Invest KOREA

Brad Buckwalter, President and General Manager for Johnson Controls Korea, shares his insight on Korea’s building industry and his experience doing business here.

Johnson Controls is a global diversified technology and multi industrial leader serving a wide range of customers in more than 150 countries. The company’s 105,000 employees create intelligent buildings, efficient energy solutions, integrated infrastructure and next generation transportation systems that work seamlessly together to deliver on the promise of smart cities and communities. More than 90 percent of the world’s tallest buildings are equipped with Johnson Controls’ intelligent building solutions, and one in three cars worldwide is powered by Johnson Controls’ batteries.

In Korea, Johnson Controls has 480 employees in eight offices across the country, with its head office located in Seoul. Brad Buckwalter, who has been working in Korea for more than 20 years, heads Johnson Controls Korea as President and General Manager. Prior to joining Johnson Controls Korea, he led Otis Elevator and ADT Korea as president. Buckwalter also serves as a board member of the Korea Foreign Company Association (FORCA), corporate advisory board of Solbridge University, advisory board’s chairman of the United Service Organization (USO) and is an active member of the Korea Asia Society, striving to contribute to domestic market development and to connect Korea’s market to the global market.

We sat down with Brad Buckwalter to hear more about Korea’s building industry and his experience doing business here.

What brought you to South Korea?

Actually, this is the third time I’ve been in Korea. I first came here as a freshman in college at a time when Korea was a developing country. I initially spent a year and a half learning the culture and language, and then later on, as I started my business career, it seemed like fate brought me here again. Then, I came here for the third time, where I’ve now been working entirely in the building industry for the last 25 years.

I can tell you that I’ve seen a total transformation in Korea and I feel like I’m a part of it. I also feel that I’ve influenced some of the change, and that’s what keeps me here.

Please tell us about Johnson Controls and its history.

Johnson Controls is a historic global company, founded in the U.S. in 1885. It was one of the first developers of electric room thermostats, and has been a leader in its industry for many decades.

Many of the big, sophisticated buildings in large cities around the world, let’s say, New York, Sydney, Hong Kong or Macau, for example, as well as many large and famous buildings here in Korea, use our products and solutions in one way or another.

It’s fun to work at this kind of a company which has been around for a long time, having a strong history, strong products, and motivated employees.

What made Johnson Controls establish a branch in Korea? What are the advantages of doing business here?

Korea’s one of the most important markets in Asia. If you look at the population or the economies in Asia, Japan, Korea and China are probably the top three. If you’re a global company, like Johnson Controls, you need a strong presence in Korea. Johnson Controls Korea was established right around the time of the Asian Financial Crisis, but had a strong business profile and continued to grow every year.

The construction market is one of the core sectors of Korea’s economy. Every year, there are new, sophisticated, modern buildings being built, and they require our products, so it’s a joy to work here. You’ll often see one-hundred story buildings that you don’t see as much of nowadays in places like the U.S. and Europe. There are top-notch buildings in Korea because they don’t want to build the best buildings in Asia, but the best in the world. So for me, as a building guy, with 25 years in the building market, it’s a really fun place to be. Some of the projects we’ve landed just within this year are some of the largest and most important in Asia.

How is Korea’s building industry different from that in other parts of the world?

Similar to other industries in Korea, there’s a lot of local competition possessing strong engineering and strong manufacturing capabilities.

In Korea’s heating/ventilation/air conditioning (HVAC) industry, 90 to 95 percent of the competitors have local engineering and manufacturing centers. They’re strong in research and development (R&D), and they spend a lot of money on new products. If you go to Hong Kong, Thailand, Singapore, or Sydney, most of the companies are importing products. But in Korea, most of the products are manufactured here. Just last month, I was at an exhibition held at KINTEX, and it had all of the top companies in this business sector, who all have their own factories in Korea.

What were some product development strategies that Johnson Controls carried out to target Korean customers?

Well, we want to have the best product line available for building owners or building users. Some companies will come in with a controls product, some companies will have HVAC products, some companies will offer a securities product, and the customer has to spend a lot of time buying these different components. At Johnson Controls, however, we feel we have the best product line-up under one company, and you just need to come to one window and we’ll take care of a large portion of the building needs—from fire prevention, firefighting equipment, security equipment, building controls, to HVAC. Having one company with a diverse line-up of products is rare and unique in the building industry.

