatively low compared to the US and other Western countries. That might soon change once Korea’s amended product liability laws take effect. For those who are not aware that Korea recently amended its product liability law effective as of April 19, 2018, here is a short summary: 1. Introduction of punitive dam-ages The current product liability law limits the claim for the damages to actual damages incurred and does not include punitive damages. The new amendment will provide for punitive damages (up to three times the actual damages or treble damages) if (i) the manufacturer knew about the defect of the product and failed to take necessary measures and (ii) the defect resulted in significant harm to a consumer’s life or body. 2. Lessening of the claimant’s burden of proof The amendment provides that if the claimant proves that (i) the claimant incurred damages while the product is used in the ordinary course of use, (ii) the damage was caused by a cause which is under de facto control of the manufacturer, and (iii) the damage does not customarily occur without the relevant defect of the product, it shall be presumed that the product was defective (existence of defect) and the damages are caused by the defect in the product (the causality between the defect and damages). 3. Shifting of the claimant’s burden of proof in case where the
manufacturer is unknown Under the current product liability law, in order for a claimant to seek compensation from the distributor in case where the manufacturer is unknown, the claimant had to prove that the distributor knew or could have known the manufacturer. Under the amended law, , if the manufacturer is unknown to the claimant, the claimant may seek compensation from the distributor regardless of whether the distributor knew or could have known the manufacturer. Product liability risk is one of the most serious issues facing manufacturers in the US. However, due to Korea’s amendment of its product liability laws, it may also become a major issue facing companies in Korea as well. Like the US, it product liability risk can result in massive law suits investigations, and even fines. Companies that fail to consider product liability risk when manufacturing, distributing or selling products in Korea may be forced to close their doors if they fail to address the seriousness of product liability litigation in Korea. It is highly probable that because of the amended product liability law in Korea, product liability costs will skyrocket. Product liability claims, product recall cases, and related litigation, besides hurting the company’s brand, image, and reputation, may soon entail many costs, expenses, and legal fees such as: • Costs related to product incidents, including recall, retrofit, management and employee time, and lost profits • Legal costs, including litigation costs
Bryan Hopkins Special Counsel, Lee & Ko bryan.hopkins@leeko.com
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Korea Voices • Increased insurance costs • Costs including those associated with a loss control program and other risk management–related processes Companies in Korea will have to now worry more than ever about design issues and how to mitigate potential product liability exposure such as implementing a legal risk management program. There are a number of areas that a company’s Risk Management Department (RMD) or related divisions must consider when implementing a comprehensive legal risk management program to address product liability concerns. The main concerns are sources of risk, whether departmental or process oriented. Each step of the design, manufacturing, sales, and distribution chain contains numerous risks, including: Product design • Performance specifications • Safety analysis and features • Labeling • Instructions for use • Warnings and cautions • Detectability of malfunctions • Serviceability • Product warranty Manufacturing and distribution • Manufactured to specifications • Components meet design specification • Product testing • Product packaging • Record-keeping procedures • Suppliers • Contractors • “OEM” or “VAR” customers • Distributors Product promotion and service • Advertising copy • Product literature • Marketing and promotional material • Service and repair procedures Therefore, with introduction of the punitive damages in Korea as well as the other changes, manufacturers doing business in Korea need to take product liability more seriously. The costs of implementing product liability mitigation strategies will go
up as product liability exposure in Korea increases. Companies selling products in Korea should review their internal procedures regarding the handling of product defects. Distributors also should review processes on handling information on the manufacturers and distributors who supply the products. Companies are also advised to establish internal procedures for taking appropriate measures in case of consumer complaints in order to minimize product liability risks such as (i) immediate suspension of sales or recalls, or (ii) adding additional or appropriate warnings in the label for the product. All in all, considering the above, it may not be a wise move for Korea to increase product liability penalties and exposure. If the US is an example, companies should be very concerned.
