Overcoming Cultural Differences in International Trade with Korea

Today’s post, which is partially based on materials from Dick Locke’s seminars on International Purchasing, is edited by Dick Locke, Sourcing Innovation contributor and President of Global Procurement Group.

This post is going to examine some of the cultural differences that you may encounter (as an American or Canadian Sourcing / Procurement Professional) if you are doing business with Korea. We start by discussing each of the eight key cultural considerations outlined in our introductory post and then highlight a few other points that you should be aware of.

As per our initial post, this discussion is high-level and general in nature and, as Dick Locke points out in his classic text on Global Supply Management, while it is too easy to stereotype a country, individuals in each country will vary from the stereotype. You need to take time to get to know the people you will be dealing with because their behavior may be nothing like the usual behavior of the country in which they reside and there is always a chance that you might run into people who are trained to act like you … while in your presence.

While Korea, and more specifically South or the Republic of, has a lot of similarities with the Asian countries that surround it, it also has a lot of differences. Having built the third largest Asian economy in less than half a century, starting with low-cost high-quality export production and then a move into high-tech high-value-add in the 90s, they tend to move at a rapid pace. Also, as (recent) history has taught them that compromise leads to defeat and second place spells disaster, they are extremely competitive. They are always looking for an advantage, quick profits, and a quick sale … which is generally more important to them than the development of solid, long-term, business relationships (which the Chinese and Japanese prefer to focus on). As a result, you should be careful of exclusivity and focus on shorter-term awards based on past-performance.

  • Power Distance

    Power distance is moderately high in Korea. They have a vertical society that strictly observes protocol. You must show a Korean the respect he deserves based on status, age, and rank … or risk being outcast. However, unlike many other Asian cultures, this does not prohibit you from being tough in negotiations … they expect it.

  • Uncertainty Avoidance

    Hofstede’s classic work indicates that they are high on uncertainty avoidance, but this is not really the case. Of all the Asian countries, they are among the most willing to experiment and take risks, as long as the reward is there. They are also very creative and inventive.

  • Individualism

    Due to the structure of their society; their core beliefs of kibun, hahn, and Confucianism; and their obsession with the survival of their society, they are not very individualistic when compared with the Western world. However, their tenacity and outgoing nature makes them more individualistic than many other Asian countries.

  • Polychronic vs. Monochronic Time

    Korea is very monochronic. Punctuality is very important and they abhor wasting time. They are always striving to beat the Japanese and this requires getting the most out of every minute.

  • Personal / Impersonal

    In Korea, personal and family relationships are very important. As a result, good, personal, relationships are important for business. However, while Korean businessmen will shake hands, it is critical to remember that touching is generally an affront in their society, so no “pats on the back” unless they do it first, you’re at a social event and inebriated, and you’re willing to apologize for it immediately and the next day.

  • Buyer / Seller Rank

    Your rank as a buyer is quite low in Korea compared to other Asian countries. They are strongly focussed on profit and have an innate distrust as foreigners.

  • Importance of Harmony

    While Korea is still strongly influenced by the teachings of Confucius, and the correctness of social relationships that bring harmony, they are also strongly influenced by hahn, which describes the build-up of pent-up energies, unrequited yearnings, and general frustrations that developed under conditions of extreme hardship and oppression. As a result, they are more prone to violence than other Asian countries, very nationalist, and very, very competitive. So while harmony is important, especially since it also relates to kibun, it is not nearly as important as it is in Japan, or even China.

  • Importance of Face

    Kibun, which roughly translates as face or reputation, is a very sensitive issue for them, on part with Japan. They see it as correct behavior necessary for social balance and it is part of their strong sense of honor.

Finally, it is very important to socialize with Koreans if you want to build a business relationship. Accept every offer for evening entertainment (and read up on their dining customs first), even if you need two teams to keep up with them.

Finally, as I strongly recommended in my first post, if you plan to start doing business with any new international country, including Korea, you should do a thorough job on your homework. You can start with:

  • Dick Locke’s course on the Basics of Smart International Procurement (which is offered through Next Level Purchasing and counts towards the SPSM2 certification or ISM Continuing Education Hours), or
  • a customized seminar from Dick Locke’s Global Procurement Group. Dick Locke and his associates each have decades of experience doing business with over two dozen countries, including the fifteen biggest importers and exporters to and from the United States, and Korea. A single day with an expert like Dick Locke could save you months of headaches.

Again, a big thank you to Dick Locke for serving as editor for this special series of posts and providing some up-to-date materials and information for the purpose of this series.

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