[Reporter’s Notebook] Han Seongsook Nominee Must Address Why SMEs Are Turning Away from AI

Amid High Hopes for AI Startups, Expanding the Demand Market Remains a Challenge
The Balance of Opportunities and Resources Must Shift Toward SMEs

On June 23, following the announcement of the first Minister of SMEs and Startups nominee under the Lee Jaemyung administration, the venture and startup sectors were particularly abuzz. This was due to the background of nominee Han Seongsook, who oversaw major projects as Naver grew from its NHN days into one of Korea's leading big tech companies. As the first ministerial nominee from the business sector?breaking the longstanding tradition of politicians and bureaucrats?expectations are high that, based on her deep understanding of the platform ecosystem, she will also contribute to nurturing domestic AI startups.

Government budget expansions promised by President Lee, such as the creation of a "National Fund" and "100 trillion won investment in advanced industries," are also expected to gain momentum. There is cautious optimism that the difficulties faced by emerging AI companies, which have struggled to secure resources such as GPUs due to limited funding, may be alleviated to some extent.

Amid these "rosy outlooks," one particular statistic has drawn attention. This is the result of an AI status survey conducted last year by the Korea Federation of SMEs, targeting 300 domestic small and medium-sized enterprises. According to the survey, only 5.3% of Korean SMEs are currently adopting AI technology. The next finding is even more concerning: among these companies, 83.7% stated that they have no intention of adopting AI in the future. The overwhelming reason cited was "because it is not necessary for our business" (80.7%).

The implications of this statistic are far more serious than the numbers alone suggest. SMEs account for 99.9% of Korea's industrial structure. If the vast majority of these companies are not adopting AI technology?and furthermore, have no intention of doing so in the future?then even if outstanding AI startups are created, they will struggle to generate revenue due to the lack of suitable customers. This also means there are clear structural limits to the growth of the domestic AI ecosystem. The lament of one AI startup CEO, "It is difficult to generate revenue because the demand market is so limited," illustrates this situation well.

Why, then, do Korean SMEs still consider AI adoption to be a distant issue? Those familiar with the realities of SMEs unanimously say, "It is because the practical benefits of adopting AI are not significant." Many SMEs operate as subcontractors to large corporations, and in the current industrial structure, decision-making power over production plans and delivery schedules lies with the large companies. This means SMEs lack the autonomy to make data-driven decisions. Even if they adopt AI, the environment does not allow SMEs to proactively change anything.

While expectations for the first businessperson-turned-minister are high, it is crucial not to forget the original purpose of establishing the Ministry of SMEs and Startups. Dramatic changes in a short period are unrealistic and may cause unintended side effects, but efforts to gradually adjust the current allocation of opportunities and resources?concentrated in large corporations?toward SMEs and mid-sized companies are essential to achieving balance across the industry. Only when this groundwork is laid can the goal of becoming one of the "top three AI powers" be realized.