Historical Timeline

A critical way to show respect for another person's culture is to have knowledge of their country's history and current affairs. Table 13.1 on pages 289–290 outlines events related to Korea, together with concurrent world events.⁵

Full Country Name and Location

The Republic of Korea occupies the southern half of the Korean peninsula. It comprises more than 3,300 islands, is slightly smaller than Iceland, and slightly larger than the State of Indiana in the U.S. It shares its only land border with North Korea. The Yellow Sea lies to the west and the Sea of Japan to the east. The DMZ (demilitarized zone) wall is the most heavily fortified worldwide.

Government/Political Structure

Korea has been a democratic republic since 1948 when the first general elections were held and the current constitution became effective. The capital city, Seoul, is considered a ‘special city,’ meaning it has the status of a province; however, it is still directly controlled by the federal government. A president elected by popular vote serves a single five-year term as head of state. The heads of government are the prime minister and deputy prime minister, both appointed by the president. The National Assembly is a single legislative body of 300 seats. National elections were last held December 19, 2012.

Population and Economic Centers

The population is approximately 49.5 million, with 83 percent living in urban areas. The country is divided into nine provinces, six metropolitan cities, one special city (Seoul), and one special self-governing city (Sejong).⁶

The main ethnic group is Korean. The country is considered homogenous, except for a minority of about 20,000 Chinese.⁷ The major business centers and populations (2010) are shown in Table 13.2 on page 291.⁸

^* The 2010 Census does not cover all cities/towns, only main districts. See the Statistics Korea website for more information.¹¹

Economy

Korea is ranked fifth out of 189 economies in terms of ease of doing business, according to the World Bank Group's Doing Business 2015 report.⁹ Its 2013 GDP was ranked 14th by the World Bank,¹⁰ and the composition of its GDP by sector was services (58.2 percent), industry (39.2 percent), and agriculture (2.6 percent).¹²

Corruption Perceptions Index

Korea ranked 46th least corrupt out of 177 countries and territories with a score of 55 out of 100.¹³ This annual index, compiled by Transparency International, measures perceived levels of public sector corruption.

The Anti-Corruption and Civil Rights Commission of Korea is the anticorruption agency that conducts investigations in Korea.

Human Development Index

Korea ranked 15th out of 187 countries and territories.¹⁴ The HDI, compiled by the United Nations Development Programme, is a composite index of life expectancy, education, and income statistics.

Global Gender Gap Index

Korea ranked 117th out of 142 countries in terms of gender equality with a score of 0.6403.¹⁵ This annual index, compiled by the World Economic Forum, assesses gender gaps based on economic, political, educational, and health-based criteria.

Climate

Korea has a temperate climate with four seasons: spring (April to May) is pleasant with temperatures in the mid-50-degrees Fahrenheit; summer (June to August) is hot and humid and contains the monsoon season with its heavy rainfall; fall (September to October) is cool and pleasant, and winter (November to March) is cold with temperatures between the teens and 30 degrees F.

Languages

Korean is the official language, with the Seoul dialect as the standard. English is widely taught in schools, along with Japanese and Chinese.

Belief Systems, Philosophies, and Religions

The country breakdown is as follows: Christian (31.6 percent: Protestant 24 percent, Roman Catholic 7.6 percent), Buddhist (24.2 percent), Other or Unknown (0.9 percent), and None (43.3 percent).¹⁶

For an overview of belief systems, philosophies, and religions, please refer to Chapter 4, pages 64–65.

Time Zones/Daylight Savings

Korea has one time zone, Korea Standard Time (KST), which is nine hours ahead of GMT (Greenwich Mean Time)/UTC (Coordinated Universal Time). It does not operate under Daylight Savings.

It is 14 hours ahead of U.S. Eastern Standard Time (13 hours ahead in Daylight Savings Time). See www.timeanddate.com/worldclock.

To calculate time in Korea, add nine hours to UTC/GMT.

Telephone Country Code and Internet Suffix

The Korean telephone country code is 82, and the Internet suffix is .kr.

Currency

The Korean currency is the won (KRW). One won is divided into 100 jeon.

Fiscal Year

The Korean fiscal year is January 1 to December 31. Dates are written as year, month, day; for example, April 1, 2020 is 20/04/01.

