Unblocking Exports Blocked by COVID-19 with 'Digital' Solutions... Platform Integration and Fostering 200,000 SMEs

by Moon Chaeseok

Published 13 Nov.2020 11:00(KST)

Government Announces 'Trade Digital Transformation Measures' at 3rd Expanded Trade Strategy Adjustment Meeting
10 Years of $1 Trillion Trade Volume, 5 Years with Under 100,000 Export SMEs
"By 2030, Achieve $2 Trillion Trade and 200,000 Export SMEs"
Increase Export SMEs by 10,000 Annually and Create a 'Korean Amazon and Alibaba'

[Image source=AP Yonhap News]

[Asia Economy Reporter Moon Chaeseok] The government announced plans to increase South Korea's trade volume to the $2 trillion level by 2030 and nurture 200,000 export companies. To achieve this, it will fully digitize the trade structure and create a top 5 global platform by 2025.

On the 13th, the Ministry of Trade, Industry and Energy announced the 'Trade Digital Transformation Measures' at the 3rd Expanded Trade Strategy Coordination Meeting chaired by Prime Minister Chung Sye-kyun.

Minister Sung Yun-mo of the Ministry of Trade, Industry and Energy emphasized, "Structural innovation is necessary for our trade to leap forward into an era of 200,000 export companies and $2 trillion."

Minister Sung stressed, "Especially with the digitalization of trade and the expansion of the non-face-to-face economy due to COVID-19, it is necessary to create new export companies and markets and to upgrade product categories."

$1 trillion for 10 years and 100,000 SMEs for 5 years... $2 trillion and 200,000 companies in 10 years↑

Source: Office for Government Policy Coordination, Prime Minister's Secretariat

According to the government, South Korea's trade entered the $1 trillion mark in 2011 but growth stagnated for 10 years. The number of export SMEs surpassed 90,000 in 2016 but has not exceeded 100,000 since then.

This year, trade volume is likely to decline due to global demand contraction caused by COVID-19 and the US-China trade dispute. From the beginning of the year to October, it remained at $798.3 billion, which may result in poorer performance compared to last year's $1.0456 trillion.

The government plans a full-scale 'digital transformation' to change the 'game' of trade. The policy is to vigorously promote the 'export transformation of domestic SMEs.'

The goal is to increase the number of export SMEs from about 95,000 last year by nurturing 10,000 companies annually over 10 years, reaching 200,000 by 2030.

Through a pan-governmental joint effort, online marketing and rapid funding support of around 20 billion KRW will be provided to selected companies.

An official from the Ministry of Trade, Industry and Energy said, "Many SMEs face difficulties in exporting due to procedures and formalities. Some companies find it hard even to travel and conduct online consultations followed by virtual factory inspections."

He added, "If these companies gain online export experience and grow, nurturing 10,000 companies annually is not an unrealistic goal."

Fostering the world's 5th largest B2B platform by merging KOTRA, SBC, and KITA platforms

Source: Office for Government Policy Coordination, Prime Minister's Secretariat

The government expects that digitizing the trade structure will yield 'threefold benefits' by expanding the number and base of export SMEs, diversifying export items such as services and products, and pioneering online markets to overcome protectionism.

It identified platform construction as an urgent issue. By the first half of next year, it will integrate the three major B2B (business-to-business) platforms: KOTRA's 'BuyKorea,' Small and Medium Business Corporation's (SBC) 'GoBizKorea,' and Korea International Trade Association's (KITA) 'TradeKorea.'

By the first quarter of next year, product information and transaction support functions of the three platforms will be urgently revamped to enhance competitiveness. From the second half of next year, efforts will be made to enlarge the platform by strengthening company incentives and promotions to increase participating companies.

Source: Ministry of Trade, Industry and Energy

The ultimate goal is to leap from 7th to 5th place globally by 2025.

An official from the Ministry of Trade, Industry and Energy explained, "As the online market grows, platforms have become a key factor determining competitiveness. Since KOTRA, SBC, and KITA's B2B platforms are highly fragmented and lack synergy, we decided to merge them."

He added, "Currently, Alibaba, Amazon Business, IndiaMART, TradeIndia, Global Sources, and TaiwanTrade rank above us. By linking the three platforms, we expect to surpass Global Sources and TaiwanTrade."

According to the government, the global e-commerce market size was $25.6 trillion in 2018, accounting for about 30% of the world's GDP. The US, China, and Japan account for 56%, with South Korea ranking 4th (market share 5.3%).

Establishing a 'Joint Korea Pavilion' on Amazon, Alibaba, and others by next year

Source: Office for Government Policy Coordination, Prime Minister's Secretariat

By the end of next year, a 'Joint Korea Pavilion' will be established on global B2B platforms such as Amazon and Alibaba to support online exports.

Permanent online exhibition halls by industry will be built and upgraded. Online permanent exhibition halls for 10 major manufacturing sectors including textiles, bio-health, electronics, smart homes, and robotics will be operated. These halls will serve as hubs for the 'Korea Electronics Show' scheduled for the 9th of next month.

Source: Office for Government Policy Coordination, Prime Minister's Secretariat

The plan is to develop seven major industrial exhibitions?bio-health, future cars, ICT, machinery, robotics, shipbuilding and marine industries?into world-class O2O (online-to-offline) exhibitions.

The export support system will be completely digitized. The entire export process will be digitalized by next year.

To this end, electronic trade system reform, electronic customs clearance and certification, and the establishment of non-face-to-face financial and legal services will be implemented.