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EXPORTING TO SOUTH KOREA.   Term Paper ID:22546 Click to get this paper

Essay Subject: Analyzes prospect for exporting personal computer educational programming. Product, marketing, Korean environment (culture, economics, U.S. relations), barriers, licensing, piracy.... More...

23 Pages / 5175 Words 12 sources, 22 Citations, TURABIAN Format $92.00 Return to List of Papers

Paper Abstract: Analyzes prospect for exporting personal computer educational programming. Product, marketing, Korean environment (culture, economics, U.S. relations), barriers, licensing, piracy. Paper Introduction: Executive Summary South Korea is one of the strongest economic forces in Southeast Asia, and presents good opportunities for companies who want to export high-tech products. The country is largely homogeneous in its population, but it has had volatile economic and political histories. South Korea is committed to building a strong infrastructure that favors global economies, but the stability of South Korea may be in question. South Korea is progressing nicely down the path of industrialization than neighbors such as Thailand (as evidenced by the percentage of its population working in agriculture, although Thailand is making strides in this area). Exporting a computer program to South Korea at this time is a wise business decision because computers, and personal computers in particular, Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. He also has put together a group of investors who are willingto invest in the project (the teacher and programmer also have familymembers interested in investing). Exercises are intended to be completed in conjunction withthe software, and a workbook is included. The software is a tutorial which uses CD-ROM technology tocombine video and native English speakers demonstrating proper grammar andpronunciation. This is a particularly acuteproblem in South Korea, where intellectual property rights have come underincreased criticism by the international community.[15] South Korean Protection of Intellectual Property Korea and the United States established copyright relations when Koreajoined the Universal Copyright Convention in 1987. American Protection of Intellectual Property The United States provides a wide range of protection for intellectualproperty, which is particularly important to a company consideringexporting a computer program. US armed forces are the prime guarantor ofprotection against a North Korean attack, and the US is also South Korea'smost important trading partner.[1] In 1991, the US withdrew its nuclearweapons deployed in South Korea; however, the Clinton administrationpledged support to South Korea in countering any nuclear threat from NorthKorea. Department of State."South Korea: Titan of Technology." Business Korea, September 1994, 39-4 .----------------------- [1]Europa Year Book, London: Europa Publications, 1994, 1599. Although informal class distinctions arestill found in this highly hierarchical society, the standard of livingamong the lower classes has improved considerably, and at least half of theurban population belongs to the educated middle class. South Korea has also eased restrictions inproducts such as cigarettes and wine and has concluded an agreement for thegradual elimination of restrictions on beef. Thecountry's debt service ratio is a strong 6.8 percent, but inflation islagging behind much of the world at 6.9 percent.[5] Outlook for Computer Products in South Korea South Korea has a strong computer industry that includes some of theworld's leading computer makers, including Goldstar, Samsung andHyundai.[6] Prices within the computer market have dropped considerably ascompetition increases, and American companies such as IBM are confidentthat they will be able to increase their market share in Korea.[7] IBM, in particular, has entered the South Korean market with aparticular enthusiasm, entering its ValuePoints products in late 1992. Thus the nation isconcerned that it reap the maximum benefit from its entry to the globalmarketplace. The recordedphrases are tied into the system so that students can "click" on ahighlighted phrase or word to hear it pronounced. The product is shipped in a cardboard box, and includes the CD-ROM,instructions in Korean for loading the software, two instruction books, oneworkbook and a license agreement. These areprinted at the same time that the CD-ROMs are duplicated. These are indications that the environment for exporting is improving,but there are still considerable problems to overcome, including the moresubtle trade restrictions that the country imposes. These individuals are paid at the rate of$15 per hour to make the recordings. Thewidening gap between urban and rural populations, and violence in the labormovement, along with deepening class consciousness and tensions caused byregional disparity are all indications of the high degree of volatilitywithin South Korean society. American companieshold that this causes delays which gives violators time to remove evidencebefore the authorities arrive. However, until the adventof the 1993 special enforcement campaign, relatively little attention wasgiven to the problem of piracy in the area of sound recordings, which has adirect impact on the computer program. By targeting large manufacturers of computer systems, this programshould be able to avoid some software piracy because these companies havealready suffered crackdowns from the government and, in theory, recognizethat they need to deal with legitimate suppliers. [8]Steve Hamm, "Seoul on Ice?" PC Week, 