Working Week

Koreans have long working weeks and work long hours, as shown in Table 13.3.

Holidays and Festivals

Some Korean holidays are determined by the lunar calendar and change from year to year. Floating holidays are designated with an asterisk. On specific holidays, an office may remain open with limited staff. Check with your embassy or trade office before planning business travel.

During the Lunar New Year and Harvest Moon Festival, all businesses and government offices are closed. It is best to schedule business meetings February through June. Common Korean holidays and festivals are outlined in Table 13.4.

Business Dress/Appearance

Koreans say clothing is a wing, meaning your image can change depending on your wardrobe selection. In Seoul and urban areas, appearance is crucial, with an emphasis on fashionable, conservative, and brand-name suits and dresses. Both men and women should select black, white, gray, and neutral colors, a brand-name watch, and the best-quality shoes and bags they can afford. Wear natural fabrics and avoid synthetic suits and dresses for humid summer weather. Women can opt for short-sleeve (not sleeveless) dresses and blouses and go without stockings in the summer.

Select understated, quality jewelry such as a pendant necklace and stud earrings. Pearls are appropriate for business dinners and cocktail parties, but not at the office. Wear two- to three-inch closed-toe heels or flats, nude stockings, and neutral make-up. Avoid collarless shirts, jeans, sleeveless items, high or stiletto heels, blue or green eye make-up, lash extensions, neon or bright-colored clothing, colored stockings, statement or inexpensive jewelry, and colored nail polish, according to Ms. Young Lee, Financial Manager, YERICO Manufacturing, Inc.

News Sources

Some of the most popular news sources in Korea are

• Chosun IIbo: http://english.chosun.com
• Dong-a-Ilbo: http://english.donga.com
• Korea Herald: www.koreaherald.com
• Korea Times: www.koreatimes.co.kr

Business Cards

Follow your host's lead; cards are usually exchanged after a head bow and proper introductions. Present your card and accept the other person's with both hands. Print your information in English on one side and Korean on the reverse. Koreans highly value education; include degrees.

Technology

Korea is a trailblazer for high-speed and wireless Internet. It led the digital revolution as a pioneer of TV on mobile devices (IPTV), and it tweets at twice the world average. The country is close to reaching universal broadband connectivity. According to Akamai Technology's State of the Internet Report, Korea has the fastest average Internet connection speed in the world.¹⁷ The latest figures rank Korea 11th worldwide for the number of Internet users¹⁸ and number 62 globally for the number of Internet hosts.¹⁹ Korea's online gaming is a national obsession, and the blogging community places second behind China worldwide.

Gifts

Gifts are presented with both hands. At first, decline a gift, and then graciously accept it. When meeting with a group, bring gifts for everyone. The highest ranked receives a slightly more valuable gift. As the recipient of a gift, reciprocate with a similar value gift.

Business gift ideas include USB flash drives, high-quality pens, lanyards, desk accessories, and clocks, which symbolize good luck in Korea. Gifts should be moderately priced. Do not give liquor to a woman. Gifts to avoid include sharp items (symbolize severing of ties), green headwear (associated with infidelity), red ink (represents mourning), shoes (signify running away), and handkerchiefs (also represent mourning). Wrapping gifts neatly with attention is important. Gold is considered a royal color. Avoid red (represents communism) and green, black, white, and blue because they are associated with funerals and mourning.

Introductions, Greetings, Personal Space, and Eye Contact

The Korean greeting is, “Are you in peace?” The teaching of Confucianism is that the sense of well-being in other people should not be disturbed. The Korean custom for greeting is a slight bow at the waist with head and eyes down, hands at the sides. A handshake may be used when greeting Westerners. Greetings depend on rank, seniority, gender, and age. Younger or lower-ranking people bow first to older or higher-ranking people and often give a deeper bow. The senior person usually offers the handshake first. Men may shake hands with men, and women give a slight nod. As a Westerner, shake hands with a Korean woman only if she extends her hand first. After bowing, Western women may extend their hand first to men. Elders prefer indirect eye contact and not direct, while the younger generation is comfortable with both.

Useful Phrases

Table 13.5 on page 297 covers phrases that may be useful for travel in Korea.

