The Asian Law & Business Blog

Check List of 7 Things to Do Before Doing Business in Korea

noreply@blogger.com (Sean Hayes) — Thu, 13 Jun 2013 22:42:00 PDT

1. Do you Have a Registered Company/Business? Operating in Korea is not as simple as just leasing an office. All businesses whether in the form of a corporation or sole proprietorship in Korea are required to register as business with the tax office and local government offices. For some businesses the approval of a government agency will be required. Other articles on Korean corporate forms may be found at:

2. Do you Have Employment Agreements, Employment Rules, License Agreements, Joint Venture Agreements, OEM agreements, Shareholder Agreements, Lease Agreements Tailored for your Korean Business?
No your U.S. agreements are not good enough. Other articles on the need for Korean-tailored agreements that may be of interest may be found at:

3. Are you in Compliance with Foreign Corrupt Practices Act? The U.S. Foreign Corrupt Practices Act (FCPA) and the British, Canadian, French, German equivalent allows the government to severely punish those for even actions of a Korean partner. A compliance system must be put in place. If you do not have a compliance system tailored to your Korean operation - you may be heading down a road that can lead you into the hands of not, only, the Korean prosecution, but the prosecution of your foreign government. A few more posts that may be of interest:

4. Have you Protected your Trademarks, Patents, Copyrights and other Intellectual Property Rights? Registration of your Intellectual Property rights (IP) "internationally" is not good enough for Korea. You must register your IP in Korea. Please read the following posts:

5. Due Diligence? I wrote so many times about Due Diligence it is painful to type those two D words.

6. Did you Conduct a Compliance Audit? You may be in violation of employment, tax, environmental, antitrust/monopoly, currency control, transfer pricing, occupational health and other laws and regulations.

Compliance Control Standards in Korea Under the Amended KCC
I should write more about this issue.

7. Did you Conduct a Financial Audit by a True Independent Auditor? Speaks for itself.

Please - this is not to be taken as an exhaustive checklist. Please scroll the blog for more issues that may arise in your operations in Korea.
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Data Theft in China: Often Comes from the Inside

noreply@blogger.com (Sean Hayes) — Thu, 13 Jun 2013 00:56:00 PDT

We often discusse Intellectual Property rights and enforcement here in the Jungle and it must be looked at from a different angle than most Westerners are accustomed.

First of all, the inhabitants of the Jungle don’t really consider it infringement and certainly most don’t have the core internal belief that there is anything wrong with taking someone’s information or intellectual property. In addition, they don’t really believe in Win – Win business outcomes and if they can get the upper hand through any means, they will try and it is your fault for letting the playing field remain un-leveled to their benefit.

Finally, there is a long history of companies coming to China and sharing technology in the hopes of doing future business or having a successful Joint Venture only for the technology to be taken by their “partner” – Wahaha and Danone are a fine example as are Siemens and their MagLev high speed train technology. So, it’s no surprise that according to a recent survey of U.S. companies in China that 25% report that they have been a victim of corporate espionage in some form – these are the companies who are willing to admit it. I tell everyone who wants to do business here in The Jungle to make sure you know who you are dealing with before you do a deal and protect your intellectual property at all costs regardless of where you are doing business.

These companies need to beef up their data security and watch out for their own employees because data theft usually comes from the inside.

by Frank Caruso
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info@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Illegal Professions in Korea: Private Investigator, Tatto Artist, Chiropractor

noreply@blogger.com (Sean Hayes) — Wed, 12 Jun 2013 19:30:00 PDT

It is illegal to be a private investigator, tattoo artist or chiropractor in Korea. Of course, Korea has private investigators, tattoo artists and chiropractors. Thus, those practicing these occupations in Korea face criminal prosecutions and fines.

Additionally, the clients of those practicing these occupations are not safeguarded by the typical administrative agency regulations that serve to protect these individuals.

Some issues have occurred with regard to private investigators. Some have utilized tactics that many consider less than ethical. These criticisms may be lessened with the regulation of the profession.

I believe in the near future that tattoo artists and private investigators will become legal occupations, but I believe you will see a vigorous fight from massage therapists (anma- blind practitioners), pharmacists and doctors towards legislation of the chiropractic profession.

Some lawyers are against the private investigator profession, but in my own straw pole I found no Korean attorney that is against the profession if the profession is monitored by an agency not controlled by those within the profession.

What do you think?
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Contracts in China: Do you Even Have One?

noreply@blogger.com (Sean Hayes) — Sun, 09 Jun 2013 23:48:00 PDT

The following is from a blog post I put up a few years ago and although it is brief and not as verbose as my other posts, it is certainly in my top ten favorites.

It is not surprising how many companies and entrepreneurs are in such a hurry to get started in manufacturing, partnering or marketing that they totally disregard the need for a contract, a simple memorandum of understanding or something written on a cocktail napkin. It’s also not surprising anymore (after 10 years in the Jungle) that people come to me looking to recover losses incurred with Chinese suppliers, factories, or partners and they don’t even have a basic agreement. Usually I have to tell them that without an agreement, you really have no chance to recover and that there are very few lawyers or legitimate collection agencies in China that are willing to work on a contingency fee basis, including yours truly.

So, as we enter the second quarter of 2013 and try to reach our manufacturing goals and sales targets for the year, it might be time to conduct a thorough review of your contracts. Do you have them? Are they written in English and Chinese? Are they written by your U.S.-based lawyer who knows nothing about China? Are they written by your Chinese lawyer who has little or no obligation to advocate on your behalf and has never even traveled outside of China?

I thought I would share this blog posting from The International Technology Law Blog as a reminder that you shouldn’t start without a contract, and if you have started you must conduct a thorough contract review or you risk not having any recourse for recovery when you get shafted by your Chinese factory, supplier or partner. There are many factors that must be considered when presenting and negotiating a contract with the Chinese and you better have someone skilled and experienced in China looking out for your best interests.

by Frank Caruso
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info@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

If it is good for Apple why isn't it Good for your Company

noreply@blogger.com (Sean Hayes) — Sun, 09 Jun 2013 23:43:00 PDT

If it is good for China, then, why isn’t it good for your company as well. You might even argue that Apple has billions of dollars and lots of cash and can spend money on high priced lawyers and accountants and you can’t. Well, that is true and they do spend a lot of money on lawyers and accountants, but what is untrue is that you can.

Some of you might remember 2008, just before the economic crisis and shortly after George W. Bush pushed through sweeping changes in the U.S. Bankruptcy laws, Haliburton moved their corporate headquarters out of the U.S. to Dubai.

This didn’t just mean they moved their physical address, which they did, they also changed the jurisdiction of their incorporation. Why did they do this? Simple, Dubai has very low, if any Corporate taxes and Haliburton can be shielded from paying those taxes, from the onerous restrictions of the Foreign Corrupt Practices Act, and from liabilities that they would otherwise be subject to under U.S. law. “Well, that doesn’t sound fair,” you might say. Fair or unfair it is completely legal and companies do it all the time.

