Singapore Airlines

International Business Negotiations

South Korea

Basic Economic Data

South Korea has become one of the 5 Asian Tigers due to its independence from North Korea, followed by a military regime led by Gral Park Chung Hee who established a government-controlled economy. Electronic, heavy and chemical industries grew and helped develop South Korea into an export-driven economy.

In the 1980's South Korea went through a democratization process and up until now has been formally a democratic republic.

Major Industries:

Ð'* Agriculture: rice, barley, fruit, vegetables, cattle, fish, pigs, milk, eggs.

Ð'* Shipbuilding: Including repair and construction

Ð'* Textiles: Importing 1/3 of raw materials, exporting 2/3 of processed products.

Ð'* Automobiles: Including electronic parts and steel. Cement

Ð'* Petrochemicals

Ð'* Iron and Steel

Ð'* Machinery

Ð'* Electronics: computers, peripherals, pc's, hard disk drives, ROMs, printers, wire and radio communication equipment, consumer electronics.

Major Imports:

Major Exports:

Machinery

Electronics

Oil

Steel

Transport equipment

Chemicals

Plastics

Industrial raw materials

Petrochemicals

Metals and ores Chemicals

Machinery & Transport Equipment

Textile Fabrics.

Electronic products

Wireless telecommunications equipment

Steel

Ships

GDP (2006 est)

GDP - real growth rate: 4.8%

GDP - per capita (PPP): $24,200

GDP - composition by sector:

agriculture: 3%

industry: 45%

services: 52%

Comparison with North Korea: GDP - per capita (PPP): $1,800

Income Distribution

Gini coefficient: 35.8 (2000)

Comparison with Mexico: 54.6 (2000)

Ð'* Most developed European nations tend to have Gini coefficients between 0.24 and 0.36

Ð'* The United States Gini coefficient is above 0.4, indicating that the United States has greater inequality than South Korea.

Ð'* Distribution in recent years has been more equitable than in the U.S. or Japan, and similar to the pattern in Britain and Sweden.

Education

Definition: age 15 and over who can read and write

total population: 97.9% male: 99.2%

female: 96.6% (2002)

Today, South Korea has one of the highest literacy rates in the world.

Influence of Politics in Business

In South Korea fear of invasion by the North is constant, this means negative attitudes toward the North are still prevalent and one should avoid talking about it.

One should also be sensitive to Korea's historical relationship with Japan, who made a colony of the Korean peninsula. Koreans have an emotionally intense reaction at times to things. Any comparative mention of Japan versus Korea, where Japan has the upper edge may harm a business deal.

On the other hand, S. Korea is based on a system of "chaebol", family owned conglomerates. For business one must consider dealing with these few which control most part of the economy and are not very open on integrating foreigners into them.

Korean patent law is fairly comprehensive, offering protection to most products and technologies. Still deficiencies remain in the interpretation of claims. It is recommended to consult a lawyer before getting to Korea.

To avoid any conflicts you should ensure you are familiar with relevant Korean rules and regulations.

Influence of Religion in Business

Buddhism is the main religion in the country, so business is based on the concept of "Harmony".

Korean's won't lose face; they will maintain a peaceful conduct but on the contrary, will express anger without doubt, especially if a sensitive topic is brought, like politics, their history, among others.

They believe in auto-discipline as much as in being in harmony with nature and their surroundings. Expect them to appear relaxed and not preoccupied.

ETHICAL SYSTEM

Korea's ethical system is much more influential on business. Korea is a Confucian society so respect for elders and the submissiveness of females is a way of life.

This is why you should expect to encounter gender and age discrimination.

Confucianism continues to shape the Korean moral system, its national laws, and general way of life in Korea.

They are group oriented, so to close a deal, the benefits for the group, whether for the company or country, should be emphasized.

Specific rules for doing