[Square] Innovative Procurement, the Shortcut to Overseas Procurement Markets

Kim Jung-woo, Administrator of the Public Procurement Service. Photo by Public Procurement Service

The global economy, where tangible and intangible economic values are generated through international trade, serves as a compass that determines the advancement or decline of national economies.

The Fourth Industrial Revolution, centered on convergence and fusion, and the non-face-to-face economy triggered by the COVID-19 pandemic are breaking down barriers between online and offline, signaling fiercer trade competition among countries.

In particular, for the Korean economy, which is highly dependent on foreign trade, the rapidly restructuring overseas markets are expected to become new opportunities and challenges for economic growth.

In this context, Korea demonstrated its resilience this year amid the COVID-19 pandemic through K-quarantine and the Korea premium, suggesting the possibility of gaining an advantage in the era of trade competition. It is expected that next year, with the rapid growth of nine new export engines such as biohealth, robotics, and secondary batteries, the Korean economy will be able to take a leap forward.

The Public Procurement Service (PPS) is also focusing on overseas markets with significant economic ripple effects and plans to play a role as a link to domestic economic growth through systematic support of central procurement and strategic overseas procurement policies.

The overseas procurement market is enormous, reaching up to 10 trillion dollars. In contrast, the domestic procurement market is saturated, with small and medium-sized enterprises (SMEs) accounting for up to 80% of orders. This is why SMEs and venture companies must expand beyond the domestic market and enter overseas markets to establish new growth foundations.

Considering these conditions, the PPS is currently striving to support Korean companies with innovative technologies to overcome entry barriers in overseas markets and take off on the global stage.

One representative example is the annual designation of promising companies for overseas procurement market entry (G-PASS), which are then invited to participate in overseas public procurement exhibitions and export consultation meetings. G-PASS is a system where the PPS selects and supports SMEs with high potential for overseas procurement market entry to strategically target the 6.2 trillion dollar overseas government procurement market.

For instance, the PPS helps G-PASS companies enter key countries by continent such as China, Vietnam, Indonesia, Russia, UAE, the United States, Turkey, the UN, India, ODA, Australia, Saudi Arabia, Myanmar, and Uzbekistan. G-PASS companies have the advantage of easier business activities in partner countries since they have already been recognized for their technology and reliability by the government through domestic government procurement.

The PPS also provides overseas bidding information from about 190 countries to G-PASS companies, enhancing domestic companies' accessibility to overseas markets. Based on this, 832 G-PASS companies achieved export results of 600 million dollars as of the end of last month, proudly expanding new growth avenues.

However, government support alone has limitations in enabling domestic companies to enter overseas markets. The functionality, technology, and innovativeness of products must be prerequisites. For the same reason, the PPS seeks ways for excellent domestic companies to enter overseas markets through innovative procurement.

Innovative procurement supports the commercialization of innovative products such as ideas and prototypes not yet available on the market by leveraging massive public purchasing power, with public institutions purchasing first to drive technological innovation.

Ultimately, it can be seen as a core public procurement policy that drives economic growth. Since the government directly recognizes the excellence of innovative products, they are sufficiently competitive in overseas markets. However, the achievements of innovative procurement should be regarded as an intermediate stop within the country, with the final destination set as the overseas procurement market.

To this end, the PPS will combine the technological capabilities of innovative products discovered through innovative procurement with various overseas expansion support projects such as G-PASS companies to secure sales channels for SMEs and venture companies and create synergy effects for the development of the Korean economy.

Furthermore, the PPS will actively pursue administrative measures to ensure that overseas market entry through central procurement capabilities becomes a strategic foothold for innovative companies to enter overseas procurement markets, concentrating administrative efforts so that domestic innovative products can be recognized in the global procurement market.

This content was produced with the assistance of AI translation services.