More Regulations as Companies Grow... Economic Groups Move to Overhaul Regressive System

Purpose: Fostering a "Korean OpenAI"
Growth-Oriented Corporate Ecosystem Task Force Launched

Economic organizations have joined forces to nurture superstar companies (high-growth enterprises) amid regulations that constrain corporate growth. Their aim is to encourage growth-oriented companies and bring attention to regulatory issues based on company size.

On August 5, the Korea Chamber of Commerce and Industry announced the launch of the "Growth-Oriented Corporate Ecosystem Task Force (TF)" in collaboration with the Federation of Korean Industries, the Korea Federation of SMEs, and others, to secure new growth momentum by fostering high-growth companies. With the reality of "0% growth" projections materializing, the initiative seeks to cultivate companies like OpenAI, which achieved a $100 billion valuation in just ten years. This is the first time that organizations representing the business community have voluntarily formed a TF for corporate growth.

Chamber of Commerce and Industry Building, Junggu, Seoul. Photo by Heejun Jang

They explained that this move was driven by a sense of urgency that a "growth mechanism" to encourage corporate expansion is desperately needed to reverse the low-growth trend, as Korea's economic growth rate remains stuck in the 0% range due to external uncertainties and the weakening of growth engines.

They assessed that the current corporate ecosystem has been emphasizing "protection over growth." Unlike the United States, where there are almost no differentiated regulations based on company size, in Korea, support decreases and regulations increase as companies grow from small to medium to large enterprises. These economic organizations analyzed that this has led to cases where companies avoid pursuing growth?referred to as the "Peter Pan syndrome"?or split their businesses to evade regulations.

In fact, the number of regulations by company size nearly triples from 57 to 183 when a company graduates from small to medium-sized enterprise status, and increases by 40% from 209 to 274 when moving from medium-sized to large enterprise. According to the 2023 Basic Statistics on Medium-Sized Enterprises, while 301 companies grew from small to medium-sized enterprises, 574 companies reverted from medium-sized back to small enterprises.

The "Growth-Oriented Corporate Ecosystem TF" plans to continue public discussion by presenting the need to redefine growth mechanisms for companies and by proposing concrete alternatives. The TF will select rapidly growing companies as exemplary cases, conduct research and surveys to maintain the corporate ecosystem, perform international comparisons, analyze regulatory environments, and work on improvement measures.

The organizations stated, "The elimination of differentiated regulations by company size to improve corporate productivity is also recommended by the OECD," and added, "As external uncertainties intensify due to global power competition, making it difficult to guarantee corporate growth, it is necessary to revise regressive regulations that companies inevitably face as they grow in size, in order to strengthen incentives for growth."

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