“Doing business” with Korea- Understanding Korean culture and how Korean companies “do business”

Objectives:1) Identify key cultural differences between U.S. and

Korean cultures;2) Identify differences in business perspectives between

cross cultures; and3) Identify key factors in “doing business”.

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Outline and overview:A. General Overview of South KoreaB. Overview of General Cultural Basics

I. The “Cultural” componentII. High Context v. Low Context Cultures (U.S. and Korea)III. Overview of Relationships (personal and business)

a. Class stratification: Traditional Social Structure b. Confucian Hierarchical Order c. Corporate Hierarchy/ Positions and Titles

IV. Korean Business Environment a. Factors that influence business relationships

b. Business and Entertainment c. Negotiating styles d. Decision making processes

V. Customer ServiceC. Legal Culture

I. Importance of contracts and rules in Korea and how Koreans perceive procedure and rules versus U.S.

D. CommunicationsI. The meaning of “Yes” and “No”

E. Dos and Don’tsF. Obtaining a visa for travel to Korea

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OVERVIEW OF KOREA

• National Flag: TaegeukgiSymbolism of “Eum” and “Yang” (Yin and Yang) philosophy.The circle represents positive (red) and negative forces (blue).The four trigrams located in each corner symbolizes one of the four universal elements: heaven, earth, sun (fire), and moon (water)• National Flower: Mugungwha (Hibiscus)• Language: Hangeul • Religion: Influenced by Shamanism, Buddhism (47%), Confucianism, and Christianity (49%).

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OVERVIEW OF KOREA

• Geography: The Korean Peninsula (divided into North and South/Republic of Korea) lies on the northeastern edge of the Asian Continent. Its bordering countries include China and Russia to the north and Japan to the southeast. • Population: The Republic of Korea has 48 million people (2003).• History: • Dawn of Statehood was the first kingdom, Gojoseon, founded in 2333 B.C. • Kingdoms and Dynasties ruled until 1910 • From 1910-1945: • 1945: Independence from Japan• 1950-1953: Korean War• First President Syngman Rhee acted from 1958 until 1960• Republic of Korea (South Korea) is a republic form of government.• Currency: Won (KW1300=USD1.00)

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NORMS and VALUES

WHAT IS CULTURE?- Shared values, beliefs, behaviors, and experiences- Culture is influenced by history, religion, age, circumstances, economics,

language, and education- Culture affects our decision making, how we behave, our perspective, and our

expectations

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Korean Values

Hardworkor

Dedication

The Group Conscious

Preserving Relationships

Social “Face”

SocialHierarchy

&Position

6th Sense

NORMS and VALUES ::U. S . Values

HIGH CONTEXT V. LOW CONTEXT CULTURESLOW CONTEXT HIGH CONTEXT

USA Korea

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Germany Japanese

LOW CONTEXT CULTURE Address business first Words have more meaning Value expertise and performance Agreements by specific, formal contract Negotiations are as efficient as possible

HIGH CONTEXT CULTURE Establish social trust first Actions and other nonverbal cues have more

meaning Value personal relations and goodwill Agreements by general trust Negotiations are slow & ritualistic

Low Context High Context

OVERVIEW OF RELATIONSHIPS: CLASS STRATIFICATION

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TRADITIONAL SOCIAL STRUCTURE Confucius taught that everyone in society had a

“role”.

Yangban – Scholars, Officials, Aristocrats Chungin – Technicians and Administrators Nongmin – Farmers Sangin – Merchants and Traders Gongin – Skilled labor (blacksmiths and

carpenters) Chommin – Despised People

OVERVIEW OF RELATIONSHIPS:

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CONFUCIAN HIERARCHICAL ORDER- Confucius taught that society is a reflection of the

family unit

Father / Son: Filial PietyRuler / Subject: LoyaltyHusband / Wife: Distinction and PositionElder / Younger: RespectFriends / Friends: Trust

OVERVIEW OF RELATIONSHIPS

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FACTORS THAT INFLUENCE BUSINESS RELATIONSHIPS:

:: Blood Ties School Ties Birthplace and where one’s family comes

from “Who you know” Family background and history History with business society or individuals Method of introduction

BUSINESS AND ENTERTAINMENT: Business is usually formalized during dining and drinking Koreans drink considerably more than most Westerners A cup may be shared and passed among the “group” It will be your neighbors duties to keep your glass full/ you

should do the same If you do not drink; it is acceptable to say you are on

medication The person who is inviting or hosting usually pays/ “Going

Dutch” is never done Karaoke or singing is a common event during entertaining

::Entertaining and socializing after work is an important component of “doing busienss” in Korea.

