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Doing Business in Korea

At first glance, Korea appears to be "just like any other nation."  Its capital city, Seoul, is a modern, thriving metropolis with all of the latest technology the world has to offer.  All over Korea, you'll find first-class telecommunications, the requisite five-star hotels, Western restaurants, modern transport systems (including very efficient subway networks in Seoul and Busan), innovative architecture, and so forth. Nonetheless, it is still very Korean and it is imperative that any American doing business in Korea realizes that Seoul is not Los Angeles (even though the latter, in fact, has a sizeable Korean community).  Every year Korea becomes more and more modern, but it is important to recognize that modern does not equal Western.  Koreans will not expect you to be an expert on the nuances of their culture, but they will appreciate a show of interest in matters that are important to them.  Koreans generally appreciate a foreigner's effort in expressing a thank you (gam-sa-ham-ni-da) or a hello (an-yong-ha-say-yo) in the Korean language.

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Though Koreans have transitioned greatly into Western society, the traditional ways of thinking in many areas are still practiced.  Koreans have a great respect for the family and hierarchy.  Extended families (i.e., parents living with middle-aged married “children” and their grandchildren) are still commonplace, although this is rapidly changing.  Among the older generation, the father is the primary wage earner, while the mother stays at home.  Due to changing social mores and economic pressures, the necessity for families to have double incomes is rapidly growing in Korea.  Although fathers are the primary income earners, in the majority of cases, salaries are entrusted to their wives and most day-to-day consumption decisions are at the discretion of the female spouse.  US companies may wish to take into consideration these traditional family roles when marketing to Korean consumers.

Even though there are incremental changes in Korean attitudes and women are making progress, women professionals at the highest levels are still very rare.  In Korean companies, the majority of working women, many with top university degrees, are still relegated to secretarial jobs, accounting or educational work. Many qualified women welcome the opportunity to work as a professional with a foreign company whose attitudes toward gender equality and professional respect and responsibility prevail.

Koreans still have a great respect for anyone senior in age, and intuitively establish their hierarchical position relative to others based on age.  Indeed, one of the fundamental principles of the Korean language is based on the plethora of verb endings, which indicate the level of respect accorded to another person.  In addition, a man generally receives more respect in the business world than a woman, though foreign businesswomen (especially, non-Asian looking women) are accorded almost an equal amount of respect as foreign businessmen.  Single women generally receive less -respect than married women whose ties to their husband oftentimes establish their position in society.  The American businessperson, as a foreigner, is generally exempt from the above societal classification system, although one should be prepared to answer questions that Koreans may regard as common to establish societal hierarchy but which foreigners may regard as personal, such as questions about age and marital status.

Americans should be ready to mix business with social life as the Koreans base their business relationships on personal ones.  The heavy drinking of the Korean alcohol, Soju, beer, scotch, or other liquor is commonplace in establishing a personal, business relationship.  Also commonplace is the "no-rae-bang" where a group of businesspeople go to an establishment to drink and sing along to a video machine playing music.  As most no-rae-bang machines come equipped with songs in English, a businessperson may want to be prepared to sing at least one song in order to gain social favor with their Korean counterpart.  Although not as common as the no-rae-bang, businessmen should also be aware of “room salons” where Korean women serve food and drink to their patrons.

When doing business, Americans should be sensitive to Korea's historical relationship with Japan, which made a virtual colony of the Korean peninsula.  Because of the Japanese colonial period, Koreans have an emotionally intense reaction at times to things Japanese, though there is an admiration for Japanese business acumen.  A businessperson should show great respect towards Korean society.  Any comparative mention of Japan versus Korea, where Japan has the upper edge may harm a business deal.

Korea still observes Confucian ethics based on strong ties to a group.  Whereas an American may think in individual terms, (i.e., what is in my best interest?), a Korean frequently thinks in group terms, (i.e., what is in the best interests of the group and how can I help to maintain harmony within the group?)  For this reason, the majority of Koreans are intensely patriotic, calling Korea by the term, "oo-ri-na-ra", ("our" country).  In order to close a deal when negotiating, the benefits for the group, whether for the company or country, should be emphasized.

For Koreans, relationships are all important.  "Cold calls" don't work and introductions are crucial.  Koreans want to do business with people with whom they have formed a personal connection or whereby a mutual intermediary has made an introduction.  As alumni contacts are a major source of networking in Korea, a particularly well-connected Korean will have attended a prestigious Korean university such as Seoul National University, Yonsei University, Korea University or Ehwa Women’s University.

The exchange of business cards is very important and a means by which Koreans learn about the name, position and status of the other person.  Koreans observe a very strict hierarchical code whereby Koreans will generally meet to discuss business with persons of the same, parallel rank.  Businesspersons should always have their (preferably bilingual) business cards ready and should treat the exchange of a Korean counterpart's card with respect. (It is a sign of respect to receive and present items with both hands, followed in business etiquette by passing and receiving a card with the right hand.  One should never give a card, or anything else for that matter, with the left hand as it shows disrespect).  For historical reasons, Chinese characters, which Koreans can generally understand, are regarded as more sophisticated.  As such, a business card written in Chinese characters can serve for a business trip to Korea, China, and Japan.

Negotiating style is particularly important.  Koreans can prove subtle and effective negotiators, and a commitment to a rigid negotiating stance early on may work to the American's disadvantage.  Your offer may include the best price, technology and profit potential but still be turned down because the Korean customer does not like your style.

An important point to keep in mind concerns the nature of reaching an agreement with a Korean firm.  Westerners attach great importance to a written contract that specifies each detail of the business relationship.  Koreans, on the other hand, value a contract as a loosely structured consensus statement that broadly defines what has been negotiated, but leaves sufficient room to permit flexibility and adjustment.  The Korean Government has attempted to address this dual perception by formulating "model" contracts for licensing technology and other arrangements.  Both parties must be assured that the obligations spelled out in a negotiated contract are fully understood.

Most Koreans have three names.  These names usually follow the Chinese pattern of a surname followed by two given names.  In a Korean household, all brothers and sisters have the same last name and a common given name; the only distinguishing mark is the remaining given name.  In addressing Koreans, foreigners should observe the use of surnames (e.g., Mr. Kim; Ms. Lee), using formal titles if possible (e.g. Dr. Yoo; Director Song). The most common last names are Kim, Lee, and Park.  In the use of formal titles as appropriate, one should always be familiar with the complete name, including the two given names, for identification purposes, as there may be several Mr. Park's or Dr. Lee's in the same company and even the same work space.

See how the U.S. Commercial Service can help you sell your products in Korea by going to our services link.