Common Mistakes Companies Make When Entering the Korean Market

December 23, 2011 § Leave a comment

Even though I’m of Korean descent, I experienced strong cultural shock when I went to Korea for the first extended period of time in 2010. Then, when I went back in 2011, I thought I would be prepared for the trip but I again experienced culture shock, this time in the workplace. The lessons illustrated below are just one example of the differences between Korean and American (business) culture. Some lessons bear repeating, so if you missed this two-part article a few years back, here it is again. (Both articles by Tom Coyner, Soft Landing Consulting, 2008).

How Not to Enter Korean Market (Part I)

The basic story is that company A’s “Division Two” hired a local business development manager, ‘Mr. Kim’, but that miscommunication concerning job titles as well as American versus Korean labor laws (and termination procedures) led to the firing of Mr. Kim without due process.

Division Two’s Asia regional manager (let’s call him Mark), who had prior Korean work experience, came to Seoul from their regional headquarters and hired a bilingual Korean man (we shall refer to him as Mr. Kim) who had just turned 60 years old, though he looked and acted much younger. Mr. Kim was given the artwork for his business cards and told to produce bilingual cards in Korea.

A few weeks later, Mr. Kim was sent to Acme’s regional office for orientation. During that time, Mr. Kim showed Mark his business cards. To Mark’s chagrin, Mr. Kim’s card depicted him as president of Acme Services Korea. Mr. Kim’s real position was that of local business development manager ― a euphemism for salesman. Mark ordered Mr. Kim to recreate the cards with the correct business title.

How Not to Enter Korean Market (Part II)

Lesson: The reasons behind certain business decisions and assignment of job titles are different across countries, just as business relations and hiring/firing processes are different; so understand the Korean labor laws and cultural significance of name/position, and focus on clear communication, before assuming things are a go.

This is a common dilemma for many international companies doing business in Korea. Job titles in terms of corporate ranking and authorized delegation of authority may not be in sync with what Korean society expects of Korean males as they approach and pass their middle years. One way around this is to have within the employment contract or in a side agreement, a listing of dual titles with definitions of what the Korean manager may put on his business cards for marketing purposes and what his actual, internal title, rank and authority may be.

More:

While “termination at will” clauses are legal in the United States and possibly elsewhere, they are illegal in Korea. Even if they were legal, such clauses can be landmines for inept supervising managers who may view them as expediencies to remove an employee without concern for due process as perceived by the local market. In other words, if a local employee is terminated at will, or for some contrived reason, that employee’s personal network ― and by extension, the local market ― can view the termination as a foreign employer mistreating a Korean employee. In such a case, the company will have shot a major hole in its own foot. After all, many Koreans may surmise that if the company is willing to ride roughshod over one’s own employees, one may expect similar ethics when doing business with that company’s management.

Good lessons for any business in general, but especially relevant when crossing from Western to East Asian/Korean way of doing business.

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