I have been promoting Hong Kong as one of the best jurisdictions in the world for protecting your assets and for legally paying less taxes and in fact in the annual Report on Economic Freedom Hong Kong is regularly ranked number 1, well ahead of the U.S.

I often wonder why U.S. individuals and companies that do business in Asia and Europe would not want to incorporate in Hong Kong and invoice out of Hong Kong and instead prefer to generate revenue in a tax system that is wasteful and takes more half of their income. It doesn’t make sense.

So, I thought I would share the below article from Zero Hedge and share it with you and hope it is enlightening. Apple and Taxes Confused why AAPL is opting for the dividend recap route (as we predicted it would in January )?

Simple: as the first chart below reminds us, as of December 31, nearly 70% of the company’s total cash, which has grown to a record $145 billion in the current quarter, was held offshore. This means that if AAPL wanted to repatriate this $100 billion or so in cash, it would have to pay Federal tax on it, amounting to dozens of billions in remittances to Uncle Sam as this is cash which AAPL does not have full access to for US based operations.

Hence: it has opted to raise cash by issuing debt instead of repatriating its cash. Which brings up an interesting point. As we have shown in the past, perhaps the one thing Tim Cook’s company has loathed more than anything in the past, is to pay taxes, which is why it has some of the most convoluted legal tax shelters imaginable. Indeed, in the current quarter, according to the company’s cash flow statement, a tiny $2.4 billion was paid in cash taxes. Putting this number in perspective, the company had an operating profit of $12.4 billion. Or, cumulatively, since December 2008, AAPL has generated a grand total of $149 billion in operating profit, while paying just $21 billion in total taxes. Is it apparent now why some $100 billion in Apple cash is not fully recourse to the company? Unless, of course, AAPL decides to follow Gerard Depardieu’s example, and run away into the tax-amnesty friendly steppes of Russia, where it will be free to do as it wishes with all of its cash…

Read the Article with all the cool graphs.

by Frank Caruso
info@ipglegal.com

U.S. ITC: Apple Infringed Samsung Patents

noreply@blogger.com (Sean Hayes) — Thu, 06 Jun 2013 18:52:00 PDT

The United States' International Trade Commission has overturned ITC Judge James Gildea's September ruling that Apple did not violate Samsung's patents alleged to be utilized in AT&T models of the iPhone 4, iPhone 3GS, iPad 3G and iPad 2 3G.

President Obama has 60 days to review the order that has placed a partial ban on the imports of older versions of Apple IPhone and IPad products.

The ban relates to the use of Apple of "standard essential patents," specifically the 3G wireless technology to transmit multiple services simultaneously that is owned by Korea's Samsung. Three related claims by Samsung were dismissed by the ITC.

The majority of scholars and most U.S. government agencies believe that the damage for violation of these type "patents" should be low-cost licenses - not a ban on imports.

What do you think?

Other articles that may be of interest:

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korea Campaign of PSY Launches in Australia

noreply@blogger.com (Sean Hayes) — Mon, 03 Jun 2013 22:56:00 PDT

A great marketing campaign for Korean tourism is underway with Psy at the helm.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Basics of Hiring Employees in Korea

noreply@blogger.com (Sean Hayes) — Mon, 27 May 2013 01:40:00 PDT

“Hiring is your most important task,” said the late Steve Jobs. Considering a wrong hiring decision can be extremely expensive to repair, let’s look at some recruiting options.

Ideally, a succession plan will have an internal candidate ready for promotion: advancing a rising star’s career and providing continuity with minimum controversy and a positive message to the workforce that capable people who do well will be recognized and rewarded.

Often, however, hiring from outside is required. If the company has a competent HR recruiting function, direct ads and in-house screening may be effective for lower and some midlevel positions.

For more important midlevel management or specialist positions, outside assistance may be needed. There are many recruiting companies. By going to any networking event, it is hard not to collect business cards from such firms.

Most recruitment firms offer contingency searches. Usually the process begins with interviewing the hiring managers and agreeing on a job description and compensation range. The recruiter ideally provides a long list of candidates and works with the client in coming up with a short list. In reality, the contingency recruiter usually relies on names from their database, or active job seekers. The recruiter may do some fundamental reference and credential checking before the final offer is made. The success fee is normally in the range of 20 to 30 percent of the first year compensation, including regular bonuses.

For lower-level positions the contingency approach is preferred, since a wrong hire is not likely to be a strategic setback. However, a hire of the wrong senior manager can be costly in terms of negative impact on the organization and lost time.

Some recruiting companies claim they do both retained and contingency searches. In reality, these are contingency recruiters that are thrilled to be paid up front - but still deliver a contingency-class service.

There is also a small number of retainer-only search consultancies that focus on identifying, evaluating and attracting “C-suite” executives (CEO, head of region or country and positions reporting directly to the region/country head) - and sometimes accept engagements one level lower. These senior professionals partner with the client in a consultative process aimed at selecting organizational leaders. Success in these partnerships depends upon a shared focus built on trust, candor and responsiveness throughout the process.

The search is conducted through an exclusive engagement with fees billed at the start and throughout the process. Consultant and client collaborate in determining leadership needs and defining executive positions. The consultant leads in identifying well-qualified individuals, selecting those best suited through a comprehensive evaluation process, and convincing them that the company/opportunity is a proper step in their career progression. Meanwhile, retained search consultants provide employers regular, detailed progress briefings.

This methodology proves to be the wisest option for senior leadership and other strategically critical hires. Some employers avoid retainer search due to the perceived costs, although in reality the total amount is not significantly higher than a contingency fee, and the risk of lost opportunity cost or reputation damage is greatly reduced. Most retained search firms are paid the equivalent to 33 to 35 percent of the total annual compensation, or in some cases a fixed fee not linked to compensation.

According to the Association of Executive Search Consultants, “Retained executive search consulting is a specialized form of management consulting. In addition to locating high-quality candidates, the retained search firm should provide information and feedback that not only helps direct the client’s search for executive talent but can also be used to run the client’s business more effectively. This feedback may include general market research regarding how the client’s organization is perceived in the market, competitive intelligence, and what kind of recruiting strategies may or may not be working at any given point in time.”

Retained searches most commonly take place when one or more of the following conditions apply:

Replacement of incumbent: There are times when a very high level of confidentiality must be maintained. As with other professional services firms - attorneys, accountants and strategic consultants - disciplined senior executive search professionals fully understand how to work with total discretion.

Difficult to find individual: Access to high-level executives who are not on the job market is fundamental, as is capability to invest time and resources thoroughly researching the target universe to identify key players.

Difficult internal promotion: Shareholder compliance (or internal debate) may necessitate a thorough look at external candidates in conjunction with independent evaluation of internal candidates.

