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Social conflict in South Korea
June 11, 2019
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Korea, a nightmare for French companies?

Playing the opposition card / consensual logic

Social conflict in South KoreaFrench companies have problems resolving labor disputes that sometimes arise in their Korean subsidiaries.
Indeed, French managers in Korea,who are often not very sensitive to the logic of consensus and are culturally accustomed to confrontation, can find themselves caught in a spiral of conflict over which they have little control.
In South Korea, playing the opposition card frequently leads social partners to radical behavior as the crisis gets bogged down; immolation as a sign of protest is rare, but does exist. All means are good to bring the employer back to the negotiating table.
When this involves a French company, the impact on public opinion is resounding. Poorly equipped or culturally ill-prepared to foster consensus, three French companies have paid the price for a strategy of confrontation with Korean unions and sometimes with public authorities.

Managerial practices that shock in Korea

Ten years after setting up in South Korea, a major French food retailer has 32 hypermarkets and 6,400 employees.
At the beginning, its “low price” policy ensured great success. Then its local competitors dragged it into a grueling price war. The French retailer finally threw in the towel and went  looking for a buyer. In order to make the bride more beautiful, the group pressured employees and tried to push them out.
Emotion came into play; anger rumbled and strikes began. The last months of the group’s presence in South Korea turned into a nightmare: social conflict that degenerated, fines for unfair business practices, intervention by the tax authorities, including a spectacular search by 50 inspectors to block the repatriation of profits from asset sales.
This story had all the more affect on Korean public opinion because it involved a foreign company. This trauma has inspired several local series and films, such as the video below, which is fictional but inspired by real facts.

« The subway from hell »

The Seoul Metro 9 Corporation manages the only line in Seoul operated by a private operator. Its capital is 80% owned by a French company. Working conditions there are more difficult than on the other eight metro lines managed by the municipality.
Similarly, users consider their transport and safety conditions to be unsatisfactory. In 2017, the unions called for a strike to bring Line 9 into the municipal fold. Six days of transportation chaos followed.
After the failure of negotiations between the city of Seoul and the operator, all public transport unions called for a strike, supported by 90 percent of line 9 users. To avoid the worst, the municipality made a decison in early 2019: the concession would not be renewed in 2023.

Marathon negotiations

Employee representatives at a production site of a French car manufacturer asked for salary increase and a reduction in working hours. The management refused and the workerforce downed tools.
One year later, after 62 walkouts and 29 attempts at negotiation, the management still refuszed to budge; it was content to propose a bonus that was not really in line with workers’ demands. At the same time, these incessant work stoppages had a significant impact on production and called into question the profitability of the factory. Its Japanese partner, which produces an SUV on the site, chose not to renew its contract and repatriated production to Japan. The French company’s image was severely damaged in the eyes of the Korean public, and its sales fell by 40% between January and April 2019.

The essential search for consensus

However, in The Land of the Morning Calm, a lot of social conflicts are settled by the opening of immediate negotiations between the parties. The objective is to find a consensus and to satisfy Korean public opinion, which does not really appreciate the attitude of some foreign managers towards Korean workers.
However, France does have a strong card to play in South Korea. It can take up the challenge of the Korean market and its companies can build exemplary success stories.French managers need to show cultural intelligence and  to seek consensus without losing face with social partners.

Arnaud Vojinovic, consultant Akteos, leader des formations interculturelles

About author

Arnaud Vojinovic

Arnaud Vojinovic

After having worked as an HR Manager and later Management Consultant, Arnaud Vojinovic now works with two South Korean companies, one based in Paris and the other in Seoul, operating in the training field. With his bi-cultural profile, he has a keen interest in Confucian countries and more particularly in the Korean peninsula. As a consultant in intercultural management specialising in Korea, he teaches in companies and business schools focusing on the problems related to these countries or their neighbours. In his next book to be published by Editions Lemieux, he proposes an interpretation of Korean society that pulls no punches, based on real life and personal experiences.

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