Korea Voices
Somewhere Under the Rainbow: Exiles Speak by a Digital Stream Everywhere the word “exile,” which once had an undertone of almost sacred awe, now provokes the idea of something simultaneously suspicious and unfortunate. — Hannah Arendt, 1944 As a child, I always loathed having my own room. It wasn’t necessarily that I wanted to share with my sister during the day, but being cut off from loved ones at night gave me nightmares. Looking back on it, and acknowledging at the outset, here, the privilege I was born into, I felt nothing short of banished every night when my parents would send me off to my room while the midnight sun still shone outside my windows and the kids of other families continued to play outside. As long as my parents were still up, I felt lonely and left out; after they went to bed, I would start to become afraid. I craved connection. My best friend Vivian and I couldn’t bear to let the other walk home alone after school, so we walked each other home—back and forth and back and forth until we had exhausted ourselves or our parents came to find us somewhere on the block and take us inside. I vividly remember being around six years old after such an incident, sitting on the floor of my room with a toy turntable, playing and replaying a vinyl 45rpm recording of “Somewhere Over the Rainbow,” crying my eyes out, imagining the tiny bluebirds flying away and leaving me—and every other lonely girl on earth—behind. Not much has really changed. Like many foreigners working in Korea, I’m mostly a honbapper (혼밥=honja (alone) bap (meal)). But, as an adult, I have always thought of my loneliness, even to the extent it is
beyond my control, as self-imposed. My choices are mostly my own. When I am not honbapping in public, I am eating alone at home in the easy company of my cell phone’s Internet radio apps, which connect me instantly to the news of the country of my choice in real time. Lately, my meals have been accompanied by radio talk of solar-powered border walls and the EU’s refugee crisis. Over the past two years, more than 1.2 million people have crossed the Mediterranean seeking survival in some safe place. Here in South Korea, according to government figures, since 1994, 1,144 Syrians have requested asylum in this country. Refugee status has been granted to only three. As recounted in a 2016 article by Jason Strother, a local immigration official once reportedly told a Syrian refugee that fleeing war is not, by itself, considered grounds for refugee status in South Korea. All of this has created a new context for my own solitude. The refugee, the immigrant, and the new visibility of nationalist/ religious identity fringe cultures present a political, existential, and moral crisis for me and for every human being by raising the question—again—of what a country is and who its citizens not only are but ought be. What do borders mean in the digital age, and what is or can be contained within them? Who is uri (우리 “us”) and who is nam (남 those exiled from “us”)? In my early adulthood, still before streaming Internet radio news and associated storytelling genres like podcasts, audiobooks, and today’s ubiquitous political commentary, my favorite thing to do on Sunday mornings was to lie in bed and listen to a program called “Alternative
Professor Jocelyn Clark Pai Chai University KBLA Arts Ambassador jocelyn.clark@kbla.info
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Korea Voices Radio,” which was broadcast over our local public radio station and hosted by investigative journalist David Barsamian. Barsamian, by all reports an accomplished sitar player, fluent in Hindi and Urdu, intrigued me. In 2011, he was thrown out of India immediately upon his plane landing because of the ways he’d handled the Kashmir and other controversies in his articles. Each week, the program would feature a recorded lecture by an intellectual— the likes of Arundhati Roy, Vandana Shiva, Angela Davis, Edward Said. The lecture would serve as a kind of yin to the preceding Friday evening’s yang: ritually watching mainstream talking heads with my dad—Brooks and Shields, Washington Week with Gwen Ifill, and The McLaughlin Group. On Sunday mornings, I would listen alone with my eyes closed, assimilating ideas foreign-seeming for their depth and frequent allusions to places I’d never been and experiences I had yet to