Automotive News - September 29, 2008 - (Page 29) SEPTEMBER 29, 2008 • 29 KOREA Strong-boss culture comes at a price continued from Page 3 Experts: Learn Korean hierarchies Gary Anglebrandt autonews@crain.com Korean chairmen rule their companies as kings. CEOs, presidents and vice presidents are their subjects. “We call them slaves,” says Chung Sun-sup, who heads a research organization on Korean conglomerates called Chaebul.com. At my job working for the news department of a Korean TV channel, things are casual compared with the upper echelons of a chaebol. But even here, if a company big shot walks into the room, everyone stands up, smiles, bows and offers a polite greeting. When you drink with the boss at one of the frequent office parties, there’s a ritual worthy of an anthropology class. Honor is bestowed on a worker, especially a younger one, to whom the boss offers a drink. With obsequious body language showing humble thanks, the worker gets up and sits next to the boss, who pours a shot into his own glass and hands it to the worker. The worker drinks and does the same for the boss. Meanwhile, everyone is watching, smiling and encouraging. SEOUL — The Hyundai-Kia Automotive Group says its corporate culture is typical of Korean companies. What does this mean for outsiders trying to deal with the group? For one thing, suppliers looking to set up shop here should consider licensing agreements more than acquisitions, says Hwan Hur, president of BorgWarner Transmission Systems Korea. Top Korean executives like to remain so and are reluctant to sell slices of their companies. Because of the executive shuffling that can occur at Korean companies, consultant Peter Underwood recommends that suppliers make a broad base of connections. “Don’t rely 100 percent on that executive sales VP. When that guy’s gone, you still want has a particular title, doesn’t mean he has any authority. “ Just because an executive PETER UNDERWOOD Consultant ” someone you are able to call,” says Underwood, who matches Western and Korean businesses, including auto suppliers. One characteristic of this chairman-oriented system is that executive titles such as CEO take on a different meaning. “Under the chairman, most CEOs, presidents and vice presidents are advisers,” says Kim Tae- nyen, a director at the Korea Automobile Manufacturers Association. Says Underwood: “Just because an executive has a particular title, doesn’t mean he has any authority. Spend time learning the hierarchy and who’s actually making decisions.” Westerners tend emphasize sales numbers and other tangible measures of success, Underwood says. It’s often said here that Koreans are kind to those they know, whether they are Korean or not. Thus the blinders they put on in public spaces, displaying an unappealing me-first attitude. Yet go to the home of the same Korean who cut in line ahead of you, and you will be doted on. “You need to be schmoozing bosses,” Underwood says. “Appeal to the emotions of colleagues and superiors. Spend more time on what Mr. Kim, Lee and Park need.”c Comfortable with strongmen Western reporters typically explain all things Korean with one word: Confucianism. Respect for order and authority creates extreme deference to corporate superiors. But that’s too easy. The chaebols’ power also stems from the ruinous economic conditions after the Korean War. The first two generations of chaebol leadership thrived under the dictatorships that followed. The era lasted until 1987 and was marked by a strong partnership of government and business. Some of the recent shuffle at Hyundai followed a shift in power, says Chaebul.com’s Chung. Chung Mongkoo replaced his uncle Chung Se-yung as chairman in 1998. Then Chung Mong-koo started bringing in people from what is now parts supplier Hyundai Mobis, which he previously headed, and rooted out those associated with the previous chairman, researcher Chung says. Indeed, the annual reports show that of the 27 executives working in the top five layers of Hyundai at the end of 2000, just three, including the chairman, were among the 61 still working at the end of the first half of 2008. Kim Ki-chan, dean of the Graduate School of Business Administration at the Catholic University of Korea, says Hyundai