The retained consultant will invest much more time than a contingency firm in understanding the client’s corporate culture, key executive personalities, vision, strategy and business objectives, and will be able to communicate this effectively to qualified individuals. Out of this process may emerge the “compelling story” critical to attracting a star executive.

A retained search firm will rigorously conduct reference checks with a broader range of people than those suggested by the candidate. It is in the best interest of the consultant as well as the client to flag concerns before an offer is finalized.

Most companies say “people are our most important asset,” yet often default to hiring friends of friends, applicants from newspaper or Internet ads, or resumes thrown at them from many sources. This may work for lower/midlevel positions, but tossing the dice when filling any key leadership role isn’t acceptable in today’s corporate environment.

In summary, there are a broad range of situations requiring different hiring strategies. The hiring executive has several options, and one recruiting strategy rarely fits all needs.

by Tom Coyner. Senior Advisor, IPG Legal.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Steps to Protecting Your Brand, Trademarks and Other Intellectual Property in Korea

noreply@blogger.com (Sean Hayes) — Wed, 15 May 2013 23:46:00 PDT

I just participated as a panelist for the United States Commercial Service Trade Winds-Asia Seminar for U.S. companies considering investing and/or exporting to Korea, China, the Philippines, Japan and Taiwan. The Seminar brought together over 150 U.S. investors and exporters of products and services. The U.S. Commercial Service did a wonderful job bringing together some of the leading experts on doing business in Korea. I was impressed.

At the event, the most frequent question I was asked was related to protecting companies trademarks and other intellectual property. Additional posts will be written on this topic by Tom Coyner - Senior Commercial Advisor for IPG Legal and head of Soft Landing Korea and myself.

TOP TEN THINGS TO DO TO PROTECT YOUR BRAND IN KOREA

Do a Complete Intellectual Property AuditForm a team to audit all your intellectual property including your patents, trademarks, service marks, books, manuals, videos, software, know-how, and trade secrets.

The team should include, at a minimum, a senior manager experienced in the internal workings of the company and an experienced Korean-savvy international consultant (attorney or intellectual property consultant) who is experienced in creating inventories.

The team should send a tailored questionnaire to the heads of all your company's departments. From the questionnaire and other ascertained information, the team should produce a complete intellectual property inventory that details what intellectual property the company possesses and evidences how much the intellectual property is worth to the company. (Protecting Your Intellectual Property in Korea)
Register your Trademarks and other IP in Korea
Yes, your international filings are not good enough for Korea and much of the rest of the world. As the U.S. Commercial Service notes: ``protection of intellectual property and the laws governing enforcement of these protections exist but are not necessarily extra-territorial. What is understood and practiced in the United States is not always practiced in Korea. . . .U.S. companies wishing to sell their products or services in Korea should first and foremost register their intellectual property rights (copyrights, trademarks and/or patents) in Korea.''
Educate Korean Customs on What is your Product and What is Not your Product
A few professionals in Korea, including professionals at IPG, do presentations to Customs informing them of how to spot counterfeit products. Some fakes are very difficult to spot and, also presentations by your professionals will go a long way in getting the positive attention of Customs of your seriousness of enforcing your IP rights.
Draft an Intellectual Property Protection Plan
The plan should include an internal monitoring and worldwide registration and licensing scheme; an action plan to deal with intellectual property violators and trolls; forming of a team that is responsible for maintaining and fostering intellectual property rights and making sure that intellectual property is properly reflected in the company's financials.
Actively Engage Customs and the Prosecution
Us all administrative avenues available to protect you products. Companies that are perceived weak are companies that are more likely to be targeted by counterfeiters, patent trolls and the like.
Actively Engage your Sales Channels
So much information can be garnered from those that are competing against counterfeiters and pirates.
Track the Importers of Counterfeit Products into Korea
The Prosecution, generally, does a decent job. However, often it is advisable to employ a professional to obtain the necessary information and present the information to the Prosecution and Customs.
Integrate the home office with the Korean entityAll too often the Korean branch is totally out of the loop and hence unaware of developments at the home office. The Korean branch, in not only intellectual property, but in other company areas should at least be near the loop.
Don't Forget Trade SecretsI wrote an article on protecting trade secrets in Korea that may be found at: Protecting your Trade Secrets in Korea: Top 5 Things to Know Before Subjecting your Business to the Korean Market.
Get Professional Assistance
Speaks for itself. If you don't have an experienced inhouse team of Korean-based attorneys (and often even if you do), you need assistance from professionals in Korean IP law who have high-level contacts with the Prosecution and Customs.

Corporate Governance of Korea Reported as One of the Worst

noreply@blogger.com (Sean Hayes) — Thu, 09 May 2013 21:51:00 PDT

What is the cause of the Korean discount? An economist article hits the nail right on the head.

So what is the source of the “Korea discount”, which means that the KOSPI has a forward price-to-earnings ratio of under ten, below most other Asian stockmarkets (see chart)? There are a few possibilities. The national economic model is still built on exports, often in highly cyclical industries such as shipbuilding. The capital structure of South Korean firms has historically been debt-heavy.
In this section

But the prime cause of the discount is more likely to be poor corporate governance at the family-run chaebol conglomerates that dominate the economy. Nefarious schemes to pass on control to sons, avoid taxes and exploit company assets for the benefit of family members are widely discussed in private. They are also lambasted abroad: a 2010 survey by CLSA, a broker, placed the country third-from-bottom in Asia on governance, ahead of only Indonesia and the Philippines. . .

Other allegations are even more serious. On February 3rd, 2012 Hanwha Group announced in a regulatory filing that its chairman, Kim Seung-yeon, was among several officials being investigated for alleged embezzlement. Chey Tae-won, the chairman of SK Group, was indicted in January over the disappearance of 99 billion won from company coffers, as part of a scheme allegedly planned by his brother to cover futures-trading losses. Mr Chey denies the charges. The Federation of Korean Industries, a chaebol pressure group, has urged prosecutors to go easy on Mr Chey. They say that punishing him would harm “entrepreneurial spirit”.

Mr Chey has had previous scrapes, having been convicted of a billion-dollar accounting fraud in 2003. He eventually received a full pardon from the president and was also chosen to represent the nation during the 2010 G20 summit, leading a meeting of international chief executives. Lee Kun-hee, the chairman of Samsung, received a similar pardon in 2009, having been found guilty of tax evasion, and was picked to front South Korea’s bid for the 2018 Winter Olympics. Yujeon mujwai, mujeon yujwai—an old expression meaning “money = innocence, no money = guilt”—is enjoying a resurgence in popularity.

What do you think?

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Court of Korea May Allow Annulment of Marriage

noreply@blogger.com (Sean Hayes) — Tue, 07 May 2013 20:39:00 PDT

Annulments have been nearly impossible to obtain in Korea when parties have voluntarily married and the marriage was properly registered. However,courts have been, recently, willing to entertain colorful arguments in some cases.

