October 18, 2023 Don Southerton
Over the years I have been fortunate to meet with and interview many of the early Korean and Western Hyundai and Kia teams and leadership. Today’s successes were built upon their struggles and can-do perseverance.
Last week the Hyundai Motor Group posted some amazing photos of the Kia T600 circa 1969. I shared some more details such as in early 1962 Kia’s Shiheung production line launched the first in the line-up–the K-360. Production would continue until 1973 with over 25,000 of the sturdy vehicles sold.
I’d add the T600 would signal Kia’s rise … ( Kia= Rising out of Asia).
From my 2012 Hyundai and Kia Motors The Early Years and Product Development
Kia Motors [Now Kia] Kia Worldwide is one of the world’s fastest-moving global automotive brands. It has earned a reputation as an industry leader in design styling along with a full line of fuel-efficient vehicles that have earned critical acclaim and dramatically increased consumer awareness. Interestingly, the carmaker had early roots as a Korean bicycle and motorcycle manufacturer.
In the early 1960s, the Kia Motors Company moved beyond first bicycle components, then bicycles, and motorcycles to produce a highly practical K360 three-wheel utility truck. Across much of Asia, similar vehicles met a demand for reliable low-cost commercial transportation that could transport goods and products often in tight urban areas.
Based on the Mazda Mazdago design, the K360 also signaled Kia Motors’ long technology alliance with the Japanese automaker with a number of cars and trucks eventually licensed from Mazda.
During this era of budding Korean economic development, strong technology ties with foreign partners were common. For example, other Korean firms entered into partnership arrangements with international carmakers, including Nissan (Datsun), Toyota, Fiat, GM, and Ford. Korean industrial groups desiring to enter the car sector forged these alliances to gain advanced automotive technology and know-how. In addition, the government implemented strong trade protectionism in an effort to build a self-sufficient import substitution economy.
In particular, the Korean Automotive Industry Promotion Law required cars to be manufactured locally versus imported from foreign markets.
When pressured by the government to produce Korea-assembled cars, Kia Motors leveraged its strength as an engineering-based company and chose not to assemble compact cars imported as knockdowns (CKD). Instead, Kia set up a full-scale production plant with considerable local sourcing of parts.
Sohari
In 1973, Kia’s Sohari plant opened with the initial production of a pickup version of the Brisa. Drawing on the ongoing relationship with Mazda, the Brisawas based on the second-generation Mazda 1000, which was marketed as the Familia in Japan.
In conjunction with manufacturing the Brisa pickup, Kia Motors also began production of 1-liter gas engines. While the competition sourced engines from their foreign partners, this marked the first Korean company to manufacture its own engines. In the first year of production, 65 percent of the parts in the Brisa, including the engine, drive shaft, and clutch, were manufactured in Korea. This local sourcing was strongly encouraged by the Korean Government and the ratio of locally produced parts increased steadily over the years.
In the fall of 1974, the first Kia Brisa S-1000 four-door sedans rolled off the Sohari production line. Overall the Brisa was a success with 75,987 sold between 1974 and 1981. In 1975 the Brisa pick-up also became the first Kia to be exported when a number were shipped to Qatar in the Middle East.
Oil Shock
Notably, what spurred the Brisa’s early success was actually its small 1000cc engine displacement. Starting in 1973, an international oil shortage forced gasoline prices to skyrocket creating a supply shortage in Korea.
Veteran Hyundai and Kia Motors executive Mark Juhn who began his career with Shinjin Motors noted that the oil shock had a devastating impact on Kia’s rival— a newly formed and much larger General Motors Korea, a joint-venture company between GM and Shinjin Motors.
Mr. Juhn shared that with high gas prices Korean consumers favored the Kia Brisa and its smaller more economical engine over GM Korea’s first production model, the Chevrolet 1700 with a larger 1700cc engine.
Mr. Juhn also pointed out, “I could say the oil shock brought good luck to Kia but GM Korea struggled.”
