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Business relationships in Korea

Business relationships in Korea are an essential ingredient to success. I hear you building relationships is essential for doing business everywhere, but I cannot emphasize enough, just how important business relationships in Korea are.

Developing relationships is usually done through informal social gatherings that generally involve a lot of eating and drinking.  That goes for new workers joining a company and new business acquaintances.

Although sometimes these gatherings may seem informal they are also used as an opportunity to discuss business in a more relaxed and friendly way. So polite, respectful behaviour is required and expected.

Koreans feel a closer bond after they have eaten a meal and drank alcohol together. Even if you don’t enjoy drinking alcohol, try to participate in at least one toast during the meal. 

If you cannot, or don’t want to drink alcohol at all, your Korean hosts will understand so don’t feel under too much pressure. But be aware that some people will view it as an essential stage in the building of relationships.

These days many Koreans don’t drink, especially for religious reasons. Just be honest and say why you don’t drink. 

Simply, ‘not liking’ alcohol is not really considered a good enough reason. Health or religious reasons are.

The Dark Side of Business Relationships in Korea

There is a dark side to tax deductible business ‘entertainment’ in Korea, although it is becoming less common in business negotiations and after-work entertainment. 

However, there are still plenty of establishments offering a range of services for businessmen, from karaoke clubs where young pretty girls serve you drinks, to business rooms or salons where girls will entertain and perform additional services. 

Of course there are seemingly endless opportunities for hedonism in brothels and massage parlours and through escort services, which although illegal are blatantly advertised everywhere across the length and breadth of the country. Many will refuse entry to foreigners.  

If you are invited to Karaoke by a business associate it will most likely be an innocent experience of poor singing and overpriced side dishes, but one should be aware that seedier establishments and practices are also commonplace.  

Koreans tend to be less open about this style of entertainment with foreigners. But some businessmen believe this is the best way to create strong business relationships in Korea

Only once in my time in Korea did I find myself invited to a bar where the menu included additional human options with horrendously overpriced whisky, squid and peanuts.

Dinner Invitations

Always accept dinner invitations as Koreans will have put a lot of thought into the venue and how they want to use the opportunity to conduct business with you.

Business entertaining tends to be reserved for the people directly involved, so it is not common to extend the invitation to spouses. 

The host will usually order the food, and when it arrives wait until the host invites you to start. 

At the end of the meal, the host will pay. 

The other party can offer to pay for the second round, coffee or more alcohol, or a meal at a future date.

Home Invitations

If you’re invited to a Korean’s home then it is a great honour and should be accepted as such. 

You should take gifts such as fruit, good quality chocolates or flowers and as always present the gift with two hands. 

Gifts are not opened immediately when received and will be done so later, so don’t assume your gift is unwelcome if it is swiftly placed to the side.

Dining Etiquette

When it comes to settling the bill, the host will usually pay for the meal. Nevertheless, a good-natured argument over who will pay is to be expected. 

It is also polite for the foreigner to offer a reciprocal dinner invitation.

On the whole, dining etiquette in Korea is similar to that of most countries. 

Don’t blow your nose at the table, don’t chew with your mouth open and so on. 

Although don’t be surprised if your Korean host noisily slurps on their cold noodles, it just means they are enjoying them.  

Koreans also tend to use their mobile phones during meetings and dinner more frequently than you would expect in the west.  

One Rule to be observed for the visiting foreigner is never leave chopsticks sticking into your rice bowl. 

This represents offering food to deceased relatives, so is therefore both shocking and uncomfortable for people to see.

When not using chopsticks to eat, place them on the chopstick rests or to the side of your place setting when you are not using them. 

Some more quick tips for dining to help forge good business relationships in Korea:

  • Don’t serve yourself at the start of the meal or start eating before the host initiates it. 
  • Always put food onto your plate or bowl, from a serving dish, before eating it. 
  • Use only the right hand when passing food around the table. 
  • Chopsticks and spoons are used for eating. 
  • Avoid picking up food with your fingers. 

Marketing in Korea

When it comes to Marketing in Korea, there are many differences, quirks and behaviours to consider.

