The government has designated 607 specialized trade companies to support the export expansion of small and medium-sized enterprises (SMEs). Amid a global trend of protectionism and supply chain restructuring, the initiative aims to leverage the expertise and overseas networks of these specialized firms to assist novice exporters in entering international markets.
On July 8, the Ministry of Trade, Industry and Energy and the Korea International Trade Association held a ceremony to designate 99 outstanding export companies as specialized trade companies. This brings the total number of specialized trade companies from 500 in 2023 to 607 this year.
Specialized trade companies are designated by the government to assist or represent novice SMEs in their overseas ventures. This system was initiated by the Korea International Trade Association in 2009 after the abolition of the general trading company system and was formalized through amendments to the Foreign Trade Act in 2014.
The designation period lasts for three years. Eligible companies must have an average export amount of over $1 million in the previous year or the last three years, and their exports of other SMEs' products must account for more than 20%. Large trading companies, specialized distribution firms, e-commerce companies, overseas procurement firms, and companies owned by expatriates are also included in the designation criteria.
Among the 99 newly designated companies this year, 27 are new entrants, while 72 have been re-designated. Notable companies include Kolon Global, Nissan Trading, and Isu Specialty Chemicals, which are major players in the general trading, automotive parts, and chemical sectors. The Ministry of Trade anticipates that these companies will utilize their overseas networks and export capabilities to support novice exporters in exploring new markets.
The role of specialized trade companies has become increasingly important in light of recent changes in the export environment. The export agency amount for specialized trade companies grew from $5.5 billion in 2022 to $7 billion last year. They have established themselves as a vital export platform for SMEs, consistently exceeding $7 billion in export agency amounts for three consecutive years.
Particularly, changes in U.S. tariff policies, a slowdown in the Chinese economy, and global supply chain restructuring have made it challenging for SMEs to independently identify overseas buyers. Consequently, the importance of a collaborative export model through specialized trade companies is expected to increase. For companies lacking export experience, the support for market research, buyer connections, and assistance with contracts, customs, and payments significantly lowers entry barriers.
The government is also expanding support for designated companies. Specialized trade companies will have opportunities for matching consultations with promising domestic manufacturers. They can receive tax support, including extensions on payment deadlines, installment payments, and deferrals of customs inspections through the Korea Customs Service. The Export Insurance Corporation will offer a 40% discount on short-term export insurance premiums and increase the export credit guarantee limit by 1.5 times.
Na Sung-hwa, Director of Trade Policy at the Ministry of Trade, stated, "We hope that specialized trade companies will lead our exports by seizing global markets alongside novice exporters. The government will spare no effort in providing various support in export marketing, finance, and taxation to ensure that specialized trade companies can operate freely."
* This article has been translated by AI.
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