SMEs Proved to Be the Backbone of the Economy... K-Quarantine and Online Sales Boost Exports

SMEs' Exports Reach $100.8 Billion in 2020, Down 0.2% YoY...Strong Performance Amid Domestic and External Shocks
Ministry of SMEs and Startups Forecasts Continued Export Recovery This Year

Last year, exports from small and medium-sized enterprises amounted to 100.8 billion dollars, a 0.2% decrease compared to the previous year, maintaining the export scale of the previous year (100.9 billion dollars) despite the difficulties of COVID-19. It is evaluated that it played a supporting role for our economy despite domestic and international shocks. Export cargo transport vehicles are waiting at the Incheon International Airport cargo terminal.
[Photo by Yonhap News]

[Asia Economy Reporter Kim Jong-hwa] Despite the challenges posed by the COVID-19 pandemic last year, small and medium-sized enterprises (SMEs) played a crucial role as a pillar of our economy through their export performance.

According to the '2020 SME Export Trends and Characteristics' report released by the Ministry of SMEs and Startups on the 19th, SME exports amounted to $100.8 billion last year, a slight decrease of 0.2% compared to the previous year, maintaining export levels ($100.9 billion) despite the difficulties caused by COVID-19.

SME exports led South Korea's total exports, particularly driving the export rebound in the second half and the fourth quarter. Thanks to strong export performance, SMEs spearheaded the economic recovery in the third quarter, serving as a backbone for the economy amid domestic and international shocks.

SME Exports Show Recovery in Second Half, Record High in Fourth Quarter

Last year, exports by mid-sized and large companies decreased by 6.7%, resulting in an overall export decline of 5.4% including SMEs. By quarter, SME exports increased by 1.7% in Q1, dropped by 13.7% in Q2, rebounded by 3.6% in Q3, and rose by 7.9% in Q4, maintaining the previous year's level.

SME exports showed a clear recovery from the second half of the year, with a significant increase of 19.1% in September, followed by 12.1% and 14.0% growth in November and December, respectively. Notably, December exports reached a record monthly high of $10.59 billion since the compilation of SME export statistics, which helped the fourth quarter exports set a new record quarterly high of $28.8 billion. The previous monthly export record was $9.69 billion in September 2017, and the previous quarterly record was $27.3 billion in Q4 2016.

SMEs outperformed mid-sized and large companies, resulting in the highest share of total exports by SMEs in the past three years. Especially since August, when exports began to show a clear recovery, the share steadily increased, surpassing 20% in the fourth quarter. The SME export share was 17.4% in 2018, 18.6% in 2019, and 20.2% last year.

Surge in Exports of K-Quarantine Products

The driving forces behind the strong SME export performance amid COVID-19 challenges were the export growth of K-quarantine products centered on SMEs, promising non-face-to-face trend items related to the home economy, and robust online exports.

Among K-quarantine products, diagnostic kits were exported to 179 countries worldwide, with exports soaring by 2,989% compared to the previous year. Other precision chemical products (PCR method) and pharmaceuticals (rapid antigen method), which include diagnostic kits, ranked 7th and 9th among top SME export items, entering the top 10 for the first time and emerging as new export drivers for SMEs.

Promising non-face-to-face trend items such as digital equipment continued their strong performance, showing double-digit annual export growth and expansion. The global spread of K-beauty fueled by the Korean Wave and the worldwide semiconductor investment boom driven by the non-face-to-face economy contributed to diversifying SMEs' main export markets.

As the Korean Wave expanded beyond Asia to the world and new industries and products were exported mainly to North America and Europe, the traditional SME export market structure centered on developing countries like China and ASEAN also diversified. Looking at export shares by region, Asia's share decreased from 63.4% in 2019 to 61.2% last year, while North America increased from 12.6% to 13.7%, and Europe from 13.2% to 14.6%.

Online Exports More Than Double

Online exports more than doubled in scale compared to the previous year, expanding the base of SME exports by increasing related export companies and employment, indicating even greater growth potential in the future.

SME online exports have been rapidly increasing, from 17.8% in 2018 to 46.0% in 2019, and 106.3% last year. The number of online export companies rose from 4,303 in 2019 to 7,364 last year, and new sellers surged from 8,497 in 2019 to 29,691 last year.

The Ministry of SMEs and Startups expects the strong export recovery trend observed in the second half of last year to continue this year. With a high likelihood of global economic recovery, a rebound in SME key items that struggled last year (such as auto parts) is anticipated, and demand for COVID-related promising items including diagnostic kits is expected to persist for some time.

Minister Park Young-sun of the Ministry of SMEs and Startups stated, "Despite the unprecedented crisis of COVID-19, we achieved the significant accomplishment of maintaining last year's export scale. We will actively respond to the difficulties faced by SMEs, whose role and status in our economy are increasing, and provide full support to leverage new trends as opportunities to expand exports."

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