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Review focus: Korea, business, culture, contacts, personal relationships, business arrangements, agreements, establishing contacts and relationships
Asian Business Code Words Index NTC/Contemporary Publishing Company Asian Business Strategy & Street Intelligence Ezine
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In Korea, as in many other Asian countries, business is a personal affair. The product, the profit, and everything else take a backseat to personal relations. If you do not or cannot establish good personal relations with a large network of people, it is either difficult or impossible to do business in Korea. Personal relations and contacts, combined with a high sense of honor and trust, are the primary foundations of Korean business ethics. Written contracts among Koreans are rare. Most business arrangements are based on verbal agreements. As a result of this system, Koreans spend a significant amount of time expanding and nurturing their personal contacts because their business depends on maintaining these relationships. Foreign executives wanting to succeed in Korea must adapt to this system to a substantial degree. It is essential that the foreign business people program this kind of activity (and expenditure) into the time frame of their plans and expectations. The more foreigners try to rush a decision or activity, particularly before the correct personal relationships have been established, the slower the process will be and the more likely their efforts are to fail. "Many foreign businessmen believe that with the right product and price they can easily sell to or buy from any Korean company. This may be the case in Los Angeles or Hamburg, but it doesn't always hold true in Korea," said Jon Saddoris, president of METEC, a business consulting firm in Seoul. Generally speaking, you are not going to get anywhere in Korea until you establish the necessary "human relations," Saddoris adds. This includes approaching the company in the "correct manner," meaning through an acceptable introduction, and on the appropriate level. Saddoris says that the first mistake many foreign business people make in their approach to doing business in Korea is to believe that meeting the president of a company and getting the president's approval and cooperation means smooth sailing from then on. In most cases, the managers - lower, middle, and upper - who actually run the company will resent being bypassed and will be less than cooperative, sometimes to the extent that the foreign proposal never gets off the ground. If you have an introduction to so, it is all right to meet the president, but you must also meet and establish a satisfactory relationship with the various managers, treating them with the same respect and concern that you extend to the president. This also applies to companies that are still in the hands of founders who appear to make all the decisions. To understand a Korean company, it is essential to determine the personal relationships between managers on all levels, especially the relationships between individual managers, and directors or the president. Personal ties such as kinship, the same school, the same birthplace, or marriage often take precedence over job seniority, rank, or other factors and may have a significant influence on who actually runs a company and how it is run. A clear understanding of these ties is often necessary to identify the real decision-maker in a Korean company. Because human relations are so important in doing business with Korean companies, it is vital that you keep up to date on personnel and personal changes within companies. The character personality of a Korean company is as changeable as the ties and emotions of the people who make up the organization. It is therefore necessary to treat the relationship as a personal one, requiring regular stroking and other forms of maintenance. Although Koreans now readily sign contracts with foreign companies, the contracts are invariably interpreted personally rather than in the legal sense, and they are no better than the personal relationship that exists between the two parties. If the relationship is not constantly renewed and reinforced, the contract becomes just a piece of paper. It is therefore very important for the foreign business owner going into business in Korea to be personally involved in the process of setting up the operation. Foreigners should also seek the aid and advice of an experienced Korean to help them smooth the way through the intricate maze of connections and relationships that are involved. Once an operation is established, the need for good, solid personal relations intensifies rather than diminishing. This means, of course, that foreign executives cannot sit back and relax as is so often the tendency. The Western habit of relying on contracts and lawyers does not work in the Korean environment. Another aspect of the personal approach to business in Korea that often upsets Westerners is the tendency for Koreans to run a company as an extended family, which means they make decisions and take many actions based on purely personal factors instead of business considerations. The Westerner is not going to change this centuries-old cultural characteristic, so the only recourse is to learn how to live with it. The same personal approach necessary for the smooth function of an office or company also applies to a corporation's relations with government officials and bureaucrats. Most companies in Korea assign a particular individual to handle their government relations; invariably a senior member of the company who has the most experience in the bureaucratic arena, and "face" with key government officials. Government bureaucrats in Korea are perhaps even more sensitive than usual to the social and business status of people who approach them, and it is especially important that the foreign company dealing with them be aware of this. Sending in a young, low-status person is definitely not the way to go.
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Boye Lafayette de Mente is one of our regular monthly columnists at the 
| This month's column is excerpted from Korean Etiquette & Ethics in Business, by Boye Lafayette De Mente available from NTC/Contemporary Publishing Company |
© Boye Lafayette De Mente & the Asia Pacific Management Forum 1999
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