Before starting a business in South Korea, it’s important to understand the differences between Korean business etiquette and Western practice. Business standards in South Korea are high. Promptness, exactness and professionalism are all bywords when doing business in this area of the world. Keep reading below to find out everything you need to know about doing business in South Korea and why you should consider it.
What’s it Like Doing Business in South Korea?
South Korea was once seen as an impoverished nation, but since the Korean War, South Korea has worked hard to earn the title of having one of the leading economies in the world.
South Korea is well known for their market openness, regulatory efficiency and willingness to embrace foreign investments. All of these things make it a great country to do business in and there has never been a better time to consider it.
However, small-scale corruption and bribery still take place in South Korea and some startups struggle to secure the subsidies they need to get started. An aging population, low levels of worker productivity and a strained relationship with North Korea are all obstacles you’ll need to consider before doing business in this country.
5 Tips for Doing Business in South Korea
Here are some of our top tips for people wanting to do business in South Korea:
- Do your research – no matter what industry you work in or where in the world you want to do business, it’s important to do your research first. This is particularly important in South Korea as you will need to do background checks on any local customers and partners and you’ll also need to understand the entry barriers and requirements.
- Find your niche – South Korea has grown phenomenally since the start of the 20th This has led to high numbers of U.S. companies exporting to the area. However, there are still plenty of opportunities available, particularly in the automotive, ICT, creative, aerospace, financial and legal services, sports infrastructures and life sciences sectors. The key is to find your niche.
- Respect the culture – if you want to do business in South Korea, then you’ll need to have an appreciation of their culture, history and heritage. This can get you a long way when doing business in the area.
- Expect hierarchy – businesses will be expected to follow certain hierarchical guidelines and procedures.
- Test the market – businesses who are interested in entering the Korean business market should start by testing the market first. They should consider looking into employment solutions like a South Korea EOR & PEO from New Horizons Global Partners. These services allow you to hire employees of your choice without having to deal with the tax, employment, HR, immigration and payroll documents. It is a cost-effective solution which enables you to test the market in South Korea without making significant investments.
5 Things You Need to Know Before Doing Business in South Korea
Despite the glitz and glamor of modern South Korea, many of the customs and traditions still permeate everyday life. So, to help you get ready for doing business in South Korea, here are some of the things you need to know:
- Meeting and greeting in South Korea – when greeting a Korean national, there are some rules and protocols you need to follow. The person of lower status should bow to a person of higher status. Once the bow has been performed, the person of higher status will offer a handshake.
- Business cards – business professionals are expected to exchange business cards when they meet a new business associate. This is similar in other countries in Asia. You should use both hands to present and receive business cards. You also need to remember to treat it as an important document. Don’t slip it in your back pocket like you would in the U.S.
- Confucianism – Confucianism emphasizes the importance of family, ancestor worship and the authority of elders. Similar to other nearby countries, the eldest son in the family is expected to financially support the family. They are also expected to have a son of their own, so that the family name will continue. Children are brought up to believe that they’ll never be able to repay their debt to their mother and father.
- Equality – in public, women often appear submissive and quiet, but in reality, they can actually hold a lot of responsibility. In fact, it’s fairly common to see women working at management level within a business.
- Kibun – Koreans will usually try and create a harmonious working environment in order to ensure that their kibun stays balanced. Kibun means inner feelings or mood. This means that Koreans will usually appear polite, helpful and friendly and will try and avoid doing anything that could affect their mood or the harmony of the environment. The best way to deal with kibun when working in South Korea is to avoid criticizing, contradicting or patronizing others. Instead, offer compliments, show them respect, or do something that helps improve self-esteem.
Business Opportunities in South Korea
There are significant opportunities in the following areas:
- Creative – the design market in South Korea is currently worth around $10 billion. US design is highly valued in South Korean companies.
- Aerospace – the government in South Korea wants to create an aircraft manufacturing value chain.
- ICT – South Korea is one of the world leaders in technology.
- Consumer products – the disposable incomes of people in South Korea are steadily increasing
- Automotive – South Korea is a leading producer of automotive technology. This means there are a range of opportunities available for component, design and auto supply companies.
- Education – education is extremely important in South Korea.
- Financial and legal services – in South Korea, there’s a huge range of opportunities for asset management companies.
- Life sciences – the aging population in South Korea and the increased push for healthier lifestyles opens up a number of opportunities for businesses who want to enter the South Korean market.
Why South Korea is a Good Place to Do Business
South Korea is a vibrant and dynamic place to do business. Nestled between two great powers, China and Japan, South Korea remains undiscovered by many U.S. businesses. This amazing country currently has the 12th largest economy in the world, and the 4th largest economy in Asia.
This high-tech country is a world leader in manufacturing and electronics, including in flat screen TVs, mobile phones and semiconductor chips. It also has the highest level of 3G mobile usage and broadband penetration in the world. These are just a few of the reasons why South Korea is such a good place to do business.
The Future of Business in South Korea
The future of business in South Korea looks extremely promising. Over the next few years, South Korea is expected to make the 10th largest contribution to world growth. In fact, its contribution to world growth is likely to be similar to that of the UK and higher than countries like Italy or France.
South Korea was once classed as one of Asia’s best kept secrets, but you won’t be surprised to know that this is no longer the case. South Korea is an amazing place to do business. Not only are the people friendly and hard-working, but it also has one of the best economies in the world.