Small & Medium Companies of Worse Productivity

On investigation, debts of the domestic small & medium manufacturers has decreased largely and so the financial strength has increased but the productivity has decreased..

According to a report of `structure transition and policy issues of small & medium companies` published on October 23, through investigation for nationwide 97,300 companies, The average debt ratio of the small companies which have employees between 5 and 300 persons, decreased to 192.56% in 2000 from 305.48% in 1997. The equity ratio continues to increase to △ 24.06% in 1997, △ 27.47% in 1998, △ 32.58% in 1999, and △ 34.18% in 2000.

In terms of the exports, a weight of small & medium companies increased to 42.9%(USD64.6 billion) in 2001 from 31.0% (USD 41 billion) in 1998. On the other hand, the weight of large companies decreased to 57.1% in 2001 from 68.9% in 1998.

However, compared with large companies, the productivity of these companies didn`t increase or has decreased because of late restructuring as the technology capital-intensive industry.

In terms of the value added per employee indicating the labor productivity, when the average of the large companies is 100, the average of the small & medium companies decreased to 35.4 in 2000 from 38.4% in 1997. Also, the ratio of value added (added value/sales) decreased to 26.08% in 2000 from 28.94% in 1997.

The companies which started the technology development as a necessity of technology development has been extended, increase to 10748 companies in 2000 from 6911 companies in 1997 in number. The R&D ratio against sales increased to 1.37% in 2000 from 1.32% in 1997. However, this average was lower than the average 1.47% of large companies.

As the service industry has been extended and an avoidance of `3D industries` has been extended, the shortage ratio of technical employees of production field increased to 10.6% in 2000 from 6.6% in 1997.

Yang Hyeon-Bong, head of small venture company, KIET said “Financial crisis works positively on the restructuring of the small companies. The fund support for the small & medium companies will have to focus on increasing the human resource development and technical power.”

Ja-Ryong Koo bonhong@donga.com