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Newspaper Article
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Playing by Local and International Rules
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By Tom Coyner
Korea Times
September 22, 2007
The old axiom of "when in Rome, do as the Romans do'' may
seem like practical wisdom. But sometimes that may not be your best option.
First of all, going native is a pretty tough thing to do as a foreigner.
Usually, at best, an expat can act approximately Korean and hope to get some
sympathetic appreciation from the local populace. Other times, one can be in
what seems to be a hopelessly disadvantageous position given the cultural
and language differences.
At the same time, being a Korean in Korea hardly comprises a bed of roses.
Often there seems to be more thorns than petals given the various social and
regulatory obligations and responsibilities. In this context, there are some
inherent advantages of being foreign since by being alien one is not
inferior or superior but simply separate from the mainstream. As such, one
can work by slightly different rules.
Often these rules are technically in place within Korean business and legal
parameters, but generally are not observed due to overriding social and
political concerns. Since as a foreigner -- and even as a foreign
business -- the expatriate manager may be surprised at how this can work in
his or her favor.
For example, with some small Korean companies, oral agreements may be
preferred to written ones. A foreigner's insistence on long, written
agreements can be regarded as almost insulting. Nevertheless, it is
imperative to have written agreements. Generally a foreigner can insist on
this easier than a Korean. He or she has the option to demand negotiated
agreements to be as explicit as possible due to the business cultural
differences.
This is not to say one needn't be sensitive about practical considerations
that may seem unique to doing business in Korea. A comprehensively detailed
agreement drafted by a Western company's legal department may seem to cover
all bases. Yet such a document can confuse and cause major problems during
and following negotiations. The expatriate business professional should be
prepared to redraft the head office's prepared document to say exactly the
same thing but in simpler language. Not to do so is likely to confuse the
Korean counterpart with Western "legalese,'' that in turn can lead to major
misunderstandings.
One simple approach is to break up long contractual paragraph blocks, with
the sub-clauses presented in easy to find and understand outline form. It is
often a good idea to add hypothetical examples of unusual or complicated
concepts or conditions to ensure not only agreement but also complete
understanding by all parties.
Being culturally sensitive, one should be careful in discussing
indemnification for malfeasance so as not to insult the other party. This
issue normally does not exist in purely Western business, but often a Korean
may take exception to how a Western attorney may describe the other party
being liable for potential penalties.
Addenda should be freely and fully included to contracts to specifically
point out issues such as payment terms and timing so that there is no
misunderstanding or possible variance of interpretation.
Now, all of this is a lot of extra work for the Western business person --
but it's worth it given the likely headaches and incriminations that may
follow if one doesn't do this kind of preparation.
Not only are the business cultures different, basic commercial concepts may
significantly vary in the details -- or possibly not even exist within one's
Korean counterpart's normal activities. So it can be dangerous to assume
understanding. When in doubt, define in writing.
Furthermore, Korean employees are quite frequently transferred among the
various departments. Rarely is there time for a decent handover of
responsibilities. It is not uncommon for the exiting employee to neglect to
mention to his/her replacement where one's contract has been filed.
Consequently, an extremely detailed, heavily illustrated, and well-organized
agreement, with full addenda, can be critical for getting the replacement
employee up to speed.
This kind of document can also get the new employee off the hook with his or
her boss should a disagreement arise. If the disputed matter is covered in
the agreement, clearly explained as a contingency or possibility -- complete
with hypothetical examples, the new employee can report that the matter has
already been contractually settled.
Keeping a Practical Balance
Now should it not be already obvious, the important lesson is not to get
suckered into the "cultural gotcha'' of surrendering good business sense due
to cultural differences. The Korean cultural trait of not wishing to put
things down on to paper or taking contracts as literally serious as
Westerners should be accommodated just so far. To repeat, the Westerner is
not a Korean and thereby is not part of Korea's social web of obligations
and potential penalties. As the Westerner regularly works across the
"cultural divide,'' he or she must protect the company's interests by
refusing to compromise the company's core values and policies.
It is critical to be as clear and as explicit as possible when negotiating a
strategic legal agreement in Korea. It is also important to keep in mind
that ultimately Korean contracts are fully enforceable. But be aware that
these documents are literally as good as they are written. There are almost
no additional legal safeguards beyond what appears on the paper.
So be prepared and be explicit. Most important, do not assume, but always
confirm, genuine understanding, in writing, of all points with one's Korean
negotiating partner.
Business negotiation is an exacting and demanding matter, particularly
complicated when playing by a different set of cultural rules and business
practices. The more the expatriate executive is familiar with the rules, the
more there can be a meeting of minds -- and the more success he or she can
achieve at the bargaining table. It is all to the expat's advantage to be
thoroughly familiar with the counterpart's set of mind and behavioral
patterns. At the same time, consider what one's strengths may be --
including those that may not strictly fit in the normal Korean cultural
context. The fact that other, Korean companies may not have these qualities
should not prevent the expat from leveraging those advantages in Korea.
To give an example, if one's company is challenged by government regulator,
one should establish a legal defense much as one would in one's native
country. Resist _ or at least seriously question -- advice from your Korean
employees -- and even Korean legal counsel -- to settle and compromise if
one is convinced that the company is totally in the clear. Even if there is
indeed a problem, a Western legal defense can be the best course of action.
Korean government officials are accustomed to sometimes unfairly getting
their way, since most Korean companies will quickly try to settle, even when
they are completely innocent. If the regulatory challenge is unjustified, it
is often best from the first moment to emphatically state so and get one's
legal ducks in a row. The regulator will probably not be amused, but will
also realize that dealing with the foreign company is going to be more work
and it may not be worth the hassle. Even if the regulator decides to
proceed, be prepared to act "un-Korean'' and cite chapter and verse of the
government's regulations, since often they can be used to one's advantage.
Keep in mind that Korean business practices, though often based on deep
cultural foundations, are rapidly changing. The marketplace is becoming more
open to international practices. Women and those Koreans who have lived
extended periods abroad are making their impacts, along with the changes
resulting from the wide application of broadband communications.
The above-discussed points are what one may consider being bedrock when it
comes to doing business. Bear in mind the rules are changing. Therefore, it
is wise to occasionally review and test one's understanding with a Korean
colleague, while being sure not to give up some of the advantages of being a
foreign business professional.
Tom Coyner is president of Soft Landing Korea, a consulting group
focusing on sales and human resources issues. He is
co-author of Mastering Business in Korea: A
Practical Guide.
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