SKB International in South Korea: A study about consultancy of nuclear waste system management from Northern Europe to Far East Asia

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Uppsala Universitet Författare:

Företagsekonomiska institutionen Michael Berggren

C-uppsats Handledare:

2011-03-02 Susanne Åberg

SKB International in South Korea

A study about consultancy of nuclear waste system management

from Northern Europe to Far East Asia

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Abstract

This essay outlines the problems in the cross-cultural communication between SKB International and the Korean market. After interviews with the vice president of SKB International and their representative in Korea I compare their strategy to cross-cultural communication theories and Korean business culture facts to see how their communication to Korea could be improved. In the results I state that the problem with getting a continuous dialogue is created by the big cultural difference between Sweden and Korea. If these differences can be tackled SKB International will be able to sell their public acceptance package to Korea to enable the project of a final repository. The biggest problems seem to be the difference of time horizons, way of building relations, hierarchy vs. flat organization and the Korean group dynamics in clash with Swedish individualism. As conclusion I state that the isolation of Korea has created a unique culture that needs special attention for successful cross-cultural communication. This calls for SKB International to develop a strategy for understanding Korean culture within the whole organization. The image of Korean culture needs to be continuously discussed through meetings or an intranet forum to get a correct image of how to communicate with Koreans. Also I find that SKB International need more staff to take care of all the Korean delegations that come on spontaneous visits. The best gateway into the Korean hierarchies was found to be through inter-governmental communication.

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1 Introduction

After the Korean War in 1953 the Korean peninsula was divided into two countries. The Northern, the richer and more industrialized region, was occupied by the Soviet Union and contained almost all of the natural resources like minerals and gas. The poorer Southern region was occupied by United States and constituted mostly by farm land. United States were determined to blow life into the destroyed South Korea and poured money and investments into the country. Since South Korea could not import energy from North Korea, US had to send large gas tank boats to fuel the new industries built to boost the economy. (Seung-Hoon Lee 2010)

Nowadays South Korea is highly dependent on their nuclear power plants to give power to one of the most modern and energy-consuming countries of the world. A problem today is the lack of plan for taking care of the highly reactive fuel rods after energy is extracted. Since a few years South Korea has been working on a low- and intermediate level radioactive waste (LILW) repository combined with a sea based transport system according to the Swedish model developed by SKB, the company responsible for nuclear waste in Sweden. The relation between SKB´s global consulting company, SKB International, and the Korean counterparts has been characterized by spontaneous meetings and short-term projects. A Swedish company like SKB International is, however, more used to structured and focused relations with their customers and has problems to answer to the spontaneous calls for help by South Korea. (Magnus Holmqvist, Interview 2010)

After a few missed opportunities for SKB International to claim Korean projects it is necessary to see if the business strategy towards Korea can be improved. Many foreign businesses have failed in South Korea before, among them the internationally highly successful companies like Wal-Mart. (Renee B Kim, 2007) South Korea has been isolated from the world since the Second World War but with a strong aid dependence on the USA. (Seung-Hoon Lee, 2010) Is it possible for a European company to successfully understand and do business with this country in Far East Asia which is still officially left in the cold war period and has developed its own unique American/Asian blend culture? South Korea has indeed a lot of time and money to save by buying consultancy about radioactive waste repository from other countries like Sweden, France and Switzerland which already have plans to build repository for SNF (spent nuclear fuel).

How can the Swedish company SKB International increase their chances of successful consulting to Korean nuclear energy companies? By analysing how SKB International is acting on the Korean

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radioactive waste market, I hope to find out why SKB International do not have a continuous dialogue with Korean nuclear companies and how to improve their strategy of communicating with Korea.

1.1 Purpose

How could SKB International handle the cultural differences in order to maintain a successful business relationship with a Korean customer?

1.2 Delimitation

Technological aspects of how the final product should be adjusted to the Korean environment will not be investigated in this report. I will focus on the cross-cultural communication in this report. Because of difficulties to get interviews with people from the Korean Nuclear Businesses I will mainly describe how SKB International is acting on the Korean market and find out how they can improve their consultancy to Korea. I will especially focus on their relation to KRMC and to some extent also KHNP.

1.3 Acronyms

KAERI – Korean nuclear power research institute

KHNP – Biggest Korean Nuclear Power Company KRMC – Equivalent of SKB International in Korea LILW – Low and intermediate level radioactive waste SKB – Svensk Kärnbränsle – Swedish nuclear waste company

SKB International – Consulting company of SKB’s services internationally SNF – Spent Nuclear Fuel

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2 Theory

2.1 Cross-Cultural Communication

When doing business with other cultures communication becomes more difficult. Different beliefs, attitudes and values are barriers for successful communication. It is therefore important for every part to have its own strategy of how to communicate with the other culture in the best way. (Adler 1997, p.63) Globalisation is, however, making cultures approach each other which could mean that an international uniform business culture is emerging that eliminates the need of cross-cultural communication. This idea is rejected by Kwok Leung et al. (2005) who believe that business cultures never will become entirely uniform. The reason is that when cultures meet they will adapt and reject things from each other´s cultures and will in that process not become much closer to each other since basic values will remain. The most used theoretical framework in International business is the four dimensions of Hofstede (1991): individualism/collectivism, power distance, uncertainty avoidance, career success/quality of life and the fifth dimension added later by Hofstede & Bond (1988) called Confucian dynamism. As implied in a research by Kirkman, Lowe & Gibson (2006) there is a risk with using data as old as Hofstede’s study in 1980. In their research about his framework they found that cultures have changed a bit since 1980, for example Chinese have become less collectivistic, more individualistic and lower in Confucian dynamism. Therefore, not to rely entirely on Hofstede’s data, this theoretic chapter is ended with more recent updates of Korean Culture.

2.1.1 Avoiding misunderstandings through stereotyping

One of the most important mistakes commonly made in cross-cultural communication is assuming similarity where cultural differences exist. Intuitively humans interpret their social and cultural environment in the way they learned in their home country. This intuitive behaviour becomes a major problem when communicating with other cultures. A way to avoid this kind of cross-cultural

misinterpretation is through stereotyping. (Adler 1997, pp.74-77) By describing the behavioural norm of the particular group to communicate with through stereotypes it is possible to correctly interpret the communication with a person of that group. A good stereotype should be consciously held which means being aware of that a stereotype describes the group norm rather than individual actions. Secondly, it should be descriptive and not evaluative. Stereotyping is not a way to judge people from another culture; it is only a means of interpreting their behaviour. Thirdly, a stereotype must be accurate and therefore constantly adjusted when proven to be false during interaction with persons from that group. It can be

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difficult to have an accurate stereotype before actually interacting with the other culture. The best way to improve accuracy is to read up on the business and social culture of the country involved.

