Newsletter – June 7, 2018
The time has arrived for my sign-off as the president and CEO of WTC Utah. It’s been a truly amazing experience working with the WTC Utah team and so many leaders in government, education, business and the civic community as we have helped grow exports in the state, raised awareness and supported Gov. Gary Herbert’s goal to increase value-added exports by Utah businesses.
Fortunately, in my new role as the president of the Salt Lake Chamber, I won’t be far away and I hope to remain involved in export promotion, trade missions and the many exciting events supported by the Chamber and WTC Utah.
In the meantime, the WTC Utah board is in the process of finding my replacement. WTC Utah is in good hands and in a strong position to keep serving Utah businesses. To that end, I wish you the best and hope you will stay connected with WTC Utah.
Market Highlight: Korea
This article was written and prepared by the U.S. Commercial Service in Korea. If you are interested in doing business in Korea, consider a Gold Key Matchmaking Service to help your business get connected with valuable and vetted business partners in the country. Reach out to Commercial Service Utah for additional market or service information.
South Korea has received significant news coverage recently for political reasons, but that hasn’t changed the export opportunities for Utah companies interested in doing business in the country. And with WTC Utah and the Governor’s Office of Economic Development leading a trade mission to Taiwan and South Korea in September, now is the perfect time to see just what the Korean market can mean to your company. The registration deadline is June 13.
South Korea is the world’s ﬁfth largest exporter of goods and the ninth largest importer (it ranks 16th in terms of service imports). In 2016 trade represented more than 77% of South Korea’s GDP.
Since February 2012, the country’s trade balance has been in high surplus (USD $95.3 billion in 2017) and is expected to remain so in the coming years. Exports amounted to USD $573.7 billion in 2017, mainly electrical equipment (28.4% of total exports), machinery and computers (12.1%), vehicles (10.8%), ships (7.1%), mineral fuels (6.3%) and plastics (5.5%), while imports amounted to USD $478.4 billion, mainly mineral fuels (23% of the total), electrical equipment (17.3%), machinery (12.7%), optical and medical apparatus (4.5%), iron and steel (3.5%) and vehicles (3.3%).
South Korea’s main trade partners are China (24.8% of total exports), the United States (12%), Vietnam (8.3%), Hong Kong (6.8%), Japan (4.7%) and Australia (3.5%). South Korea has concluded free-trade agreements with many countries (the last one with five Central American countries) representing more than 70% of the global economy. The country is now considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was signed by 11 Asia-Pacific countries in March 2018.
At first glance, Korea appears to be “just like any other nation.” Its capital city, Seoul, is a modern, thriving metropolis with all of the latest technology the world has to offer. All over Korea, you’ll find first-class telecommunications, the requisite five-star hotels, Western restaurants, modern transport systems (including very efficient subway networks in Seoul and Busan), innovative architecture, and so forth.
Nonetheless, it is still very Korean and it is imperative that any American doing business in Korea realizes that Seoul is not Los Angeles (even though the latter, in fact, has a sizeable Korean community). Every year Korea becomes more and more modern, but it is important to recognize that modern does not equal Western. Koreans will not expect you to be an expert on the nuances of their culture, but they will appreciate a show of interest in matters that are important to them. Koreans generally appreciate a foreigner’s effort in expressing a thank you (gam-sa-ham-ni-da) or a hello (an-yong-ha-say-yo) in the Korean language.
Though Koreans have transitioned greatly into Western society, the traditional ways of thinking in many areas are still practiced. Koreans have a great respect for the family and hierarchy. Extended families (i.e., parents living with middle-aged married “children” and their grandchildren) are still commonplace, although this is rapidly changing. Among the older generation, the father is the primary wage earner, while the mother stays at home.
Due to changing social mores and economic pressures, the necessity for families to have double incomes is rapidly growing in Korea. Although fathers are the primary income earners, in the majority of cases, salaries are entrusted to their wives and most day-to-day consumption decisions are at the discretion of the female spouse. U.S. companies may wish to take into consideration these traditional family roles when marketing to Korean consumers.
