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, we built the Korea Technology Exhibition Center in order to transfer our advanced technology and exchange manpower and information between Korean and Vietnamese SMEs.”
SMBA is also pushing to conclude an SME business cooperation pact with Russia in April 2012 in an effort to prepare Korean SMEs’ advancement into Russia’s industries. “In addition, SMBA plans to hold an SME cooperation meeting with China and Turkey in July and August this year to discuss the possibility for Korean SMEs’ to enter into the Chinese and Turkish markets,” said Lee.
Government 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 that SMEs supply their parts and materials to larger companies.” Despite serious difficulties both at home and abroad, including the global financial crisis, the yearly export increase rate of SMEs exceeded that of large companies. In 2011, the rate 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 exports by fostering domestic firms as exporters. The other goal is to foster SMEs’ global competitiveness. Related to this, SMBA will expand the number of SMBs from 83,000 to 100,000 in 2015. To achieve this goal, SMBA will extend its support such as business education, market survey, strategies for attracting overseas customers, and providing financial assistance for market exploration. This service is being provided to 1,500 domestic firms every year.”
“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’ total exports declined from 30.9 percent in 2008 to 21.1 percent in 2009 and 2010 with additional declination of 20.6 percent in 2011. The number of SMEs in the export business steadily rose from 75,489 in 2008 to 83,041 in 2011. Over 83 percent of SMEs exported less than USD1 million in 2011, indicating that most Korean companies are SMEs.
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 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 discussed during the interview with Lee Jeong-hwa, director of International Affairs Division at SMBA.
Q: Would you introduce SMBA’s key role for SMEs
A: Actually, more than 80 % of SMEs export less than USD 1 million. This is why these companies need assistance from the government and SMBA. In terms of this, SMBA’s key role is to support beginners and help them find potential international customers. Throughout this process, beginners can finally develop their own promising export companies.
Every year, we choose 1,000 companies and categorize them into three types. The first type is beginners; the second are promising companies that export USD 1 million to USD 5 million. The last type is enterprises that export more than USD 5 million. Once beginners establish promising companies, they will gain many benefits such as receiving funds from the bank and governmental organizations. At the same time, many research and development projects will be given to promising companies so they may use these assets to achieve their goals.
Q: Would you comment on SMBA’s major policy directions for 2012
A: SMBA will build a crisis management system to prepare for the unstable global financial market by providing policy funds and operating an SME “healthcare” system. SMEs will be given USD62 billion of policy funds for stabilizing their liquidity supply. Also, the scale of purchase of account receivable insurance will be increased to USD6 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 education through SME-employment classes and field studies through teaching programs. SMEs such as venture and Innobiz corporations will directly participate in hiring high school graduates and specialized education programs through industry-academy cooperation. A database will be built by selecting 500 qualified SMEs where people want to work. We will also hold an 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 also introduce SMBA’s main task
A: Regarding SMBA's main task, we are cultivating a business environment that encourages, nurtures, grows new businesses and generates the Korean can-do-sprit. 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 entrepreneurs or new SMEs. 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 entrepreneurs at universities to expand their vision by applying and inspiring their entrepreneurship. This program is designed to train college students as future entrepreneurs with creativity and a pioneering 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 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 consistently pursuing its efforts to provide easy access for SMEs to receive capital and funding that have traditionally been difficult to attain.
