Half of Small and Medium Enterprises Unaware of Support Programs

1754 Government SME Support Programs, 53.3% of SMEs Respond They Are Unaware

There are as many as 1,754 government support programs for small and medium-sized enterprises, but 53.3% of these businesses are unaware of them. Photo by Asia Economy DB

[Asia Economy Reporter Kim Heeyoon] #Kim Deoksu (pseudonym), CEO of Company A, a hydraulic cylinder manufacturer located in Gwangmyeong-si, Gyeonggi-do, recently faced difficulties while exploring the introduction of a smart factory for factory automation. He looked into government support programs based on a tip from an acquaintance but found it challenging. Although there were many types of support programs, it was hard to find one suitable for his company. He wanted to learn about equipment investment support, but most information was about software-centered solution offerings. Ultimately, Company A decided to postpone the smart factory introduction by a year and first hire related personnel.

Although the government offers 1,754 support programs for small and medium-sized enterprises (SMEs), more than half of SMEs are unaware of their existence. Despite efforts by the government and executing agencies to promote these programs, the sheer number and overlap of programs by various ministries and local governments make understanding them difficult.

According to the ‘2021 SME Management Outlook and Policy Tasks’ report recently published by the Small and Medium Business Research Institute, 53.3% of SMEs responded that they were unaware of SME support programs last year. The number of SME support programs reached 1,754 last year, a 30.2% increase over the past three years, but awareness remains low due to insufficient promotion.

The smaller the company’s workforce, the lower the awareness of SME support programs. On a 4-point scale, awareness scores were 2.57 for companies with 50 or more employees, 2.50 for companies with 10?49 employees, and 2.34 for companies with 5?9 employees.

Additionally, non-manufacturing sectors (2.37) showed lower awareness of support programs than manufacturing sectors (2.49). The Small and Medium Business Research Institute added, "Although the difference is slight, service industries, which tend to be smaller in scale compared to manufacturing, were more likely to be unaware of support programs."

In the field, there are criticisms that promotion of support programs is insufficient and that it is difficult to find programs suited to company characteristics. Kim Sangsoo (pseudonym), CEO of a dye company in Incheon, said, "There are many support programs for people starting businesses, women, and the disabled, but it is hard to find support programs for chemical industries or manufacturing like ours, and meeting the support conditions is even harder."

No Minseon, head of the Future Strategy Research Group at the Small and Medium Business Research Institute, pointed out, "The main reason SMEs are unaware of support programs is that, despite the large number of programs, the governance system is not organized, and multiple ministries implement them sporadically, resulting in relatively low awareness. As the importance of SMEs grows, it is necessary to improve overlapping programs and rationally divide roles, strengthen the policy coordination function of the Ministry of SMEs and Startups, expand promotion of support programs, and improve the delivery system."