By Na Jeong-ju
Staff Reporter
The administration announced a plan Thursday to nurture 300 small- and mid-sized enterprises (SMEs) with high growth potential, commonly known as "hidden champions," into competitive global players by 2020.
The firms will enjoy tax cuts and other financial incentives as well as technological support from state institutes under the so-called World Class 300 Project, Knowledge Economy Minister Choi Kyung-hwan said in a report to President Lee Myung-bak.
The measure reflects worries that South Korean SMEs, the key supplier of parts and technicians to leading conglomerates, such as Samsung, LG and Hyundai, are largely unknown outside the country, making it difficult for them to compete globally.
Many small firms are suffering a shortage in their workforces due mainly to the salary gap with large firms and their weaker reputation even though the country's youth unemployment has soared.
The government will support their overseas marketing activities and provide "corporate doctors" to help them improve their financial health, develop new technologies and create long-term growth strategies, Minister Choi said.
The globalization of the hidden champions is crucial not only for the country's economic future, but also for the government's efforts to enhance Korea's international image.
Last year, Euh Yoon-dae, chairman of the Presidential Council on Nation Branding, proposed measures to promote the little-known but powerful Korean firms abroad, saying it will help consolidate the country's reputation as a technological powerhouse and, in the long run, enhance its global image.
"Entrepreneurship is more important than ever for us to tide over the economic hardship. The economy will become stronger when it has more adventurous and brave young entrepreneurs," President Lee said at the meeting. "We will spare no efforts in supporting the firms with vision and ambition."
According to the ministry, the number of made-in-Korea products that are among the top five in terms of global sales totals 388. Of them, 244, or 63 percent, are produced by SMEs.
Many of those companies have failed to get attention from end users for various reasons: Their names are unknown largely because the market is not big enough, or they produce parts or accessories. Some have avoided revealing their origin due to the so-called Korea Discount.
Industry sources said the government will focus on finding hidden champions in the clean energy and bio industries as part of its "low carbon, green growth" strategy.
By investing 107 trillion won ($90 billion) over the next five years in green technologies, Korea aims to become one of the world's top seven green economic powers by 2020.
The term hidden champion originated from Hermann Simon's book "Hidden Champions," an analysis of 500 small German enterprises that hold leading global positions.