Innovation Briefingthe best strategy, 'Cultivation of Talented Manpower,' and to implement it, the 'Firm Will' of CEOs is imperative. An enterprise is like a man. Therefore, managing

APEC SMEInnovation Briefing

APEC SME Innovation Center

June 2009 / No. 7

24-3, Yeouido-dong, Yeongdeungpo-gu, Seoul, 150-718, KoreaCOPYRIGHT 2006 APEC SME INNOVATION CENTER, ALL RIGHTS RESERVED

APEC SMEInnovation Briefing 3

CONTENTSColumn

4 Cultivation of Talented Manpower - An Investment for Post-

Economic Recession Period

Interview

6 Korea-Peru FTA Seen to Invigorate SME Tie-ups

Feature Story

10 Deliberation of KPIs for Better APEC Economies

12 SBC - Best Partners for SMEs

Best Practices

14 Era of One-Person Creative Enterprises

17 Reinvest Most Profits for Creative Expansion

Opinion

19 High Time to Promote SME Entrepreneurship

SMEIC News

21 2009 SME Innovation Seminar Scheduled for Aug. 25-28

21 New Brochure & Annual Report Published

22 Korea-China e-Business Cooperation

22 SMEWG Chair Visits SBC for SME Innovation Support

23 APEC SME Innovation Consulting

23 Korea-Japan SME Business Matchmaking

23 APEC SMEIC Website Innovation


SME CEOs need to

continuously ask

themselves whether

their enterprises have

sufficient learning and

implementation

capabilities to secure a

comparative

advantage in

competitiveness.

suitable for their companies. I dare suggestthat SMEs can resolve such problems at theSmall Business Training Institute (SBTI).

SBTI is a specialized training institute forSMEs that implements level-tuned, custom-tailored training based on the experienceand know-how gained from havingconducted education and training for800,000 SME executives and employeesover the past 30 years.

First, SBTI is implementing the practicalbusiness-centric training requiredimmediately by the employees of SMEs.With diverse programs, including technicaltraining, which are difficult for any privatetraining institute to operate, SBTI offers anexpanded selection range for thedemanders, SMEs.

With establishment of its regional traininginstitutes in four spheres (Capital, Honam,Daegu-Gyeongbuk and Busan-Gyeongnam), SBTI also enables enterpriseslocated in provincial regions to utilize itsservices easily. Moreover, not only aretraining and education fees cheaper than atprivate training institutes but additionaldiscounts are provided to employment-maintaining enterprises and provincialenterprises that qualify for policy support

so as to receive education almost free ofcharge.

Jack Welch, former CEO of GeneralElectric (GE), said, "The learning ability ofan organization and the ability to translateit quickly into action decides thecomparative advantage of corporatecompetitiveness."

In order to grow more and faster thanothers after the economic recession ends,in particular, our SMEs also absolutely needthe best strategy, 'Cultivation of TalentedManpower,' and to implement it, the 'FirmWill' of CEOs is imperative.

An enterprise is like a man. Therefore,managing an enterprise requires nurturingits employees. This is common sense thateverybody understands, but it is a principlethat is often disregarded in the day-to-dayactivity of an enterprise. I expect SME CEOsto continuously ask themselves whethertheir enterprises have sufficient learningand implementation capabilities to secure acomparative advantage in competitiveness,while hoping enterprises will respondeffectively to the present economicrecession from a long-term perspective tosucceed all the more in the future.

Column

APEC SMEInnovation Briefing4

The economic recession triggered by theU.S.-originated financial crisis is showingsigns of recovery. However, it might bepremature to say that substantial economicconditions have entered a spring season.

When facing an economic recession, forsurvival, enterprises normally decrease newrecruitment and/or education programs forexecutives and employees and pursuereduction of expenses. Nevertheless,enterprises that decrease educationinvestment and others that increase suchinvestment produce clearly differentbusiness results after the recession ends.

Distinguished professor of businessadministration Tom Peters advised, "Ifmanagement results are good, invest two-fold in education, and if poor, increaseinvestment in education four-fold." The keyto success of an enterprise that perceiveschanges rapidly in times of depression andactively responds is just 'talentedmanpower.'

The response capabilities of our SMEs toan economic recession period are, in fact,weak. Each of the executives andemployees of SMEs that absolutely lackmanpower resources, in particular, shouldplay multiple roles. Due to urgentimminent problems, such SMEs say that

there is no room for investment ineducation, although they are well aware ofthe need to nurture talented manpower.Successful CEOs never neglect importantthings, even if not urgent.

In the industrialization era, enterprisescould secure a comparative advantage incompetitiveness only if they providedproducts at cheaper prices more rapidlythan others. But securing profitability isdifficult just with this approach today whenlate developing countries are makinginroads into the market. Now, no longercan we postpone our investment for thefuture.

For this, various activities, identification ofnew products, development oftechnologies, securing of talentedmanpower, expansion of innovationcapability, etc., are required, but we cansay that the core factor is 'Cultivation ofTalented Manpower' in a few words.

It is not easy, in reality, for SMEs tocultivate executives and employees intotalented manpower without havingspecialized personnel responsible foreducation, although they would like to doso. They also have to worry about selectionof an appropriate educational institutionand where to find training programs

In order to grow more

and faster after the

economic recession

SMEs need the best

strategy, 'Cultivation

of Talented

Manpower.'

Column

Cultivation of TalentedManpower - An Investmentfor Post-Economic RecessionPeriod By Lee Ki-Woo

PresidentSmall & medium Business Corporation

Interview


Q: Can you give a brief summary of APECPeru 2008 on the theme “a newcommitment to Asia Pacific Development”

A: The APEC agenda 2008 had veryimportant themes for Asia PacificDevelopment, focusing on how to face thefinancial crisis, regional economic integration,and the social dimension of globalization,fight against corruption, climate change andnatural disasters.

To tackle these ideas, the delegates in theAPEC meeting looked to harmonize unilateral,bilateral and multilateral policies towards theseobjectives and promote a free area for trade inthe Asia Pacific region. This landmark providesthe outlines towards the establishment of anarea of free trade, jointly with the preparationof a number of important measures that couldstir immediate negotiation.

