Selling to South Korea

Stephen Kim, Associate, Asia-Pacific Practice Universal Consensus www.UniversalConsensus.com info@UniversalConsensus.com +1 (760) 696-0151

Opportunities

Opportunities in South Korea

7th largest U.S. trading partner, and FTA pending
15th largest economy in the world, one of the fastest growing in OECD

Opportunities

Opportunities in South Korea

Economy increasingly becoming more marketoriented, with increasing demand for FDI and technology Koreans are proven to be very loyal and hardworking business partners

Opportunities

Opportunities in South Korea

Sectors with the best potential for U.S. companies:
Automotive Parts and Accessories Broadcasting Programming and Equipment Computer Software Construction Equipment Cosmetics Defense Industry Equipment Drugs and Pharmaceuticals Education and Training Services Healthcare Technology and Medical Devices Pollution Control Equipment Renewable Energy Specialty Chemicals Travel and Tourism Wireless Broadband Equipment and Services Smart Grid Technology and Services

Cultural Background of South Korea

Cultural Background of South Korea

Business Model of Intercultural Analysis (BMIA)

1. Cultural Themes 2. Glocalization 3. Process Engineering 4. Communication 5. Time Orientation 6. Group Dynamics

Cultural Background of South Korea

Cultural Themes Include:

1. History and Social roots
2. Belief systems

3. Traditions
4. Current state of South Korea 5. Values

Cultural Background of South Korea

History of South Korea

Progress through history has a major influence on culture
Experienced many foreign invasions throughout history anti-foreigner, strongly nationalistic

Cultural Background of South Korea

History of South Korea

1392-1910: under Chinese political umbrella adoption of Confucianism
1910-1945: Japanese Colonialism antiJapanese sentiments Since liberation: American model Americana

Cultural Background of South Korea

Belief Systems
~50% no religion, ~25% Buddhist and ~25% Christian However, Confucian values dominate society
Paternalistic leadership Family-like working environment Hierarchical structure (respect is key) Importance of family ties and blood-based succession Gender inequality Collectivism

10

Cultural Background of South Korea

Traditions of South Korea

Nationalistic and anti-foreignism, but foreigners respect/interest towards Korean culture greatly appreciated Linguistically and ethnically homogeneous
High population density high interconnectedness and trends spread quickly

11

Cultural Background of South Korea

Traditions of South Korea

While domestic products are generally preferred, foreign luxury products with brand-recognition are very popular

12

Cultural Background of South Korea

Traditions of South Korea

Local presence is essential for the success of foreign firms
Large conglomerates known as chaebols dominate Korean economy Traditionally, the economy was highly coordinated by government but is becoming more liberal

13

Cultural Background of South Korea

Current Dynamics of South Korea

South Koreas economy grew 6.2% in 2010, and continues to grow
Increased affluence increase demand for quality which increase demand for technology and services FTA with America and EU

Stable democracy but highly politically and regionally fragmented demographics

14

Cultural Background of South Korea

Values
Kibun state of mind one must show the proper respect and avoid causing loss of face in front of a group of people Nunchi ability to identify anothers kibun Inhwa harmony collectivism and very cordial formal behavior Confucianism Relationships

15

Cultural Background of South Korea

Key Business Values

Importance of:
Price Relationship Negotiations Value Brand Image

16

Cultural Background of South Korea

Key Business Values

For Price
Guidelines:
Manufacturers prefer to buy lowest priced raw materials Koreans seek bundles and undervalue software Mark-up from manufacturer price to consumer price is generally 50%-150% Increasingly quality-conscious as products becoming more branded and sophisticated

17

Cultural Background of South Korea

Key Business Values

For Relationship Guidelines:
Trust is a major factor in doing business Relationship guarantees long term business and more connections prefer in-person meetings Common to go out to drink or a karaoke bar to build relationships Cold calls do not work; 3rd party introductions for mutual trust Alumni contacts and networking strong in Korea

18

Cultural Background of South Korea

Key Business Values

For Negotiations
Guidelines:
Contracts seen as gentlemens agreement Subject to many changes Saying No is viewed as impolite Build personal relations before negotiating

19

Cultural Background of South Korea

Key Business Values

For Brand Image
Guidelines:
Highly susceptible to outside influences but also highly Americanized (style, trends, technology etc.) Word of mouth very effective Established names garner more attention Tourists seek the genuine American experience think the Statue of Liberty and Hollywood

20

youtube.com/universalconsensus

facebook.com/Univconsensus

twitter.com/#!/UnivConsensus