Business Culture in South Korea

Western firms should keep an open mind as the business culture is a mélange of the traditional and the international. It continues to evolve as South Korea integrates more into the global economy and demonstrates its formidable competitiveness and service orientation while rebalancing and placing attention on the quality of life.

History

Korea was divided into North and South Korea in 1945. The erratic and often openly hostile North Korean regime remains an ongoing source of stress and uncertainty for South Korea. Both nations have endured an immense amount of adversity since the war, and South Koreans have been significantly toughened by years of instability. The need for adaptability, tenacity and education have been ingrained into South Korean life. These contemporary attitudes have intermingled with older Asian traditions. The new cultural combination has worked in favor of the country’s development, seeing the nation rebound and thrive economically, and begin to heal psychologically.

The South Korean sense of national belonging and pride remains very strong and stems from some of the historical challenges which they have faced. The country is overwhelmingly ethnically homogeneous with over 96% of all South Koreans sharing the same Korean ethnicity. This common identity provides societal unity and supports the collectivist orientations of the culture.

The business environment is evolving rapidly, and norms and customs are changing quite quickly. Western companies will be impressed by the strong service orientation and the high degree of connectivity throughout the market. Western companies should note that the average per capital income is about 3 times that of China.

The sophistication and modernization in approach is breaking down some of the traditional customs and means that you need to do your homework relating to the culture of your specific counterparty. The ongoing pandemic has had an effect on Western companies and diplomats as it has been harder to meet and connect with South Korean executives and government officials. Also, the tradition of after-hours drinks among South Korean colleagues has also suffered because of the pandemic.

Confucian Values

Confucian values are still very evident in South Korean business culture. This way of thinking promotes the idea that relationships between people are unequal with defined hierarchical roles (for example, ruler and subject, husband and wife, father, and son). When this natural inequality is accepted and respected, it becomes easier to maintain harmonious, stable relations among individuals and, therefore, in the society.

The Confucian logic of obedience, responsibility and adherence translates into a variety of Korean behaviours and attitudes. One will notice that within South Korean society, interactions are tiered, requiring a level of deference and respect from one party – particularly in business. In the social hierarchy, one’s position, occupation and level of education is an indicator of status. However, age is often an overriding factor that determines the level of respect one should be shown.

Greetings

In South Korea these days it’s more common to shake hands when you meet someone for the first time. However, that hasn’t entirely taken the place of bowing, which might still take place before or during the handshake. It is noteworthy that South Korean bows are not as pronounced as in Japan. As a Westerner, you don’t need to worry about bowing for the most part. However, the gesture is always appreciated.

You should note that, it is not unusual for South Korean women to offer a bow instead of a handshake. For formal and business situations, the normal custom is for South Korean women to maintain a certain distance from men. Western businesswomen have the option of just bowing instead of shaking hands.

Gift Giving in South Korea

The culture of gift giving persists in South Korea, particularly for formal meetings and meetings between very senior people. Also, when traveling overseas, taking a gift for your host (and reciprocating) is not uncommon. For working level business meetings, gifts are rare. However, hosting meals is expected.

Giving small gifts is part of the process of building a business relationship in South Korea. Items from your home country or your region will be especially well received, as will items branded with your company logo. Note that often South Koreans will refuse the gift once or twice as a gesture of humility.

You should give and receive a gift with both hands. Gifts should be wrapped, and it is customary to wait until the giver is out of sight before opening them. Gifts should always be reciprocated at a similar level.

South Korea Business Ethics

On the Corruption Perception Index (2020), South Korea ranks 39th out of 180 countries. This perception suggest that the country’s public sector is moderately clean from corruption.

Western companies should always be mindful of transparency and ethical issues as they navigate in international markets and undertaking sound due diligence while drawing on a variety of sources to confirm information is recommended. Having said that, ethical issues will unlikely be overriding concerns in the South Korean market.

Dining and Entertainment

A great deal of relationship building takes place in bars and restaurants. Always accept dinner invitations as this is the Korean’s opportunity to assess your trustworthiness and whether they wish to conduct business with you.