know. Though I listened to the radio hard, and read as much as I was asked to in school, to this day there continue to be gaps in my education. I seem not to be alone in this. Anyone in my generation concerned about today’s increasingly complex geopolitical situation has to scramble to acquire what felt only a few years ago like nonessential knowledge. When we were young, the Cold War took a big bite out of our literary sustenance, then along came digital culture, which has caused many my age and younger to stop reading books altogether. Thus, recent New York Times bestseller lists comprise books mostly from my parents’ generation and earlier: Sinclair Lewis. John Steinbeck. George Orwell. Hannah Arendt. I only know Sinclair Lewis’ It Can’t Happen Here because rockers Frank Zappa and his Mothers of Invention had a popular song by that title. For me, Steinbeck was a different story. In high school, I pulled my first voluntary workrelated all-nighter (in what would become a lifetime of voluntary work-related all-nighters) reading The Grapes of Wrath cover to cover. That night endowed me with many
images I would later return to—not only a sense of the subjective texture of exile, but more specific allusions, e.g., when I moved to Seoul in 1992, I recognized the name of Korea’s national flower, the Rose of Sharon, as the name of a Joad daughter. Still, Steinbeck’s story felt far away, both geographically and temporally—a place and time from which we’d moved on. I could not relate its distant dusty prose to my high school temperate rainforest reality. Steinbeck’s last novel, The Winter of Our Discontent, published in 1961, bore a title that seemed more in sync with my living conditions, but I never got around to reading past the cover. My classmates and I may have been made to read Orwell’s 1984—we’d at least have heard of it, because it was, after all, actually 1984. For those who did read it, the warnings against the tyranny of government propaganda and historical revisionism—“alternative facts,” “double speak,” and whatnot—no doubt failed to resonate. But, Hannah Arendt? Through all my school days, I had never heard of her—in the same way and perhaps for the same reasons I had never heard about other aspects of World War II, including the internment camps located less than 100 miles from my home, to which hundreds of Alaska’s indigenous villagers from the Japanese-occupied Aleutian Islands had been forced to move and made to work for the fish processing and seal harvesting industries—all for the sake of their own, and the nation’s, “security.” At home in Korea, whenever I can get time, I like to relive the early Sunday morning radio broadcasts of my younger years. Of late, I have noticed the mid 20th century writings of Hannah Arendt frequently making their way into cyber conversations on solar border fences and refugee camps. Arendt’s reemergence as a voice for our times stems from her 1963 statements on Adolf Eichmann, bureaucracy, and the “banality of evil”—that last one referring to our tendency to follow orders, ignore questioning voices, and resist
Korea Voices engaging in productive dialogue with others, whether near to us or in the wider world. Arendt is also getting a lot of attention because of her firstperson observations of the dynamics of totalitarianism. As a Jewish refugee, an “enemy alien,” who was stateless for 18 years of her life, she lived in exile first in France and later in the U.S. Issues of belonging and exile, and the role these play in the advancement of totalitarianism, stood at the center of Arendt’s understanding of the world. Now she is back to remind us that when human rights are made contingent we all become vulnerable. In her 1929 dissertation, Arendt implored the world’s citizens to create meaning in the here and now by connecting with others. She criticized Christian philosophers like St. Augustine for looking to eternity as the source of meaning for human existence. Arendt’s spiritual thought had to do with engagement, while Augustine, who was no less a humanist, looked ultimately to transcendence. In reading these different ideas about how a person, a society, a globe may become fully human, I couldn’t help but wonder why humanist theorists from the Abrahamic traditions rarely, if ever, mention Confucius, Mencius, and other East Asian philosophers whose writings look not to gods, but to