Names

Korean names are usually on the order of family name (surname or last name) plus given generational name plus given name.

Use courtesy titles and family name. Once a relationship is established, use of the family name may be followed by ssi (Mr., Mrs., or Miss), pronounced shee. Females retain their maiden names after marriage. Using a professional title and a family name such as Attorney Kim, President Lee, or Chairman Min is common.²⁰

Meetings and Negotiations

Koreans penalize those who are late. Punctuality is important, however, high-level Korean executives may arrive late for meetings.

Meetings begin with beverages and small talk and may extend past office hours. At first meetings, be prepared to match the level of formality set by the Koreans—wait to be invited to sit down. Listen more and speak less. In a group meeting, the seating arrangement will closely reflect status. When departing, show respect by bowing to everyone present.

Koreans are competitive, efficient negotiators wanting success for their company and Korea. During negotiations, a calm, persistent approach works best.

Presentation Styles, Conversational Topics, and Humor

When giving a presentation, share as much detail as possible about your company and your status within it to establish credibility and trust. If using Slide Share or PowerPoint, start with a purpose statement and an agenda. Koreans prefer background context before the main objective is presented, with data and facts to support a position. Pictures and charts are helpful because Korean culture emphasizes symbols. Major concepts should be summarized. Koreans are solutions-focused, group-oriented, and tend to be deductive thinkers who appreciate rational explanations with examples and analogies. Because Koreans tend to be hesitant to interrupt and reluctant to ask questions, reserve time for a question-and-answer period.²²

Gestures

The following are noteworthy gestures in Korea:

• Sucking in air between the teeth usually means ‘no’ or ‘difficult.’
• To beckon someone, extend your hand, palm down and curl your four fingers together several times.
• Spitting on the street is an act of hygiene in Korea.²³

Notable Foods and Dishes

Ms. Young Lee of YERICO Manufacturing advises, “If you did not eat rice today, then you did not have food.” Rice is a dish of honor in Korean cuisine, so always accept this national favorite. Korean cuisine includes vegetables, soups, meats, and seafood. Korean food is steamed, stir-fried, or boiled. Unique teas may include cinnamon, ginger, or ginseng. Korean barbecue is a popular and interactive experience where guests order ingredients from the menu and observe as they are prepared at a grill built into the table.

Specialty Dishes

Here are some well-known dishes from Korea:²⁴

• Bi bim bap: Hot stone bowl of rice mixed with meat, vegetables, egg, and spices
• Kimchi: Spicy fermented condiment made of daikon (a type of east-Asian radish)
• Juk: Rice porridge; the basis for many dishes
• Bulgogi: Strips of marinated and barbecued beef
• Gimbap: Steamed rice, vegetables, and meat or seafood rolled in dried seaweed
• Samgyae-tang: Chicken and ginseng stew with rice
• Kim: Dried seaweed heated in sesame oil and cut in squares
• Shinsollo: Meat, fish, vegetables, eggs, and nuts cooked in a hotpot
• Mul-man-du: Soup with dumplings filled with onion, egg, meat, sesame seeds, and chives
• Tteok: Pounded rice cake
• Chunkwa: Candy-coated thinly sliced fruit

Dining Etiquette

‘Eating from the same pot’ is a Korean way of purposefully bonding relationships. Be sure to respect the host as the highest in rank or age to begin the meal, and others join in later. Business dinners are more common than lunches. Dishes are simultaneously served with round metal chopsticks; sometimes spoons are provided as utensils. Individuals serve themselves and place food from the serving platter into their own bowl before eating it; they do not place food from the serving bowl into their mouth. Items are passed or poured with the right hand. Table seatmates fill each other's glasses; it is impolite to refill your own glass because an empty glass shows more is needed. It is acceptable to slurp soup, but avoid picking up food with your hands or raising a dish to your face. Leave food on your plate or the host may lose face because it may appear they did not serve enough.

Drinking and Toasting

After-hours drinking is part of the relationship building in the business lives of Korean men. White wine, soju, is served during meals. After dinner, it is popular to move to a club. Here is where the paths may change directions: a group of men may continue to talk separately, whereas a mixed group of men and women may go to a bar for drinks and singing. Drinking is inappropriate for Korean women. However, moderate drinking is acceptable for international businesswomen.