On regional integration, it was agreed thatthe analytical work must be continued, inorder to evaluate the impact of a free area forAsia Pacific commerce, and the requirementsfor the strengthening of capacities for futurenegotiations.

The summit in Lima also supported theagreements of sub regional integration withthe P4 (New Zealand, Brunei, Chile andSingapore), as an element that served as acatalyst in order to attain this objective, that is

now known as Transpacific StrategicAgreement, in which Australia, United States,Vietnam and Peru have also expressedinterest in participating.

As to the financial crisis, the leadersapproved a separate declaration regarding thisissue, where they recognized that not onesingle economy can be immune to the effectsof the actual crisis, and that it represented oneof the major challenges of the globaleconomic system. Facing this, the APECleaders proposed to act fast, decidedly and incoordination in order to correct the imminenteconomic deceleration in the region andcontribute to the general recuperation.

In this direction, the summit of 2008adopted various transcendental decisions, likeAPEC’s compromise to not imposeprotectionist measures and on the contrary godeeper into the free flux of trade andinvestment.

APEC’s persistency in the politics of marketopening was considered a main instrumentthat the region has that will help the globaleconomy recuperate with absolute confidenceand initiate its recuperation.

The summit in Lima also guaranteed tosecure the flux of investments and the creditsfor business, including SMEs and theconsumers and at the same time, improve the

Korea-Peru FTA Seen toInvigorate SME Tie-ups

Q&A with Amb. Marcela LopezBravo

The APEC agenda

2008 had very

important themes for

Asia Pacific

Development,

focusing on how to

face the financial

crisis, regional

economic integration,

and the social

dimension of

globalization, fight

against corruption,

climate change and

natural disasters.

Interview


regulatory and supervisory capacities of each economy, aproblem that has been at the centre of the crisis in theprincipal markets. In sum, APEC has assured it will keepadvancing its agenda of regional economic integration asone of the best ways of mitigating the effects of the globalcrisis.

On the theme that covers the social dimension ofglobalization, the Peruvian delegation achieved theinclusion for the first time of corporate social responsibility.The statement of the leaders contains a call for thegeneralization of the fair practices of good corporatecitizenship in the region as the way of doing business in the21st century.

In the field of the fight against corruption, it achieved thelaunch of a program of cooperation to fortify capacities tocomply with the principal aspects contained in theConvention of the United Nations against corruption. Thisprogram must culminate in 2009 during the presidency ofSingapore.

The Lima Declaration has had relevancy in thenegotiations of the new multilateral landmark with thecommitment to confront climate change that will beapplicable in 2012 when the Kyoto protocol expires.

With the advent of natural disasters, we established astrategy for the reduction of risk, prevention, preparednessand a response to natural phenomena and the pandemicin the region.

In the final ceremony of the APEC summit of 2008, thePrime Minister of Singapore expressed that during hispresidency in 2009, and based on the achievements ofPeru, Singapore will build, and would focus on advancingregional economic integration. That is why he announcedthat he will concentrate his efforts in trade liberalization,simplifying regulations to facilitate business inside theregion and promoting improvement of transportation andlogistics networks among the fellow economies.

Q: Please tell us the current status of the Korea-PeruFTA negotiations and review the first and second roundof FTA talks in March and May.

A: The encounters have been very positive. The firstcontact was in the city of Lima in the month of January in2009, to define the terms of basic reference, thesubstantive themes, a tentative calendar for the meetings,the modalities for the case of commence of goods, servicesand investment and the period for the exchange ofinformation.

Interview


are in Peru experiences of some best practices inagriculture, aquaculture, ecological recycling, etc. that canbe conveyed to the Korean side by means of cooperationamong SMEs.

Q: Can you give your commentary on the possibleagenda of the APEC meeting that will be held inSingapore this October?

A: As was agreed during the Ministerial Meeting held inChiclayo city in Peru last year, the agenda includes policies,adequate business environment and regulations topromote fostering of SMEs, particularly in the presenteconomic and financial crisis. Thus the Working Group onSMEs will review the actions taken since the last meetingand tackle the main challenges that remain ahead forMicro, Medium and Small-size enterprises, regarding theirneeds for innovation, reduction of operation costs,interchange of experiences and access to new markets.

The global financial crisis is a great challenge but is alsoan opportunity for SMEs to take advantage of newmarkets, government procurement and “Green Growth“that is being promoted in APEC economies. Considering allof these acts, I firmly believe that the next meeting inSingapore will focus on the implementation of new policiesand regulations as well as the promotion of innovation andIT technologies to enhance targets like the development ofMicro and SMEs and the innovation in managingenterprises in APEC economies.

There is also another important issue on the agenda: thisis the implementation of Corporate Social Responsibility

(CSR) practices by SMEs that can impact positively on theircompetitiveness. Referring to this, it was requested to theSME Working Group to identify the best ways to integrateawareness of CSR for SMEs in its activities.

Innovation management in SMEs is another matter thatwas the core of a seminar. Then, there is the DaeguInitiative that includes conducting voluntary self-assessmenton the progress of SMEs’ innovation in 2010.

There is also work related to Pandemic Preparedness forSMEs that would be considered regarding the presentpandemic threats.

From the Peruvian side, Peru is promoting thedevelopment of SMEs by the application of informationand communications technologies, training courses inprovinces, innovation and promoting access to newmarkets.

The 16th SME Ministerial Meeting to be held inSingapore in October will have an important issue relatedto "Helping SMEs Access Global Markets and OvercomingTrade Barriers" with the following sub-themes:

Market liberalization to enhance market access amongstSMEs in member economies; Facilitating business collaboration by encouraging cross-border networks/platforms; and,Support for SME internationalization

In this regard, the delegations of Peru and Korea willwork together to support mutual interest in these targets.

Interview


Subsequently two meetings have been held, one inSeoul, and the other in Lima, in the months of March andMay, respectively. The negotiators estimate that tworounds of additional negotiations will be necessary in orderto have the possibility to close the negotiations.

During the first round a 40% advance was made in thenegotiations, which is a very significant level, in which thenegotiating teams have closed a chapter of publicpurchases, cross border services, as well as the institutionalchapter. The second round achieved the closing of somethemes in the regulatory section of the treaty, while thethematic of initial rate of duty is still absent.