politics, governance, and ethical systems to improve the person, the family, and society—or, put another way, to regulate moral and humane relationships among the living. Confucius’ philosophy always had at its heart the task of becoming fully human. Augustine’s promise of Heaven for the “good” individual no doubt rang hollow, given Arendt’s World War II experiences—in “We Refugees,” she asks, who needs ghost stories when it is real experiences that makes the flesh creep? I like to think she may have taken comfort in the Confucian ideal that humans are born with benevolence, righteousness, propriety, and wisdom, rather than Original Sin. Mencius, in particular, believed “The tendency of man’s nature to good is like the tendency
of water to flow downwards. There are none but have this tendency to good, just as all water flows downwards.” For both Confucius and Mencius, these were not just nice thoughts but political tenets. In the Great Learning, Confucius teaches: . . . 物有本末，事有終始，知所先後，則 近道矣。The ancients who wished to illustrate illustrious virtue throughout the world, first ordered well their own States. 古之欲明明德於天下者，先治其國 Wishing to order well their States, they first regulated their families. 欲治其國者，先齊其家 Wishing to regulate their families, they first cultivated their persons. 欲齊其家者，先修其身 Wishing to cultivate their persons, they first rectified their hearts. 欲修其身者，先正其心 Wishing to rectify their hearts, they first sought to be sincere in their thoughts. 欲正其心者，先誠其意 Wishing to be sincere in their thoughts, they first extended to the utmost of their knowledge. 欲誠其意者，先致其知 Such extension of knowledge lay in the investigation of things. . . . And, in the Doctrine of the Mean, he instructs: ... 子曰。好學近乎知、 力行近乎仁、知恥 近乎勇。知斯三者、則知所以修身。 知所以修身、則知所以治人 Loving study, you approach wisdom; loving energetic practice, you approach ren [benevolence/humanism]. Understanding shame, you approach courage. If you understand these three, you know how to polish your character; knowing how to polish your character, you know how to handle others; knowing how to handle others, you know how to govern a state or clan. Elisabeth Young-Bruehl, in her 1982 Hannah Arendt biography titled For the Love of the World, recalls Arendt’s statement that “[a]s long as mankind is nationally and territorially organized in states, a stateless person is not simply expelled from one country, native or adopted,
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Korea Voices but from all countries . . . which means he is actually expelled from humanity.” That is, the person is made to be completely alone. An Unperson. A nam 남 in Korean. As with the example of World War II’s Alaska Native internment camps, U.S. history features countless episodes of the government exiling its people. Many in my home country live today in permanent exile within its boundaries. One can find comparable examples in most rich countries, including South Korea. In the U.S., the African-American continuum of slavery, Jim Crow, neighborhood redlining, mass incarceration, and police brutality provides the starkest example. Under all current U.S. politics lies a past built on domestic exile. The exiled American may be allowed to stay in the country, but not the neighborhood or the county. After tens of thousands of African Americans were forced from their New Orleans homes by Hurricane Katrina, they found themselves not only denied the means to return home but unwelcome elsewhere. As columnist David Brooks described at the time (in an article that actively advocated for a policy of no return), “There [was] local resistance to the new arrivals—in Baton Rouge, there were three-hour lines at gun shops as locals armed themselves against the hurricane victims moving to their area.” When Hannah Arendt wrote of being “expelled from humanity,” she may have been thinking of her expulsion from her native country. America’s homegrown refugees, though most often not required to move as far away as another country, are nonetheless all too familiar with what it means to be disappeared. This past week, as I was busy reading up on Arendt, the Internet delivered to my screen the justreleased dash cam video of a police officer shooting Philando Castile, an African-American man on his way home from buying groceries, with his girlfriend Diamond Reynolds and her four-year-old daughter in the car, when he was pulled over.
