SME Cooperatives to Be Fostered as Core Collaboration Platform for SME Growth

Announcement of the 4th Three-Year Plan for the Activation of SME Cooperatives

The government has unveiled detailed plans to foster small and medium enterprise (SME) cooperatives as a core collaboration platform, enabling SMEs to respond to the rapidly changing internal and external business environment and secure competitiveness through collaboration.

On October 23, the Ministry of SMEs and Startups announced the “4th Three-Year Plan for the Activation of SME Cooperatives” to support the strengthening of competitiveness and growth of SME cooperatives. This is a statutory plan established every three years in accordance with the SME Cooperative Act. To reinforce collaboration among SMEs, the Ministry will focus on five major strategies centered on SME cooperatives: ▲ enhancing market responsiveness, ▲ jointly responding to internal and external environmental changes, ▲ strengthening export competitiveness, ▲ expanding the regional economic base, and ▲ improving related systems, along with 15 specific tasks.

First, to address the structural imbalance caused by differences in bargaining power between large enterprises and SMEs, the Ministry plans to introduce a “right to request consultation” system by amending the SME Cooperative Act. The introduction of this right is a key government initiative, allowing SME cooperatives to negotiate transaction terms with large enterprises and others when entering into collective contracts on behalf of their members. An amendment to the SME Cooperative Act to this effect has been proposed and is under discussion. The Ministry, in cooperation with the Fair Trade Commission and other relevant agencies, will work to ensure the smooth implementation of the system.

In addition, the Ministry will identify and promote digital utilization and dissemination initiatives that reflect the characteristics of each industry and production process within SME cooperatives, and support the establishment of infrastructure for artificial intelligence and digital transformation. To this end, a dedicated department will be established within the Korea Federation of SMEs to handle digital transformation support work for SME cooperatives and SMEs, and the SME Cooperative Act will be amended accordingly. To help SMEs reduce costs and strengthen the stability of sourcing raw and subsidiary materials, the public procurement support program for such materials will be expanded to include overseas suppliers. The Ministry will also increase the production and distribution of ESG (Environmental, Social, and Governance) toolkits and enhance support for ESG initiatives, including the prevention of serious industrial accidents.

A “global expansion collaboration project” will also be promoted to enable industry-specific SME cooperatives to establish and operate overseas bases. This involves supporting the direct operation of permanent exhibition and sales spaces in overseas markets. The Ministry will also strengthen support to help SME cooperatives serve as key channels for responding to global supply chains and enter new markets such as developing countries by participating in international development cooperation (ODA) programs.

The Ministry will expand support systems to strengthen the role of regional cooperatives so that SME cooperatives can become central to revitalizing local economies. To further activate SME cooperatives, requirements such as the statutory minimum number of promoters needed to establish a cooperative will be relaxed, and greater flexibility will be introduced to allow mergers and changes in organizational type with cooperatives established under other laws. To promote joint business activities, which are the main purpose of establishing cooperatives, systems such as the priority investment system and the associate membership system will also be introduced. In addition, grounds for limiting the consecutive terms of full-time executive directors responsible for the day-to-day operation of cooperatives will be established to enhance transparency in cooperative management.

Kim Jeongju, Director General of SME Strategy Planning at the Ministry of SMEs and Startups, stated, “SME cooperatives serve as a core platform that enables SMEs to respond jointly through collaboration to changes in the market, technology, and global environment that are difficult to address alone,” adding, “The Ministry will actively support SME cooperatives so that they can build competitiveness and achieve sustainable growth.”