South Korea is located at a cultural crossroads, where Western and Eastern customs and values intersect. And that can have a profound impact on how business is conducted there.
South Korea (officially known as the Republic of Korea) was established in 1948. Five years later, the armistice ending the Korean War instituted the demilitarized zone that marks the country’s border with North Korea. Over the next 62 years, the two countries took divergent economic paths. Communist North Korea has seen comparatively little economic growth and remains one of the world’s most isolated and secretive countries. The Democratic South, by contrast, has seen sprawling economic growth. South Korea is now the world’s 13th largest country by nominal GDP, and the capital, Seoul, is one of the world’s most important centers for business and finance.
Although South Korea’s business climate is decidedly Western, Eastern customs and traditions – particularly the principles of Confucianism – still factor heavily into Korean life, and Westerners conducting business in South Korea should be mindful of the Eastern influences that pervades its culture.
With that in mind, here are some things to remember about doing business in South Korea.
Respecting superiors
Respecting individuals who have seniority and authority is a major tenet of Confucian philosophy. Because of that, South Korean businesses tend to be very hierarchical, and younger or lower-ranking individuals defer to their elders and superiors in nearly all decisions. Do not expect to work with associates who are used to highly collaborative decision-making processes.
Breaking the ice
As in many Asian cultures, reserved behavior is expected among strangers and new acquaintances. Immediately developing warm, open relationships with new business associates is uncommon. Rather, close business relationships are the product of months – and sometimes years – of building trust.
Maintaining relationships
Once you’ve taken the time to build a trusting relationship with your Korean counterparts, your ongoing behavior will dictate whether you maintain that level of trust. Continue to invest the time and effort to solidify your business relationships. A misstep that comes across as self-serving or rude can set the relationship back.
Negotiating a deal
Because seniority and rank are so important, sending a lower-ranking representative to negotiate a deal with higher-ranking South Korean executives can be perceived as disrespectful. The delegation you send to negotiate should be of equal rank with the delegation sitting across the table.
Managing people
When managing a Korean workforce, you are expected to take an active role in the well-being of your staff – including their personal lives. The relationship between employer and employee is not viewed as merely transactional – labor for money – but as one based on years of building and maintaining trust.
Dressing the part
Conservative business attire is still very much the norm in South Korea – dark suits with shirt and tie for men, business suits or dresses for women. And dress appropriately for the season. The Korean Peninsula is located in the middle latitudes, with the accompanying shift in weather from summer to winter. In Seoul, located in the northwestern part of the country, the average high in January is in the mid-30s Fahrenheit, while the average high in July is in the mid-80s.
The role of women
As a conservative culture, women rarely occupy high-ranking roles in Korean businesses, and their opinions and input are rarely given more weight than that of a male counterpart – even a younger, less-experienced male counterpart. Because this can be a frustrating experience for women from Western cultures, it helps to make a contingency plan for this scenario before you arrive in South Korea.