Dinner is the largest meal of the day and normally occurs between 7pm and 9pm. While it is common in other countries to extend dinner invitations to spouses, this is not the case in South Korea; business entertaining tends to be reserved for the people directly involved.

It is customary for the host to order the food, which all arrives at the same time. Korean food can be extremely spicy but milder dishes are also available. Wait until the host invites you to start. Do not leave chopsticks sticking into the rice bowl – place them by the side of your place setting on the chopstick rests when not in use. Use only the right hand when passing food around the table. The host is expected to pay for the meal; nevertheless, a good-natured argument over who will pay is to be expected. It is also polite for the foreigner to offer a reciprocal dinner invitation.

Historically, appearance has been very important when conducting business and South Koreans have tended to dress more formally than in most Western countries. Business attire has been quite conservative, with an emphasis on conformity rather than individual expression. Men often wear dark-colored business suits with ties and white shirts. Women should also dress conservatively and in subdued colors. In recent years, there has been a gradual change in some local companies including in chaebols where the business culture has moved to a slightly more business casual approach. Westerners should do their homework and consult with local contacts to gain insight into the dress code of your counterpart’s organization and the nature of the meeting.

Business Cards in South Korea

You should go into your initial meetings with your business cards ready to be given to the person you are meeting. This often takes place immediately before or after shaking hands.

When presenting and receiving a business card from someone else, you should use both hands. Spend 30 seconds to look it over and read it carefully, even if you’re meeting several people. Each will wait their turn and appreciate the short time you take to give attention to the card on your hand.

It’s polite to make some comments on their position or some other piece of information on their business cards. Hold each card as you comment on it. Once you’re done reading it, put the card in front of you on the table.

The “Face” Concept

The concept of face is central in influencing South Korean behaviour and thinking. This is the quality embedded in most Asian cultures that indicates a person’s reputation, influence, dignity, and honour. In South Korea, the perceptual lens of face is taken especially seriously. It gained new importance during the hardships of the 20th century as people had to learn to control their rage and frustration under a mask of stoicism. However today, though great effort is still made to disguise one’s true feelings, many Koreans are now less concerned about appearing completely stoic and are sometimes unable to hide or control their temperament.

South Koreans often go to great lengths to disguise their social, financial, and academic status if they are in a ‘shameful’ situation (i.e., divorce, unemployment, poverty, bad grades). By complimenting a person, showing them respect or doing something to increase their self-esteem, you give them face.

Hierarchy

Hierarchy continues to be an important concept in South Korean business and most relationships are hierarchical. The individual in the “superior” position is treated with respect while the “junior” is subservient (sometimes to the point of rudeness by Western values). Age, position in the company, education, and marital status all determine one’s “rank” in society.

Westerners are often surprised that they are asked very specific and even personal questions when they first meet a South Korean. Your counterpart is trying to determine where you fit in the hierarchy. Your “rank” can have a major impact on who is willing to meet you and the nature of the dialogue. Titles are hierarchical rather than functional in South Korean companies. You need to do your homework and determine where your counterpart fits into his organization.

Language

Most Korean businesspeople in the major cities will have a good command of English but may still be nervous about using it. So, if you know a few Korean words, phrases and can express time and numbers in Korean, it can make a huge difference in how you are perceived. Demonstrating an interest in South Korean business culture and showing a desire to learn, will go a long way in putting your counterparts in South Korea at ease and you will be remembered. Don’t assume that people in general outside of the major cities will function in English.

Negotiations

As in some other Asian countries, cultivating relationships with South Korean counterparts is an important step as you move towards negotiations. You can expect that the negotiations will be less time efficient, and agenda driven than in Western countries. Negotiators should expect the need for closely monitoring agreements. Remember that in your South Korean counterpart’s eyes, contracts are treated more as living documents that reflect a relational commitment rather than hard and fast provisions.

It is important for Western companies to remember that the South Korean business environment is in a continual transition and has in fact changed quite rapidly in the past couple of decades. For example, some companies have introduced performance-based pay systems rather than the hobong system (which compensates age and seniority using different standards for men and women). Companies’ traditional paternalistic approach is also under pressure, and the loyalty structure of many firms is also changing. The practice of providing entertainment during business negotiations is also disappearing.

