Business Customs
At first glance, Korea appears to be "just like any other nation." Its capital city, Seoul, is a modern, thriving metropolis with all of the latest technology the world has to offer. All over Korea, you'll find first-class telecommunications, the requisite five-star hotels, Western restaurants, modern transport systems (including very efficient subway networks in Seoul and Busan), innovative architecture, and so forth. Nonetheless, it is still very Korean and it is imperative that any American doing business in Korea realizes that Seoul is not Los Angeles (even though the latter, in fact, has a sizeable Korean community). Every year Korea becomes more and more modern, but it is important to recognize that modern does not equal Western. Koreans will not expect you to be an expert on the nuances of their culture, but they will appreciate a show of interest in matters that are important to them. Koreans generally appreciate a foreigner’s effort in expressing a thank you (gam-sa-ham-ni-da) or a hello (an-yong-ha-say-yo) in the Korean language.
Though Koreans have transitioned greatly into Western society, the traditional ways of thinking in many areas are still practiced. Koreans have a great respect for the family and hierarchy. Extended families (i.e., parents living with middle-aged married “children” and their grandchildren) are still commonplace, although this is rapidly changing. Among the older generation, the father is the primary wage earner, while the mother stays at home. Due to changing social mores and economic pressures, the necessity for families to have double incomes is rapidly growing in Korea. Although fathers are the primary income earners, in the majority of cases, salaries are entrusted to their wives and most day-to-day consumption decisions are at the discretion of the female spouse. US companies may wish to take into consideration these traditional family roles when marketing to Korean consumers.
Even though there are incremental changes in Korean attitudes and women are making progress, women professionals at the highest levels are still very rare. In Korean companies, the majority of working women, many with top university degrees, are still relegated to secretarial jobs, accounting or educational work. Many qualified women welcome the opportunity to work as a professional with a foreign company whose attitudes toward gender equality and professional respect and responsibility prevail.
Koreans still have a great respect for anyone senior in age, and intuitively establish their hierarchical position relative to others based on age. Indeed, one of the fundamental principles of the Korean language is based on the plethora of verb endings, which indicate the level of respect accorded to another person. In addition, a man generally receives more respect in the business world than a woman, though foreign businesswomen (especially, non-Asian looking women) are accorded almost an equal amount of respect as foreign businessmen. Single women generally receive less - respect than married women whose ties to their husband oftentimes establish their position in society. The American businessperson, as a foreigner, is generally exempt from the above societal classification system, although one should be prepared to answer questions that Koreans may regard as common to establish societal hierarchy but which foreigners may regard as personal, such as questions about age and marital status.
Americans should be ready to mix business with social life as the Koreans base their business relationships on personal ones. The heavy drinking of the Korean alcohol, Soju, beer, scotch, or other liquor is commonplace in establishing a personal, business relationship. Also commonplace is the “no-rae-bang” where a group of businesspeople go to an establishment to drink and sing along to a video machine playing music. As most no-rae-bang machines come equipped with songs in English, a businessperson may want to be prepared to sing at least one song in order to gain social favor with their Korean counterpart. Although not as common as the no-rae-bang, businessmen should also be aware of “room salons” where Korean women serve food and drink to their patrons.
When doing business, Americans should be sensitive to Korea's historical relationship with Japan, which made a virtual colony of the Korean peninsula. Because of the Japanese colonial period, Koreans have an emotionally intense reaction at times to things Japanese, though there is an admiration for Japanese business acumen. A businessperson should show great respect towards Korean society. Any comparative mention of Japan versus Korea, where Japan has the upper edge may harm a business deal.
Korea still observes Confucian ethics based on strong ties to a group. Whereas an American may think in individual terms, (i.e., what is in my best interest?), a Korean frequently thinks in group terms, (i.e., what is in the best interests of the group and how can I help to maintain harmony within the group?) For this reason, the majority of Koreans are intensely patriotic, calling Korea by the term, “oo-ri-na-ra,” (“our” country). In order to close a deal when negotiating, the benefits for the group, whether for the company or country, should be emphasized.
For Koreans, relationships are all important. "Cold calls" don't work and introductions are crucial. Koreans want to do business with people with whom they have formed a personal connection or whereby a mutual intermediary has made an introduction. As alumni contacts are a major source of networking in Korea, a particularly well-connected Korean will have attended a prestigious Korean university such as Seoul National University, Yonsei University, Korea University or Ehwa Women’s University.
The exchange of business cards is very important and a means by which Koreans learn about the name, position and status of the other person. Koreans observe a very strict hierarchical code whereby Koreans will generally meet to discuss business with persons of the same, parallel rank. Businesspersons should always have their (preferably bilingual) business cards ready and should treat the exchange of a Korean counterpart's card with respect. (It is a sign of respect to receive and present items with both hands, followed in business etiquette by passing and receiving a card with the right hand. One should never give a card, or anything else for that matter, with the left hand as it shows disrespect). For historical reasons, Chinese characters, which Koreans can generally understand, are regarded as more sophisticated. As such, a business card written in Chinese characters can serve for a business trip to Korea, China, and Japan.
