Korea's New Growth Engine
The Small & Medium Business Administration and the Korea Venture Business Association announced on Dec. 28 that a total of 29,910 venture firms were in business in Korea as of the end of last year, recording 214.6 trillion won (US$183.5 billion) in annual sales. This amount is equivalent to 14.5 percent of Korea’s GDP for that year and only 33.4 trillion won short of the Samsung Group’s sales. For reference, the SK and Hyundai Motor Groups, the second- and third-largest Korean conglomerates, recorded 165 trillion won and 158 trillion won in annual sales during the same period, respectively.
The sales per venture firm increased 11.2 percent from a year earlier to 7.19 billion won, whereas those of large corporations and small and medium enterprises (SMEs) decreased by 0.4 percent and edged up by 4.4 percent. The operating and net profits per venture firm rose by 14.9 percent and 6.0 percent to 420 million won and 300 million won, while the ratio of operating profits to sales increased from 5.6 percent to 5.8 percent. Although their net profit-to-sales ratio fell from 4.3 percent to 4.1 percent, they surpassed both conglomerates and SMEs in terms of each operating profit ratio, net profit ratio and rate of increase in profits.
As of the end of last year, a total of 717,000 persons were working for Korean venture firms, which accounts for 4.7 percent of the total, with the number of employees per venture firm increasing from 22.6 to 24. During the period, SMEs recorded an average number of 3.9 employees.
Venture firms surpassed in technological innovation based on R&D investment as well. They invested 2.9 percent of their sales in R&D, while the ratios were 0.8 percent and 1.4 percent for SMEs and large corporations, respectively.