3 October 1994, A8. In1993, IBM began saturation advertising designed to create a market for itsproducts in a market largely dominated by South Korean manufacturers. The company also has the advantage of entering the South Korean marketat a time when the country itself is expanding beyond its horizons and whenthe demand for English speakers is increasing. He is familiar with the tools necessary to buildthe software, and has contacts in the industry who have expressed aninterest in working on the project. The decline of the farm population has been accompanied by an increasein the number of urban working class Koreans. [4]Ibid., 16 1. The entire package is shrink wrapped and packed in a sturdymanner for shipping overseas. Concerned that most companies fail because theyare underfunded, this individual has concentrated on finding willinginvestors in order to prevent such an eventuality for this company. "Cutting Edge." Far Eastern Economic Review, August 29, 1991, 34.Hutton, Bethan. She is college-educated, has capital to put into theorganization, but has little business background. These characteristics make South Korea a particularly attractivemarket for a computer program which can help improve English languageskills since the population itself is more inclined to participate inactivities where English is the predominant language. Nonetheless, this continues to be a problem in SouthKorea and one which must be addressed by any company seeking to make asuccess from exporting computer programs. BibliographyBangsberg, P. There is also the concern that the region's military instabilitybrings. In 1994, the US announced the deployment of Patriot anti-missilebatteries to help defend the country against a northern attack. "Seoul on Ice?" PC Week, 3 October 1994, A1, A8.Handley, Paul. This division of Korea was intended as atemporary administrative measure only. [6]"South Korea: Titan of Technology," Business Korea, September1994, 39. The programmer is using the material that the teacher has provided tobuild on-line programs, using hypertext and other techniques, in order thatstudents are able to combine the books with the computer. This strategy requires that the companies be found to be inviolation of piracy rules by the government, but it also means that theyare subject to financial penalties over and above those imposed by thegovernment. [19]"Export Regulations," 8. These are loosely formedorganizations that extract strict adherence from their members; operatingoutside a chaebol is nearly impossible for foreign companies to dosuccessfully. At the same time, instruction manuals areprepared in Korean, and workbooks are prepared in English. He also has little businessbackground, and has limited financial capital available to put into theorganization. While tension continues to exist between North and South Korea,there have not been significant problems on this front. Marketing Strategy Purchase of the product will be targeted not at end consumers, but atcompanies such as Hyundai and Samsung who manufacture personal computers.The goal is to have the software bundled into those units bound for salewithin South Korea. More than 1 million peoplenow work in manufacturing. [12]"South Korea," 12. [16]"South Korea," 8. Department of State, 5. Conclusion Can a software program designed to teach English succeed in SouthKorea? [17]Hamm, A1. [5]Ibid., 16 5. South Korea is committed tobuilding a strong infrastructure that favors global economies, but thestability of South Korea may be in question. The company's efforts paid off as IBM doubled its sales from1993 to 1994, and the company has publicly announced that it seeks to havethe largest share of the South Korean market by 1997.[8] This situationopens up the Korean market to educational software, particularly given thehigh literacy rate and the availability of the personal computer. Rugged areas are found in the mountains of the easterncoast as well as the interior; good harbors are found on the western andsouthern coasts. Suchmoves have resulted in batteries and glass products being subject toemergency tariffs, but the computer program in question here should not besubject to either emergency or adjustment tariffs. While there is an individual involved who is not familiar withthe product (the marketing director), those involved in producing thesoftware have the right combination of technical expertise and experiencein teaching English to Korean-speaking individuals. One of the successes of the newcommitment to IPR protection is that there is now a mechanism for reviewingregistration applications that tracks the ownership of works from bothbefore and after 1987.[16] However, software piracy continues to be widespread: an estimated 78percent of all software in South Korea is considered to be pirated, whichrepresented more than $65 million in lost sales in 1993.[17] South Koreanauthorities have conducted raids on retailers and wholesalers, but havegiven relatively low priority to large end users. Weaknesses Despite the best intentions of the organization, the fact remains thatthe product will be exported to Korea, which has a history of significantbarriers to imports, and which has a particularly dismal history withregard to software piracy. By building on this personalexperience, the enterprise is poised to achieve success in its endeavor. The government also uses "adjustment" tariffsto reduce the impact of the liberalization of import restrictions. Inaddition, difficulties unique to South Korea and its import environment areconsidered, as well as the role that South Korea plays in the overallinternational problem of software piracy. An FSC requires that a corporation be set up in a country bymanufacturers or groups of exporters. [3] South Korea's rapid economic progress in recent years has helped it toovercome many social problems. FSCs must be located in countries which aredesignated as acceptable hosts (South Korea has been so designated), and isthen set up according to the rules of the country where it is located.Taxes paid by the FSC to the host government to not qualify for the taxcredit. Instead of filing complaints, the BSA has initiatedlawsuits against companies who have been found to be using or sellingunauthorized computer software.