is paying a price for its strong-boss culture. The automaker is still “not making cars to sell but making them and then having to sell what’s been produced.” Impatient Hyundai is shifting from its production-based strategy to a marketing one. But it still must move toward a horizontal management style that empowers managers to make decisions, Kim says. He also says Hyundai’s management is poor at coordi- nating different departments, and “this leads to a lot of stress.” A Hyundai spokesman dismisses that assertion and attributes the management shuffle to the need to rotate experienced managers among the 42 companies in its empire. “Some departures are explainable by the need to rotate people to different parts of the company,” says spokesman Oles Gadacz. “That’s not always apparent to people outside the country.” But moving from the flagship company to a small subsidiary is not considered positive in any society, much less one that values rank and image as much as this one. And once gone, names rarely reappear on the flagship company’s list. Gadacz also says Hyundai is striving to reach the top rung of global automakers. Being fast, aggressive and unapologetic is how a young company moves up. And a company with a strong hierarchy can move quickly. For instance, when the former DaimlerChrysler AG invited Hyundai to help develop a 2.4-liter engine with Mitsubishi, Hyundai produced drawings in just two months. Gadacz says Chrysler was impressed, saying its engineers would have taken 18 months. Another example: Hyundai was able to build its Alabama plant in 18 months and its first China plant in six. “We have our detractors,” Gadacz says, “but we get things done. If bodies are left by the wayside, hey, I’m sorry. There’s a bigger goal here.”c AUTO SHOWS Sept. 26-Oct. 19 — State Fair of Texas Auto Show, Fair Park, Dallas, 214-421-8728, www.bigtex.com Oct. 2-5 — Orange County Auto Show, Anaheim Convention Center, Anaheim, Calif., 323-782-2216, www.motortrendautoshows.com Oct. 2-5 — San Antonio Auto & Truck Show, Henry B. Gonzalez Convention Center, San Antonio, 210-732-9647, www.saautodealers.com Oct. 4-19 — Paris International Motor Show (press days: Oct. 2 and 3), ParisExpo – Porte de Versailles, Paris, 33-1-56-88-2240, www.mondial-automobile.com Oct. 10-12 — Northwood University International Auto Show, Northwood University, Midland, Mich., 989-837-4823, www.northwood.edu/mi/studentlife/ autoshow Oct. 16-19 — Long Island Auto Show, Nassau Veterans Memorial Coliseum, Uniondale, N.Y., 717-671-4300, www.autoexpo.com Oct. 30-Nov. 9 — Sao Paulo International Motor Show, Anhembi Park Exhibitions Pavilion, Sao Paulo, Brazil, 55-11-3060-5011, www.salaodoautomovel.com.br Oct. 31-Nov. 2 — Central California Auto Show, Fresno Convention and Entertainment Center, Fresno, Calif., 323-782-2216, www.motortrendautoshows.com Nov. 5-9 — Seattle International Auto Show, Qwest Field Event Ford unveiled the redesigned Mondeo at the last Paris auto show in 2006. The Paris show, which alternates years with the Frankfurt motor show, opens this week. Press days are Thursday and Friday, Oct. 2 and 3. Center, Seattle, 206-542-3551, www.seattleautoshow.com GENERAL Oct. 7-9 — SAE International Powertrains, Fuels & Lubricants Meeting, Society of Automotive Engineers, Donald E. Stephens Convention Center, Rosemont, Ill., 877-606-7323, www.sae.org Oct. 12-15 — Brake Colloquium and Exhibition, Society of Automotive Engineers, Grand Hyatt, San Antonio, 724-776-4841, www.sae.org Oct. 13-16 — SCMLogistics World, Raffles City Convention Centre, Singapore, +65 6322 2757, www.terrapinn.com/2008/scmlog Oct. 14-15 — Global Powertrain Congress, Gleacher Center, University of Chicago, Chicago, 734-944-5850, www.gpc-icpem.org Oct. 14-16 — Rubber Mini Expo & Technical Meeting, Kentucky International Convention Center, Louisville, Ky., 330-972-7814, www.rubber.org Oct. 15-17 — Fleet Management Seminar, National Association of Fleet Administrators, Hilton New Orleans Riverside, New Orleans, 609-720-0882, www.nafa.org Oct. 16 — The Growth of India and China: Harnessing the Fastest Expanding Automotive Markets in the World, Automotive World, One Birdcage Walk, London, +44 (0) 20 7878 1024, www.awbriefing.com/events Oct. 16-19 — Manufacturing