For Korea, one of the sensitive issues is the agriculturalsector, especially crops, like rice and corn. In its section,Peru does not present major sensitivities in the admission ofKorean products, on the contrary it searches for thebenefits of sectors like Korean technology, in which Koreaplays a key role.

In the field of investments, the advances have been verysignificant, that is why there are few aspects left to talkabout in the third round of negotiations that will be held inSeoul from 29th of June to the 3rd of July. To date, Koreaninvestment in Peru amounts US$1,200 million dollars, anestimate that will increase with the FTA between bothcountries, not only in extractive activities, like mining, butalso in the fields of oil and the manufacturing industry.

Regarding intellectual property, we are advancing in aneffective and efficient manner, which contains elements ofinterest for Peru as well as Korea.

The interest of both countries is to arrive in November ofthis year with a final document, which should pass throughthe corresponding process of legal review in Peru andKorea, to be later ready for the signing of the respectiveauthorities of both countries.

Q: You said in the interview with Korea Times ‘FTA isabout commerce but isn’t just about commerce. Canyou elaborate on your statement?

A: The precision of your question seems very important,because actually a treaty of free trade not only refers tointrinsic themes of import and export, but also has animportant coverage of other themes like dispute

settlement, sanitary and phytosanitary measures, rules oforigin and public purchases, as well as intellectual property,telecommunications and financial services. Also, included isthe exchange of information about institutional issues,labour themes, and policies of competence, customprocedures, and environmental issues.

This panorama of themes gives our business sector a legalframework of security that benefits not only commerce,finance, diplomatic relations and even tourism, but alsooffers an appropriate frame to develop greaterunderstanding and knowledge of our countries

Q: What is your opinion on the possible effects of theKorea-Peru-FTA on Korea-Peru SME economiccooperation?

A: Among the results of FTAs, we should considerincreasing cooperation of both sides, not only in bilateraltrade but also in related activities; this means that Peruvianand Korean business of all sizes will have access to moreinformation, data and mutual interchange.

To mention some activities, Peruvian handicrafts that arevery famous around the world are almost 100% fromSMEs, not only from the capital, but mainly from thePeruvian provinces, where family business creates jobs forwomen and young people.

The market opening for Peruvian products such as freshfruit, vegetables, spices and other goods will allow Peruvianproducers from SMEs to enter the Korean market on oneside, and on the other side this process will accelerate theinterchange of knowledge and technology for both parties.

Let’s take an example. Peru has a very wide production ofnatural medicine and healthy natural herbs and fruits; thiswould be complemented with Korean technology forprocessing those goods and preparing them for the Koreanmarket and Korean customers.

Most of the growers of these natural products are smalland medium enterprises, thus there is an opportunity forthem to work together.

Korea has a well developed IT utilization and this can helpto establish a network of SMEs from both sides to promotebilateral trade and interchange. In addition to this, there

Feature Story


Project KPIs and medium-term KPIs on fivepriority areas were recapped and deliberatedat the 28th APEC SMEWG, which took placein Chinese Taipei on June 10-12.

KPI is APEC's strategic approach that arespecific, measurable, achievable, relevant andtime-bound to fullfill APEC's mission as follows:

Develop policy, business and regulatoryenvironments that foster the growth anddevelopment of SMEs and MEs.Build the management capabilities of allSME and ME owners and managers.Strengthen the skills that SMEs and MEsneed to access international markets.Give special attention and support to thecreation and growth of youth, womenand minority-owned SMEs and MEs.

Korea is lead on KPIs for innovation alongwith two member economies - Chinese Taipeiand USA.

The KPIs for innovation numbered six. Theyare Improve SME R&D Performance, FosterInnovative SMEs to GDP, Promote Industry-Academic Collaborations, Encourage

Commercialisation of IPR, Promote Exportingof IPR, Encourage SMEs’ Expenditure on R&DEducation, and Encourage CollaborativeResearch Among APEC Economies. Themedium term KPIs numbered four. They arePercentage of Government Expenditures onR&D, Number of SME Patents Awarded perYear, Growth Rate of Innovative SMEs, andPercentage of R&D Expenses to Revenue.

Innovation is one of the five priorities ofSMEWG annual work plan, along withBusiness Environment, Building ManagementCapability and Promoting Entrepreneurship,Market Access and Internationalization andFinancing.

In the Taipei meeting, all committees agreedthat both the Project KPIs and Medium-TermKPIs developed are Best Practice KPIs and eacheconomy can choose one or more KPIs fromthe list of KPIs developed to measure, trackand report progress resulting from the work ofSMEWG. All committees agreed that at leastone or more of the Project KPIs and/orMedium-Term KPIs developed should be usedto measure the outcome and effectiveness ofAPEC SMEWG supported projects.

KPIs for Business Environment Lead: Mexico Members: Malaysia; Hong Kong, China; USA; Viet Nam

Deliberation of KPIs for Better APEC EconomiesSpecific, Measurable, Achievable

Type Project KPIs Medium-Term KPIsUsage

Best Practice 1.Registration of business (time/cost to register business and obtain 1.No. of days for business registration

KPIs licence where necessary) 2.No. of business startups

2.Regulatory impact on SMEs (eg Getting credit, paying taxes, 3.No. of jobs created and sustained

hiring labour, formalisation of businesses) 4.No. of SMEs linked to large firms

3.Evaluation of data collection to determine success of government’s 5.No. of SME suppliers to government

services for SMEs 6.Contribution of SMEs to GDP

4.Promoting industrial linkages between SMEs and large firms

(e.g. outsourcing, offshoring, global supplier programme)

5.Promoting government procurement for SMEs

Innovation is one of

five priorities of

SMEWG annual work

plan, along with

Business

Environment,

Building Management

Capability and

Promoting

Entrepreneurship,

Market Access and

Internationalization

and Financing.

