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Korea
Business Success eZine – Winter
2005
Welcome to the Winter 2005 issue of the Korea Business Success
eZine of Korean Consulting & Translation Service, Inc. Did you
have a pleasant Christmas and New Year's break? We hope you find
this information helpful to your business in Korea and with Koreans
everywhere.
Table of Contents
- South Korea Ranks Number One for Broadband Internet
Access
- Feature Article: Profile of Korean Consumers
- Getting Around in South Korea - Part Two
- Relocating the Korean Capital
- Brief Introduction to One of Korea's Cities - Busan
- E-Commerce is a Reality not a Dream in South Korea
1. South Korea
Ranks Number One for Broadband Internet Access
A recent report by the
OECD reveals that South Korea has the highest rate of broadband access
among all the OECD nations. According to the report, as of the end
of 2003, broadband access stood at 24.08 per 100 people. Second-ranked
Canada had a figure of just 15 per 100 people. South Korea has held
this number one position since 2000.
2. Feature
Article: Profile of Korean Consumers
This article is intended to give
a brief introduction to some of the main characteristics of Korean
consumers. As with all generalizations, many exceptions exist within
the marketplace too.
· Korean Consumers are Particularly Group-Oriented
Koreans are encouraged to buy what they see others buying. This is
true to some degree for most age groups, not only the youth and means
there are many product fads in Korea that come and go more quickly
than we are used to in the US.
· Korean Consumers Value Newness
Korean consumers like new products with new features and can be persuaded
to update frequently in order to have the latest models.
· Korean Consumers Value Prestige
The wealthy and aspiring middle-class often buys expensive, imported
products to display their status to others. They often choose highly-priced
products even though products of comparable quality are available at
a significantly lower price because they believe that there is a relationship
between price and quality and will therefore instinctively trust an
expensive product and distrust an inexpensive one.
· Korean Consumers Expect to be Taken Care of by Companies
After-sales service ("A/S" in Korean) is very important to
Korean consumers. Korean consumers expect to have a company technician
do the installation and servicing rather than do it themselves. It
is not uncommon for a technician to come to them rather than having
to take the product to a service center as on-site service calls are
considerably cheaper than in the US. All employees dealing with customers
are expected to behave in a very humble and polite manner.
· Korean Consumers Value Trust and Reputation
Individual Korean consumers tend to buy products of large well-known
companies rather than small and unfamiliar ones. Korean companies,
on the other hand, are generally able to evaluate products and services
objectively. However, this is not to say that their decisions will
be purely objective. As discussed in previous issues of this eZine,
building personal relationships is very important when doing business
with Korean companies in order to take advantage of this factor.
· The Korean Housewife
There are a lot of women in Korea who are full-time housewives. It
is still quite common for women marrying today to decide to give up
their jobs and become full-time housewives. Korean women, and housewives
in particular, have a lot of economic clout. In Korea, a working-class
or middle-class man usually gives his entire salary to his wife, and
she uses a portion of it to pay for household expenses, gives a small
amount of money to her husband to spend on things like lunch and cigarettes,
and saves and or invests the rest. It is the wife who makes the majority
of everyday purchasing decisions and also she who conducts preliminary
research before purchasing big ticket items. The husband will generally
manage savings and investments and make purchasing decisions independent
of his wife.
· Educational Expenses
Koreans value education very highly and spend a significant proportion
of their income on their children's education - including school and
institute tuition, educational resources and study aids. Such expenditures
are not restricted only to school-age children; Koreans will spend
money on their children's education from the time they're born up until
the time they reach their late 20s or early 30s in some cases.
· Spending and Saving Patterns
Traditionally, Koreans adults spent little money on themselves. Instead,
they save hard and spend their money on housing and their children's
education, and save for a rainy day or to pass on to their children.
While this pattern is still the rule, discetionary spending has grown
considerably in recent years as incomes have risen and the number of
products and services on offer has increased. Koreans are now much
more willing to splash out.
3. Getting Around in South Korea
- Part Two
Part one of this article appeared in the last edition of
the e-Zine and described modes of public transport for getting around
within cities in South Korea. In this issue, I will discuss modes of
public transport for traveling between cities in South Korea.
Airplane
South Korea has eight international airports and seven domestic airports,
but this information is somewhat misleading. In practice, almost all
passengers arriving and departing from South Korea arrive at or depart
from Incheon International Airport. The other "international" airports
service only a very limited number of international destinations.
Gimpo (Kimpo) International Airport in Seoul was formerly the main
international airport in South Korea but this role has now been taken
over by the newly-built Incheon International Airport. International
flights to and from a very limited number of cities arrive at and depart
from Gimpo International Airport but none of them appear to be in the
US. Unless you have specific information to the contrary, assume that
you won't be able to fly directly to or from Gimpo Airport.
Unfortunately, domestic flights do not arrive or depart from Incheon
International Airport. To fly to another city within Korea after arriving,
you must travel overland to Gimpo Airport in Seoul (about 30 minutes
by bus) and catch a domestic flight from there. See http://www.airport.or.kr/Eng/transportation/traffic.jsp for
details of various means to travel between Incheon and Gimpo airports.