in Mexico Summit, Offshore Group, Camino Real Hotel, Saltillo, Mexico, 520-889-0022, ext. 1251, www.offshoregroup.com Oct. 20-22 — Convergence, Society of Automotive Engineers, Cobo Center, Detroit, 724-776-4841, www.sae.org Oct. 21 — The Global Oil Paradox: Transforming the Automotive Industry, Automotive World, One Birdcage Walk, London, +44 (0) 20 7878 1024, www.awbriefing.com/events Oct. 28-30 — Onboard Diagnostics Symposium, Society of Automotive Engineers, Omni Severin Hotel, Indianapolis, 724-776-4841, www.sae.org Oct. 29-Nov. 2 — Auto+Automechanika St. Petersburg, Lenexpo Exhibition Centre, St. Petersburg, Russia, 7 495-721-1057, www.automechanika.com Nov. 3-5 — Light-Duty Diesel Emissions Control Symposium, Society of Automotive Engineers, Marriott Ann Arbor Ypsilanti, Ann Arbor, 724-772-7115, www.sae.org Nov. 4-6 — Automotive Aftermarket Products Expo, Sands Expo Center, Las Vegas, 708-226-1300, www.aapexshow.com LOANS If firms fail to repay, taxpayers pony up continued from Page 8 economist with the Mackinac Center for Public Policy, a free-market think tank in Michigan. More probably, Littman says, “there is no recourse” for taxpayers if a company fails. The auto loans are to be made by a small, little-known office of the U.S. Department of Treasury, the Federal Financing Bank. The bank’s CFO, Gary Burner, declined to comment last week. A July statement said the bank’s holdings of obligations total about $30 billion. Bleak outlook Bruce Clark, senior vice president of Mood http://www.Chaebul.com http://www.Chaebul.com?s http://www.sae.org http://www.bigtex.com http://www.awbriefing.com/events http://www.motortrendautoshows.com http://www.sae.org http://www.saautodealers.com http://www.automechanika.com http://www.mondial-automobile.com http://www.seattleautoshow.com http://www.sae.org http://www.northwood.edu/mi/studentlife/ http://www.rubber.org http://www.aapexshow.com http://www.autonews.com http://www.autoexpo.com http://www.sae.org http://www.nafa.org http://www.sae.org http://www.salaodoautomovel.com.br http://www.autonews.com/ http://www.awbriefing.com/events http://www.terrapinn.com/2008/scmlog http://www.motortrendautoshows.com http://www.gpc-icpem.org http://www.offshoregroup.com
Table of Contents Feed for the Digital Edition of Automotive News - September 29, 2008 GM, Ford and Chrysler place new-product bets Credit freeze could mean cash crisis Mr. Big Volume reaches the end of the line Korea's revolving door Mazda quits Ford Credit for Chase Mitsubishi, UAW reach tentative agreement Volt could break feds' 100 mpg ceiling Chase cuts back on auto leasing Target for Traverse: No. 1 in large crossovers BMW's new 7 series: Timing may be all wrong Tucson revisited Can Ford light fire under Fiesta? Lithia puts brakes on used-car stores Revived Mercury will focus on 3 segments VW taps 'zealots' to promote diesels Farley, Leuliette will kick off World Congress The new Soul (and nose) of Kia Hyundai: Drivetrain key to more mpg Taxpayers at risk if firms get fed loans - then fail GM plans high-tech small engines for Volt and Cruze Buick looks upscale Denso says U.S. woes will cut its profits Denso: No plans to make hybrid parts in U.S. Bailouts are a bad idea Chic small cars? Check them out at the Paris show Credit's no problem, but a weak brand is Helping dealers helped GM Ford field rep didn't help at all Who knew? Electric cars are fun to drive Where is the power going to come from? Hyundai shifts its U.S. ad agency Hyundai, Kia mold separate identities Behind on hybrids, Hyundai sets high goals Dealers Flashes of genius, years of turmoil No cop-out; car designed for police use PICTURE THIS: A trip to the bank RV sales drop 31.9% in June Mexico sales off 4.8% in Aug., 1.2% for 8 mos. Suzuki to aim pickup at motorcycle owners Experts: Learn Korean hierarchies Readers' comments on Bill Heard's collapse Bill Ford sells some Ford stock CarMax net income falls ArvinMeritor raises forecast Toyota plans CNG concept Chrysler cuts 250-300 salaried workers Minority supplier drops stamping business Will Cerberus buy up Chrysler to wave bye-bye? Rioters kill supplier exec in India No pickup seen for pickups Piech's ploy was masterstroke in war with Porsche Honda's highway groove