Insights into business in Korea

Insights into business in Korea

Totem Poles 500X500Totem polesNever mind the Chinese and Japanese, what’s it like doing business with the South Koreans? In some way, the inhabitants of South Korea are a bit of a mystery for Westerners.

For example, unlike other “Confucian” societies in Asia, they are not oblique and indirect in their manner. They look you straight in the eye and at first sight seem rather stern (see Chapter One of my new book Phoenix Rising: A Journey Through South Korea).

However, under that forbidding exterior, South Koreans tend to be warm, amusing, tolerant and respectful. Yes, they are a bit formal with their bowing and their honorary titles, but one look at Korean TV and movies and pop music – and Psy’s Gangnam Style – will tell you that they are far from conservative.

Their history of national suffering and survival has made them extremely straightforward and tough in their business dealings.

Developing local partnerships
Successful foreign companies in South Korea, including multinationals, know the importance of establishing a local presence in the Korean market rather than relying on distributors or trying to simply transpose their products and brands without tailoring them to the local culture, market needs and expectations. 

This means that personal relationships in Korea are highly valued both socially and in business. A well prepared MNC or SME or entrepreneur with a good guide at their side can achieve dynamic revenue growth by establishing a local presence in South Korea and tailoring their brands to the individual Korean segments and markets. 

This process of “glocalization” – localizing global operations based on a country’s specific culture – is two-way. Some of the larger South Korean companies, particularly those operating overseas, are adopting the Western style of doing business: becoming less “Confucian” in hierarchy, using Western position titles, offering an increasing role to women, recruiting more foreign industry experts.

Business Korean Style 
However, in order to achieve success in the South Korean market, foreigb companies need to develop Korean interpersonal skills and accept that Korean business decisions are not ultimately based on contracts and documents but rather on the relationships they have developed with their Korean counterparts. 

For this, they need to know the business and social culture of Korea, its history of invasions and survival, its religions and traditions. These are the “psychological driver” of Korea’s remarkable economic transformation from one of the poorest countries in the world in the 1960s to one of the richest and most dynamic now.

What are Korea’s major cultural traits? Oddly enough, modesty is a value that is highly revered and appreciated in Korean culture. Age and wisdom (the Confucian scholar tradition) are valued over hands-on experience. A well-coached foreign executive will recognise that cultural flexibility has to be shown in business dealings as well as business common sense. 

Many foreigners have come to Korea with the idea of changing the business culture and showing Koreans how business is done in the “real world”. However, South Koreans have their own way – Korean style – of conducting business and the well-informed foreign executive will adopt this in order to be successful in the Korean market.

The Korean Opportunity
What industries are booming in South Korea? There is strong growth in advanced technologies. Korea is leading the way in LED Display technology, automotive and energy producing industries.

DCPDavid Clive Price The South Korean government has offered financial support to Green Growth companies and the pharmaceutical, nanotechnology and biotechnology industries. A recent United Nations Global ICT – Information and Communication Technology report ranked South Korea No. 1 globally for progress in information technology and related industries.

The culture of innovation and start-ups is new to an economy based on large conglomerates – “chaebol” –  and state-supported industries. However, the government is very supportive of this new culture. South Korea is quickly becoming a global centre for IT, apps development, internet and mobile products etc. 

This innovative and entrepreneurial culture fits well with South Korea’s history of overcoming obstacles (including lack of money), resilience and relative openness to international ideas. South Korea is highly wired, with the highest broadband penetration in Asia; four out of five people have smart phones.

The consumer, retail, travel and hospitality industries are also rapidly advancing. Many retail and hospitality opportunities will arise from the awarding of the 2018 Winter Olympics to the city of PyeongChang. With a current economic output of more than US $1.13 trillion, Seoul is also emerging as a new financial hub for Northeast Asia. 

How to achieve win-win
The most successful foreign executives in Korea have the ability to communicate in Korean. More and more South Koreans are developing a high level of English communication skills, were educated overseas and have developed themselves as global citizens. However, speaking some Korean will clearly encourage better communication in leadership, business development and understanding the Korean style of business.

It is also vital to learn something about the culture. South Korea is rich in history and culture, produces great storytellers, and is at the cutting edge of Asian movies, TV drama, theatre, pop music, fashion and design. Knowing the culture will enable foreign companies to bridge the gap between their own background and embrace unique Korean social and business values.

Pansori and family life
A good example of these values is the historical form of storytelling called pansori. This form of sung narrative, usually by a woman holding a fan, is accompanied by a drummer and can last up to eight hours. More on pansori here

 The whole performance consists of highly emotional outpourings of romance, separation and survival stories. The keening, yearning tone and determination to overcome life’s challenges are very much part of the South Korean psyche – including their way of doing business.

And at the root of it all is the family. The family still dominates Korean social and business life. Many large South Korean conglomerates as well as SMEs are family-run and -owned. Sometimes several generations live together under the same roof or nearby. Koreans have an inbred respect for their elders and ancestors.

They also have a very strong work ethic, averaging almost 2,200 working hours annually, which is among the very highest work rates in OECD membership countries.

If you want to succeed in South Korea, you will have to work very hard, localize, find the right partners, learn some Korean culture and have some basic spoken Korean. You will also have to show patience and long-term commitment.

But it will all be worth it!

ASI Fellow David Clive Price helps companies, SMEs and entrepreneurs to build highly lucrative partnerships and target their brands in Asia markets through local cultural knowledge and competitive intelligence. You can follow him on Twitter @DavidClivePrice

  

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