Recently, a young married couple obtained an annulment based on some interesting facts. The couple lived together with the sister of the husband prior to marriage. They were living, according to the couple, just as friends. Thus, the couple were not having sexual relations.

The employer of the male asked about his marital status and he advised the employer that he was single. The company discovered that he was living with a woman. Employees of the company were not amused and requested that he clarify the situation. The man, then, fearing for his job requested the woman to marry him. They married. The woman claimed they she, only, married because she felt bad for the man.

The case is interesting since the case doesn't rest on whether the marriage was voluntary, but focused on the intent of the marriage. The court opined that : "The marriage was a hoax with the only intention being him not getting fired." Seemingly, at least one court in Korea will accept that if someone purpose of marriage was not simply to marry, but for other reasons - a marriage may be annulled.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Intriuging Article from the Korea Herald Regarding the Success of K-Pop Abroad

noreply@blogger.com (Sean Hayes) — Mon, 06 May 2013 18:45:00 PDT

We have worked with a leading entertainment company in Korea and this article, we feel, does a great job in summing up why Psy has been the, only, K-Pop star, to date, to be able to significantly capitalize on his talent in the States. We wish more of the Korean entertainers would consider fostering the the skills that make the entertainers unique and not, simply, try to make an artist conform to what audiences are perceived to like. Psy has done this and, thus, has been successful.

The article notes, in part, that:

Psy’s unexpected international success not only took Korea by surprise, but the rest of the world as well. On July 15, the Korean rap star, who had enjoyed little international popularity in the past, released his comedic and cleverly choreographed “Gangnam Style” on YouTube.

What followed is history. With more than 1.5 billion global views, “Gangnam Style” has become one of the world’s most successful songs.

“Gentleman,” Psy’s follow-up single to his record-breaking track, was released worldwide on April 12. The music video which was uploaded onto YouTube the following day broke a world record for the most views in 24 hours with an astonishing 38.4 million hits, making it the rapper’s fourth entry in the Guinness World Records. As of Thursday afternoon, “Gentleman” has been viewed more than 267 million times, alleviating Psy’s public worries of becoming a one-hit wonder.

Psy was the underdog that no one thought could make it big overseas. Whereas the previous K-pop acts who premiered in the U.S. before him had tried to conform and blend in with the sounds and trends of the Western music market and had sung in English, it was Psy’s comedy, creativity and pure entertainment that finally caught America’s interest.

As for an explanation for his phenomenal global success, Psy summed it up best when he stated, “I’m simply an entertainer.”

Psy, simply, was successful because he is doing something unique.
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Spies of National Intelligence Service of Korea Caught in Australia

noreply@blogger.com (Sean Hayes) — Sun, 05 May 2013 19:20:00 PDT

Newspapers throughout the world have been reporting that two South Korean spies have been caught trying to procure sensitive information from Australian government officials with access to information related to a proposed Korean-Australian Free Trade Agreement.

This is not the first time that the Korean government has been accused of spying see: Seoul Hotel Break in Has Making of a Spy Novel.

What disappoints me is not that Korea is engaged in spying, but that they do it in such a Keystone cop-type fashion. Its seems like the training is not coming from one of the CIA spy manuals, but out of one of those old Scooby Doo episodes I loved so much.

The present situation concerned a Korean-Australian official with the Australian Bureau of Agricultural and Resource Economics regular contact with known Korean National Intelligence Service officers.

I bet Scooby Doo and his friend Scrappy, without the help of Dahne, Velma and Scrappy would have even caught them. A Korean-Australian government worker meeting with those reported by the Korean government as liaison officers from the Korean National Intelligence Service seems like an easier catch.

Hey guys, please for the good image of Korea, next time, get a native born Australian on board. If you can't, don't jeopardize the image of Korea by these boneheaded antics. I bet Australian-Korean will have a very difficult time obtaining top secret clearance clearance in Korea in the future.

What do you think?

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Selling Traditional Korean Products to the World by Tom Coyner

noreply@blogger.com (Sean Hayes) — Wed, 01 May 2013 00:25:00 PDT

Even foreigners living in Korea cannot help but notice how makgeolli has taken on a new air of respectability. As a long-time imbiber of the brew - we are dubbed “makgeoholics” - this is good news!

I once was a Peace Corps volunteer who lived on a monthly stipend of 43,000 won for lodging, food and entertainment. That meant beer and other Western beverages were beyond my budget. So, during most after-hours events, my choices were pretty much limited to soju and makgeolli. But after some forgettable evenings and unforgettable mornings after, I soon realized that the soju of the 1970s was not healthy for living things.

Fortunately, I learned that makgeolli was not only cheap but even good for you. As an Irish-American, I have reverently believed that Guinness stout beer is good for you. In fact, the Irish say that Guinness is a meal in a glass. So, I was overjoyed when I heard from Eumseong townspeople that it is possible to survive a full two weeks on nothing but makgeolli. Having imbibed the stuff for over three decades, there is no doubt the creamy, tangy stuff is full of nutrients - and who knows what else.

And as a rural Peace Corps volunteer, I came to respect Korean farmers and small townspeople. These were real people, doing real work and drinking a real beverage. To me, soju was something akin to poison for a quick drunk, but makgeolli was a real man’s drink with which one can enjoy like a real man while not getting so drunk that the rest of the evening is only a hazy memory.

And, I might add, any woman who tells me she, too, loves makgeolli is immediately regarded by me as a superior sort of female. And that leads to my old friend from our shared Peace Corps days, the former U.S. Ambassador to Korea, Kathleen Stephens.

She has appreciated makgeolli for decades, and often served it at her official residence. While I cannot say her high regard for makgeolli is responsible for her success, I will say a woman who drinks it is likely to be up for any job.

All of which leads us back to the current fad, rediscovery and new ideas for exporting makgeolli. Frankly, I’m pretty excited about all of this. First, it opens the doors for further improvement of makgeolli. Back in the 1970s, under the Park Chung Hee regime, the amount of rice used in makgeolli production was curtailed as part of the nation’s efforts for grain self-sufficiency: a wise move since everyone knew how many Koreans would allocate their limited rice reserves towards the production of makgeolli.

Later on, as Korean agricultural production improved, the controls were removed and pure rice makgeolli became common. That was a major step forward and now makgeolli may be about to take the next important step in upgrading its quality.

When we order makgeolli at a restaurant, usually we really don’t know which type we are drinking. The stuff is served in a generic ceramic pot. In other words, unlike every other beverage on the menu, makgeolli is devoid of branding. As a result, one goes to those restaurants that serve “good makgeolli,” which means a beverage that is made by one of the better brewers and is fresh. Even good makgeolli sours relatively quickly, even when kept at optimum temperatures.