The first step to become successful in intercultural communication is to realise one´s lack of knowledge about the other culture to become consciously incompetent. Next step is to have a conscious attitude towards other cultures by gathering information about their culture. In that way one becomes

consciously competent in intercultural situations. But to acquire a level of cross-cultural communication that is fluent and without disturbances one has to be unconsciously competent. The only way to reach this last step is to have long-lasting and continuous experience with the specific culture to be able to act correctly without thinking. (Shim, Kim, N. Martin 2008, pp.173-176)

In the remainder of this chapter I will give a description of Korean business culture to provide information for accurate stereotyping.

2.1.2 Individualism/Collectivism

Individualists define themselves as individual persons and they always aim to reach personal success or satisfaction. The group of an individualist culture has loose ties and is regulated by rules rather than group mentality. Free will and self-determination are important in such a culture. Individualists believe that there are universal values that should be shared by all. Guilt and internal pressure is regulating the individualist’s behaviour to act according to the universal values. Individual self-respect is the mechanism used to avoid guilt. (Adler 1997, pp.47-49)

Collectivists on the other hand define themselves as part of a group. Achievement for them is to satisfy the group by working for the common group goals. The collectivist group is very tight and groups are kept well apart from each other. Members of a group in a collectivistic society are expected to take care of each other and always be loyal. These groups can have different values from other groups since universal values are less of interest. Group members are controlled by shame and external social pressure when someone´s behaviour is different from the group’s common goals. Shame is rarely used though, since it would result in a “loss of face” (honour) for that person. “Loss of face” might be the worst thing that could happen to someone of a collectivist culture and can be avoided by always keeping harmony within the group. (Adler 1997, pp.47-49)

According to Hofstedt (1991, p.53-54) South Korea has a collectivist culture while Sweden has an individualistic culture. In his book he lists countries in a chart according to Individualism index where Sweden scored 71 out of 100 and Korea only 18 out of 100. He states that the difference of values in

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these two types of societies plays a big role in international business and is an important source of misunderstandings in cross-cultural communication.

Within the dimension of collectivism and individualism there is the aspect of universalism and particularism. In collectivistic societies the personal relationship is more important than rules and the opposite is true for individualistic societies. Universalism is to value rules higher than relationships and particularism is to value relationships higher than rules. (Hofstede 1991, p.67) Corruption is rare in universalistic societies since people treat each other equally independent on type of relationship. Business relationships between universalistic and a particularistic cultures cause problems since the former rely on contracts while the latter are sceptic towards contracts and rather confirm deals through developing and maintaining personal relationships. Another problem is that particularists do not trust universalists since they have little value in helping a friend if it strides against the laws while universalists can think particularists are corrupted. (Adler 1997, pp.59-62)

2.1.3 Power distance

Power distance is a measure to what extent group members can accept unequal power distribution. Large power distance cultures believe the superior is always right because he is the superior and they always work to satisfy his demands without questioning him. It is never okay to bypass the hierarchical structure to solve tasks with other members at different ranks without consulting the superior. (Adler 1997, p.51) Since superiors and subordinates consider each other as unequal the hierarchical system is strong. The power is at the top of the hierarchy and subordinates are expected to do all the manual work and report upwards about their progress. (Hofstede 1991, p.35)

Small power distance cultures give freedom to individuals to solve tasks in the way they prefer and it is ok to question the superior if he has too difficult or questionable demands. Since the power distance is small it is ok to bypass the superior and talk directly to the persons with best knowledge of the problem to be solved. Titles are very important during negotiations in high power distance countries but have less importance in low power distance countries. (Adler 1997, p.51) The hierarchical system in small power distance countries is weak and the organization is usually flat. Instead of reporting upwards all workers report sideways in the organization which gives everyone an overview of the whole organization. (Hofstede 1991, p.36)

In Hofstede’s (1991,p.26) power distance index Sweden scores 31/100 and Korea 60/100 which shows that Korea has a large power distance and Sweden small power distance.

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2.1.4 Uncertainty avoidance

Hofstede (1991, p.113) defines uncertainty avoidance as “the extent to which the members of a culture feel threatened by uncertain or unknown situations”. Sweden has a low uncertainty avoidance in Hofstede´s Uncertainty avoidance index, 29 out of 100, while South Korea has high uncertainty avoidance, 85 out of 100.

Uncertainty avoidance is a measure to what extent people try to avoid uncertain situations especially regarding working environment. High uncertainty avoidance cultures value career stability, formal rules, expertise and dislike deviant ideas and behaviour. The communication within the company runs vertically and never horizontally, which reduces uncertainty since everyone knows who has authority over whom. Low uncertainty avoidance cultures resemble village markets. Companies have flat organizations where everyone talks to everyone else, risk taking is encouraged and deviant ideas are welcome. (Adler 1997, pp.51-55)

2.1.5 Career success/Quality of life

The original name of this dimension by Hofstede is “Masculinity/Femininity”. Masculinity refers to career success and femininity to quality of life. A masculine society has clearly defined gender roles where men are encouraged to be tough and focused on career success while women are modest and should be focusing on things related to quality of life. Feminine societies are more equal and without clearly defined gender roles. Sweden has the lowest score in Hofstede´s masculinity index, 5/100 and South Korea 39/100. (Hofstede 1991, pp.83-84)

Adler calls this dimension “Career success/Quality of life” to get a broader use of Hofstede´s dimension. A country where career success is most important values material things and money higher than people. The boss mainly worries about how to improve quality and efficiency of his workers than job satisfaction. Extra money strongly motivates workers and low taxes are common. Quality-of-life societies mostly value concern for other people and the overall quality of life. Women and men are expected to share responsibility for working and household since the femininity/masculinity roles are not clearly defined. Companies are more concerned about improving job satisfaction and flexibility than maximum efficiency. Workers prefer extra holiday over extra money and taxes are usually high. (Adler 1997, pp.54-57)

2.1.6 Confucian dynamism

After Hofstede (1991) defined the above four categories as the most important dimensions of cross-cultural dimensions a fifth dimension was found (Hofstede & Bond 1988), Confucian dynamism. It refers

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to the extremely strong work ethic and commitment to Confucian values that fuels the economies of South Korea, Hong Kong, Singapore and Taiwan. (Adler 1997, p.58)

The two sides of this dimension is long-term and short-term orientation. Societies with long-term orientation are the Confucian dynamic countries of Asia and short-term orientation is found in most western countries. The characters of long-term orientation countries are persistence, thrift, sense of shame and to have strict order of organizing relationships by status. In short-term orientated countries it is important with personal stability and status, respect for tradition and reciprocation of greetings, favours and gifts. Since the characters of long-term orientated cultures are more oriented to the future they are referred to as more dynamic. All these values are from the Confucian philosophy, hence the name “Confucian dynamism”. South Korea got a relatively high score in Hofstede´s Long-Term orientation index, 75 out of 100. Sweden which got a score of 33 out of 100 is a short-term oriented country. (Hofstede 1991, pp.164-166)

2.2 Korean Business Culture

In this section I will explain the most important aspects of Korean business culture to consider when doing projects with a Korean company. The motivation for having this chapter is that understanding the business culture of Korea is fundamental for keeping a successful business relationship with a Korean company.