Even though there are incremental changes in Korean attitudes and women are making progress, women professionals at the highest levels are still very rare. In Korean companies, the majority of working women, many with top university degrees, are still relegated to secretarial jobs, accounting or educational work. Many qualified women welcome the opportunity to work as a professional with a foreign company whose attitudes toward gender equality and professional respect and responsibility prevail.
Koreans still have a great respect for anyone senior in age, and intuitively establish their hierarchical position relative to others based on age. Indeed, one of the fundamental principles of the Korean language is based on the plethora of verb endings, which indicate the level of respect accorded to another person. In addition, a man generally receives more respect in the business world than a woman, though foreign businesswomen (especially, non-Asian looking women) are accorded almost an equal amount of respect as foreign businessmen.
Single women generally receive less respect than married women whose ties to their husbands oftentimes establish their positions in society. The American businessperson, as a foreigner, is generally exempt from the above societal classification system, although one should be prepared to answer questions that Koreans may regard as common to establish societal hierarchy, but which foreigners may regard as personal, such as questions about age and marital status.
Americans should be ready to mix business with social life as the Koreans base their business relationships on personal ones. The heavy drinking of the Korean alcohol, Soju, beer, scotch, or other liquor is commonplace in establishing a personal, business relationship. Also commonplace is the “no-rae-bang” where a group of businesspeople go to an establishment to drink and sing along to a video machine playing music. As most no-rae-bang machines come equipped with songs in English, a businessperson may want to be prepared to sing at least one song in order to gain social favor with their Korean counterpart. Although not as common as the no-rae-bang, businessmen should also be aware of “room salons” where Korean women serve food and drink to their patrons.
When doing business, Americans should be sensitive to Korea’s historical relationship with Japan, which made a virtual colony of the Korean peninsula. Because of the Japanese colonial period, Koreans have an emotionally intense reaction at times to things Japanese, though there is an admiration for Japanese business acumen. A businessperson should show great respect towards Korean society. Any comparative mention of Japan versus Korea, where Japan has the upper edge may harm a business deal.
Korea still observes Confucian ethics based on strong ties to a group. Whereas an American may think in individual terms, (i.e., what is in my best interest?), a Korean frequently thinks in group terms (i.e., what is in the best interests of the group and how can I help to maintain harmony within the group?). For this reason, the majority of Koreans are intensely patriotic, calling Korea by the term, “oo-ri-na-ra”, or “our country”. In order to close a deal when negotiating, the benefits for the group, whether for the company or country, should be emphasized.
For Koreans, relationships are all important. “Cold calls” don’t work and introductions are crucial. Koreans want to do business with people with whom they have formed a personal connection or whereby a mutual intermediary has made an introduction. As alumni contacts are a major source of networking in Korea, a particularly well-connected Korean will have attended a prestigious Korean university such as Seoul National University, Yonsei University, Korea University or Ehwa Women’s University.
The exchange of business cards is very important and a means by which Koreans learn about the name, position and status of the other person. Koreans observe a very strict hierarchical code whereby Koreans will generally meet to discuss business with persons of the same, parallel rank. Businesspersons should always have their (preferably bilingual) business cards ready and should treat the exchange of a Korean counterpart’s card with respect. (It is a sign of respect to receive and present items with both hands, followed in business etiquette by passing and receiving a card with the right hand. One should never give a card, or anything else for that matter, with the left hand as it shows disrespect). For historical reasons, Chinese characters, which Koreans can generally understand, are regarded as more sophisticated. As such, a business card written in Chinese characters can serve for a business trip to Korea, China, and Japan.
Negotiating style is particularly important. Koreans can prove subtle and effective negotiators, and a commitment to a rigid negotiating stance early on may work to the American’s disadvantage. Your offer may include the best price, technology and profit potential but still be turned down because the Korean customer does not like your style.
