Ministry of SMEs and Startups
The Ministry of SMEs and Startups is a government ministry of South Korea. It was established in July 2017 by the Moon Jae-in government. It succeeds the former Small and Medium Business Administration. Its headquarters are located in Sejong City, Sejong. As of February 2021, Lee Young, a member of the National Assembly and People Power Party, has been appointed as the South Korean Minister of SMEs and Startups.
Mission
The South Korean Ministry of SMEs and Startups is dedicated towards supporting the innovation, growth and security of small-to-medium sized and micro enterprises. It follows various policies to improve the conditions for small and medium-sized businesses. It aims to reduce barriers through preventing legislation that may put an excess or unreasonable burden on small and medium enterprises. It does this through identifying such regulations and difficulties that interfere with the success of SMEs and Micro-Enterprises and attempting to resolve them.The South Korean MSS also works to create a desirable business environment for SMEs and start-ups. In order to achieve this, the Ministry provides support for expanding the marketing structure for SME products through help with sales strategies, design development, etc. The Ministry also implements a public purchase program, which is intended to increase the amount of contracts signed between central and local governments, public corporations and institutions and SMEs. Furthermore, the Ministry provides growth support for tech startups, which includes a Tech Incubator Program for Start-ups that offers R&D funds, and assures that universities provide supportive infrastructures to students who consider creating their own startup. Additionally, the MSS implements policies that both help reduce the cost of failure and reorganise and rehabilitate SMEs.
The South Korean Ministry of SMEs and Startups also aims to promote shared growth between large companies and small and medium enterprises. For example, the Ministry implements the SME-suitable Industry Design Scheme which regulates entry of expansion of large enterprises. In order to achieve shared growth and create a sound business ecosystem, the Ministry works alongside a number of other ministries in order to lower taxes and ease regulations for start-up firms.
The MSS also helps to promote the overseas expansion of SMEs, as increased exports and domestic employment is heavily beneficial for their national economy. For example, the Ministry carries out the Export Voucher Programme which provides selected small and medium enterprises with support packages to aid in global expansion. Additionally, the Ministry offers a variety of online and offline programmes for SMEs wanting to expand into overseas markets.
The Ministry of SMEs and Startups has hosted COMEUP, a global startup event hosted in South Korea, since 2019. COMEUP 2020 focused on overcoming the impact COVID-19 had on businesses and hosted 59 Korean domestic startups and 61 overseas startups.
Furthermore, in order to improve the environment of traditional South Korean markets, the Ministry conducts fire safety inspections, aids in rehabilitation and provides shopping and delivery services to attract customers. Traditional markets are often encouraged by the MSS to remodel their layout, and receive support in improving facilities, rebuilding into more modern shopping sites and improving service quality. This support from the Ministry allows for traditional markets to flourish, attracting new customers and increasing customer retention.
Enterprises focusing on tech innovation are offered support through R&D cooperation networks between universities, research centres, and other businesses. The Ministry’s Technical Dispute Mediation/Arbitration Committee aids SMEs to build adequate security systems for protection of their technologies. The Ministry is one of the organisers of the K-Startup Grand Challenge, held in Panggyo Techno Valley, a Korean government initiative offering accelerations programs and networking opportunities to foreign startups that want to enter the Korean market.
Startup climate in South Korea
Reports show that Korea has become an attractive destination to international startups. In 2020, 2,648 overseas startups from 118 countries applied to participate in the K-Startup Grand Challenge, which showed an increase of 58% in comparison to application rates in 2019. South Korea has a strong domestic market with great purchasing power, making the country attractive to foreign entrepreneurs. According to the OECD, South Korea has the second-highest expenditures on R&D in the world, which is another pulling factor. Currently, small and medium-sized businesses account for 99% of all enterprises in South Korea, 88% of employment and 38% of national export.Laws surrounding SMEs in South Korea
Small and medium enterprises have played a fundamental role in South Korea’s rapid economic development, making up 99.9% percent of businesses in the country and employing nearly 88% of the workforce. However, due to the power of chaebols and the government’s tendency to focus resources on the development of chaebols internationally, policies to protect SMEs have, in the past, been lacking. This is now changing as the South Korean legal system is moving to promote and support SMEs in order to strengthen their economic role in the country’s development.On the official site of the Ministry of SMEs and Start-ups, some of the key laws surrounding SMEs and the purpose of these acts are listed as follows: