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Rock Street, San Francisco

Dear Mr.

This is in reference to our conversation on May 15, 2008 regarding business negotiation conduct in South Korea.

I have talked extensively with my father, who is currently in South Korea regarding negotiation protocols in business.  He provided me with a few good insight as to how business negotiations in Korea are conducted.  Please note that my father is currently an entrepreneur dealing with a lot of foreign customers and has had previous experience as a purchasing manager in a chaebol (a Korean conglomerate of different businesses owned by one family, or a few interrelated family groups).

My father says that negotiations in Korea should involve a team member who knows the Korean language, or at least a good interpreter.  He explains that while English is well-received and understood, people who do not speak Korean has a limitation in terms of social and professional contacts.  Aside from that, the Korean language is a complex one and there are some words and contexts that are not directly translatable.  Koreans also put more emphasis on how something is being said rather than what is said.  This is basically what Lothar Katz suggested in his Global Negotiation Resources Web site.  Katz also adds that it is necessary to ask whether an interpreter should be present before hand.  Katz also suggests that when speaking in English, sentences should be kept simple and brief, and key points should be summarized often.  Dr. Eun Y. Kim, a consultant at the Executive Planet Web site, adds that it would be very helpful to provide copies of your presentation materials in advance, so they could preview them and make it easier for them to understand what you are trying to say.

My father emphasized that Koreans are very conscious of hierarchy and rank.  Respect for the elderly or someone with a higher rank is a deeply rooted Confucian value, which Koreans subscribe to.  Lothar Katz agrees, writing that Koreans are very status conscious, as such encourage the most senior members of your team to do most of the talking.  Katz also writes that there are various aspects of business decorum that are ruled by this value, like addressing the most senior of the Korean negotiators first, the order of entering the room, as well as introducing members of both parties.  It is always, the eldest to the youngest, or the most senior to the least.  This respect for rank and status is also translated to simple everyday things like dress and attire.  Formal attires are important in business meetings as it conveys respect for the other party.

My father also told of a time when representatives from a British supplier came to Korea to negotiate a contract with their chaebol.  He was one of the 15 members of the Korean delegate.   At some point into the negotiation, a humorous problem came up, the British company president, who was also their leader, kept on addressing “Mr. Kim”.  It was “Mr. Kim, we offer you the lowest prices…” or “Mr. Kim, our plants can deliver your requirements in record time…” or “Mr. Kim, this” or “Mr. Kim, that…”  The problem was there were eight Mr. Kims on the Korean side of the table, and none of them knew who was being referred to, so they all nodded not wanting to offend the British leader.  This anecdote underscores an important concepts that were referred to in the Global Negotiation Resources Web site: that is Koreans put an emphasis on “saving face”, not wanting to cause another person embarrassment since harmony and emotional restraint is important, as is emphasized by Dr. Kim. Dr. Kim explains that saving face is an important thing to consider because it can also affect a person’s reputation and social standing.  Dr. Kim also warns that even unintentional embarrassment can harm the negotiations.

Another point is that there is a difference in Korean and American names.  Koreans have their surnames mentioned and written first.  So Cho In-Sung is actually a Mr. Cho, not Mr. Sung. Moreover, a lot of Koreans share the same surnames, almost 50% of Koreans are surnamed Kim, Park, Lee, or Choi. Katz explains that Koreans have their family names last, then their given names.  If the person has a professional or academic title, it is better to use that as well and say something like Chairman Kim, instead of Mr. Kim.

            When I asked him for his advice on negotiating, he said to bring a lot of business cards.  Dr. Kim and Lothar Katz echo the same advice, saying that one could never bring too many business cards.  Katz explains that the exchange of business cards is essential, if someone presents you with his or her business card, you are expected to offer one in return.  It’s a sign that you are interested in making an acquaintance and develop a more personal relationship, which is very important in business negotiations.  Dr. Kim adds that your business card would contain information about your own rank, degrees, and status, and would help your Korean counterparts to select people from their organizations that are matched to your own rank.  Dr. Kim also advises that you should give your business card with both hands, and make sure that there are no writings on your card as this is a sign of disrespect.  If you receive a business card, take time to read it before putting it away, because immediately putting it away into your wallet or pocket is an indicator of disinterest.

In the course of my research, here are some additional important points that may assist you in understanding Korean business culture:

For negotiations, always try to match your representatives with the Korean negotiators by virtue of rank.
Meetings often begin with small talk, and are often punctuated by silence, this is normal.
Cigarette breaks are not only appreciated, but highly expected.
The key to successful negotiations with Koreans is respect and rapport.  Be sure to be honest and aboveboard during meetings, and keep in touch after you’ve left the country.
Don’t be surprised that there are fewer women in negotiation tables.  Women have only just begun entering into the corporate higher-ups as most Koreans consider women as being successful in other fields–like publishing, medicine and engineering–but not in decision-making roles.
Karaoke parties are common, and typical, in business negotiations.  Excessive alcohol consumption is expected.  These social functions outside of the boardroom helps develop strong interpersonal relationships.
In conversations, avoid discussing the country’s relationship and history with Japan.
Gift giving is common in both business and social settings.  You are expected to reciprocate, and refrain from opening gifts in the presence of the giver.

While both Executive Planet and Global Negotiation Resources are very informative with regards to Korean culture, and the way they do business, Dr. Kim’s list of guidelines are more comprehensive and detailed.  Some basic and empirical—but nevertheless, important—details  that Dr. Kim included are:

Be flexible in your bids.  Not doing so will be viewed negatively by your Korean counterparts.
Don’t appear to be in a hurry as this overshadows the chance to build personal relationships, besides business are conducted more slowly in Korea compared to the United States.
Koreans generally have a hard time saying “no”.  And a yes is not always a yes.
Koreans prefer to secure a contract first, then talk about the details later.
A name written in red ink means the person is dead.  Avoid signing contracts or writing a person’s name using red ink.
* * *

One of the steps that leads to a successful negotiations with other countries is understanding its culture and working within it to give us an advantage over our competitors.  This is specially true for Korea, where the business culture is very different from the way Americans do business.

As you have indicated before, Korea is of special interest since the signing of the Free Trade Agreement between Korea and the United States.  With the opening of markets, we have the option available to us, if we should ever decide to either sell our products or source suppliers in Korea.  If that time comes, this information should come in handy.

Works Cited

Kim, E.Y. South Korea.  Executive Planet, LAst Updated October 2007.  Retrieved on 25 May 2008. <http://www.executiveplanet.com/index.php?title=South_Korea>

Katz, Lothar. (2006). Negotiating International Business – South Korea.  Global Negotiation Resources.  Retrieved on 23 May 2008.  <http://www.globalnegotiationresources.com/cou/SouthKorea.pdf>

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