Business in South Korea
Though South Korea has gone through a rapid phase of modernisation, it still greatly retains plenty of its rich culture and heritage. Though Koreans will not expect you to be an expert on the nuances of their culture, but they will appreciate a show of interest in matters that are important to them. Koreans generally appreciate a foreigner’s effort in expressing a thank you (gam-sa-ham-ni-da) or a hello (an-yong-ha-say-yo) in the Korean language. 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. In 2014 South Korea was the world’s 13th largest economy by Gross Domestic Product (GDP) Purchasing Power Parity (PPP) according to the International Monetary Fund (IMF). It has a GDP per capita (PPP) of USD 35,277 – 3 times that of China and almost equal to Japan’s.
South Korea has a civil law legal system as the laws were influenced largely by the European civil law system. However, the US law has influenced more recent legislation. South Korea does not recognise a federal legal system. The South Korean government has imposed heavy restrictions on doing business with North Korea under the National Security Act. In addition, there were restrictions on engaging in financial transactions with Iran under the Foreign Exchange Transactions Act. The South Korean Government recently lifted most of those restrictions, but some of the restrictions will remain for a certain period of time.
Major Exports are automobile, wireless communication devices, semiconductor, petroleum products, ship structure and parts, liquid crystal displays (LCDs). Korea’s semiconductor industry has shown remarkable growth in the past 20 years and now ranks first in the world in terms of total production in 2009. Korea has been the largest D-RAM producer in the world since 1998 and has emerged as the world’s largest manufacturer in memory semiconductor production, of which D-RAM constitutes a major portion.
In the shipbuilding industry, Korea recaptured the world’s no.1 title in 2004, with exports of US$15.66 billion and a ship manufacturing volume of 8.34 million compensated gross tons. In 2005, Korea held fast to the first place with exports jumping to US$17.7 billion and shipbuilding volume reaching 10.24 million compensated gross tons. And, in 2006, the shipbuilding industry recorded exports of US$ 22.1 billion. Major imports are oil, semiconductor, petroleum products, steel, and semiconductor manufacture equipment. As for business etiquette, it is important to spend time establishing a good working relationship and building trust with South Koreans.
Languages and Business Cultures
You will find being introduced to a company by a trusted third party, such as the British Embassy, more effective than going in cold. If you make a mistake in business, always own up to it and demonstrate what you are doing to put it right. While many South Koreans are comfortable communicating in English, many talented and capable South Koreans are not. Accommodate your language to your audience. Speak in clear, basic English. When making presentations, minimise words and maximise graphs, charts and visuals that can communicate across languages and cultures.
South Korea is a country where things can happen extremely quickly. Same day response is the norm. A week without communication is interpreted as lack of interest and/or termination of a project. Remember that the aim of initial meetings is usually to get to know one another, so don’t expect to begin business negotiations right away. A slight bow, followed by a handshake, is the preferred way of greeting somebody in South Korea. More junior personnel will bow first to their senior colleagues. You should wait for more senior personnel to offer their hand first.
South Koreans prefer a softer handshake and, during the handshake, you may support your right forearm with your left hand. Some senior South Koreans consider eye contact as rude, but that’s not the norm. It is advisable to make direct eye contact when addressing South Korean business professionals in order to show honesty and interest. South Koreans tend to dress appropriately for their work surroundings, as you would expect in the UK. Black, blue and brown-coloured suits are recommended. Hierarchy is also an important concept in South Korean business. When addressing someone in business you should use their professional and honorific titles. You should be punctual for meetings and leave plenty of time for your journey to avoid arriving late. When engaged in a business relationship, you should ensure that delivery times are clear and that you act quickly to remedy any problems. You will need to have a good supply of business cards as it is customary to exchange these (using both hands) when meeting a business person for the first time.
Your business cards should be translated on one side into Korean. Be sure to treat someone’s business card with respect as to do otherwise risks insulting them. Examine the card before putting it away, or place it face up on the table in front of you during a meeting. Never write on someone’s card in their presence unless they are happy for you to do so. One good tip is to ask a question based on the information on the card. Treat cards with respect; they represent your counterparts’ ‘face’, provide important clues as to their importance and are a key tool for managing relationships. While its place in the global business circuit has made changes to the way that business is generally conducted in the country, there is still an elaborate system of hierarchy in South Korea that is based on position, age, prestige and, to an extent, gender.
About Osung Accounting Corporation
Osung Accounting Corporation has been a formidable accounting corporation in South Korea since 2008, and has been a helping hand for companies who have ventured into the Korean market to achieve major success. Foreign companies especially, that are planning to venture into South Korea would face various administrative, judicial and language barriers, which is why the assistance of professional companies like Osung Accounting Corporation comes in handy and can be a good business partner to have on your team. Our team of professional have the in-depth experience, one stop service practice, customer-oriented services and a powerful business network in Korea to help your business achieve success at its full potential.