Small firms want to see big jump in sales
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Officials from small- and medium-sized companies consult visitors at a product exhibition center set up by CJ E&M at the company’s building in Seoul in this file photo taken on Dec. 3. The company has helped SMEs to expand exports with various cultural events. / Korea Times
By Park Si-soo
Small- and medium-sized enterprises (SMEs) hope the government will take supportive steps to help them sell more products at home and abroad in 2015.
They also want big conglomerates to invest more in facilities so the smaller companies can benefit from the trickledown effect and hire more workers.
Of course, the business outlook for small businesses is not bright. Nearly 80 percent of 1,365 SMEs responding to a Korea Federation of SMEs’ survey, predict a dismal outlook for 2015.
This suggests that the overall economic climate will worsen or, at best, maintain the status quo.
Contracted spending and investment was cited as the biggest culprit, followed by swelling household and corporate debts and unfavorable exchange rates.
The SMEs hope the government will come up with measures that may help remove obstacles standing in the way of an economic rebound.
The Korea Times interviewed several SME leaders recently to find out their hopes for 2015 and their suggestions of what must be done to improve things.
Support for exports, investment
Lee Seung-do, CEO of KSTEC, an industrial software developer, called on the government to do more to boost exports, especially for information technology (IT) companies, which he said were increasingly welcomed in China and other developing nations. He also said big companies should become more active in making investments.
“It would be easier to increase exports of software and other IT products when the Ministry of Science, ICI and Future Planning, the Korea Trade Investment Promotion Corporation, the National IT Industry Promotion Agency and other related state agencies tighten their partnership,” he said.
“Up-to-date information from them is very useful.”
Another of Lee’s wishes for this year is for more investments from big companies.
“Big companies are still reluctant to make large-scale investments,” he said. ”This has significantly reduced the number of lucrative projects we were supposed to take part in this year.
“Something needs to be done to encourage them to be active in making investments.”
He also asked for more subsidies for SMEs, with which they could better promote their products overseas and produce customized goods.
Han Young-ho, CEO of Jinyang Industrial, which makes weather forecasting devices, said lending regulations should be eased. This would make it easier for SMEs with advanced technologies to expand beyond borders, he noted.
In early 2014, the Anseong-based company signed a $6 million contract with the Qatar government to install 53 high-end weather forecasting devices and a communication network connecting them in the Middle East nation.
“Easing regulations on lending is like giving more room to breathe,” Han said. “The demand for Korea’s meteorological devices is increasing globally thanks largely to the country’s proven IT prowess. It (deregulation) will help boost exports of our products.”
Tax reduction, FTA
A senior executive at a domestic animation production company said the company would be able to produce more high-quality animations if the government eased tax regulations. The company’s computer-animated comedy film was released in the U.S. early last year and was then screened in dozens of countries.
“We are working on another animation film for the global market,” the executive said. “To that end, the government’s active support is necessary.
“I think the government needs to deepen its understanding of the cultural content industry to come up with measures that actually help.”
He said cutting taxes would have an immediate and far-flung impact on the industry. On top of this, he suggested the government allow tax incentives and tariff exemption on imported and exported cultural products to nurture the domestic cultural content industry.
Another senior executive at a mid-sized cosmetics company expressed high expectations for the Chinese market, calling for the Seoul-Beijing free trade agreement (FTA) to be implemented as soon as possible.
The countries signed an FTA agreement in November, but many things still to be done ㅡ including the parliamentary endorsement of both sides ㅡ before the agreement takes effect.
So it is still uncertain when Korean cosmetics companies will benefit from the trade pact.
“The Korea-China FTA will give cosmetics companies a good business opportunity,” the executive said.
“I hope the government will ease domestic regulations on the cosmetics industry, which will make it possible for companies like us to grow faster.”
China is by far the largest market for Korean beauty items. For the first eight months of 2014, Korean exports of cosmetics to China totaled $290.63 million, up nearly 70 percent from the same period last year.