Firm foothold for leap to Europe

November 1, 1996

Already 130 South Korean companies are operating in Britain and there are more to come. Elaine Carlton reports on how universities have greeted the newcomers. British universities expect significant developments to follow last month's announcement by South Korean conglomerate Hyundai that it plans to invest Pounds 2.4 billion building a new plant in central Scotland before 1998. They know that the arrival of this silicon chip producer, just like those before it, will create graduate jobs and bring cash for research.

The arrival of leading Japanese firms over the past ten years has clearly shown universities they have plenty to gain from developing foreign partnerships.

It is not only the communities surrounding the new factories that will thrive because of the huge investment. Universities could also be beneficiaries in a financial sense. But these partnerships do not come easily. The engineering school at the University of Sunderland has spent years working on its relationship with Japanese car giant Nissan, which came to Britain a decade ago. The university strove hard to build mutual understanding and trust.

Dennis Wilcock, head of the school, says it has taken a long time to reach this level: "Nissan has been here since 1986 and our working relationship with the company has been established over four or five years. The Japanese like to get familiar with their suppliers and find out whether they can work together."

Today there are very wildly different Nissan research projects being carried out at the university. Researchers at the engineering school are looking into ways in which Nissan employees can be involved in designing their own work space. Others are examining ways to improve Nissan's cars for disabled people.

Sunderland's success with Nissan has encouraged it to try to make headway with other Southeast Asian companies. It has contacted Samsung, the Korean electronics conglomerate, in a bid to get to know the company.

"We've asked Samsung's advice about where it sees the production process going. We've tried to get them involved and show them we have mutual interests."

Samsung, which makes televisions and microwaves in Britain, is one of the first of a wave of Korean companies following the Japanese into the UK to get a foothold in Europe.

Brian Hood, professor of business policy at the University of Strathclyde, says there is strong evidence that the cash they invest is benefiting universities, particularly in providing graduate jobs.

"In the initial stages of investment, graduate recruitment may be low volume, but as soon as the value-added work starts, the company will employ many graduates," Professor Hood says.

Once the company becomes interested in a given university's graduates, then it takes an interest in their degree courses. It will often pay to develop and set up a new course, he suggests.

At the University of Sunderland, Nissan worked with engineering professors to create a BEng in automotive design and manufacturing. A Nissan spokesman says: "The university needs Nissan to take on graduates and we need an abundance of graduates with particular skills, so it is important that graduates learn the skills."

Samsung, which already has links with Durham University business school and Newcastle University, is keen to strengthen its university links. The company set up its first factory in Britain nine years ago. Last year it unveiled plans to splash out more than Pounds 450 million before 2000 to set up a new site at Wynyard, just outside Newcastle.

So far Samsung has spent more than Pounds 20,000 sponsoring students at Newcastle's department of electronics. It is currently sponsoring one undergraduate's term of study at Newcastle. By the end of this year, however, it plans to sponsor one student's postgraduate study and is now searching for a further postgraduate student for its international scholarship which will involve a period in Korea.

Samsung feels it has already made considerable efforts to link up with the universities, but for the institutions it is a painfully slow process. "The site at Wynyard has only been open a year and we already have links with the universities in the Northeast," says a spokesman for Samsung. "We will build on those links with universities who can come up with programmes of mutual benefit."

At the new site Samsung is close to completing a 200-seat auditorium where, it hopes, local universities will send lecturers to teach extra courses, including computing and electronics to its staff and their families.

Reinhard Drifte, professor of Japanese politics at Newcastle University, called on the Korean firms to help him introduce Korean language teaching at the university's language centre in 1990. LG put up Pounds 20,000 but Samsung only donated Pounds 2,000 and INKEL (International Korean Electronics), which produces car radios, gave Pounds 1,000.

Not all universities have struck it lucky with Korean firms. Michael McDermott at the University of Strathclyde contacted Korean electronics company LG to try and secure funding for a research project on Korean investment in the European Union. His request was denied and he is now speaking to Korean headquarters.

There are already 130 Korean firms operating in Britain. The Northern Development Company helps foreign companies preparing to invest in the North of Britain.

"Foreign companies liaise with us and we introduce them to the local authorities, the Training and Enterprise Council," a spokesman said. "A company planning to invest may need to know if the area has enough engineers to carry out its projects, then we'll bring the university on board."

Dan Jones of Cardiff Business School has been working for five years for his university as an independent broker between foreign companies and their suppliers. Professor Jones has examined the way Southeast Asian firms relate to their suppliers and now teaches their methods to suppliers in Britain. He has created 35 supplier organisations for East Asian firms. He believes, however, that Japanese and Korean companies' attitudes to universities are very different from those of United States companies. "Going to Southeast Asian companies for money for research projects is not so easy because they are not used to it," he says. "Normally they are prepared to sponsor you to steer your best students in their direction, as they do in their country. They don't realise that isn't so easy over here."

Daewoo, the Korean car giant, set up in Britain last April. So far the company has no links with British universities but it is considering a move in this direction. Korean pharmaceutical group, Il Yang, is also believed to be looking at making a considerable investment in Britain in the near future.

But the focus is on Hyundai, which until now only had its sales and marketing team in Britain. "Our links with universities will start to spring out of our Dunfermline investment," says a spokesman for the company. Edinburgh, Heriot Watt, St Andrews and Stirling are the four universities closest to the new plant. "We'll be looking for technical, engineering-based universities with an interest in semi-conductors. We'll work with them and cajole them into laying on courses and developing study programmes that will benefit us," he says.

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