Korea is the most connected country in the world and is the result of strategic government policies and investment. Starting in 1995, the government initiated the Korean Information Infrastructure project.  A 10-year program that started with laying internet infrastructure between government buildings and rolled out country-wide broadband by 1998. By the year 2000, South Korea had connected nearly half of its 45 million citizens. (Source IDG)

In 2018, the internet penetration rate peaked at 96%, while the internet usage rate had reached 91.6%, according to Statista. It is not just young Korean’s who are highly active online, Koreans in their 50s, 60s, and older are also connected and comfortable using online services, especially shopping. eCommerce is huge in Korea with super fast delivery and highly competitive prices driving a dynamic market.

Not Surprisingly marketing in Korea also has its specific quirks. Korea has its own search engine, blogging and advertising platform, in some ways similar to google, but at the same time very unique.

https://www.linkedin.com/posts/seoul-startups_digitalmarketing-seoulstartups-workingtogether-activity-6650860256668762112-rXSx

NAVER

Naver is the goto place for information in Korea and like google this has also become a verb, “Naver it” is the war-cry of curious Korean keyboard warriors. Naver is extremely powerful in Korea and provides all the expected services such as Blogging, Map, search, and chat (via its LINE app).  Line is the second most popular messaging app in Korea, with Daum Kakao’s Kakao Talk reigning supreme.

If you are launching a business in Korea then it is essential that your business can be found through a simple Naver search. SEO exists in Naver but it is “Paid Results” that take the top spot in the search results. 

Naver does display organic search results, but these appear after the paid listings. Organic results often won’t be shown until page three or four of search results, so ‘pay to play’ is essential for marketing in Korea.

Naver’s CPC (Cost Per Click) platform is called Power Link and is a paid advertising system that operates with a public bidding style. Fees vary by keyword popularity and the keywords cannot be capped individually, although the total spend can be capped to allow for budgeting.  You will need to pay in advance for power link campaigns. 

Naver shows top 10 results for a given keyword on page 1 on PC and Top 3 results on Mobile. Bear this in mind when planning campaigns and budgets as Korea is heavily mobile-first. If you are not in the Top 3, then you risk being invisible to your potential customers.

Naver has a number of Categories that could display keyword results, Naver Cafe, Naver Blogs, Naver Encyclopedia, Naver maps, and Naver Images, but remember that Naver Organic results are shown way below any paid listing, in any category.

Another, probably obvious, point I should make clear is that Naver searches and results are in the Korean Language. So you will likely need some local assistance to get your Korean marketing machine up and running.

Marketing success in Korea takes some investment, a business registration number, and a loyal following.  

The Power of Reviews

Reviews and testimonials are huge in Korea. To succeed you need to get people talking about your business… on Naver. Korean’s tend to be highly influenced by their peers and product and style trends can explode and disappear quickly, with online recommendations the driving force for propelling trends. Particularly in the food industry, the power of recommendations has resulted in many restauranteers paying for positive reviews to achieve ‘Delicious house’ (맛집 mat’chib) status. Influenced by the recommendations of other’s, restaurants with ‘맛집’ status can easily be spotted by the long queues of foodies eager to sample for themselves.

Influencers

Social media is also huge in Korea with Bloggers, YouTubers and social media influencers, posting in their thousands from, Seoul’s wonderous selection of cafe’s and restaurants. Exercise and Diet themed accounts on Instagram are also popular with Korea’s youth providing a great deal of choice for companies looking to use influencer’s to market their products.

Summary

Due to the unique social dynamics of Korean society, and the high internet penetration rate marketing in Korea is a complex beast and can be confusing and complicated to navigate alone, but the opportunity is huge. 

Check out the book: Business in Korea: A guide fo foreigners

5 facts about Korea and why startups need to care (in 2021)

If you haven’t considered Korea as a base to launch your startup, here are 5 reasons why you should. Funding and support from government, corporate, and global venture capitalists are just some of the reasons Seoul has one of the best startup ecosystems in Asia. In this article, we explore 5 facts about Korea and what they mean for startups in 2021.

1. A Highly Educated Savvy Population

There are 53M People in Korea and 26M live in the greater Seoul area. A bustling metropolis of tech obsessed highly educated citizens, each with a smartphone and credit card. Koreans are early adopters, quick to propel trends about new products through word-of-mouth and an active and influential community of netizens.
Sixty-five percent (65%) of the nation are college graduates and with many having an international education they are sophisticated and demanding Tech Consumers with reasonable Levels of English. Korea is growing in popularity across Asia and beyond not only as a producer and exporter of high tech products but also for its obsession with food, fashion, music and beauty. These are ideals and standards with massive global appeal.