An important point to keep in mind concerns the nature of reaching an agreement with a Korean firm. Westerners attach great importance to a written contract that specifies each detail of the business relationship. Koreans, on the other hand, value a contract as a loosely structured consensus statement that broadly defines what has been negotiated, but leaves sufficient room to permit flexibility and adjustment. The Korean Government has attempted to address this dual perception by formulating “model” contracts for licensing technology and other arrangements. Both parties must be assured that the obligations spelled out in a negotiated contract are fully understood.
In Korea’s export-driven economy, price competitiveness is a key factor. Korean manufacturers try to purchase lower-priced raw materials or equipment, while also looking for quality.
Korean buyers generally consider that U.S. goods:
- Have an overall good reputation
- Are of high quality and good performance
- Are relatively expensive, especially because of shipping and other logistical costs.
Most Koreans have three names. These names usually follow the Chinese pattern of a surname followed by two given names. In a Korean household, all brothers and sisters have the same last name and a common given name; the only distinguishing mark is the remaining given name. In addressing Koreans, foreigners should observe the use of surnames (e.g., Mr. Kim; Ms. Lee), using formal titles if possible (e.g. Dr. Yoo; Director Song). The most common last names are Kim, Lee, and Park. In the use of formal titles as appropriate, one should always be familiar with the complete name, including the two given names, for identification purposes, as there may be several Mr. Park’s or Dr. Lee’s in the same company and even the same work space.
Welcome to the S.L. Chamber, Derek Miller
By A. Scott Anderson
Zions Bank President and CEO
This article was first published by the Deseret News and is republished here with permission.
It’s hard to overestimate the influence the Salt Lake Chamber — and its leaders — have had over many decades representing the Utah business community. The chamber has been a powerful voice for more than 130 years, tracing its roots to 1887, when enterprising Utah business leaders wanted to change the image of their remote territory and attract new businesses and residents. They rented a Union Pacific railroad “palace car” and filled it with paintings of Utah scenes, minerals and pamphlets. They embarked on a three-month, 9,000-mile journey through 60 Eastern cities, to show off the “Gem City of the Rocky Mountains.” Since then, a series of remarkably strong leaders have directed the chamber through good times and bad, elevating the voice of the business community to a position of real leadership in Utah.
One of the legendary chamber leaders was Gus Backman, who directed the chamber for 34 years and piloted it through the Great Depression. He formed an alliance with President David O. McKay of The Church of Jesus Christ of Latter-day Saints and John F. Fitzpatrick, publisher of the Salt Lake Tribune. The three of them met weekly at Lamb’s Grill on Main Street and together directed numerous civic, cultural and governmental improvements that still benefit Utah.
Another great leadership tandem was Fred Ball, Salt Lake’s unofficial “Man About Town,” who led the chamber for 25 years, and Deborah Bayle, chief operating officer for 20 years. They led a remarkable period of growth and success, playing a key role in bringing to Utah the 2002 Winter Games, the Utah Jazz basketball team and the Delta Air Lines hub.
The effective and visionary 15-year leadership of President and CEO Lane Beattie, who recently retired, is well-known. He built the chamber into a public policy powerhouse, and his fingerprints are on nearly every major success and achievement Utah has enjoyed over the last several years.
Now begins a new era of chamber leadership with the appointment of Derek Miller as CEO and president. Miller brings a wealth of experience, a lot of energy and a fresh perspective to the respected institution.
Miller is quick to praise his predecessors, saying he wants to build on their legacy. “I would never compare myself to any of them,” he said. “I want to continue their amazing work and focus the chamber to address the unique challenges of our time.”
The new chamber leader has just the right mix of experience for his new position. An attorney by training, he served as Gov. Gary Herbert’s chief of staff, as managing director of the Governor’s Office of Economic Development under former Gov. Jon Huntsman, and most recently directed the World Trade Center Utah as president and CEO.
In taking the job, Miller said the thing that surprised him most was the depth and breadth of the chamber’s programs and its involvement in so many issues and organizations. He said he greatly appreciates the talent and dedication of the chamber’s excellent staff.
Miller noted that the chamber has been a powerful voice on all the big issues facing the state, not just business-specific matters. It has taken the lead on education, transportation, immigration, air quality and housing, to name a few.
