The small and Medium Business Administration (SMBA) is seeking close cooperation with a variety of foreign countries to help small and medium-sized enterprises (SMEs) advance into overseas markets. SMBA is building a foundation to enhance cooperation with foreign countries with a high growth potential in the small and medium business sector, said Lee Jeong-hwa, director of the International Affairs Division at SMBA.
In an interview with Korea IT Times, Lee said, “SMBA is actively pushing ahead with concluding a strategic cooperation agreement with a number of foreign countries to help domestic SMEs make inroads into overseas markets. “For instance, SMBA has so far signed an SME cooperation pact with 19 countries, including China, India, Indonesia, Vietnam, Turkey and Mexico, to back up Korean SMEs’ encroachment into overseas markets,” said Lee.
In 2011, SMBA concluded a memorandum of understanding (MOU) with Indonesia, Vietnam and Turkey for business cooperation between SMEs. Lee said, “Under the MOU, SMBA established the Green Business Center (GBC) in Indonesia to fully support green business-related Korean SMEs’ advancement into the Indonesian market. “In Vietnam, a newly emerging country, it built the Korea Technology Exhibition Center for Korea’s advanced technology transfer and mutual exchanges of manpower and information between Korean and Vietnamese SMEs.”
SMBA is also making a strong push for the conclusion of an SME business cooperation pact with Russia in April 2012 in an effort to prepare for the basis for Korean SMEs’ advancement into the Russian strategic industries. “In addition, SMBA plans to hold an SME cooperation meeting with China and Turkey in July and August this year, respectively, to tap the possibility for Korean SMEs’ to enter into the Chinese and Turkish markets,” said Lee.
Gov’t policies to enhance SMEs’ overseas marketing ability
Noting that SMEs’ exports came to $114.6 billion in 2011, accounting for 20.6 percent of Korea’s total overseas shipments, Lee said, “The contribution of SMEs to the nation’s exports will be greater considering the indirect exports that SMEs supplied their parts and materials to large companies for exports.” Despite serious difficulties both at home and abroad, including the global financial crisis, the year-on-year export increase rate of SMEs far exceeded that of large companies. In 2011, the ration increased from 15.6 percent to 16.2 percent.
Asked about SMBA’s policy purposes, Lee said, “There are two policy goals – one is the expansion of export base by fostering domestic market-oriented firms as exporters and the other is fostering of SMEs armed with global competitiveness. “Related to this, SMBA will expand the number of SMBs from the present 83,000 to 100,000 in 2015. To achieve this goal, SMBA will extend package supports, including education on exports, market survey and buyer-finding strategy, tailor-made overseas marketing strategy and assistance of market exploration costs, to some 1,500 domestic market-oriented firms every year.”
As a means of fostering SMEs with strong export competitiveness, SMBA will select a number of promising SMEs equipped with high technology, marketability and overseas marketing ability to provide them with exclusive overseas marketing and research and development funds. “In connection with the World Class 300 Program launched by the Ministry of Knowledge Economy, SMBA will actively push for creating an SME growth ecosystem connecting small companies, SMEs and mid-tier companies,” he said.
Status of SMEs’ advancement into foreign countries
The portion of SMEs’ exports to the nation’s total exports declined from 30.9 percent in 2008 to 21.1 percent in 2009 and 2010, and further to 20.6 percent in 2011. Although the number of SMEs engaging in the export business steadily rose from 75,489 in 2008 to 83,041 in 2011, over 83 percent of SMEs exported less than $1 million in 2011, indicating that most Korean SMEs are very small-sized ones. Korean SMEs are exporting their goods to a total of 227 countries. They exported more than $1 billion to 15 countries, including China, Japan, the United States, Hong Kong, Vietnam, Taiwan, Indonesia, India, Iran and Russia.
“Meanwhile, more than 80 percent of Korean SMEs exported their commodities to less than three countries, indicating that their exports are excessively concentrated on specific countries,” Lee said. The number of goods exported by SMEs came to a total of 1,175. Their major export items included auto parts, ship marine structures, computers, and home electronic goods.
The Following are the major points talked about during the interview with Lee Jeong-hwa, director of International Affairs Division at SMBA.
Q: Would you comment on SMBA’s major policy directions for 2012
A: SMBA will build a crisis management system in preparation for the unstable global financial market through the supply of policy funds and the operation of an SME “healthcare” system. Some $62 billion of policy funds will be supplied to SMEs to stabilize the supply of liquidity. Also, the scale of purchase of account receivable insurance will be increased to $6 billion, making a safety-net for SMEs. In case that financial monitoring for regions and industries decline due to the financial crisis, a unified government emergency response team will be formed.
Specialized high schools will strengthen their field education through SME-employment classes and field studies through teacher programs. SMEs such as venture and Innobiz corporations will directly participate in hiring high school graduates and specialized education programs through industry-academy cooperation. It will build a database of good SMEs, select and announce 500 SMEs where people want to work, and hold an exclusive employment expo for high school graduates.
SMBA will train a work force with applicable skills and promote the employment of young people by stimulating the foundation of new businesses based on technology and expanding venture investment.
Q: Would you introduce SMBA’s policies and services
A: SMBA's main task is to cultivate a business environment that encourages, nurtures and grows new business start-ups and generates the Korean can-do-spirit-based entrepreneurship. Aiming at generating a new vigor of the economy, SMBA has run various programs for prime innovative business start-ups across the country.
In particular, SMBA supports Business Incubators (BIs) operated by universities and research institutes armed with facilities and equipment that can support would-be entrepreneurs or new SME founders. This program is designed to promote the survival and growth of newly established venture companies. SMEs are provided with land, an expert consulting service, marketing education and other support.
SMBA provides financial support and training for entrepreneur clubs at universities to expand their start-up mind-set and inspire their entrepreneurship. This program is designed to train college students as future entrepreneurs with creativity and pioneer spirit. It places high priority on human resource development, the engine of SME competitiveness and creativity. SMBA is pursuing education, training and recruitment policies that enhance the ability of SMEs to develop, produce and market new products and services, while keeping their technology and organizational development processes up to date.
SMBA’s direct and indirect SME financing programs are focused on helping innovative entrepreneurs set up or expand operations, develop new products, and invest in new staff or production facilities.
In addition, SMBA is pursuing consistent and sustained efforts to expand SMEs' access to capital, opening funding channels that have traditionally been closed to them. SMBA's indirect SME financing programs are focused on helping innovative entrepreneurs set up or expand operations, develop new products, and invest in new staff or production facilities.