Cultural Paradigm of Nepal and Korea –Search for potential

Cultural Paradigm of Nepal and Korea –Search for potential
Business venture
NEPAL



Ghimire, Tek Bahadur
PhD student, ID 2007-30681
Seoul National University, Collage of Engineering
Information technology policy program




Abstract

Nepal, a country in South Asia almost double in size and half in population compared to Korea, is seeking massive savings that are generated from foreign direct investment (FDI) and portfolio investment in order to accelerate its economic development in the dawn of the new development of replacing centuries old royal legacy from federal republican setup with popular mandate. In this light, Korea and the Korean companies can intervene the situation understanding the cultural linkage and business potentiality in Nepal that really needs to replicate the fundamentals and strategies of the economic growth achieved by Korea in a short span of time. Nepalese business cultural perspective is very much favorable for the Korean counterparts to invest, cooperate and achieve win-win results as Nepal has not been able to attract the Korean investment so far. We have found too many similarities between Nepalese and Korean business culture. Nepal is still far behind from industrializations. Agriculture and tourism sector are the first and second potential sectors of industrialization. Venture business in Nepalese tourism sector could be fruitful for both countries. Nepal has made an attractive favorable environment with security for the foreign investment and cooperation. However, Nepal needs to carry out major improvements on gaining productivity with growing foreign assistance.

Nepal in the Globe

Globe

Nepal is located between China and India in South Asia
The total Area of the country is 1,47,181sq,km The average length being 885 km east to west and the average breadth is 193 km from north to south.Geoimagesically, the country is divided in three regions; Mountain, Hill and Terai region.
Population - 24,797,059 as of 2004, central Bureau of statistics, Nepal. Male 12,406,222 ( % )Female12,390,837 ( %) Official language: Nepali, about 93 National languages( Nepali 48 percent Mathali-14 percent Tharu- 6 percent and so on ) ,Provision of bilingual education in primary level .Major religion: Hinduism, Buddhism, Islam and Christianity. Major potential areas of industrial development: Agriculture and tourism. Economic development rate------ Nepal in figurea bata line

1 Geo political situation of Nepal

Nepal is a landlocked country with a total land area of 147,181 sq.km. It lies between 26o 22'N - 30o27'N latitudes and 80o4'E - 88o12'E longitudes. Roughly rectangular in shape, the land extends approximately 885 km. east-west and 145 km. at its narrowest to 241 km. at its broadest, north-south. The country is bordered by China in the north and by India in the south, west and east. The high Himalayan region extends in the north from west to east at an altitude of 4000 m. to 8000 m.Nepal is the home of the world famous peaks of Mt. Everest (8848 m.), Kanchanjunga (8586 m.) Makalu (8463 m.) Dhaulagiri (8167 m.) the Annapurnas (8091 m.) and many more mauntains and peaks.
Nepal had entered a new era of development following the historic political changes in 1990 ushered in a Parliamentary System of Government based on Multi-Party Democracy.[2] Recently we have completed the new election of constitutional assembly. The promulgation of new constitution, the state will be Federal Democratic Republic of Nepal abolishing 240 years of monarchy.

