Business negotiation Korean style
Koreans are clever, forceful negotiators. They are not conditioned by any sense of fair play, of not taking advantage of a weaker adversary. They will take all they can get. There is also the very strong feeling that foreigners have so much and Koreans have so little that it is only right that Koreans get more than the foreign side out of any relationship.
One vital point the foreign manager should keep in mind when in Korea to negotiate any kind of arrangement is to never let the Korean side know when you are scheduled to leave. If you do, they will invariably lead you on and wait until the last minutes or even seconds to inform you that they cannot accept your terms. This puts the foreign visitor under tremendous pressure to make last-minute concessions in order not to go home empty-handed.
Typically, say old-timers, the visiting American executive reacts in one of two ways: the American “gets hot, blows a gasket, and kills the deal, or he gives in and lets the Koreans have what they want.” Japanese business people are experienced at this sort of brinkmanship, however, and are usually able to play the game with as much finesse as the Koreans.
A similar approach is often taken in labor-management negotiations, which union leaders assuming seemingly irreconcilable positions until the last few seconds of a deadline, when they will suddenly accept a compromise.
It is essential that foreign negotiators know their own products and company, know clearly how flexible they can be, and be as knowledgeable as possible about their Korean counterparts. Foreign business people often negotiate deals or contracts with Korean companies without leaving their hotel, having only the name and very general information about the Korean side.
Like their Japanese cousins, Koreans negotiate in groups and are masters at wearing opponents down. The more important the relationship, the more troops the foreign executives should bring along.
Because of the personal, emotional nature of business relationships in Korea, how one negotiates is just as important as what is being negotiated. Koreans will not – or cannot – come to an agreement until they feel comfortable with the people involved; that is, until they like and trust them. This is true no matter how good the deal is or how much they might want it. since communicating and communing across the Korean/Western cultural barrier is a demanding task itself, coming to a meeting of the minds and hearts is a business matter can be a formidable undertaking that requires an extraordinary amount of time and effort.
Negotiations usually begins with a series of meetings and exchanges primarily designed to put the relationship on the necessary personal basis. Initially these meetings usually involve higher level executives. However, detailed discussions are generally left to lower level managers who are more experienced with the matters at hand.
It is crucial that communication be as complete as possible. Many foreign managers without experience in Korea leave it up to the Korean side to deal with the language barrier – including bringing in their own interpreters if the managers themselves don’t speak English. This obviously puts the foreign side at serious disadvantage. Foreign executives should provide their own interpreters and just as obviously should brief them carefully before any meeting, providing the main points in writing. Foreign managers must then make sure not to rush or overburden themselves during negotiations.
Any sign of impatience from the foreign side during negotiations will be exploited by the Korean side. Under the best of circumstances, the negotiating process in Korea is usually long and drawn out, not only because a fairly large number of people have to be satisfied with the details of any agreement, but also because communication and understanding take longer, and there is an unusually strong element of caution on the Korean side because they feel so strongly that they cannot afford to make mistakes.
Again, Korean etiquette, especially during the early periods of getting acquainted, often gives the impression that Koreans are easy marks. but that impression is definitely false. Their politeness masks a shrewd, never give up, never lose, business sense.
Foreign executives in Korea have also learned over and over again that creating a friendly, positive feeling is more effective than logic, verbal skills, or even an obviously good deal, in bringing negotiations to a successful close. An uninhibited night out on the town is almost always worth several days of hard bargaining in a board room.
Another factor that is common to Confucian-oriented business people is an extreme reluctance to say no quickly and clearly to a proposition. Typically they will simply let things drag on, while at most giving off very subtle hints that the project is not going to go anywhere. One of the most common and clear-cut gambits for shelving a proposal is to say, “keul seh” – meaning “We’ll think about it.”
If the foreign side cannot read these signs and becomes suspicious that it is being stonewalled, their best recourse is to have a third party contact one of the key Korean players unofficially to find out what is really going on. And again, regardless of the outcome, it pay, especially in Korea, not to burn any bridges.
Foreign negotiators should plan in advance what concessions they are willing to make, and they should not make them too soon just to avoid appearing to ignore Korean etiquette, or to avoid a direct confrontation. Koreans expect potential partners to bargain strenuously and giving in too quickly is regarded as a weakness.
It is best to set generous but specific deadlines in negotiating and be prepared to stand by the conditions. It is also important to keep in mind that Koreans inevitably expect ongoing concessions after agreements are signed. The contract is the starting point for the development of the relationship. Negotiators who give away all of their concessions before a contract is signed leave themselves in a weak and sometimes untenable position.
Koreans automatically attempt to put all business relations on a personal, emotional level, leaving the foreign side with no room for maneuvering without appearing as callous, arrogant, and anti-Korean. The foreign side should set absolute limits beyond which it will not go, and hold that line diplomatically but firmly.