Report shows SMEs in rough patch

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Report shows SMEs in rough patch

Small and medium-sized enterprises (SMEs) have essentially failed to grow the past three years as the average production and sales rates increased less than 1 percent, according to a report released by the Korea Chamber of Commerce and Industry (KCCI) on Wednesday.

The report showed SMEs are at a crossroads between a recovery and slump as businesses surveyed had differing perspectives on the current economic situation.

Among 300 companies the KCCI looked into, 44 percent said the economy would improve this year, while 56 percent said it would get worse.

The report said manufacturing SMEs increased production by 0.3 percent in 2012, 1.5 percent in 2013 and 0.1 percent last year.

The number of shipments, an indicator of sales, increased 0.5 percent in 2012 and 1.3 percent in 2013, before posting minus 0.1 percent last year.

Employment rose 5.4 percent in 2011, 4.2 percent in 2012 and 2.4 percent in 2013, then was minus 0.1 percent last year. The report showed total invested to expand plants and buy equipment jumped 9.3 percent in 2012, but plunged to minus 3.2 percent in 2013 and minus 13.6 percent in 2014.

The report said the biggest problems for Korean SMEs are their small size, lack of innovation capabilities and reliance on the domestic market, adding the 82.3 percent of Korean SMEs had fewer than 10 employees in 2013, compared to 52 percent in the United States and 69.2 percent in Japan. According to the Organization for Economic Cooperation and Development, average labor productivity at Korean SMEs was $35,100 per worker, second-lowest among member countries after Ireland ($29,500). The average was $65,500.

“Korean SMEs should cooperate with each other and innovate in order to overcome the current economic hardships,” said Chun Soo-bong of the KCCI. “The government needs to help SMEs stabilize their management by creating a better business environment. It should help SMEs with restructuring and promote fair trade.”

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