KITECH - matchmaker between small exporters and global markets
Korea Institute of Industrial Technology (KITECH) officials and their Vietnamese counterparts discuss detailed plans of building an industrial incubation park in Can Tho, Vietnam, in June. / Courtesy of KITECH
Choi Byung-wook
By Kim Tae-gyu
Korea is the world’s ninth country to achieve $1 trillion in annual trades and the nation strives to double the figure in a decade so as to further rise in the global rankings.
Toward that end, Asia’s No. 4 economy is well aware that small and medium-sized enterprises (SMEs) should play a bigger role down the road. Up until now, mega-sized powerhouses including Samsung Electronics and Hyundai Motor spearheaded the brisk cross-border transactions.
The question is how to do so and many have agonized over getting solutions. Here is a unique idea of the Korea Institute of Industrial Technology (KITECH), which strives to underpin small-sized high-tech outfits.
“SMEs are very important for our economy and included in our top priority list is to help them make a foray into foreign markets,’’ said Choi Byung-wook, who has led KITECH’s global initiatives.
“In particular, we focus on small corporations with their own technology. Many of them fail to wade into world markets for some reason and we are supposed to assist them.”
Indeed, just a small fraction of homegrown SMEs have been globalized _ less than one out of every 25 SMEs sell their products in markets outside of the country.
Korea Institute of Industrial Technology’s Gyeonggi Province office in Ansan
In comparison to Germany where more than 10 percent of SMEs are exporters, the proportion in Korea is just 2.4 percent, which is too small in consideration of their significance.
Korea’s SMEs account for more than 99 percent of all business establishments and they employ up to 90 percent of overall domestic workers.
The Korea Trade-Investment Promotion Agency (KOTRA) has helped domestic firms tap into the world markets and Choi said that the KITECH can be of great help in completing the mission.
“KOTRA typically encourages small-sized outfits with their own final products to vend them outside of Korea and our focus is those with technological edges,’’ Choi said.
Matchmaker ―
Indonesia project
Where is the most populated Muslim country in this world? Many would think of some big ones in the Middle East but the correct answer is an island state in Asia ― Indonesia.
Composed of five major islands and numerous smaller ones, Indonesia is very rich in marine products. Yet, its exports of fishery products have been relatively small compared to its rich resources.
One of the major jitters is its dearth of the proper logistics networks for dealing with perishable freights at sultry regions.
Refrigerator trucks are a must to boost exports of Indonesia’s aquatic products and that’s where the KITECH got the smell of business opportunities.
“Based on years of collaboration, we helped a Korean company set up a joint venture with an Indonesian counterpart, which will provide refrigerator trucks there,’’ Choi said.
“The joint venture would churn out the trucks in Indonesia and the Korean firm would get royalties for the technology. We have promoted to achieve the two-way cooperation.”
Choi likened KITHEC’s efforts to those of matchmakers in the global scene.
“We try to learn what technologies are needed by foreign countries and what technologies Korean companies can offer so as to bridge the demand and supply,’’ he said.
Vietnamese venture
In Can Tho, one of the largest cities of Vietnam, KITECH is set to build an industrial incubation park with the aim of finishing it by 2014 and the ground will be broken midway through next year.
At the requests of Vietnam, the Korean side is expected to run the park for the time being, which is designed to promote Vietnamese entrepreneurs to set up new businesses at the park situated about 170 kilometers southwest of Ho Chi Minh City.
“Vietnam has abundant fishery products and produce lots of grains. Due to a lack of processing facilities, however, it was not able to put high price tags on their merchandise overseas,” Choi said.
“The Vietnamese administration hopes to earn appropriate profits by properly processing their rich raw materials and the incubation park is set to contribute much for the purpose.”
Along with the venture, Korean manufacturers are expected to enter the nation including makers of agricultural machinery.
“Japanese farming equipment is too expensive while Chinese one falls behind in quality despite its low prices. Korean firms can offer affordable products that also have good quality,” he said.
“While building and operating the incubation park, we think that we will be able to offer chances where Korean farming equipment producer sell their products in Vietnam.”
Choi added that Vietnamese delegation already took a flight to Seoul to check the technological level of domestic agricultural equipment makers.
“They said that they were quite impressed. As the Vietnamese people have an amiable sentiment toward Korea, I think the two countries will be able to attain a win-win situation with various collaborations in the future,” he said.
International cooperation
To rack up faster growth of the country’s international initiatives, Choi claimed that the government should channel more funds to the segment.
For example, he said that Korea spends too little on developing strategies and tactics with which local corporations, typically small-sized ones, can advance into other markets.
“Merely 2 percent of the country’s total R&D budgets are used for international cooperation like conducting joint research projects, opening overseas offices or partnering through exhibitions,” Choi said.
“The proportions are more than 5 percent for most of advanced countries like Japan and the United States. We are required to crank up the figure for the international cooperation, which would be of great help for SMEs in their export drives.”