2 Cultural Diversity

The rich cultural heritage of Nepal, has evolved over centuries. This multidimensional cultural heritage encompasses within itself cultural diversities of various ethnic, tribal, and social groups, located at different altitudes, and is also manifested in various other forms, including music and dance; art and craft; folklores and folktales; languages and literature; philosophy and religion; festivals and celebrations; and foods and drinks.
The ethnic diversity, and proximity to neighboring giant cultures have also influenced the culture of Nepal, and Nepal has inherited several customs and cultural practices and over a period of time attuned the same to its own indigenous requirements based on its topography, available resources and climate.[3] So far as the language is concerned Nepali is the national language with many other regional and ethnic languages. And English is spoken and understood by the educated people and generally understood by people in most urban centers.[4]
2.1 Nepalese customs and etiquette
Nepali people are friendly by nature. Foreigners are advised to have a genuine interest in them,talk to them be friendly as you travel and. Say hello or Namaskar if anyone is initiating a dialogue. The form of greeting in Nepal is 'Namaste 'or 'Namaskar.' It has a lot of meaning such as hello, how are you, have a nice day, good bye. To do Namaskar by hand, we join our palms together, bring them few inches below our chin facing it upwards we may accept handshake offered by both sex male or female, but we never offer your hand first to women. This is very much similar to Korean culture.
Many of the Nepalese customs are based on traditions and beliefs in Hindu and Buddhist religions. There are more than 100 ethnic groups of Nepalese in Nepal each with their own custom, tradition, and rituals, all sorts speaking different languages.[5]
2.2 National independency, integrity and social harmonization
Nepal enjoys the distinction of having always been an independent country. It has never been under foreign domination.[6] The unique feature of the Nepalese society is its ethnic, linguistic, religious and cultural diversity; there is religious tolerance and the country is secular now. Nepal has maintained one of the world's oldest and richest continuous cultures. Nepalese culture finds exquisite expressions in the fields of religion, art, music, and dance, social and socio-religious festivals.[7] National independency, integrity and social harmonization: We have decided to have a new National anthem after successfully completion of second popular movement in 2006. The national anthem as mentioned bellow expresses the inner heart of Nepali people in regards to independency, national integrity and social harmonization as well as social solidarity for new Nepal and consensus of global development network.
National Anthem
We are hundreds of flowers, the one garland - NepaliSovereign, spread out from Mechi to Mahakali.
Amassing nature's millions of heritageby the blood of the braves, independent and immovable.
Land of knowledge, land of peace, Terai hills, mountainsUndivided this beloved, our motherland Nepal.
Diverse race, language, religion, culture are so largeour progressive nation, long live, long live Nepal.

2.3 Working Culture.
Normal working hours are fixed at 48 hours per week, 8 hours a day. Continuous working hours should not exceed 5 hours. There should be a break of half an hour. Overtime work is remunerated at one and half times the normal wage. In addition to 12 public holidays, workers are entitled to one day's leave for every 20 days, 15 days medical leave and one month leave without pay every year. Female employees are entitling to 45 days maternity leave with full pay. However, in the case of skilled worker whose services are indispensable, the retirement age could be extended up to 60 years.[8]
2.4 Wages and salary
The wages payable to workers in Nepal are comparatively very low. The low cost of living enables workers to offer their services at relatively low wages. The minimum wages rates set by the government are generally lower than the going wage rates for workers. Salaries of middle management executives, technical grade officers, engineers and other professionals are generally lower than those in other developing countries. Permanent employees of a factory should contribute 10 percent of the monthly salary to a provident fund and the management should make a matching contribution. Gratuity is payable to workers who have worked for over 5 years[9]
2.5 Labor Force
Nepal has an easily trainable and keen work force. Unskilled labor is cheap and abundant. Semi-skilled and skill labor are available in sufficient numbers, particularly in vocations such as metal work, wood work and painting. The government has established technical institutions to develop skills at the technical level in civil and electrical engineering, radio electronic, air conditioning/refrigeration, general mechanics and auto mechanics. Training programs are also geared to industrial and vocational training in wood working, general fitters, tailoring and so on. The programs on entrepreneurial and management development and the colleges of higher learning provide educated persons to be groomed for managerial positions in both public and private sector industries[10].

