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THE PACIFIC RIM

Patience Pays Off in Korean Deals

July 10, 1987|DONNA K. H. WALTERS | Times Staff Writer

It was 11 years ago, Dale Williams said, that he learned the secret of negotiating a sale to the South Koreans.

Williams, vice president and general manager of Far East operations of Rockwell's semiconductor products division in Newport Beach, was in Seoul for a one-day meeting with a buyer. He was supposed to leave on a late afternoon flight.

But the meeting dragged on, he remembered, and he was getting edgy. The negotiators were using a tactic that, by now, seemed all too familiar, Williams said. "They talk very slowly, covering the same ground you've been over and over. . . . On several occasions, I'm sure they have seen (my) fatigue and thought, 'Now is the time.' "

Williams realized that he would miss his flight and would have to stay in Korea that night. "At that point, all the adrenaline I had built up during this meeting was gone. I was very relaxed. I started talking slowly, repeating things. I even suggested having dinner that night. I had no deadline."

When you use their own tactics on them, he said, "they get bored with that, too. That tends to speed up the pace, and the deal, suddenly, closed that night."

Lessons Paid Off

For Williams, and Rockwell Semiconductor, the lessons learned that day and over the long course of the relationship are bearing fruit. Korean electronics companies have been on a buying binge during the past couple of years as they have accelerated their push into consumer and component electronics markets, and Rockwell has been one of the companies on the selling end.

Williams said Rockwell Semiconductor's sales to Korean firms, such as Samsung Electronics, have more than trebled in the past two years. "And I expect that part of the business will increase more than 40% a year through 1992," he said.

Such relationships--and numbers--are being touted this week as a delegation from South Korea's electronics industry winds up a two-week trade mission designed to highlight that country's increased purchases from U.S. companies. The group has visited Los Angeles, Chicago, New York and Washington.

The delegation members, under the auspices of the Electronics Industry Assn. of Korea, are toting a "shopping list" of $300 million worth of products they are buying or hope to buy from U.S. companies--and a passel of reasons for wanting to make sure that the United States is aware of their efforts.

$7.4-Billion Trade Surplus

Although the bulk of the recent trade frictions in the Pacific Rim has been between the United States and Japan, South Korea has also come in for its share of anxious looks from Congress and U.S. trade officials. Last year, South Korea had a $7.4-billion trade surplus with the United States even as it maintained restrictions on foreign products in many of its markets. In its U.S. sales spurt of consumer products--electronics and automobiles--it has been helped because the strength of the yen took a heavy toll on Japanese competitors.

The current electronics buying trip is a small part of a plan to purchase $2.6 billion worth of goods from U.S. companies this year in an attempt to lower the trade surplus to about $7 billion by year-end.

Like the United States, Korea has a trade deficit with Japan. K. S. Choi, leader of the delegation and president of the huge Goldstar Group, said the buying program will help reduce that deficit while averting protectionist measures by the United States.

Exar, a San Jose-based maker of specialized semiconductors, is another company whose products are on the Koreans' shopping list.

David K. Long, Exar's international sales manager, said his company has not seen a substantial increase this year of South Korean purchases from the levels of the past two years. But it sees promise in South Korea's move away from strong dependence on Japanese imports.

Exar is "looking at what products they get from Japan, and we may try to make those," Long said. Since Exar's majority owner is a Japanese company, Rohm, Exar might arrange to make products that Rohm currently supplies to the Koreans.

In the electronics industry in 1986, less than 17% of Korea's imports were from the United States and 43% came from Japan. Choi said that by the end of 1987, the electronics industry hopes to be making fully one-quarter of its purchases from the United States, reducing its spending in Japan to 34% or 35% of the total of about $5 billion. Eventually, it hopes to even those two figures out, to about 30% each.

Members of the Korean delegation said one difficulty in achieving this goal is that American companies often are not export-oriented and, even when they are price competitive, other aspects of a purchase, such as delivery time and financing arrangements, put the Americans at a disadvantage.

American companies, however, caution that such highly visible trade missions by the Koreans don't necessarily guarantee a favorable sale. First, they say, you have to get through the marathon negotiating sessions.

"The Koreans are the toughest negotiators," said David S. Perloff, president of Prometrix in Santa Clara, Calif. A $200,000 machine made by Prometrix, called a litho map, is on the trade mission's "shopping list." Perloff said the negotiations over the purchase of the litho map--which is used to measure performance of other machines in semiconductor manufacturing--had lasted months.

"They have a strategy. They know how to get the lowest prices, and they don't do it by jumping into town for a couple of weeks and placing orders," he said. One of the South Koreans' strategies is to open the negotiations by saying that they expect a 25% to 40% discount, Perloff added.

Said Rockwell's Williams: "Negotiating with the Koreans is never-ending. Like Japanese television serials, there's no beginning or end. . . . It's never over until it's over, and even then, it's never over."

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