2.2.1 Korean hierarchy

When Koreans meet someone for the first time the usual questions will be about age, education and job title. These questions can be too sensitive for a westerner to share directly after being introduced but are important to share without embarrassment to make Koreans feel comfortable in the conversation. The reason is that they need to know these aspects to be able to treat the other person correctly according to social rank. Even though hierarchy may be less strong in western cultures Koreans prefer to be treated correctly according to social rank even when dealing with non-Koreans. (Shim, Kim, N.Martin 2008, p.174)

The hierarchy in a Korean company is strictly vertical and is characterized by father-son like relationships between superiors and subordinate workers. The Korean boss should get involved in his employees family and personal life by attending family ceremonies and giving gifts at important occasions. If an employee has personal problems the boss will try to help solving it since it is affecting his performance at work. In western countries employees are expected to keep private matters to themselves and keep a

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bigger distance to their colleagues. It would be considered quite odd if the boss would start asking about the employee’s private life. (Ungson,Steers & Park 1997, p.173)

The decision-making process in Korean companies is called pummi which means that decisions are made at the top while the full responsibility to complete the task successfully is at the bottom of the hierarchy. As subordinates seldom can neglect orders from above it is customary that the manager avoids putting a too heavy workload on the group to maintain group harmony. There are mainly three different kinds of Korean managing styles within pummi. In the “authoritarian” company the manager make all decisions himself. The “consultative” manager first consults the subordinates before making the decision. The most western-like style is the “participative” where the manager encourages the subordinates

themselves to make decisions regarding their work. Companies managed directly by its owner are more authoritarian and companies managed by professional managers are more participative. (Ungson,Steers & Park 1997, pp.174-176)

2.2.2 Korean harmony

There is a social contract between Korean employees to preserve harmony within the group. A good example is the motto of the Korean company LG: inhwa which means harmony. Inhwa is a heritage from Confucianism which represents an extremely high value of smooth, constructive and conflict-free interpersonal relations. Individual rights are never allowed to interfere with inhwa. For example a post-work drinking time for improving the tightness of the group may never be turned down because of personal reasons like spending time with family. Inhwa is an example of a saboon, a companies’ slogan for motivating their workers. The saboon is chosen by the company founder and is spread out at all levels of the company in the form of paintings and such. (Ungson,Steers & Park 1997, pp.171-172) If a Korean subordinate would openly refuse a task from a superior it would result in loss of face for both of them. Loss of face is a feeling of extreme embarrassment which might be expressed by a nervous smile and a face turning red. (Ungson,Steers & Park 1997) Face has a major influence on organizational behaviour in Asia and is essential to understand for western companies in Asia. Firstly, Asians value saving face higher than immediate economic gains. Face is the public image and status of a manager or a company and is the best way to show trustworthiness and is a measure of how much money and responsibility one can invest in that company or worker without losing face. Asian companies prefer doing business with companies that have equivalent face/public status. Secondly, to promote one´s company or business role it is consider immature to promote any personal attributes. This can be difficult for a westerner since it is often encouraged in the West. In Asia individuals are valued in their

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social status and relation to others instead of personal attributes as for westerners. Thirdly, people inside a group in Asia are responsible to save each other´s face to outsiders. If one person makes a mistake it can damage the face of the entire company. The higher status one has the more important is it for oneself and the rest of the group to protect that face. Different ways of losing face involves to not meeting expectations of social status, not to be treated correctly by others according to status and when in-group members lose face. (Kim & Nam 1998)

Koreans use nonverbal cues to avoid loss of face, this kind of nonverbal communication is called nunch’i. A person with nun´chi is able to do the right interpretation and choosing the right words by being aware of the social context, hierarchy and situation. A manager with a good nunch’i can look into the eyes of the subordinate while asking a favour to determine if the employee actually feels capable of doing the task or not. This is fundamental in Korean culture and Koreans often expect that everyone have a good nunch’i which might result in confusions in international business relationships. (Ungson,Steers & Park 1997, p.174) Among the young generation nun´chi and loss of face is less important. Because of western influence the younger generation tend to be more individualistic and less concerned about group harmony than the older generation. (Shim, Kim, N. Martin 2008, p.76)

Indirectness was found to be a big source for misunderstandings and bad communication between East-Asians and westerners in an investigation by Sanchez-Burks et al. (2003). The conclusion in their study was that indirectness may be less severe in non-work situations due to globalization but is growing as a problem in work situations. They stress the need of strategies for cross-cultural communication to overcome this problem. A surprising statement in their paper is that Americans have the same level of indirectness as East-Asians in non-work situations. The conclusion is therefore that Americans can learn to be indirect in work situations. A suggestion is to organize non-work situations like after-work or other activities to put all people at work into a non-work situation and take the culturally difficult discussions there. The study is conducted on Americans and East-Asians but could possibly be transferable to other western cultures. (Sanchez-Burks et al. 2003) Indirectness is important for foreigners to consider when doing business in Korea. Since Korea has a past of being colonized and suppressed by other cultures there is a national pride that makes Koreans very sensitive to criticism, especially from foreigners. (Shim, Kim, N.Martin 2008, p.174)

2.2.3 Korean relations

Western countries rely on written contracts while Koreans only secure deals through developing personal relationships between the business parties. Since the business relationship becomes personal

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the goal is to find a deal which is mutually beneficial for both parties. Signing a contract is only a

symbolic action with little meaning. Foreign businesses that trade with Koreans need to keep this in mind and constantly nurture the personal relationships to keep a successful business relationship.

(Ungson,Steers & Park 1997, pp.172-173) Even if a first attempt to conclude a deal fails, it can still be fruitful to develop personal relationships between the companies for a future deal. A bonding is created by exchanging favours which often result in a stronger personal bond. The favours must be given for free to create a mutual indebtedness which is the foundation of the relationship. (Shim, Kim, N.Martin 2008, p.175)

A difficulty for westerners with building relationships to Koreans is the strong distinction between the group and outsiders. Koreans give full trust to all members of a well-defined group but have a total lack of trust for strangers and therefore have strong difficulties to communicate with outsiders. A way of bonding with a stranger in Korea is to connect through common “blood”-relations: shared home-town, child-hood experiences and academic background. (Yoon & Cho 2010, pp.73-74) Of course these are difficult connections for foreigners and in a study by Chang&Chang (1994) it was relieved that Koreans only trust foreign strangers as little as 1 on a scale of 100. The trust for Koreans with shared “blood”-relations is 97 out of 100, family “blood”-relations 100 out of 100 and Korean strangers 5 out of 100. The strong trust within a group is the base for the dynamic collectivism that characterizes Korean corporate culture, which will be further described in following subchapter.