2. A Top 15 Global Economy

Despite its relatively short history as an economic powerhouse Korea ranks in the top 15 global economies, with a GDP of more than US$1 TN. Speak to a Korean over the age of 40 for any length about the economy they will probably talk about 3 things; the Korean War, hard work, and being a shrimp between two whales. The Korean war came after centuries of isolation and oppression placing korea far behind the west’s definition of a developed country. The devastation of the Korean War left Korea as one of the poorest nations in the world but as you walk around the centre of Seoul, today, 65 years after an armistice ended fighting on the peninsula today’s Korea couldn’t be more different. Home to flagship designer boutique stores, and internationally renowned modern architecture it looks much like any other major city, but with a pleasing and uniquely korean flavour.  Its days as the shrimp between production behemoths China and Japan are definitely numbered, if not firmly resigned to history. It’s location serving as a hub for the asia region with more than 2 billion financially solvent and hungry consumers on its doorstep.

3. A World Class Infrastructure

Due to its excellent infrastructure, reasonable cost of living and proximity to Japan and China South Korea is considered one of the most comfortable places to live in Asia.  It is no secret that Korea has the fastest average internet speed in the world. Akamai Technologies ‘State of the Internet’ report revealed that in 2017 Korea’s average speed of 28.6 Mbit/s was a massive four times the world average. But that’s not all, perhaps a more staggering achievement is that 99.5% of Korean households have internet access and according to data published by OECD, over 40 Million mobile Internet users, who from March 2019 will have access to 5G connectivity.  The rest of Korea’s infrastructure is not left behind with the total length of national highways in South Korea reaching approximately 14 million kilometers in 2017. The six major cities in Korea each have a subway system and there is an extensive and affordable rail and bus network connecting Korea’s main cities, ports, airports and tourist sites. South Korea is the third country in the world to commercialise a maglev train which provides a high speed connection to its award winning Airport. Incheon Airport has received the Airports Council International’s Airport Service Quality Award for the last 12 consecutive years.

4. A Global Business Player

Korea enjoys FTAs (Free trade Agreements) with 52 Countries and is home to an increasing number of desirable cosmetics brands and numerous global leaders such as those listed below.
Samsung, the world’s largest exporter of semiconductor chips and Apple’s leading supplier. Samsung also dominates as the largest smartphone manufacturer, based on recent figures, with 23.3% market share.
Posco, the world’s fourth largest steel exporter handles 7% of the worlds crude steel, over 40 Million Tonnes.
Hyundai, carries the title of the world’s 5th largest automaker based on annual sales (when you include its subsidiary, KIA).
LG, combined with Samsung make South Korea the top exporter of LCD screens with a 40% market share.
Korea can also lay claim to producing 6% of the world’s electrical goods, 29% of the world’s shipbuilding exports. And as home to one of the world’s busiest shipping ports has established itself as an important player in the global supply chain.

5. The Best Startup Ecosystem In Asia

It is not by chance that Korea has the best startup ecosystem in Asia. In 2015, the Korean government established plans to position South Korea as regional start-up hub by placing $3B USD on the table and more recently in 2017 pledged to establish a $9B USD venture fund made up of public and private finances. This bold commitment to the start up community has firmly positioned South Korea as having the highest government backing per capita for startups. There is a long list of government agencies tasked with supporting startups and a number of corporate funds providing several routes to funding,  free office space, legal and financial advice, and an acceleration program specifically aimed at foreign startups. This commitment has not gone unnoticed, Google, SparkLabs and other big names have also set up operations in Seoul over the last three years.

BONUS REASON

Resilience and organisation in challenging times. Korea has led the world in the fight against Covid-19. Quick to spring into action with containment, quarantine, track and trace, speedy testing, and avoiding a lockdown with very few cases of infection. Korea has shown the world a pretty compelling reason why it is worth considering as a base for launching a business.

Conclusion

These are just some of the reasons that make Korea an excellent choice to launch a startup. Korea is attracting more and more foreign students, many fall in love with Korea (or in Korea) and want to stay generating a growing pool of qualified international talent. Of course, there are some hurdles to overcome but the benefits are greater than the barriers. And the commitment from government, local and International business shows a promising future. And as is often the case, those that get in early have most to gain.