Invest KOREA

People tend to want to forget their birthdays as they get older, but when it comes to the cutthroat world of international business, longevity is truly something to celebrate. So this year was an especially happy one for Otis Elevator Company, which marked its centenary in the Korean market. Since installing its first elevator in the country 100 years ago, the US-based, global "people-moving product" leader has steadily expanded its presence in Korea, a trend that culminated in its acquisition in 1999 of the elevator-related assets of local firm LG Industrial Systems.

While his firm has a lengthy local history, Otis Elevator Korea President & CEO Thomas Vining is a recent arrival to Korea, having held a number of management positions for Otis in North America and most recently serving as area director for Hong Kong and Taiwan. But even before his arrival the country and the firm's local operation had made a significant impression.

"Otis Korea has an excellent reputation within Otis globally," he said. "Not only for the dedication and hard work that Koreans are known for but for engineering expertise, for innovation, and for moving very quickly on a number of key global initiatives. My initial impressions of the Korea organization lived up to what I had expected."

As one of over 200 countries worldwide in which Otis operates, Korea is participating in a vast and storied tradition. The firm traces its roots back all the way back to the mid-1800s, when it was founded by Elisha Otis, the inventor of the safety elevator. It's since expanded to some 61,000 employees, the vast majority of which are based outside its home market. Revenues came in at just under $12 billion in 2009, again with 80 percent generated outside the United States. For an idea of how globally ubiquitous its products have become, and how long they've been around, consider that France's Eiffel Tower, Russia's Kremlin, the Washington Monument, the Royal Palace of Madrid and Dubai's Burj Kalifah, the tallest building in the world, all employ Otis elevators.

With some 3,500 employees and 20 branch offices, Otis's Korea business is sizeable even by the company's standards, spanning manufacturing facilities and sales and engineering operations. A significant focus for the firm here is, of course, marketing its solutions to Korean customers. The company is the local market leader and has a history of racking up high-profile contracts, including a $23 million deal in 2005 to supply 169 elevators, escalators, moving walkways and a monitoring system for the second phase of the much-lauded Incheon International Airport. More recently it has successfully bid to install elevators in the planned Seoul International Finance Center in Yeouido and the Northeast Asia Trade Tower in Songdo International City, the country's tallest skyscraper.

Vining sees strong potential for future growth locally despite a relatively sluggish construction sector. "Although the apartment segment is stagnant at best, there are still a lot of opportunities in other areas, and also in the service and modernization part of our business," he says.

But more than simply a market for Otis, Korea is proving to be a vital business base. The firm has put great effort into cultivating alliances with local companies, which has led to further projects overseas as Korean builders snatch up a growing share of the infrastructure market in promising markets like Africa and the Middle East.

"We've found that we can partner with Korean construction companies in the markets that have a lot of Korean activity ... they're comfortable with the technology, expertise and project management that we can offer," Vining explains.

The local contribution

Otis's Korea team is also playing a prominent role in some of the company's main development thrusts. These include a global "elite service" product that employs remote technologies to improve responsiveness to customer requests, allowing Otis to monitor and troubleshoot elevators from a distance and address service disruptions more quickly. "Otis Korea has actually been at the forefront of Otis Worldwide in implementing those solutions to our customers," Vining says.

With environmental issues occupying an increasingly prominent place on the construction and corporate agenda, green technology is another key focus for the firm. Its new Gen2 elevator systems employ innovations such as polyurethane belts, which allow the use of more energy efficient motors, and regenerative drives that can put power back into the electrical grid of a building as they run. "A significant amount of regenerative drive development was done here in Korea," Vining says. "Our engineering team is a big part of the global effort to develop our drive technology."

Vining has been impressed with Korea's business environment so far despite coming from Hong Kong, well known as a conducive platform for commerce and for its light regulatory touch. "Though there's less regulation in Hong Kong, I think that Korea has tried to overcome some of the obstacles by setting up organizations such as the Korea Trade-Investment Promotion Agency (KOTRA) and giving us opportunities to make sure that we can communicate with the government on our concerns," he says. "I take that as very positive message from the government on trying to welcome foreign businesses into Korea."

For companies looking to do business in Korea or win deals locally, Vining emphasizes the importance of teaming up with local firms.

"The cost (to your customers) is more than just the cost of your product -- it's also how smoothly you can install it (and) what solutions you can provide throughout the project," he explains. "We have very strong partnerships both on the new equipment and service sides of the business ... (clients) want to have confidence in a total solution and we can offer them that."

It is this ability to serve a truly global market -- products manufactured in Korea are currently exported to 75 countries -- while simultaneously cultivating local talents and relationships to which Vining attributes Otis's endurance and market leading position.

"To me that's been the success of Otis Elevator, our ability to act local within a market and have a local business that is well tied in to our customers, but at the same time being able to use global solutions, global processes, global procedures," he says. "We try to draw on the strengths of the local business to make us better worldwide."