Renault: the Challenges of an International Acquisition in South Korea

Matthew MacLachlan

16 Jun 2010

The French car maker Renault has recently made a proposal to buy the smallest South Korean car manufacturer Ssangyong Motor. This bid is a joint operation between Renault, its subsidiary in South Korea and its Japanese partner Nissan.

Renault is renowned for its involvement in the world market and is the perfect example of an intercultural company. Its chairman Carlos Ghosn has lived in Brazil, Lebanon, France and Japan where he is highly regarded after his spectacular saving of Nissan during the 90’s. Ghosn also strongly supports multicultural organisations, claiming they will be increasingly successful in the future. His company has also developed a successful joint venture with Nissan and Samsung and is present everywhere in the world from South America to China and Eastern Europe.

It is safe to say that Renault is more than used to dealing with intercultural challenges within the global work place. However, this operation in South Korea will come with its own set of specific challenges and cultural differences that Ghosn and his employees will need to recognise and be able to deal with in order for this acquisition to be a success.

Here are just three key areas where French carmaker Renault may experience challenges as a result of the cultural differences.

The Impact of Confucianism
Confucianism values are deeply rooted within South Korean society and have shaped the laws, moral systems, beliefs and values shared by South Koreans. Confucianism emphasises the importance that every member of society look after each other, respect hierarchy and strive for harmony.  This particular value has a tremendous importance when doing business in South Korea and drives South Koreans to look for consensus in the workplace resulting in a sometimes slow and confusing decision-making process.

Kibun and Bae Liou
Like in many Asian cultures, the concept of Face (or Bae Liou in Korean) is crucial to understand.  South Koreans will try to keep face at all costs so you should show them as much respect possible.  A loss of face includes any sign of disrespect or loss of temper.  The concept of Kibun involves understanding other people’s feelings and emotions through non-verbal signals and cues which can sometimes be difficult to correctly interpret without the right level of preparation and cultural awareness and understanding.

Personal Relationships and their Impact on Doing Business
Personal relationships have a significant influence on doing business in South Korea. As relationships are an imperative part of South Korean business culture, it can be helpful to be introduced by a third party. Lacking the proper contact or trying to do business in South Korea without introduction can lead to closed doors and failures.

Understanding these and the many other key concepts in South Korean business and social culture is essential for anyone doing business in South Korea.  To help Renault ensure a smooth acquisition of Ssangyong Motor, employees working with counterparts in South Korea should be provided with intercultural training solutions that will give them the required level of knowledge and understanding of South Korean culture. Communicaid’s Cross Cultural Awareness Training South Korea courses like Doing Business in South Korea or Living and Working in South Korea can help Renault and other companies doing business in South Korea reduce the chances of misunderstandings and critical incidents, resulting in a more successful business venture.

 



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