3 Foreign Relation
Wedged between India and China, Nepal has historically followed a policy of nonalignment, both regionally and globally. The country's dependence on India for trade and transit routes to the south, however, and both nations' reliance on common water resources, makes Nepal's relations with India especially sensitive. Since 1950, these relations have pivoted around a Treaty of Peace and Friendship that gives India significant leverage over Nepal on economic and security matters.[11]
3.1 Nepal-Republic of Korea Relations
Diplomatic relations between Nepal and the Republic of Korea were established in Counselor level in 1969 and was upgraded to Ambassadorial level in 1974. The Republic of Korea opened its Embassy in Kathmandu in 1974. The Government of Nepal has established its Embassy in Seoul in March 2007.[12]
3.2 Nepal-ROK Cooperation
There have been exchanges of visits in different level between Nepal and the Republic of Korea in recent years. Those visits have been instrumental in enhancing the bilateral cooperation as well as in widening the understanding between the people of the both countries. The Republic of Korea is increasingly becoming an important and reliable partner in Nepal's economic development. Construction, sericulture development, hydropower development, road and infrastructure development, health science, e-governance are some of the major areas supported by the Government of Korea to Nepal. Korea has also assisted Nepal with soft loan through the Economic Cooperation Fund of Govt. of Korea. ROK is providing various support to Nepal also through the Korea International Cooperation Agency (KOICA) mostly in technical fields in various areas.
Both Governments have encouraged respective private sectors to set up joint ventures in different areas. Electronics, hotel industry, chemical industry, medicinal goods, mineral water are some of the examples in this field. Currently, there are 21 operating, 1 under construction, 6 licensed and 28 approved joint ventures initiated between Nepal and Korea. Volume of trade, between the two countries is increasing over the years but the balance of trade is heavily in favor of the ROK.[13]
3.3 Cultural Agreement between Korea and Nepal
Both Governments have concluded a Cultural Agreement on 30 March 2005. The cultural agreement envisages promoting and developing the cooperation between the two countries in the field of culture, art, education, youths, sports and tourism. Republic of Korea has been associated as Observers to South Asian Association for Regional Cooperation (SAARC). It is believed that Korea's association will not only expand its linkages with the region but also help its economic integration with member countries as well.
3.4 Trade balance
Source: Country wide trade balance (2007), Ministry of industry, commerce and supply Governrnent of Nepal
3.5 Other Issues
Both countries have concluded an agreement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to taxes on Income; both countries have also agreed to form a Nepal-Korea International and Cooperation Committee of Industrialists and Businessmen.[14] Cooperative agreements has between the Korean Chamber of Commerce and Industry (KCCI) and FNCCI, Federation of Nepalese Chambers of Commerce.
4 Management Style
Nepalese management is based on the idea that the individual is both willing and able to do a good job. A Nepali manager tends to think of himself as a coach rather than a commander, and he often delegates tasks and authority to his staff. Nepalese business organizations, employees on all levels have the freedom to make decisions and solve unexpected problems without asking superiors for permission.
A manager should lead the employees not through his power or formal position, but through the principles of cooperation and agreement. Being a good listener is considered to be another important quality. In discussions with his staff, a professional manager should use reason and base his views on facts.
Managers only rarely give signals of their own status and employees normally don't feel inferior to them. An executive is most of all considered to be a specialist in managing companies and he is therefore not socially superior to a specialist in any other field. In this respect, Nepal seems to differ from many other countries. A further sign of the non-hierarchic (or, better, modestly hierarchic) Nepalese company structure is that Nepalese normally use their first names at work. Nepalese executives are generally more willing to take risks than their colleagues.
4.1 Making Decisions
Although Nepalese executives are willing to take risks, decisions are often made with great consideration. This is so, because there is one thing that must not be risked: the feeling of consensus and agreement in a company. Heated debates are very unusual at business meetings, and criticism has to be presented in a non-personal and diplomatic way.
4.2 Punctuality
Being punctual is not only regarded as a sign of respect but also of efficiency and Nepalese businessmen will have little understanding for cultural variation in this case. The stressing of the time factor can also be seen in everyday business contacts; it is generally not considered rude to set a deadline for a thing to be done or a decision made. Punctuality is important not only in working life but also when it comes to purely social gatherings.
4.3 Business Contacts
Foreign businessmen often find that their Nepalese colleagues talk too much business, and too little about themselves or their interests. They might draw the conclusion that their partners are simply limited and ignorant. The Nepalese businessman, on the other hand, probably wishes his foreign business partner would cut the small talk and come to the point. In Nepal, a direct approach is seen as a sign of efficiency and a wish not to waste the other person's time.