NEGOTIATING STYLES:

::Korean: Maintaining a good mood Preserving social harmony Things can be worked out later Remaining flexible and adaptable to changes

(depending on circumstances) Emotions are used to persuade Aggressive bargaining as relates to price Long term

U.S.: Price Quality Timing Something for something/logical

DECISION MAKING PROCESSES

::Korea:

• TOP DOWN, TOP DOWN (Hierarchy)• Slow/impossible or extremely quick• Important to know who is making the

decisions• Decisions are not always made on facts

and data; relationships; circumstances; and other factors are considered

U.S.:• Top down; however input is taken and

considered• Matrix• Authority given at different levels of

management / able to bypass• Decisions are made on facts and data

CUSTOMER SERVICE

::Customer is “King”

In Korea: the “Top” customer is “King”• “Big” customers are given priority• Suppliers will bend over backwards to make sure that

their biggest customers are happy• The more you spend, the more attention and perks you

are given• If you are a supplier and you are “courting” a big

customer, you are expected to do all things necessary to meet the needs of the customer

• Competition for the “big” customer is fierce

In the U.S.: All customers are important • Customer service is generally nondiscriminatory• There are other fish in the sea• No matter who the customer is; there is no expectation to

tolerate unfair on unreasonably treatment

LEGAL CULTURE

::Korea: • Contracts are general guidelines, which

are subject to change depending on the circumstances

• Underlying relationships dictate behavior

• Preserving a “good feeling” in the beginning is important

Tip: Use Letters of Intent versus formal contracts at the start of the

negotiating process.

U.S.:• Contracts are the basis for relationships

and are literally relied upon• Contracts are essential prior to

beginning a business relationship and are given weight over circumstances; if the circumstances change, “too bad”

MEANING OF “YES” AND “NO”

::• Korean meaning of “Yes”:

“I understand” or “I will do my best”

• U.S. meaning of “Yes”:“I will do it” or “I agree”

• Korean meaning of “No”:Koreans usually do not say “No”. Koreans usually make the circumstances unfavorable or avoid answering.

• U.S. meaning of “No”:Americans generally say “No”. Americans value being “straight forward” and not wasting time.

Dos:

:: Do understand the differences in communication styles Do build a relationship Do use feelings and emotions to persuade Do your homework with regards to the person’s position

and role in the company Do assess a situation /timing Do take the time to entertain Do use an intermediary or consultant Do expect to bargain Do try to eat the local food Expect to partake in drinking, entertaining, and singing Dress appropriately depending on who you are meeting Do pay attention to people’s business cards Do ask personal questions (shows you are interested in

the person)

Don’ts:

:: Do NOT criticize Do NOT throw objects (business cards, papers) Do NOT put your feet up on a desk or chair Do NOT wear your shoes into someone’s home Do NOT make noises or faces and foods you do not like Do NOT stick your chopsticks in your rice Do NOT joke and act informally in front of someone with

a high ranking title during a business meeting Do NOT sign your name in red ink Do NOT use the telephone for important issues; face to

face is preferred DO NOT overuse email Do NOT project your cultural expectations

OBTAINING A VISA: GOTO www.chicagoconsulate.org

NOTE: U.S. CITIZENS MAY TRAVEL TO KOREA AND STAY WITHOUT A VISA FOR UPTO 30 DAYS; EXTENSIONS CAN BE GRANTED IN KOREA, IF NECESSARY.

The following information was copied from www.chicagoconsulate.org

I. General Information Following is the general information for U.S. citizen's Korean Visa application. In principle, U.S. citizens need to have a Korean Visa to enter into Korea, but they can visit Korea within 30 days without the visa for the purpose of tourism or transient stop-over. Normally, it takes 2-3 business days to process a visa application.* The following items are required for all visa categories:1. Valid passport and 1 copy of its personal data page2. A completed visa application3. A passport picture (2x2, color) attached to application4. Visa Fee : US citizen $45 (non US citizen : check with visa section) * Money order only - pay to : Korean Consulate General - Cash accepted in person 5. Self-addressed, pre-paid envelope for return of the passport by mail6. Foreign nationals with U.S. permanent residency : copy of Alien Registration Card (front & back)

The category of Korean visa varies depending on the application's period and purpose of stay.The following is the detailed information about the frequently asked visa category.

1. Short-term Visitor status(C-3)   - US citizens who want to visit Korea for the purpose of tourism, academic conference,relative-visitation, religious ceremony, etc, within 3 months are required to apply for C-3visa. - In case of US citizens, a 5-year valid multiple entry visa is usually issued. - This visa holder can stay up to 90 days at a time when he/she visits Korea - The necessary documents are as follows1) Valid passport 2) Completed visa application form with photo attached.

2. Short-term Business status(C-2)   - US citizens who want to visit Korea for the purpose of business such as marketingresearch, business negotiations, pilot operation of export machines, etc, within 3 months are required to apply for C-2 visa. - In case of US citizens, a 5-year valid multiple entry visa is usually issued. - This visa holder can stay up to 90 days at a time when he/she visits Korea - The necessary documents are as follows1) Valid passport 2) Completed visa application form with photo attached. 3) Notarized letter from the hiring company (content must indicate the purpose of the journey, references in Korea, guarantee of expenses, etc)

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Q & A

If you are interested in executive or customized cultural business training as relates to South Korea, please contact Skye Suh at 248-932-8844 or email: mail@skyesuhplc.com