Negotiating style is particularly important. Koreans can prove subtle and effective negotiators, and a commitment to a rigid negotiating stance early on may work to the American's disadvantage. Your offer may include the best price, technology and profit potential but still be turned down because the Korean customer does not like your style.
An important point to keep in mind concerns the nature of reaching an agreement with a Korean firm. Westerners attach great importance to a written contract that specifies each detail of the business relationship. Koreans, on the other hand, value a contract as a loosely structured consensus statement that broadly defines what has been negotiated, but leaves sufficient room to permit flexibility and adjustment. The Korean Government has attempted to address this dual perception by formulating "model" contracts for licensing technology and other arrangements. Both parties must be assured that the obligations spelled out in a negotiated contract are fully understood.
Most Koreans have three names. These names usually follow the Chinese pattern of a surname followed by two given names. In a Korean household, all brothers and sisters have the same last name and a common given name; the only distinguishing mark is the remaining given name. In addressing Koreans, foreigners should observe the use of surnames (e.g., Mr. Kim; Ms. Lee), using formal titles if possible (e.g. Dr. Yoo; Director Song). The most common last names are Kim, Lee, and Park. In the use of formal titles as appropriate, one should always be familiar with the complete name, including the two given names, for identification purposes, as there may be several Mr. Park’s or Dr. Lee’s in the same company and even the same work space.
Telecommunications
There are three types of public telephones; prepaid, credit card and coin phones. If you want to make a local call in the same city or province, simply dial the phone number with no area code. For international phone calls, press the red button and then dial 0072911 for AT&T, or 0072916 for Sprint. However, please note that it is often difficult to find a public pay phone because Korea has one of the highest penetration rates in the world for mobile phones. The most convenient way is to rent a mobile phone upon arriving at Seoul-Incheon International Airport. You can either contact the numbers below for reservations or simply sign up for a rental phone at the rental desks at the airport.
SK Telecom: 82-32-743-4011/4042 KTF: 82-32-743-4018/4078 LG Telecom: 82-32-743-4001/4019
The mobile phone penetration rate in Korea is 94.8 percent, with about 45.5 million of Korea's 48 million population subscribing to three different local carriers, SK Telecom, KTF, and LG Telecom. Currently Korean mobile technology is based on both Code Division Multiple Access (CDMA) and Wideband CDMA (WCDMA), which can offer roaming capabilities for Global System for Mobile Communications (GSM) based technologies.
Korea ranks among the top countries in the world in terms of Internet usage and broadband penetration, primarily on xDSL or cable networks. KT and SK Telecom are two major facility-based wireline telephone operators and broadband service providers. There are also many small-and-medium sized Internet service providers. Korea also boasts its unique 'PC Baang (room)' service that offers broadband access services outside homes with the latest computer systems, charging by the amount of time used. Major urban hotels are also fully equipped with broadband access services for hotel guests' computers. Several upscale hotels and coffee shops have established hotspot zones in their lobbies for wireless Internet access. Satellite Digital Multimedia Broadcasting (S-DMB) and Terrestrial DMB (T-DMB) and services are now available through mobile operators and broadcasting companies respectively. DMB services allow users to watch digital TV programs on their DMB-ready mobile devices, including cell phones, PDAs, and Personal Multimedia Centers (PMCs). Internet Protocol TV (IPTV) service has also been launched since November 2008, by major Internet service providers.
Transportation
Flying time for direct flights from the U.S. to Korea ranges from 12-16 hours, depending on the point of departure. Flights with connections can take as long as 18 hours, door to door.
Incheon International Airport is the primary gateway for international travel to and from Korea. The new state-of-the–art airport is one of the most modern in East Asia. Incheon Airport is currently only accessible by car or bus, however, construction of the Incheon International Airport Railroad (A’REX) is nearly complete. The first 37.6 km segment from Seoul-Incheon Airport to Gimpo Airport opened in 2007. Service to and from Seoul Station is scheduled to begin in 2010. Airport buses and taxis are widely available, although availability may be limited late in the evening. Travel time to Incheon Airport from downtown Seoul typically takes about one-and-a-half hours. The only road to the new airport is a toll road, which charges 6,700 Korean Won (approximately USD 6) per passenger vehicle.
The cost of travel by taxi from downtown Seoul to Incheon Airport averages 60,000 ~ 80,000 Korean Won (approximately USD 70 ~ USD 90), although some taxis charge more. Some taxi drivers also charge higher fares to make up for revenue lost by having to drive back to Seoul without a passenger. If this happens, the traveler should contact the airport authority (032-741-2422) and provide the taxi’s license plate number so the authorities can take action and have the driver banned from driving to the airport.