To get around the strong distinction between in-group and outsiders foreigners should show a great interest in learning about Korean culture. If such an interest is shown Koreans open up more easily and make more efforts to build a relationship. (Shim, Kim, N. Martin 2008, p.175)

2.2.4 Dynamic collectivism in Korea

The Korean collectivism is dynamic since it is collectivistic to in-group members and individualistic to out-group members. The strong division between inner- and outer out-group members sparks a strong

competition which is considered to make Koreans more hard-working than many other people. The backside of the strong competition is the hastened decisions and instability of long-term projects. “Balli-balli” is the Korean term commonly used to describe the importance of efficiency in Korea, a society where fast decisions and implementations often are more important than safety and stability. (Yoon & Cho 2010, p.71)

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Balli-balli has a big impact on Korean business and has resulted in a very rapid progress between project planning and implementation. If the government is involved in a project the deadlines will be even tighter which often lead to a lowered quality of the implementation and in worst case collapsed buildings. Another side of Balli-Balli is na-doo which means “me too”. If a neighbour (or another country) has the latest technology the consumer (or Korea) wants to have the same technology or product as fast as possible, often without questioning the actual need or quality of the product. These two aspects of Korean culture create an atmosphere of fast and unpredictable changes in Korea which is important to remember when learning about their culture and society. Korea is “negotiating between Confucianism and capitalism, hierarchy and equality, collectivism and individualism, traditional calm and recent societal dynamism” (Shim, Kim, N. Martin 2008, pp.22-24)

The dynamic collectivism of Korea is constituted of in-group harmony, optimistic progressivism and the hierarchical principle. The in-group harmony is the fact that all members of the group strive to preserve group harmony, the superior through engaging in his employees personal life and using nun’chi to avoid demanding too much and the subordinates by sacrificing their own goals for the best of the group. Optimistic progressivism refers to the often too optimistic goals set by persons in the higher levels of hierarchy that the persons in the lower levels of the hierarchy have to achieve without questioning their tasks. The hierarchical principle is the strong hierarchy always present in Korean groups which gives a very efficient military-like communication with well-defined roles. There is also an uncertainty to the dynamic collectivism since both group harmony and strong hierarchy preserves a static social order while optimistic progressivism is calling for high flexibility in all aspects. (Yoon & Cho 2010, pp.77-79)

Koreans are one of the most hard-working people in the world; even Japanese complain that Koreans work too hard. A major reason for this is the Confucian work ethic that drives Korea and other economies in Asia. Eui-yok is the Korean term for this attitude which translates “ambition”. Eui-yok is the internal drive Koreans have to accomplish something important, not to earn money but for spiritual satisfaction. This work ethic is group-oriented and not individual as in western countries, Koreans work extremely hard for the group/company not for their own individual benefit. Several Korean companies consider Eui-yok to be fundamental for a company’s survival. (Ungson,Steers & Park 1997, pp.170-171) In recent years centrality of work in Korea has diminished because of stronger labour unions that put demands on the management of companies for better working conditions. Working hours as well as salary are being adjusted to be able to compete with multinational companies in Korea. At the same time

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the old Confucian ideals of seniority promotion and lifetime employment is getting challenged by western influences of performance-based employment. (Shim, Kim & Martin 2008, pp.48-50)

This chapter started with theories about cross-cultural communication where unconscious stereotyping is the goal to enable a smooth communication. Hofstede & Bond´s five cultural dimensions were then given as a tool to discuss cross-cultural communication problems. Finally a discussion about Korean culture was given, structured after the most important topics for cross-cultural communication. Below the model for analysis shows how the theoretical framework will be used in the further discussions.

2.3 Model for analysis

The goal of the theoretical framework is to provide a base for SKB International to improve their cross-cultural communication towards the Korean market. The fundamentals of cross-cross-cultural communication are Hofstede´s five dimensions. The four most important aspects of Korean business culture to SKB International all have a relation to one or more of the five cross-cultural dimensions. By combining the two elements of Korean business culture and cross-cultural dimensions it will be possible to provide SKB International with a better foundation for creating a consciously held stereotype than they had before.

Cross-cultural dimensions Korean culture International business Conscious stereotyping Korean hierarchy Uncertainty avoidance Power distance Korean relations Career sucess/ Quality of life Korean harmony Individualism/ Collectivism Dynamic collectivsm Confucian dynamism

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3 Method

3.1 Choice of study

I chose to write about SKB International’s relations to Korea since I wanted to combine my interest for international business with my field of engineering studies and former work experience within the nuclear business. The possibility to go to Korea through a department change guided me to choice of country for this case study. My first ideas concerning this topic emerged, however, during a nuclear industry seminar in Uppsala where SKB International held a presentation about their work in the world. It was a natural approach to do a qualitative study since only a few persons at SKB International were involved in the connection to Korea.

3.2 Data collection

3.2.1 Interviews

I made two interviews for this essay. The first one was with Magnus Holmqvist of SKB International who is in charge of the consultancy to Korea. That interview took place at SKB International’s office building in Stockholm and gave a lot of information about their business and their relation to Korea. The second interview was made with SKB International’s representative in Korea, Kwang-Sup Shin. He helps SKB International to maintain a dialogue with the Korean market and to find new projects. During the interview with Kwang-Sup Shin I could find a more neutral view of both SKB International’s actions on Korean market and also how the Korean counterparts are acting towards SKB International.

Magnus Holmqvist in Stockholm, Sweden

I chose to interview Holmqvist since he is responsible for SKB International’s relation to Korea. His job is focused on sales, establishing contracts and project management. He studied Hydrology Science at Uppsala University and started working with projects related to his field of studies: transport of radioactive isotopes in rock, equipment and methods for site investigations of rock at 1000m depth. Before he started at SKB he worked as a consult for ten years. The interview was held in a semi-loose structure based on about 15 questions I had prepared before-hand.

The questions to Holmqvist were formulated very loosely to get a first impression of the problem. However, to get a deeper understanding of the problems I used follow-up questions to get more details. I asked general questions about SKB International and SKB as well as specific questions about problems

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with cross-cultural communications. This interview was very important since he is responsible for all communication to Korea.

