Firms with Huge Potential

Korea Eximbank to extend concessionary loans to export firms with big growth prospects

The Export-Import Bank of Korea announced on March 28 its list of 34 firms that it sees as hidden champions that the bank will support for their further growth to become real “champions.”
The bank said that under its Hidden Champion Nurturing Program it screened firms for their potential for growth since January in such areas as technology, potential growth, the ability of management and stability of their financials including on-the-spot checkups for the selection of successful candidates.
The bank plans to release 1 trillion won in support of some 100 such companies with excellent potential for growth this year with the final selection to be made this month. The firms to be selected will have the DNA to be strong companies in the global market in their areas of operations.
They also should have their products being exported to niche markets in 25 countries around the world; they should have 3.65 percent of their annual sales invested in R&D activities, 2.06 percent higher than SMEs; have at least 38 intellectual property rights on their products; and have average annual sales of 69.2 billion won, including 61 percent of their annual sales coming from overseas exports.
Major areas of businesses include machinery and metal (18 firms), electric and electronics (11), chemicals (3) and others (2), on the selection list, with seven of them being green technology new growth firms.
Once the companies make the bank’s list, they will get concessionary loans in various stages for purposes including R&D activities, production and overseas marketing, in addition to consulting services on their long-term strategies from experts provided by the bank.
They will also be given information on overseas markets necessary to build an overseas marketing network for their products as well as overseas market exploration from a professional export consulting firm that has an agreement with the bank.
President Kim Dong-soo said the Korea Eximbank would like to see the hidden champion firms grow to be envied by people the world over 10 years from now. “They will be Korean-type hidden champions providing good jobs, making a huge contribution to the nation’s export growth, playing the role of a backbone in the national economy,” the CEO said.
Kim said the bank will provide 20 trillion won to help companies with more than $1 million in annual exports, totaling 300 firms by 2019, so that they would be able to have strong presences in the world market. The bank selected 12 firms for experimental purposes last year to kick off its “Korean-type hidden world champion fostering plan.”
In its 2010 1Q export forecast, Korea Eximbank predicted an export growth rate of approximately 30 percent thanks to a strong comeback in exports.
The Bank anticipated 33 percent growth, the highest rate since 4Q of 2004. The forecast was based on the current rate of recovery in the export markets and the dismal performance of the same quarter the previous year.
According to a representative from Eximbank, “The Bank’s Leading Export Index, the standard for future economic outlooks in exports, indicated continuous growth in developing countries such as China and India, rapid market recoveries in developed countries such as the United States, and increased unit prices for exports (a 2.0 percent increase from the previous quarter) for the last three consecutive quarters. As such, the Bank anticipates the continued expansion of export markets.”
The Leading Export Index is a composite index that predicts the outlook of the export market by utilizing variables that influence Korea’s exports such as the economic status of major importing countries, prices of export products, export forecasts by industry, and sales forecasts of companies.
Companies are also positive about a recovery in exports. The Export Business Expectation Index (EBEI), which measures the expectations of Korean companies for improved conditions in exports, reached 110, exceeding the standard level of 100.
Nevertheless, “the Bank will strive to provide even greater support particularly for SMEs and green growth sectors to increase exports further,” stated the representative. nw

Chairman and President Kim Dong-soo of Korea Eximbank.