Simultaneously released was black and white footage of Diamond Reynolds handcuffed in the back of a police car for an hour after her boyfriend was shot, her four-yearold begging her not to fiddle with the cuffs lest she too be shot. South African-born American immigrant and late-night television host Trevor Noah had this to say about these images: Diamond Reynolds has just seen her boyfriend shot in front of her [and] she still has the presence of mind to be deferential to the policeman. In that moment, the cop has panicked, but clearly black people never forget their training. Still, in that moment, the black person is saying, sir. “I respect you, sir. I understand what I need to do, sir.” The same thing Philando Castile tried to do. New York Times op-ed contributor Elise C. Boddie, in a column she titled “Philando Castile and the Terror of an Ordinary Day,” offers us the view of the modern American Unperson: “The problems we face are not only about the glaring wrongs of the criminal justice system, the structural barriers and persistent inequities that shut out opportunities, but the grinding daily hassles that deny black people the ability to just be.” On her podcast On Being, Krista Tippett recently interviewed University of East Anglia professor Lyndsey Stonebridge, who has written extensively on the “meaning of exile,” including on Hannah Arendt’s idea that totalitarianism is “organized loneliness” and loneliness in turn creates the “common ground for terror.” Stonebridge recalls how, in The Human Condition, Arendt borrows a phrase . . . from Herodotus called isonomia, which is the principle of equal liberty. She says you need to have a political community which is capable of responding to isonomia, or this principle of equal liberty, [which]. . . says, “Well, how come I’ve got total freedom of movement and you haven’t? How come my child
Korea Voices gets a really good education and yours doesn’t? How come my mom can grow vegetables in her garden, and your mother’s garden has just been blown to bits? That’s not good enough.” In the interview, Stonebridge goes on to assert that “there needs to be enough in the way we think about political democratic life to allow citizens and people to act on the principle of equal liberty . . . [T]he situation we have now is a kind of phobic repudiation of vulnerability, everyone’s vulnerability, which is very, very bad.” In Orwell’s prescient 1984, an Unperson is someone who has been “vaporized”—that is, secretly murdered and erased from society, the present, the universe, and existence. In the book, the true histories of the Unperson are discarded down memory holes. The only difference in the American context—in the age of social media—is that such disappearances, like that of Philando Castile, often occur in plain sight. The truth isn’t even discarded or hidden. It simply isn’t seen in the first place, even when it is viewed. As Arendt writes in The Origins of Totalitarianism, once you disappear into “the dark background of difference,” you no longer have rights, entitlements, or presence. While we may like to believe social media can guard against invisibility, Arendt also reminds us, from her own experience, how the privileged and politically empowered become— through social instruction and their own intoxication by power—unable to relate to the disempowered as equal members of humanity. As she famously wrote, “the world [finds] nothing sacred in the abstract nakedness of being human.” We are now finding out how social media overload has a way of further desecrating the “nakedness of being human” by rendering it ever more “abstract.” In another of her essays, “We Refugees,” Arendt describes how, after four weeks of exile in France
and six weeks in America, members of her refugee community began to try and “pass”—to pretend to be Frenchmen or Americans. “The more optimistic among us,” she writes, “would even add that their whole former life had been passed in a kind of unconscious exile and only their new country now taught them what home really looks like.” Writing from California at the time, she added, “In Paris we could not leave our homes after eight o’clock because we were Jews; but in Los Angeles we are restricted because we are ‘enemy aliens.’ Our identity is changed so frequently that nobody can find out who we actually are.” She ends the essay with the following: Man is a social animal and life is not easy for him when social ties are cut off. Moral standards are much easier kept in the texture of a society. Very few individuals have the strength to conserve their own integrity if their social, political and legal status is completely confused. Lacking the courage to fight for a change of our social and legal status, we have decided instead, many of us, to try a change of identity . . . Those few refugees who insist on telling the truth, even to the point of “indecency,” get in exchange for their unpopularity one priceless advantage: history is no longer a closed book to them and politics is no longer the privilege of Gentiles. They know that the outlawing of the Jewish people in Europe has been followed closely by the outlawing of most European nations. Refugees driven from country to country represent the vanguard of their peoples—if they keep their identity. For the first time Jewish history is not separate but tied up with that of all other nations. The comity of European peoples went to pieces when, and because, it allowed its weakest member to be excluded and persecuted. I recently learned there is an original introductory verse for “Over the Rainbow” that was cut from the Wizard of Oz Broadway musical