Kwang-Sup Shin in Seoul, South Korea

He is the representative of SKB International in Korea and works for facilitating the cross-cultural communication between Korea and Sweden. He was born in South Korea but moved permanently to Sweden in 1961.Since then he has been engaged in business between Korea and Sweden in various ways. Amongst all he is the founder of the “Korean-Swedish Association” and also president of “SWETRA CO” in Seoul. (Kwang-Sup Shin, Interview 2010)

The interview questions to Kwang-Sup Shin were written to find answers to the theoretical cultural problems I have found through the theory about Korean Business Culture and Cross-cultural

communication. I also based the questions on problems that I have learnt about from the interview with Magnus Holmqvist. In this interview I tried to get a more neutral view of the cross-cultural

communication between SKB International and KRMC/KHNP. Since Kwang-Sup Shin have a deep insight in both cultures and is highly involved in all discussions he could comment on SKB International´s communication from a Korean perspective as well as from a Swedish perspective.

After major difficulties with getting further interviews I chose to settle for the extensive interviews made with Kwang-Sup Shin and Magnus Holmqvist of SKB International. Since my focus in the essay is to explain the behaviour of SKB International on the Korean energy market these interviews provide a good basis for understanding how their company deals with cultural differences to Korea. The interview with Holmqvist gave an opportunity to get a basic understanding of the dialogue to Korea and potential problems. It was a good opportunity to understand how Korean culture is perceived by Swedish business men. The interview with Kwang-Sup Shin gave a good view of both the Swedish view of Koreans and the Koreans view of how SKB International is acting. Of course the lack of further interviews is a problem. But since Magnus Holmqvist and Kwang-Sup Shin are the two persons most involved with Korea at SKB International I think they are the most relevant for this essay.

3.2.2 Secondary Data

Initially much of information regarding SKB, KRMC and the nuclear industry of Sweden and Korea was given in the interviews. This information was later reconfirmed and adjusted through secondary data from various more reliable online sources.

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As for the chapter of Swedish actors I used sources from SKB’s own website. Since the information I needed for that chapter is pretty basic information the risk of subjectivity from using the company’s own website isn’t that important. For the chapter about Korean actors I used info from World Nuclear Association. They write on their website that they are an organization that works to promote nuclear energy in the world. (“WNA: Supporting a Fast-globalizing Nuclear Industry”, 2010) It is a reliable source but at the same time subjective in its view of the nuclear industry. Then again the information I needed for writing about Korean actors are mostly facts and not questionable in itself.

3.2.3 Living in Korea

During the writing of this thesis I lived in South Korea. I was an exchange student to Seoul National University for one semester. Writing about Korean culture while being in Korea enabled me to compare my theoretical findings to the reality I was living in. I also believe that things I learned about Korean culture through living there led me to choose facts and theories that in fact are a noticeable part of their culture today. My experiences in Korea have in that way strengthened this report.

3.3 The trustworthiness of the study

Theories about cross-cultural communication specifically highlighting the differences between Swedish and Korean culture was used to form interview questions that would give an image of the problems SKB International are having with the communication to Korean actors. The theories about Korean business culture are used to provide explanations and solutions to problems that SKB International are

experiencing. All together the different parts enable a discussion where problems and solutions can be outlined and summarized.

Since interviews only were made with SKB International and not with the Korean actors involved the results can only be drawn on how SKB International is acting towards Korean market in general. The two interviews were however very informative and gave a good insight into SKB International´s organization and into some of the cultural clashes that have occurred throughout time. The theory about Korean culture, which was constantly revised by my own experiences living in Korea, gives a good depth to the essay which makes it easier to use the results of this essay for other Swedish or western companies that want to improve their communication with Korean business actors.

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4 Result

4.1 Swedish actors

4.1.1 SKB

When the first Swedish nuclear power plants were constructed in the 70’s SKB was founded by the nuclear companies to take care of radioactive waste from these plants. The main incentive for founding SKB was the Swedish law stating that a company producing electricity through nuclear power is

responsible for taking full care of all their waste. Taking care of the Swedish radioactive waste is in other words the sole mission of SKB. There are in total 15 owners and the three major owners are: Vattenfall, Fortum and EON. The first repository for spent nuclear fuel is inside the nuclear power plants themselves. The second step is transferring this spent fuel to a repository in Oskarshamn called Clab by a specialized boat called m/s Sigyn. The last step is transferring this spent fuel to a final repository which will be constructed in Forsmark in the near future. There is also a repository for low-active nuclear waste in Forsmark called SFR. Low-active waste can for example be clothes and equipment that have been exposed to nuclear radiation. (“Om företaget SKB”, 2010)

There are 400 employees at SKB and there is a constant dialogue about their program with 350 experts outside the company. Their main office is in Stockholm and there are also offices near the nuclear power plants at Forsmark and Oskarshamn. The company is organized in departments according to their main tasks: managing the current nuclear waste repository system, R&D and site investigation. (“Organisation SKB”, 2010)

4.1.2 SKB International

SKB International was founded in 2001 by SKB to consult the accumulated knowledge of SKB to other countries. The services of SKB International include consultancy about handling LILW (low and intermediate level radioactive waste) and SNF (spent nuclear fuel). SKB has been doing international consulting since the 80’s, but since their main goal is to take care of Swedish nuclear waste they created an independent company called SKB International. Their mission is to “increase safety and decrease environmental risks in the handling and repository of spent nuclear fuel and radioactive waste” internationally. There are currently 15 consultants working full-time for SKB International. As projects are carried out staff from SKB is connected temporarily to these projects. (“SKB International AB”, 2010)

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SKB International is strictly a sales- and project management organization. They buy their services from SKB and transfer it to their international customers. According to Swedish law SKB can only spend money on things that benefit the Swedish power industry. Therefore, SKB International was created to be able to sell the well-demanded knowledge of SKB to other countries. Another reason was the lack of time for SKB to handle the international requests. SKB International is completely “self-financed” and earns all money from their international consultancy. (Magnus Holmqvist, Interview 2010)

SKB International’s service is to let international clients get insight into SKB’s 30 year old experience in “…research, development, siting, design, construction and operation of repository and disposal facilities for spent nuclear fuel and radioactive waste from nuclear facilities”. They provide these services through the SKB network which includes experts from universities, consulting firms and construction companies. (“About SKB International AB”, 2010)

4.1.3 SKB International’s Services to Korea

SKB has about 70 years of experience in nuclear waste management while Korea just has started their repository of nuclear waste in an organized way in the recent years. The first consultancies to Korea in the 80’s were about nuclear waste repository know-how transfer. It was a more theoretical than practical knowledge transfer to the Korean research institute, KAERI. More recently SKB International has had two projects with Korea about building a LILW repository. They are building such a repository in Gyeongju next to a nuclear power plant called Wol-song which is due in 2012. SKB International helped with consultancy about how the organisation should work and necessary functions at the repository site. It also involved information about all the technical details of the project. (Magnus Holmqvist, Interview 2010)