Popular Drinks

Some popular drinks in Korea are:²⁵

• Scotch and beer
• Soju: Distilled rice wine
• Makgeolli: Rice-based alcoholic drink
• Takchu and yakchu: Made from grain or potatoes, similar to vodka
• Chong-jong: A rice wine similar to sake, usually served hot

Toasting is common in Korea. The host offers the first toast and the guest of honor returns the gesture. At formal occasions, proper etiquette is to lift the glass in your right hand while using the left to support the forearm. A common toast is gonbae (GOHN-beh) or “bottoms up.” A formal occasion toast is wihayo (wee-hah-yoh) or “for health and prosperity.”

Tipping and Bill-Paying

Historically, tipping has not occurred in Korean culture. Today, the expectation is that business travelers will tip. International hotels and restaurants may include a 10- to 15-percent service charge automatically, so examine the bill. Taxi drivers and bellman may expect a small tip. As the host, the person extending the lunch or dinner invitation pays the bill. Offer to pay three times, and then graciously accept the rejection.

Taboos

The following are cultural taboos in Korea:

• Confusing Koreans with the Chinese, Japanese, or other Asians
• Blowing your nose in public
• Placing chopsticks sticking upright in rice or parallel on top of bowl
• Touching other people with your feet or shoes
• Printing or writing in red ink
• The numbers 4 and 9 and even numbers (bad luck); 3 and 7 are good luck.
• Standing with your hands in your trouser pockets
• Laughing, yawning, or using a toothpick without covering mouth
• Winking or whistling

Heroes and Sports

Knowing about another country's heroes and sports offers opportunities to incorporate culture-specific references into your conversations and presentations.

1. How Do Koreans Prefer to Act: Individually or as a Group?

Korea, with an Individualism score of 18 on the Hofstede dimension,²⁶ is considered a collectivist society (See Chapter 2, page 15). However, not all businesspeople there are consensus decision makers. After 20 years living and working in Korea, Joel Momberger, the former director of the Korea Tech Innovation Program at The University of Texas at Austin found that within multinationals and groups, such as SK or LG, groups are hierarchical. Usually one high-ranking person makes the go-or-don't-go decision. That decision maker may take into account the opinion of others and factor that in, but, at the end of the day, it's their decision.

This means that although Koreans may work in groups and teams to accomplish projects, team members at lower levels in an organization won't make a decision without prior approval from their superior. Even if a team has been following a certain protocol for some time, when a superior says, “No, you need to do it this way,” everything changes. Indeed, as Soraya Kim of The University of Texas' Global Commercialization Group says, she can't think of a situation in which a subordinate or junior has ever openly disagreed with the highest-ranking person.

2. How Are Power and Authority Viewed in Korea?

In Korea, it's who you know, not what you know.

—Anonymous

In Korea's ancient Confucian society, there were four classes of people representing vertical relationships. The Sa, the scholars, were the literate class, and wielded the most power and authority. Below them came the farmers (Nong), the manufacturers (Kong), and the merchant class (Sang). High world rankings in educational attainment reflect the value that Koreans place on scholarship. The country consistently places in the top five with Singapore, Hong Kong, and Taiwan. Mr. Ih Min, CEO of YERICO Manufacturing, Inc., said that Korean children learn to focus on education and prepare for exams, and that this is ingrained from kindergarten through high school, to compete for college. Education plays strongly into who holds power and authority in Korea.

The crowning achievement of this education-based upbringing is graduating from one of Korea's three prestigious universities (Seoul National University, Korea University, and Yeunsei University). Korea's premier graduates join conglomerates known as chaebols (pronounced jay-bol), comprising many different companies across various industries held under the umbrella of a single, family-owned holding company.

Koreans will be interested in where you went to school. As Trompenaars and Hampden-Turner say in Riding the Waves of Culture,²⁷ in achievement-oriented societies such as the U.S., U.K., and Canada, you are likely to be asked “What did you study?” whereas in ascriptive cultures like Korea, the question is, “Where did you study?”

In Korean organizations, the power and authority is at the top, and business works top-down.