As a marketing professional, I see these negatives as allowing for future positives to be developed. First, by exporting abroad by brand, more competitive pressures will be placed on makgeolli brewers for consistent quality. Tetra Pak Korea, for example, is providing cartons to be used for the export of makgeolli, but so far, there has been no demand for these containers for domestic distribution. Rather, makgeolli is normally distributed only near the brewer’s facility.

But, when exporters fully master the means to deliver makgeolli abroad and as foreign consumers develop a thirst for the beverage, more Koreans will try to make money by exporting. And in so doing, branding will become more important. Furthermore, as brands become stronger, we may see the best brewers doing wider distribution domestically, taking advantage of new packaging - and possibly applying new refinements in brewing.

And that leads me to the second, likely development of makgeolli - new investments in improving the production of makgeolli so that it sours more slowly. In the past, there was regular soju and superior “tourism soju,” and I believe the Korean economy has outgrown that kind of product differentiation.

But I should add a word of warning. Given this upsurge in the creamy stuff’s popularity, I have been sometimes horrified as the unacquainted (usually female) imbibers shake the bottles to stir up the contents prior to uncapping. Frankly speaking, watching that kind of experience is only one level lower in anxiety than watching a sweet young thing pull out the pin from a hand grenade and ask what’s the purpose of the pin.

Should you see a well-meaning dining mate start shaking the bottle, immediately grab away the makgeolli bottle for everyone’s safety. Rather, hold the bottle by the top and slowly swing the bottle in downward arcs, almost as if you were ringing a chime or bell. The beverage deserves respect and your guests deserve to drink it, not wear it.

So next time you are out with your friends, lift your cup of makgeolli and toast what it once was and what it has become. Then dream of what makgeolli may soon be: a real beverage for real people around the world.

by Tom Coyner. This article appeared in the Korea Joonang Daily.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korea: Retirement Age of 60 May be Mandatory for Most Companies

noreply@blogger.com (Sean Hayes) — Sun, 28 Apr 2013 22:30:00 PDT

The Korean National Assembly, in a move that leaves many of my U.S. and other Western colleagues and clients bewildered by the lack of understanding of the contributions provided by those in their 60s and 70s, has agreed to mandate that the retirement age in Korea, for most companies, be set at, at least, 60 years old.

The revision is meant to protect older workers. Many companies impose retirement ages of 55 and many even impose lower retirement ages.

The revision will still need to make its way through two committees and, also, reach a vote on the National Assembly floor.

Other articles that may be of interest:

Korea Maritime Liens: The Arrest and Attachment of Vessels at Ports

noreply@blogger.com (Sean Hayes) — Sun, 28 Apr 2013 22:28:00 PDT

The arrest of vessels/ships in Korea is a common tool to satisfy judgements against debtors. Korean courts allow the ex-parte arrest of ships. The court, normally, does not request from the Korean counsel of the creditor/claimant evidence of how long the ship will remain in Korean waters, as is, sometimes, the case in other neighboring jurisdictions.

We find Korea to be a much easier destination for arresting vehicles than many other Asian nations, because of the efficiency focus of the Korean court system and the less than efficient other Asian jurisdictions. Typically, the arrest action will take a few days to complete.

The major ports in Korea that an arrest may be executed at are: Busan ,Jinhae, Incheon, Gunsan, Masan, Mokpo, Pohang, Donghae, Ulsan, Yeosu, and Jeju.

ARREST OF FOREIGN VESSEL IN KOREAN WATERS
There are two different ways to arrest a vessel in Korean waters.

1. Preliminary Attachment
The Korean Civil Enforcement Act allows the arrest of a ship or attachment of an asset through a preliminary attachment. The attachment, normally, requires the posting of a security. The amount of the security is, normally 10% to 15% of the claimed amount. Often the court allows the posting of the majority of the amount in the form of a bond. Normally, the court will not grant a preliminary attachment if a maritime lien is available to the complainant. Foreign parties, often, have a difficult time obtaining a bond in expedient fashion. We have, even, failed to obtain bonds for some foreign creditors.

2. Maritime Lien
A creditor or claimant in Korea may exercise the right to arrest a vessel. The Korean court, under Korea's Conflict of Laws Act, will look to the law of the nation of the vessel's flag. Normally, the court in Korea will not grant a preliminary attachment if a maritime lien is available to the complainant.

A maritime lien, in Korea, is also available for time-chartered vessels, sister vessels and even when an arbitration clause exists.

ENFORCEMENT OF AN ARREST ORDER
The sheriff of the court, upon the disposition of the court, will arrest the vessel by serving on the ship master the notice of arrest and, also, attaching the order to the vessel. It is, also, advisable to arrange with the sheriff to advise the port authorities to not allow the vessel to leave the port.

Upon arrest, in most cases in our experience, the owner of the vessel or charter party will provide a letter of undertaking from the the P & I club of the arresting party. The arresting party is not required, under Korean law, to accept the letter of undertaking and many demand 100% of the claimed amount in cash before granting the release of the vessel.

In order to obtain information of the release of an arrested ship in Korea, please refer to our post entitled: Release of an Arrested Vessel in Korean Waters.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Foreign SME's will now may be Qualified for Free Economic Zones

noreply@blogger.com (Sean Hayes) — Thu, 18 Apr 2013 21:38:00 PDT

In an attempt to spark a resurgence in Foreign Direct Investment in Korea, the Korean government has proposed the development of Mini Free Economic Zones. These zones are an attempt to attract SMEs that supply parts to Korean companies.

These Mini-FEZs are expected to charge rent far lower than market value in Korea, offer tax incentives, while offering no fee leases for companies that bring into the country technology and invest over USD 1 million in the local economy.

The exact details of the plan are not known. I will update the readers when more details become known.

I suspect that the plan will, also, be a benefit to companies already in Korea that are looking to modernize facilities.

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korea Legal News for the Week of April 7

noreply@blogger.com (Sean Hayes) — Sun, 14 Apr 2013 19:05:00 PDT

This Week's Legal News Reported by Media

Most Recent Posts from The Korean Law Blog

Should Companies in South Korea be Worried about North Korean Threats?

noreply@blogger.com (Sean Hayes) — Wed, 10 Apr 2013 23:19:00 PDT

North Korea has ratcheted up its propaganda. The situation is the most tense, since I first came to Korea in the mid 1990s. However, most of my friends and colleagues, that have lived in Korea far longer than I, are not concerned.

For these old Korean hats, North Korea is simply rattling its little saber, since the tension between the North and the South allows the North Korean population to have an increased sense of nationalism and loyalty to Kim Dynasty; when North Korea, in the past, shook its rattle, the international community provided more foreign aide and the international community increasing accepted the Kim Dynasty as a legitimate government.