He wants to continue those efforts while targeting and refining the chamber’s efforts, according to the priorities of the chamber membership. Among his first priorities are dealing with the challenges of rapid growth, especially the housing crisis facing the state, and the wage gap between male and female employees.
He also wants to engage more young professionals in civic matters by inviting members of the various chamber committees to bring a young person with them to chamber meetings and activities.
Business leaders aren’t looking to just attend another lunch, he said. Business leaders want to solve problems, improve the business climate and protect Utah’s enviable quality of life.
Miller is off to a great start, and it will be exciting to see Utah’s business community continue to thrive under the chamber’s leadership.
Toolbox: Tip #7 – Grow as You Go
Utilize Trade Shows and Trade Missions to Explore Markets, Test Demand and Meet Potential Partners
World Trade Center Utah’s “10 Tips to Help you Think, Act and Succeed Globally” provide a deeper dive into topics that will help as you pursue international business opportunities.
Small and medium-size enterprises (SME) may think international trade missions and trade shows are only valuable for large, multi-national companies, but that is not the case. Trade missions and trade shows can be beneficial to any company considering expanding to a new international market. Such opportunities can provide a looking glass into what it would be like to do business in a new location and often present new possibilities for growth. This article will help you understand how you can best utilize trade missions and trade shows to grow your business globally.
Did you know each year Gov. Gary Herbert leads trade missions to countries around the world in an effort to provide opportunities for Utah companies to explore new markets, meet prospective clients and connect with potential partners? In the last five years, the Governor’s Office of Economic Development (GOED), in conjunction with World Trade Center Utah, has led more than 26 trade missions to countries such as China, England, Brazil and Israel.
Trade missions are usually coordinated by a government entity, nonprofit organization or commercial service, but sometimes even banks conduct trade missions in an effort to boost exports and international business in a given geographical area.
Government officials, legislators and business leaders often make up the bulk of the trade mission delegation. Traveling in a delegation represented by a government official will often increase the legitimacy of the trade mission. What’s more, the increased exposure from traveling with high ranking officials and business leaders in a foreign country may open doors for your business that would have otherwise been closed.
Trade missions are a great way to save on the cost of traveling to another country. Being part of a delegation will allow you to take advantage of group discounts, corporate/government sponsorships or funding and discounts that may be available for services provided by federal, state, and/or city government entities. Further, GOED manages a State Trade and Export Promotion grant program that can provide matching funds to participate in trade missions, trade shows and conferences.
Ultimately, your participation in a trade mission can serve as a way to familiarize yourself with the business culture, trends and customs of a target market and will also allow you to assess demand, competition and opportunities. Even if you are not new to the country, if a trade mission is visiting, you should consider attending to forge new relationships, gain a greater understanding of the market and expand your current operations in that country or market.
Trade shows provide industry specific exhibition opportunities for companies interested in showcasing their products and services to potential clients and partners. Trade shows are usually attended by hundreds, if not thousands of company representatives, industry experts and leaders, and potential clients and partners.
Because trade shows bring potential clients and partners together in one room, a lot can be accomplished in a single trip. Trade shows are a good way to assess foreign competition and current trends in the industry. To maximize the time you have at a trade show, it is best to devise a strategy and goals early on. This can be accomplished in part by reviewing the list of exhibitors and map of the venue that is distributed before the event.
With foreign trade shows, it is important to be mindful of language differences, travel plans, logistics of getting exhibit material to the foreign country and local customs and cultures. Consider translating key documents, bringing visual aids and preparing follow-up forms to help you remember everyone that you’ve talked to.
Being an exhibitor at a trade show can often be costly for many SME’s. If a trade mission is in conjunction with a trade show, consider being a part of a U.S. or state pavilion, which will provide booth space at a more affordable rate. Because pavilions are prominently marked, it can also be a way for you to increase visibility in a crowded trade show. Again, being part of a larger group such as a U.S. or state government pavilion can help establish legitimacy and trust with potential clients and partners.
