Russia is currently striving to maintain and develop relations with South Korea. This country has a highly developed corporate and business culture, so there is much for Russians to learn from their Asian partners. Some features of the Korean labor market may well take root in our country.
Narrow specialization
In South Korea, any specialized activity requires a license. For example, if you open a car repair shop, you can only perform car repair work, oil changes, tire fitting, etc. If you want to do painting or bodywork, you need a different specialization, and you cannot do it in a car repair shop, otherwise it will be a violation of the law, with subsequent sanctions.
Company employees must also have the appropriate specialization. For the same reason, you cannot call an electrician to your home and ask them to fix up a curtain rod for you: these are different types of services that are provided by different specialists, and sometimes by different services.
The absence of multifunctional businesses and employees who are able to solve a variety of issues within a company may seem inconvenient for clients. But on the other hand, this approach does not allow competitors to win by expanding the range or number of services.
Corporate hierarchy
Koreans strictly follow the instructions of their superiors. While in Russia it is possible to dispute a decision of the management and offer your own vision of the problem, this is not acceptable in an Asian country.
Additionally, many young Koreans aim to secure jobs in major corporations like LG and Samsung, which are seen as highly prestigious. The opportunity to advance through the ranks in such companies is considered a stroke of luck, making even entry-level positions highly sought after. This trend contributes to a shortage of workers in roles that require physical labor or specialized technical skills. Consequently, positions like construction workers and factory foremen are increasingly filled by migrants. In Korea, versatility is highly valued, but young Koreans are generally not inclined towards hard manual labor.
High-quality customer service
Business practices in Korea are highly customer-focused with a strong emphasis on excellent service. When hiring and training employees, particular attention is paid to delivering a high-quality customer experience. For instance, if you visit a car repair shop, you can expect to be offered complimentary coffee and snacks. In cafeterias, in addition to your ordered meal, you may be served extra treats. This level of attention to customer service is consistent across all businesses, earning it a well-deserved reputation for respect.
The high customer focus in Korea can be attributed to the non-confrontational nature of Koreans. If you contact a car dealer outside of business hours, they calmly address your questions without showing any dissatisfaction. The client is unlikely to encounter negative feedback. Korean businesses operate 24/7, but if a customer is unhappy with the service, they can easily reach out to supervisory authorities and expect compensation.
While Russian companies may not need to fully adopt this approach – since 24-hour work schedules can limit employee relaxation – striving to enhance service quality would still be beneficial for businesses in Russia.
Adhering to the letter of the law
Koreans are law-abiding people who are closely monitored by regulatory bodies to ensure that businesses operate in strict accordance with the law. Locals have little incentive to deceive partners, employees, or clients, as any disputes are settled through the legal system, and the losing party faces fines or other penalties. Reputation damage can be significant for companies involved in legal conflicts, so entrepreneurs take great care to avoid such situations.
Government inspections of businesses are conducted by agreement with the entrepreneur, allowing for a brief grace period to make necessary corrections. While inspections triggered by complaints can be unexpected, they are relatively rare in Korea.
Relationships between business partners are established with maximum transparency. Checking a business owner or a company’s financial viability does not require you to search for them in the registry or attempt to do it in an indirect way; an official request is made to the potential partner to verify the availability of real estate, cash deposits, and other resources in case covering losses is necessary.
When a company goes bankrupt, debts cannot be eliminated, with the owner having to pay off wage arrears to employees. In this case, the situation will affect the entrepreneur’s family members: supervisory authorities will review all credit histories and check whether they own any property as well as its source. With debts passed on to the family members, evading the law is hardly possible.
Fostering entrepreneurship through state support
The government makes extensive efforts to support small and medium-sized businesses. Starting your own business in South Korea is easy, with the state subsidizing the process through existing agreements with banks that provide citizens with loans at minimal interest rates and offer deferred payment options. During the pandemic, entrepreneurs were provided with tax holidays and money allowances, with reduced acquiring fees offered by banks as well.
The tax system in South Korea allows its citizens to pick the best payment option. The country has a self-employment scheme that is somewhat similar to the one existing in Russia: citizens can launch their own micro business, such as a workshop or a cafe, and pay minimal taxes. This money-earning method is often chosen by pensioners as well as those who failed to land a job. Facing no bureaucracy when starting your own business along with available state financial support allow a person to independently establish a source of income within the minimum wage.
The higher the profit, the greater the taxes: the latter may reach 40%. When registering as an individual entrepreneur, a person chooses a convenient type of taxation. There is no point in avoiding reporting profits to tax authorities or engaging in tax evasion as it leads to severe penalties.
The South Korean business market has its own specific characteristics. Being law-abiding and non-confrontational are the nation’s essential qualities that ensure its stable development. The willingness to adhere to corporate hierarchy along with high quality services and client-oriented approach, as well as stable government support, promote the active advancement of small and medium-sized businesses. These are the characteristics that the Russian business community should cultivate as well.
By Igor Shakhin, head of CarEx Korea branches in St. Petersburg and Moscow