A division of Soft Landing Korea Ltd.
By Tom Coyner
October 4, 2007
For a Korean, negotiating is viewed more as part of a relationship, rather than specific terms of an agreement that happen to be written down on paper. A written contract among Koreans is not necessarily regarded as binding or important as it is in the West. To the Korean mind, commitments based on relationships, or on a personal level are equally important.
It is commonly considered that "a contract is as good as the willingness of the parties to observe it." Perhaps Koreans are more concerned, even in the early stages of negotiating, that future enforcement of agreements can only be secured by personal commitments.
Foreign businessmen are often puzzled and frustrated that Korean counterparts sometimes shy away from seemingly lucrative deals. Sometimes it is because the Korean party lost face, or felt that he or she was patronized too much, or possibly that the setting of the negotiation was unsatisfactory. To a Westerner, this may be a denial of the process of logic with which he or she is familiar.
"Who's in charge?" is sometimes a baffling mystery to the Western negotiator. A dozen negotiators may sit on the opposite side of the conference table, but none may have decision-making authority. This can be the cause of the Western negotiator's frustration and impatience. This is especially the case with family-owned companies. Families still control many companies in Korea. When negotiating with a family-dominated company, the key family decision maker usually does not attend the negotiations. Pinpointing the real decision maker may seem to be impossible. In many cases, the real decision maker's absence can seriously delay negotiations.
As negotiating situations can vary greatly, generalization is not easy. The following, however, are some suggestions that may help foreign business professionals to sharpen their sensitivity to the local business environment, and to enhance their negotiating skills:
Build the Right Climate
Koreans prefer to do business with people they like. Profit alone is not always their first priority. Sustained growth and good personal relations are equally important.
Entertainment plays a major role among businesspeople in building a climate conducive to a better understanding of each other. To facilitate the negotiating process, entertain and be entertained. Behave as an uninhibited human being at a drinking party with local counterparts. Let one's hair down. They love to see a foreign opponent unmasked by his nationality, company, and position. One will be quite surprised to discover the different mood and rapport at a negotiating session the next morning.
Communication is not easy even between parties who have a considerable background of shared values and experience. Cross-cultural communication is even more difficult. Negotiating under these kinds of conditions requires from both parties special qualities such as empathy, patience and a good ear, in addition to proficiency in the language used.
Remember that local businesspeople prefer to express themselves in their own language that is often vague and ambiguous. It may help for a foreign negotiator to repeat, in her own terms, what has been presented by her counterpart after each session. Exchanging minutes after meetings is helpful to avoid misunderstanding. Don't assume that all was understood by one's counterpart and therefore agreed.
If an interpreter is used, make the most of him or her. Brief them beforehand and give any notes one has on the proposal one intends to make. Also, allow sufficient time for them to clarify points where they think the meaning is obscure.
Allow For Sufficient Time
Typically, a visiting foreign businessperson will attempt to settle all his business dealings in a short period of time. He becomes impatient when he cannot secure a firm reply from the counterpart on short notice. This is, of course, an even greater problem when the foreign representative has committed a milestone to his or her overseas management. Consequently, experienced foreign businesspeople in Korea tend to underestimate results compared to their colleagues elsewhere.
Negotiation can be time-consuming in any place. Time must be spent, however, to assure that the decision is as close as possible to what one desires. For most local businessmen, their exposure to foreign business is rather limited and naturally they want to be more prudent in their decisions with foreign partners. Do not demonstrate impatience at a negotiating table since one's counterpart will interpret this as weakness. Allow sufficient time to negotiate and remember to be patient with their deliberate and often slow decision-making process.
By not allowing sufficient negotiation time, more often it is the foreign negotiator than his Korean counterpart who often unnecessarily concedes important points in order to catch the plane. Depending on one's relationship with the other negotiation team, one may wish to be precise or vague in offering one's flight departure date and time. If one is negotiating with an established partner, it is good to share the information so that the other side can negotiate in good faith at a pace to come to an agreement in time. On the other hand, if one is unsure or unfamiliar with the other firm, one may give a general, expected departure date but work with an airline ticket that one is certain one can extend the departure date of if necessary.
Finally getting to "yes" with the other side of the negotiating table may not be the same as coming to an agreement with the other firm. Often the final agreed terms may require additional time to gain final approval when dealing with a large, bureaucratic firm such as one of the chaebol (business conglomerate) companies.
To strike a deal in a dynamic country where nothing seems stationary, one must be quite imaginative. During the course of negotiations, generate as many possibilities and present these alternatives as often as necessary to induce an agreement.
Foreign firms often have Korean employees who may have personal, often long-term, relations with employees of the other firm. The foreign executive can learn a great deal about the "lay of the land" -- and sometimes surprisingly more -- via these personal connections. If the other firm has a sincere interest in coming to an agreement, one may be surprised to find invaluable "inside sales people" in the other firm. These individuals are normally junior managers and above who are willing to assist the overall negotiation process by providing insight as to the real priorities of their company, which personalities are leaning towards and against a deal with one's firm, and even information on competitive offers.
Use a Facilitator
It is desirable especially in the case of sensitive negotiations to have someone to facilitate the proceeding either at the negotiating table or outside the meeting. A facilitator may help to keep the meeting on the right track, enforce any ground rules and stimulate proceedings at the negotiating table. In this case, a third party mediator or a consultant may play a role. An interpreter can also perform on a limited basis. In the case where a mediator is not participating in the meeting, he can work as a go-between, facilitating the process of agreement. These facilitators may ask for a flat fee, but often payment is a percentage of the value of the deal.
Do not leave hard feelings with your counterpart even if the negotiations fail. Though the negotiations break off, try to establish a pleasant climate for one's potential partner. It will also facilitate one's next move. There is often a second chance to come back to the table if not for this deal but at the next opportunity. Also, it is important to remember that the Korean marketplace is a tight-knit one and one's reputation of any sort can precede one.
Always leave the counterpart with something about which to feel good. Otherwise, the creation of an enemy may result. Try to negotiate as though one will definitely have the occasion to deal with the same partner again. Given the escalation of mergers and acquisitions in the Korean marketplace -- not to mention that Koreans often these days change firms -- it is important not to burn one's bridges.
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.