Background to Business in South Korea

Korea is probably more heavily influenced by Confucian values than any other business culture (including China).

Confucian ethics permeate all aspects of working life from management systems to interpersonal relations and although both Western and Japanese influences are becoming stronger there is a deep well of conservatism within Korean society which makes change difficult, slow and somewhat painful.

Confucian ethics emphasise the value of collective group harmony, respect for authority (and therefore management), as well as the all embracing importance of family, clan and friendship. Thus, as in countries like Japan and China, the quality of relationships is the real key to business success at both a personal and a corporate level. A Korean saying highlights the all-important nature of networking and relationships – ‘make a friend first and a client second’. The key to creating good relationships lies in one’s ability to play the Confucian game. It is important to appear to be an honourable, trustworthy and respectable person.

The economic downturn experienced in South Korea during the Asian currency crisis (as well as many other Asian countries) precipitated a period of great introspection which has led to many traditional beliefs and approaches being challenged both internally and externally.

Thus, South Korea is a business culture at a significant crossroads with a great need to find an accommodation between traditional values and modern management practice.

A brief overview of some key concepts to consider when doing business in South Korea

Written and Produced by Keith Warburton

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Overview

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.

How did South Korea succeed where so many other countries have tried and failed? What does South Korea have which other countries lack? In a word, the answer is culture. South Korea is steeped in key Confucian attitudes which have enabled this economic miracle to occur. Confucianism extols the virtues of education; South Korea’s approach to education is universally lauded and endlessly studied. Confucianism places emphasis on frugality and loyalty; hard work and acceptance of temporary hardship, bringing their own rewards over time.

If you are thinking of doing business in South Korea (and you really should be), then one of the key elements of successful engagement with South Korean counterparts and potential partners must be linked to gaining a better understanding of South Korean business culture. If you don’t understand how companies are structured locally, how do you know who you should be speaking to? If you are not aware that South Korea is group-oriented in its approach, how can you understand the local decision-making process?

This country profile provides an overview of some of the key aspects of South Korean business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining
  • Top tips