Feature Story


Type Project KPIs Medium-Term KPIsUsageBest Practice 1.Provide access to management information 1.Number of participants in entrepreneurship programsKPIs and guidance to business owners 2.Percentage increase in participation

2.Provide access to business start-up information 3.Number of initiatives for providing access to management and guidance information and guidance to business owners

3.Implement programs to promote 4.Number of initiatives for providing access to business entrepreneurship to youth, women and minorities start-up information and guidance

4.Share information on new business models 5.Number of initiatives for implementing programs to 5.Strengthen the capability of business development promote entrepreneurship to youth, women and minorities

service providers 6.Survival rate of start-ups 7.Increase in the number of start-ups

KPIs for Building Management Capability and Promoting Entrepreneurship Lead: Chinese Taipei Members: Canada; Indonesia; New Zealand; Papua New Guinea; Thailand

KPIs for Market Access and Internationalisation Lead: Singapore Members: Australia; Chile; Chinese Taipei; Japan; Guest: Costa Rica

Type Project KPIs Medium-Term KPIsUsageBest Practice 1.Increase information on market access and opportunities -- eg providing 1.Growth in exports by SMEs KPIs databases, websites, seminars, trade opportunities, eg increase in number /

2.Increase availability of information on trade financing and investment -- eg percentage of SME information on foreign investment legislation, seminars on trade financing, industry exporters, overseas sales,

3.Implement measures/programs to identify and address trade barriers -- export figures consultations, information / sharing on trade barriers eg customs procedures

4.Build SME capabilities to market products and services internationally -- eg training and seminars on IP, branding, promotion.

5.Deliver strategies to facilitate SMEs participation in international business -- eg overseas missions and fairs.

KPIs for Innovation Lead: Republic of Korea / Members: Chinese Taipei; USA

Type Project KPIs Medium-Term KPIsUsageBest Practice 1.Improve SME R&D performance 1.Percentage of government expenditures on R&D KPIs 2.Foster innovative SMEs to GDP

3.Promote industry-academic collaborations 2.Number of SME patents awarded per year4.Encourage commercialisation of IPR 3.Growth rate of innovative SMEs5.Promote exporting of IP 4.Percentage of R&D expenses to revenue6.Encourage SMEs’ expenditure on R&D education7.Encourage collaborative research among APEC economies

KPIs for Financing Lead: Peru / Members: Brunei Darussalam; Indonesia; ChinaType Project KPIs Medium-Term KPIs

UsageBest Practice 1. Financing assistance for micro-enterprises (e.g. micro-credit, 1. Increase number of micro-enterprises which KPIs pawn shops, workers remittances) have access to financing assistance

2. Availability of different forms of public / institutional 2. Increase number of public and private financing financing (eg. loan, grant, equity, export and schemes/programmes/forums for SMEstrade financing, credit guarantee)

3. Availability of private financing (e.g. venture capital, angel capital funds)

4. Availability of technical assistance funds to facilitate access to credit5. Other forms of financing not covered above6. Development of information systems for monitoring, provision

of financial information etc

Feature Story


to today's dynamic global economy.

- Issuance of ABS

Provides SMEs with direct financingopportunities from domestic andinternational capital markets.

- Micro-Business Loan

Provides financing for micro-businessstart-ups and their managementinnovation

o Non-Financial Programs

From industrial complexes to overseasmarketing channel development, SBC hasan expansive non-financial program,which, along with its financial program,serves the ever-diversifying needs of currentday SMEs. Living up to its name as the“general hospital” for small businesses,entrepreneurs can find vital assistance innetworking, training, and internationalbusiness efforts at SBC.

- Consulting Service/Business Innovation

“Comprehensive Corporate Diagnosis“A 360 degree diagnosis is used todesign a more accurate trouble-shooting program that engagesvarious programs and consultants.

- Marketing Assistance Program

Korea Business Development Centers(KBDC)Dispatch of Trade DelegationsInternet SME Pavil ion:www.gobizkorea.comBusiness Matchmarking Assistance:www.bizmatchkorea.comGlobal Network ProgramSME Global Branding & MarketingProgram

- Information Service & IT Promotion

Timely dissemination of informationranging from research studies, newmanagement strategies to policyanalyses, and much more.

Magazines published by SBC:GIUPNARA, Tech TimesSME Data Bank (Knowledge SharingCommunity)

- Global Cooperation Program

A two-fold, domestic and international,approach to provide industrialcooperation opportunities forentrepreneurs worldwide.

SBC also supports Inter-koreanEconomic Cooperation betweenSouth and North KoreaAPEC SME Innovation Center

Feature Story


SBC - Best Partners for SMEs

o Financial Programs

As its major financial functions, SBC provides timely loans to SMEs, whichare used for the enhancement of their productivity as well as to aidbusiness innovation. The beneficiaries are expected to improve their future-oriented business structures and strengthen their competitiveness, so as toplay a key role in the 21st century.

- Venture Business Start-up

Provides financing for venture firms in their start-up and early growthstages.

- Commercialization of R&D Results

Provides financing for the commercialization of intellectual propertyand R&D results.

- Promotion of New Growth Industry

Provides financing for innovative SMEs in high-tech and low-carbonindustry sectors to improve their competitiveness

- Local Industry Developement Program

Provides financing for local SMEs to promote the local economy andthe balanced development of Korea

- Management Stabilization

Provides financing for raw material purchases, export working capitaland restoration support

- Industrial Structure Adjustment Program

Provides financing and consulting assistance through EnterpriseRestructuring and Trade Adjustment Initiative to allow SMEs to adapt

SBC provides a wide range of services to help Korean Small and Medium sized Enterprises (SMEs) start-up, run, and grow their businesses. Our programs can be divided into Financial and Non-financialPrograms. To effectively discover and innovate Korean SMEs, SBC provides them with comprehensive one-stop and package-deal assistance through the New Modernization Program

Best Practices


The Great Shift in What's Possible

The global economic landscape has beenchanging dramatically, shifting from anindustrial economy into knowledge economyand again to a creative economy paradigm.This monumental change has generated anew era for individual entrepreneurs. Anyperson with a great business idea will be ableto plug into a vast global network ofinterlocking marketplaces where they canquickly and easily assemble the right sets ofbusiness processes to succeed.

In a plug-and-play economy, sourcing majorbusiness processes - design, finance,manufacturing, scheduling, logistics,insurance, sales, marketing - will be as easy asopening the Yellow Pages. And thisspecification, automation and outsourcing ofprocesses with global economies of scale willbring huge growth in the number of strategiesfor assembling business. The number ofpotential business andmarketplaces will growexponentially.

