As the global business environment changes due to the 4th Industrial Revolution and COVID-19, the structures of industries and markets are rapidly changing. Thus, the role of small and medium-sized venture companies (SMEs), the backbone of the Korean economy, is becoming more important.

The total exports of all Korean companies in 2020 amounted to $512.8 billion, down 5.4 percent from $542.2 billion last year due to the effects of the COVID-19 pandemic. On the other hand, the total exports of SMEs in the same year amounted to $10.8 billion, putting up a good fight, considering that the previous year’s performance was $10.9 billion.

The reason why the exports of smaller companies were able to achieve good performance despite the difficulties of the pandemic crisis is that excellent technology-based products led SME exports.

In particular, exports of self-test diagnostic kits have surged year-on-year, reaching 179 countries. SMEs’ share of total exports was the highest in three years (17.3 percent in 2018, 18.6 percent in 2019, 19.6 percent in 2020).

Korea’s SMEs, based on their excellent technology, turned the crisis into an opportunity, driving exports through active research and development and setting global standards. The role and status of SMEs are increasing in Korea’s export-oriented economic and industrial structure.

An environment should be formed so that Korea’s promising SMEs, the so-called “9983” (99 percent of the total number of businesses and 83 percent of the total number of workers), find export opportunities through overseas expansion and use exports as opportunities.

Thus, it is time to expand support for entering overseas markets, such as strengthening global networks and monitoring risk factors in entering overseas markets.

Efforts to support overseas expansion in 2020

The Korea Technology and Information Promotion Agency (TIPA) started to actively strengthen global cooperation last year, operating support systems including a global cooperation department.

First of all, TIPA has newly established its Overseas Source Technology Commercialization Technology Development Project to help our SMEs to develop follow-up products by strengthening the technology cooperation system with Russia and implementing Russian technologies. Especially, through cooperation with commercialization support agencies like the Korea-Russia innovation center, TIPA has laid the foundation for technological cooperation, such as supporting communication between Korea and Russia and solving problems that may arise while implementing Russian technologies.

In addition, TIPA is operating various business projects, such as establishing cooperative networks among international related agencies and hosting overseas technology exchange consultations and seminars to promote the support for overseas expansion and strengthen the global networking of SMEs

Since last year, through “Convergence Technology Exchange Promotion project” (overseas technology exchange), TIPA has discovered new countries to exchange technologies with, with an emphasis on emerging markets with a high demand for cooperating with Korean SMEs, such as Vietnam. Also, for firms that participated in R&D for overseas technology cooperation and exports, TIPA has supported finding and diagnosing excellent customized technologies.

Support for overseas expansion in 2021

In order to further strengthen the supporting ecosystem for SMEs to enter global markets this year, TIPA is planning on extending the operation of programs for SMEs’ overseas technology exchanges and overseas expansion and strengthening the system management through our Innovation Bridge strategy, which intends to enhance the connections and cooperation between innovation leaders.

First, centered on TIPA, we are strengthening industry-university-institute cooperation.

This February, TIPA launched the Global Technology Cooperation Project Special Committee and is operating a policy promotion control tower for smooth promotion of the global technology cooperation project for SMEs.

The committee consists of nine experts from various fields, including related public institutions, academia, and government-funded research institutes, as well as experts who have worked for global cooperative organizations, such as KOTRA, or have a lot of experience in related fields.
Second, TIPA is further strengthening its support system from “start up” to “scale up” of small and medium-sized venture firms.

To this end, TIPA supports the global-level R&D of startups that are less than a year old and have a high growth potential in overseas markets, and newly supports the Global Start-up Technology Development project (with up to 400 million won over two years) to support Korean-type global start-ups with technologies that have good export prospects.

This is a support program for Born Global SMEs -- high value-added business, such as a business that are created to enter the overseas market from the outset.

In particular, TIPA plans to fast track technology development from the starting stage to discover global small hidden champion firms and nurture companies that have the potential to become “unicorns” – startups that go on to achieve valuations of over $1 billion. These companies will be central to Korea becoming one of the four major export powers in 2030, supporting consultations by experts in exports for commercialization support and strengthening follow-up support after the export support program.

Third, TIPA does not simply stop at supporting R&D, but strengthens support in a package format that connects global expansion and commercialization.

This April, TIPA signed an MOU with the Public Procurement Service to expand the designation of G-Pass (Government Performance ASSured) backing for SMEs with their products designated as products of innovation through R&D support. TIPA is also planning to strengthen its support, including development support for acquiring overseas certifications and standards and discovering overseas sources of demand.

It is expected that the follow-up support for commercialization, extending from domestic procurement to overseas exports, will strengthen further after R&D through overseas procurement markets support for innovative procurement firms with excellent technologies.

Specifically, TIPA gives additional points to G-Pass firms when evaluating for “Overseas Certification/Standard appropriate product technology development project” (Up to one year, 150 million won) to help the firms meet the certification requirements and standards of each country, which are prerequisites for entering those markets. For the selected firms, TIPA helps them to improve their export competitiveness through customized technology development support from the product planning stage.

In the second half of this year, TIPA is planning to focus on discovering leading examples, such as by creating an organization for entering the American procurement market.

Fourth, it is necessary to establish a base for overseas expansion so that domestic small and medium-sized firms can grow into global unicorn firms and lay foundation for vitalizing the exchange and expansion in the overseas market, including providing cooperative networks at home and abroad.

This May, TIPA plans to work with the Korea SMEs and Startups Agency to boost the exports of technologies through matching and linking with overseas businesses that have a demand for the Korean firms’ technology. As for firms promoting long-term projects in need of localization, TIPA is planning on strengthening support for promoting global commercialization and technology export, such as export incubators.

By smoothly implementing new SMEs global support programs this year, TIPA will establish an environment where SMEs can easily take on the challenge of overseas expansion, and continue to play the role of an innovation bridge to connect SMEs R&D and commercialization support for global expansion.

The support for SMEs’ global expansion also needs to be approached in a form of an ecosystem support as well. In Post-Corona era, SMEs with a global capability will drive rapid growth as global unicorns. It is TIPA’s task to focus its policy capabilities on growing domestic SMEs into global hidden champion firms by establishing an ecosystem where SMEs can challenge themselves for overseas expansion.

By Lee Jae-hong
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The writer is the president of the Korea Technology and Information Promotion Agency. The views reflected in the article are his own. --Ed.