Smith & Associates – which is celebrating its 30th year in business this week -- opened its office in Seoul in 2000. Although electronics behemoths such as Samsung, LG and Hynix are headquartered in Korea, Choon Byun, Smith’s president for Asia-Pacific, said relationships still matter when it gets down to buying and selling components.
In the second part of Doing Business in Korea, EPS conducts an in-depth Q&A with Byun and Minji Hong, managing director of Smith’s Korea office. Smith, an independent distributor, is headquartered in Houston but gives its far-flung sales offices a lot of autonomy in conducting business on a local level.
EPS: How should a business such as Smith begin to approach your market? (Acquisition, trade or do business with them etc.)
Byun and Hong: Businesses like Smith have approached expansion into Asian markets in different ways – from acquiring or partnering with a local distributor to opening an office and essentially starting from scratch. At Smith, we think that doing business in a market is the best introduction to it. We’ve let our customers lead us into the markets that we’ve expanded into. We certainly think that if you look out for your customers and have their interests in mind – it pays off in valuable relationships, no matter what region you’re working in.
EPS: In terms of businesses practices, do most companies bring their own practices/policies or adopt local practices/policies?
Byun and Hong: We’ve found in our years in the industry that the strongest companies are the ones that are able to maintain the integrity of their own corporate identity and practices while also adopting local business customs and policies. Finding a harmony between the two can be challenging, but that’s why working closely with your partners in the supply chain and learning from them (and often enlisting local talent who know the market well) can be a great help. We believe that the best corporate identity is one that is already open to new ideas and new cultural approaches and can adapt to diverse practices seamlessly and gracefully.
EPS: Which works better in your particular market?
Byun and Hong: In our market we believe you have to be part of the local culture and business environment to be a true partner. Being able to interact with customers on their terms increases the respect and relationship you can build with them, and that’s one of the best ways to establish a strong customer base in a specific market. Learning the ins-and-outs of another business culture doesn’t happen overnight, though; it requires patience and attentiveness. But very important to all of these local assimilation practices is the critical aspect of keeping the core company culture while having the flexibility to adjust to local business practices.
EPS: Assuming a company opens an office in your region, do they tend to bring their own management along or hire locally?
Byun and Hong: Most companies start local offices with managers that they bring in from their headquarters from a different country. This has been done with the idea of ensuring company culture and seamless communication with the worldwide network of offices. This trend has changed from before due to a much bigger pool of talented local employees. Bringing in managers from elsewhere isn’t necessarily a bad thing, but cultural awareness, sensitivity, and respect are necessary if these local offices are going to make real, lasting relationships with local employees and especially with local customers. Having local employees, though, is really important - and not just for their language skills. We think it’s critical that there be a plan in place to train local employees to take over management of an office so that it’s not just a façade but a true local business partner.
EPS: If they bring their own people does it take longer to build relationships? Why/why not?
Byun and Hong: There can be a greater speed and fluency for people who come from within the local market, interacting in it; they instinctively know the context and meaning of different practices and standards, and this can definitely offer an edge in building relationships locally and globally. Having a diverse team enriched with local employees can be one of the best ways to achieve these deep relationships and understandings, so that even an office led by someone outside the region doesn’t come across feeling like an “outsider” in that region.
EPS: How important are supplier or customer relationships in your market? Do they tend to be loyal?
Byun and Hong: We’ve found both supplier and customer relationships to be the vital differentiator in our business – no matter where in the world that business is taking place. These relationships, in turn, absolutely tend to be loyal; when navigating a supply chain as complex as the electronics and semiconductor one is, you learn quickly which suppliers you can trust, and you quickly establish to your customers that you’re a supplier they can rely on. In the Asia-Pacific region, especially, face-to-face interactions tend to be the sturdy foundation business relationships are built on and these social interactions really need to show an understanding and agility in the local culture and language.
EPS: Within Asia-Pac, how different are the various regions and how do companies adapt to this?
Byun and Hong: There can be vast differences across regions, which is why doing your homework and being respectful are the baseline for any interaction. Learning local customs – whether through research, input from local contacts, or simply paying attention during your interactions in a region – can often make the difference between building a lasting relationship or failing to connect with a potential customer. Sharing a meal to discuss a deal might be the norm in one region, while phone conversations may be how you conduct your business with a customer in another region; it’s all about local business and cultural practices and building the knowledge of how to interact with each other respectfully.
EPS: What have you learned from your experience at Smith?
Byun and Hong: No matter what we do, we strive to meet our customers’ needs – that’s the customer-driven approach Smith was founded on thirty years ago, and it’s the way we do business today. This may take many forms because, in building relationships around the world, we’re called upon to help in so many different ways. We tailor our service to each customer’s needs and preferences – whether these vary based on region, culture, company, or just individual-to-individual. We do business with people, not just companies, everywhere in the world. Because of this approach, our people are the key to our success. Smith's never-ending search to be better is what drives us to stay the leader in our industry.
EPS: How is Smith's approach to doing business locally different from other international companies? What is important or particularly effective about Smith's approach?
Byun and Hong: The nature of our company is both international and global, from our headquarters in Houston to each of our offices worldwide. Having such a diverse workforce makes openness and adaptability natural, so that we’re in our element when working with customs of different parts of the world – and different companies’ unique corporate cultures. It’s not out of our comfort zone to do business in innovative ways, or to build relationships on a wide array of different interactions and foundations. Although we are the biggest in the industry, we work daily to keep the flexibility and agility to change with the market based on customer needs.