Various supports needed to increase SMEs' foreign shipments
Korea's exports totaled $512.5 billion last year, up 9.9 percent from 2010, according to recent data released by the Ministry of SMEs and Startups. Large businesses' shipments increased 5.8 percent to $321.1 billion, and those by mid-market companies ― with total assets of 500 billion won or more ― soared 42.6 percent to $89.3 billion. However, overseas shipments by small- and medium-sized enterprises (SMEs) climbed only 2.1 percent to $100.7 billion.
The data show that the export growth rate of SMEs lagged far behind that of large and mid-market enterprises, failing to reach the overall average. A fundamental solution is urgently needed. Policymakers should not attribute SMEs' export slump only to their weak competitiveness. Many SMEs say they often give up selling hard-won products in foreign markets because it is easier for a camel to pass through the eye of a needle than to open a new export market.
Even after SMEs develop new products, they must acquire various standards and certifications required in overseas markets. Small exporters must also know about the situation of their target markets, a skill that requires marketing abilities. Even if SMEs overcome these barriers, they need administrative support ranging from for customs clearance to actual shipments. All these procedures require SMEs to have a professional workforce.
To jumpstart the sluggish exports of SMEs, the government needs to ensure a solid support system is in place. The country has various export-supporting agencies, including the Korea Trade-Investment Promotion Agency (KOTRA). Still, it is not easy for small exporters to get their feet in the door of these organizations. Most SMEs are short of the money and manpower to maintain export departments or teams as their large counterparts do.
Moreover, the export environment is changing rapidly, as shown by calls for carbon neutrality and the emphasis on environmental, social and corporate governance (ESG) principles. SMEs account for 99 percent of all businesses in Korea. Only if they maintain their competitiveness can the competitiveness of the entire nation increase. Therefore, the government should come up with a drastic policy shift toward enhancing SMEs' export competitiveness. Without their robust shipments, Korea's reputation as a global export powerhouse will crumble like a house of cards.