2018 SME exports hit record high of $114.6 billion

Korea’s SMEs reported record export figures last year thanks to the growing semiconductor industry and the Korean cultural wave known as Hallyu.

According to the Ministry of SMEs and Startups Sunday, SME exports amounted to $114.6 billion in 2018.

This is up 8 percent compared to the $106.1 billion in 2017, which was the previous record.

It is also the second year SME exports have exceeded $100 billion.

Exports by SMEs as of last year accounted for 18.9 percent of total exports, a 0.4-percentage point increase from the previous year. This is a slight recovery after the share fell from 20.1 percent in 2016 to 18.5 percent in 2017

Additionally, the number of SME exporters has grown to an all-time record of 94,589, a 2.4 percent or 2,215 additional companies compared to the previous year.

The ministry cited the booming global semiconductor market as one of the leading drivers behind the increased exports. Although growth has been slowing lately, semiconductors have still been the driving force behind Korea’s overall exports. Semiconductors account for 25 percent of all Korean exports.

Among the top 10 export categories, plastic ranked top, up 6.1 percent compared to the previous year to $5.5 billion. The biggest contributor was the rise in unit price thanks to a hike in international crude prices. Plastic goods accounted for 4.8 percent of all exported goods made by SMEs.

Flat panel display manufacturing equipment saw the largest increase among the top 10 categories, up 68 percent compared to the previous year to $3 billion. Exports to China rose especially sharply, growing 127 percent to $2.6 billion as Chinese companies increase development of OLED displays. Flat panel display manufacturing equipment accounts for 2.6 percent of exports by SMEs.

Semiconductor manufacturing equipment trailed behind with a 34-percent increase to $3 billion, which accounts for 2.7 percent of all SME exports.

Thanks to the continuing popularity of Korean culture, cosmetic exports enjoyed the third-sharpest increase among the top 10 at 27.7 percent. Among SMEs, cosmetics are the third largest export category at nearly $4.9 billion, which accounts for 4.2 percent.

According to the ministry, cosmetic exports have risen sharply since 2010 and are inching closer to the second-largest SME export category - automotive parts.

Automotive parts, which grew 2.5 percent compared to the previous year to $4.9 billion, account for 4.3 percent of the total SME exports. The growth was largely thanks to the growing number of orders from Korean automotive companies’ overseas plants. While orders from the United States have grown 7.6 percent, China actually fell 9.5 percent.

The largest export markets for Korean SMEs were China, the United States, Vietnam, Japan and Hong Kong.

The ministry also highlighted that exports to China and the United States have hit an all-time high.

China, which accounts for 23.8 percent of SME export, grew 17 percent last year to $2.7 billion while the United States, which trails behind China at 11.6 percent, grew 12 percent to $1.3 billion.

“The fact that [Korean] SMEs have been able to enjoy growth in exports for two consecutive years, even when faced with difficult global export conditions including the spread of protectionism, shows SMEs efforts in actively trying to expand to the global market,” said Minister Hong Jong-haak.

However, he said this year it will likely be difficult for SME exporters to enjoy the same growth as the past two years as external trade conditions are getting more unfavorable, especially with the economic growth of major trading partners slowing down.

“[The government] will continue to monitor the risks and difficulties our SME exporters are facing through regional export support centers, while further strengthening cooperation by holding regular meetings with related institutions,” Hong said. “We will focus all our policies so SME companies can enjoy export growth in 2019.”

BY LEE HO-JEONG [lee.hojeong@joonang.co.kr]