[For those of you long associated with Hyundai, Mr. Juhn would later in his career head up Hyundai Motor America and was the driving force convincing HMC leadership to approve and support the game-changing 10-Year, 100,000 Mile Guarantee program].
Steady Growth
By 1976 Kia also strengthened its position in the commercial vehicle sector by purchasing Asia Motors based in Kwangju, South Korea. Asia Motors manufactured heavy trucks, buses, and a line of military vehicles. In addition, to meet the growing demand in Korea for cars, Kia even started CKD assembly of the Fiat 132 sedan, along with the Peugeot 604, a larger model sedan.
Government Intervention
Despite Kia’s successes, government intervention imposed new mandates over much of the growing Korean economy. Direct competition was regulated across many sectors of industry. In 1981, Kia Motors was told to stop producing cars and concentrate instead on light commercial vehicles. In turn, more light truck and van models were added, including the 1-ton Bongo, the Ceres pick-up and some larger truck models.
Ford Alliance
By the mid-1980s the Korean Government decided to change policy and relax its restrictions on the car and truck companies. Kia was allowed to return to car production. Working with Mazda’s Ford alliance, Kia Motors began to produce the Festiva (known as the Pride in Korea). Export to the U.S. began in 1988. The venture was extremely successful with 300,000 Festivas being shipped overseas between 1988 and 1993.
Stay tuned!
More to come on my documented early years of Kia Motors , Kia America, and Kia Worldwide and Hyundai Motor America and Hyundai Motor Group
Everything Korea September 11 Episode. A Revisit- Working with Korean Teams
Korean Business with Don Southerton
For most of my career I have worked with Korean teams—many based in Korea, many in local overseas operations. I find both exchanges rewarding, but very different and require a varying set of skills. I’d like to offer some best practices.
To begin
We find with Korea facing international operations the primary communication channel between the Korean HQ and local subsidiary is through expatriates—although in some cases this is shifting.
In key positions, Korean expats serve in roles including the CEO who is responsible for managing the local company or region. The CFO and technical support can be expats, too. Most often these Korean expats along with local leadership executive form the core for business operations in the host country.
By the way, the expats below senior management are often referred to as “Executive Coordinators” or “Executive Advisors” in the West. As a caveat, this model does vary some and in some organization we see a mix of “Coordinators” and Korean assigned as line managers. However, the Korean term for these expatiates is ju jae won.
In the larger overseas subsidiaries, the Korean expats are assigned to the major departments.
In many instances, as I mentioned, the expat Coordinators are not assigned a direct managerial role but still hold considerable oversight over the local operations.
Roles vary with each company, but frequently a Coordinator’s primary role is to be a departmental liaison and communication channel between Korea and the local subsidiary.
That said, for westerners unfamiliar with the Korean model, this “oversight” usually translates into the Korean expats requiring sign off on all decisions—trivial to substantial.
This can be a huge challenge when newly assigned expats have little specific background in or knowledge of the host country’s operations and market. More so, when their decisions are motivated by what they feel would please the HQ in Korea.
Cognitively, they do recognize local management skills and expertise, but especially if under pressure to perform and meet expectations may defer to engaging in decision-making.
Of course, this can be a challenge.
New ju jae won are skilled and accomplished in Korean style business operations, norms and practices.
However, they are now assigned to an overseas subsidiary where norms, practices, expectations, and laws differ. Adding to this “Managing westerners” is very different than overseeing a Korean team…
Next, I’ll cover several scenarios with best practices for supporting overseas team. All take finesse and collaboration, plus recognize norms and practices differ… as well as require working “within the Culture.”
To again clarify, my perspective is based on years working with Korea and especially in daily mentoring and providing strategy for their overseas operations—Koreans and Westerners.
Scenario One
It’s common for a Korea expatriate, frequently called a Coordinator, to directly request members of the team to gather information or data on the local operation. Usually, Korea has asked for this information and the Coordinator is executing the request. These always have a sense of urgency.
