Korean Culture and Business Relations: A Practical Guide

Introduction

Today, the "Land of the Morning Calm" is anything but calm. South Korea is booming economically, and the southern half of the divided peninsula has emerged from the devastation of the 20th century to become one of the so-called "Asian tigers" dominating the global economy. Despite the tensions that exist between the two Korean states, South Korea enjoys favorable relations with many of its neighbors as well as the international community, and an increasing number of transnational corporations are seeking to establish strategic alliances with South Korean companies. Although the Korean people are generous and friendly and foreigners can expect to be warmly received, there are some important cultural practices that must be observed in order to establish and sustain effective business relations in the country. This paper reviews the relevant literature to identify the cultural practices that affect business relations in South Korea.

By any measure, the Korean people have witnessed their fair share of strife and violence over the years, and these experiences have manifested themselves in the country's culture. According to Austin (2007), "The business culture of Korea is a fascinating subject. It is representative of North Asian culture norms but has also been forged and tempered over the fiery anvil of the country's history" (p. 7). Although the Korean people can trace their ancestry back thousands of years—during which they contended with one invader after another—modern South Koreans have been primarily preoccupied with their nuclear neighbor to the north. In this regard, Villegas (2006) reports that "Korea was born on the frontlines of the Cold War and throughout its existence has conducted its domestic politics within the looming shadow of a reclusive and potentially dangerous North Korea" (p. 37). Traditional Korean culture therefore has a powerful influence on Korean businesses, and as a result of the country's subjugation by Japan during the early 20th century, a strong desire to win has become evident among many Korean businesspeople today (Austin, 2007). This drive has been translated into the highest rate of export growth among the top 20 exporting nations of the world and the third strongest economy after Japan and China (Lee, 2005).

Notwithstanding this strong desire to win and achieve, the pace of business itself is somewhat slower than in the West, and foreigners should be prepared to invest the time and effort needed to forge lasting relationships with their Korean business contacts before enjoying significant levels of success. Austin emphasizes that "strong relationships are fundamental for business success in Korea. Building such bonds takes time and cannot be achieved in a single visit; you must be prepared to invest in the relationship to make it work" (2007, p. 8).

South Korean Business Culture and Historical Context

The South Korean people have also been highly influenced by the forces of globalization, especially in the country's major metropolitan areas. According to Austin, "The young are embracing the fads of the youth pop culture, which is a phenomenon across the region. Attitudes are changing, but traditions remain strong. They are in fact influencing the new" (2007, p. 8). Even though the pace of business and the formation of relationships may require more time than in the West, South Koreans can be differentiated from their Japanese counterparts by a sense of pragmatism. As Austin notes, "Koreans see themselves as being very direct people and they often contrast their approach to that of the 'polite' Japanese. Due to the importance attached to relationships, it is more often the dinner, drinks, and karaoke following the business meeting that seals the deal" (2007, p. 8). Like their Japanese counterparts, however, South Koreans place a high value on education. Austin adds that "for Koreans, education is fundamentally important. Koreans value being number one and therefore the institutions they support must also be top performers" (2007, p. 8).

To better understand how cultural differences affect business negotiations and transnational operations, it is useful to compare South Korea's national culture with that of the United States using Hofstede's cultural dimensions framework. The five dimensions examined are: Power Distance Index (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance Index (UAI), and Long-Term Orientation (LTO) (Hofstede, 2010).

South Korea and the United States have several stark differences in their cultural profiles, particularly in individualism and long-term orientation. Cultures such as South Korea's that score high on long-term orientation are characterized by patience, perseverance, respect for elders and ancestors, and a sense of obedience and duty toward the larger good (Newman & Nollen, 1999). The long-term orientation dimension encompasses values such as persistence, ordering of relationships by status, frugality, and a sense of shame (Jackson, 2004). The short-term aspects of this dimension include personal steadiness and stability, protecting individual "face," demonstrating respect for tradition, and the reciprocity of gifts, favors, and greetings (Jackson, 2004).

Based on these cross-cultural differences, Lee (2005) offers a set of important recommendations for Western managers seeking to establish business contacts in South Korea. The most salient of these are summarized below:

1. Expect negotiation to take time.

2. Be familiar with Korean counterparts and the items under negotiation.

3. Have at least the same number of individuals as the Koreans on the negotiation team.

Hofstede's Cultural Dimensions: South Korea vs. the United States

4. Have flexible deadlines.

5. Be prepared for socializing. Entertaining is an integral part of doing business in Korea, and alcohol acts as a social lubricant in Korean society; it is considered essential for business dealings.

6. Understand that a contract is not always final. Be flexible, as agreements may be revisited.

7. Know the difference between a genuine "yes" and a face-saving "yes." Saying "no" directly results in loss of face and can damage relationships. It is common for Koreans to avoid saying "no" directly in order to protect both parties' dignity.

Conclusion

The research showed that South Korea has overcome the devastation of the Korean War, which ended in 1953, to emerge as one of the strongest economies in the world. The South Korean people achieved this remarkable rate of growth through perseverance, hard work, and a set of cultural values that place high importance on education, respect for authority, and loyalty. These same cultural values, however, can be the source of missteps and outright failures during business negotiations if they are not understood and respected by foreign partners. By following straightforward, expert-informed guidance on Korean business practices and cultural values, it is possible to forge strong and lasting relationships with Korean business contacts.