Most of these old hates believe that North Korea will never invade the South, since an invasion will, simply, lead to the total destruction of the Kim Dynasty. The saber rattling know is simply to appease the North Korea's population, obtain more foreign aide and obtain a peace agreement in order to obtain more legitimacy.

I agree with these old hates and, thus, I don't worry about the new round of saber rattling, I only worry that the South Korean, Japanese or United States will misconstrue the saber rattling and launch a "preemptive strike" that could lead to a small volley of missiles hitting Seoul and Tokyo.

All signs point to these governments not reacting in any way other than the reaction in the past -increased recognition of North Korea as a legitimate government and additional foreign aide.

Maybe the answer is just to ignore and let the North play its hand.

What do you think?

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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Seoul Central District Prosecutors' Office Arrests South Koreans Responsible for Aiding North Korean Cyber Attack

noreply@blogger.com (Sean Hayes) — Tue, 09 Apr 2013 18:14:00 PDT

The Seoul Central District Prosecutors' Office has announced that they have arrested the owner of a South Korean-based company and its employees for violation of the National Security Law. The owner of the company was arrested and detained and the owner's older brother and the employees of the company were arrested, but were released pending further investigation.

The arrests were, apparently, in relation to the recent cyber attacks by North Korea and, also, the alleged operation by the arrested of an illegal gambling site, futures trading site and spam email program.

The prosecution has alleged that the technology for operating these sites and programs were obtained from a North Korean hacker that works for the North Korean governments Reunggrado Information Center and that part of the profits was shared by these individuals with the North Korean government or agents of the North Korean government.

Reunggrado Information Center may have been behind the recent cyber attacks.

As I have noted in numerous articles in local vernaculars, the North Korean government has agents and sympathizers throughout South Korea. Hey - one even ran for president.

Is this reality reason enough to maintain the National Security Law?
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

IPG Legal's New Law Blog: Korean Entertainment Law Blog

noreply@blogger.com (Sean Hayes) — Tue, 09 Apr 2013 18:13:00 PDT

IPGs new law blog the Korean Entertainment Law Blog may be found HERE. The attorneys and entertainment law professionals at IPG Legal will be posting three to four post per week on issues related to Korean Entertainment Law.

We are looking forward to hearing comments and to have questions asked of us. Topics that will be addressed will include legal and business issues related to:

K-Pop
Korean Films
Korean Screenwriters
Korean Producers, Directors, Studios & Technical Staff
Korean Actors & Actresses
Korean Television
Korean Recording Companies
Korean Censorship & Defamation Laws
Korean Intellectual Property Law
Korean Copyright Law
Korean Fair Use Law
Korean IP Infringement Actions
Remedies for IP Infringement
Korean Trademarks & Trade Secrets
Korean Patent Law
Korean Merchandising
Korean-Tailored Agreements

Actor, Writer, Director Contract
Television Contracts
Korean Music Agreements, Band & Symphony, Band-Agent Agreements

Korean Manuscript, Copyright, and Royalty Clauses, Accounting, Warranties, Assignments
Arbitration Clauses
Dispute Resolution

Please try to be patient this is a new law blog. We will be dealing with all of the following general issues over the next six to nine months and, then, we will begin to handle more specific issues.
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korea's New President and the North Korean Issue by Tom Coyner

noreply@blogger.com (Sean Hayes) — Wed, 03 Apr 2013 18:37:00 PDT

This week South Korea has a new beginning, with a new president who promises change - she is the nation’s first female head of government - while providing continuity as a member of the same party of the outgoing president. But as the old saying goes, “The more things change, the more things remain the same.”

That is to say, in spite of contemporary events’ cosmetics, the fundamentals remain remarkably constant. I was reminded of this fact during my monitoring of an email roundtable. Last week I sent out an essay by American columnist and part-time politician Patrick Buchanan. Like a number of U.S.-based scribes who pretend to understand a great deal more about Asia than they actually do, Buchanan wrote a rational, appealing piece that was based on a slim understanding of Korea.

Essentially, Buchanan asked why North Korea’s nuclear test should be an American crisis in 2013? His point was that given how strong South Korea has become both economically and militarily, why can’t America just go home and let the Koreans solve their own problems now that American forces have been here some 60 years? After all, the Cold War is long over and Kim Jong-un is South Korea’s problem - not America’s! His essentially isolationist pitch ended with a Lord Salisbury quote: “The commonest error in politics is sticking to the carcass of dead policies.”

I disagreed, pointing out that the recovery costs from a possible second Korean War - even just the post-war costs - would cost America much more than the costs of maintaining U.S. forces in Korea should the U.S. abrogate its diplomatic and moral obligations to stand clear of a second Korean war. (One may also consider a peaceful resolution towards unification but we will get to that theoretical point below.)

Shim Jae-hoon, the doyen of foreign correspondents in Seoul, entered this conversation by asking, “Why is North Korea so bent on developing nuclear weapons?” He pointed out that North Korea does not need nuclear weapons to entice the U.S. to replace the Armistice Agreement with a peace treaty. However, a peace treaty remains an end objective of the North Koreans. With a peace treaty, it would be difficult to rationalize maintaining large U.S. forces on the Korean Peninsula.

Shim reminded us that when Saigon fell, Kim Il Sung asked Beijing to back him in making a second attempt to militarily conquer the South. Mao turned him down, but the overall strategy remains the same with Pyongyang as it once was with Hanoi.

To be sure, it is unfair to compare today’s South Korean Army with the old South Vietnamese forces. Regardless, the communist strategies remain the same. In fact, when one considers the so-called failed state of the North operating in its parallel universe for the past 60 plus years, one can see through Pyongyang’s propaganda.

North Korea has very limited options for its ultimate survival. It knows it will be overwhelmed by South Korea’s development and will be eventually absorbed by Seoul through peaceful unification, as was the case of the two Germanys, but even more so.

North Korea holds just one card for its long-term survival: Coax the Americans out of Korea and then blackmail South Korea through its nuclear arms or, if necessary, try to capture South Korea by military means.

As farfetched as that may seem, when reality is viewed from north of the DMZ, that is the only option. The rest is a purposely confusing mishmash of window dressing and red herrings that may incidentally provide badly needed aid to prop up North Korea until it can put its master plan into action.

Returning to the opening adage of this essay, things in Korea have not changed since the founding of the South and the North. It sometimes takes old men, who were young men at the time of the Korean War, to remind the young of the underlying fundamentals.

And that brings me to my final point. There has been much handwringing about outgoing President Lee Myung-bak’s “failed” North Korea policies. But given the above-reviewed realities, he has been much more realistic than his “Sunshine Policy” predecessors. After the sinking of the Cheonan and the shelling of the Yeonpyeong island near the Northern Limit Line, Lee revised the orders of the day: If fired upon by North Korean forces, South Korean forces were ordered to return immediate fire, including using air power as necessary. From that moment, there has been peace.

