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SMEs in South Korea - statistics & facts

Small and medium-sized enterprises (SMEs) represent an essential part of South Korea’s economy. They account for about 99.9 percent of all domestic enterprises and provide more than 80 percent of all jobs in the nation. Unlike in many other countries, South Korean SMEs are not defined by the number of employees, but primarily by the revenue generated by the company. According to this definition, SMEs are for-profit enterprises whose total assets do not exceed 500 billion South Korean won and which meet the criterion of independence – meaning that they are not subsidiaries of a large corporation. Social enterprises and cooperatives can also fall under this category in some cases. Companies are classified as SMEs depending on their average three-year revenue, with different thresholds depending on the industry. For real estate companies, the threshold is 40 billion South Korean won or less, whereas, for some sectors of the manufacturing industry, 150 billion South Korean won or less would be the standard to be categorized as an SME.

SME landscape in South Korea

In 2020, South Korea had approximately 7.3 million SMEs compared to about 9.3 thousand large enterprises. More than 90 percent of SMEs were micro-enterprises with a comparatively lower revenue level and fewer employees. Many SMEs were engaged in wholesale and retail trade, followed by real estate and accommodation and food services. Wholesale and retail SMEs in particular saw a sharp increase in number during the COVID-19 pandemic, driven by the growth of non-store retailing in the e-commerce sector. However, despite the steady rise in the number of SMEs in recent years, their total revenue has not increased significantly, largely due to the pandemic’s impact.

Competitiveness of South Korean SMEs

Although SMEs account for a large share of economic power in South Korea, their competitiveness vis-à-vis large business groups have been increasingly questioned in recent years. For example, large business groups such as family-owned conglomerates (also known as chaebols) – which account for less than one percent of all companies in South Korea – generated more than 50 percent of all corporate profits in 2019. Furthermore, the labor productivity of manufacturing and service sector SMEs has been far below the level of large enterprises. The wide productivity gap has correspondingly led to weak export performance and lower wages in SMEs in the past few years. Accordingly, such enterprises are becoming increasingly unpopular with job seekers. Many young people want to work in large chaebol companies, where they enjoy better remuneration and greater social recognition. Against this backdrop, the promotion of competitiveness and financial support for SMEs have always been and still are an important focus of the South Korean government's industrial policy.
This text provides general information. Statista assumes no liability for the information given being complete or correct. Due to varying update cycles, statistics can display more up-to-date data than referenced in the text.
Published by L. Yoon, Oct 13, 2022

Key insights

Number of SMEs
7.3m
Number of people employed by SMEs
17.5m
Total revenue of SMEs
2,673tr KRW
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