5 Foreign Investment policy
In the process of industrialization of the country, it is extremely important to promote foreign investment and technology transfer for making the economy viable, dynamic and competitive through the maximum mobilization of the limited capital, human and the other natural resources[15] The New Industrial Policy of 1992 identifies foreign investment promotion as an important strategy in achieving the objectives of increasing industrial production to meet the basic needs of the people, create maximum employment opportunities and pave the way for the improvement in the balance of payments. Foreign investment is expected to supplement domestic private investment through foreign capital flows, transfer of technology, improvement in management skills and productivity and providing access to international markets.[16]
5.1 Foreign investment environment
Doing business 2008, Nepal, the report made by World Bank group has shown clearly that Nepal has much more potential for foreign investment and venture business compared with India. Data in Doing Business 2008 allows a comparison of the economies not only with one another but also with the “best practice” With an ancient cultural heritage, rich natural resources and a variety of agro-climatic conditions, offers unique opportunities for profitable investment. Foreign capital, technology and know-how are welcome to contribute to the modernization and industrialization of the country. As an important strategy in resource mobilization, Nepal has attached high priority to foreign investment as Korea did the same in the 1960s. Nepal has also undertaken a series of fundamental reforms in fiscal, monetary, industrial, commercial and labor policies to create an attractive environment for investment.
Very generous incentives and facilities have been offered to the local as well as foreign investors. This will encourage foreign investors to undertake business as well as industrial ventures in Nepal.[17]
Steps to Start a business in Nepal
Verify the proposed company name
A professional verifies and certifies the memorandum and articles of association
Buy a stamp to be attached to registration form
File documents with the Company Registrar’s Office
Make a company seal/rubber stamp
Register with Tax office
Enroll the employees in provident fund
It requires 7 procedures, takes 31 days,and costs 73.87% GNI per capita to start a business in Nepal.
Source: Doing business in Nepal 2008, World Bank group


Starting a business-Global Rank of Nepal (Compared to Global Best / Selected Economies

Ease of Doing Business – Global Rank of Nepal (Compared to Global Best / Selected Economies)
Nepal is ranked 111 out of 178 economies. Singapore is the top ranked economy in the Ease of Doing Business
Source: Doing business in Nepal 2008, World Bank group
5.2 Foreign technical personnel
The employment of foreign technical personnel in projects is permitted with the approval of the Department of Labor. In such cases arrangements should be made to train counterpart staff in the technical/managerial operations within a time bound program. Foreign experts working in Nepalese industries with prior approval, from countries where convertible currencies are in circulation, are permitted to remit up to 75 percent of their earnings in convertible currency.
5.3 Repatriation and dividends and capital
Foreign investors who have received permission to invest in convertible foreign currency are permitted to repatriate the following outside Nepal at the prevailing rate of exchange:- [18]
The amount received by sale of the share of foreign investment as a whole or any part thereof.
The amount received as profit or dividend in lieu of the foreign investment.
The amounts received as payment of principle and interest on any foreign loans.
A foreign investor shall be entitled to repatriate outside Nepal the amount received under an agreement for the transfer of technology in such currency as set forth in the concerned agreement.
5.4 Royalties, technical service fees and management fee
Royalties, technical service fees and management fees may be allowed, as appropriate, on an evaluation of royalty agreements, technical service/management agreements.
5.5 Security of investment
Industries established under the Foreign Investment and Technology Act assures the security of investments. They will not be nationalized.
5.6 Investment protection agreement
Enforcing contracts- Global Rank of Nepal
Nepal is ranked 123 overall for Enforcing Contracts. Hong Kong, China is the top ranked economy followed by Luxembourg, Latvia and Singapore
Source: Doing business in Nepal 2008, World Bank group