One-Person BusinessesHighlighted as NewEconomic Engine

In advanced countries withdeveloped IT technologies,including the Internet, one-personenterprises in the knowledge service fieldare taking the lead in business start-ups andjob creation. In major advanced countries likethe USA and others, one-person enterprisesaccount for 6~15% of all employees, a

percentage that is still growing.

Silicon Valley in the U.S., in particular, isleading creation of new jobs, with the start-upof creative and innovative one-personenterprises in the fields of R&D, design, etc.booming. According to the U.S. CensusBureau, one-person enterprises, in fact,increased to 96.9 million in 2005 from 8.9million in 1995, while the unemployment ratein Silicon Valley decreased to 4% in 2006 from8% in 2002.

To resolve the unemployment problem andscarcity of jobs that occurred since unification,Germany also has operated a 'one-personenterprise support program.' Under thisprogram, 300,000 persons are activelysupporting the establishment of one-personenterprises and administering monthlysubsidies (EUR600 for 1st year; EUR360 for2nd year and EUR240 for 3rd year), if annualincome does not exceed EUR25,000 after the

Era of One-Person CreativeEnterprises

Innovative Blossom of Plug-&-Play Economy jobless start a one-person enterprise. In addition, Japanpassed the New Company Act in 2005, which opened theway to enable establishment of a one-person companywith only 10,000 yen.

One-Person Enterprise Status in Korea

Korea, a major IT Kingdom, promotes fast-trackdevelopment of one-person enterprises. The domesticoutsourcing market is growing rapidly, reaching 120 trillionwon in 2007 from 98 trillion won in 2005. Below aresuccessful cases of one-person enterprises:

Policy Initiative as Human New Deal

The Small & Medium Business Administration(SMBA)has unveiled a policy package to foster one-personenterprises, creating 30,000 one-person enterprisesnationwide .

The package, as a part of Human New Deal to combatthe current economic crisis, features the commercializationof creative ideas, deregulation to boost start-up andexpansion of the growth base.

As a follow-up measure to 'Ways to Stimulate One-ManStart-up Enterprises' implemented on March 26, 2009,SMBA announced that it will establish and operate 'e-Service Transaction Mall.'

'e-Service Transaction Mall' is part of the 'Idea Biz Bank'establishment project included in the March 26announcement, and aims to support one-man start-upcompanies to secure orders for such projects as software,design and translation through outsourcing from otherenterprises.

Best Practices


Success Stories in Korea 1. Producers of Content, Traditional Foods, Handicrafts, Jewelry, etc.

o A type of commercialization (development, manufacturing and sale)

of ideas having high creativity and commercial viability

<Success Practices>Online gift shop 'Portrait of Jennie': Produces

and sells initial screen pictures 'Skin' (used to

change the mood of mini homepages

according to season or state of mind) required for preparation of

personal homepages and create profits.

Producer & seller of traditional foods

(Grandmother Lee Gi-Nam in Sunchang):

Manufacture fermented foods, such as

gochujang (hot pepper paste), doenjang (bean paste) and Jangachi

(sliced vegetables preserved in soy sauce), with traditional secret

methods that have succeeded for four years and sell them (annual

sales: 1.5 billion won)

Developer and seller of English vocabulary

learning machine (Mr. Lim Hyung-Taek):

Successfully developed English vocabulary

learning machine, 'Vocamaster,' over seven years by utilizing

cognitive science and achieved 20 billion won in annual sales and

300 persons in employment creation.

2. Web Designers, Translators, Culture Interpreters, etc.

o A type of providing services, utilizing specific knowledge and

creating profits

<Success Practices>Book Publisher 'Sai' (President Kwon Sun-

Hee): Self-planning of publication, design,

marketing, etc., while resolving remaining

processes with outsourcing (published 12 books in four years after

start-up in 2005 with 20 million won)

Web Designer (Mrs. Kang Hye-Jin): Carries

out development of web pages for large

enterprises like SK Telecom and Samsung

Electronics, while doing housework at the same time. (monthly

average income: four million won)

SMBA Initiative Highlights to Foster One-Person Creative Enterprises

1. Establish and operate 'Idea Biz Bank' designed to collect and identifycreative ideas.=> Assist with linkage to 'Idea Commercialization Support Project'

2. Improve restrictions for activation of business start-ups (5 laws andordinances and 7 systems of 11 ministries)

o Improve systems for easier start-up of traditional food manufacturingbusinesses in farming regions.

o Improve systems to enable manufacturing and sale of traditionalfood in farming regions and in private houses

o Exempt three-fold heavy imposition of the registration tax if one-person creative enterprises establish corporations in the capitalsphere.

o Expand social safety net by allowing optional subscription to anemployment insurance.

3. Support creation of demand for one-person creative enterprises o Expand public and private markets (2 billion won) through easing of

the requirements for participation in government-supported projectsand support for knowledge service vouchers

4. Strengthen the management stabilization support system for one-person creative enterprises

o Reinforce support systems for financing, manpower, technologydevelopment, etc. to help one-person enterprises grow stably.

Best Practices


Oil seals are, simply, a device that prevents oil leaks. Oil isused in machinery and other applications such as enginesto reduce friction and make the machine run smoothly. Oilseals are used to prevent leakage of oil from areas wherethe machine has external connections.

In the early days, leather, natural rubber, etc. were usedas oil seal materials. In line with development of syntheticrubber since World War II, however, oil seals have beenrapidly improved and spread to wide-ranging usages withnumerous advantages.

As application of new materials and development of newdesigns continue at a rapid pace owing to thedevelopment of the petrochemical industry, widespreadrecognition of environmental problems and functionalimprovement of machinery, oil seals also have become afield requiring a high-level technological prowess.

Jinyang Oil Seal Co., Ltd. is a company that specializes inproduction of oil seals, o-rings, rubber components, etc.

"A small company, which recorded 22 million won infirst-year sales after establishment in 1991, has grown intoan oil seal specialist representing Korea today," said CEOLee Myung-Soo, recalling his pleasant experiences at thecompany over the past 18 years. If a manager says that heis having no difficulty, it must be a lie. CEO Lee has alsoexperienced hard and difficult times, but this has notlessened his passion for his work.

