Overcoming the legal and domestic political environment impacts on business
No matter how big the stakes are, or the pressure to win, winning right is everything.
Tell us a little about your background and yourself.
I have a background which you see more and more around you in Korea these days. My family emigrated to the US when I was a teen and I completed all my secondary and advanced studies in the US before I took a job in Korea. I also worked for a US defence company while in the States. Although I am an engineer by education and training, I also love history, international relations, music and literature. Learning and getting better understanding on different cultures, languages and collective behaviour of any nations or ethnicity always fascinate me. Apart from these sedentary elements, I also love golf as a sports, but also as a means to get my hands on with the equipment and skillset. That’s why I became interested in golf club fitting and now I have a Golf Fitter Association’s first class fitter license.
What made you decide to go in the aeronautics and astronautics fields?
I can tell you the exact place and the date when I realized my calling. It was in a TV room of my neighbour (my family did not have a TV then) and it was July 20, 1969, when I saw Apollo 11 landed on the moon. Neil Armstrong said that it was a giant step for a mankind, but it was indeed a special step that prompted a 7 year old boy into the world of airplanes and rockets. I have never faltered away from these worlds and that led me to study the filed in the universities and to all my professional careers in the US and in Korea with four different industrial concerns. It has been a wonderful journey as an engineer, program and strategic planner and most recently as a marketer.
Are there any ethical concerns that your type of business must deal with?
I do not believe the businesses I am in are any different from any others when it comes to the issue of the ethics. We deal with customers, suppliers, and various stakeholders in the country and around the world to convince we have the right products at right prices that fits the requirements of our customers. These processes involve many stakeholders with various different economic and financial motivations, and again, this should not be different from any other industries or commercial entities.
However, one thing is very clear. No matter how big the stakes are, or the pressure to win, winning right is everything. It is not because we are living in the world of FCPA, Serious Fraud Offices, or even the new Kim Youngran law here in Korea. But because it is the only way to win and to be in the business for a long time. Of course, the new laws and regulations with sharp watching eyes of various regulators around the world now creates more or less the level playing fields for everyone, but convincing ourselves and our customers that we only do the business the right way is our everyday effort and emphasis.
How big are the legal and political environments impacting your businesses in Korea?
One of the key elements of any country strategy is the PESTR analysis, which contains quite prominently the regulatory and political environment of the region affecting one’s businesses. Korea is bit more dramatic because of its geo-political presence with such neighbours as the North Korea, and in the middle of world’s new power politics between China, the US, and Japan. Thus, macroscopically, these geo-political elements and any associated economic and financial impacts certainly are important points to gauge the rational why we are in Korea. One good example is of course the Defence businesses here in Korea. A big part of Rolls- Royce’s business here in Korea is with Defence customers. We have products in service at all military branches and significant portion of our US businesses is indeed in the Defence sector where such products are also in operation in Korea.
Microscopically, legal and domestic political environment also have impacts on our businesses here in Korea. The FTA with the US and EU have been such important elements to further boost trade with Korea and thus impacting our businesses. The Kim Young-Ran Act certainly created an environment where direct contact with the customers more adventurous. The political changes in the Blue House, or at the National Assembly, often impacts the changes in regulations with government’s acquisition policies or products of choice. But, in broader sense, our businesses in Korea is mostly with the industrial entities whether they being customers, partners, or suppliers, and the world’s economic winds are more relevant to us whether we are in Korea or anywhere else. The dramatic downturn of Korea’s shipbuilding industries has a direct impact to our Marine business, but this is due to the world’s ship and offshore equipment demand and has very little to do with Korean’s internal legal or political environments.
How do you see your industry going in the future? Are there many major changes to come?
Rolls-Royce has four distinctive business focuses; Civil aero engines, Defence aero engines, Marine equipment and systems, and Nuclear. More than 50% of our revenues and profits are coming from large Civil engines, such as the Trent engines for A350XWB and B787 Dreamliner. Therefore, as you can imagine, the most important barometer of our industry’s fortune is the demand of the air traffic and thus new airplanes. This is especially pertinent to the regions of rapid economic development such as China and India where near term new aircraft requirements are huge. Today’s airplanes with most advanced engines such as our Trent engines are 20 to 30% more fuel efficient than airplanes just over a decade ago. We therefore see that many major airlines around the world, both established ones and up and coming ones, will get new airplanes such as the B787 and Airbus A350 in a scale not seen since the birth of the jet age. Now for the market segment we are in, the large civil engines, Rolls- Royce is the leader of the two dominant players. With continuous new technology and product development, and with huge entry barriers for any new players around the block, Rolls-Royce is very well placed to lead the industry and to meet the growing demand of the market in the future. We have good business model, good products, and continuous investment into the technologies and products that will keep us in this trend for many years to come. We also make technologies of the fourth industrial revolution. Internet of Things, unmanned platforms, big data, additive manufacturing (3D printing) are all the usual suspects that we are making huge investment. Obviously, for further ahead, we have to look at quite different situations as well. One day the oil will become scarce and different fuel, thus different power systems, will be needed. Intelligent machines, drones, electric powered flights and ocean navigation will one day become necessary realities. Rolls-Royce is thus actively investing in technologies and products that would be required in such a future.
Anything you would like to tell us?
KBLA is becoming more prominent in Korean MNC and its expat communities. The data and indicators that it collects from various government and private organisations and distribute to KBLA subscribers/members are quite timely and poignant. I wish for the continuous success to the KBLA and good businesses and prospects for all its member companies and individuals.