Doing Business in South Korea? Your Strategy Plan Should Factor in the Saber Rattling
Stability on the Korean peninsula is in short supply this holiday season, what with the shelling of a South Korean island last week and South Korea expecting more attacks.
The security of Koreans and its neighbors, not to mention world peace, are the biggest worries, naturally. But anyone buying, selling or otherwise interested in this vital market has to recognize that there's a new level of uncertainty. And if your company is in high tech, your concern might ratchet up exponentially.
South Korea is large market for technology goods and services, as well as a source of products and components. In November 2010, there were roughly 48.7 million people in the country. More than 90 percent own a mobile phone.
According to the Telecoms Korea blog, within the first year of the Korean introduction of the iPhone, Apple (AAPL) had more than 1.6 million users of the device. A literal 3.3 percent of the entire population had already become customers.
Apple hopes for similar sales trajectories with the iPad, which went on sale two days ago.
South Korea, now one of the world's top 20 economies, plays a major role in two top industries-- electronics and telecommunications. A third, automobile production, has a heavy technology component. Among the country's top exports are semiconductors, wireless telecommunications equipment, and computers.
Samsung and LG Electronics are, respectively, the world's second and third largest mobile phone vendors. Both companies make an array of consumer electronics products. Samsung is the world's largest producer of DRAM, NAND flash memory chips, and LCD screens. LG is the second largest LCD screen manufacturer. An attack on the country could disrupt the flow of products from either company, which would affect electronics manufacturing worldwide.
But the geopolitical considerations that corporations must learn to navigate in a global economy aren't just in Seoul. North Korea itself is a growing IT outsourcing location. China has already spoken out against joint US-Japanese military exercises that were a response to the North Korean attack:
"Brandishing of force cannot solve the issue," Chinese Foreign Ministry spokeswoman Jiang Yu said at a regular briefing in Beijing today. "Some are playing with knives and guns while China is criticized for calling for dialogue, is that fair?"It was less than two months ago that China cut off rare earth supplies critical to high tech manuacturing to Japanese companies after Japan detained a Chinese trawler captain whose ship strayed into Japanese waters. Is a repeat action potentially on the table? Are high tech businesses approaching a time when they will become pawns as China uses raw materials supply rationing as a way to indirectly twist the arms of other nations? Absolutely.
We do business in dangerous times. When the world is your market, your strategy must include the range of obstacles you might meet -- whether in South Korea or some other place. Today's status quo can become tomorrow's upheaval.
Related:
- U.S. Strategy to Change Chinese Currency Will Badly Backfire
- China Cuts Off Rare Earths to Japanese High Tech. Who's Next?
- Andy Grove Is Right, Industry Needs Its Own Manufacturing
- Geopolitics and High Tech: Big Surprises Await in Afghanistan and North Korea