It all starts with accurate statistics
After the JoongAng Ilbo reported that the government’s “2015 Venture Companies Report” was exaggerated, the Small and Medium Business Administration immediately released an explanation. It claimed that venture companies’ revenue was not exaggerated intentionally. But it failed to explain how the portion of companies with more than 10 billion won ($8.2 million) in sales grew from 12.5 percent in 2014 to 26.9 percent in 2015. If its research is true, the number of venture companies in Korea with annual sales revenue of 10 billion won or more has increased from 3,600 to 8,000 in a year.
Aside from the statistics, it is hard to understand with common sense. The administration did not explain how the 7,300 companies (23.4 percent) with incomplete sales data, or none at all, were reflected in this research. Unlike the official explanation, a Small and Medium Business Administration official said that “after the JoongAng Ilbo report, we have detected that something was not right and have called in the research company for review.”
“It wasn’t intentional, but we were worried about the strange sales distribution,” the Korea Venture Business Association said. “We’ll reconsider if the sample of 2,000 companies can represent over 30,000 companies.”
This report on venture companies was not the only case of inaccurate statistics. The staff of the Korea Small Business Institute and Korea Federation of Small and Medium-Size Enterprises often say they have a hard time researching because there is not enough data on sales revenue. “The National Tax Service does not cooperate, and many of the numbers in data from Statistics Korea are masked. So it is hard to provide accurate statistics.”
Just like all statistics, government statistics should be reliable. They have to be accurate and should be free of distortion or errors. Once trust in the data is lost, policies made based on them, as well as the statistics themselves, are not effective.
The Small and Medium Business Administration should improve its statistical research methods. It needs to reconsider if its existing methods actually reflect the overall situation of small and medium-size enterprises and venture companies. For more accurate statistics, it needs the cooperation of the National Tax Service and Statistics Korea. Only then can relevant small and medium-size company and venture company policies be drafted.
by Kim Tae-yun, Business news writer at the JoongAng Ilbo