South Korean businesspeople are realizing some of the benefits of a more individualized and less collective society, especially when they can spend time with their family or friends after business hours instead of socializing among colleagues. Western negotiators should be mindful not only of traditions but also of transitions. As South Korean companies globalize, their negotiators may be more familiar and tolerant of differences in negotiating styles and approaches than in the past. More business leaders in South Korea have MBAs from Western universities and many are quite adaptable to Western approaches. You will want to do your homework on your counterpart prior to the negotiations and keep in mind that relying on cultural stereotypes is more perilous today than ever before.

Modern Values

Though Confucian and traditional values constitute the root of societal expectations, their influence is weakening in the age of technology. Younger generations are notably more Westernized and individualistic. Bolder communication patterns are also becoming more prevalent, as shyness is now considered less of a virtue and more of a limitation. Furthermore, the majority of young South Koreans reject the traditional notions of gender roles and consider all genders and sexual orientations equal.

Despite the influx of Westernized values into South Korean culture, the society is still more restrained and conservative than that of most Western countries. The country’s economic success has largely been fueled by its educational system that produces an incredibly diligent and competent workforce. Thus, society tends to put emphasis on the importance of one’s schooling. Perhaps because of this pressure and high standards, being busy throughout one’s life is strongly valued.

While being busy is the norm, it is also true that a “rebalancing” has been taking place with South Korean companies and employees focused not only on efficiencies but a more balanced lifestyle.

To better understand your own cultural values and how they compare to that of South Korea, we encourage you to inquire about the ICBI Cultural Self-Assessment.

Naming Conventions

Korean naming conventions arrange names with the family name followed by the personal name – For example, KIM Min Su (male) or LEE Hyori (female).

Be aware that Korean names written in the Roman alphabet have all been transcribed from the original Korean or Chinese characters. There are different ways to represent these characters in English, which can result in the same Korean name being written with many different spelling variations. For example, LEE may also be spelt RHEE, YI, LI, RI, LEIGH, REE, RHI or NI.

Many Koreans use a ‘westernised’ version of their original Korean name to adapt to international and English-speaking contexts.

This may involve reversing the arrangement of their given name and family name to suit English-Western naming conventions: For example, KIM Min Su may be known as Min Su KIM.

Many Koreans have an ‘English name’ that they use in international and English- speaking contexts. For example, LEE Hyori may be known as “Michelle”.

The most common family names in South Korea are Kim, Park, Lee, Choi, and Chung with around half of all South Koreans having one of these five names.

Relationships

As South Korean business culture is very competitive, the business relationships a South Korean maintains are very important to them. An introduction by a third-party is often very effective in establishing rapport and confidence early on. When mutual trust is established, South Koreans work hard to ensure the success of their partner and the collaboration. They tend to want to know a great deal about their partners. You may consider many of the details and questions asked to be irrelevant or unrelated to the point at hand but try to be patient and provide them with answers for the sake of the business relationship.

Business relationships often cross into the personal life; South Koreans appreciate developing relationships over meals and drinks and like to think of their business partners as friends. Businessmen often smoke cigarettes and drink alcohol together at the end of a day’s work. Your South Korean counterpart may exhibit an ability to consume a great deal of alcohol as a point of prowess, but do not feel pressured to keep up with their consumption. In fact, it pays off to be the more sober one as key business information is often disclosed at the end of drinking sessions.

If you want to excuse yourself from drinking, do so for religious or medical reasons as opposed to moral ones. Keep in mind though that excusing yourself from South Korean drinking culture means that it will be harder to develop the camaraderie and loyalty with your counterparts as they consider this to be strengthening the teamwork and partnership.

Women in Business

Although South Korean attitudes to women in business are changing slowly, it is still very rare for women to hold senior positions in South Korea. Consequently, the opportunity to work with a foreign company, with more enlightened attitudes toward equality, tends to be welcomed by many professional women in the country.

Interested in learning more about working with South Korea? Reach out to us here.