If place of residence and word choice could define ethnicity, Peter Underwood would be Korean.
When the white-haired, goatee-wearing American talks about South Korea, he often uses the word “we” instead of “they.”
That makes perfect sense considering the ancestry of Mr. Underwood, a business consultant and the leader of Georgia‘s economic office in Seoul. His family has been in Korea since before the turn of the century. The 1900s, that is.
In 1885, his great-grandfather Horace G. Underwood came to Korea as a missionary during the waning days of the Chosun Dynasty, a monarchy that lasted five centuries and served as the halcyon period of Korean history. Mr. Underwood founded Yonsei University to solidify Christian doctrine and promote educational progress.
His children and grandchildren worked to build up Yonsei during many tumultuous periods that plagued Korea during the 20th century, and the school gradually blossomed into what is now considered one of the top private universities in the country.
In 1985, exactly a century after the first Underwood arrived in Korea, Peter Underwood was hired to lead Georgia’s efforts to recruit Korean business. The appointment came during a time of transition for the Korean economy. Companies, especially large, government-influenced chaebols, or conglomerates, were gaining strength and starting to ponder global expansion.
During a recent interview in Seoul, Mr. Underwood estimated that during his 24 years heading the office, he’s helped at least 35 Korean projects land in Georgia, including facilities planned or built by some of the chaebols’ smaller units.
“Five already of the top 10 conglomerates in Korea have got locations in Georgia, so that’s momentum, it builds its own noise,” he told GlobalAtlanta.
Mr. Underwood, who heads business development services for IRC consulting firm in Seoul, calls his operation the “big end of the funnel” for Georgia’s Korea efforts. His company peruses news reports, hosts investment promotion seminars and monitors trade associations and internationally focused companies, looking for signs that a Korean company might be heading for North America.
In a wide-ranging interview, Mr. Underwood talked about how Georgia landed the Kia Motors plant in West Point and won related parts suppliers, how Korea can be a gateway to China, the future of Korean investment in the U.S., hurdles for small businesses selling in Korea and more.
Please see snippets of the interview in the Q&A below:
You’ve led the state’s recruitment efforts here for more than 20 years. Does there need to be more awareness in Korea about Georgia’s business opportunities?
There’s a bit of awareness of Georgia really growing in Korea and certainly more than any of the other state offices in Korea we are known for investment promotion.
Why do you think that is?
I think it’s the effort (the state has) put into the media, I think it’s the successes that we’ve had. We talked about the high-profile companies, including SKC, Doosan, LG Chemical‘s got a plant in Gordon County. Kia of course made a lot of noise down in West Point. Because of Kia I think there were 10 or 12 suppliers that came in with them on our side of the border. (There were a number on the other side; we didn’t win them all.) Kumho is on hold right now, the timing is pushed back right now, but they’re coming along. So that’s five already of the top 10 conglomerates in Korea have got locations in Georgia, so that’s momentum. It builds its own noise.
So to attract investment from Korea, you pretty much have to focus on these big conglomerates? It seems that different branches of the same companies are working in all different sectors.
It used to be that the conglomerates did everything … but since the Asian financial crisis 12 years ago, there has been a reversal of that trend, a little bit more specializing, the conglomerates have broken into subgroups. There’s not one Hyundai anymore, but there’s five. Daeyu went bankrupt and split and sold off to different people.
One of the things we get all the time is people throwing out the name Samsung, but there’s 40 or 50 different Samsungs, so which one are you talking about? And that’s a lack of awareness in the States.
What were the clinchers that sealed the Kia deal?
When Hyundai went to Montgomery we were very actively promoting ourselves to Hyundai, and we didn’t get that plant, obviously. …. [Kia] wanted to be close to Hyundai but they wanted to be in a different state, and that’s why they were looking at Mississippi, and obviously if you’re not going to go to Mississippi, then what’s left? Georgia and Kentucky are about it if you want to be nearby. We had the labor, we had the land. They found the land themselves and the state had to go and buy it, so it was a big challenge.
We [at IRC] then turned and started focusing on suppliers immediately, and that was a very, very slow process because the suppliers didn’t want to appear to be making plans to invest in Georgia or even in the States until they had negotiated terms of trade with Kia. None of the suppliers was willing to admit that they had a project. Everyone said, “No, we decided we’re not going to go.” Why? Because they didn’t want to show their hand. So that took a long, long time, and then when it came, it came in a big rush. In fiscal year [ended June] 2007, we had record number of announcements, of which about three quarters were Kia suppliers.
Is Korean investment into the U.S. going to increase substantially soon, and how can Georgia communities position themselves to benefit from it?
I think Korean investment to the States is growing. We see a lot of activity even though we’re in the middle of a financial crisis globally. We had I think five announcements in fiscal year 2008, which is a lot for us. The year before we had 12 but that was because of the Kia suppliers, and of these five, only one was an auto supplier.
Activity is still going on. I think we have a critical mass or a degree of momentum that’s building on itself. The big investments in Georgia are looking to add to what they are doing there. … America is still a big market, and Korean labor is not cheap anymore. Raw materials are available in America, so the raw material costs are not going to be any more expensive.
To digress just a little bit, I think our challenge is going to be that the industries that are looking at the U.S. are changing, and our whole department of economic development has been focused on bricks and mortar. It’s been focused on manufacturing – put up a plant, hire 100 people and crank out widgets. I think we’re going to have to change a little bit. The areas that are up and coming are all kinds of electronics and software. The gaming industry is an area that’s had some momentum lately. We’ve got a number joint R&D programs between Georgia Tech and Korean companies.
So you’re looking at small numbers [of jobs] …. perhaps, but higher-end jobs, more value added, and I think that’s where Georgia needs to go as a state, not just our department, but as a state and as a country I think that education needs more focus. I think that creative, mental jobs are where we should be focusing, not on metal-bashing.
Can Korea be a gateway for companies interested in selling or manufacturing in China?
I used to laugh at that. I said, “Why would anybody use Korea as a gateway to China when they could just go straight to China?” But i’ve seen it happening, and I’ve seen it happen very effectively, and the reason is that even though Chinese and Korean culture of course is very different, it’s much more similar than American and Chinese culture is.
Things like how to manage people, rule of law, managing “white envelopes,” relationship-based legal structure rather than law-based legal structure – all of these things are what Korea used to be like 20, 30, 40 years ago, so your senior executives in Korea have all been through that.
Now Korea has changed a lot, and rule of law is becoming more important. Bribery is much more difficult to achieve than it used to be, but these businessmen have experience in that kind of an environment, so I’ve seen it happen very effectively that foreign-invested companies in Korea have used the Korean human resources to manage their operations in China. Koreans have been much more comfortable there.
Korea has trade surplus with China, one of a few countries in the world. China is Korea’s manufacturing base. Samsung Electronics – 85 percent of their products are made in China. Eighty-five percent! So they still do the design and development here and then they go and screw it all together in China and export it to the world. The estimates I’ve seen are that roughlly 50 percent of what Korea exports to China is re-exported to the outside world.
Do people think the pending free trade agreement between Korea and the U.S. is a good thing?
The free trade agreement I think is good for both countries – very beneficial for Korea as well as to the United States. I hope it gets ratified very quickly.
We’re losing some momentum and more importantly right now Korea is talking with the EU, Australia and New Zealand and I think Canada. I would like us to be the first one, and we’ll lose some momentum by not being the first one, but I know we have some political prolems with it in America, and we also have political problems with it in Korea. With both sides the political problems are not to do with the content of the FTA but with people using the FTA to enhance their political position rather than truly being concerned with the contents.