[22] This approach means that companies whoare engaged in piracy face the very real and painful penalty of a civillawsuit, which may be the most effective means of stopping piracy in thelong-term. By providing marketing support via the end user, and byusing the manufacturers to provide remaining marketing efforts, the companyshould be able to overcome the cultural and structural barriers that havebeen erected by South Korea. The population ischaracterized by ethnic and linguistic homogeneity; however, historical andregional loyalties survive, particularly in the Cholla Province insouthwestern Korea. Agents in South Korea receive commission on sales made by theirprincipal as a result of the agent's efforts; in this way, they are notdifferent from agents acting in other countries. However, not all agentshave taken the additional step of registering as foreign traders, whichwould make them eligible to import and take title to goods under their ownname. The overwhelming ethnic group is Korean, which is also thepredominant language. By including an individual who is familiar with exporting in generaland who has the ability to bring venture capitalists into the organization,the company has recognized that its strengths are in the product, and notin its own business background. Inaddition, IBM will be one of the manufacturers targeted to include thebundled software on its system, or to work with its distributors andretailers in bundling the software. [2 ]Bill Glynn, "Blyth Software Announces New Strategic Partnershipwith Daewoo Telecom," PR Newswire, 7 August 1995, 8 7SF 16. Strengths of the Project The company has the advantage of being able to put together a strongproduct. South Korea is progressingnicely down the path of industrialization than neighbors such as Thailand(as evidenced by the percentage of its population working in agriculture,although Thailand is making strides in this area). Under SouthKorea's agreement to phase out its GATT balance of payments (BOP)restrictions, the government is committed to eliminate even most of theserestrictions by 1997. How the Product is Produced The teacher has drawn on years of lesson plans and exercises in orderto create the written materials for the product (workbooks and exercisebooks). This means that thecompany will have to interview agents and determine their relationship withthe chaebols that dominate South Korean business. The United States withdrew its military forces from Korea in 1949; inJune 195 , North Korea forces invaded South Korea. It is compatible with IBM computers, not with Applesystems. South Korean Relations with the United States Relations with the United States are second in importance only torelations with North Korea. At the same time, the companyhopes to have a strong retail distribution effort that will enable thoseconsumers who already own computers to purchase the software directly. "EMS Obtains Initial Two Software Orders Under Marketing Agreement." PR Newswire, 13 July 1995, 713MN 9.Europa Year Book. South Korea Economic Factors Real GDP growth ranks in the top 25 percent of all nations, at 7.4percent over the past five years, and unemployment and capital investmentas a percentage of GDP are also strong (unemployment is at 2.5 percent andcapital investment as a percent of GDP is a strong 36.5 percent). The country is largely homogeneous in its population, but it hashad volatile economic and political histories. Small FSCs must file an election withthe IRS declaring itself a small FSC, which means that it does not have tomeet the foreign management or foreign economic process requirements. As World War II ended, the UnitedStates and the Soviet Union agreed that Japanese forces in Korea wouldsurrender to the United States south of the 38th parallel and to the SovietUnion north of that line. An FSCcan be related to a manufacturing parent (as would be likely in this case),or it can be a broker. At the same time, byworking with South Korean distributors to distribute the software, it maybe possible to help diffuse the piracy temptation because the distributorshave also been hit hard by South Korean efforts to reduce software piracy.It is unlikely that piracy of a given product can be avoided, but theopportunity for piracy can be minimized. In September 1948, the Soviet Unionestablished the Democratic People's Republic of Korea in the north underKim Il Sung, a former Soviet army major, who claimed authority over theentire peninsula. In this way, large shipments can be madewhich will help keep transportation costs low, and the software productwill have the marketing strength of these organizations behind it. Bangsberg, "Group Sues Firms in South Korea, ChargingUnauthorized Software," Journal of Commerce and Commercial, 12 September1994, 2A. [2]Ibid., 1598. While this is not an overriding concern for the company at thistime, it must be considered a potential problem for the future. An FSC must have at least one director who is not an Americanresident, keep