CEO Lee, who has run his business with unyieldingentrepreneurship, has not spared investment fortechnology development or manufacturing facilityupgrades. He believes that only through investment canfuture growth engines be identified. He has reinvestedmost of the company's profits, whenever achieved, inexpansion of facilities and technology development.

ERP/POP enterprise information systems launched in2002 and the establishment of its research institute are themost valuable contributors to the accelerated growth of

Jinyang Oil Seal. There could be no strongercompetitiveness for a company than being equipped withefficient systems to accurately and consistentlymanufacture the products developed through innovativeR&D.

CEO Lee said, "As all our processes have been digitalized,we obtain required information by utilizing a bar codesystem between processes. When reading the bar codes ofcompleted products, we can track the whole workenvironment and conditions. Since the entire managementprocess can be seen at a glance, we have been able torealize overall productivity enhancement as well as qualityimprovement with nearly no defective products."

It was not easy for the company to integrate IT withproduction sites, but the fruit from efforts has been sweet.Jinyang Oil Seal implemented the system and upgraded itwith steady investment of more than one billion wonannually. The high satisfaction of business partners whohave visited the site to see the system in operation is anatural result. This is because it gives them confidence inthe quality above anything else.

Based on its IT system and innovations, Jinyang Oil Seal isgrowing between 20 and 50% every year. Starting in2004, the company advanced into the automobile marketand has expanded its business scope while supplying oilseals to large enterprises. With its in-house technologies

Reinvest Most Profits for Creative ExpansionJinyang Oil Seal Co. Ltd

Best Practices


To support market creation throughstimulation of outsourcing by largeenterprises and SMEs, SMBA willprovide 'Knowledge Service PurchasingVoucher' equivalent to 10% of contractexpenses up to three million won forthose SMEs that issue project orders toone-man start-up enterprises.

If one-man start-up enterprises are unable to carry outprojects due to accident, injury, etc., SMBA will operate a'Substitute Manpower System' that can provide services onbehalf of the enterprises utilizing an experts' pool registeredat private knowledge transaction-specialized companies.

SMBA will also introduce a 'Performance GuaranteeSystem' to compensate for loss related to non-performanceof contracts between one-man start-up enterprises anddemanders.

In addition, SMBA plans to conduct a mentoringprogram to help one-man start-up enterprises receiveeducation on project management, marketing strategy,success know-how, etc., utilizing executives and employeesof private knowledge transaction companies.

Moreover, SMBA will support custom-tailored educationaccording to the characteristics of respective one-manstart-up enterprises, while providing a coupon-style 'Self-Development Gold-Card' (up to 500,000 won, with thestart-up bearing 50% of the cost) for development ofcapabilities.

Those one-man start-up enterprises, SMEs or largeenterprises that want to participate in this project canreceive support and custom-tailored information byselected field on a real-time basis after simple verification,by justifying 'Idea Biz Bank' (http://www.ideabiz.or.kr) andfiling an application for registration.

5W1H That One-Person Enterprises Should Answer

It is not too much to say that one-person enterprises havebecome a growth engine in the present and future societyas the concept of lifetime jobs replaces lifetime work-places.

The era of concentration of capital and knowledgecentering on large enterprises is gradually transforming

into an era of individuals having the capability to createknowledge-based new added value.

If this is true, what would be necessary to become asuccessful one-person enterprise? It is the so-called '5W1H.'

What: What kind of work will one do? The more 'Blue-Ocean,' referring to few competitors, the field is, the better.The ability to find Blue-Ocean - What would be the ideathat converts even a Red-Ocean into Blue-Ocean throughdifferentiation? (find business items, create profit models)

When: Is this the right time? Is it time to push or to pull?(business and marketing capabilities)

Where: Where are the things that I or clients are lookingfor? (search for distribution channels, materials, etc.)

Who(m): Is my network composed of the best people foreach task? (human network) How would future resourcesbe deployed? For today, how to make it work now? (shortand long-term projection and judgment and information-collection abilities)

How: How can I produce the best quality with efficientprocesses? How can I be more creative? (processimplementation ability, creativity)

Best Practices


secured, Jinyang Oil Sealexports its products to fivecountries, including China,the United States andThailand, and plans toincrease exports on agradual basis. For severalyears, the company hasbeen endeavoring todevelop new technologiesand products to advancefurther into theautomobile market.

"I think that our products are competitive enough in theglobal market. We can manufacture good products atcheaper prices based on our technology and know-how.We have taken the first step toward the global market.Global competition is now underway," CEO Leeemphasized.

CEO Lee added, "We have had many successes, such asselection as a star company in Daegu in 2007, selection asa world-class enterprise by the Small and medium BusinessCorp. (SBC) in 2008, etc. We also received recognitionfrom our customers for the development of new products.I believe that my employees take pleasure in achievementdespite difficulties, having worked with perseverance. I alsoenjoy the successes. All the praise, however, should betaken as encouragement to work more diligently."

CEO Lee is targeting annual sales of 50 billion won withinthe next five years. After recording 18.1 billion won in saleslast year, Jinyang Oil Seal established this year's growthtarget at 28%. Never entertaining an unreachable dream,CEO Lee sets only realizable goals and then exerts utmostefforts to attain them.

Saying that the most important thing is a 'ChallengingSpirit,' CEO Lee believes that the company and thecapabilities of its employees should grow together. If acompany expands its scale without developing itsemployees, it is bound to face limitations in the long run.Under this philosophy, CEO Lee does not spare investmentfor manpower cultivation, supporting various kinds ofeducation, mandatory education programs by department,leadership training, etc.

He also believes that to survive an enterprise must pursuecontinuous change; but how to change is the key and heconstantly seeks consultations in this regard. To furtherdevelop an enterprise, he suggests active utilization ofexternal support and education.

"I would like to grow Jinyang Oil Seal into a companythat can achieve sales of over 100 billion won. We hope tocompete shoulder-to-shoulder with advanced enterprisesin the world market. We will continue our challenge untilthe day we become a world-class enterprise," CEO Leeemphasized.

With development of materials through in-house rubberblending designs and quality assurance through durabilitytesting and a state-of-the-art design system, Jinyang OilSeal's technology research institute is engaged in researchof new technologies to suggest a future vision. Among thecompany's 100 employees, 16 are research specialists.

