Exports Likely to Achieve
2005 Target of 10.7% Growth
KITA executive vice chairman forecasts robust export performance 
despite unfavorable conditions

Lee Suk-young, executive vice chairman of Korea International Trade Association (KITA), forecasts that Korea will continue to sustain a considerable export growth in the second half of the year, boosted by large corporations?good performances.
"I'm happy to see exporters make a remarkable showing. Exports are predicted to achieve its earlier export target for this year - a 10.7 percent surge to $281 billion,"Lee said in an interview with NewsWorld. The KITA executive vice chairman said exports will likely grow about 11 percent to $300 billion, surpassing the export target unless such external factors as the appreciation of the Korean currency affects Korean exporters' profitability.
Korea registered a 31 percent growth rate last year. Korea's exports witnessed a 12 percent growth in the first seven months of this year. August saw a 20 percent growth.
The robust export growth is primarily attributable to large corporations?remarkable performances, Lee said.
A look into exporters' performances shows that about two-thirds of the overseas shipments have been done by large corporations. The problem is that SME exporters' portion shrank to 33 percent from 35.6 percent last year.
Citing an analysis of Korean exporters indicates that Samsung Electronics fared better in terms of net income than Japanese counterparts, Lee noted that large corporations have served as the engine to a sustained export growth.
"There is no problem with large corporations, which have made a strong showing on their own, but SMEs are KITA's major target of concern,"he said.
KITA has provided a wide range of support to SMEs, including the one designed to ease losses stemming from the appreciation of the Korean currency.
"The biggest problem faced with SME exporters is an issue related to manpower. In the past, they cited as their major problem securing funds, but these days they speak about a shortage of talented manpower,"he said.
Korean exporters have been grappling with how to deal with two unfavorable conditions - the steep of appreciation of won and oil price hikes. They appears to react against oil price hikes in a calmer manner than those of the past, Lee said, adding that the situation of the export industry has changed much, with the number of exporters, each exporting more than $100 million worth of overseas shipments, tripling to 158. KITA is making its utmost to raise the figure to 300 in the years to come, he said.
Lee said the domestic export industry is likely to make its way forward by overcoming worse external conditions. The problem is that from next year, Korean exporters will likely see a decline of profitability, caused by such unfavorable external factors. Experts like Lee share the worry that not investing into expanding a production capacity or making new products would have an adverse impact on their future performances. In reality, large corporations are grappling with how to handle an abundant money without finding proper investment targets, but SMEs are in a different situation.
KITA is proactively promoting e-Trade among SMEs as part of its efforts to ease the difficulties they experience in dealing with foreign buyers. The government and KITA have channeled 30 billion won into developing e-trade infrastructure, including software, with the goal of implementing e-Trade in the first half of next year, the first of such kind in the world. Under an experimental project, Korea will form up a consortium on the implementation of e-Trade with nine Asian countries, including Japan, Taiwan and Hong Kong. Korea will demonstrate e-Trade to the summit leaders of APEC 2005 Korea it will host in Busan in November, Lee said.
Korean commercial banks are expected to handle on-line trading based on e-L/C under the scheme instead of such documents as letter of credit (L/C), contributing to relieving a shortage of manpower facing SMEs.
Lee himself is well aware of the plight of SMEs because he once served as the administrator of the Small and Medium Business Administration.
KITA has allocated 104.6 billion won for supporting exports by SMEs, which have been haunted by a shortage of operation funds. Each SME trader is entitled to up to 300 million won in an easy loan with an annual interest rate of 4 percent. About 80 percent of the beneficiaries of the fund are SMEs located in provincial areas.
As part of its efforts to promote e-Trade among SMEs, he said, KITA has been offering a free service to produce a website each trader can carry information on its products. The campaign has paid off since its debut in 2000: A total of 7,000 firms now have their own websites.
For SMEs which cannot afford to conduct their own marketing activities, KITA has formed up overseas export exploration delegations to help SMEs participate in 50 worldwide fairs in the first six months of this year. These led to signing of $230 million worth of export contracts. KITA has inked MOUs with 78 trade organizations around the world, including the Chinese trade promotion organization CCPIT to promote exchanges among SMEs. Lee said, "It is more desirable for SMEs themselves to participate in diverse delegations abroad."
There are many Korean SME companies which have advanced to the Chinese market, but few have excise information about China. KITA is opening a website on the economic and industrial database to solve this problem, he said.
As to the appreciation of yuan, Lee noted that the appreciation of the currency of a country normally boosts exports of its counterpart, but the problem facing Korean exporters is different from the precedent. China's change from its currency pegged to the dollar and the appreciation of yuan could weaken China's domestic demand, thus having a bad impact on Korean SMES, he said, adding that they are expected to be getting in a bigger problem under the influence of raw material price hikes and the simultaneous appreciation of Korean won, fueled by China? latest step.
Another problem plaguing Korean companies lies with an antidumping issue, with 121 antidumping suits being filed against Korean companies, the second largest number in the world following China.
An example of antidumping suits filed against Korean SMEs is that Australia filed an antidumping suite against such Korean SMEs as Hi Steel Co., which have subsequently been suffering from difficulty in exporting their steel pipe products. The problem is that many SMEs give up their bid to counter antidumping suits due to the huge cost of legal proceedings like the appointment of lawyers and accountants. In an effort to help SMEs in such a difficult situation related to antidumping suits, he said, KITA has been operating an import regulation response counter, designed to offer counseling on the issue by shouldering part of the legal cost. The organization provides each SME exporter with up to 25 million won or an equivalent to 50 percent of the legal cost. Thanks to KITA's help, Hi Steel and other related steelmakers were cleared of the antidumping charges.
Lee said amid the worst job-seeking market, SMES are complaining of a shortage of manpower in charge of trading. Unfortunately, SMEs are facing with a difficulty in hiring trade manpower even though a flood of college graduates remain employed. To solve this mismatch, KITA is cultivating 200 "trade masters."The organization is offering 100 courses for educating 3,500 SME employees on trade per year. KITA is considering a plan to open a separate course for fostering trade manpower dispatched to China, Lee said. nw

Lee Suk-young, executive vice chairman of Korea International Trade Association (KITA)
A fully-loaded container vessel with Korean export products heading for the sea.