The South Korean Opportunity: Doing Business Korean Style

The South Korean Opportunity: Doing Business Korean Style – Asia Scotland

By David Clive Price, Asia Scotland Institute, June 15, 2016

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.

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 television 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.

PANSORI AND FAMILY LIFE

One of the best examples of this aspect of their psyche 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.

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 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 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.

DEVELOPING LOCAL PARTNERSHIPS

Successful foreign companies in 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 to South Korea 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 multinational or SME or entrepreneur with a good guide at their side can achieve dynamic revenue growth by establishing a local presence in Korea, cultivating local partnerships 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 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, and recruiting more foreign industry experts.

BUSINESS KOREAN STYLE

However, in order to achieve success in the Korean market, Western 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 drivers 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 South Korea’s major cultural traits? 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 Western executive will recognise that cultural flexibility has to be shown in business dealings as well as business common sense.

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

THE SOUTH KOREAN OPPORTUNITY

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

The Korean government has offered financial support to Green Growth companies and the pharmaceutical, nanotechnology and biotechnology industries. A recent UN Global 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 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 technology.

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

The consumer, retail, travel and hospitality industries are also rapidly advancing. Due to the buying power and social network of Koreans, many foreign companies believe that if their product is successful in Korea it will be successful anywhere else in the world. 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 over $1.130 trillion USD, Seoul is emerging as the new financial hub for Northeast Asia. This project is aimed at attracting foreign investors to form a cluster of financial services at the Seoul International Financial Center (Seoul IFC), completed in 2012.

HOW TO ACHIEVE WIN-WIN IN KOREAN BUSINESS

The most successful foreign executives and entrepreneurs in Korea have the ability to communicate in Korean. Speaking some Korean will clearly encourage better communication in leadership, business development and understanding the Korean style of business.

An increasing number of Koreans are developing English communication skills, have been educated overseas and see themselves as global citizens. However, they are unlikely to have attained perfect English communication skills. Learning basic or intermediate Korean will encourage the necessary sensitivity and flexibility to develop a Korean team and business relationships.

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.

If you are willing to invest in developing your cultural intelligence for the South Korean market, the rewards in terms of profitability, competitiveness, innovation and creativity are likely to be immense.

Ref. By David Clive Price, Asia Scotland Institute, June 15, 2016

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