"Taking into consideration that the household electronicsfield accounts for 70% of total sales, one-third of thecurrent research staff is sufficient. However, looking ahead10 and 20 years, we are staffing the institute to the presentlevel. This institute will lead the future of Jinyang Oil Seal,"CEO Lee said.

As he always looks to the future rather than focus solely onthe present, CEO Lee invests continuously. The system todigitalize all processes and the establishment of the researchinstitute were elements of a systematic preparation stage.Yet, there are still many cases that Jinyang Oil Seal relies onadvanced countries for major core parts.

There is a common belief that Korea is being outpacedby Japan in high-end technologies and by China in low-price competitiveness. However, CEO Lee sees it differently.He believes that the technological prowess and know-howsecured by Jinyang Oil Seal is sufficient to succeed in theglobal market.

He also thinks that functional products, in particular, are amarket worth challenging. He understands that if acompany grows its internal capabilities, includingproductivity enhancement and technology development,and actively participates in government tasks or support,when necessary, it can harvest considerable synergy effects.

Opinion


Seoul SMBA Administrator Beck Du-Ock

The current global recession providesan opportunity for a renewed economictake-off in Korea. At this juncture, it ishigh time to promote a creative andcommunicative environment to launcha new round of SME entrepreneurship.

Beck Du-Ock, administrator of SeoulRegional SMBA (Small & MediumBusiness Administration), made theseand other points at an internationalforum sponsored by Soongsil Universityand Babson College on May 29.

During the forum on the theme“Entrepreneurship Beyond the GlobalRecession,” Beck highlighted historicalperiods that indicate the greater thecrisis the nation experiences, the moreintense is subsequent Koreanentrepreneurship in transforming thecrisis into opportunities.

Analyzing Korean entrepreneurshipfrom a historical perspective, successhas been achieved with the applicationof the so-called “change and unity”spirit championed by U.S. PresidentObama plus the patented Korean “can-do” attitude.

Highlights of Beck’s presentation titled“Korean Entrepreneurship: NewFrontier for Conquering Crisis” arepresented below.

Korean Entrepreneurship inHistorial Perspective

Korea’s rags-to-riches development isoften called a man-made miracle. Theroot of this economic legend has beenentrepreneurship as well as effectivegovernment policies.

From the historical perspective ofentrepreneurship evolution, businessconglomerates, such as Samsung andHyundai, were the engines of outward-oriented industrialization that startedwith Park Chung-Hee’s military regimein 1961. Over the ensuing twenty years,the state guided industrial izationthrough the development of a powerfulexport machine worked well.

In the early stage of economicdevelopment, the governmentdeployed a so-called “stick and carrot”policy, namely incentive and regulation.The big enterprise-oriented policiescontributed to fast-track growth andefficiency to a certain extent. But theywere an obstacle to theentrepreneurship of small enterprises.

The sleeping SME entrepreneurshipbegan to awake in the late 1970s as thenation sought to create a win-winrelationship between SMEs and largeenterprises. In the 1990s, Korearealigned SME competition policies to

“As Koreanentrepreneurship has

demonstrated withhistorical milestones,SMEs are capable oftranslating crisis into

opportunity.”

High Time to PromoteSME Entrepreneurship

SMEIC News


2009 SME Innovation Seminar Scheduledfor Aug. 25-28

The APEC Innovation Center will host an SMEInnovation Seminar on Aug. 25-28 inSeoul, Korea, under the theme“Innovation in SME Financing andMarketing,” as part of the 2009APEC-funded project “EffectiveImplementation and Assessment of SMEInnovation Policy” (APEC SME01/2009A).

The main objective of this seminar is to bring SMEworking group members together for the purpose ofstudying and discussing SME policies and successfulcases of SME innovation amid the global economiccrisis among APEC member economies, according tothe Center; whose secretariat is the Small & mediumBusiness Corporation (SBC).

APEC SME Working Group members, governmentofficials in charge of SME policy, SME innovationspecialists and researchers are invited to participate inthis seminar at COEX InterContinental Hotel in Seoul.

The seminar will address the finalresults of the research project“Assessment Framework Development

of the Daegu Initiative on SME IAPs(Innovation Action Plans)”.

The research results will provideparticipants with an effective framework for assessing theSME IAPs. Since APEC member economies are expectedto submit a self-assessment report on the progress ofIAPs for SME innovation in 2010 when the first five-yearcycle of the Daegu Initiative ends, it is recommendedthat APEC SME working group members participate inthis seminar.

New Brochure & Annual Report Published

The APEC SME Innovation Center has published anew brochure and annual report for 2008-2009.

The publications are a result of the InnovationCenter’s renewed efforts to facilitate communicationamong regional economies.

Highlighted contents of the brochure, tit ledPromoting Sustainable Co-Prosperity in the APECRegion Through SME Innovation, are “Vision &Mission,” “Key Milestones,” “Track Record,” “BusinessPlan for 2009”, etc.

The annual report features “Achievements in 2008,”“Work Program for 2009” and “About SBC,” whichtook over the Center’s secretariat role from the KoreaTechnology and Information Promotion Agency forSMEs (TIPA) as of Jan. 1 this year.

In the foreword of the annual report, Hong Suk-Woo,

SMBA Administrator, emphasizes that the APEC SMEInnovation movement is sure to provide the rightprescription to stimulate the regional economy in thesetrying times.

“On the strength of active cooperation andcollaboration among the APEC economies, I believethat the SME innovation drive will ‘move the mountain’to take advantage of the opportunities created by arapidly changing, globalizing marketplace,” Hong says.

Opinion


address the new environment established with thelaunch of the World Trade Organization regime.

In 1997, Korea weathered the so-called IMF crisis,which was dubbed an economic Korean War. The crisis,however, provided momentum for Korean SMEentrepreneurship to blossom with the burst oftechnology-intensive venture success.

The current global economic crisis, triggered by the U.Sfinancial crisis, poses challenges to SME entrepreneurshipin the short-term. However, as Korean entrepreneurshiphas demonstrated with historical milestones, SMEs arecapable of translating crisis into opportunity.

These days, the nation’s main task is to cultivate abusiness environment that encourages and nurturesnew business start-ups and capitalizes on Korean can-do-spirit-based entrepreneurship.

