Global interest grows in Korean-style biz management

Five CEOs and executives from a company dedicated to corporate education in China visited Korea in March. The purpose of their trip was to introduce to China corporate education programs that reflect the success stories of Korean companies.

Han Cheol-hwan, director of the Institute of Global Management’s corporate value institute who met the Chinese executives, said, “They had keen interest in education methods to transfer Korean conglomerates’ management systems and global strategies to Chinese companies.”

Global enterprises struggling amid the economic slump are seeking to learn from Korean conglomerates their future course of action. Not only companies in emerging markets including China and India, but also those in advanced economies including Japan and the U.S. are seeking to benchmark Korean companies.

○ Benchmarking Korean-style corporate ‘control tower’

Consultants at the Chinese office of Bain & Co., a global consulting firm, bring materials analyzing management systems of Korean conglomerates with them when seeing clients. They prepared materials analyzing such data because more Chinese companies have inquired about the governance structure and management methods of Korean conglomerates.

One consultant at Bain`s Indian office recently said, “An Indian company with more than 40 trillion won (33.9 billion dollars) in sales wants to know the management methods of Korean companies,” and asked Bain`s Seoul office to provide related information.

Kim Jeong-soo, a partner at Bain’s Seoul office, said, “Chinese and Indian companies that have grown in scale in a short time are considering as role models Korean conglomerates that took similar trajectories of growth,” adding, “They are especially interested in the group management structure and inheritance of managerial control to children of conglomerate founders.”

The Chinese and Indian companies reportedly seek to learn about "control tower" organizations such as the Future & Strategy Office of Samsung Group, as well as the governance structure and operating methods of companies that have transformed into holding companies, including LG Group and SK Group.

Noted family-controlled companies have also begun exchanges with Korean companies. In March, a business delegation from Northern Europe, including the owner of Wallenberg, a family-controlled business group in Sweden, visited Korea. Early this month, Exor, which controls companies such as the automotive brand Fiat, appointed Samsung Electronics President Lee Jae-yong as an outside director.

Citing an Exor spokesman of Campdon FB, a wealth and family business magazine, said, “(Lee Jae-yong`s appointment as an outside director) was meant for Exor Chairman John Elkaan to share problems and challenges facing family-controlled businesses with other companies and learn about corporate governance structure and lessons in corporate management.”

○ Learning from Korean companies that remain strong in bad times

More foreign companies are also making inquiries about Korea to learn the global strategies of Korean companies, which make prompt decisions and aggressive investment despite the economic slump.

According to the Korea Trade-Investment Promotion Agency, a Chinese IT company with annual sales of 16 trillion won (13.6 billion dollars) and 80,000 people on its payroll recently inquired about Samsung’s global strategy through the agency’s trade office in China.

Last year, staff from a Japanese electronics company that is a rival of Samsung Electronics visited the Korean trade agency`s New Delhi office and asked for information on how Samsung manages its Indian affiliates and materials on Samsung’s marketing.

Also last year, Harvard Business Review carried a research paper on factors behind Samsung’s success written by business professors Song Jae-yong and Lee Gyeong-muk of Seoul National University, which effectively reflected keen foreign interest in Korean companies.

Korea has also started to export management and economy know-how. The Institute of Global Management has teamed up with Nankai University in China on a project to provide education programs designed to teach Chinese CEOs in Korea and China, and introduce content focused on case studies of Korean companies to the Chinese market.

Ryu Han-ho, senior executive director of Samsung Economic Research Institute, said, “Japanese corporate interest in Korean enterprises of late is more than simple attention,” adding, “It`s about time that Korea defined and introduced Korean-style management and thus enhance the status of Korean companies and Korea`s national brand.”