Martial Arts: "SMEs Face Export Competitiveness Disadvantages in Pricing and Marketing"

SME Export Competitiveness: 'Quality and Design' Advantage, 'Price and Marketing' Disadvantage
KITA Calls for Changing Perceptions of Innovation in SMEs and Expanding Government Support

Source=Korea International Trade Association

[Asia Economy Reporter Kim Pyeonghwa] Despite small and medium-sized enterprises (SMEs) achieving record-high export volumes in 2021, it has been revealed that the export competitiveness perceived by domestic companies still falls short of that of their competitors.

On the 6th, the Korea International Trade Association (KITA) International Trade and Commerce Research Institute conducted a survey on export competitiveness targeting 1,025 SMEs with export performance exceeding $500,000 (68.6 million KRW) in 2021. The results showed that the companies’ overall competitiveness scored 98.3, slightly lagging behind leading competitors. Overall competitiveness refers to the level of competitiveness a company self-assesses relative to the leading competitor’s competitiveness, which is set at 100 in their main export markets. Companies with over 16 years of export experience also rated their overall competitiveness low at 97.4. This indicates that regardless of experience, domestic SMEs face difficulties in securing a competitive edge.

By category, domestic companies showed strengths in ▲quality (108.9), ▲design (104.8), and ▲service (105.2). However, ▲price (95.6) and ▲sales and marketing (99.0) competitiveness were somewhat lacking.

Regarding future exports, 71.8% of companies predicted that exports would remain similar to last year or decrease. The main reasons cited for expected export deterioration were supply shortages and price increases of raw and subsidiary materials (66.6%) and reduced demand due to global economic slowdown (58.9%).

Meanwhile, domestic SMEs are making multifaceted efforts to gain a competitive advantage amid worsening export conditions. More than half of the companies with overseas production bases actively pursue globalization through expanding overseas production and developing sales channels. Companies holding or applying for patents accounted for 57.4%, and 47.5% of companies plan to increase investment in research and development (R&D), indicating ongoing investment in innovation. To compensate for lagging price and marketing competitiveness compared to competitors, efforts are also being made to reduce costs and strengthen distribution and sales channels.

Although 76% responded that they are currently pursuing or planning new business ventures, the proportion of companies without new business plans increased with longer export experience, showing a passive attitude toward new business initiatives. The report advised, “For strengthening SME export competitiveness in the future, a shift in SMEs’ awareness regarding the necessity of innovation must be prioritized.”

Researcher Kim Arin of KITA stated, “Since companies with long export experience also face difficulties in securing competitive advantages due to worsening external environments and regulatory barriers, the scope of government support, currently focused on export beginners, should be expanded and customized support should be provided according to company characteristics.”

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