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Strategies for Success in South Korea

As outlined by a former Canadian Ambassador to 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.

“A focus on relationships remain important and Western firms need to be mindful of the investment in time and money to develop and maintain these relationships including with the powerful chaebols. It all calls for doing one’s homework on your counterparties and drawing on local support in Seoul to effectively navigate in the evolving and highly competitive business environment.”

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.

Business Meetings

The best advice is to make appointments for meetings in advance, even a few weeks beforehand if possible. Meetings in South Korea are often scheduled in the mid-morning or mid-afternoon, without cutting into anyone’s lunchtime.

Be aware of the reality that if these meetings get canceled, it often happens with little or no advance notice. If it happens once, it’s probably insignificant as something unavoidable popped up.

However, if the same person repeatedly cancels on you, it could indicate that they’re not that interested in doing business with you. Or possibly that doing business with you must be postponed for some other reason.

To reduce the possibility of a misunderstanding during a meeting, you should send out written information beforehand. This will also demonstrate your commitment and your being well organized. When showing up, be punctual and prepare a small tasteful gift if it is the first meeting. South Koreans value punctuality so you should attempt to be on time or a little early. Keep in mind that if your meeting is in Seoul, you may run into heavy traffic or have challenges finding a taxi. Additionally, some of the buildings may not be easy to find, even for the taxi driver. Given that, you should make sure that you factor in a minimum 30 – minute time buffer.

Communications

While many South Koreans are comfortable communicating in English, many talented and capable South Koreans are not. You should be mindful to tailor your language to your audience and don’t assume they understand the flow of English. Speak in clear, basic English. Do not rely solely on verbal communications but reiterate your messages in writing.

You should also be mindful of the fact that cultural differences influence communications. Traditional South Korean culture favors harmony rather than confrontation often causing Westerners to understand silence as acceptance. Negative questions are understood differently and “yes/no” questions are often unreliable. You need to ask questions from several directions to verify that the message has been comprehended. Your counterpart is unlikely to request clarification even if understanding is not complete.

When making presentations, minimize words and maximize graphs, charts and visuals that can communicate across languages and cultures.

South Korea is a country where things can happen extremely quickly. Same day response is the norm. A week without communication can be interpreted as lack of interest and/or termination of a project.

Contracts

South Koreans prefer contracts to have some room for flexibility with room for adjustments. With this in mind, you may find that their preferred wording is vaguer than you may have expected.

From your South Korean’s perspective, the relationship between the companies is often viewed as more important than the contract itself. Be aware of this and communicate clearly with whomever you’ll be signing a contract with respect to your expectations and theirs.

Demeanor

As in other Asian cultures, South Korean businesspeople have a modest and humble demeanor and will relate best if you act in a similar way. You might not want to completely undersell your company, but it’s also best to keep your boasting about its achievements to a minimum.

This includes boasting too much about yourself, or even complimenting your South Korean associate too much. Of course, everyone enjoys a compliment or two thrown their way, especially when deserved. But too much will be viewed as insincere in South Korea.

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.

First Contact

In South Korea, it’s common to be introduced to a new business associate by someone else, as opposed to introducing yourself. This goes a long way in establishing your credibility and you can expect it to be an important door opener.

Of course, if there is no third-party, things can still work out. However, it does mean that you need to take special care in establishing your credentials and being memorable.

Geo-Political Sensitivities

South Korea and Japan dispute the territorial sovereignty of several islands in the sea between the two countries. These include the small islets called Dokdo in South Korea and are known as Takeshima in Japan. The two countries refer differently to the sea surrounding these islands. To maintain good business relationships with South Korean stakeholders, it is wise for you to use local and appropriately referenced versions of any geographical materials (such as maps that might be used in a presentation to a Korean audience). Not observing such delicate affairs can cause insult and may lead to business relationships fracturing.

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.

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.

Hierarchy in South Korea

It is important to be aware of how you fit in the social hierarchy that South Koreans observe. Discern who is superior to you based on age, position, and family name, and show respect to each person as necessary. If you do not adhere to these expectations and fail to give your counterpart the respect, they are due, you may lose face in their eyes.

Language

You should note that most South Korean businesspeople that you interact with 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 able to express time and numbers in Korean, it’s a great idea to use them. In my experience, if one demonstrates an interest in South Korean business culture and language, it will go a long way in setting the scene for further meetings and business.

Marketing in South Korea

Westerners should note that the marketing of products, particularly consumer products involve intense marketing through a range of channels. “Star” marketing where celebrities pitch products is common and the famous K- dramas are hugely popular. Trends come and go quickly, and international firms are well advised to work with local marketing agencies to get the pulse of the market. The South Korean market thrives on the concept that the consumer is always right, and the marketing is always intense to adapt to needs and capture that consumer.

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.

Public Holidays in South Korea

Dates of significance that you will want to be mindful of as you plan visits and conduct operations in the South Korean market include:

South Korea Independence Declaration Day (1st of March) Buddha’s Birthday (Varies each year)
Children’s Day (5th of May)
Parents’ Day (8th of May)
Korean New Year (Varies each year)
Memorial Day (6th of June)
Constitution Day (17th of July)
Liberation Day (15th of August)
Chuseok (Varies each year)
Armed Forces Day (1st of October)
National Foundation Day (3rd of October)
Anniversary of Proclamation of Korean Alphabet (9th of October) Christmas Day (25th of December)

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.

With Covid-19 and the continual evolution of the business environment, in some circles the time allocated to relationship building has
decreased. Some colleagues advise that even some of the local South Korean counterparts have cut some of their golf club memberships.

Saving Face

As in other Asian societies, maintaining face is central to the way business and social relationships work. Through their social etiquette and behavior, South Koreans aim to preserve a harmonious environment in which a person’s kibun (their mood or feelings) can remain balanced. The best way to handle kibun is not to demand yes or no answers and to accept the need for slow consensual decision-making. Contradicting someone openly, criticizing them in front of someone else or patronizing them are sure ways to lose business. It is more advisable to give sincere compliments, show respect or do something that raises self-esteem.

For the sake of saving face, South Koreans will seldom give a flat negative response to proposals you make, even when they do not agree with it. Therefore, focus on hints of hesitation and pay close attention to what they may imply. Double check your understanding by asking open- ended questions.

 

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