[Good Job SME]⑧ Second Startup with a Resolution: "A Company Where Employees Are Happy"

Interview with Kim Young-rae, CEO of KES
Recognized for Technical Competitiveness as a Certified Testing and Certification Company
Half of Employees Are Shareholders: "Performance Should Be Shared with Employees"

Editor's NoteSmall and medium-sized enterprises (SMEs) are the backbone of the national economy. Numerically, 99% of companies in South Korea are SMEs. SMEs are the workplaces of the people. 81% of workers are employed by SMEs. When SMEs falter, our economy shakes and the jobs of the people are threatened. However, negative perceptions of SMEs persist. Low treatment and unguaranteed 'work-life balance', and uncertain future growth prospects. Despite the employment difficulties, young people do not choose SMEs. There are people who fight these prejudices and create good jobs and SMEs. They develop technologies that can compete with large corporations. They also devote efforts to building sound financial structures and corporate cultures to provide stable living foundations for employees. On the ground, there is the struggle of SME owners to fulfill corporate social responsibility while nurturing companies where employees can take pride. Asia Economy visited the field and directly heard their voices.

In 2009, when the Radio Research Institute building in Anyang-si, Gyeonggi-do was relocated, the issue of dismantling the electromagnetic certification equipment (electromagnetic chamber) located there arose. Although it was a core facility, experts said relocation was impossible. Dismantling was expected to cost about 100 million KRW. CEO Kim Young-rae of KES won the equipment at auction for 5 million KRW to move and install it at the Yeoju Research Institute. Everyone said it was unprecedented and difficult. However, CEO Kim, together with his employees, cut the entire wall to move and install the electromagnetic chamber in Yeoju while maintaining its performance intact. This story is still talked about at KES. We heard from CEO Kim about how KES established its position in the domestic testing and certification market, driven by the employees' unity that began at that time.

Kim Young-rae, CEO of KES

CEO Kim said, "To create a company that succeeds together with employees, the employees participate in company management, and half of them are also shareholders." KES is a specialized testing and certification company. Testing and certification evaluate whether products or services meet national and international standards, a mandatory procedure before release. Electromagnetic certification is a representative example. This work, which guarantees safety and quality, was previously conducted directly by government agencies but is now operated so that qualified private companies can also perform it. CEO Kim is a figure who led the growth of this market since his first startup in 1997. He also experienced an 'exit' by selling his first startup to the Swiss SGS Group, the world's number one testing and certification institution. KES is the company he founded for the second time in 2008.

CEO Kim said, "When I started my second business, I thought about the reason for doing business, and money was not the goal," adding, "I wanted to create a good company, a company where employees are happy." To this end, he refused external investment and allowed employees to participate in equity. Starting a new business requires facility investment, and external investment could speed up the process, but CEO Kim chose to raise investment funds internally even if it took time rather than mixing external equity. Sharing the results with employee shareholders was more important. He explained, "If we succeed, profits should also go to employees," adding, "We provide incentives based on sales and have been paying dividends for 10 years."

KES Testing and Certification Facilities

This cannot be achieved by the CEO's management philosophy alone. Above all, it is important to establish a foundation for stable company growth. The domestic testing and certification market is already complex. There are more than 50 registered institutions with the Korea Information and Communication Testing Agency Association. The fields are diverse, and many global companies have also entered.

In this market, KES has been recognized for its technological competitiveness. CEO Kim said, "Testing and certification cover electromagnetic waves, electrical safety, wireless communication, and reliability fields, and we have expanded the market focusing on electromagnetic waves," adding, "In the recently added railway field, although the market is not large, KES handles more than 80% of the testing volume." The results are also confirmed by numbers. From about 2 billion KRW in sales in 2010, the early stage, the company has grown steadily and aims for 12.2 billion KRW this year. The sales target for the first half has already been achieved. The number of test reports issued was about 250 at the start of the business but is expected to reach 6,000 this year.

From this year, KES plans to expand into the healthcare field. It established a healthcare division and invested in medical device testing. CEO Kim said, "The medical device field is growing steadily," adding, "From next year, we will achieve successful results and make KES a world-class testing and certification institution representing Korea."