Reliable Partner for Small Businesses in Korea

“Our most important goal is to help small business and venture firms providing creative technologies take their place in a virtuous cycle,” said Dr. Kim Dong-sun, President of the Korea Small Business Institute (KSBI), stating the interview. He continued, “Korea can beat the current economic recession and reach a per-capita GDP of US$30,000 only in the presence of competitive SMEs, or small and mid-size enterprises, and my staff and I will be a foothold for them to achieve growth in the global arena.”

His remarks show his strong desire to foster small businesses. Not surprisingly, he previously worked as head of the Small & Medium Business Administration.

“I’ve been to Israel as of late and found that the country’s technology foundation system can be a role model for small businesses in Korea,” the head of KSBI said, adding, “Interestingly, entrepreneurs in Israel were envious of Korea for having global market leaders and large businesses.” Even if he said it neutrally, he seemed to miss a virtuous cycle between big and small corporations in Korean business world. It would mean Korea is failing to put to optimal use its advantage in terms of industrial structure.”

Throughout the interview, the interviewer could not get rid of the idea that the new Park Geun-hye administration, which pledges economic democratization, should be well advised to listen closely to the voices of experts like him with abundant knowledge and experience in the SME-related field.

Spearheading Joint Growth between Big and Small Businesses

These days, economies around the world are striving for job creation and domestic consumption growth. Korea is no exception in this trend. Key to this goal is the growth of SMEs, which account for 99% of the total number of companies and 88% of employment.

“Under the new government, we’ll focus on policies to enhance SMEs’ competitiveness, while researching the common prosperity of large and small businesses,” said the CEO, adding, “Specifically, we’ll make various efforts to cover the weaknesses of venture and startup firms in financing, employment, marketing and technological R&D, as well as look at how to protect them from large companies’ unfair business practices, such as price dumping, inter-company transactions and entry barriers for market infringement.”

Leading Think Tank for Local SMEs

The chairman stressed the importance of practical, viable policy measures and the expansion of the role beyond research to education, training and consulting in order for KSBI to become a leading think tank.

“In regards to specific actions plans, we’re refining our statistical systems to provide more helpful research data on issues associated with small-scale firms, while benchmarking and exchanging data with our counterparts in advanced economies and international organizations such as the OECD,” added, “Furthermore, we’re making full use of our database for policy financing programs, and R&D support result analysis, and so on, as well as trying to further raise policy efficiency by means of feedback from interested parties.” In this vein, the KSBI is planning to build more systems for self-reporting by potential beneficiaries and utilize past project results in conjunction with relevant government authorities.

In the meantime, the organization has employed approximately ten more research analysts since his inauguration last year. More than 50 researchers are currently working on matters such as venture foundation, win-win growth, the globalization of SMEs and knowledge service. “In fact, I don’t think they suffice,” he said, adding, “I’d like to hire more research personnel so as to better deal with newly emerging policy demands and industrial issues.”

The KSBI has also exerted great efforts for cooperation with foreign entities. It is in this context that the institute has signed agreements with Taiwan’s Industrial Technology Research Institute, the China Center for Promotion of SME Development, and the China Center for Information Industry Development. “We’ve learned a lot from the two countries, both of which have an industrial structure centered on small firms,” adding, “Furthermore, we’re expanding networking and cooperation with Israel and Silicon Valley in the United States in order to establish better startup ecosystems and financing support systems.”

SMEs Should Not Be Content with Domestic Market

With regards to the greatest challenge for SMEs in Korea, he mentioned the small-size of firms guaranteeing little profitability, their structural dependence on major corporations, and the lack of attempts to open up overseas markets. To combat this, he proposes self-developed technologies, globalization in tandem with large companies, and the removal of unfair, imbalanced and unreasonable business practices.

“To this end, we need to assist technology foundation and overseas marketing, while helping companies manage risks related to trade, insurance and foreign exchange,” he added, “I will also introduce necessary tighter restrictions and regulations regarding big businesses’ malpractices, such as technology theft and market encroachment.”

Sharp Competitive Edge Key to Survival

The Korean economy has entered a phase of low growth. The annual economic growth rate is estimated to be below 3%, with the aging of society progressing at a fast pace. Economists are concerned about the repercussions, including a slowdown in employment and investment, deteriorating business and export conditions, and soaring debt burdens on the government, households and enterprises.

“In order for our society to thrive, SMEs should do their part by sharpening their competitive edge, independently of government aid, and seeking new business models through hardware-software, information-knowledge convergence, and technological development.” He wrapped up the interview by saying, “The huge popularity of Psy’s Gangnam Style and the mobile game Anipang can be nice overseas marketing lessons for them. Efforts in human resources training and recruitment must also continue.”