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Thursday, March 02, 2006

Understand the Law BEFORE Going into Business

I'm always amazed at the number of companies that try to go into business in Korea without truly understanding the country or obtaining the services of someone that does. Recently, a company that I was working with found itself in that situation and they now risk losing their entire investment, over $4M. Their biggest problem was after one or two visits to Korea they felt they knew all they needed to know.

I wonder how much their final bill to Brendon Carr's firm will be...

Anyway, this situation goes both ways as a Korean company finds itself in trouble in the US.

The U.S. Justice Department has decided that four executives of Hynix Semiconductor will serve five to eight months in a U.S. jail for their part in the international price fixing of DRAM chips, a conspiracy it says caused losses to U.S. computer manufacturers and therefore consumers. The decision is no different from a court ruling, a deal reached because the executives pleaded guilty and agreed to jail terms offered by the Justice Department.

It is a regrettable tale. The executives may well feel they are taking the fall for corporate misconduct since they hardly acted in their own interest. There is also a feeling that it makes little sense for the Hynix executives to do hard time since the company already paid US$185 million in fines last year.

Still, it is a chance for Korean companies venturing into foreign lands to learn important lessons. It is not only the U.S. that takes a dim view of price fixing and regards it as a criminal activity with consequent severe punishment.
Knowledge is so important and the lack of it as well.