music: It sounded better on vinyl St. Louis dealer to paper that outsourced typesetters: 'Deal me out' Automotive News - September 29, 2008 Automotive News - September 29, 2008 - (Page Intro) Automotive News - September 29, 2008 - (Page Bellyband1) Automotive News - September 29, 2008 - (Page Bellyband2) Automotive News - September 29, 2008 - Mr. Big Volume reaches the end of the line (Page 1) Automotive News - September 29, 2008 - Mr. Big Volume reaches the end of the line (Page 2) Automotive News - September 29, 2008 - Volt could break feds' 100 mpg ceiling (Page 3) Automotive News - September 29, 2008 - Tucson revisited (Page 4) Automotive News - September 29, 2008 - Tucson revisited (Page 5) Automotive News - September 29, 2008 - The new Soul (and nose) of Kia (Page 6) Automotive News - September 29, 2008 - The new Soul (and nose) of Kia (Page 7) Automotive News - September 29, 2008 - Buick looks upscale (Page 8) Automotive News - September 29, 2008 - Buick looks upscale (Page G1) Automotive News - September 29, 2008 - Buick looks upscale (Page G2) Automotive News - September 29, 2008 - Buick looks upscale (Page G3) Automotive News - September 29, 2008 - Buick looks upscale (Page G4) Automotive News - September 29, 2008 - Buick looks upscale (Page G5) Automotive News - September 29, 2008 - Buick looks upscale (Page G6) Automotive News - September 29, 2008 - Buick looks upscale (Page G7) Automotive News - September 29, 2008 - Buick looks upscale (Page G8) Automotive News - September 29, 2008 - Buick looks upscale (Page G9) Automotive News - September 29, 2008 - Buick looks upscale (Page G10) Automotive News - September 29, 2008 - Buick looks upscale (Page G11) Automotive News - September 29, 2008 - Buick looks upscale (Page G12) Automotive News - September 29, 2008 - Flashes of genius, years of turmoil (Page 9) Automotive News - September 29, 2008 - Denso says U.S. woes will cut its profits (Page 10) Automotive News - September 29, 2008 - Denso says U.S. woes will cut its profits (Page 11) Automotive News - September 29, 2008 - Ford field rep didn't help at all (Page 12) Automotive News - September 29, 2008 - Ford field rep didn't help at all (Page 13) Automotive News - September 29, 2008 - Where is the power going to come from? (Page 14) Automotive News - September 29, 2008 - Where is the power going to come from? (Page 15) Automotive News - September 29, 2008 - Hyundai, Kia mold separate identities (Page 16) Automotive News - September 29, 2008 - Hyundai, Kia mold separate identities (Page 17) Automotive News - September 29, 2008 - Behind on hybrids, Hyundai sets high goals (Page 18) Automotive News - September 29, 2008 - Behind on hybrids, Hyundai sets high goals (Page 19) Automotive News - September 29, 2008 - Dealers (Page 20) Automotive News - September 29, 2008 - Dealers (Page 21) Automotive News - September 29, 2008 - RV sales drop 31.9% in June (Page 22) Automotive News - September 29, 2008 - RV sales drop 31.9% in June (Page 23) Automotive News - September 29, 2008 - RV sales drop 31.9% in June (Page 24) Automotive News - September 29, 2008 - RV sales drop 31.9% in June (Page 25) Automotive News - September 29, 2008 - RV sales drop 31.9% in June (Page 26) Automotive News - September 29, 2008 - Mexico sales off 4.8% in Aug., 1.2% for 8 mos. (Page 27) Automotive News - September 29, 2008 - Suzuki to aim pickup at motorcycle owners (Page 28) Automotive News - September 29, 2008 - Experts: Learn Korean hierarchies (Page 29) Automotive News - September 29, 2008 - Readers' comments on Bill Heard's collapse (Page 30) Automotive News - September 29, 2008 - Chrysler cuts 250-300 salaried workers (Page 31) Automotive News - September 29, 2008 - Minority supplier drops stamping business (Page 32) Automotive News - September 29, 2008 - Minority supplier drops stamping business (Page 33) Automotive News - September 29, 2008 - St. Louis dealer to paper that outsourced typesetters: 'Deal me out' (Page 34) Automotive News - September 29, 2008 - St. Louis dealer to paper that outsourced typesetters: 'Deal me out' (Page 35) Automotive News - September 29, 2008 - St. Louis dealer to paper that outsourced typesetters: 'Deal me out' (Page 36)
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