The number of Korean companies among the global top 1,000 list has been reduced to 12 this year from 25 in 2017, declining by more than half in five years. The four new companies that joined the list for the first time are subsidiaries of Korean conglomerates, except Kakao. None of them are new companies established within the last 10 years.
Korea's performance pales in contrast with the strides made by new companies in the U.S. and China. One hundred sixty-seven Chinese companies made the global top 1,000 list this year, which is triple the number of five years ago, and nine-five U.S. companies, including Uber and Zoom, made a list. Many emerging companies have also rapidly risen and dominated the global market while Korean companies lingered behind.
It is noticeable that most of the new players in other countries are involved in high-tech IT industries such as big data, fintech, and AI, resulting from quickly adapting to evolving industrial trends by combining new technology with service. Korea, though, had only three companies identified as IT companies on the list: Samsung Electronics, SK hynix, and Samsung SDI, suggesting that Korea, traditionally known as an IT powerhouse, is losing its innovative drive.
Korean start-ups, which are eager to go to market, are tied down with regulation. “Regulatory sandbox” that apply exemptions to start-ups are in effect, but they are replaced with new regulations as companies' business grows. Many companies eventually change the direction of their business, frustrated by outdated regulations that fail to keep up with the pace of change—no wonder the government focuses on preventing young entrepreneurs from leaving the country to do business elsewhere.
The Korean government has promised to revamp regulations that tie down free markets and creativity and came up with 900 initiatives, but most are merely amending executive decrees. Without altering the main laws causing red tape and simply tweaking by-laws will not bring real change. For example, shipping service by autonomous driving robots requires changes in various laws, including the Road Traffic Law, Personal Information Protection Act, and Park Welfare Act. The government and ruling party should work with the opposition party to bring significant changes to conventional laws to allow business innovation. A capable government that can bring real change will be the key to bring business vitality to start-ups and venture companies.