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Korea Voices version of the song. The song originally began, “When all the world is a hopeless jumble . . .” It was written by Yip Harburg (nee Isidore Hochberg) (1896-1981), one of four surviving children out of 10 born to Orthodox Jews who emigrated from Russia. Harborg, who became famous not only for writing Judy Garland’s signature song but also the anthem of the Great Depression, “Brother, Can You Spare a Dime?” would eventually find himself swept up into the House unAmerican Activities Committee’s famous Communist witch hunt in 1950. By mixing in the global second person (the dreams that you dare to dream) with the first person (if happy little bluebirds fly beyond the rainbow, why oh why can’t I?), Harborg joined individual aspiration to collective longing. I remember my 6-year-old episode of crying on the floor while repeatedly listening to “Somewhere Over the Rainbow” as a profoundly lonely but also connected moment. I cried not over a singular hurt caused to me by one person or a singular life event. My sadness was existential. I had reached an age where I was beginning to open to universal suffering, connect with it genuinely, take it on as my own. I continue to hold dear the memory of that moment, before society got down to the business of teaching me what it wanted me to know—before Mencius’ naturally flowing water of innate kindness was replaced by chlorinated truths pumped uphill in pipes. I have written often in this column about how global digital media are erasing our imagined map lines and how technology can be expected to continue to take a toll on our once-solid ideas of nationhood. Given the countless everyday boundary crossings of culture, trade, and refugees, the current surge in nationalism and longing for the return of homogeneity (as if it ever existed) in America, and the longing for its preservation in Korea, should not come as a surprise. But, given the way information now flies around, does anyone really
believe isolationism, as policy, stands a chance? Will we end up separated from one another or come to discover we have merely made of ourselves exiles honbapping in place? By sending me to my room early, my parents may have successfully, at least for a few hours each evening, turned back the clock to a life of pre-parenthood simplicity. But things can never go backward for long. I can’t count the number of mornings my parents would awake to find me sleeping, repatriated at the foot of their bed. The exile of Diamond Reynolds and her little girl from the warm presence of Philando Castile, however, will never be undone.
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Changes Ahead for Major Korean Chaebol Groups This week President Moon Jae In made history by appointing Professor Kim Sang Jo as the head of the Fair Trade Commission, the Korean government unit that supervises the Korean conglomerates, the chaebol groups as they are known in Korea. What makes this a controversial appointment is that Mr. Moon did not wait for a vote of approval from a committee of the National Assembly which is holding hearings on all of the president’s officail appointments. It is also controversial because Mr. Kim is a well known advocate of chabol reform and he has been active as a member of the chaebol reform council and the People’s Solidarity for Participatory Democracy, a corporate reform group. The Fair Trade Commission is the only body in Korea that has the authority to hold the chaebol to account in Korean courts, and upon his appointment Mr. Kim commented that he would do “his best to abolish the Fair Trade Commission’s exclusive power to accuse companies of unfair practices so that anyone can raise objections to such practices.” This might not sound like a particularly important comment, but if Mr. Kim is succesful in modifying Korean laws and regulations so that companies could be subject to legal suits by individuals and other entities, that could potentially be a highly transformative change in the way major chaebol companies conduct their businesses. For example, it is quite common for chaebols to delay payments to subcontractors and vendors by issuing post dated payment bonds that are typically not due for payment until 9 months after issuance, which in turn means that if your company has provided services or goods to a chaebol and you want to be paid prior to the expiration of the 9 month period, you must discount these bills in the market and take what a financial institution will offer which might be only 80% to 90% of the face value of the bond. The chaebol are not known for their fairness when it comes to policies involving minority shareholders either,