For example, I used to work at Otis Elevator, where they sell just elevators; I used to work at ADT, where they sell just security equipment. We are a one-stop provider for best-in-class products, technologies and service capabilities across controls, fire, security, refrigeration and HVAC. We have so many different product lines that customers can come to us and we can handle everything at once. The common denominator is that all of our products are the leading products in the global industry. For example, if someone buys our HVAC product, it would come from York, a leading global brand with No. 1 in market share in the U.S. and in most major markets; a fire or security product would come from Tyco, one of the most famous security product brands in the world and in Korea.

We offer a wide range of products and integrate them to provide efficient and centralized control with a data-driven approach, and ultimately realize an intelligent building. We meet all of the customer’s needs, so that he/she doesn’t need to worry about working with many different companies separately; this is one unique quality that makes us easy to do business with.

Were there any challenges your firm faced while doing business in Korea?

When Koreans build buildings, they always aim to build top-class, world-class buildings. There are a lot of strong competitors here, so we always have to compete with those competitors in their home market.

I don’t know if there’s a country, anywhere in the world, where we have so many strong local competitors. If you go to Hong Kong, there are two or three foreign companies that are competing in HVAC, whereas in Korea, we have a hundred local competitors, so it’s an ultra-competitive market, meaning that you better have differentiation in your products to compete. And while we’re not the cheapest, we feel very strongly that we not only offer best-in-class products but also connect them for enhanced control and optimization.

How can Korea become a more ideal business environment for foreign companies like Johnson Controls?

It would be beneficial for Korea to become a bit more import friendly, since importing products usually takes a lot of time and requires a lot of certifications. So, if you manufacture in Korea, there’s definitely a big advantage.

We do manufacture in Korea through our factory, and although not all of our product lines are manufactured in Korea, the ones we do manufacture here, we have a higher market share of. There’s a direct correlation between our market share and the percent content we manufacture in Korea.

What Korean companies or government agencies do you work with to strengthen your business partnerships?

During the time I’ve been here, I’ve kept a strong relationship with KOTRA, because it’s difficult to maintain a personal relationship with all the government bodies individually. As a foreign investor and a foreign company in Korea, having a close relationship with the agency and knowing the Foreign Investment Ombudsman is helpful because they can help resolve any difficulties that may arise.

Also, I try to stay active in the chambers of commerce here, including the American Chamber of Commerce (AMCHAM) and FORCA. When there is an industry-wide, and not necessarily a company-specific issue, you can discuss it with one of the business chambers here.

Our fire business is one of the leading businesses in Korea, so we have a long-standing relationship with the fire department. We also try to have close relationships with the government bodies that deal with safety related issues, and I’m personally very involved in and put a lot of my time towards activities like seminars and lectures held by such institutions to contribute from our business aspects.

What are some future plans that Johnson Controls has when it comes to doing business in Korea and in Asia?

We want to grow as rapidly as possible. We believe in the Korean market; it’s one of the strongest building markets in Asia, and in the world in terms of new buildings. It’s my goal and the company’s goal to grow the revenue and profile of this business as much as possible. I think that’s the common goal for Johnson Controls in Asia as well.

We want to be the top, most well-known company in the world for buildings. I don’t think we’re there yet, and there are lots of strong competitors in the building industry, which are companies and competition I respect, but I will say, that we have a very bright future, and are in a unique and competitive position where we have so many global, diverse products and integrated solutions. Ultimately, we want to continue to strengthen the market presence of all our products and solutions.

What is Johnson Controls doing to rise above the competition in the Korean building industry?

I’d be proud to say that in addition to our wide-range offerings, we offer strong product quality. Some local competitors may have products with lower price tags, but when considering the life of the building, our products will work well through and through, give no trouble to the owners, and increase the value of the building.

We also have a strong maintenance and service network. We don’t just sell products, but when there’s a product in a building with our name on it, we put our reputation on it and on how well that equipment works. We take pride in ensuring that no issues happen with any of our equipment, as Johnson Controls products are designed to last beyond the lifetime of the building.

By Grace Park (gracepark@kotra.or.kr)
Executive Consultant
Investment Public Relations Team / Invest Korea
Korea Trade-Investment Promotion Agency (KOTRA)