one set of its books of account in the foreign office,cannot have more than 25 shareholders or preferred stock, and it must filean election to become an FSC with the Internal Revenue Service (IRS). Introduction This research considers the prospects of exporting computer softwarein the form of an educational package for personal computers to SouthKorea. Both North andSouth Korea maintain that the MDL is a temporary administrative line, not apermanent border. This makes the timing ofthe enterprise especially good. This is one of the primaryadvantages that computer based language instruction has over traditionalclassroom instruction since the students can learn at their own pace and inthe privacy of their own homes. IBMalso opened a demonstration showroom in Seoul designed to enhance itsvisibility. Use of limited deferred payment terms(typically 6 to 9 days) is restricted to items with a tariff of tenpercent or less, which effectively limits everything except raw materials.Using deferred payment terms for other goods typically requires a licensefrom the Foreign Exchange Bank and permission from the Governor of the Bankof Korea, which is rarely given. After 16 years of alternating instability and military law,presidential elections were held in 1987. The Principals Involved in the Company The idea for this product came from a second-generation Korean-American who teaches English at adult education centers to other members ofthe Korean-American community and to recent immigrants. Because the product is designedto teach English, it uses both native Korean and English speakers, and themanuals will be produced in Korean with the workbooks in English. [21]Dale Buss, "EMS Obtains Initial Two Software Orders UnderMarketing Agreement," PR Newswire, 13 July 1995, 713MN 9. The Demilitarized Zone (DMZ)extends more than 1.5 kilometers on either side of the MDL. This does not mean that the situation is going to be an easy one tocomplete, but this companies has the advantage of South Korean contacts intwo of its three primary partners, and these contacts should proveinvaluable in introducing the company to the South Korean market. He has export experience, although in South America,not in Asia. The UN engaged in itsfirst collective military action through the establishment of the UnitedNations Command (UNC), to which 16 member countries sent troops andassistance. She has a strongbackground in education (she is a high school teacher of English, as well)and is bilingual, which gives her a unique understanding of thedifficulties that students face. [22]P. Korean governmentadministrative measures outlined in the 1986 United States-Koreaintellectual property rights (IPR) agreement were intended to provideretroactive protection for books copyrighted from 1977 to 1987, softwarecopyrighted from 1962 to 1985, and all pre-1987 sound and video recordings. Voters elected Roh Tae Woo,marking the first peaceful transition of power in the country's 4 -yearhistory. Asmall FSC tax exemption is limited to the income generated by $5 million orless in gross export revenues.[19] South Korean Agents and Distributors The appointment and use of local agents is governed by the KoreanCivil Code and the Korean Commercial Code. In this case, an agent would be used, but not necessarily aforeign trader, since the goal is to reach large manufacturers rather thanend users, which would require a strong retail effort. Presentation is in chapters, and users may move as rapidly or asslowly as they desire, with the ability to repeat sections or to go back tosections already completed at any time. Building relationships with manufacturers will helpinsure against piracy, but this is a long-standing problem in South Koreawhich is not likely to be eradicated in the near future. In the works made for higher, the durationof the copyright is 75 years from the date of publication, or 1 yearsfrom creation.[13] However, the level and scope of copyright protection available outsidethe United States depends on the foreign country's laws and treaties. The software program code and the recordings are included on the sameCD-ROM, which has a large capacity for storing information. The only land boundary that the country has is theMilitary Demarcation Line (MDL), established in 1953 to separate North andSouth Korea at the end of the Korean War. South Korea Geography The Republic of Korea is a small country occupying the southernportion of a mountainous peninsula. In this way,the company hopes to provide one of the largest recorded libraries of wordsand phrases in the market. Each of the individuals involved in theorganization also has a personal stake in its success: the teacher has afinancial stake since she is putting up capital, the programmer is building"sweat" equity, and the marketing director is also providing capital and isanticipating long-term profitability, providing him with strong incentivesto succeed. The computer expertise comes from a friend of the teacher's who is acomputer programmer and who works for a company which produces CD-ROMsoftware. In 1987, in part due to American pressure, South Korea adopted aconstitutional amendment that included provisions for direct presidentialelections and political liberalization.