and the Fair Trade Commission has the right to contest corporate policies that are blatantly against the interests of minority shareholders--but this has seldom happened in the past. Mr. Kim may also audit the accounts of the chaebol companies, and in cases where the chaebol chairman of members of the chairman’s family are found to have siphoned off assets from their companies, whether the companies are listed in the Korea Stock Exchange or not, and in cases of embezzlement the Commission can get the Korean Prosecutor’s Office to issue criminal indcitments. In fairness to past chairmen of the FTC, it should be noted that the FTC has arranged the indictment and conviction of a number of chaebol chairmen over the years. But Mr. Kim may take things to a new level, and he will also be on the alert for any suspicious trading activities such as the very common practice at many chaebol of having listed chaebol companies deal under exclusive supplier contracts with unlisted companies owned by members of the chairmen’s families. This practice can obviously can lead to abuses when assets owned by listed companies with minority investors are siphoned off to privately held companies owned by the families of the chaebol chairmen at pricing levels that are well below market levels. There is certainly an opportunity for Mr. Kim and the FTC to alter the board of directors practices at major Korean companies to further enhance the rights of minority shareholders and to ensure that chaebol companies are adhering to fair trading practices in their business operations. In the past, many chaebol companies have not had experienced independent directors on their boards and as a result too often the boards did not act on behalf of the minority shareholders or other stakeholders in these companies but rather only to enhance the powers of the families that control the chaebol companies. Measures to strengthen corporate governance at major Korean companies is likely to be something that Mr. Kim
Hank Morris Argentarius hank@argentarius-group.com
Korea Voices and the FTC will address under his leadership. The other appointment that President Moon appears determined to make before the National Assembly has an opportunity to make its recommendation is that of his foreign minister designee, Ms. Kang Kyung Hwa, who in recent years has been an employee of the UN in New York and has not been a senior member of the Korean foreign service. Mr. Moon has said that Ms. Kang is a “confident and great woman� and he noted that she has had a very good employment record at the UN and has been highly regarded by many former foreign ministers and by members of the public. President Moon went on to note that he has full appointment powers to appoint ministers without the approval of the National Assembly except for the appointment of the Prime Minister, the members of the Supreme Court and the Constitutional Court, and the chief of the Bureau of Audit and Inspection. But aside from those positions, the president in Korea has the authority to make all other appointments and Moon hinted that he did in fact intend to use his powers of appointment to the extent necessary. At this stage President Moon is enjoying record popularity levels with some polls indicating that his popularity level was in excess of 82%, which is quite high by any measure. No doubt Moon will begin working soon on more controversial legislation and then his poll ratings may not hold up at such high levels, but for now Moon does appear to have the general approval of a great majority of Korean citizens. His handling of the upcoming visit to Washington D.C. to meet President Trump may be a difficult time for Moon since President Trump has been a strong supporter of the installation of the THAAD missile system in Korea, while Moon has not been very supportive. Also President Trump has been highly critical of the Korea US Free Trade Agreement and may signal an determination to renegotiate the terms of that agreement, which would be difficult for Moon to accept and retain a high level of populatity at home. Difficult challenges are just around the corner for President Moon and it will be very interesting to see how he manages these challenges.
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Korea Voices
The 10 Things That I look For in a Hire If you reflect into a mirror at yourself, you probably do not see yourself the way others see you. Not only your appearance, but your actions, body gestures all give distinct clues to who you really are.
intelligent, experienced leaders ready to take on the new position of the company. There are more candidates at the initial review than positions when we begin a search for that one superman or superwoman.
It is a fact that a singer hears herself differently than the audience hears her. The singer, when performing hears herself through her inner ear, which sounds differently to her than to the audience which hears her through their outer ears. So, perception is truly different from reality.
So, to differentiate comes down to experience and how that experience has affected their behavior. According to Lu Adler, “First impressions based upon emotions, biases, chemistry, personality, and stereotyping cause more hiring mistakes than any other single factor.”
