Products by large companies such as Samsung and Hyundai are crucial to keeping South Korea’s economy afloat however the country’s small and medium-sized businesses may be even more important. These smaller businesses provide more than 80 percent of the country’s jobs but are beginning to feel the pressure from Korea’s big conglomerates. The number of smaller firms competing in various sectors has been reduced to just a handful because of the difficulties of earning a profit in the face of big company demands. This is not the only concern for small-businesses in South Korea.
The downward price pressure on small-sized suppliers has contributed to strikes and worries about Korea’s domestic economy. This is critical at a time when South Korea needs to boost its domestic economy to offset jitters in the United States and European markets. Korea’s biggest companies now make up more than 70 percent of Korean exports and to some this is seen as a major problem. South Korea’s President Lee Myung-bak has spoken about the need to rebalance the economy. Experts now describe Korea as a “two-tier” economy, where the gap between the large conglomerates and their small to medium-sized suppliers is growing to the point where the export and domestic economies are at risk of being separated.
There are many ways to possibly solve this issue in South Korea but perhaps the most important is the creation of mutual partnerships between large and small companies. If this happens the larger businesses can maintain long-run stability and continue to earn profit while the small businesses can broaden their customer base in Korea allowing them to also generate revenue. This is easier said than done of course but given the importance of both these types of businesses in Korea, actions to ensure stability and equilibrium will soon have to be taken.