Dealing with Korea’s Bureaucracy

With the President-elect's transition team making daily headlines about streamlining government, one may be tempted to believe that doing business with Korea's bureaucracy will become simpler. We can hope so, but as we all know, politicians come and politicians go, but bureaucrats are with us forever.

Tom Coyner

By Tom Coyner

With the President-elect's transition team making daily headlines about streamlining government, one may be tempted to believe that doing business with Korea's bureaucracy will become simpler. We can hope so, but as we all know, politicians come and politicians go, but bureaucrats are with us forever.

Bureaucrats anywhere are infamous for maintaining the status quo. But change can and does happen. Contrary to many foreigners' expectations, the real power for change normally does not take place at the minister lever. Rather, it is most commonly found in the bureaucracy at the director (samugwan) and deputy subdirector (gwajang) levels. Although those holding these positions are relatively low in the bureaucratic hierarchy, they are the gatekeepers. Only by their direct involvement do all documents move upwards to the ministers who make the actual decisions. They are personally responsible for specific bodies of regulations. At the same time, like their counterparts in other countries, the bureaucrat's primary instinct is for self-preservation. Under the bureaucratic system, as long as one does not make major blunders, one's position is usually secure.

The three things that mid-level bureaucrats do not wish are 1) to be discovered by internal and external government auditors making the wrong decisions; 2) to hear from their senior officials that the director generals are saying ``you are making my life miserable;'' and 3) to cause their ministry to be chastised by the press ― or be questioned by higher-level government bodies, including the presidential or prime ministerial offices. Officials, therefore, naturally tend to be quite prudent in handling affairs in the private business sector, lest a hasty decision cause some adverse repercussions and thus jeopardize their position.

Often problems are caused by lower bureaucrats who don't understand the issues, including when change is in Korea's overall best interest. Rather the bureaucrat is preoccupied with questions such as: ``Why should I take the initiative to open this market segment?'' These same government people work with regulations consisting of rules that are often not very transparent and are open to conflicting interpretation, requiring an official and final decision by the appropriate individual samugwan's interpretation (yugweonhaeseok).

To make things even riskier for these bureaucrats, they live in a society where often the Korean media doesn't understand the issues and thereby creates unfair pressure on the government decision-makers. So even when a samugwan has a good grasp on the issue at hand, he may not be interested in taking the right initiative if the press is critical of the issue. He needs to be concerned about being unfairly criticized by the press. The bureaucrats are also subject to public censure by members of the National Assembly and NGO leaders ― both groups being notorious in making irresponsible statements and allegations.

Given the above, the best thing a bureaucrat can do is to do nothing or be convinced that something needs to be done as a defense against the above-stated pressures. Consequently, whatever strategy one employs to change a regulation, it is normally essential to take the time and effort for long-term education of the middle bureaucracy. Though one may often get the impression that officials are ``dragging their feet'' ― or are being evasive or non-committal, one must keep in mind that officials are overly sensitive about the long-term security of their positions.

Centralized Decisions

It is generally accepted that the top official is ultimately responsible for any adverse results from decisions made by his subordinates, even though he may not have been directly involved. We sometimes see a top government minister resigning, taking the responsibility for an accidental blunder made by lower level officials, which may even have transpired during his predecessor's term of office. Due to this centralized decision-making process and responsibility system, the approval process is often extended to include the top level of the bureaucratic hierarchy, even for minor issues, which makes the procedure more complicated and time-consuming.

Yet, having noted the above, one of the most common ― and expensive ― errors foreign firms make in trying to effect change is focusing too much time and money on the top officials who are often rotated among bureaucracies ― and even in and out of government by the then winds of politics. It is the lower-level professional bureaucrats who make careers in managing laws and regulations. It is ultimately they who have the most power in many cases.

A too common scenario runs like this: an expatriate country manager discovers a regulation that prevents his company from being as successful as it should be in the Korean market. He then reports the matter to the regional or global head office. The issued is then vetted to internal or external legal counsel whom normally at best has peripheral knowledge of Korea. These lawyers then contact an international legal firm in Seoul who often boast of having on their payroll former ministers who can certainly by their influence get the regulations changed. While this may sound sensible, in fact there are several war stories where firms have spent literally millions of dollars in reimbursed expenses and legal fees over months and even years ― often without desired results.

Penetrating the Bureaucracy

It takes a specialized set of skills to effect change within the Korean bureaucracy. If one does not have the resources to have a Korean employee being the ongoing representative to the bureaucracy and/or one's need is clearly beyond one's capacity to handle an issue by oneself, one may consider hiring the services of a government relations firm.

Contrary to many foreign companies' expectations, legal firms may often not be the best places to turn for government relations. Usually they are not the most cost effective. Attorneys play critical roles in many international business, but cost-effective ― or even simply effective ― government relations is not one of their strong points, beyond charging their clients major bills. Often it requires much more than having maintained very long-term relations with key people in the government. To influence change, it takes much more than staying on top of who's who with each annual administrative shuffling of government personnel. Most important, a savvy government relations firm is creative and capable of launching a multi-prong strategy that may require going beyond what one would normally consider part of government relations.

Our firm does not attempt something so specialized as government relations, but we are willing to recommend those people who are the real pros in this field. Should you need help in this area, we can confidentially suggest a firm or two for your company (www.softlandingkorea.com) to consider.

Tom Coyner is president of Soft Landing Korea, a consulting company focusing on sales and human resources issues. He is co-author of Mastering Business in Korea: A Practical Guide.