[CEO Column] Growth of Small and Medium Companies, Development of Human Resource Must Come First /Lee Soo Tae

The basic strength of Korean economy, which covers 99% of all companies and creates 88% of all jobs

People are the root of a company, self-helping effort is necessary

After the 6•4 regional election last month, the local government head who will lead our region for the next 4 years was elected. Foremost, as a local businessman, I’d like to congratulate him. Right after he was elected to office and before he officially took office on July 1st, Mayor Seo made swift actions related to jobs by  launching a Good Company Invitational Preparation Committee Based on the phrase ‘安居樂業’, which means that ‘citizens will live without worries and joyfully engage in their trade’ and is also his political philosophy, his promise to create 200,000 jobs during his term is something I look forward to.

 If we look back at the 70 years after we restored independence, Korea has achieved a fast-paced economic growth that goes beyond imagination. During President Park Chung-hee’s regime, our main goal was freedom from poverty, and since strong leadership by the government was emphasized before the $10,000 national income era, problems like close relationship between politics and businesses occurred. However, we cannot deny that it secured competitiveness in major industries such as electronics, automobile, steel, and ship manufacturing that made Korea the world’s 12th largest economic power and played a major role in creating private assets concentrated on large chaebols.

On the other hand, in the current $20,000 national income era where information is disseminated in real time, an economical structure led by small and medium companies is required. These companies, commonly known as ‘9988’, are transforming into global companies and becoming the foundation of the economy. Small and medium companies consist 99% of all companies in Korea, and create 88% of all occupations. Along with large corporates, the basic strength that pulls Korea’s economy comes from small and medium companies. Because of this, at a time when we are on the verge of a $30,000, $40,000 national income era, we must let small companies with superior technology develop into strong medium size companies.

 In order to nurture these excellent small companies into global hidden champion companies, the Small and Medium Business Administration’s ‘World Class 300 project’ completed the selection of 56 companies last month. 

Among the selected 56 companies, four were selected from Busan including my own company, and therefore, I feel extremely happy and also assume great responsibility.

The 100 companies that received support for the past three years established themselves as the centerpiece leading the Creative Economy by increasing 16.6% in revenue, 20.7% in exports, and 9.5% in employment on average compared to before being selected by the World Class 300,  thanks to their own efforts and the help of related organizations.

While the significance of excellent small companies is rising every day, developing sturdy small companies require ‘core talent’ that fit their needs and ambition. While there are various reasons for global leading companies like Google, Samsung to have risen to the world’s best, one of them was clearly the management philosophy of valuing talent.
Great companies regard securing core talents as a type of war and put desperate effort. Small companies must also possess the mindset that people are the root of the company and go all out on developing human resource.

 It is most important for small and medium companies to train ‘small company talent’ by developing internal workforce. As a CEO of a small company myself, I feel much difficulties in recruiting talent. However, compared to large corporates, a small company must focus on putting self-helping effort by placing deep interest in excellent talent and investing in their training in order to overcome the poor employment environment. A company must lure the best talent and sufficiently utilize them to contribute to the organization by developing human resources that play the role of a 'talent magnet'. Especially, training the core workforce who are 'talent magnets' is extremely pressing in order to resolve regional small companies due to losing regional talent to large corporates and the capital area. Young people must also share the spirit of ‘entrepreneurship’ with challenge and innovation with the executives at small companies. They must understand that it can be stabler than large corporates and that they can lead societal development If they lead the company with innovation.

To do so, it is important to change the society’s overall perspective on small and medium companies. Through this, companies with excellent technology will make profits, jobs will increase, the economy will recover, the birth rate will rise, and consumption will vitalize, creating a virtuous cycle. Also, active small and medium company support policies by the government and relevant organizations, small companies will become medium size company, medium size company will become big corporates. To realize such  'growth ladder', an ecosystem that is pro-business must be established to invite many companies with new growth factors. The time has changed and now, an open and flexible society employment system is being advanced through active regulation reforms. It is an era where the competitiveness of small and medium companies, as well as the outer regions, are becoming more and more important. High quality small companies must be developed to create quality jobs, and excellent small companies must have quality workforce to continuously grow and develop.

Chairman, Panasia

President, Busan Ulsan Technology Innovation Association