A less expensive option is the widely available airport bus to/ from major cities in Korea. City Coach and airport buses cost 8,000~13,000 Korean Won (approximately USD 9 ~ USD 14) and depart from various locations throughout Seoul about every 15 minutes. Korean Air offers an airport/hotel shuttle bus service (KAL LIMOUSINE), which costs 14,000 Korean Won (approximately USD 16). These buses have several different routes, so it is necessary to check the route prior to boarding. KAL airport limousine buses depart every 20 minutes from major hotels throughout the city. Even though these two bus services are substantially cheaper than taking a taxi to Incheon Airport, passengers must factor in extra time, given the additional stops to pick up passengers at the various hotels.
Seoul’s public transportation system is very well organized. With nine subway lines and city buses that service the entire city, as well as a multitude of taxis, traffic is the only major obstacle to movement. The seemingly endless rush-hour traffic can be a major hindrance, so early preparation, as well as patience, is required. Fortunately, buses takes less travel time than taxis because of a bus-only lane traffic system. The Seoul Metropolitan Government maintains an English language interactive bus map that allows passengers to obtain bus route and schedule information based on point of origin and destination.
Public transportation is also recommended for travel throughout Korea. KTX provides high-speed transportation to major cities throughout Korea. There are also intercity urban railway networks connecting Seoul to the rest of the country. Travel by bus also provides a cost-effective way of navigating throughout Korea.
Language
Korean is the official and accepted business language. English is taught throughout primary and secondary school, and is spoken at some government agencies and companies that engage in international business.
Local Time, Business Hours and Holidays
Local Time Zone: Korea is 13 hours ahead of Eastern Standard Time during daylight savings time, and 14 hours ahead of Eastern Standard Time at all other times. Korea does not subscribe to daylight savings time.
Business Hours: Business hours are normally from 8:30am to 5:30pm Monday through Friday, and 8:30 am to 1:00 pm on Saturdays for some government agencies.
Temporary Entry of Materials and Personal Belongings
Travelers are allowed to bring USD400 worth of goods into Korea duty/tax free. Goods bought overseas or bought duty/tax free before leaving Korea are included when determining your duty free allowance. Common examples of acceptable items include: cameras, electronic equipment, leather goods, perfume concentrate, jewelry, watches, sporting goods, new clothing, footwear, articles for personal hygiene/grooming, one liter of alcoholic liquor (including wine, beer or spirits) for travelers aged 20 years and over. The tobacco allowance is 200 cigarettes, 50 cigars and 250g of tobacco products, other than cigarettes, for travelers aged 19 years of age and over.
Personal goods that you have used may also be brought into Korea without payment of duty and tax (proof of the date of purchase may be required). Your clothing, toilet articles, personal jewelry (including watches) will be admitted free of duty and other taxes irrespective, if they accompany you or are sent separately, provided: 1) They are intended for your own personal use or wear; and 2) They are not intended for any other person or persons or as a gift, sale or exchange.
Commercial quantities of individual items are not permitted under the provisions of this concession since the term "personal effects" only covers used articles or those that a traveler may reasonably require for his or her personal use during a journey.
Members of the same family who are traveling together may combine their individual duty/tax free allowances.
Gifts (given to you or intended for others) are counted as part of the USD400 duty free allowance.
Non-residents must declare in writing to Korean Customs all foreign currency with a value in excess of USD 10,000 that they carry into or acquire in Korea. This rule is enforced. When buying Korean Won in Korea, be sure to keep the receipt(s) because re-exchange is allowed up to the amount specified in the receipts. Without receipts only USD 500 worth of Korean Won can be re-converted into USD.
Articles in Excess of The Duty Free Allowance
All goods and proof of purchase must be declared to the Korea Customs Service (KCS) for calculation of any duty and tax to be paid. Customs will collect customs duty, VAT (Value Added Taxes) and special consumption taxes on imported items. The KCS has adopted a Simplified Duty Rate that reflects all duties and taxes to facilitate customs procedures.
It is important to note that there are different rates of duty and tax. When purchasing items, caution should be exercised to ensure that the imported items are not in excess of the duty/tax free allowance. For further information, contact Korean Customs or go to their website at www.customs.go.kr/eng/.
Calculation of Customs Duties And Payment Method
Customs duty and other taxes, where applicable, are levied on the transaction value of the goods, i.e., the price actually paid for them. Where there is no identifiable transaction cost (such as a gift), Customs will endeavor to have the goods valued independently. Payment will only be accepted in cash and in Korean Won. Passengers cannot pay Customs duties by credit card or any other means of payment.
Business Travelers
Business travelers carrying commercial goods or samples may need to obtain permits for their goods depending on the nature of the goods, regardless of value. Quarantine and wildlife regulations and other restrictions may also apply to certain goods. Laptop computers and other similar electronic equipment for personal/professional use may be brought in duty/tax free, provided Customs is satisfied that these items will be removed from Korea on departure.
Temporary Importation of Commercial Goods
Carnets may be obtained for temporary duty/tax free entry of goods such as commercial samples, jewelry, goods for international exhibitions, equipment for sporting events, professional televisions and film equipment, etc. Contact your local International Chamber of Commerce for application details.
For more information on importing goods, the International Cooperation Division of the Korean Customs Administration can provide assistance with general customs questions.