[2] American Trade Relations with South Korea A US trade deficit with South Korea, which peaked in 1987 at $9.6billion, led to sustained pressure on South Korea by the US government toeliminate a range of restrictive trading and investment practices. In addition, because she has taughtimmigrants directly from South Korea, she is aware of the specificdifficulties associated with learning English as a second language in thissituation. Although the South Korean governmentcurrently has no plans to change its complaint requirement, Americancompanies continue to press for increasing the penalties for copyrightinfringement and encourage the government to remove the complaintrequirement. One of the most promising efforts made by South Korea in recent yearswas the Presidents' Economic Initiative (PEI), which is a bilateralcooperative effort to eliminate generic barriers in the areas of standardsand rule-making, customs and import clearance, technology, and investment.The PEI lists of recommendations in these critical areas addressed keybusiness concerns of American companies, and considerable progress has beenmade toward carrying out these recommendations (with the exception of thearea of investment). [15]Hamm, A1. However, theBusiness Software Alliance, a group of companies which has joined togetherwith the overriding goal of eliminating piracy and unauthorized use ofsoftware, has taken a different approach with regard to the software piracyissue in South Korea. Theportion of the FSC gross income from exporting that is exempt from Americancorporate taxation is 32 percent for a corporate-held FSC if it buys fromindependent suppliers or contracts with related suppliers. Distributors are independent contractors who purchase goods fortheir own account and who are responsible for bearing the risk of disposingof the goods. This company has brought together the rightindividuals to produce the product, and has aligned itself with a marketingindividual who has experience in conquering the vagaries of theinternational market. [7]"PC Industry Engaged in a Price War," Business Korea, March 1994,27. As South Korea moved toward democratization in1987, widespread labor strikes nearly crippled the economy, andurbanization has also resulted in an increased level of crime. [14]Ibid. [18]Bethan Hutton, "Resistance to Imports," Financial Times, 26 June1995, FTS2. At the same time, she has located several former students who arewilling to record Korean phrases, and several American friends willing torecord translated phrases in English. Significant Barriers to U.S. The personal contacts and the familiarity with the Korean culture oftwo of the principals is also a strong point for the company. Most (52percent) of the population is engaged in the service industry, with 27 and21 percent of the population working in industry or agriculture,respectively. The few raids that havebeen conducted on training schools and other end users have resulted in anincrease in purchase orders to legitimate vendors.[18] In 1994, thegovernment sponsored a series of public seminars on the importance ofcopyright protection for software, and the number of raids and arrestscontinued to rise. By selecting an agent who is familiar with the software market andwith hardware manufacturers, the company should be able to gain access tocompanies that would otherwise be nearly impossible to form alliances with. Peace negotiations began in July 1951, but hostilitiescontinued until 1953. Overall export difficulties are considered as well as the economicand cultural factors that could influence the success of the product. South Korea ratified theUruguay Round agreements and became a founding member of the World TradeOrganization (WTO) on January 1, 1995.[1 ] South Korean regulations permit the government to impose special"emergency" tariffs of up to 1 percent on imported goods in order toprotect domestic industry. With the right organization behind it, enough capital, and soundknowledge both of the economy it is entering and a strong product, theanswer should be yes. These requirements mightmake the initial system difficult to sell, but the long-term goal is tohave the software bundled on systems sold within South Korea so that theprimary target market will not be end users so much as computermanufacturers and distributors (although end users will certainly betargeted in the marketing program in order to "pull" the product throughthe distribution system). Approximately 27 percent of its population is underage 15, with most (73 percent) of the population living in urban areas,which are growing at the annual rate of 3.5 percent per year. Executive Summary South Korea is one of the strongest economic forces in Southeast Asia,and presents good opportunities for companies who want to export high-techproducts. In such cases, the offer agent is usually able to render effectivemarketing services to the principal by working through a registered foreigntrader. This is a technique that the teacherhas used to create audio tapes to assist her students, and she is usingseveral of the same individuals. The government reconfirmed its commitment to tradein general and to the reduction of these limitations in 1994 and added anumber of key items. For the same reason, distributors associated withthese companies will be targeted. With the government'sinsistence that complaints be filed before any action is taken, it will bedifficult to make a serious dent in the piracy market. Alliances such as this are becoming more common in South Korea,particularly in the high-technology markets. All information on the packagingpertaining to the product is printed in Korean, although some Englishphrases are used on the package to reinforce the English language nature ofthe product. Elections were carried out under UNobservation in the US zone of occupation and the Republic of Korea (SouthKorea) was established there. By taking advantage of the tax breaks that theAmerican government has set up, and by using its