So as President Park Geun-hye looks forward to the coming five years, she and the rest of the nation should also keep an eye on the past. Wishful thinking in itself is not a prudent perspective. Genuinely failed policies from the right could lead the South Koreans into developing their own nuclear arms and thereby initiate a major breakdown of nuclear non-proliferation in Northeast Asia and possibly around the world. Or, equally disastrous failed policies from the left could cause South Korea to fall into North Korea’s trap.

As the cliche goes, North Korea offers only a choice of bad options. In the end, the Korean War continues in its long armistice, waiting for one of the two Korean states to crumble.

Tom Coyner is Senior Advisor to IPG and President of Softlanding Korea.
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Korean Information and Communications Network Act: Personal Data Protection in Korea

noreply@blogger.com (Sean Hayes) — Wed, 03 Apr 2013 18:35:00 PDT

Under the Korean Act on the Promotion of Information and Communications Network Utilization and Information Protection, Etc. ("ICNT") a Government Notice, that entered into force last month, mandates all the major information services providers and data centers to become Information Security Management Systems certified.

The Notice was a reaction to security breaches that may have revealed confidential information of users of various websites.

The Notice requires all press agencies, on-line shopping malls, web portals and the like with revenue of over KRW 10 million or over 1 million users to become certified or face shutdown and a KRW 10 million fine.

Those required to comply with the notify must be certified by the end of this year. We predict that it may take up to four months for a site to be certified compliant according to a consultant we work with. The new law may be welcomed by foreign and domestic internet security companies and web consultants, but will be a real headache for companies that believe they have already put in place a system that securely manages the personal information of users.

What do you think? Overreaction or necessary in the age of North Korean cyber attacks.
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Frank Caruso's Speech to NYU Law School on Doing Business in Shenzhen, China

noreply@blogger.com (Sean Hayes) — Wed, 20 Mar 2013 22:32:00 PDT

Following is a synopsis of a recent lecture to New York University Law School students:
I Arrived in China after being in the IT industry for 10 years as an in-house attorney. Came to work on a project as a legal adviser and ended up staying because I saw tremendous opportunity in China as well as in the legal industry.

Since then, I have worked for China’s biggest companies, the Beijing Olympics, many foreign companies including Fortune 500 and even advise foreign and Chinese governments. I founded Caruso and Associates, Chairman at IPG Legal which is our Asia association and involved as a partner/equity stakeholder in several other businesses in China.

I could offer a boring academic lecture on Chinese law and the particulars of the Corporation Law or the Intellectual Property law, but, I thought it better to share my experiences with the law and the practice of it over here is developing and quite different than in the West and the nimble and open minded are the ones who can be successful in the legal profession in this region.

So, I’ve selected 5 critical things to remember, which you may have picked up in reading books on China, when/if doing business or advising clients here in China and I’ll highlight them with my own experiences and then open up in the end for questions.

1. Nothing is Real in the Jungle
I call this place the Jungle, because it is. This city of 20m people was literally carved out of Jungle and is in sub tropical Asia. Everything grows here and it grows fast. It is also a Jungle because of the laws of nature that seem to apply more than the laws of man (Western Man that is).

One is constantly amazed at the things we experience and see and even after ten years and considerable change, this place is still a Jungle. If you are coming here expecting it or hoping it can be like the quaint civilized place that you grew up in Darian Connecticut it is far from it. China, like it predecessors Japan, Korea and Taiwan does not innovate. They copy.

And like their predecessors they will one day learn to innovate, but for now they are the most prolific copiers in the world. Challenge everything here. Do not take anything at face value, trust no one, trust nothing and when you finally verify enough to trust, verify some more and at some point your client won’t want to pay you to verify anymore or won’t think it’s necessary so make sure you cover your ass.

Some of my favorite copied and fake items: Fake crab (Yancheng Lake), Fake egg, Fake divorce, Fake ambulance, Copied Software and Media and of course Copy Salt which is my favorite because it must actually cost more to make fake salt than the real stuff.
Don’t assume that anything or anyone is real and you will protect your reputation and your clients business.

2. File IP Often and Early.
Apple v. Proview. Proview is a Chinese company that made digital displays. In 2000 Proview filed and received a trademark for Ipad from the State Intellectual Property Office. As China is a first to file jurisdiction, the first to file gets the IP, and Apple had not even invented the Iphone, Proview was the rightful owner in China. Note that Chinese IP is not widely recognized in other jurisdictions so if you are filing on behalf of your client, file in China first, then U.S. and then EU. So in 2006 Apple’s attorneys believed that they had paid $55,000 for the global rights to Ipad and rejected Proviews offer to sell for $10m believing that they were covered globally and didn’t need to buy the Chinese trademark. Hold on a minute. When Apple tried to launch the IPad in China, Proview, in Bankruptcy, sued Apple and stopped the distribution and sale of Ipads. Apple and their attorneys countersued which was a pointless endeavor because they neither had the law on their side nor did they have the court or the government. In the end they ended up settling for $60M with Proview not to mention the several million in legal fees they had to pay and the opportunity costs lost from the delays, when they simply could have paid $10m and been on their way in 2006. I had a similar matter with a client. They came with a great product and a great branding strategy and wanted to bring the product to China. I advised them that prior to talking to anyone in China or connected to China that they should at minimum file a trademark in China which costs about $2,500. Of course they decided that they were smarter than me and proceeded to talk to several people who they “trusted” because they were a nephew of a friend, or had studied in Australia and spoke perfect English, or they went to church with their neighbor. You can figure out what happened, they later decided to file a trademark and it was rejected because someone else had already filed it and this someone else was connected to the person they trusted whom they then had to buy the trademark from for several hundred thousand dollars or forgo bringing the product in under the current brand (which Brand is everything in China).

3. Time is your Client’s Best Ally. Never, ever, be in a Hurry when Negotiating.
I have a client who is a well known high end hotel chain known for their otherworldly bed. For client confidentiality reasons I won’t their mention their name. A couple of years ago at one of their properties here in the Jungle 3 Chinese men walk in and………….

Despite the disruption to a tax paying/employing Jungle resident (Hotel) the police did nothing – they just wanted it to go away.

The police were the arbitrators – at the Police station.
Under Chinese law, the rioters (family members) should have/could have been arrested and I demanded that they be arrested and jailed.

Even though it was grueling and I wanted to leave that Police station as quickly as possible because of their stupidity and circular reasoning, we waited them out.

They repeatedly pulled my Chinese lawyer into the other room and asked why she was being unpatriotic and not supporting the Police. She mentioned Client Advocacy and they ignored her. She wasn’t afraid because she knows I advise their bosses and they didn’t.

We threatened to call in the media, which pushed them along. The media came and they were deported, so someone leaked stories to them this helped as they didn’t like to see their names in the Hong Kong newspaper.

