[Doing biz in Korea] Understanding Korea’s ‘national sentiment law’

The Korea Herald is publishing a series on South Korea’s business environment for foreign companies and investors. This is the third installment. -- Ed.


When Samsung Group heir Lee Jae-yong was released from prison on Feb. 4 almost a year after he was jailed on corruption charges, the center-left People’s Party released a statement, saying, “We doubt whether the public will accept this ruling with their ‘national sentiment law.’”

National sentiment law, a phrase often used in South Korea, is not an actual law, but rather an intangible yet powerful yardstick of the public opinion, largely influenced by the local media.

Within four days of Lee’s release, more than 200,000 people called on the Blue House to carry out a special audit on the judge, who let him leave, claiming the judge “ignored the people’s common sense and justice.”

The Blue House had to officially respond to the petition because the number exceeded 200,000 within a month, the minimum requirement set by the presidential house citing better communication with the public upon its inauguration. The response, meanwhile, said Cheong Wa Dae had “no authority” to make a special audit.

“Public sentiment is what we are afraid of the most (even compared to the government or the prosecution). When public sentiment is formed, even the media that are generally friendly to us have no choice but to follow the mainstream,” a senior Samsung official said on condition of anonymity.

In other cases, local pizza chain Mr. Pizza’s chairman resigned last year after his assault on a security guard came to light and a boycotting of the firm followed. Namyang Dairy Product saw operating losses for two straight years after an employee at headquarters was found to have verbally abused an owner of its agency that led to the public boycotting its products.


Foreign companies are not an exception.

Spanish fashion brand Zara, Swedish closing firm H&M, Swedish furniture retailer Ikea and the US automaker Tesla all faced criticism or boycott after featuring a world map with “Sea of Japan” instead of “East Sea” in their websites.

UK-based Oxy Reckitt Benckiser, which sold humidifier disinfectant blamed for the deaths of about 100 people, has faced boycott for all of its products. It saw sales drop by half in 2016 and closed its plant in Iksan city last year.

Academics say such strong sentiment is deeply rooted in the society where fairness is largely deemed to be lacking by the general public against the top tier.

“Law is not considered to be fair to everyone in Korea. People with money, power and authority can easily evade the law but for people without them, the law seems harsher. So they tend to resort to the anonymous but collective outcry,” said Koh Moon-hyun, chairman of Korean Constitutional Law Association and a professor of Soongsil University’s law department.

As an example, he described the court’s decision last year to fire a bus driver who stole 2,400 won ($2) as “lawful,” while a relatively light punishment has been imposed on conglomerate chiefs facing billions of won worth of embezzlement.

To name a few, Cho Hyun-ah, the Korean Air heiress who achieved global notoriety in the 2014 “nut rage” incident, and Hanwha CEO Kim Seung-yeon who assaulted bar employees in 2007 were all released with probation.

“Compared to the CEOs from Facebook, Amazon and Apple, entrepreneurs do not win respect in Korea,” said Park Ju-geun, head of corporate analysis group CEO Score.

“People are always aware here that conglomerates have grown here on the strong support from the government. And, the businesses are now run by their sons and daughters -- regardless to their capabilities.”

Such sentiment, driven by the larger mass, spreads further through Korea’s unique method of news distribution -- through a couple of market-dominant portal sites.

More than 90 percent of Koreans consume news articles through portals, including Naver and Daum, according to research firm Embrain.

Unlike Google, the portals manually edit news articles and assign some articles -- which they consider important -- at the front site, which draw massive clicks from readers, which means many Koreans consume the same news articles every day. Media also takes advantage of this trend by churning out similar but provocative contents.

With such an environment, catering to, or remaining under the public radar is particularly difficult for the foreign firms operating here.

“When a negative article of a company is assigned on the front site, throngs of online news -- which just copy and paste the original one -- are churned out even though some of them are not true. We still have a hard time making our headquarters understand this media culture,” said an official from a European automaker based in Korea.

Shin Min-soo, a professor at Hanyang University’s business college, pointed out, “It is difficult to figure out whether portals keeps neutrality when it distributes news articles because portals are not subject to regulation now. But, if portals can be controlled under law more transparently, abusing public sentiment can be addressed in some sense.”

And such moves have been recently made. Last year, Naver’s senior official was found to accept the request from the Korea Professional Football League to hide news articles unfavorable to the association. Naver CEO officially apologized for the matter.

In February, 12 lawmakers from opposition parties proposed a bill to make portal companies not involved in news article arrangement. According to the proposal, portal companies, including Naver and Kakao, should disclose its principle for the arrangement and selection by its employees is prohibited.

By Shin Ji-hye (shinjh@heraldcorp.com)