The second recent consultancy job to Korea was about the Swedish radioactive waste transport system. Since Korea, like Sweden have all their nuclear power plants along the coast they decided to initiate a sea-based transport system like that SKB is using in Sweden. SKB gave their knowledge about how it was done in Sweden: about all the necessary parts in the system, communication, responsibility issues and how to make it all work together. (Magnus Holmqvist, Interview 2010)

As for now Korea does not have any repository ready for nuclear waste and no plans for building a repository for the highly radioactive waste such as spent nuclear fuel rods. SKB have constructed a LILW repository in Sweden and well advanced plans to build a repository for SNF in the coming years. This

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gives Korea a good motive to buy consulting services from SKB International. (Magnus Holmqvist, Interview 2010)

Consulting to Korea is focused on two areas: management strategy and technology transfer. To be able to use the technological solutions of nuclear waste management it is important to have a national strategy for radioactive waste and SNF. A nuclear back end programme is very expensive and storage and the repository should last more than 100 000 years. SKB International can give Korea an insight of how these projects were achieved in Sweden, for example in areas of organisation, finance, research foundations, university relations, industrial networks etc. The technological aspects are the same in all of SKB:s programs, even though the technology must be adjusted to the nature surrounding the repository. All these parts are inspired of “KBS-3” which is the policy developed in 1983 in Sweden of how to take care of SNF. (Magnus Holmqvist, Interview 2010)

4.2 Korean actors

4.2.1 Nuclear Power Industry in Korea

South Korea has today 20 reactors that provide 17,7 GWe which is 40% of the country’s total electricity production. KEPCO (Korea Electric Power Company) is a government corporation that had sole responsibility of electric power production between 1961 and 2001. It was then split up into six units where the biggest unit was KHNP (Korea Hydro & Nuclear Power Co Ltd) which handles all nuclear generation as well as a small part of the hydropower. Nowadays KEPCO have monopoly over transmission and distribution of electricity in Korea. The highest decision-making instance for Korean nuclear energy policy is the Atomic Energy Commission where the Prime Minister himself is chairman. The step below in the hierarchy is MKE (The Ministry of Knowledge Economy), they are responsible for energy policy, construction and operation of nuclear power plants, nuclear fuel supply and radioactive waste management. Both KEPCO and KHNP are placed under this ministry in the hierarchy. The national nuclear R&D has a goal to secure the national energy supply and to enable the country to be a nuclear exporter in the near future. KAERI (Korea Atomic Energy Research Institute) has the main responsibility for R&D and lies under KORP (Korea Research Council of Public Science & Technology). MEST (The Ministry of Education, Science & Technology) is responsible for nuclear R&D and safety. The current energy policy is to expand nuclear power to minimise dependence on imports. (“Nuclear Power in South Korea”, 2010)

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4.2.2 History of the Korean Nuclear Waste management

In 1988 the ‘polluter pays’ principle was established in Korea through the Atomic Energy Act. KHNP has since then paid fees to the governmental Nuclear Waste Management Fund. In 2009 KRMC (Korea Radioactive Waste Management Co Ltd) was founded to have sole responsibility for Korea’s waste management, waste disposition and to gain a national consensus on high-level waste. Before 2009 KHNP had this responsibility but nowadays their only responsibility is to pay 900 000 won per kg of spent fuel to KRMC. Nowadays spent fuel is stored on the reactor site, which will be full by 2016. There are hopes and loose plans to have a repository for SNF ready by 2016. Even LILW is stored on the reactor site but a construction of a radioactive waste disposal facility is planned to be ready in Gyeongju 2010. KAERI and MEST failed several times to get public acceptance for a repository site between 1988-96 but NETEC took over the task in 2000 and asked local communities to volunteer to host a LILW repository site. In exchange the local community would get 290 million USD as compensation for the psychological burden and as a reward for supporting the nation. 90% of Gyeongju’s population was supportive to such a proposition so the repository was built there. (“Nuclear Power in South Korea”, 2010)

4.2.3 Organization of KRMC

KRMC is using the traditional Korean hierarchic organization structure. It’s a vertical organization where everybody writes a report to his superior at the end of the day. After the superior has gathered all information from the reports he will make a decision of what should be done. Nobody below the superior is encouraged to take decisions and only the superior has an overview over the whole project. The most important decisions are even made by the government. This structure was initially a problem to SKB International since they communicated with the lower ranked people of KRMC who did not have any power to make decisions. To solve this issue SKB International always tries to communicate with the senior management of KRMC. According to SKB International the strict hierarchy also causes problems to Korea. It’s difficult to do things in the right order and hard to integrate all different parts since everybody is 100% focused on their own task. (Magnus Holmqvist, Interview 2010)

4.2.4 KAERI – a competitor to SKB International?

It’s debatable whether KAERI is a competitor to SKB International or not. Since they are a research institute they could spend 10 years researching about a small detail which may not be the most relevant detail for KRMC. KAERI does not have any money or interest in buying knowledge from SKB since they are paid by the government and working for universities. In one aspect KRMC might prefer buying ‘local’ knowledge from KAERI. But since KRMC need to make progress in their programme it may be more

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beneficial for them to buy consultancy services from other countries that already have acquired the relevant knowledge for the specific project. KRMC and KAERI are independent of each other and put under different ministers by the government. KRMC does not have any influence over KAERI’s research which put them in a position more likely to buy knowledge from abroad. SKB however has a big influence over the Swedish research program of nuclear waste through their funding’s of research at universities. When SKB have a gap of knowledge they set up a project to fill the gap using both national and

international resources. KRMC would have more difficulties of hiring researchers from abroad because of the national pride in Korea as well as language and cultural barriers. Korea have developed from a poor country to an industrialised country in only 50 years all by themselves and have a strong belief and will to continue that journey by own force. Though KRMC are willing to buy foreign knowledge they prefer keeping the main project in Korean hands through connections with universities and KAERI. (Magnus Holmqvist, Interview 2010)

4.3 The Dialogue between SKB and the Korean actors

4.3.1 Character of the dialogue

About 5 employees at SKB International are involved in the dialogue with Korea including Magnus Holmqvist (Vice President), Claes Lindberg (President), Kwang-Sup Shin (Representative in Korea) and secretaries. They have not received any official Korean culture education but get continuous help from Kwang-Sup Shin himself. (Kwang-Sup Shin, Interview 2010)

