KITA News and Reports
  • 49% of Small and Medium Exporters with Overseas Production Consider Expansion of Overseas Manufactur
    2017-09-04

    49% of Small and Medium Exporters with Overseas Production Consider Expansion of Overseas Manufacturing

     

    -      Most exporters depend on face-to-face contact for overseas marketing,

    only 12.4% utilizes  e-commerce    -

     

    -  Small and medium-sized exporters need to work on price and marketing competitiveness   -

     

     

     

    While approximately 49 percent of small and medium-sized exporters with overseas production bases is considering expanding additional overseas production, only 4.7 percent is planning reshoring which brings overseas manufacturing back to Korea. Therefore, it is necessary to work on the measures to revitalize the domestic economy as well as create jobs through the promotion of reshoring, including incentive expansion.

     

     

    According to a report titled 2017 Survey on Competitiveness of Small and Medium-sized Exporters issued by the Institute for International Trade (President, Shin Seung-kwan) of the Korea International Trade Association (KITA), 25 percent of the 1,015 small and medium-sized exporters with self-manufacturing facilities has overseas production facilities and manufactures an average of 32 percent of their sales from the overseas factories. The larger companies or the companies with bigger export volume have more possibilities of having overseas production bases. Those companies are willing to expand their overseas production additionally for the purpose of further reduction of production cost (45%) and fast response to the changes in local markets (35%).

     

    For the overseas marketing, the small and medium-sized exporters mainly depend on face-to-face contact by participating in the international exhibitions or directly visiting their customers. In addition, 65 percent of the exporting companies are not utilizing SNS channels for the overseas marketing. Only 12.4 percent of the exporters were using e-commerce. Most of the exporters major e-commerce platform is their own website (48.8%), and only a few companies are utilizing the popular global platforms (29.1%) or the platforms of the export destinations (14%).

     

    In addition, it is analyzed that the small and medium-sized export companies are not securing competitive advantage over the leading competitors (100 points) as their level of competitiveness in the major export market was evaluated at 96.1 points. The small and medium-sized exporters have a competitive edge in terms of quality, design and service, with the scores of over 100. However, their price competitiveness and the competitiveness in overseas marketing and sales were 97.4 points and 93.9 points, respectively. In order to overcome these problems and to strengthen export competitiveness, the small and medium-sized export companies appear to be the most active in improving cost competitiveness through cost reduction.

     

     

    On the other hand, it appears that the small and medium-sized companies are highly motivated to expand their exports through the innovation of products as 48.3 percent of the exporters are investing more than 10 percent of their sales in research and development, and 64.9 percent of the companies are planning to expand their investment in the future. Moreover, 53.9 percent of the small and medium-sized companies is already working on new businesses and 30.5 percent is planning to start new businesses in order to secure the future revenue sources. It is obvious that the small and medium sized companies are exerting efforts to prepare practical measures by themselves as 71.2 percent of the exporters has already secured future revenue sources.

     

     

    Jang Hyun-sook, a researcher at the Institute for International Trade, noted New exporters with export experience of less than 3 years have strong willingness to export and are interested in innovation and improvement of competitiveness. The researcher continued It is expected that those companies will be able to secure competitiveness effectively, if concentrated supports are provided for them.

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