Reality or the Truth is we really do not know what is going on in someone’s brain. We do not hear them the way they hear themselves. What really motivates them or depresses them? We just don’t know. Our normal could be different from their normal. What we hear and what they hear is probably different. How many of us really know ourselves, let alone someone else? How do we fit? Do we belong? David Thoreau once wrote. “The mass of men lead lives of quiet desperation.” So, we all struggle to see how we fit into society and the workplace. There are many factors that come into play to determine success or effectiveness. Throw yourself or your organization into a new country like South Korea for example, and there are many more factors required. If you think it is difficult in your hometown, state or country to hire staff, finding staff in a foreign country is multiplied many times that. So, we need to be good. we need to be special or have exceptional strengths to hire and compete in the job market. What sets us apart? Or, what sets one candidate apart from another candidate? There is a large pool of
Here are 10 characteristics that I look for in a great hire in addition to the specific specifications that my client may ask of me. Good-ones. Keepers. 1) Positive Attitude 2) Motivated 3) Flexible 4) Global Mindset 5) Humble 6) Honest 7) Team Oriented 8) Risk Taker 9) Great Communicator 10) Professional Mistake Handling Expertise
Steven B. McKinney McKinney Consulting Inc. steve.mckinney@kbla.info
Korea Voices Here are 10 characteristics of potential hires that I disregard in the process quickly. Bad-ones. Rejects. 1) Negative Attitude 2) Or, better than thou type attitude 3) In-flexible 4) More “I” than “We.” 5) Is always right 6) My way or the Highway Attitude 7) Military type Authority 8) Very Controlling 9) Poor Communicator 10) Lack of responsibility — it’s someone else’s mistake Another reason why the word normal is overused is that most people are unaware of how they really act. Just like the singer, they think of themselves or judge themselves based on what they hear and know about themselves from the inside versus what we see on the outside. We cannot see into their hearts or minds to see them as they see themselves, we are not God. We are left to judge and evaluate based on their actions and behaviors. So, when making hiring decisions or management placement directions one should evaluate based on what you can see, prove, and observe through the actions and behaviors of the individuals. This is your “hearing” of the candidate. This is your reality of what the candidate is all about, not the song that they may sing. They may sing in perfect harmony the song that they think you want to hear. But you must muffle some of the noise for clarity’s sake. Interpret holistic their abilities and attitudes from all the input that you have received before making the hiring decision. Hear them with knowledge and observation not with just your ears. Steven B. McKinney is the founder & President of McKinney Consulting Inc. (IRC Korea) a partner firm of IRC Global Executive Search Partners (Top 3 Globally) with over 17 years of experience as a consultant in executive search
and leadership consulting placing 100’s of executives of multinational companies in Korea and Asia-wide. Mr. McKinney is also the co-founder of the Korea Business Leaders Association (KBLA). He earned the distinction of Certified Master Coach from Behavioral Coaching Institute and a certificate in Leadership Coaching Strategies from Harvard University. Previously he managed global footwear R&D efforts for Adidas International and oversaw manufacturing production and R&D duties for Reebok International in Korea.
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About the KBLA Korea Business Leaders Alliance Our mission is to serve leaders in Korea, primarily business leaders, but also academics and arts leaders. We bring peer leaders together, help them build relationships, expose them to new ideas and best practices, give them opportunities to interact, publish, demonstrate expertise, and just spend time getting to know one another. We provide information tools and channels for them to interact online and to be informed.
The KBLA also serves business leaders around the world who have a stake in the Korean business environment through our business intelligence reporting service: Korea Intelligence Package.
Partners of the KBLA
About the KBLA Value Chain Advertisers Index EDITOR IN CHIEF Rodney J. Johnson
Cushman & Wakefield www.cushmanwakefield.com
MANAGING EDITOR Alixe Trang
Korea International School www.kis.or.kr
CONTENT EDITOR Kyle Johnson
Seoul Foreign School www.seoulforeign.org
CONTRIBUTORS Svein Tyldum Kyle Johnson Soo Yeon Oh Bryan Hopkins Jocelyn Clark Hank Morris Steven B. McKinney Arthur Sabalionis
Grand Intercontinental Seoul Parnas https://www.grandicparnas.com:444/kor/index.do
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Value Chain is published monthly by the Korea Business Leaders Alliance on the ground, in Seoul, Korea. Value Chain is a digital-only publication available in PDF and online forms. For advertising and distribution inquiries contact us at admin@kbla.info.
Lee & Ko www.leeko.com Kavod Ltd. http://www.pierrecigar.com Marsh & McLennan Companies http://www.mmc.com Asian Tigers Mobility www.asiantigers-korea.com KEB Hana Bank hanafn.com/main.do Top Cloud http://www.topcloudcorp.co.kr/ Agility Korea www.agility.com Grand Hyatt Seoul http://seoul.grand.hyatt.com/en/hotel/home.html Taejon Christian International School http://www.tcis.or.kr/ United Airlines www.united.com Erudite Risk www.eruditerisk.com McKinney Consulting www.mckinneyconsulting.com
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Two roads diverged in a wood, and I—I took the one less traveled by, And that has made all the difference. -- Robert Frost