The Challenge is the local departmental head may be circumvented (often unintentionally)…. and requests disrupt operations and designated priorities. More so, the line of management for the department is blurred—i.e. staff confused on “who is in charge.”
The Workaround centers on an effective working relationship between the Coordinator and the department head. An understanding must be reached that when requests from Korea (or from the senior Korean leadership at the subsidiary), it is first brought to the department head… and they handle who will execute.
In particular, the local western manager is more familiar with their team, individual workloads, any special situations and skill sets. In fact, with a clear communication channel the work will be performed with better results by the individuals tasked with the assignment, and less stress on the Coordinator asked to acquire the data.
As a caveat, one burden on a department can be when a high percentage of work and tasks teams are engaged are to support Korea and not the local operations.
Scenario Two
As noted, a Coordinator’s role is to support the local operation. Local teams and specialists are hired with a high degree of knowledge and experience. A clash occurs when decisions best left to those in the know are deflected.
The Challenge occurs when Coordinators override a decision or unilaterally make the call. This can range from the hiring of new employees to pushing off a much-needed program.
Again, the Workaround is a clear Company-wide defined role for the Coordinator. They are advisors who can provide much-needed input and an HQ / mother company perspective… but not assume line manager responsibilities.
In other words, clarity must be established in regard to as long as they are acting on behalf of the mother company considerable weight must be given to their input. That said, even when they have the company’s best interest in mind, their own personal views must be gauged and moderated.
Scenario Three
Perhaps the most challenging situation is moving Coordinators to make a decision.
The Challenge In most Korean companies leadership decide on direction and major issues. In turn, the working team’s role is to implement or gather needed information. This role/ skillset changes when working level Koreans are assigned as an overseas Coordinator.
Workaround When conducting a meeting where a decision must be made recognize that your Coordinator will have considerable say in the outcome. First, since the topic and subject matter may be new to your Coordinator, I recommend you share prior to the meeting any needed background documents (best provided in PPT format).
In addition, have an informal pre-meeting Q&A with the Coordinator to brief and update them on any specifics. Note: they may need a day to review proposals and agreements, so timing is critical.
Even in the best cases, expect that the Coordinator may want to postpone any decision until they can carefully review and perhaps confer with Korea. I suggest all documents and meeting PPTs be immediately forwarded to the Coordinator.
I’d create a sense of urgency with a timeline for execution and implementation. Regardless, expect some delays and be patient.
Over the years, I’ve found that Coordinators appreciate when their overseas co-workers recognize that the internal approval process takes time and be ready to offer, as needed, additional supportive data or documents.
BTW, if you are a vendor and your firm provides services to a Korea-based partner, it’s best to provide both the western and Korean teams with background information prior to any meetings. Moreover, be prepared to share the meeting’s content in digital format afterward with the Korean team, too.
With the shift to ever-increasing daily interactions with Korean HQs via web and phone conferences, western teams need even deeper practical insights into working within the Culture along with new skill sets.
In particular, the Executive Coordinator/ Advisor model has had its limitations…but the Koreans assigned as expatriates do learn local norms and adapt over time. This means the Coordinators mold to local operations with a little need for many of the local teams to become skilled in Korea workplace norms.
In contrast, working with teams based in Korea takes a different approach.
Korea-based teams follow deeply embedded HQ and company norms. They are not likely to model or adapt to their overseas subsidiaries.
This now means 1) becoming acquainted with Korea norms, understanding the Korean workplace “in’s and out’s” and “do’s and don’t.” And, 2) developing strong skills in managing the relationship with effective cross-communication taking on a new heightened significance.
Over the past years, I’ve shared solutions in my books, articles and case studies… that said, I find that each situation requires one having to drill deeper to truly grasp and then provide a solid resolution.
Thoughts?
As always, Stacey stacey@koreabcw.com, my assistant can schedule us a time to meet or chat by phone.
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For more information on my work…. www.learnmore.Koreabcw.com