Finally, know that you don’t have to be an exhibitor at a trade show in order to reap the benefits of the trade show. Just by visiting a trade show you can make meaningful connections by talking with exhibitors, gaining insight on industry trends in the local and foreign markets and assessing potential threats and opportunities with regard to your products or services.
By traveling with government officials, business leaders and other business owners/operators from your geographical area, both trade missions and trade shows can be a great opportunity for you to learn from the people you travel with. Mingling with like-minded business owners and operators will create new relationships that can result in additional business and shared experiences.
In Utah, various organizations are committed to helping you expand your business internationally. Below are few resources in the state that can help jump start your efforts in attending trade missions and trade shows.
World Trade Center Utah:
WTC Utah’s Trade Services team can help you identify specific markets for your international expansion and connect you with other resources throughout the state.
Contact Jim Porter at email@example.com
WTC Utah hosts many trade missions throughout the year.
Contact: Meg Garfield, firstname.lastname@example.org.
The State Trade and Export Promotion (STEP) Program:
The STEP program provides funds to offset the cost of attending a trade mission or trade show.
Contact: Nicole Sherwood, email@example.com
U.S. Commercial Service:
The Commercial Service provides Gold Key (B2B) matchmaking, market intelligence and many other services to help you in your exporting efforts.
Contact: Shelby Daiek, shelby.Daiek@trade.gov.
Going Global: Arnal Consulting LLC
There couldn’t be better time to be doing business in Mexico. That’s the message Eduardo Arnal would like to share with Utah companies interested in growing their businesses by exporting.
As a former Mexican Consul General in Salt Lake City, Arnal knows well the potential for Utah companies to find success in Mexico, which is Utah’s third best export destination, according to World Trade Center Utah’s export report data.
“Trade between the U.S. and Mexico amounts to more than $1.5 billion daily,” he explains. “The Mexican market is huge and growing.”
In fact, he continues, Mexico buys more American products than China, Japan and Australia combined, and also more than with Spain, France, Italy, the United Kingdom, Germany, the Netherlands and the Czech Republic combined.
With approximately 35 million Mexicans who can afford U.S. products and services, Arnal emphasizes the time is right to do business in Mexico. Looking ahead, he predicts that Mexico could be the number one market for U.S. products and services within the next decade.
As a trade consultant, he wants to help Utah businesses discover the Mexican market and how easy it is to get started. Because he “knows both sides of the border,” his firm Arnal Consulting LLC can provide strategic advisory services and business startup and legal support.
Furthermore, by utilizing Arnal’s own host company in Mexico, Utah firms can establish a foothold in Mexico without creating substantial risk by utilizing his experience with the legal requirements, product registration, business organization, taxes and more.
Arnal notes that the trade relationship between Utah and Mexico is strong. He points to companies like Bimbo Bakeries USA and Autoliv as examples of export and foreign direct investment successes. Bimbo Bakeries USA is part of the Mexican conglomerate Grupo Bimbo, the world’s largest bakery company, and employs approximately 12,000 workers in Utah through its various brands.
Meanwhile, Autoliv has a significant role in Utah’s transportation products and equipment exports. Arnal says Autoliv’s air bags and related products account for a large portion of Utah’s exports to Mexico.
Other Utah companies are expanding in Mexico. doTERRA, a Utah-based essential oils company, and Spire Ranges, the Utah-based leader in shooting range technology and installation, have both opened facilities in Mexico. Because of the approximately $850 million in Utah exports to Mexico each year, the Governor’s Office of Economic Development and World Trade Center Utah have conducted several state-led trade missions to Mexico. During the most recent trade mission, Gov. Gary Herbert met with Mexican President Enrique Peña Nieto to discuss the importance of this trading partnership.
|June 13||St. George Area Chamber of Commerce – Business Summit 2018|
|June 17-20||OutDoor Trade Show|
|June 25||Elevating Utah’s Life Science Industry|
|July 16-22||Farnborough International Airshow|
|Sept. 17-21||Taiwan Trade Mission|