Business, Economics and Jobs

In South Korea, real business gets done in brothels and karaoke joints

In South Korea, this is a common business expense.
Credit: Chung Sung-Jun

SEOUL, South Korea — “It’s not fair!” complained a South Korean sex industry aficionado, a former “consultant” for a large call girl website. “The tax men are hurting business! Cracking down on company cards!”

The consultant, a 32-year-old, chiseled and rakish figure who, as a youngster, mingled in gambling dens and street gangs, is outraged over mounting government scrutiny into South Korea’s executive sleaze.

You see, just as companies stateside pick up the tab for employees’ lunch meetings, in Korea they subsidize business entertainment — which tends more toward hard core boozing and even the country’s sex trade (never mind that prostitution is illegal).

Not far from glitzy office towers of Seoul are the frenzied hangouts where business is really done: a cacophony of karaoke joints, shady neon-lit parlors, and cluttered barbecue restaurants full of drunken managers ordering their junior staff to pound shots.

To Koreans, the business districts of American cities appear staid, orderly and a bit dull. A shop-worn joke here has it that North America is a “boring heaven” while their country is an “exciting hell.”

No salesman (and the majority are men) gets far here unless he can sing mean, inebriated karaoke and then slug through negotiations the next morning with a thumping headache. South Koreans slam the world’s largest quantity of hard liquor, imbibing 11.2 shots of soju per week, more than twice the average Russian’s vodka consumption (although soju isn’t always as strong).

What happens when this macho after-hours culture goes too far, littering the company tab with payments to prostitutes and hostess clubs? “That’s the business model we depend on. When the Korean men are doing business together, they hang out at these places,” explained the sex industry consultant.

There’s a dark logic to the debauchery.

“When you’re a man and you do something dirty and sinful with your business partner around, you share your secrets, you share trust like brothers. You can always trust your new business partner.”

“At the highest end, people in this industry used to offer up failed celebrities, really sexy ones with killer bodies, as hostess girls for Korea’s richest men,” the consultant reminisced. (He spoke to GlobalPost on condition of anonymity, which is customary in South Korea.) “You know, the powerful men you read about in the news. Top tier. Only the wealthiest executives could afford it. But it’s getting harder to sell with the tax police all over it!”

South Korean civic groups and a few lawmakers have long pushed to clean up business and make it friendlier to women and immigrants. Last month, the government tax body finally put a number on the excess, reporting through a conservative lawmaker that $1 billion was spent on corporate credit cards on sleazy nighttime entertainment in 2013.

That’s a significant slice of the estimated $8.7 billion companies spent on all entertainment services last year, according to the National Tax Service. Entertainment expenses are tax-deductible up to a limit.

It’s a number that makes women’s groups uncomfortable, not only because of the ethical issues of tapping into prostitution for business deals, but because the glass ceiling stays abysmally low. "There is definitely a discriminatory and exclusionary element at play in that kind of sexual corporate entertainment culture,” said Shin Sang-ah, a consultant at the Seoul Women’s Workers Association, a nonprofit.

"Wining and dining clients or other forms of similar corporate entertainment generally involve male higher-ups in the corporate hierarchy,” she said. “And this goes hand in hand with the fact that Korean women are generally confined to less important roles within social organizations."

Although prostitution is illegal, some 500,000 women continue to work in the sex industry in South Korea, reports the Ministry of Gender Equality and Family, the body charged with protecting women’s rights. The ministry did not respond to a request for comment on the corporate entertainment report.

Of the total, businesses spent about $733 million on “room salons” — essentially premium hostess bars where young women flirt, drink, and sometimes leave the premises with their clients. In second place at $204 million were “danlanjujeom,” which in an oddity translates to “healthy family saloon.” Those are slightly lower-level establishments that contract out work to entertainers, explained the consultant. Finally, there’s the $100 million spent at “yojeong,” old-style saloons where women serve you in traditional garb.

Paid sex in Korea is a complicated, compartmentalized business, the consultant explained. There are, for instance, four strata of the fabled room salon.

“Ten-pro” salons hold the most prestige as essentially the private dens of aspiring celebrities, who sometimes linger in Seoul’s finest hotels and bars, seeking a wealthy patron with the help of a trendy club. There are the “15% bars” where the establishment takes a 15 percent cut of the hostess’s earnings, followed by “full salons” where customers dish out for all services up front. The cheapest in the hierarchy, the “hardcore room salons,” can get you a lap dance, body shots, and maybe some action, he said.

Not all clients can dish out loads of cash, in which case they turn to an array of lower-priced hangouts you can read about it here, if you’re really curious.

Higher-end haunts can be exclusive, turning away people without invitations and foreigners, who tend to find their niche in US Army districts.

The government report added that the amount spent on sexual services has been declining over the past five years. But that doesn’t stop South Korea’s highly educated female professionals from crying foul.

“As long as this kind of executive-level sexual corporate entertainment culture is seen as the norm,” said a programmer at a multinational electronics company who asked not to be named, citing the ire of her employer, “it's obviously assumed that women won't be willing to participate, and that can definitely exclude them from certain opportunities."

Max Kim contributed reporting.

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