contacts in the region tobuild additional business, the company should be able to enjoy a stronglevel of success. TheUnited States maintains copyright relations with countries (including SouthKorea) under the Universal Copyright Convention. [13]"Export Regulations, Customs Benefits and Tax Incentives," A BasicGuide to Exporting, Washington, DC: International Trade Administration, 7. The use of the CD-ROM technology increasesthe flexibility of the software, and also makes it possible for users tohear how words and phrases are actually pronounced. London: Europa Publications, 1994."Export Regulations, Customs Benefits and Tax Incentives." A Basic Guide to Exporting, Washington, DC: International Trade Administration, 7.Glynn, Bill. Commercialcompanies specializing in these processes are used to generate the finalproduct. Following this agreement, South Korea had some success in curbingpirating activities, particularly in the area of printed materials, throughthe use of tax and trademark infringement laws. "Blyth Software Announces New Strategic Partnership with Daewoo Telecom." PR Newswire, 7 August 1995, 8 7SF 16.Hamm, Steve. T. Form of Organization for Exporting Under American law, an exporter can reduce federal income tax onexport-related income by setting up a foreign sales corporation (FSC).This tax incentive for exporters is in the form of a permanent exemptionfrom federal income tax for a portion of the export income attributable tothe foreign activities of the FSC. However, standards, registration and certification requirementscontinue to effectively limit American access to the South Korean market.Unusually stringent and unevenly enforced standards and labelingrequirements have adversely affected exports of a wide variety of consumerproducts, including appliances and electronic equipment. Agent-principal relations may alsobe governed by the Foreign Trade Act, and agents are required to beregistered with the Association of Foreign Trading Agents of Korea (AFTAK). This era was characterized bynearly total control from Tokyo, and relentless efforts to replace Korea'slanguage and culture with that of Japan. Hardware requirements are a 486 or later computer, 12 megabytes ofdisk space, and a CD-ROM drive with sound card. [1 ]"South Korea," 1995 Country Reports on Economic Policy and TradePractices, Washington, DC: U.S. In particular, the product is designed to help userslearn English. Such a copyrighthas a term that endures for the author's life plus an additional 5 yearsafter the death of the author. Part of South Korea'sreluctance to completely open its markets can be traced to the fact thatthe country is only now emerging as a strong economic force, and it istrying to protect its own economy while continuing to pursue a policy ofinternational participation in the global economy. [11]"Republic of Korea," 7. Local distributors are notexpressly covered, but are covered by the laws governing the sale of goodsas a form of long-term sales contracts. The marketing end of the organization is given to an American friendof the teacher's who has successfully started and run several smallbusinesses before. It is close to Japan on the east andChina on the west. At thesame time, such a relationship should be beneficial for the computercompanies in question as learning English is an activity in which more andmore South Koreans are showing an interest. The formalitiesassociated with this agreement are that the works being copyrighted bear acopyright registration notice and that they be formally registered.[14] However, despite the best efforts of the American government toprotect intellectual property rights, enforcement of these rights in othercountries is the responsibility of those countries, with the owner of therights bearing the most direct responsibility for encouraging prosecutionand enforcement of suspected infringements. These arenot just individuals who have spotted an opportunity and who are looking toexploit it; instead, these individuals are able to take full advantage ofthe personal knowledge they have regarding the many social and politicalcharacteristics and conflicts of the region. It can function as a principal,buying and selling for its own account, or as a commission agent. Exporting a language which helps teach English is especially timelybecause English is the language of business, and South Korea isincreasingly competitive in the global marketplace. However, theregion's history has been marked by violence, and a new uprising orincreased hostilities could bring about a severe decline for computersoftware. He is also a Korean-American (and also second generation), butspeaks limited Korean. A five-year tariff reduction planended in 1994 when Korean tariff rates averaged 7.9 percent.[9] As part ofthe Uruguay Round of the General Agreement on Tariffs and Trade (GATT),South Korea will continue to reduce tariffs. "Group Sues Firms in South Korea, Charging Unauthorized Software." Journal of Commerce and Commercial, 12 September 1994, 2A.Buss, Dale. The American government has designated small FSCs as an opportunityfor smaller companies to take advantage of the benefits accorded largercompanies as part of the FSC system. Because of this, the end user will not be completely left out of themarket, and there is a considerable market among existing computer owners.Thus advertisements will be placed in print media which target these usersin order that the company will be able to encourage consumers to "pull" theproduct through the distribution channel. T. In 199 , Roh strengthened his government's position in Parliamentby merging his party with