“Doing business” with Korea - Understanding Korean culture and how Korean companies “do business”

2. :: “Doing business” with Korea- Understanding Korean culture and how Korean companies “do business” Objectives: Identify key cultural differences between U.S. and Korean cultures; Identify differences in business perspectives between cross cultures; and Identify key factors in “doing business”.

3. :: Outline and overview: General Overview of South Korea Overview of General Cultural Basics I. The “Cultural” component II. High Context v. Low Context Cultures (U.S. and Korea) III. Overview of Relationships (personal and business) a. Class stratification: Traditional Social Structure b. Confucian Hierarchical Order c. Corporate Hierarchy/ Positions and Titles IV. Korean Business Environment a. Factors that influence business relationships b. Business and Entertainment c. Negotiating styles d. Decision making processes V. Customer Service C. Legal Culture I. Importance of contracts and rules in Korea and how Koreans perceive procedure and rules versus U.S. Communications I. The meaning of “Yes” and “No” Dos and Don’ts Obtaining a visa for travel to Korea

4. :: OVERVIEW OF KOREA National Flag: Taegeukgi Symbolism of “Eum” and “Yang” (Yin and Yang) philosophy. The circle represents positive (red) and negative forces (blue). The four trigrams located in each corner symbolizes one of the four universal elements: heaven, earth, sun (fire), and moon (water) National Flower: Mugungwha (Hibiscus) Language: Hangeul Religion: Influenced by Shamanism, Buddhism (47%), Confucianism, and Christianity (49%).

5. :: OVERVIEW OF KOREA Geography: The Korean Peninsula (divided into North and South/Republic of Korea) lies on the northeastern edge of the Asian Continent. Its bordering countries include China and Russia to the north and Japan to the southeast.  Population: The Republic of Korea has 48 million people (2003). History: Dawn of Statehood was the first kingdom, Gojoseon, founded in 2333 B.C. Kingdoms and Dynasties ruled until 1910 From 1910-1945: 1945: Independence from Japan 1950-1953: Korean War First President Syngman Rhee acted from 1958 until 1960 Republic of Korea (South Korea) is a republic form of government. Currency: Won (KW1300=USD1.00)

6. Hardwork or Dedication 6th Sense The Group Conscious Preserving Relationships Social Hierarchy & Position Social “Face” :: NORMS and VALUES WHAT IS CULTURE? - Shared values, beliefs, behaviors, and experiences - Culture is influenced by history, religion, age, circumstances, economics, language, and education - Culture affects our decision making, how we behave, our perspective, and our expectations KoreanValues

7. :: U. S . Values NORMS and VALUES

8. :: • Germany Japanese • LOW CONTEXT CULTURE • Address business first • Words have more meaning • Value expertise and performance • Agreements by specific, formal contract • Negotiations are as efficient as possible • HIGH CONTEXT CULTURE • Establish social trust first • Actions and other nonverbal cues have more meaning • Value personal relations and goodwill • Agreements by general trust • Negotiations are slow & ritualistic Low Context High Context HIGH CONTEXT V. LOW CONTEXT CULTURESLOW CONTEXT HIGH CONTEXT USA Korea

9. :: • TRADITIONAL SOCIAL STRUCTURE • Confucius taught that everyone in society had a “role”. • Yangban – Scholars, Officials, Aristocrats • Chungin – Technicians and Administrators • Nongmin – Farmers • Sangin – Merchants and Traders • Gongin – Skilled labor (blacksmiths and carpenters) • Chommin – Despised People OVERVIEW OF RELATIONSHIPS: CLASS STRATIFICATION

10. :: • CONFUCIAN HIERARCHICAL ORDER • - Confucius taught that society is a reflection of the family unit • Father / Son: Filial Piety • Ruler / Subject: Loyalty • Husband / Wife: Distinction and Position • Elder / Younger: Respect • Friends / Friends: Trust OVERVIEW OF RELATIONSHIPS:

11. :: • CORPORATE HIERARCHY • Everyone has a role and position/title • That role dictates the acceptable behavior between individuals (subordinate/superiors) • verbal language • body language • privileges • POSITIONS & TITLES • An individual’s position will determine how others relate to him/her • Where one sits • How he/she is treated • In business, Koreans will never address each other by first name • Use of last name • Use of title OVERVIEW OF RELATIONSHIPS

12. :: • Blood Ties • School Ties • Birthplace and where one’s family comes from • “Who you know” • Family background and history • History with business society or individuals • Method of introduction FACTORS THAT INFLUENCE BUSINESS RELATIONSHIPS:

13. :: • Entertaining and socializing after work is an important component of “doing busienss” in Korea. BUSINESS AND ENTERTAINMENT: Business is usually formalized during dining and drinking Koreans drink considerably more than most Westerners A cup may be shared and passed among the “group” It will be your neighbors duties to keep your glass full/ you should do the same If you do not drink; it is acceptable to say you are on medication The person who is inviting or hosting usually pays/ “Going Dutch” is never done Karaoke or singing is a common event during entertaining

14. :: • Korean: • Maintaining a good mood • Preserving social harmony • Things can be worked out later • Remaining flexible and adaptable to changes (depending on circumstances) • Emotions are used to persuade • Aggressive bargaining as relates to price • Long term • U.S.: • Price • Quality • Timing • Something for something/logical NEGOTIATING STYLES:

