‘Born global start-ups’ hold the key
Korea’s exports are struggling due to the slowdown of Chinese economic growth, a global economic slump and low oil prices. But the exports of small and medium-sized companies are going well. The portion of exports of small and medium-sized economies was 35.9 percent in 2015, but is growing by 1 or 2 percent every year. Small and medium-sized businesses continue to make efforts to expand overseas markets, and the government is promoting the globalization of small businesses.
However, since small and medium-sized companies make up 99 percent of all business and 88 percent of employment, there is great room for expansion in exports. We need to pay attention to the start-ups that have successfully advanced to overseas market. While only 2 percent of start-ups expand overseas, they have achieved a lot. From 2011, the Small and Medium Businesses Administration assisted global start-ups for 193 companies for five years, and the 12.2 billion won ($11 million) in total assistance led to 54.9 billion won in foreign investment, 91 overseas offices, 70.4 billion won in revenue and 425 jobs. It shows the possibility that the globalization of start-ups could be successful.
Start-up companies are limited to make consistent growth within the domestic market. Now, global expansion is the answer to successful start-ups. It is more effective for a “born global start-up” to make overseas expansion as it would set the direction internationally from the beginning.
According to Eurofound’s research, the born global start-ups make twice more jobs, are 40 percent more sustainable and get 21 percent more investment than the companies that gradually pursue overseas expansion.
The government is also promoting born global start-ups to help companies target the global market from the beginning. Recently, the Korean and French governments signed a start-up exchange program in France on June 2. The exchange program is between Korea’s Tips Town and France’s EuraTech and Paris&Co. In the pilot program, a five-member technology start-up team from each country will visit the partner country. The exchange program is to be expanded to other countries. The start-ups by young Koreans with innovative technologies and ideas can blossom in the world. The global market of 5 billion people in the countries that Korea has made free trade agreements with would be the business domain for young Korean entrepreneurs.