South Korea’s exports fell in November on-year, keeping its downward trend for the 12th consecutive month. Concerns are growing over the protracted slump in exports, the nation’s key driver for growth -- due to the sluggish semiconductor industry and falling exports to China.
It is important to recover the level of export duties collected from key industries and on shipments heading to major overseas destinations. However, we need to think whether our nation is heavily dependent on a few big businesses. We need to seek ways of effectively tackling problems of being too reliant on big firms. I believe the government must help small and medium-sized companies with potential to become export-oriented companies as much as the bigger firms.
Currently, the country has more than 500 measures designed to support SMEs to expand their overseas shipments, but many face difficulties in getting the support needed because they are being handled by different agencies and the process is complicated. According to a survey by the Korea Customs Service, 58 percent of SMEs said they were not able to get the required support. This highlights the importance of establishing innovative and efficient systems to manage support measures rather than making new ones.
KCS Commissioner Kim Yung-moon (Korea Customs Service)
Above all, SMEs are desperate to get information about overseas markets to figure out where they can sell products. To provide such information, the government needs to build a customized support system, rather than simply making country visits.
Indeed, information on export destinations is being provided by the Korea Trade-Investment Promotion Agency as well as by a number of websites offering around 28,000 pieces of data on overseas market demand. It seems to be a lot, but when searching for detailed information for each item, we often face difficulties. For example, there are only 10 subjects on ramen products.
Then how can we support those firms by providing more useful local information? It can be done by cooperating with overseas Korean diplomatic missions in around 160 countries around the world. If we can have all offices to make reports on local markets, then there will be a lot of data on local markets. By doing so, SMEs can build up their export strategies without having to travel around. In the process of making reports, offices will be able to build up their information gathering skills as well as networks with related individuals. In the future, such networks can be able to act as suppliers of made-in-Korea products and play a crucial role in expanding trade between the nations.
Also, municipalities have to offer customized services by organizing the list of support measures scattered across different public offices. To do so, they need to form a consultative group with other export support institutions within municipalities and study what their demands are. Further, they need to bring in support to the group.
Finally, it is important to establish an organization that connects companies and related agencies in and out of the country. If the government forms a new organization consisting of a few dozen people -- including officials from the Ministry of Trade, Industry and Energy, the KOTRA, export support institutions and the Korea Association of Machinery Industry -- those in export representative bodies can receive related information from the offices and post them on their websites. Further, local government and export companies can also request more information via the organization. By giving information back and forth, more information on exports will be created.
Citing an example, a company identified as R was in trouble, due to the sudden shutdown of the Kaeseong industrial complex. The firm had a hard time finding new markets in Southeast Asia. With the support from KCS’s Incheon branch and its “YES FTA Consulting Business,” program, publicity support from KOTRA’s “Export Voucher” program and Gyeonggi Provincial Government’s buyer partnership program, the company was able to find a new market.
In October last year, it exported $370,000 worth of products. The result came in through cooperation among those institutions, along with utilization of collected information. It will be even more efficient, when an institution can handle all the export support policies scattered across institutions. By doing so, we will be able to expand exports by SMEs and provide support they need.
By Kim Yung-moon
Commissioner of Korea Customs Service