Trend expected to follow in U.S. on back of FTA


Korea’s long-standing economic landscape, in which big conglomerates have been the main drivers of export growth, appears to be gradually changing as smaller firms contribute more to increasing Korea’s outbound shipments.

About 83,000 second and third-tier Korean suppliers and manufacturers, with fewer than 300 employees and capital of less than 8 billion won ($7 million), exported goods worth some $9.6 billion to Europe in 2011, according to the Small & Medium Business Administration.

This is up about 19 percent from 2010 when SMEs exported about $8 billion worth of shipments to Europe, and the growth is higher than the 16 percent increase Korea achieved in worldwide exports last year.

Despite the economic downturn in Europe, an SMBA official said the free trade pact with the European Union has sustained Korean exports through greater price competitiveness of SME goods, following the immediate removal of tariffs especially on auto parts, Korea’s No. 1 export item to Europe.

The official said that SMEs have “steadily” become part of the driving force behind the country’s export growth to Europe over the years, and this momentum is expected to follow in the U.S. in the near future backed by the Korea-U.S. Free Trade Agreement that went effect on March 15.

Korea’s exports to Europe reached $55.7 billion in total in 2011, while Korea imported $47.4 billion worth of goods from Europe, according to the Korea International Trade Association. Germany ranks 13th among Korea’s top export destinations, and is Europe’s biggest market for Korean exports, said a KITA official.

Exports of Korean industrial parts for automobiles and wireless communication devices were valued at $729 million and $321 million last year, respectively, making them the best selling items among European buyers.

SMEs also exported some $11 billion to the U.S in 2011, according to the SMBA official. Korea exported $56.2 billion in total to the U.S., Korea’s second largest export market following China, KITA data showed.

SMBA data excludes export figures from small and medium-size companies that are part of or affiliated with conglomerates.

By Park Hyong-ki (hkp@heraldcorp.com)