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SMEs left out of Korea’s export rebound as chips, cars lead charge

 Containers are piled up for overseas shipment at a port in Busan, April 1. Yonhap

Small- and medium-sized enterprises (SMEs) have been sidelined in Korea’s recent rebound in exports as outbound shipments have mainly been fueled by large companies that make semiconductors, cars and ships, according to data and industry officials Wednesday.Fueled by a recovery in global demand, exports of chips and cars led the overall export growth, which broke a year-long losing streak in October 2023 and continued to rise for seven consecutive months through April, according to the Korea Customs Service (KCS).”Such an export revival is very encouraging for Korea’s export-dependent economy, but unfortunately, it overshadows the difficulty SMEs face in selling their products overseas,” Noh Mean-sun, a researcher at Korea Small Business Institute, said. “Under the circumstances, SMEs receive little attention and are often overlooked in the country’s recovery trajectory.”The researcher noted SMEs “showed hardly any presence” in the latest growth of exports and gross domestic product (GDP).Citing KCS data, he noted that SMEs’ exports from January to March rose 2.2 percent from the previous year, far lower than the 11.5 percent year-on-year gain displayed by conglomerates over the same period.During the first quarter, Korea posted a 1.3 percent quarter-on-quarter GDP growth, which beat all estimates and marked the sharpest expansion in more than two years.

Net exports, defined as the value of a country’s total exports minus the value of its total imports, contributed 0.6 percentage point to the GDP components in the first quarter.The contribution of net exports exceeded that of private spending and construction investment, each contributing 0.4 percentage point to GDP components in the first quarter.Exports, which rose 9.7 percent year-on-year to $220.1 billion from January to April, were primarily driven by large companies, as indicated by additional KCS data.Among the key items, semiconductors accounted for 18.6 percent of overall outbound shipments in the first four months of this year. The rate was up from 15.6 percent a year earlier and also neared an all-time high of 20.9 percent set in 2018.Automobile exports rose 10.3 percent year-on-year to $6.79 billion in April, surpassing the previous record of $6.53 billion posted in November 2023.”Given the fact that semiconductors are made by Samsung Electronics and SK hynix and that cars are made by Hyundai Motor, the government should note that positive data on the economy does not necessarily mean SMEs are benefitting from growth,” Noh said.The researcher stressed that SMEs made up as much as 40 percent of the country’s exports during their heyday, and helping them tackle slow growth in overseas sales is crucial.As a possible solution, he suggested diversifying export destinations beyond China, considering that SMEs, compared to conglomerates, are not successfully coping with the recent economic slump impacting the world’s second-largest 온라인카지노 economy.

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