55% of SMEs in the Seoul Metropolitan Area Intend to Relocate to Provinces... Government Subsidies Most Preferred for Relocation

Jungjingong, Gyunhyeongwi, and Saengsanseongbu Announce Survey Results of 2,188 SMEs
Regional Economic Revitalization and Balanced Development Have Answers in SMEs

Small and Medium Business Corporation

[Asia Economy Reporter Kim Cheol-hyun] More than half (55%) of companies located in the Seoul metropolitan area have considered relocating to provincial areas. It was analyzed that to alleviate overpopulation in the metropolitan area and revitalize the regional economy through corporate relocation, it is necessary to create a regional startup ecosystem that considers overall corporate activities such as location, networks, and workforce.

The Small and Medium Business Corporation (Chairman Kim Hak-do, hereinafter referred to as SBC) announced this on the 2nd by publishing the 'KOSME Issue Focus,' which contains the analysis results and policy implications of the 'Survey on Discovering Regional Innovation Growth Engines for SMEs' conducted on 2,188 small and medium venture companies. This survey was jointly conducted by SBC, the Presidential Committee on Balanced National Development (Chairman Kim Sa-yeol), and the Korea Productivity Center (Chairman Ahn Wan-gi) to hear opinions from companies on regional relocation and activation of regional startups.

Specifically, small and medium enterprises considered 'location conditions of headquarters or factories (36.7%)' as the most important factor at the startup stage. The advantages of regional startups were cited as 'linkage with local ordering companies and partner organizations (35.1%),' while the disadvantages were 'difficulty in securing talent (38.8%)' and 'lack of infrastructure for corporate activities (15%).'

Among the responding companies, 55% had considered regional relocation, and the potential demand excluding companies that had already relocated reached 35.2%. Reasons for considering but not executing relocation included difficulty in linking with partner companies (39.2%), employee residence and children's education (38.9%), difficulty securing space (30.7%), and difficulty attracting talent (26.8%).

As incentives for regional relocation, 42.5% preferred government subsidies and other relocation support funds the most, followed by support for labor costs of hired personnel at 18.5%. 85.9% of responding companies said they would hire more personnel if they relocated to provincial areas. When considering relocation, headquarters prioritized securing business sites (50.2%), transportation and logistics environment (40.1%), and securing workforce (37.8%), while research institutes prioritized securing workforce (50.0%), securing business sites (34.9%), and residential conditions for employees (30.0%).

The preferred relocation regions for companies were Daejeon, Sejong, and Chungcheong (57.9%), Busan, Ulsan, and Gyeongnam (27.3%), Gwangju and Jeolla (16.2%), and Daegu and Gyeongbuk (14.0%). More than 8 out of 10 companies (84.2%) had a positive stance on linking their current business fields with regional characteristics. 88.6% expressed willingness to match with regional mid-sized companies, and 77.5% responded that networks among regional companies were helpful.

Through the report, SBC suggested that since the demand for regional relocation of SMEs has been confirmed, active regional corporate support policies that can realize this are necessary. Chairman Kim Hak-do stated, "Small and medium venture companies are the core growth engine leading innovation in the regional economy," and added, "SBC will take the lead in creating policy outcomes for the regional balanced New Deal by promoting projects to foster growth in regional key industries and supporting the relocation of youth startup companies from the demand-side perspective rather than the supplier-side."

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