15 minute read
Thinking about doing business in Korea?
Need to learn more about Korean business etiquette?
Navigating the murky waters of Korean Business Culture can be challenging.
There’s much to be gained through a successful partnership, but many ways to lose 정 (Jeong), or the unspoken bond that holds the country together.
With the many hidden rules that can make or break a business relationship in Korea, it’s important to be prepared.
These simple tips will help you avoid major mistakes when doing business in Korea.
Before You Meet
- Korean Business Etiquette is influenced by Confucianism and Military Hierarchy.
- There’s a lot of similarity with Japanese Business Culture as both use job titles derived from Chinese characters.
- Your age and job title relative to others determines how you communicate and behave. A higher age/job title will give you more credibility.
- Most Koreans have been exposed to Western culture through movies and TV shows, and will often have their favorites.
- Many have studied abroad or interacted with native English speakers at private academies.
- Regardless of the amount of exposure to the West, Koreans will most likely follow local business protocol.
- A close relationship is the key to doing business in Korea, while planning takes a backseat. Since most businesses operate this way, it’s especially difficult to predict the future, so things are often decided on the fly.
- The concept of “face” also applies. So make sure never to correct/criticize someone in public. You might be met with a lot of resistance in the future.
- Flexibility is also very important when doing business in Korea. Don’t be surprised if you end up performing tasks well outside your scope of expertise.
- Although becoming less important, gender is still a factor. Married males over 40, or “ajeossi”, are perceived as having a higher position in society. Women still handle domestic duties, even when they have their own careers. It’s not uncommon for female managers to serve tea in business meetings.
- In business you will either be a 갑 (gahb), “the party with power and money” or 을 (uhl), “the party without”. Some examples of this are “employer and employee” or “buyer and seller” relationships. All contracts in Korean define “Party A” and “Party B” as either “gahb” or “uhl”, while in western countries “Party A” and “Party B” are considered somewhat equal.
- Two people usually attend a business meeting, a junior and a senior employee, so plan accordingly.
You will be judged by your appearance and grooming (clean shaven and clean cut are a plus).
Dress shoes, slacks, a button up shirt and tie are recommended.
If you are meeting an ajeossi, or married man over 40, it’s a good idea to wear a jacket and tie.
Your watch will also be judged. Tag Heuer grants instant credibility. Citizen and Tissot are the bare minimum. Anything cheaper than 200 USD is better left at home.
Bring a wallet and a business card holder (full of your business cards), preferably a brand name like Mont Blanc or Gucci.
During the Meeting
Bow slightly and shake with a loose grip using two hands (a firm grip is a sign of aggression) after the oldest/highest ranking person reaches out.
Business cards are exchanged at the same time while standing, even if you have their contact info.
Don’t make small talk at this stage, just follow our formula unless a question is asked.
Present your business card with two hands when the oldest/highest ranking person presents theirs.
Make sure your info is facing the person accepting the card, so they can read it.
Look at their card for 3 seconds, then say their name and title (add a “nim” at the end of the title for extra points).
Place their card on the table so you can see it during the meeting (don’t put it in your pocket as this is uncommon).
The older person by more than two years usually makes eye contact while the younger person will look away slightly as a sign of respect.
As a non-Korean, you can simply use soft eye contact.
The main topics in order of importance are:
- Price Negotiation (they will want a discount)
- Quality Assurance (especially for ongoing projects)
- Their Company History and Process (during the first meeting)
You will hear a full presentation on their company history and milestones. Prepare yours as well.
Koreans are vague by Western standards, especially during the first meeting. They will not settle on numbers, dates and specifics.
They will minimize the time spent on details and will mostly be feeling out the situation.
Don’t expect them to present the information you need. Prepare specific questions.
When they respond that “they aren’t sure” or “don’t know yet”, ask politely when you can receive the information.
Koreans will answer your questions after providing context.
Whereas in English, questions are answered first, then an explanation is provided.
If someone goes off on a tangent when asked a question, ask again for a rough estimate.
It’s ok to ask for a discount or an adjustment.
Asking for a final and best offer is considered a bit aggressive.
Koreans won’t say “no”, instead they will say, “it will be a little difficult”.
Expect there to be multiple rounds of negotiations.
It takes at least a week to finalize details.
The decision maker doesn’t usually attend the meeting, and their approval is necessary to proceed.
You will most likely receive a gift near the end of the meeting.
Accept the gift with two hands and thank them. Do not open it in their presence.
What to Buy as a Gift
You are not required to give a gift unless you are a seller, but something small would be appreciated.
Company gifts (pens, umbrellas, calendars, etc.) are safe choices.
For women, Yankee Candle or L’Occitane Hand Cream.
For men, alcohol (Ballentines or Chivas Regal if you really want to make an impression) or golf equipment including golf balls as they cost double in Korea.
After the Meeting
Goodbyes are short. Repeat the same steps in the Greetings section minus the business card exchange.
Thank them for their time.
If your deal is important to them, you will probably be invited to a meal.
Expect alcohol to be involved.