Finally, after a few days they got tired, the Police got tired, and we held our ground. They wanted to get back home to their families.

They agreed to a donation from the hotel for the burial costs which was far less than their asking amount.

As much as I wanted to throw my hands in the air and just say, “okay can we just get this over with”, we waited them out and earned a favorable result for our client.

4. Expect Anything.
I had a client years ago who wanted to set up a proper corporate structure in China and begin to export from their Chinese Foreign Owned Company. The set up for this takes at least 6 months as the maze of bureaucracies one must navigate is insane.

This client, a fortune 500 and listed holding company sold their products to Home Depot, Lowes and others around the world. They had a Taiwanese GM in China who had been sourcing product from various factories and then shipping directly to clients like those I mentioned. The CFO in the US would oversea the payments to suppliers and payments from customers.

The Asian manager who was an American noticed that costs were increasing and that customer orders had been decreasing and this pattern had continued for several years. So, they decided that they wanted to get better control over the process and bring the products to their facility and ship from their, so they hired me to come in and help them with this process.

I spent about 15 minutes talking to their management and the Taiwanese snake when I realized that him and the CFO were skimming money through the purchasing process with local suppliers and that he had at the same time had his brother set up a factory (within 100 feet of their new facility) to make the products and sell direct to their existing customer base.

To make matters worse, the Taiwanese had been paying off the local government mostly in liquor, meals and prostitutes and there wasn’t anything they could do about it other than abandon everything in that town and move far away. This wasn’t the first or last time this has happened with clients. As a listed company this also uncovered some serious Foreign Corrupt Practices Act issues for this client. They chose to keep the status quo and I chose to move on to other clients.

5. Chinese Lawyers are Different.
We all know a dozen lawyer jokes and many of them are true. Lawyers are sharks and can be very aggressive and can be ambulance chasers etc…. But, there are also many good lawyers and honorable lawyers and lawyers who take their ethical obligations and client advocacy obligations very seriously.

China also has these lawyers. However, the system of being a lawyer in China is completely different. Firstly, less than 10% of lawyers taking the lawyers exam each year pass and the exam is very difficult purely because of the breadth of issues and information that must be memorized.

Secondly, and most important the Chinese lawyers obligations are not to ethical practices or even their client they are first and foremost to China and the Party. *Remember comment earlier from the Police attacking my lawyers Patriotism.

“I volunteer to become a practicing lawyer of the People’s Republic of China and promise to faithfully perform the sacred duties of a legal worker under socialism with Chinese characteristics; to be faithful to the motherland and the people; to uphold the leadership of the Chinese Communist Party and the socialist system; to safeguard the dignity of the constitution and the law.”

There also is not a system for malpractice or disbarment in China which enables a foreigner to make claims against their Chinese lawyer and even if you are told there is, it would be impossible to have the claim heard and for the foreigner to prevail unless the foreigner was a huge company with huge interests and investment in China.

Early on I was introduced to foreigners who had the rights to build/sell huge theaters in China and they were negotiating with a shopping mall owner. I know the actual story because I know the shopping mall owner and he didn’t know I knew the foreigners. Foreigners decided to hire a local Chinese lawyer instead of the American lawyer because they were told the American didn’t know Chinese law and didn’t understand Chinese culture and he was more expensive.

So during negotiations, the foreigners new Chinese lawyer repeatedly met with the shopping mall lawyers and shared client information on the negotiations. They agreed with the mall owner to share 3 ways the cost savings to the mall owner, which was in the millions, unbeknownst to the foreigners who ended up with a deal they didn’t like but were told by their lawyer that it was the best he could get.

I don’t think they ever found out what hit them and even if they did, there wouldn’t have been anything they could have done.

6. Bonus
In order to recover, you must have a contract. Without one your chances of recovery are near zero.
Any contract with a Chinese national must be in English and Chinese. Be very careful of the Chinese translation as legal Chinese is very difficult.

7. Foreign Judgments are Often Not Enforceable in China.
If the Chinese party has assets/companies in Hong Kong, use HK law and their courts.
While the law is important, it is not most important. There are many other factors such as harmony, and social issues, and the application of the law, and the education/standing/party relationship of the parties and lawyers and judges.

I want to thank NYU and Adam Bedzow, the best intern I ever had, for inviting me today and wish all of you the best of luck with your legal careers, wherever they may take you.

Presentation by Frank Caruso - Chair of IPG's China Practice Team
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.

www.ipglegal.com

Points to Note Before Signing a Joint Venture/Partnership in South Korea

noreply@blogger.com (Sean Hayes) — Tue, 19 Mar 2013 23:36:00 PDT

One of the major parts of my law practice for international clients, in Korea, is the structuring of joint ventures and the resolution of joint venture disputes in court and through arbitration. I find, in most of these cases, the non-Korean party is not in need of a joint venture with a a Korean party to succeed in Korea and the Korean party does not realize or has no intent in satisfying obligations under the joint venture agreements.

Thus, many disputes are caused by the realization by the non-Korean party that he/she doesn't need the Korean party and the realization by the non-Korean party that the Korean party had no intent in following the joint venture agreement.

Do You Need a Korean Joint Venture to Succeed in Korea?

We find that a joint venture is, normally, only successful in a few situations. The following are the major situations that we encounter that tend to make sense for both parties.

The Korean party has instant access to a proven distribution network (retail outlets) or supply chain and the non-Korean has a product that easily fits into this supply chain. Often this, however, is best addressed through a distribution/license agreement and, not, a joint venture agreement, but in some cases the joint venture makes sense. Be careful, often a joint venture is not necessary and changed circumstances can kill the relationship.
The industry is an industry closed to foreigners (few industries in Korea as closed to foreigners - ie. publishing) and the Korean party needs the expertise or money of the non-Korean party in order to succeed in the industry. Be careful, needs often quickly change and, often, these industries are heavily regulated and, often, lead into a money pit that you will never dig anything out of. Knowing the governor does not mean that you will receive government support. Everyone in Korea has contacts, however, few are able to capitalize on these contacts, thus, don't be sold a can of hooks.
The non-Korean party is broke and, thus, unable to commercialize an invention and the Korean party is in need of a new product line or has spare manufacturing capacity. Be careful, the learning curve may not be as great as you think and this you may not be needed for too long.
The industry is a niche industry with only a handful of players and the non-Korean can receive instant access to one of the main players through the joint venture and the Korean is able to gain access to the technology through the joint venture. Typically, this is a joint venture between a Korean conglomerate (chaebol) and a multinational company. Often these relationships are fleeting and lead us to many hours in arbitration.

If you have money, have the expertise in doing business in Korea (or can hire experts), are not in a regulated industry, carefully consider the market, have a local guide and are not in a need of joint venture because of the nature of the business - forgo the risk of a joint venture and hit road in Korea on your own.

Other articles that may be of interest;