DOING BUSINESS IN KOREA

Doing Business In Korea

Doing Business In Korea

Introduction

It is significant to realise the Korean Culture in alignment to effectively perform business in this country. There are numerous dissimilarities in the way that act and perform business versus the way Koreans manage business. Koreans have a exclusive way of managing business that is rather distinct from Western practices. Negotiations with Koreans can often be annoying and bewildering except one makes an effort to realise their heritage foundations. Their business culture tends to be cautious and have a powerful work ethic. Generally, harmony and structure are emphasized over discovery and experimentation. Personal connections are highly significant, and Koreans worth face-to-face associates with their Western business partners, rather than considering over the telephone or fax. Confucianism is powerfully discerned in this society

 

Discussion

The economic scheme founded on personal ownership of the entails of output, in which individual earnings can be came by through buying into of capital and paid work of work is called capitalism. Capitalism is grounded in the notion of free enterprise, which contends that government intervention in the finances should be constrained and that a free market, founded on provide and demand, will finally maximize buyer welfare. Based on the principles of South Korea, it displays that Korea has flourished under a free market financial system (Ellis, 2005, pp 45-289).

Legal And Political Environment

To promote greater competition the government liberalized capital markets and the foreign investment regime to allow Korean companies direct access to foreign capital and promote competition at home. To improve corporate governance the government introduced measures to make the corporate balance sheet more transparent, improve the accounting standards in line with international best practices, and require independent external audits, full disclosure, and the provision of consolidated statements for business conglomerates. And to improve capital structure and profitability, the government pushed corporations to reduce their debt levels, increase their equity investment, and eliminate cross-subsidization of weaker affiliates. Recognizing the linkage between the health of the financial sector and the profitability of the corporate sector, the Korean government pursued reforms in both sectors simultaneously.

But, as it turned out, it has been more successful in carrying out reforms in the financial sector than in the corporate sector. The relatively slow pace of corporate restructuring is partly due to the rapid recovery from the crisis, which has led to a sense of complacency and a weakened political support for tough reform measures within Korea.

More important, however, is the presence of certain institutional features in Korea such as weak accounting and disclosure standards, poor risk management by both corporate borrowers and banks, and an inadequate legal and judiciary framework governing insolvency procedures, which have contributed to the slow pace of corporate restructuring. Weak accounting practices have led to a loss of credibility in company reports, which consequently has lost its usefulness as a reliable indicator of the health of the corporate sector. The practice of collateral-based lending and poor disclosure of cross-payment and cross-guarantees among affiliates of chaebol also ...