See http://www.airport.or.kr/Eng/home.jsp for
information on Incheon International Airport. See http://kac.airport.co.kr/eng/index.jsp for
information on all other airports in South Korea.
Flying has been the fastest way to travel between two cities, but the
new high-speed train offers a new way to get around, assuming the train
line connects the two cities you are traveling between. Since the high-speed
train departs from and arrives in the centre of the city, you don't
need to spend as much time traveling to and from the airport.
Advantages
· Flying is a fast, cheap and convenient way to travel between
cities in South Korea. In the case of flights between Seoul and other major
cities, there is generally no need to reserve or pre-buy a ticket. You can
just go to the airport, buy a ticket at the ticket counter for the next available
flight and go. Flights between Seoul and Busan (Pusan), for example, leave
around every 30 minutes. However, flights between Seoul and small cities tend
to be less frequent and direct flights between cities other than Seoul may
be infrequent or non-existent. Be sure to check http://gimpo.airport.co.kr/eng/flight/fly_info.jsp for
flight schedules and departure times.
Disadvantages
· Traffic congestion around airports, other than Incheon Airport,
can be bad so you will need to factor this into your schedule. (In the case
of Gimpo Airport, you can get to and from the airport and Seoul by subway,
thus avoiding traffic congestion completely.)
Train
There are two types of train - the regular train and the new high-speed
train. The high-speed train takes under three hours to travel from
Seoul in the north of the country to Busan in the south-east or Gwangju
in the south-west of the country. The high-speed train takes about
half the time of the regular train but costs a bit more.
With the regular train, there are three different services: the Saemaul
Express, the Mugunghwa Express and the Tongil Express. The only differences
are the facilities and degree of comfort of the carriages. The Saemaul
Express is the best, followed by the Mugunghwa and Tongil Expresses.
With the Saemaul and Mugunghwa Expresses, there are also two classes
of carriage. The Saemaul Express comes recommended, the Mugunghwa Express
is quite acceptable but the Tongil Express would probably be best avoided.
See www.korail.go.kr for
information on regular and high-speed trains.
Advantages
· Unlike planes, trains depart from and arrive in the center of
the city.
· Unlike buses, trains are not subject to traffic congestion so
you can predict your arrival time.
Disadvantages
· Trains don't depart as often as planes.
Things to be Aware of
· With the regular train, if all seats are sold out (which could
be the case if you purchase your ticket at the station close to departure time),
you may be given the option of buying a standing ticket, which is cheaper than
a seat ticket. With a standing ticket, you are unofficially permitted to sit
in any vacant seat until the person who has booked that seat gets on the train,
at which point you will have to give up the seat to that person and stand for
the remainder of the journey or until another seat is vacated. If you wish
to avoid this, book early or catch the next train. For safety reasons, no standing
tickets are sold on the high-speed train.
Intercity (Express) Bus
Express buses are coaches that travel directly between major cities
with no stops other than one or two rest stops.
There are three express bus terminals in Seoul - Seoul Express Bus
Terminal (Express Bus Terminal subway station, station number 339 on
the orange number 3 line, or station number 734 on the olive colored
number 7 line), Nambu Express Bus Terminal (Nambu Bus Terminal subway
station, station number 341, on the orange number 3 line) in southern
Seoul, and Dongbu Express Bus Terminal (Gangbyeon subway station, station
number 214, on the green number 2 line) in eastern Seoul. Other cities
in Korea will generally have only one express bus terminal.
There is another express bus terminal, Incheon Bus Terminal (Incheon
Bus Terminal subway station, station number I 126, on the Incheon number
1 line), in the city of Incheon, which is nearby Seoul, for those doing
business in Incheon.
South Korea is a fairly small country so you can travel between two
major cities in half a day's travel or less. After arriving at the
express bus terminal you will be able to get to remote locations just
about anywhere in the country by transferring to a feeder bus and then
to a taxi. (Feeder buses will be explained later.)
There are two classes of express bus which are usually translated into
English as general (ihl-bahn) and excellent (oo-seung). The general
class is not bad but the excellent class is better. There is not a
great deal of difference in price, so catch the excellent class of
bus if it is available at the time you want to travel.
There is very little information available in English on express bus
travel and express bus terminals. The homepages of the three terminals
mentioned above are Seoul: www.exterminal.co.kr/,
Dongbu: www.ti21.co.kr/,
and Nambu: www.nambuterminal.co.kr. www.easyticket.co.kr is
a site with information on the services of some bus lines and www.kobus.co.kr is
a site with information on the buslines not covered by easyticket.
Of these sites, only www.kobus.co.kr has
an English version. However, it was still under construction at the
time of writing.
Advantages
· All of the major express bus terminals in Seoul are very quick
and easy to get to by various means of transport, including subway. In comparison,
it is possible to get to Gimpo airport by subway but it does take a long time
as it is actually outside the city.