two opposition parties; Kim Young Sam, a memberof the new party, took office as president in 1993. With the combinationof a high level of commercial interest and an increase in the number ofpersonal computers available in the country, the introduction of a computerprogram which helps South Koreans learn English should be popular. [3]Ibid., 16 4. Despite these limitations, it is expected that exporting an Englishlanguage program to South Korea should be profitable for the companyinvolved. Forming Partnerships To be successful in the South Korean market requires a strongrelationship with the agent that the company selects. "Resistance to Imports." Financial Times, 26 June 1995, FTS2."PC Industry Engaged in a Price War." Business Korea, March 1994, 27."Republic of Korea." International Business Practices: Asia and the Pacific Rim, Washington, DC: International Trade Administration."South Korea." 1995 Country Reports on Economic Policy and Trade Practices, Washington, DC: U.S. Most (34 percent) of those Koreans having areligious preference are Christian; there are also a significant number ofBuddhists (19 percent) and some Confucianists (2 percent). As a result, some items will not be liberalized untilthe year 2 , but the computer program currently under consideration isconsidered to be a prime candidate for a license. Exporting a computer program to South Korea at this time is a wisebusiness decision because computers, and personal computers in particular,are gaining popularity as the country's economic fortunes continue to rise. South Korea History South Korea's history has been characterized by the invasion of itslarger neighbors. Rural workers have moved to the citiesin large numbers, and the small minority of the population still involvedwith farming has been hurt by high debt, the importation of farm products,and an increasing gap between rural and urban incomes. [9]"Republic of Korea," International Business Practices: Asia andthe Pacific Rim, Washington, DC: International Trade Administration, 3. However, the company must be wary of losing profits to softwarepirates, and so must be vigilant in its selection and relationship with itsagent in South Korea. In addition, the region is marked by a violenthistory, and the differences among nations in this area has not yetproduced a stable business environment. A manufacturer based inCalifornia formed an alliance with Daewoo to market the client/serversoftware produced by the American company.[2 ] Another softwaremanufacturer, Effective Management Systems, has formed a marketingagreement with LG-EDS (formerly Lucky Goldstar) in order that the Americancompany's software will be used in LG-EDS plants.[21] Future Outlook Software piracy will continue to be a primary concern to companiesconsidering exporting products to South Korea. There is also the question of entering the market in South Korea,although the decision to target manufacturers and to use an agent is a goodway to gain entrance to the powerful chaebols that control much of SouthKorea's industry. American firms have estimated that theycould expand their exports by as much as 33 percent if Korean firms wereallowed to buy on credit.[11] Licenses Licenses are required for all imports to Korea, but they are usuallygranted automatically, excepted for prohibited or regulated goods.[12]Such limitations are imposed largely on agricultural products. Another formal barrier to American exports is the restriction of theability to import on credit. Inresponse, the South Korean government has significantly lowered tariffs,removed some quantitative restrictions on imports, phased out the case-by-case approval process for many investments, and improved enforcement ofintellectual property laws. There are five major forms of intellectualproperty protection, but the copyright is what protects computer software.A work created in the United States after January 1, 1978 is automaticallyprotected by a copyright from the moment of its creation. The tax exemption can be as high as 15percent on gross income from exporting, and the expenses can be kept lowthrough the use of intermediaries who are familiar with and able to carryout the formal requirements. Description of the Product The product being considered for export is an educational package forpersonal computers. A further difficulty regarding software piracy comes from complaintsof American companies that South Korean law does not permit the prosecutoror the police to undertake an investigation of alleged copyrightinfringement unless a formal complaint has been filed. Exports Formal barriers to imports have fallen, although South Korea hasraised new, more subtle secondary barriers that effectively prevent thewidespread liberalization envisioned under the major trade incentives ofthe late 198 s (which led to the PEI). He is enthusiastic about the opportunitythat he sees in this area, although he does not have a strong background incomputer software (his experience does include exporting electrical andelectronic components). Here, many inhabitants complain of discrimination bythe central government.[4] South Korea has successfully made the transition from an agriculturalsociety to an industrial society. The country was independent until the late 19th century,when Japanese influence became dominant. The US has also played an influential role in shaping the South Koreanpolitical system, which is patterned after the American presidentialsystem. South Korea Cultural Factors South Korea has a high literacy rate (96 percent) with an annualgrowth of one percent. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.