4/22/2015

How to Successfully Manufacture OEM in Korea: Break Products Down to the Threads

While China is the factory to the world, Korea is, still, a great choice for those that enjoy less headaches.  Even though Korea tends to be easier to painlessly manufacture OEM in, Korea is not without risk or pains.

We see an alarming number of cases of fraud and, also, an alarming number of cases where a product infringes on a patent or is made to standard that does not allow the item to be marketed.

I have wrote a good deal in other posts how the key to success in dealing with Korean businesses is, often, in listening to my wonderful Italian mother.
Bespoke Korean OEM Agreements"My mother once told me to look both ways before crossing the street, carry an umbrella in the spring, and don’t go out alone at night. The advice can go a long way when doing business in Korea or in most parts of the world. It is best, before doing business with any Korean company to do a little due diligence (look both ways), have a carefully drafted agreement (carry and umbrella) and employ some Korean know-how (hire local professionals)."
This post will focus on one of the most important issues related to drafting OEM agreements in Korea.  Please check on my numerous other articles on Korean Due Diligence including: Doing Business in Asia and Korea Contracts. Don't Forget the Counter-Party.  Please don't forget due diligence.  Also, don't forget about liquidated damages: Liquidated Damages Clauses in Korea and the multitude of other issues discussed on this blog. 

Specificity in OEM and Like Agreements in Korea
To, often, we see foreign OEM agreements drafted by dopey hacks.  These hacks rarely do anything, but cut and paste a product description into an agreement. No this is not adequate.  It is, also, not adequate to just refer to your Spec Sheet with a review. 

For example, I would never go into a bespoke suit shop and request a "beautiful two-button grey suit," you, also, should not be ordering products based on general descriptions.  Suits come with different fabrics, different buttons, different thread, different liners, different designs, different blah blah blah.

If your lawyers hasn't broken your product down to the thread, you may have the wrong lawyer.

Ask you lawyer to provide you with a Specification Sheet Sample.  Most good lawyers will have one.  Fill-out the Specification Sheet Sample and have your attorney review it.  Also, it may be advisable to have a QC professional (many law firms have them inhouse), also, review the Spec Sheet.
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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. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.