SMEs in South Korea - statistics & facts
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Small and medium-sized enterprises (SMEs) represent an essential part of South Korea’s economy. They account for about 99.9 percent of all domestic enterprises and provide more than 80 percent of all national jobs. However, large business groups such as family-owned conglomerates (also known as chaebols) and other large companies, which comprise less than one percent of all companies in South Korea, generate more than half of the country’s total corporate profits. Furthermore, the productivity gap between large companies and SMEs is one of the largest among countries in the Organization for Economic Co-operation and Development (OECD). The South Korean government is working to enhance the competitiveness of SMEs and attract young job seekers, but the long-term effectiveness of these efforts remains to be seen.
In 2022, South Korea had approximately 8.1 million SMEs compared to about 10,000 large enterprises. More than 90 percent of SMEs were micro-enterprises with a comparatively lower revenue level and fewer employees. Many SMEs were engaged in wholesale and retail trade, followed by real estate and accommodation and food services. Wholesale and retail SMEs in particular saw a sharp increase in number during the COVID-19 pandemic, driven by the growth of non-store retailing in the e-commerce sector.
SME landscape in South Korea
Unlike in many other countries, South Korean SMEs are not defined by the number of employees, but primarily by the revenue generated by the company. According to this definition, SMEs are for-profit enterprises whose total assets do not exceed 500 billion South Korean won and which meet the criterion of independence – meaning that they are not subsidiaries of a large corporation. Social enterprises and cooperatives can also fall under this category in some cases. Companies are classified as SMEs depending on their average three-year revenue, with different thresholds depending on the industry. For real estate companies, the threshold is 40 billion won or less, whereas, for some sectors of the manufacturing industry, 150 billion won or less would be the standard to be categorized as an SME.In 2022, South Korea had approximately 8.1 million SMEs compared to about 10,000 large enterprises. More than 90 percent of SMEs were micro-enterprises with a comparatively lower revenue level and fewer employees. Many SMEs were engaged in wholesale and retail trade, followed by real estate and accommodation and food services. Wholesale and retail SMEs in particular saw a sharp increase in number during the COVID-19 pandemic, driven by the growth of non-store retailing in the e-commerce sector.