However, who has the power to make decision varies depending on geographic location. One professional advised “In the province in which we did a lot of work, it was the chairman of the small and medium business center that made the major decisions, then above him was the governor. So when the governor says, ‘This is what I want,’ it gets done. When the chairman says, ‘This is what I want,’ it all gets done.”

If you want to get a deal done, you must have a comparable-level person attend the negotiations. High-ranking Korean businesspeople will normally not discuss anything with someone who is lower ranking.

Korea has a score of 60 on Hofstede's power distance dimension, which means it is a slightly hierarchical society. Everyone in the organization has a place, and subordinates expect to be given orders.²⁸

3. How Do Koreans Compare Rules and Relationships?

As Joel Momberger pointed out, one of the most important things to remember is that Korea is a 50-million member family, with 60 percent of Koreans sharing one of three names: Park, Kim, or Lee. The entire network relies on relating to each other, alongside a set of common values that are more like familial values.

For the past six years, Mr. Momberger has asked Korean innovators: Why are you in this business? “Number one reason is to promote Korean culture worldwide, then to help their family, then to build a legacy. Money is usually fifth or sixth on the list. And that's shocking to Westerners, Americans in particular. In the U.S., we tend to rely on contracts and litigation because we don't have that common cultural grounding that goes back centuries to say ‘this is how we do things.’ Contracts are so important because the contract isn't about the relationship.”

Not surprisingly, the idea of a binding commercial contract that solidifies all the details of the relationship is not the Korean way.²⁹ Koreans look at contracts as flexible documents or guidelines, not to be strictly construed or enforced.³⁰ This is an important distinction to appreciate when negotiating with Koreans.

4. How Do Koreans Regard Time?

Whatever you think you know about Korea is going to change within three weeks. It's a place that evolves so fast.

—Joel Momberger

The Koreans have an expression that pervades business and their approach to life generally: palli palli, meaning ‘faster, faster’ or ‘always in a hurry.’ People we interviewed for this book repeatedly pointed out the high speed at which deals are done after a relationship has been established.

For example, the moment contracts had been signed with a Korean institute, another professional said that, “It was as if the floodgates had opened. Koreans are known to work very quickly. They want something done—like now. In fact, I think they get frustrated when an agreement is sent over to the U.S. and attorneys take time to review it.”

To help shorten the length of time it takes to finalize a deal you should bear in mind what was addressed in the first two questions: Wherever possible, locate and work with the highest-ranking decision maker from the beginning. Also bear in mind the concept known in Korea as chung, which Ms. Kim defines as the bond between people and also speaks to loyalty. Face-to-face meetings between equals in the hierarchy help establish a bond that otherwise might take years to develop when exchanging email. International business negotiations may appear to be more efficient through email, but Koreans prefer Skype calls and face-to-face meetings so they can read body language and other nonverbal cues.

5. How Direct Is Communication in Korea?

The goal (of face) is to guarantee that everyone is in a constant state of anshim (ahn-sheem) which means “peace of mind” or “at perfect ease.”

—The Korean Mind: Understanding Contemporary Korean Culture³¹

Poor communication and manners can detrimentally impact business negotiations. Due to the Korean preference for harmony, international business travelers should be clear and firm about their positions, while avoiding adversarial and aggressive approaches. Koreans may respond to questions with a question of their own in an attempt to determine how much you know, and the point of your questions.

Be prepared to listen carefully for phrases that mean “no” such as “I am not sure,” “I will consider it,” and “I would like to, however…”

Professionals who fail to observe subtle communication cues unwittingly violate what is known in Korea as myongye or ‘the need for honor.’ As Boyé Lafayette De Mente explains, “To succeed in Korea, both foreign businesspeople and diplomats must understand the nature and role of honor in Korean life.…This requires a substantial degree of knowledge about Korean values, expectations, and behavior.”³²

6. How Formal or Informal Do Businesspeople in Korea Tend to Be?

It is becoming more informal here, especially within smaller, start-up companies. But it's not there yet with larger corporations where relationships are usually quite formal, especially with outsiders.