Most Korean restaurants serve a few main dishes with a variety of side dishes that you can get refilled.
The main dishes sometimes come in a large pot for everyone to share.
So, people in groups tend to order the same thing.
Feel free to order what you want at a western restaurant.
The youngest staff member in each group will set up the utensils and pour the water.
You can gauge how progressive the company is if the oldest/highest ranking person helps out.
When the oldest/highest ranking person lifts their utensils, you can begin eating.
Tips at a Korean Restaurant
Do not lift plates or bowls while eating.
Do not use chopsticks and a spoon at the same time.
Close your mouth when chewing and try not to make noise.
When you’re done eating, put your spoon and chopsticks in their original position.
Koreans normally share side dishes, so don’t repeatedly touch them with your chopsticks.
Small talk during meals is uncommon, especially with middle-aged people.
Seoulites tend to eat quickly by western standards.
The oldest person or the person inviting usually pays for the entire meal.
You might find yourself fighting for the check.
If you are the seller, regardless of age, make sure to fight extra hard for the check.
If you absolutely need to pay, pretend to go to the bathroom near the end of the meal and pay at the front (this would only be acceptable if you are a seller).
I’ve been successful with this about 50% of the time, since Koreans are experts.
접대 (Jeopdae, wining and dining) is a very important part of business.
This is sometimes where the deal gets made.
A night out with Koreans will involve bar hopping and possibly 노래방 (Noraebang) or Karaoke.
You can be more informal (semi-formal would be the operative word with basic etiquette still followed) and get to know each other better.
Don’t say no to the first shot of alcohol and make sure you finish it in one gulp (Koreans call this 원샷, one shot).
When an older/higher ranking person pours liquor for you, hold your shot glass in your right hand and touch the bottom of your right elbow or the bottom of the glass with your left hand.
This same principle applies when you pour for others.
If things get really relaxed, you might find yourself playing some drinking games.
Even if you are reaching your limit, do the 건배 (geonbae) or “cheers” motion and lightly touch the glass to your lips and put it back on the table.
If you don’t drink at all, make sure you fill your shot glass with soft drinks and go through the motions.
The most important seat is the center furthest from the entrance.
The second most prestigious is next to the most important seat, where the two can converse.
The least important seat is near the entrance.
If you see that an older/higher ranking person’s glass is empty, pick up the bottle with your right hand as to cover the label.
Touch the bottom of your right elbow or the bottom of the bottle with your left hand.
Pour liquor (usually soju) until it fills 3/4 of the glass.
When you drink, turn your head slightly away from the older/higher ranking person and drink.
Koreans have a variety of drinking games, some involving math.
I advise you not to play them, unless you want to drink a lot.
Make sure to follow up in two days.
Request the information you didn’t receive during the meeting.
If you do not receive it by the date promised, call them on the phone.
Expect to follow up in a week or two.
Contracts should be in both Korean and English.
It’s possible for a Korean court to invalidate a contract if the counter party didn’t understand the terms.
Avoid ambiguous and inconsistent language.
A Korean court will often balance out any contract in favor of the counter party if the terms are vague.
Expect to continually renegotiate terms, even after they have been agreed upon.
Failing that, arbitration can be the next step to resolving any differences.
Of course, make sure to designate an impartial arbitrator to make sure your interests are looked after.
Korean companies often have cash-rich subsidiaries in other countries.
It’s often better to have your counter party be one of these overseas subsidiaries.
Also, designate an overseas district to enforce a contract when possible, since it’s much easier to win a judgement in a non-Korean court.
Finally, make sure that the signing party is the one with the highest likelihood of having a judgement enforced against it (this is not always the Korean HQ).
A contract in Korea is usually a loose agreement to work together in some capacity with the particulars changing to your benefit or detriment as time goes on.
Keep this in mind and focus more on the relationship to make sure things stay balanced.
Define as many terms as possible to increase clarity and not leave anything up to the courts.
This will help you understand your counter party as their definition might differ from yours considerably.
A contract doesn’t always carry the same weight as it does in other countries.
Just because something is put in writing, doesn’t make it ironclad.
Always proceed with caution and use your best judgement.
Get the Infograph Version of this Guide here!
More helpful articles on Korea
Korean corporate titles can be very different from their English counterparts. Make sure you understand them before doing business in Korea.
Translation isn’t always fun and games. Here are some times it went really wrong.
North and South Korean are changing drastically. Here are some interesting ways they differ.
Korean tariffs and customs regulations change every few months. Here are some important differences this year.
Doing business in Korea is hard. Here are some important tips to help you succeed.
Finding good translation resources is hard. Here are some ways to choose the correct one and get consistent quality.
Translation is an unappreciated industry. Here are the top blogs that shed light on the subject.
Want to learn more about Korea? Check out these interesting facts!
Interested in Korean drinking games? Want to make Korean friends fast? Here are 21 popular Korean drinking games!
Bored at home? Looking for some new k-dramas to watch? Check out these binge-worthy dramas on Netflix approved by a Korean!
Korea has had an exceptional response to the Coronavirus. What’s their secret? Find out here!