40.8% of Small and Medium Enterprises in Changwon Undergo 'Business Transformation'

Changwon Chamber of Commerce and Industry Conducts Survey on 120 Companies

Gyeongnam Changwon Chamber of Commerce and Industry. / Photo by Se-ryeong Lee ryeong@

[Asia Economy Yeongnam Reporting Headquarters Reporter Lee Seryeong] The Changwon Chamber of Commerce and Industry in Gyeongnam announced the results of a survey on business transformation among small and medium-sized enterprises (SMEs) in the Changwon area.

The Changwon Chamber conducted the survey from August 1 to 19, targeting 120 local SMEs.

According to the Chamber, business transformation such as industry or item switching and addition is considered one of the execution strategies for companies amid the rapid changes in the industrial environment.

It is gaining attention as an important solution for corporate survival and maintaining competitiveness, and the government is also preparing support measures accordingly. Therefore, the Changwon Chamber conducted this survey to understand the actual conditions of local companies.

The Chamber first asked companies in the Changwon area about their plans for business transformation.

According to the Chamber, 38.3% are preparing for transformation or addition, 2.5% have already undergone transformation or addition, and 40.8% responded that they are either preparing or proceeding with business transformation.

Table showing the results of the investigation into the reasons for the business transition decision.

The reasons for undertaking business transformation were as follows: seeking opportunities for the future 30.9%, diversification of related industries 25.9%, decline phase of main product markets 21.0%, responding to client demand 11.1%, commercialization driven by technology development 8.6%, and business expansion through mergers and acquisitions 2.5%.

The reasons for not pursuing business transformation were lack of professional personnel and technology at 37.6%, lack of information on promising industries (items) at 23.9%, lack of funding capability at 12.8%, lack of innovation will at 7.3%, and lack of market analysis capability at 4.6%.

The Chamber reported that ▲profitability of the current business model ▲market competitiveness of the current business model ▲progressive corporate culture ▲number of employees ▲need for business transformation were identified as factors influencing the recognition of the necessity for business transformation.

Analyzing the causal relationships of each factor, it was explained that the more a company evaluates its business model as having low profitability, and conversely, the more it is assessed as having a progressive corporate culture, the greater the recognition of the need for business transformation.

It was added that there was no particular correlation with the level of competitiveness in existing markets or company size.

A Chamber official said, “It is generally inferable that low profitability of the current business model leads to a sense of crisis, prompting the recognition of the need for business transformation,” and added, “Companies with a corporate culture accustomed to change and challenge tend to pay more attention to business transformation rather than strengthening the competitiveness of existing business models for stability.”

A table showing industry-specific perceptions of profitability.

Through profitability evaluation by industry, the Chamber inferred the intention for business transformation, finding that all industries rated below the benchmark score of 4 points, with the automobile parts industry at 3.19 points and metal processing at 3.49 points being the lowest.

Next were electrical and electronics at 3.51 points, machinery at 3.68 points, and other industries at 3.71 points.

Among profitability evaluations, automobile parts showed a very low score of 2.31 points in the future profitability category compared to the present.

A table showing industry-specific perceptions of profitability and progressive corporate culture.

In the evaluation of progressive corporate culture, metal processing scored 5.25 points, automobile parts 5.14 points, both above the average of 5.12 points, while other industries scored 5.13 points, machinery 5.10 points, and electrical and electronics 4.94 points.

The Chamber compared and analyzed the perceived necessary support areas between companies preparing or undergoing business transformation and those not doing so.

The analysis showed that companies preparing or implementing business transformation or actual demanders rated the importance of ▲expansion of support targets ▲ease of applying for support ▲tax benefits ▲professional consulting significantly higher than companies not involved in business transformation.

A Changwon Chamber official said, “Current business transformation support projects have raised issues such as limitations on the scope and duration of support targets, lack of reflection of the diversifying industrial structure, and insufficient diversity of support projects. Therefore, it is necessary to relax conditions for receiving business support, such as the proportion of transformation industries and support targets.”

He added, “Most companies not pursuing business transformation cite lack of professional personnel and information as reasons,” emphasizing, “It is necessary to expand professional consulting projects that can achieve the most advantageous business transformation for individual workplaces.”

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