We, also, see cases where a Korean company is importing a product and the importing party ends up not being the party that the American or European company thought they were doing business with.
Also, often, companies in Korea are broken up into smaller companies. The manufacturing arm may be one company, the sales arm one company and these companies are wholly owned by a holding company. Of course, the agreement ends up being with the broke sales arm.
Thus, know the counter-party. Due Diligence is required. Due Diligence is not checking the firms website or simply matching up the name on the PO with the Wire Instructions. A wire will, normally, clear even if the name is not correct. Example:
Account Holder: Amazing Trading ABC Limited
Kim Bad Boy
Account # 112345678
The funds will, normally, clear even if the account is in the name of Bad Boy KIM.
Please do your due diligence on the party you are intending to contract with, prior, to even negotiating the agreement. It will save you a good deal of stress and maybe even your job.
Many people in Korea do this due diligence service for a minimal fee.
Posts from The Korean Law Blog that may be of interest:
- Listen to My Mother: JVs in Asia
- Doing Business in Asia: Due Diligence, Agreements, Attorneys and Street Smarts
- Korean Joint Ventures: Bare Essentials of a JVAs in Korea
- Building Systems Before JVs in Korea to Build trust Between the Parties
- Basic Agreements for Doing Business in Korea
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. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.