Basically the Koreans go over to SKB:s office in Sweden to gain knowledge through workshops and reports. These visits also include getting feedback from SKB on the systems Korea already built from advice of SKB. SKB had two big projects with Korea in recent years which were both around 10-12 weeks. When the Koreans are visiting SKB International’s office in Sweden they get tasks from SKB International to solve during this period. This is also combined with lectures and seminars by SKB International. The two major projects consulted so far were about how Sweden implemented the LILW repository including the sea-based transport system. As for the transport system the Koreans got a task to design their own system with the help of all knowledge about the Swedish system. The different parts of the system were law issues, finance, responsibility, governmental communication and technical parts. They completed this task within the 10-12 weeks and ended up with a system very similar to the Swedish one. When they go back to Korea the dialogue continues and SKB International give support during implementation. They usually have a lot of ideas of further developments and the work of SKB International is to find a way to realize these ideas. During the last year only minor projects were consulted to Korea. The last project

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regarded the human resource management system of SKB through a one-day seminar in Stockholm. The Koreans wanted to understand why SKB’s company is organized the way it is and how to apply it in their own company. There are usually 4-5 short visits per year by the Koreans to Stockholm where Holmqvist also try to discuss with them about their program to find where SKB can help them in the future. (Magnus Holmqvist, Interview 2010)

SKB International has a contact person in Korea that finds new projects for them, Kwang-Sup Shin. He also helps them with translation and communication with the customer. He does not have any technical background but provides a necessary link to the Korean market. Another form of linkage that SKB International uses in other countries is the Swedish Trade Council (STC). They helped SKB International a lot in Japan and are a major reason for their great success there. Since their projects in Japan have been more successful than in Korea, SKB International is thinking about using STC also in Korea. In Japan STC was used since they weren’t satisfied with their former link in Japan. Through STC and the Swedish embassy, SKB International found partners to cooperate with to gain a successful entrance into Japanese market. STC in Korea and Japan share the same management so SKB International may try their services in the future. But since the cost of using STC is very high they want to avoid contacting them as much as possible. (Magnus Holmqvist, Interview 2010)

4.3.2 Getting a continuous dialogue

The strong national pride characterises the Korean industry. Korea wants to minimize the involvement of foreign consultancy in Korea and prefer doing short trips between Sweden and Korea to gain the knowledge from SKB through seminars and lectures. KRMC then tries to copy this knowledge and create something by own force, even though the result often is identical to the systems SKB International provided. This way of communicating suits SKB International since they do not have to be directly responsible in case of accidents or other failures of the product. It is necessary for such an expensive and long-term project that the country building it takes national responsibility and preferably has built the systems by proper force so that all knowledge about risks is available to the government and the local people. (Magnus Holmqvist, Interview 2010)

Even though Korea tries to save money on consultancy Holmqvist thinks that they can save more money by getting help from other countries who already has implemented a nuclear waste system. Since it costs 1,5-2 billions of SEK per year to build such a system, cutting 5 years means saving about 7-10 billions of SEK. France and Switzerland are the only competitors to SKB International since no other countries have come as far in their radioactive waste system or have an organization which allows for consulting. Korea

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has a well-developed nuclear industry and is exporting nuclear reactors, but has not come as far as the above mentioned countries in radioactive waste systems. (Magnus Holmqvist, Interview 2010)

The next project SKB International wants to have in Korea is about creating a final repository for SNF. The temporary storage sites in the nuclear power plants will be full by 2016 and by then Korea need an alternative way of disposing SNF. SKB International wants to provide help with all parts of creating such a repository including organization, finance, laws, public acceptance and technical aspects. Holmqvist knows that Korea is worrying about this but he is not sure how far they have come in their plans. France and Switzerland are also interested in helping Korea with this, although they have not come as far in the program as Sweden. (Magnus Holmqvist, Interview 2010)

4.3.3 Public acceptance

One of the biggest problems of developing nuclear waste systems is getting public acceptance from societies living near the planned nuclear waste site. Sweden and Finland are the countries that have come furthest in the plans of building a final repository thanks to their public acceptance. Other final repository plans around the world have failed because of lack of trust from locals. Canada and the UK have looked at the Swedish model after failing with their programs and are now more successful in public acceptance than before.

Korea has gotten their public acceptance for their radioactive waste repository sites through

governmental money and investments to the surrounding societies. Holmqvist said in the interview that buying local trust is not a good solution since they might require more and more money as problems evolve. He has tried to inform Korea of the Swedish model of getting public acceptance but they want to do it in their own way. He thinks the problem is the Korean national pride that inspires Korea to go its own way without listening to advice from other countries. Holmqvist thinks it is difficult for Korea to get advice from another country regarding how to get public acceptance from its own population. In Japan and Taiwan SKB International are known to be experts in public acceptances-issues and are deeply involved in their programs. Korea is still in high need of help with their public acceptance. (Magnus Holmqvist, Interview 2010)

4.3.4 A difference of time horizons

A problem for SKB International is the lack of communication with KRMC. The Koreans are very focused on their program and only contact Sweden when they get stuck and need urgent help. SKB International on the other hand needs at least a month to schedule any projects with staff from SKB which delays their

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ability for quick assistance to Korea. Because of these delays SKB International sometimes have to turn down the most urgent requests of KRMC. This problem is less severe in relation to Taiwan and Japan where SKB has come much further and even started consulting about public acceptance and a final repository. SKB have been most successful in consulting to UK and Canada which have totally accepted SKB’s view of getting public acceptance and other aspects of a final repository. This problem is based on a difference in planning horizon. SKB International is used to plan meetings several months ahead while KRMC often wants help within a week. SKB International wants to solve this problem by getting more insight to KRMC’s projects through a continuous dialogue. They think it’s a bad solution to help KRMC with urgent requests if it means the quality of the consultancy will be lowered. And if SKB International delivers products that are not satisfactory it will damage their reputation in Korea and around the world. (Magnus Holmqvist, Interview 2010)

Shin has difficulties to convince the Koreans that they need to schedule appointments with Sweden months in advance and also for the Swedes to realise the importance of receiving Korean officials. The Korean counterparts have thousands of employees so they are always ready to receive a visit. It is difficult for SKB International since they only have about 5 employees working towards Korea. The Swedish summer holidays are another obstacle since Korea often sends delegations in early summer to Europe. These visits are important since the Koreans through these visits investigate which partner will be best for consulting of different projects. Such a trip often includes visits to Finland, Sweden,

Switzerland, Germany and France. Often the visit is more of a touristic character where they want to visit the nuclear waste site and research facilities. There might be up to 100 Koreans coming at once on these spontaneous visits, which makes it even harder for the five SKB International employees to take good care of them during their visit. If Sweden can’t receive the Koreans it gets tougher to win deals in the competition with the other European countries. Swedish frustration over the Korean spontaneity clashes with frustration from Koreans about the Swedish inflexibility. (Kwang-Sup Shin, Interview 2010)

