The Korea Herald

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[Editorial] Competitive SMEs

By Korea Herald

Published : May 7, 2012 - 11:08

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A recent survey by the Korea Chamber of Commerce and Industry showed local small and medium-sized enterprises are far less competitive than SMEs in Germany, Japan and other industrialized countries.

If the competitiveness of small companies in advanced nations with a strong manufacturing sector is put at 100, that of Korea’s SMEs scored 59.6, according to the survey of 151 economic experts here.

Among the key problems cited by the experts for holding back domestic small firms were a lack of innovative ability, delay in globalization and excessive reliance on government support.

The results of the survey remind Koreans that there is still much to be done before the country’s industrial structure as a whole becomes competitive globally, even though some of its large businesses such as Samsung Electronics and Hyundai Motor have grown into major competitors in the world market.

The weakness of SMEs could be further troublesome for Asia’s fourth-largest economy as several conglomerates, especially in sectors such as shipbuilding and heavy engineering, face an increasing challenge from China.

Nurturing SMEs with international competitiveness is also needed to provide more quality jobs for young people. Korea’s official jobless rate for the under-30s is 8.3 percent, far above the national average at 3.7 percent.

Only half of college graduates, who number about 500,000 annually, have landed jobs in a country where more than seven out of 10 high school graduates enter university.

Unemployed youths are often blamed for shunning hard work at small manufacturing firms and advised to lower their job expectations. But that cannot be an excuse for government and industry officials neglecting efforts to create more decent work for graduates entering society.

With a limit on increasing jobs at conglomerates, which hire only 5 percent of the workforce, more jobs with acceptable wages and working conditions should be offered by SMEs. That could be possible if they enhanced their competitiveness to match international standards.

It is desired that a variety of effective measures to support small companies in research and development, advancement into overseas markets and deregulation are coupled with their own efforts to become more competitive.