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South Korea Small and Medium-Sized Businesses
Small and medium-sized businesses--generally those with less
than 400 employees--accounted for US$11 billion, or 32 percent,
of South Korea's exports in 1986. By 1987 these businesses
generated an estimated US$14 billion, but the export percentage
dropped to 30 percent as large automobile and electronics groups
led export growth. Small and medium-sized businesses contributed
38.9 percent to the GNP in 1986 when calculated on a value-added
basis.
Many of South Korea's smaller firms manufacture specialized
parts or equipment for the larger chaebol. As is the case
with keiretsu in Japan, many of the chaebol in
South Korea assemble and market goods under their own brandnames,
but rely on smaller support firms to manufacture most of the
individual parts. Wages are often lower in the smaller firms than
at the chaebol, and working conditions often are worse.
Starting in 1983, Seoul selected a number of the more
promising smaller firms to receive special government assistance.
These businesses were eligible for a number of tax breaks, help
in
securing financing, and consultations and technical education
from the Ministry of Trade and Industry. Small businesses were
central to the government's policy of producing more
sophisticated technology locally; additionally, they were
critical to the government's strategy of encouraging regional
development away from the overcrowded area around Seoul. In 1989
the government announced a plan to spend billions of won to help
small and medium-sized industries seek structural improvements so
that they could move away from labor-intensive production in
favor of technology-intensive production.
Data as of June 1990
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