—Senior Scientific Advisor, Fortune 50 Company

If you think figuring out how formal to be during introductions in Korea is difficult, be aware that your hosts probably find it just as challenging. Says Soraya Kim, “We are still in the process of trying to figure out how to address each other. On the one hand, you find Westerners trying to accommodate Koreans by referring to people formally, as Governor Kim, Chairman Hong, and President Lee. The Koreans are trying to accommodate Westerners, and will say Joel, Sid, Bob, and Susan.”

One thing to bear in mind is that, as Joel Momberger explains: “Koreans live within a distinct hierarchy, and the degree of formality used in Korean speech is largely dependent on who you are in relation to everyone else. It's not just level of speech, it's a total mindset. If you're older, then I owe you respect; I owe you deference. If you ask me to do something, it is incumbent on me to do that. If you're younger than me, I can tell you what to do; I can instruct you. This is not necessarily a conscious Korean thought process; it's something automatic. Everybody knows where they fit in the society and where everybody else fits and what they are supposed to do.”

That is why when a Korean asks questions regarding your age that may seem personal in a Western context, they're trying to assess where you fit in the hierarchy in relation to them, so they know how formal or informal to be.

In the meantime, things are changing rapidly. As a general rule, you are likely to find smaller organizations populated with younger people to be more informal in their dealings than larger, more established organizations whose senior managers are more formal.

7. How Aligned Are Korean Social and Business Lives?

“Make a friend first, and a client second.”

—Local Korean saying

Ms. Donna Lipman of the Korea Tech Innovation Program at The University of Texas shared that, “I find business and social to be intertwined when I conduct business in Korea. After my presentations training, the group has taken me out every time. The male-to-female ratio of the group is roughly 7:3. We enjoy drinking soju, a white wine, sometimes until 3:00 a.m. This is how to nurture business relationships. We all take our turns at karaoke, and I offer some John Denver songs I sang with him in Colorado.”

One of the differences in business socializing today is that both men and international women dine and drink together. Drinking and singing into the early hours of the morning is part of relationship building in Korea, so accept invitations. It's the way deals are sealed and business relationships cemented. Mr. Min confirms that much of the decision making and relationship-building in Korea is conducted after dinner. Music is also a major way to find favor because Koreans love music. As Ms. Lipman emphasized, it's invaluable to have an authentic musical talent or ability, whether it's singing or playing an instrument.

8. How Is the Concept of Women in Business Handled in Korea?

Mr. Min says international businesswomen with expertise, specialization, seniority, and rank will encounter less resistance in Korea from male counterparts, although challenges remain. Ms. Soraya Kim offered three key insights for international businesswomen visiting Korea:

1. “First, you need to understand our history and culture. Korea is predominantly a Confucian-based society, and Koreans ask questions to understand where in the hierarchy to place you. In the past, they asked: ‘How old are you?’, ‘Are you married?’, ‘Do you have children?’ But Koreans are beginning to understand these are inappropriate to ask Westerners. Now they will ask, ‘What is your position in the company?’, ‘How long have you been with the company?’, ‘Are you the manager?’, ‘Are you the assistant manager?’, or ‘Are you the team manager?’ In that way, everybody knows how to talk to people based on their position. In Korean culture, everyone is in the hierarchy.”
2. The second point is that this hierarchy of relationships can play to your benefit, especially if you're an older professional. Says Ms. Kim: “Oftentimes, when I am in meetings, I'm older than most people, except perhaps for the CEO. Koreans want to accommodate Westerners and not offend, depending on who you are talking to.” She pointed out generational differences in the country and that you are less likely to be slighted when working with more progressive, younger companies and team members.
3. Ms. Kim's third point highlights that this is a country where women may still be viewed as second-class citizens. While Ms. Kim was in a reception line with Caucasian men, a Korean female went down the line shaking hands but turned away, didn't make eye contact, and walked off before reaching Ms. Kim, “because she assumed that I was support staff.” Although this may be an unsettling experience for an international businesswoman, know that leaders like Cho Sun-hae, founder and CEO of Geo Young, who began her career as a pharmacist and is now one of Korea's most well-known female executives, are paving the way for the next generation of powerful females in the nation,³³ as are entrepreneurs like Romi Haan, CEO and founder of Haan Corporation,³⁴ and as Korea's first female president, Guen-hye Park, who is eleventh on Forbes' The World's 100 Most Powerful Women 2014 list.³⁵