Globalization is localization

Sung Lee

Two challenges confront virtually every Korean company, large or small: global expansion and technological or artificial intelligence (AI) development. Setting the latter aside, and assuming that most enterprises harbor at least some overseas ambitions, the reality is stark — Korean companies have historically struggled to globalize effectively.

According to a survey by the Ministry of SMEs and Startups, only 21.1 percent of Korean startups engaged in exports have established a physical presence overseas, highlighting how limited true operational expansion remains. By comparison, more than 50 percent of venture-backed U.S. startups with meaningful foreign revenue have at least one overseas office within five years of founding, typically in Europe or Asia.

Among Korean small and medium-sized businesses (SMEs) that do export, only 15 percent participate in global value chains, as opposed to 30 to 40 percent of SMEs in advanced economies. In fact, only 13 percent of Korean firms overall have foreign subsidiaries, compared with over 30 percent of U.S. firms. Korea ranks below the OECD average in outward foreign direct investment as a percentage of gross domestic product (GDP).

This is paradoxical. Korea is among the world’s most formidable export economies, home to global brands that rival those of Japan and China, as well as Europe and the United States in certain capacities. In 2023, Korea ranked among the world’s top 10 exporting nations, with exports accounting for over 40 percent of GDP. Yet merely exporting goods — successfully placing products in the kitchens and living rooms of foreign households — does not equate to genuine globalization. Manufacturing, exporting and selling abroad represent only the tip of the iceberg.

True globalization takes hold when a country exports not just consumer products, but also sophisticated services, intellectual property (IP), homegrown content and technology — and ultimately influences the qualitative dimensions of foreign societies, including cultural norms, behaviors and consumption patterns, thereby capturing long-term value. Without this, an economy risks being reduced to a “banana republic” or an oil exporter — or, more contemporarily, a semiconductor republic.

The natural evolution is well understood. Trade in goods establishes a foothold; higher-value services and IP should then follow suit. The world’s largest accounting, legal and consulting firms exemplify this model, leveraging captive outbound clients to enter new markets, then expanding organically through talent and partnerships, and inorganically through mergers and acquisitions, investments and joint ventures.

So why, then, are Korea’s major professional services firms, for example, largely absent as substantive global players?

Given the scale and influence of Korean conglomerates such as Samsung, Hyundai and LG, one might expect Korean law firms, consultancies and advisory groups to maintain substantial presences in global hubs like London or New York, staffed by hundreds of professionals. Instead, most operate a small number of overseas offices with limited autonomy and capacity.

The answer lies in localization — or the lack thereof.

The Big Four American accounting firms — Deloitte, PwC, EY and KPMG — all followed their multinational clients abroad, but critically, more than 70-90 percent of their partners in major markets such as the U.S., U.K. and Germany are locally hired, with localized leadership, profit pools and decision rights. Their global brand masks deeply localized operations.

True globalization demands more than geographic expansion; it requires deep local integration. This begins with hiring locally, investing locally, acquiring locally — and most critically, entrusting and empowering local leadership. In other words: “When in Rome.”

American companies have long understood this. Their approach to localization typically mirrors revenue composition: the greater the local business, the greater the local managerial exposure and authority. At major U.S. corporations like McDonald’s and Unilever, the majority of country CEOs are local nationals.

By contrast, many European firms have tended to retain leadership drawn predominantly from their home countries. Asian companies — particularly those from Korea and Japan — tend to go even further, centralizing leadership and decision-making at headquarters, exporting management rather than locally engaging and embedding them. This approach has arguably limited responsiveness, cultural alignment and ultimately market relevance.

The results speak for themselves. Outside of a few specialized or heavily protected industries, U.S. corporations dominate the global corporate landscape — not merely through scale, but through perspective and presence. Over 60 percent of the world’s top 100 global brands by value are American.

As I discussed in a previous column, “Made in Korea” content, IP and services are increasingly in demand abroad as cultural and social borders dissolve. In this environment, Korean companies must focus with strong discipline on core competencies — both technical and territorial — and partner with those who possess deeper expertise in local markets to achieve meaningful entry, integration and market development.

Korea has already made a remarkable transition from export-driven manufacturing to leadership in specialized services, IP creation and global cultural influence. Across content, technology and lifestyle, Korea’s competitive DNA — comprising creativity, innovation and speed — has become its strategic edge.

“Made in Korea” is no longer merely a label of origin; it is evolving into a mark of global leadership, shaping industries, defining trends and creating entirely new markets. But we need to better lean on, learn from and leverage what has worked — and what has not — from a local-to-global-to-local perspective.

Genghis Khan conquered more of the world than any ruler before or since — not solely through superior military might and overwhelming force, but through alliances, integration and the empowerment of local structures. With limited resources, he scaled control and power through cultural and territorial recognition, understanding, respect and trust.

Sung Lee is a senior advisor and partner at Midas Private Equity; concurrent advisory and directorship roles at Hyosung Group, Kakao Games, Mirae I&C, and Yefira Group; former Country CEO of WPP Group, Global Head of M&A for Ogilvy Worldwide, and Regional Director for Clear Channel; Juris Doctorate, University of Michigan.