15. :: • Korea: • TOP DOWN, TOP DOWN (Hierarchy) • Slow/impossible or extremely quick • Important to know who is making the decisions • Decisions are not always made on facts and data; relationships; circumstances; and other factors are considered • U.S.: • Top down; however input is taken and considered • Matrix • Authority given at different levels of management / able to bypass • Decisions are made on facts and data DECISION MAKING PROCESSES

16. :: • Customer is “King” • In Korea: the “Top” customer is “King” • “Big” customers are given priority • Suppliers will bend over backwards to make sure that their biggest customers are happy • The more you spend, the more attention and perks you are given • If you are a supplier and you are “courting” a big customer, you are expected to do all things necessary to meet the needs of the customer • Competition for the “big” customer is fierce • In the U.S.: All customers are important • Customer service is generally nondiscriminatory • There are other fish in the sea • No matter who the customer is; there is no expectation to tolerate unfair on unreasonably treatment CUSTOMER SERVICE

17. :: • Korea: • • Contracts are general guidelines, which are subject to change depending on the circumstances • • Underlying relationships dictate behavior • • Preserving a “good feeling” in the beginning is important • Tip: Use Letters of Intent versus formal contracts at the start of the negotiating process. • U.S.: • • Contracts are the basis for relationships and are literally relied upon • • Contracts are essential prior to beginning a business relationship and are given weight over circumstances; if the circumstances change, “too bad” LEGAL CULTURE

18. :: • Korean meaning of “Yes”: • “I understand” or “I will do my best” • U.S. meaning of “Yes”: • “I will do it” or “I agree” • Korean meaning of “No”: • Koreans usually do not say “No”. Koreans usually • make the circumstances unfavorable • or avoid answering. • U.S. meaning of “No”: • Americans generally say “No”. Americans value being “straight forward” and not wasting time. MEANING OF “YES” AND “NO”

19. :: • Do understand the differences in communication styles • Do build a relationship • Do use feelings and emotions to persuade • Do your homework with regards to the person’s position and role in the company • Do assess a situation /timing • Do take the time to entertain • Do use an intermediary or consultant • Do expect to bargain • Do try to eat the local food • Expect to partake in drinking, entertaining, and singing • Dress appropriately depending on who you are meeting • Do pay attention to people’s business cards • Do ask personal questions (shows you are interested in the person) Dos:

20. :: • Do NOT criticize • Do NOT throw objects (business cards, papers) • Do NOT put your feet up on a desk or chair • Do NOT wear your shoes into someone’s home • Do NOT make noises or faces and foods you do not like • Do NOT stick your chopsticks in your rice • Do NOT joke and act informally in front of someone with a high ranking title during a business meeting • Do NOT sign your name in red ink • Do NOT use the telephone for important issues; face to face is preferred • DO NOT overuse email • Do NOT project your cultural expectations Don’ts:

21. OBTAINING A VISA: GOTO www.chicagoconsulate.org NOTE: U.S. CITIZENS MAY TRAVEL TO KOREA AND STAY WITHOUT A VISA FOR UPTO 30 DAYS; EXTENSIONS CAN BE GRANTED IN KOREA, IF NECESSARY. The following information was copied from www.chicagoconsulate.org I. General Information Following is the general information for U.S. citizen's Korean Visa application. In principle, U.S. citizens need to have a Korean Visa to enter into Korea, but they can visit Korea within 30 days without the visa for the purpose of tourism or transient stop-over. Normally, it takes 2-3 business days to process a visa application.* The following items are required for all visa categories:1. Valid passport and 1 copy of its personal data page2. A completed visa application3. A passport picture (2x2, color) attached to application4. Visa Fee : US citizen $45 (non US citizen : check with visa section) * Money order only - pay to : Korean Consulate General - Cash accepted in person 5. Self-addressed, pre-paid envelope for return of the passport by mail6. Foreign nationals with U.S. permanent residency : copy of Alien Registration Card (front & back) The category of Korean visa varies depending on the application's period and purpose of stay.The following is the detailed information about the frequently asked visa category. 1. Short-term Visitor status(C-3)   - US citizens who want to visit Korea for the purpose of tourism, academic conference,relative-visitation, religious ceremony, etc, within 3 months are required to apply for C-3visa. - In case of US citizens, a 5-year valid multiple entry visa is usually issued. - This visa holder can stay up to 90 days at a time when he/she visits Korea - The necessary documents are as follows1) Valid passport 2) Completed visa application form with photo attached. 2. Short-term Business status(C-2)   - US citizens who want to visit Korea for the purpose of business such as marketingresearch, business negotiations, pilot operation of export machines, etc, within 3 months are required to apply for C-2 visa. - In case of US citizens, a 5-year valid multiple entry visa is usually issued. - This visa holder can stay up to 90 days at a time when he/she visits Korea - The necessary documents are as follows1) Valid passport 2) Completed visa application form with photo attached. 3) Notarized letter from the hiring company (content must indicate the purpose of the journey, references in Korea, guarantee of expenses, etc)

22. :: • Q & A • If you are interested in executive or customized cultural business training as relates to South Korea, please contact Skye Suh at 248-932-8844 or email: mail@skyesuhplc.com