4.3.5 Building relations

The more important visits between Korea and Sweden are in small groups of high-positioned people in the organizations, often consisting of CEO-s, presidents and vice-precidents. Magnus Holmqvist, Claes Lindberg and Kwan-Sup Shin are mostly involved in those visits but it might also involve other actors like travel agency, family members and other employees of SKB. In Korea the representatives of SKB International get treated to Korean food and drinks in the evening. Likewise SKB International takes the Koreans to a traditional Swedish restaurant for food and drinks when they visit Sweden. This creates an

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open atmosphere where both parts can ask important questions about projects that were too sensitive to ask during the day. He says that all important decisions in Korea are made in the evening after many shots of the Korean alcohol soju, and then confirmed the morning after in a sober mode. (Kwang-Sup Shin, Interview 2010)

Shin knows that personal relations are extremely important for business relations in Korea. During one of the 3 months project when a few Koreans were stationed in Stockholm he tried to entertain them during the weekends. He mentions the importance of not talking business during these casual meetings. Sometimes he takes them out with a luxury boat for dinner. Other times he invites them to his home where his wife cooks Korean food to them. When the Swedes are in Korea, usual activities are tennis, mountain climbing, golf and dinners. (Kwang-Sup Shin, Interview 2010)

To keep the relationship alive the Koreans sometimes send greetings through e-mail not related to business which SKB International sometimes forget to answer during stressful workdays. The Koreans keep a high value in maintaining the contact on a more personal level while the Swedes would like to get a better dialogue on a professional level. However, the staff at SKB sends Christmas cards to Korea as a way to keep a personal relationship. (Kwang-Sup Shin, Interview 2010)

Shin thinks that Holmqvist is the best one in keeping a dialogue with the Koreans on a personal level since he is very good at adapting to different cultures. But since he is also responsible for Taiwan and Japan he is usually very busy. Shin on other hand is available to both Koreans and the Swedes 24 hour on his cell-phone. When Holmqvist is not available the Koreans will get help from someone else at the SKB office, the problem is that they are not as aware of Korean culture as Holmqvist. When

misunderstandings occur because of this Shin act as a middle hand and try to solve the misunderstanding by talking both to the Swedes and the Koreans. (Kwang-Sup Shin, Interview 2010)

4.3.6 Korean hierarchy vs. Swedish flat organization

Most decisions for KRMC are made on the top level of the hierarchy, often on governmental level. For SKB International the decisions are made by vice-president Magnus Holmqvist or by the president Claes Lindberg in consultancy with the involved staff at SKB. At business meetings Korea always try to match the level of hierarchy. If SKB International sends the vice-precident of SKB International, KRMC also will send the vice-president of KRMC. A problem is that the vice-president of KRMC does not have much influence on the organization since the president does all the decisions as well as the government. As a way to solve the problem Shin constantly reassures KRMC that Holmqvist in fact has the same power as

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the president of SKB International and can make importance decisions by himself. Still the Koreans are often disappointed when they send their President to Sweden without a possibility to meet the Swedish equivalent. (Kwang-Sup Shin, Interview 2010)

In late 2010 five people from the Korean embassy decided to visit the nuclear waste repository at Forsmark. Shin took care of their visit together with the CEO Claes Lindberg and a guide of the nuclear waste repository. Korea’s ambassadors were impressed by the visit and sent a report to the Korean government about their visit. This report was later examined by the president of Korea and sent to the Korean minister of energy and lastly to KHNP and KRMC. Shin thinks this is an ideal way of getting through the Korean hierarchy and hopes that it will result in future projects. (Kwang-Sup Shin, Interview 2010)

4.3.7 Korean group dynamics vs. Swedish Individualism

Decisions at KRMC are made by the top-superior after consulting with his whole group to see what they think about his decision. The superior needs to use his nun’chi to realise what the best decision for the entire group is. SKB International are used to a more direct dialogue about projects and sometimes gets frustrated with the delay of negotiations when the Koreans need to consult the whole group before any decision is made. Holmqvist have been given full power by the CEO of SKB International to make decisions himself when dealing with the Koreans, but of course he has to call around in SKB to see if the project is possible to make. He is using breaks in discussions to make these calls. (Kwang-Sup Shin, Interview 2010)

Another problem with nun’chi is that Koreans are using it to interpret the negotiations with SKB International. If the dialogue from the Swedish side sounds a bit negative the Koreans might think that the Swedes are rejecting their proposal. But Shin thinks that Holmqvist has great nun’chi so there is no problem when they are in dialogue with him. (Kwang-Sup Shin, Interview 2010)

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5 Analysis

In the following discussion I will analyze how SKB International should tackle the cultural differences when doing business in Korea. To do so I will first distinguish the major cultural differences and then discuss how SKB International is tackling these. Finally I will give some advice of possible improvements to this cultural dialogue from SKB International’s side. The basic assumption I make is that cross-cultural communication can be improved by stereotyping as I described in section 2.1.1. The most common mistake in cross-cultural communication is misinterpreting the communication and also assuming similarity in cultures where differences exist. That’s why I in this essay want to provide a good base for SKB to successfully stereotype their Korean business partners for a successful communication. As shown in the model for analysis the five dimensions of Hofstede & Bond is the starting point for the analysis. Within these five dimensions theories about Korean business culture will be discussed together with the experiences of cross-cultural communication that SKB International has had on the Korean market. The final stage of the model for analysis is conscious stereotyping – in other words the analysis will determine how SKB International can stereotype in a conscious and a correct way for better cross-cultural communication with Koreans.

5.1 Cultural differences between SKB International and Korean actors

In the following points I will find out where the critical cultural differences between SKB International and their Korean business partners lie to see where misunderstandings and frustrations might easily rise.

5.1.1 Individualism/collectivism

As mentioned in the interview with Holmqvist there is sometimes a problem of prolonged negotiations due to the Koreans´ need to reach a consensus within their whole group including upper-level

hierarchies. It is easier for Holmqvist to make fast decisions being in an individualist culture. Free will, self-determination and high belief in rules characterizes individualists which all encourage such a negotiator to make fast decisions. A collectivist group like Koreans value group harmony much higher than following logic and rules. It is therefore difficult to negotiate between these two cultures. Koreans negotiate to satisfy their group, they are very flexible about prices, laws and rules to be able to reach a good deal. The Swedes on the other hand have a very high belief in rules, laws; have fixed working hours and fixed prices. Holmqvist and Shin are flexible and go beyond the Swedish boundaries to satisfy the Koreans in a negotiation through extended working hours and giving them extra time to reach consensus. A problem is that the rest of SKB International has less knowledge about Korean collectivism and