Disadvantages
· Traffic congestion around bus terminals can be severe so you
will need to factor this into your schedule. At times of high traffic congestion,
it can take an hour or two to travel the last portion of your journey from
the outskirts of the city to the bus terminal. If you need to arrive at a certain
time then it would probably be better to take another means of transport with
a more predictable arrival time.
· The express bus system is not really designed to be used by
non-Korean-speakers. Unless you are traveling together with a Korean-speaker,
it would probably be better to take another form of transport.
Things to be Aware of
· While some intercity (express) bus services do leave from and
arrive at Dongbu and Nambu terminals and they are called express bus terminals,
they tend to be more for feeder buses. If you want to catch an express bus
from Seoul to another city then generally you should depart from Seoul Express
Bus Terminal. On the other hand, if you are traveling by express bus from another
city to Seoul and your ultimate destination is eastern Seoul rather than southern
Seoul and you can find an express bus that goes to Dongbu Express Bus Terminal,
then it would be worthwhile catching that bus.
· Express Bus Terminal and Nambu Express Bus Terminal are very
close, only two subway stations apart. Be careful that you go to the one you
intend to go to.
· Once you buy a ticket, you need to find the right bus. It is
unlikely that you will find anyone who can speak English, but people will certainly
point you in the right direction if you show them your ticket. You will see
a sign placed in the window, which should be written in both Korean and English,
displaying the cities of departure and arrival. You will also see a clock displaying
the departure time. That "clock" is not really a clock. It doesn't
change every minute to show the current time, it displays the departure time
and is fixed for the entire journey. The right bus is the one displaying both
the right destination, the right departure time and also being the right busline.
The drivers are always careful to check passengers' tickets to make sure they
don't catch the wrong bus, so getting on the wrong bus and going to the wrong
destination will not be a worry, but locating the right bus before it departs
will be. It would be advisable to buy a ticket for a bus leaving in 20 minutes
rather than one leaving in 5 minutes to give you enough time to find the correct
bus.
· The bus will stop for perhaps 15 minutes at one or more rest
stops along the way. It is possible that the bus will leave without you if
you take too long getting back, so you need to do whatever you need to do quickly
and get back to the bus before it departs.
· Many other buses will be parked at the rest stop, so you need
to make sure you can find your bus again. Make a note of the location the bus
is parked and check the departure and destination and departure time displayed
in the front window. The driver will check your ticket so there is no chance
of you getting on the wrong bus and going to the wrong destination, but you
need to be sure you are able to find the right bus before it leaves.
4. Relocating
the Korean Capital
Recently, a plan was announced to relocate the South
Korean capital. The plan involved creating a new city in South Chungchong
Province and moving most branches of the central government there while
leaving Seoul as the business center that it is.
Planning for the move was fairly advanced but the government has decided
not to go ahead with the plan. In fact, the modern proposal to move
the capital is not a new idea and goes back to the time of President
Park Chung-hee in the late 1970s, but was abandoned at that time, also.
People following South Korean news should take what they read and hear
with a grain of salt. There are many ideas being bandied about in South
Korea for reform but economic costs, external factors and vested interests
often get in the way to prevent change.
5. Brief Introduction to One
of Korea's Cities - Busan
Busan (formerly written as Pusan), located
on the south-east coast, is the second largest city in South Korea.
Busan is the home of the major sea port in Korea and a great deal of
manufacturing is done in and around there. Fishing is a major local
industry. It is geographically close to and has strong cultural and
economic links with Japan. The majority of the South Korean business
and political elite hail from South Kyeongsang Province, of which Busan
is the capital.
See http://english.busan.go.kr/index.jsp, http://eng.gsnd.net/,
and http://www.visit.busan.kr/eng/ for
further information on Busan and South Kyeongsang Province.
6. E-Commerce is a Reality not a Dream in South Korea
Internet and
broadband penetration in South Korea is very high. Koreans, particularly
young to middle-aged people and many housewives use the Internet daily
in a way that is integral to their lives. They use it as a source of
information, for communication and for recreation. Having a website
is almost a necessity for companies doing business in Korea and having
a substandard website will tend to reflect very poorly on the company.
The standard of websites in Korea is often significantly higher than
in the US.
The existence of low-cost and efficient payment and distribution systems
mean e-commerce is a reality rather than just a dream in Korea.
Using Internet banking, Koreans can transfer money from their bank
account to the bank account of any other person or company with a bank
account at any other bank in Korea instantaneously. They are not restricted
to transferring to their own accounts, other accounts at the same bank,
or to accounts which they have pre-registered; they can transfer money
to absolutely any bank account in Korea. There is no charge for the
account receiving payment and only a very small charge for the person
making the transfer, or no charge if the transfer is between two accounts
at the same bank. Companies can easily and quickly verify that payment
has been made by checking their own bank account via the Internet.
Low-cost and efficient courier services mean same or next day delivery
of products to customers in most cases.
While the conditions for a successful e-commerce business certainly
exist in Korea, success is by no means guaranteed. As with e-commerce
in any country, customers are wary about making payment for goods to
companies they are unfamiliar with, and tend to be reluctant to buy
products online in cases where a physical inspection of the product
is desirable before making a purchasing decision.
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