5.7 Double taxation agreement
In order to avoid the double taxation on incomes of foreign investors, the Government has taken necessary action to conclude agreements for the avoidance of double taxation with the countries of the concerned foreign investors.
6 Potential sectors of business in Nepal
The prospect for tourism is enormous in Nepal. Mount Everest (8848 m.) the highest peak of the world, Mt. Kanchanjangha (8586 m.) the third highest peak of the world and the second highest in the country, and Mt. Lhotse (8516 m.). Major rivers are - Koshi, Gandaki and Karnali. Major lakes are - Rara, She-foksundo, Phewa, Tilicho etc. Lumbini is a great centre for international pilgrimage; Pokhara is te international destination for pleasure trip; mountaineering and rafting are adventure tourism to attract additional tourists in Nepal. The tourists visiting Lhasa via kathmandu could stay back in Nepal for longer period, and Chitwan safari Park could attract large number of tourists, if en-route facilities are upgraded to international standard.
Nepal is blessed by nature with her gorgeous flora and fauna, lakes, rivers and mountains, which must be globalizes through international media to attract tourists from all over the world. This requires designing a new Master Plan for Tourism Development in Nepal in compatible with the spirit of globalization.

Nepal has been one of the most favored tourist destinations for Korean people mostly in adventure tourism. In 2004, 2005 and 2006, tourists arrival in Nepal from the RoK were 3189, 5475 and 7,002 respectively, which is around 2.0 per cent of the total tourist arrival in Nepal on respective years.
The other potential area of business in Nepal is Pasmina

7 Hints and Tips
7.1 Patriarchic society Male dominant culture and dogmatic social value (dogmatism
7.2 Cultural diversity: We are rich in cultural diversity. It is said, Cultural diversity is irrespective to the Development. However, in our present context of secular state, balancing cultural diversity and recognition of each and every ethnic groups is being excited to maintain sustainable peace and development.
7.3 Heartily welcoming Nature
We used to welcoming our international business delegates and the guests greeting by Pancha Kanya (five children) with flowers and garlands
Culture of Living Goddess Kumari

7.4 Generous labor management system: taking care of Human rights situation in the industry, reasonable working time.
7.5 Inclusive business administration: Women, marginalized, disadvantaged and indigenous people are offered quota in public service, which is also applied in the business community. This is taken as a gesture of positive discrimination in employment.
7.6 Perks concerning social values Nepali business culture is oriented from inclusion of the culture, tradition and social values. Women are entitled for maternal leaves while their spouses do also get the same. Workers get a half month leave on their parent's demise. Similarly they enjoy festival leaves for the celebration of the festivals and social gatherings.
7.7 National solidarity: As there is unity in diversity in Nepali society. People do show national solidarity for the overall development of the nation, no matter where they live.
7.8 Punctuality Punctuality is important not only in working life but also when it comes to purely social gatherings
7.9 Secure business environment: Industries established under the Foreign Investment and Technology Act assures the security of investments. They will not be nationalized.
7.10 Easy for doing business Entire environment seemed easier to business compared with India.
7.11 Respect of elder and love to younger: Nepal culture firmly believes in respecting elder and senior citizens and loving the younger ones, which is taught from the early childhood.
7.12 Ceremony oriented Culture: We believe 16 ritual ceremonies in human life from pre births to post death. Baptism (nomenclature ceremony) birth day, first hear cutting day, marriage and memorial ritual of anniversary ceremony (at least two time Shraddha in a year) and so on.
8 Korean Companies in Nepal
Samsung India is the hub for Samsung's South West Asia Regional operations. The South West Asia Headquarters looks after the Samsung business in Nepal, Sri Lanka, Bangladesh, Maldives and Bhutan besides India. Samsung India which commenced its operations in India in December 1995 enjoys a sales turnover of over US$ 1Billion in just a decade of operations in the country.
The Samsung manufacturing complex housing manufacturing facilities for color televisions, color monitors, refrigerators and washing machines is located at Noida, near Delhi. SAMSUNG ‘Made in India’ products like color televisions, color monitors and refrigerators are being exported to Middle East, CIS and SAARC countries from its Noida manufacturing complex. In November 2007, Samsung commenced the manufacture of color televisions and LCD televisions at its state–of-the-art manufacturing facility at Sriperumbudur, Tamil Nadu.

