Friday, July 25, 2014

Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of July 21, 2014

Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of July 21, 2014
Korean Legal News Reported by the Media on the Week of July 21, 2014
Most Recent Posts from the Korean Law Blog
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Thursday, July 24, 2014

"Samsung's First Family Struggles to Keep Grip on Company" Report by Bloomberg

The Samsung saga continues.  Lee Jae-Yong is likely to take over from his father soon.  It looks like Lee Kun-Hee's health is not improving.  Bloomberg has an interesting article on this issue that may be found on the link below.  

The Lee Family owns less than two percent of the total shares of Samsung Group, though they near absolutely control 74 companies "through a web of share holdings."

However, because of recently enacted regulations and tax laws, the family may lose its influences over the companies.  President Park has banned "new cross holdings." Under current tax law in Korea, heirs have to pay inheritance taxes of 50 percent of the asset value which means that Lee Jae-Yong may have to pay about  $6 billion as inheritance taxes.

While the Lees are planning to take two companies public in order to raise money to pay the inheritance taxes, Lee Jae-Yong has faced another challenge.

According to Chung Sun Sup, CEO of Chaebul.com, Lee Jae-Yong "won't command the same respect and authority that his father has had because he's largely unproven."  Well we heard this argument, also, with the father.  We will update the reader when new developments occur.

The full article may be found at: "Samsung's First Family Struggles to Keep Grip on Company"
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info@ipglegal.com

Wednesday, July 23, 2014

Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor

The number of bankruptcy and rehabilitation filings in Korea are on the rise.  The Korean economy may be entering into a recession.  The last creditor to be paid is, typically, the foreign company.

We receive emails, on nearly a daily basis, from companies and individuals attempting to collect a commercial debt in Korea. Many of these creditors are not aware that the debtor has filed for bankruptcy or is experiencing financial difficulties.  

Please follow this basic advice and take a read of other others we wrote on this topic.

Before Engaging in a Relationship with a Korean Company:
1. Before engaging in any work or giving a Korea company money - please do a little due diligence.  Many SMEs and even conglomerates (mainly construction companies) are experiencing serious financial difficulties. Do a little due diligence before wasting your time and money.  If you find that the company is experiencing financial issues, the agreement should be tailored to reflect these realities.

2.  Before continuing work with a company in Korea - please do a little due diligence.  Many companies with no problems paying you in the past - might be experiencing problems now.

After Realizing you Got Yourself in Pickle:
1.  Immediately send a formal demand letter from a Korean law firm.  The demand letter may be answered with a bankruptcy/rehabilitation notification (mandated by law if company is in proceedings); and
2.  Quickly ascertain if the company has any assets.  Law firms can, typically, assist with discovering assets.

In all debt collection matters in Korea - it is necessary to act quick.  Assets disappear quickly and the courts are very efficient in closing cases quickly.  Act fast or you may be left with only an invoice.

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Monday, July 21, 2014

Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of July 14, 2014

Weekly Korean Legal News From International Law Firm - IPG Legal For the Week of July 14, 2014.
Korean Legal News Reported by the Media on the Week of July 14, 2014
Most Recent Posts from the Korean Law Blog
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Thursday, July 17, 2014

Opportunities in Korea's Growing Tuning & Performance Modification Industry for Foreign Companies

Korea has been behind its Asian neighbors in its love for modifying cars, partially, because of Korea draconian laws related to car modifications.  Police, regularly, impose fines on those that modify the look and performance of cars.

The tuning industry in Korea is estimated to be around USD 500mil, while Japan tops in at over USD 14billion.  We suspect this will change soon.

The good news for foreign aftermarket parts manufacturers, looking to enter the Korean market, is that the present administration has vowed to change laws to allow cosmetic and performance modifications to cars. We assume the changes to law (or application of law) will occur this year.

A decent article on the issue may be found at: Legal Tune-up to Help Koreans Pimp Their Rides

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Monday, July 14, 2014

Korean Fugitives on the Run: Getting more Difficult with Change of Law

Korea, last May, changed it law to allow the statute of limitation on crimes not to toll for fugitives.  Before the law change,if a defendant was not sentenced, the statute of limitation could toll (expire), thus, the defendant could avoid a conviction based on the tolling of the statute of limitation.

For example, if a person is being questioned for a crime with a ten year statute of limitation, prior to the change in the law, the accused would not be able to be prosecuted after the ten year term expired. 

Other articles that may be of interest are:
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Friday, July 11, 2014

Distribution Agreements in Korea: Crawl before you Walk

Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor.

We see too many distribution agreements that are mere spun U.S. agreements.  Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea.  We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.

