Slowing South Korean Economy Threatens to Spark Crisis for SMEs

The South Korean government has attempted to remedy the problem but its roots are deep: the country’s powerful conglomerates and offshore competition are squeezing smaller employers, the Financial Times reported. “Although SMEs account for a small portion of the country’s GDP, their trouble has a big impact on the job market and consumption,” said Lee Sang-jae, an economist at Eugene Investment and Securities. Chinese competition is hollowing out vast tracts of industry that once girded South Korea’s export-led economy. The pain is felt across Asia’s fourth-largest economy but it is the SMEs, long dependent on sales to the country’s conglomerates and with few international networks of their own, that are bearing the brunt. This situation was thrown under a spotlight on Monday with the release of new figures showing SMEs have this year suffered their sharpest drop in output since the aftermath of the global financial crisis in 2009. Read more