Soruce: pixabay

Relationships Trump Profits

Relationships are important everywhere but in Korea, they can drive business decisions even at the expense of profitability.  A closer look at Korean history and culture helps us to put this into perspective.

Relationships and personal connections in Korea can be divided into four major categories: family, education, region and politics. There are others such as military unit, workplace and group activities but the four main types are most important.

So, why are relationships disproportionately important in Korea? We would like to focus on two main reasons: traditional farming culture and the modern competitive environment.

Rice is the main crop in Korea and mutual support was a key element of rice farming. Korea has a harsh climate for farming and there is only one rice harvest per year (unlike many southeast Asian countries that enjoy multiple harvests). Given the massive effort required in a short period of time for planting and harvesting, group effort was required. Floods, typhoons and other natural disasters also required farmers to work together to save their individual plots.  Man-made challenges also demanded cooperation, marauding bandits and the occasional corrupt official were better confronted by working together. Small groups were formed and participating in the group was essential to access help when it was needed. These types of group endeavors and the related values are embedded in the Korean psyche.

The importance of relationships was further reinforced in the modern, post-Korean war era.  Exploited during 35 years of Japanese colonial rule and then devastated by the internecine Korean war that twice swept across the length of the peninsula, by the late 1950s, the economy was in tatters.  Excess population swelled by refugees from the north lived on scarce land without any mechanization, natural resources or functioning infrastructure.  Life was a highly competitive struggle for survival.  Korea's only resource was 'human capital'.

Korea became the 'factory of Asia' converting (imported) raw materials into (exported) finished goods.  Jobs meant the difference between eating and starvation.  Education became an obsession as the means for economic advancement.  Access to jobs and education determined an individual's potential.  With industrialization came migration to the cities (concentrated in Seoul, the capital) lead to competition for limited housing.  Allocation of jobs, admission to schools, access to housing were all highly competitive.  Standing alone was overwhelming.  The tradition of relying on groups was reinforced in the industrial Korea.

As one benefited from membership to a group, contributing to the group became equally important.  The West is often defined as a 'transaction' culture where giving and receiving favors was 'quid pro quo'.  Korea is defined as a 'relationship' culture, advancement was achieved by contributing to and being supported by a group.  Thus, promoting the success of the group was the key more than the outcome of a specific transaction. 

A corollary of group orientation is indirect communication which evolved out of group dynamics.  Many people are aware of the concept of ‘face’ or chemyun (체면), a key to maintaining good relationships within the group.  Harmony is important for cohesion of a group so it became important to avoid hurting other peoples' feelings and to preserve their chemyun.  To this end, people tended to avoid direct communication in favor of indirect expressions, nuances and suggestions. While it may help to preserve harmony, it can have a negative impact on business as it can lead to vague and ambiguous communication. This increases the need for understanding indirect and non-verbal communication. This is called nunchi (눈치), the art of guessing your counterpart's intentions. This culture emerged because it could be less confronting to be more truthful in nonverbal communications than verbal communication. 

Many Western business people misinterpret indirect, non-confrontational communication as agreement sometimes leading to disastrous outcomes.  Likewise, the transaction-based approach to business at the expense of nurturing relationships can lead to lost opportunities. Learning how to deal with group values and strengthening personal relationships in Korea will smooth the way to better business.  Let IRC guide your way; avoid the pitfalls and capitalize on the opportunities to achieve your ambitious targets in Korea.