Beyond Crisis, Toward New Take-off

Unprecedented hardship has befallen a large numberof small and medium-sized corporations. It isimperative that they now concentrate on their existingproducts and services, and prepare themselves for thechanging paradigm of business by being keenly awareof contemporary trends. There are three categories ofchanges in regards to the current businessenvironment.

First, there are sudden but obvious increases ofuncertainty in the current business environment, asaptly described by the terms “gray zone,” “twilightera” and “chaotic age.” Consequently, small firms needto move through uncertain times by managing riskswhile being creative and pursuing experimentation.

Second, changes are occurring in the varied demandsand increased participation of customers, who nowhave powerful channels, such as online communities,to voice their opinions directly to corporations.

There are still many small firms that agree with thenecessity of reacting to these changes, but are unableto come up with virtually any flexibility, citing a lack ofresources. Entrepreneurship may provide necessarymeasures to close the gap, deficiency andshortcomings, only if firms have the vision for thesenew environmental changes and businessopportunities.

History shows that the greater the crisis the nationexperiences, the more intense is Koreaentrepreneurship, transforming the crisis intoopportunities. And the success epic is the fruition of“Change and Unity” spirit plus “Can Do” attitude.

Suffering the pain of the Korean war in the early1950s and the subsequent social unrest, Koreanentrepreneurship gathered steam, responding to thedemands of the times, i.e. supplying cheap but qualityproducts to global consumers. Responding to the IMFfinancial crisis, Korean entrepreneurship was combinedwith digital technology to build a strong ITpowerhouse. Struggling with the current economiccrisis, Korean entrepreneurship is swiftly channeling thechallenge into such new horizons as green technologyand knowledge-based culture economy.

Indeed, an SME renaissance is blossoming thanks toKorean entrepreneurship’s drive to develop its ownblue-ocean competitiveness. Crisis is the mother ofgreat opportunities.

SMEIC News


SMEWG Chair Visits SBC for SMEInnovation Support

PNG Cheong Boon, Chair of APEC Small & MediumEnterprises Working Group (SMEWG), visited SBC,which is the secretariat of SMEIC, in April 30, meetingLee Ki-Woo, SBC president to discuss APEC SMEinnovation and knowledge & information exchangesbetween the two organizations. PNG Cheong Boon isconcurrently Chief Executive of SPRING Singapore.

The two sides exchanged policy and financialmeasures to support creative SMEs, combating theglobal economic crisis.

On April 29, the APEC SMEWG chair met Hong Suk-Woo, Administrator of Small & Medium BusinessAdministration (SMBA) and other SMBA and SBCofficials, where he praised the role of APEC SME

Innovation Center. He said that he would make aneffort to participate in the 2009 SME InnovationSeminar, scheduled for Aug. 25-28 in Seoul.

Korea-China e-Business Cooperation

Aiming to create a successful model for SMEinnovation by establishing a consistent marketeconomic environment, the Center is looking toproduce momentum from e-business cooperationbetween Korea and China. This program featuresmutual linkage of the Korea-China Product InformationNetwork and establishment of a Korea-China SME e-business cooperation corner.

Exploiting the advantages of digital convergence,networking and clustering of innovative SMEs, theprogram links networks of the two countries, Korea’sGobizkorea site (www.gobizkorea.com) and China’s(www.sme.com), as well as the launch of the Korea-China Online Trade Corner. The latter forum links theSME product information networks of the two countriesand provides a platform for ‘Online Trade’ and ‘TradeData Room.’

The ‘Trade Data Room’ provides historical data andinformation to facilitate bilateral trade, various export &import document forms, standard trade contractformats, etc.

The Center is also pursuing the establishment of aKorea-China SME e-Business Cooperation Corner at therespective Gobizkorea and SME.com sites of Korea andChina. The corner will provide Chinese-languagehomepages, e-catalogs and company blogs for thoseenterprises that are seeking cooperation with SMEs ofthe two countries so that the enterprises themselvescan publicize their own products and services.

SMEIC News


Korea-Japan SME Business Matchmaking

A Korea-Japan Business Matchmaking Session isscheduled to take place in Tokyo on July 2 to generateopportunities for innovative SMEs to access new markets.

About 20 Korean small and medium enterprises will beselected to participate in the bilateral businessmatchmaking session with prospective partners from theneighboring economy.

The Korean side will conduct a collective educationsession for the Korean participants in order to help themsuccessfully generate new business collaboration with theirJapanese counterparts.

In the July session, Korean companies will givepresentations on potential areas for collaboration in aprelude to specific one-on-one business discussions.

The company-by-company results from the session willbe analyzed for appropriate follow-up measures.

APEC SME Innovation Consulting

The Center plans to host APEC SME InnovationConsulting, focusing on productivity enhancement tocreate SME innovation opportunities for developingeconomies of the region.

Scheduled for the May-June period, the pilot projectfeatures diagnosis and consulting based on the businessstructure sophistication tools of the Small & mediumBusiness Corporation (SBC).

A group of management and technology specialists will

be dispatched to more than 15 SMEs, which will beselected from among applicants in the Philippines andIndonesia.

The consulting team, which will be reinforced, ifnecessary, with specific area experts such as taxation,accounting, etc., will develop a roadmap for each SME formanagement innovation and suggest solutions for creativeinnovation. It will also extend education/training support toenhance quality. The results of SME Innovation Consultingwill be thoroughly analyzed and revised as appropriate tobe implemented in the other economies of the region inthe future.

APEC SMEIC Website Innovation

The APEC SME Innovation Center has innovated itswebsite (www.apec-smeic.org), aimed to provide acreative and communicative vehicle to facilitate the APECSME innovation drive.

The website innovation includes content expansioncovering SMEIC news/notices, SME policy innovation, andSMEs on the move.

The new homepage has strengthened linkages withmember economy media such as SBA newsletter andSPRING newsletter as well as APEC and APEC SMEWG. Italso carries SMBA newsletter, delivering to readers informative and instructive SME policy innovation in Korea.

Documents

Innovation Briefingthe best strategy, 'Cultivation of Talented Manpower,' and to implement it, the 'Firm Will' of CEOs is imperative. An enterprise is like a man. Therefore, managing