Polarization Among SMEs... Clear Recovery Only in Advanced Manufacturing and Capital Region

Jungjinkong, Q1 Management Trend Survey
Chemical Engineering, Information, Distribution 'Export Increase' Responses
"Regional and Industry Gaps... Need for Customized Support"

[Asia Economy Reporter Kim Bo-kyung] As the COVID-19 pandemic accelerates the transition to a contactless and digital economy, polarization is becoming evident in the small and medium-sized enterprise (SME) sector. While advanced manufacturing industries such as information processing and electrical/electronics experienced a slight decline in sales, traditional manufacturing saw a much larger decrease. This trend was clearly reflected in export performance, with a significant gap between the Seoul metropolitan area and non-metropolitan regions.

On the 6th, the Small and Medium Business Corporation (SBC) announced the results of a survey conducted in February on 606 SMEs regarding their business trends in the first quarter of this year. Overall business conditions, including sales, exports, and employment as perceived by companies, showed recovery compared to the fourth quarter of last year, but differences by industry were pronounced.

In the first quarter, 7 out of 10 SMEs expected exports to decrease compared to the same period last year, with an average decline rate of 12.9%. Among them, traditional manufacturing respondents anticipated a 16.2% decrease in exports compared to the same period last year, whereas advanced manufacturing expected a 33.1% increase. The overall proportion of respondents expecting an 'increase in exports' was 11.9%.

By industry, the order was chemical engineering (24.1%), information (18.2%), distribution (16.7%), and electrical/electronics (14.3%). This was mainly due to increased demand in information and communication technology (IT) and security industries, as well as increased export volumes driven by secondary batteries and new car development.

Differences were also notable in export forecasts by region. While Seoul respondents expected an 8.7% increase in exports compared to the same period last year, non-metropolitan areas such as Gangwon (-40%), Daegu and Gyeongbuk (-27.2%), and Daejeon and Chungcheong (-19.2%) anticipated export declines.

Due to the prolonged COVID-19 situation, first-quarter sales also varied significantly by industry. 71.1% of SMEs reported a decrease in sales compared to the same period last year, with an average decline of 14.5%. Sales in contactless industries such as information processing (-3.4%) and electrical/electronics (-4.6%) were relatively stable, but traditional manufacturing sectors like textiles (-29.1%), food (-23.8%), and metals (-18.3%) exceeded the overall average decline rate.

Kim Hak-do, Chairman of SBC, stated, "Although the economy is gradually improving compared to the same period last year, there are disparities by region and industry, so tailored policy support segmented by industry is necessary."

Meanwhile, SMEs preferred SBC policy funds the most when securing additional financing, citing management difficulty relief expenses (55.0%), research and development investment (15.1%), and export-related costs (5.5%) as the main uses of policy funds.

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