By Steve McKinney

McKinney Consulting Inc.

Recently, President-Elect Roh Mu-Hyun uncovered ten national agenda items. One of those items was to improve the circumstances of local and local divisions of foreign-based companies operating in Korea. The foreign business community is very heartened by these remarks.

Foreigners who choose to invest in Korea have already made a very difficult decision to commit to the Korean market over a multitude of other potential destinations. The decision to invest in Korea was made only after much due-diligence and soul searching. There must have been overwhelmingly favorable factors prompting a decision to move into Korea. These companies are now committed to the long-term success of the Korean economy. As the Korean economy goes, so go the fortunes of foreign business in Korea. Therefore, what is good for Korean business is good for Korean business - there can be no double standards.

The foreign business community in Korea is very open-minded about business reform and business environment improvements. The community's main theme is, "Help us help the Korean economy."

With that in mind, what can Korea do today to make the business environment better and more effective for everyone? First, Let's look at some of the things the Korean government is most likely looking at, but let's look at them from a foreign investor, or potential foreign investor's viewpoint.

A survey printed in the Fortune Magazine surveyed the "Top Factors To Make a Great Business City" is relevant here since because it compares cities from around Asia that are direct competitors for foreign investment with Seoul. In this survey, five factors were graded; Pro-business attitude, local availability of professional talent, the level of entrepreneurial activity, IT and telecom infrastructure, and government regulations.

The first factor is Pro-business attitude. There is no question as to whether 'the business of Korea is business.' The question is whether the environment allows businesses to execute their planned business easily and efficiently. A pro-business attitude is a collection of other factors, ranging from cultural openness to financial incentives. Korea is now very culturally open, but in an outward way. Korean business and Koreans are quick to adapt and learn the ways of other markets, but are not so quick to compromise local cultural comfort in favor of increased business opportunities. Korea's pro-business attitude is definitely on the upswing.

Availability of Local Talent. Korea has one of the highest concentrations of highly educated people in the world. The rates of participation in higher educational institutions by Koreans are, indeed, the world's highest. This not withstanding, there are some key improvements that can be made. One key area is in creating a more concrete relationship between the classroom and the workroom. Most Korean youngsters don't work prior to college, and many don't work even in college. This means that younger talent is often over-educated and under-skilled. More job-training type programs might increase the supply of needed workers in horribly under supplied areas, and give young Koreans a better sense of what to expect in the job market.

Korea also has a very high-rate of English study. Korea is not a native English speaking country, but serious effort is made to learn English in Korea, and the situation is improving. Korea may one day be as competitive as India, or the Philippines when it comes to English speaking talent. Another plus is the willingness of young talented professionals to join multi-national firms, ensuring that Korea is competitive in attracting needed foreign investment.

Other issues surrounding talent include the continuing difficulty in hiring and firing, the high levels of regulations surrounding employment in Korea, and the militancy of unions. Again, we see that foreign firms are largely in the same boat as Korean ones.

Entrepreneurial Activity. Korea's entrepreneurial environment was all but non-existent a few years ago. The availability of outside capital to small or emerging firms was very constricted. Today this is not necessarily the case. Much of the capital flows in the Korean market have been liberalized, and much capital finds its way to entrepreneurs who are desperate for it. Whether or not the liberalization has reached or will ever reach foreign companies in the same way that has Korean companies is anyone's guess. What barriers and problems foreign entrepreneurs face are still largely unknown.

Infrastructure. No complaints here.

Government Regulations. While there are numerous and sundry cultural or local issues that might impede foreign business in Korea, these issues are sometimes ambiguous and difficult to address. Government regulations, on the other hand, are squarely in the hands of the government. This is one area where the government can really put its money where its mouth is. Flows of financial capital, transparency and accounting regulations, limits on foreign participation and ownership, and tax rates are all squarely in the realm of the improvable.

The government cannot make improvements alone. It will take the combined efforts of foreign and domestic businesses along with the government’s attention and action to improve our standings. As a member of the Board of Governors for the American Chamber of Commerce- Korea (AMCHAM) I know first hand what our member companies are doing to make improvements.

AMCHAM with members of around 2,200 representing over 1000 member companies compiles and publishes a book annually on recommendations from American businesses on how to “Improve Korea’s Business Climate”. Current issues are discussed and possible solutions are presented for consideration. These recommendations are compiled from the standing 32 committees and are communicated to the Korean and US Government officials in a very transparent and proactive method.

While it is true that some issues take longer than others to resolve, modify or improve, there are many issues that are addressed immediately. The beauty of working with the Koreans is their willingness and desire to listen to new ideas and suggestions, and then once convinced, act promptly. For this I say don’t change, this is what has helped Korea progress so fast in such a short time.

Steve McKinney is the Founder and CEO of Seoul-based McKinney Consulting an executive search and management consulting firm. Steve serves as a Governor on the American Chamber of Commerce in Korea Board and can be reached at This email address is being protected from spam bots, you need Javascript enabled to view it