South Korea

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DOING BUSINESS IN SOUTH KOREA

Since the Korean War, South Korea has become one of the world’s leading economies- a far cry from the impoverished nation it once was. This is despite the nation suffering a major economic crisis towards the end of the twentieth century remedied amongst other things by an IMF agreement and a governmental commitment to reform.

Forward-thinking governmental restructuring has resulted in the country scoring incredibly high on the World Bank’s scale measuring how easy it is to do business in different countries. Indeed, regulatory efficiency, market openness and the South Korean government’s willingness to embrace foreign investment make doing business in South Korea a wise choice.

There has never been a better time to consider doing business in South Korea as post-registration procedures that previously needed to be adhered to when setting up a business have now been abolished. South Korea is described as ‘mostly free’ by the Index of Economic Freedom and businesses old and new will face little hindrance from government interference.

However, bribery and corruption are still commonplace – with even the country’s President being impeached on corruption grounds – and start-ups can still struggle to secure subsidies. Low levels of worker productivity, an aging population and a strained relationship with neighbouring North Korea all present large-scale obstacles to doing business in South Korea.

On a more day-to-day basis, the fact that South Korea is extremely influenced by Confucian values and ethics (almost more so than any other business culture) can lead to misinterpretations especially by differing Western countries. Confucian values include admiring those that appear ‘honourable’, a virtue earned through loyalty, hard work, respect for authority, consensus decision-making and time and effort spent on relationship-building. Hence why “Make a friend first and client second” is a well-known illustrative Korean saying.

The extensive bank of knowledge and tips available on the World Business Culture website will help anyone looking to do business in South Korea become well-versed in the country’s business and economic systems. The website also offers advice to equip business professionals with the skills needed to maintain inwha (harmony among people of equal rank) and successfully navigate the South Korean communication paradox of being non-confrontational yet emotional, stemming from the concept hahn.

OVERVIEW

In little over half a century (since the end of Korean War), South Korea has managed to transform itself from a deeply impoverished nation to one of the world’s leading economies. It achieved this whilst at the same time restricting Direct Foreign Investment (FDI) and with a strongly interventionist government which dictated policy and goal-setting to local industry. Over the same period, it moved from being a follower of product development to a global leader of innovation. And this has massively improved the overall affluence of its citizens.

How did South Korea succeed where so many other countries have tried and failed? What does South Korea have which other countries lack? In a word, the answer is culture. South Korea is steeped in key Confucian attitudes which have enabled this economic miracle to occur. Confucianism extols the virtues of education; South Korea’s approach to education is universally lauded and endlessly studied. Confucianism places emphasis on frugality and loyalty; hard work and acceptance of temporary hardship, bringing their own rewards over time.

If you are thinking of doing business in South Korea (and you really should be), then one of the key elements of successful engagement with South Korean counterparts and potential partners must be linked to gaining a better understanding of South Korean business culture. If you don’t understand how companies are structured locally, how do you know who you should be speaking to? If you are not aware that South Korea is group-oriented in its approach, how can you understand the local decision-making process?

This country profile provides an overview of some of the key aspects of South Korean business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining
  • Top tips