Issues to consider for your Korean Distribution Agreement:
  1. Will your distributor in Korea be your agent?  If the distributor is an agent, generally, you will, only, be paying your agent a commission and you will be directly invoicing the client.  Liability and other issues to consider.
  2. Will you Korean distributor be your exclusive distributor?  How long will the relationship last?  How can the relationship be terminated?  Territory?  Scope?
  3. What occurs after termination of the relationship with the Korean distributor?  Return of products, buy back inventor etc.?
  4. Dispute resolution mechanisms? Venue? Arbitration?
  5. Have you created a franchise?  If so, we have some more talking to do.  The requirements for franchising in Korea is much more cumbersome than a mere distribution relationship.
  6. Have you registered your trademarks?  Korea is a first-to-file nation.  If you have an agreement with a distributor - you may be protected even without registering your trademarks - however- register and avoid issues with others. 
  7.  Did you conduct a thorough due diligence on the distributor?
  8. Who handles warranty claims, distribution, support, marketing etc.? 
  9. Is the party signing the agreement authorized to sign the agreement?  Make sure the agreement is properly executed.
We see too many distribution agreements that are mere spun U.S. agreements.  Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney that has on-the-ground experience in Korea.  We see too many issues that could have been easily resolved by a carefully drafted agreement and a little due diligence.

Other articles that may be of interest:
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    Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team and Entertainment, Media and New Tech Law Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He assists clients in their contentious, non-contentious and business developments needs in Korea and China.

    Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of July 7, 2014

    Weekly Korean Legal News From International Law Firm - IPG Legal For the Week of July 7, 2014
    Korean Legal News Reported by the Media on the Week of July 7, 2014
    Most Recent Posts from the Korean Law Blog
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    Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

    Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

    Tuesday, July 8, 2014

    Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of June 30, 2014

    Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of June 30, 2014
    Korean Legal News Reported by the Media on the Week of June 30, 2014
    Most Recent Posts from the Korean Law Blog
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    Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

    Sunday, July 6, 2014

    Is Samsung Doomed? No Innovation Price Trap

    I love The Street. The Street is the investment site of Jim Cramer of Mad Money.  If you don't know who Cramer is - you are missing out.  The show is a blast and is useful for investors.

    A piece on The Street entitled Samsung has an Innovation Problem - Its Not Apple is very enlightening on the future of Samsung.

    A few interesting clips from the article.
    "Samsung used to have a few strengths it flexed against Apple in the smartphone space:
    • Bigger screens in the Galaxy phones and the Note Phablets 
    • Its carrier relationships 
    • Its high/mid/low market phone offerings 
    • Vertical integration - which it used to lower its chips and DRAM costs 
    Let's take those in turn: 
    Apple has bigger screens coming this Fall. The iPhone 6 is expected to have a much larger screen. It now has the iPad Air and Mini. Apple may be looking into other types of phone/tablet form factors as well. What's Samsung going to do to counter this? Make even bigger phone screens? 
    Samsung has been selling phones for a long time so it has had a lot of carrier relationships -- just as Nokia (NOK) did. Apple's always been the new kid on the block trying to build these up. But it really broke through in a big way in the last year. Apple now has well over 200 carrier relationships globally, including DoCoMo (DCM) recently in Japan. Apple's footprint is now extremely extensive -- and still growing. Samsung's is at its ceiling. 
    Many once argued that Apple needed to have a mid-tier and low-end version of the iPhone. Apple seems to disagree, preferring the high margins of the upper end of the market. Besides, its older phones have effectively become their "free" offering on the low-end. Samsung's ability to offer phones to all these markets is part of the reason why its profits have been eroding. It's a market share vs. profits tradeoff. Samsung -- the whole conglomerate and not just the smartphone division -- had $4.6 billion in net incoming in the March quarter. Apple, by contrast, had $10.2 billion in that same quarter. 
    Samsung can still benefit from vertical integration. However, Apple's profits still vastly surpass Samsung's. Apple is becoming more and more vertically integrated. Apple's move into chips give it both a cost and performance advantage in certain products relative to Samsung. Apple has also been creative in the way it's used its cash to develop relationships with suppliers of certain strategic components like sapphire glass covers."
    So is Samsung's Competitive Advantage Dead?

    The article goes on to note that:
    "So, when you look forward, how exactly will Samsung differentiate itself from Apple? Will it be through greater innovation, as the mainstream business press suggests? Innovation how, exactly? Like with the new Samsung Gear watches that it pushed out the door to beat Apple to the punch? The ones that have not been well received? 
    Through wearable devices? Through its Tizen mobile OS? 
    The truth is Samsung has never been an innovative company. It's not in their DNA. It's always been a vertically integrated conglomerate. What do vertically integrated conglomerates do? They compete on price and volume. . .
    Maybe the company's best hope for turning around its profits is to double the size of the screen of Apple's iWatch when it eventually copies it."
    Is Samsung doomed?  The majority of the Korean economy is based on companies that compete, mainly, based on price.  Samsung has been criticized for years for being nothing more than a follower that competes based on dumping products on foreign markets.

    With the cost of doing business in Korea increasing and competitors like China being nearly as capable manufactures as Korean companies - will the Korean economy falter.

    Who will step up and create innovative products/services in Korea?  Will the Korean government protect the big boys to the detriment of more innovative small companies?  All these questions are at the very top of the present Korean government.  The government is eagerly trying to promote start ups, while balancing conglomerate realities.

    No simple answers to these questions.  I know I wont be buying Samsung stocks, but I am happy to be holding onto a good deal of Apple and Microsoft stock.

    The full article may be found at: The Street.
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    Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

    Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

    Wednesday, July 2, 2014

    Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of June 23, 2014

    Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of June 23, 2014
    Korean Legal News Reported by the Media on the Week of June 23, 2014
    Most Recent Posts from the Korean Law Blog
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    Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.