The worst economic crisis since the Great Depression has caused many negative economic effects such as negative economic growth, higher unemployment rates, and more bankruptcy for small and mid-size companies. The government has tried to put more liquidity into the market to save companies and revive the economy. As a result, the declining economy is slowly recovering. According to President Park Chan-hwang of the Dae Han Economic Research Institute, however, the end of the dark tunnel is not here yet. President Park discussed the survival strategy and establishment of a risk management system for small and medium sized companies at the recent International Conference.
“Korean small and mid-size companies are experiencing the economic recession, which is totally different from the currency crisis in 1998,” Mr. Park continued, “In order to lead the new era of revolution facing new challenges, small and mid-size companies need new business strategies, financial stability, and innovative technologies to survive in the changing world. The companies have to focus on green environmental technology and related product development.”
During an economic crisis, small and mid-size companies require a conservative approach in business until the economy is completely recovered because the business for small and mid-size companies could immediately contract as the companies try to secure high liquidity or the government starts its exit strategy.
Park emphasized, “Small and mid-size companies need to invest and develop products and services in the area where specialized skills are needed such as technology convergence or cultural content businesses. New revolutionary technologies developed through engineering skills and know-how have to be patented for intellectual property protection.”
The world’s economy is continuously changing and small and mid-size companies need different strategies to react and adopt to the change. Currently, many manufacturing businesses co-exist. However, due to modulation and smaller parts requirements, only specialized manufacturers have survived to monopolize the market. The market for small and mid-size companies is shrinking and survival strategies are necessary.
“The electronic parts industry is growing quickly and consumers have more interests in new products and new design. Specialized Italian companies are leading the fashion market in the world. The trend has to be observed closely,” said Park, “Small and mid-size companies need to invest and put more effort toward producing a revolutionary convergence product like Apple.”
In a global society, businesses with great potential and future are waiting to be found and developed. Also, there is always room for businesses expansion in the high growth field. The new strategy raises the competitiveness in the market and potential for development.
Park mentioned, “For Green Growth, more environmental friendly businesses have to be developed. With Green industry and Green technology improvement, a strategy for more investment in new industry is needed.”
The carbon labeling system showing carbon emission rates will start next year. The system will use Eco Efficiency Index, which evaluates the total resources used and pollution rate in the manufacturing process. The policy, such as giving tax benefits to companies with high Eco Efficiency, could help to develop the industry. It is time for consumers and companies to work together to develop a new Green industry.
In a global society, small and mid-size companies have more opportunity to grow and expand in overseas markets. However, the whole industry is changing quickly and competition is tougher. The recent economic crisis has taught crucial lessons to many small and mid-size companies. Those companies need a new strategy to compete against other global companies and eventually to survive in a turbulent global economy.
