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Koreans Hold Unique View on
Foreign Firms
By
Tom Coyner
Korea Times
Nov.
2, 2006
For
many years, the Korean market has been synonymous with protectionism in many
foreign marketers' minds.
However,
with the advent of a strong middle class and its successful struggle to
gain a genuine democracy during the past two decades, many of the trade
barriers have fallen. As more foreign products and services have become
integrated into the Korean economy, a wider acceptance of foreign
corporations has taken place.
However,
it would be a mistake to say this is a trend.
A
number of counter factors remain -- some of which are even strengthening.
Foreign
companies, especially from the major countries, are regarded with mixed
feelings.
While
high technology and advanced products are admired and coveted, they are at
the same time somewhat feared by Korean businessmen who perceive the
possibility of having to depend on them.
When
using foreign IT products and services, Koreans sometimes feel they
themselves are not up to snuff in some way.
When
work-arounds are devised using Korean solutions, many Koreans take pride in
"getting smarter" -- no matter what may be the real costs, and
often despite a lack of design for long-term flexibility.
In
recent years, however, Korea
has generally become more accommodating to foreign business, perhaps not by
choice, but by necessity as its trade and investment overseas are expanding
rapidly.
Even
though most Koreans acknowledge that Korea's economy is highly
trade-dependent, in 2004 it took seven months of deliberations and three
failed attempts for the National Assembly to ratify its first ever free trade
pact with another nation, Chile, because of the overzealous and
nationalistic agrarian interest groups.
Nonetheless,
the trend is evident in relaxing regulations on imports and foreign
investments -- though most foreign chambers of commerce would say the pace
of deregulation is still too slow.
In
relations with major trading partners, Korea tends to have a
"poor country mentality."
Just
four decades ago, it was regarded as one of the poorest in the world,
requiring much relief aid from advanced countries. Even after attaining
their present prosperity, Koreans still regard themselves as poor, needing
preferential treatment from trading partners.
Until
fairly recently, the United States had been looked upon as a generous big
brother with unlimited affluence and resources, while Japan continues to be
regarded as a country that should eternally compensate Korea for its
colonial exploitation.
Today,
younger Koreans look upon the U.S. in less favorable terms -- partially out
of concern that America seems at times an economic bully, and partially
because a large number of younger Koreans blame the US for being an
obstacle to unification of the country. In dealing with the ever-growing
trade frictions with these two major trading partners, Koreans have maintained
these attitudes.
The
readjustment of past relationships, along with the recognition of a new
relationship with China,
increasingly recognized as an economic giant at Korea's doorstep, seems to take
a long time, often to the detriment of cooperation.
Even
after becoming an OECD member in December 1996, South Korea feels a bit
disadvantaged. Korea's
2002 gross domestic product, at $898.7 billion, was 10th among the 30
member countries.
The
average GDP of the OECD members was $962.4 billion. Perhaps by other
developing countries' standards, Korea with its high tech
strengths may be viewed as a "poor little rich country." Yet
Koreans measure themselves by the standards of Japan,
the US and Western Europe.
And
from that perspective, they feel relatively impoverished.
Another
factor in relation to foreign business is the growing sense of nationalism,
especially among the younger generation.
As
the nation's economy becomes healthier and stronger, there is a growing
sense of nationalism, which may also be a latent legacy of past President
Park Chung Hee's infusion of positive thinking and somewhat chauvinistic
sentiments. More recently, under the Kim Dae Jung, and even more so the Roh
Moo Hyun governments, populism has become a key element in the population's
thinking.
This
includes a strong element of "minjok-jui" which literally means
"racism," but actually means something more akin to the Spanish
"la raza," or prideful recognition of a common ethnicity. A natural,
if unfortunate, side effect is a kind of generally benign racism that
resents foreign influences on the fate of the nation.
These
sensitive and idealistic young students who did not experience the
hardships of war or poverty are inclined to more independent and
nationalistic ideals.
The
collective, younger generation's voice in the last presidential election
was temporarily loud enough to win the acceptance of the majority of
student voters and of the general public. With a nationalist, populist government
in power, however, many of the weaknesses of this philosophy have become
self-evident.
As a
result, today there is an emerging moderate and practical _-- and at times
even conservative -- body of young people. In any event, nationalism
remains a very strong, emotional factor in the daily lives of Koreans, and
foreigners have no choice but to handle the matter sensitively.
Koreans
generally associate foreign-origin brands with quality and durability.
That's
why many manufacturers and marketers like to give even truly local products
western brand names or western graphics, even if the products are
exclusively for local buyers.
Though
nationalistic sentiment may indicate otherwise, nowhere is prejudice for
foreign goods more evident than in buyer behavior or buying habits.
Buyer
preference for quality seems to transcend ideology everywhere. In reaction
to this trend, some consumer activists have attempted to discourage the
purchase of foreign-brand products, alleging that high royalties have to be
paid to foreign licensers for using their brands on local products with the
same quality as foreign brands.
This
kind of propaganda can seep into corporate buyers' thinking, sometimes
convincing them that purchasing foreign goods represents a "loss"
to Korea as money is remitted overseas as earned profits.
Still,
the general perception of foreign companies among most Korean buyers is
rather favorable, again relating to their quality goods and services as
well as the impression that foreign corporations provide better working
conditions for national employees.
This
is counterbalanced by an overall anxiety as to whether foreign companies
can provide the same level of apparently unconditional after sales support
offered by local companies. While production quality assurance (QA) is
greatly improving, too often in the past, the quality seemed to go in after
the product was installed rather than during manufacture.
Consequently,
24x7x365 technical support has become standard in many information
technology (IT) sectors.
Tom Coyner is a long-term
resident in Korea and runs Soft Landing Korea, a business consulting firm.
Coyner can be reached at www.softlandingkorea.com.
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