Korea to designate small-firm-only biz

By Kang Seung-woo

Korea’s large corporations may have to quit businesses such as tofu and red-pepper paste as the government is set to come up with a list of markets suitable for just smaller firms.

The Commission on Shared Growth for Large and Small Companies (CGS) held a hearing Friday to decide what items will be included in the list for smaller companies with the aim of wrapping up the work as soon as possible.

According to sources markets whose size are between 100 billion and 1.5 trillion won as well as those involving more than 10 small-sized firms would meet the requirements for small-firm-only businesses.

The general expectations are that traditional foods, sauces, tofu, tire recapping and metal crafts would make it to the final list.

There is controversy in the mold industry, for which CGS head Chung Un-chan expressed special concerns of late, because its market size is about 5.5 trillion won.

The CGS initiative comes as larger companies are expanding into areas where smaller counterparts have usually been involved.

Along with the chicken and pizza sectors to which some big firms advanced, creating a public backlash, they have expanded their horizons to wine, food services, baking, education and waste water industries, threatening small- and medium-sized enterprises.

Such expansions by major firms prompted the government to raise concerns over the protection of smaller companies.

“The unfair relationships between large and smaller companies are becoming more serious. We need to fix it,” Chung said in a press conference Wednesday. “The government agencies including the Fair Trade Commission (FTC) and Ministry of Knowledge Economy are trying to settle the problem.”

Despite the government’s efforts the move is expected to face obstacles.

The Korea Economic Research Institute (KERI) called the government’s plan anachronistic.

“The move will prevent large firms from wading into specially designated industries, which is not fair” KERI said.

“If major companies, which have an edge over smaller ones in quality, are left out of competition, it will be a blow to smaller ones because it will not motivate them to improve.”