Samsung and LG have made a strong brand image in the Nepali household appliance sector. These two brands have made a strong image of themselves and the competition is on, head to head. Both of these brands sell equally in the Nepali market leaving all the other far behind. Other such brands which include IFB, Whirlpool, Electrolux and some Chinese brands have not been able to do what LG and Samsung have been able to do. These two brands are established very well as Golcha Organization and Chaudhary Group look after Samsung and LG respectively in Nepal. The number of dealers in the market is also in a large number which deals with Samsung and LG.[19]
Source: Nepalese Embassy in Seoul.
9 Recommendations for venture business and foreign investment to Korean (or other International) company In Nepal
Taking the abstract I have prepared into consideration, I recommend the following for result-oriented Nepal-Korea joint venture business on reciprocal basis.
1. Korea, an Asian country with world leading IT industries, has a very conducive environment to invest in IT related business in Nepal as it lies between the two giants of the world - India and China, can be a business hub, whose advantages can be shared by the Korean companies.
2. It is high time for Nepal to accelerate business promotion activities with foreign investment and venture business. Nepal has to learn from the Korean experience and translate it into Nepalese context with the assistance and investment from the Korean counterparts.
3. Nepalese culture believes in 'Guest is God'. The ultimate meaning of which is relevant to welcoming foreign venture business partners to the prosperity of both parties. The data and figures and the analysis presented above sketch the truth of the cultural understanding.
4. Nepal has made a landmark in global democratic movement, which cannot be left behind as the world will not be developed unless a country like Nepal is neglected in the development perspective. Therefore, it calls for international community to invest in unexploited fields of business and projects.
5. Nepal lacks what modern industrialized notions of result-oriented management. It has to abandon the process-oriented red-tapism bureaucracy and provide ample opportunity to the prosperous ground of the private sector investment.
6. ICT is recognized as an all- purpose enabling tool for development. Nepal cannot achieve development goals unless ICT is fully perceived and developed. So, Korea as a leading IT hub has, in a way, the responsibility to develop Nepal which shares the cultural proximity.
7. Nepal, a mountainous country with natural and cultural heritage, offers tremendous tourism potentiality for both Korean and the other tourists. Data show Korean tourism promotion center or business people in cooperation with Nepalese counterpart has to promote for tourism development, which counts for a considerable GDP growth in Nepal.

References
1. Nepalese political and cultural Historym Dr. Ganesh Chettry
2. The office of the Prime Minister of Nepal
3. Ministry of Finance, Government of Nepal
4. Ministry of Culture, tourism and civil aviation, Government of Nepal
5. Ministry of Industry, commerce and supply, Government of Nepal
6. Ministry of foreign affairs Government of Nepal
7. Trade Promotion center Nepal
8. Nepalese Embassy in Seoul
9. Labor Act 1992
10. Labor Policy 1992
11. FDI Act 1992
12. FDI policy 1992
13. Industrial Policy 1992
14. Federation of Nepalese chambers of commerce (FNCCI)
15. Nepal in figure, central bureau of statistics, Government of Nepal
16. Doing business 2008 Nepal, World Bank Group
17. Country wide trade balance 2007
18. www.wikipedia.com
19. www.catmando.com
20. www.naukri.com
21. www.nepembseoul.gov.np


[1] Nepal in figure, central bureau of statics , Govt of Nepal
[2] http://www.catmando.com
[3] Ministry of culture, tourism and civil aviation govt of Nepal.
[4] www. wikipedia.com
[5] http:// www.nepalvista.com
[6] Nepalese Political History and culture, Dr. Ganesh Chettry
[7] http://nepalvista.com
[8] Labor Act 1992
[9] Ministry of finance,government of Nepal
[10] Ministry of industry, supply and commerce govt of Nepal.
[11] Ministry of foreign affairs.
[12] http:// www.nepembseoul.gov.np
[13] http://nepembseoul.gov.np
[14] Nepalese Embassy in Seoul
[15] FDI Act 1992
[16] Industrial policy 1992
[17] http://catmando.com
[18] FDI Act and Policy 1992
[19] http://www.naukri.com