Small and medium enterprises (SMEs) in Korea, unlike major companies, are using their own strategies and those selected by the Small and Medium Business Administration (SMBA) to operate their own Global Strategic Item Consortium to advance into niche markets. The business helps small and medium businesses form a consortium to combine as a greater power to advance into the niche market together. On the 46th Trade Day, the Korea IT Times did a question and answer session with SMBA International Cooperation Division Director Kim Yoo-sook about the government's role in supporting small and medium enterprises to raise exports, and what small and medium enterprises in Korea can do as global companions in the global market.
Q: It is my understanding that global strategies were selected by the SMBA. Are there separate strategies that can be used by small and medium businesses
A: Global strategies are selected after careful consideration of a small and medium enterprise's export performance and analysis of the overseas market. After the first 15 export consortia showed remarkable results in exports, 21 items were additionally selected. We can look forward to more export consortia forming next year. Looking at the promising global strategic items selected recently, we can certainly expect a great deal of diversification to take place in the market of SMEs.
Q: It is noticeable to see small but very competitive and strong companies (hidden champions) rising in the global market. Please give me some examples of industries where we have such companies.
A: There are already strong recognized industries such as machinery, electronics, and semiconductors. However, it is also hopeful that clothes, household goods, living supplies, whole sales, retail sales, and even pharmaceutical seem to be gaining global competitiveness. We are providing overseas marketing strategies appropriate for the global market. By reforming export financing regulations like global outsourcing, we are trying to create an industry environment where we can do mutually beneficial business in overseas markets.
Q: Rather than using tariffs as a protection for their own markets, developed countries use trade barriers related to environment, security, and health. Considering that small and medium enterprises are easily exposed to the dangers of trade barriers, what policies are you putting in effect
A: Under these harsh circumstances, small and medium exporting enterprises are suffering. SMBA is supporting them to acquire regular certificates from overseas. Increasing from 130 consulting certificates, more certificates will be added in new fields such as the environment, medication, plant, and clearance, reaching 150 certificates in total.
Q: According to a survey related to this issue, people point out that the preparation for contracting Korea-EU FTA is insufficient especially for small and medium exporting companies. What preparations, do you think, are essential in contracting Korea-EU FTA
A: The EU is considered to be the biggest market for our companies. Therefore, Korea-EU FTA will critically contribute to the increase of our exports. EU is the market where individual income level and preference is distinguished, so practical strategies, which reflect on each country's characteristic, are needed. More research and efforts are needed in this area, but if our companies take advantage of the characteristics, they can have competitive advantages over rivals. Current trends after global financial crisis teach us that EU companies are expanding global outsourcing to Asian countries. This will be a big opportunity for our companies to strengthen their technologies and to acquire competitiveness.
Q: There should be supports to improve small and middle companies' export capabilities and efforts to strengthen their substantiality. Is there a plan for offering education or support for this part
A: The most critical part in supporting SMEs' exports is their own export capability. Government intentionally limits its support on direct support for companies, but, on the other hand, it builds an infrastructure, which companies can use as a stepping stone to become strong exporting companies. Currently, we are focusing on trainings, providing information, consulting, and networking for building infrastructure. Especially, the trainings are provided for new trade companies utilizing export supporting agencies such as the Korea International Trade Association (KITA). We also conduct presentations and seminars on market report, global trend, and marketing strategy, and offer off-line trainings like the foreign exchange rate risk management and FTA utilizing strategy. All useful information is posted on the Export Support Center website.
Q: After the global economic crisis, what can you tell us about the future of SMEs and how should they prepare for it
A: Since the global economic crisis, the competition among SMEs is expected to be tougher and fiercer. Each country will introduce and adopt new policies to protect its market. The price competitiveness is not good enough for the new environment. More SMEs with technology competitiveness and capacity are expected to arise. Based on thorough understanding and analysis of the global market, the companies need to use appropriate marketing strategies with continuous study of market trend to find a niche market. The government is actively supporting SMEs to give competitiveness in a global market.
