See BOLD below, from Forbes:
12/15/97 Forbes 208
1997 WL 16177900
Forbes
Copyright 1997 Forbes Inc.
Monday, December 15, 1997
International
Silicon missionary Even in a sick Korean economy you can make money going
against the grain. This fellow does it importing American technology.
BY Neil Weinberg
WHEN HIS 24-YEAR-OLD SON went swishing down an icy Korean ski slope
three years ago, Mahn-Jick Lim did what comes naturally and swished
after him. Bam! Lim injured the same ribs he'd broken on a Colorado
mountain a few months earlier.
"I like to do daring stuff," says Lim, now 59. A North Korean native
whose family moved to Seoul during the Japanese occupation and rode out
the Korean War there, Lim is no stranger to peril. But his riskiest feat
may have been to give up a comfy life as a researcher in New Jersey a
decade ago to set up a business in Seoul.
"My friends thought I was crazy," recounts Lim. "I had a very good
job. A good life. 'Why would you even think of leaving?' they'd ask."
It's not an easy life being a businessman in Seoul--not with the won
collapsing and the economy on the verge of recession--but Lim was not so
crazy. His family-owned firm, MJL Korea, netted $3.9 million on revenue
of $37 million last year from sales of U.S. software and hardware.
Despite the local turmoil, Lim expects sales to grow 22% this year, to
$45 million. He has succeeded by doing everything that's not supposed to
work in Korea--importing American products, luring top talent with
financial incentives and penetrating the chaebol (conglomerates).
MJL's stock-in-trade is things like Altera Corp.'s programmable logic
devices, Centigram Communications' voice, fax and E-mail forwarding
systems and Ascend Communications' wide area network switches (the
switches funnel data between Internet users and service providers' high-
speed communications lines). Household names these are not, but unlike
Korea's struggling makers of me-too products such as cars and memory
chips, Lim's firm sticks to things others can't easily copy. That often
means gaining exclusive Korean distribution rights and painstakingly
adapting the products to local language and software standards.
Consider Korea Telecom's nationwide Internet network. Lim's engineers
spent nine months working with Korea Telecom and Ascend to get the U.S.
firm's Internet switches to work with Korea's telephone protocols, which
are rather unlike the ones found in North America. When Korea Telecom
picked SsangYong Information & Communications as its main contractor,
MJL won $2.8 million in business installing Ascend switches.
The nine-year-old MJL could retire its $4.5 million in debt with less
than one year's earnings. Contrast it with the chaebol, which have
collapsed like dominoes recently after expanding recklessly and racking
up huge debts. So weak and overleveraged have been Korean corporations
that the shareholders' equity of many has been declining consistently
for years.
"Big Korean companies often fail by getting into businesses they don't
understand," says Lim. "From the outset I've made sure there's a synergy
among my products."
A chemical engineering graduate of Seoul National University, Korea's
Harvard, Lim earned a Ph.D. in engineering science at the University of
California, Berkeley, in 1967. Lim spent the next two decades at the
AT&T Engineering Research Center in Princeton, N.J. Since a lot of Lim's
work there involved developing and manufacturing new semiconductors, he
scoured U.S. startups for the latest technology.
"In the memory business, if you pick the wrong stepper [a device used
in chip-making], your company fails," says Lim. "I gained lots of
experience evaluating small companies' technologies and finances."
A rapid-fire talker whose father started a newspaper and a tiremaking
business, Lim had long wanted to work for himself. He figured his skills
would be in greatest demand in South Korea, with its pressing need for
leading-edge technology and its spotty record employing it (see box, p.
210).
In 1987 Korean firms were just beginning to compete with Americans and
Japanese in computers and other high-end electronics. Success meant
mastering new technologies. Lim approached Altera, an upstart in the
then-emerging field of programmable logic chips. These make it possible
to install custom programs into standard chips, rather than starting
from scratch at a huge cost.
Lim's enthusiasm won him exclusive Korean distribution rights for
Altera's product line. He quit AT&T, returned to Seoul and dipped into
savings to rent a small office. After a struggle he managed to lure one
new engineering graduate as a salesman. Within two weeks they'd landed a
$500,000 order.
That put MJL in the black its first quarter, but the sacrifices
weren't over: Lim discovered that if he was going to be a real player,
he'd have to give up his hard-won U.S. passport. He and the Korean-born
wife he had met while studying at Berkeley--Mija Kim Lim, also chief
financial officer at MJL--left their three grown children behind in the
U.S.
Hardest of all was attracting talented engineers in a country that
worships big firms. Until a few months ago stock options were illegal in
Korea. Drawing on his U.S. experience, Lim split MJL into four
departments and gave each sales targets and bonus-linked incentives.
MJL's top performer took home compensation of around $200,000 last year,
a princely sum in an economy with a per capita income of $10,000. Twenty
of Lim's 75 employees hold engineering graduate degrees. Says Lim: "I
tell employees, 'One of my objectives is for you to get rich.' "
To motivate Lim's employees to move its products, I-Cube, a small
supplier of chips used in data routers based in Campbell, Calif., has
taken incentives one step further. Explains Shrikant Sathe, I-Cube's
vice president for international market development: "We give MJL
employees stock options to get an unfair share of their available
bandwidth [attention]." It seems to be working. MJL's sales for I-Cube
should quadruple this year, to $130,000, about 5% of I-Cube's worldwide
total.
Lim is readying new products to help Korean firms cut costs and
improve efficiency. MJL will soon launch a Korean version of Scopus
Technologies' telephone customer care center software, which lets firms
respond more rapidly to caller inquiries, almost a foreign concept in a
land used to waiting. Lim figures Scopus could bring in as much as $2
million in new sales next year and at least double that in 1999.
Korea is also slow in making large corporate databases accessible to
workers. Two of Lim's partners, Prism Solutions and Business Objects,
are hot players in the data warehousing business.
Ultimately, Lim would like to go beyond customizing others' software
and put his own Korean-made products on the world market. "I saw many
[San Francisco] Bay Area startups become vastly successful," says Lim.
"It's important to prove the same can be done in Korea."
---- INDEX REFERENCES ----
COMPANY (TICKER): Altera Corp.; CENTIGRAM COMMUNICATIONS CORP.; Ascend Communications Inc. (ALTR CGRM ASND)
NEWS SUBJECT: High-Yield Issuers (HIY)
INDUSTRY: Semiconductors; Communications Technology; Telecommunications, All (SEM CMT TEL)
LAYOUT CODES: International (ITL)
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