According to a report from the Ministry of SMEs and Start-ups (MSS), the cosmetics category benefited from the growing popularity of Korean beauty products in the United States, China and Russia.
Riding on the K-Wave
The amount of exports by Korean small and medium-sized enterprises (SMEs) hit a record of $114.6bn in 2018, up 8% from a year before.
The increase of consumer goods such as cosmetics allowed SME exports to exceed $100bn in value for the second consecutive year. The report added that the number of exporters grew by 2.4% to 94,589.
Due to the “Korean Wave effect” total exports of cosmetics, pharmaceuticals and fashion apparel increased 6.9%. Aside from major countries like China, exports of these goods increased significantly to emerging countries.
According to MSS, the export volume of cosmetics have risen sharply since 2010. It estimates that exports grew 1.3 times since last year, inching closer to overtaking automotive parts, the second-largest SME export category.
SME exports accounted for 18.9% of the country’s total exports, up 0.4% from the previous year due to robust exports of cosmetics and other products, said MSS.
According to the report, the largest export markets for Korean SMEs were China, the US, Vietnam, Japan and Hong Kong.
It highlighted that exports to China and the United States hit a record high even as the countries continue to be embroiled in a trade dispute.
China accounted for 23.8% percent of the SME exports, growing 17% to $27.3 bn. The US, on the other hand, grew 12% to $1.3bn.
Growth unlikely to continue
Minister Hong Jong-haak said the record results are evidence that Korean SMEs are actively tapping into the global market.
“The fact that [Korean] SMEs have been able to enjoy growth in exports for two consecutive years, even when faced with difficult global export conditions including the spread of protectionism, shows SMEs efforts in actively trying to expand to the global market,” he said.
However, he added that it will be difficult for SMEs to enjoy the same growth in the past two years as the foreign trade conditions are getting more unfavourable due to the “slowdown in the economic growth rate of major countries”
Especially since there has been a decline in export growth due to “China's growth slowdown and semiconductor unit price decline,” he explained.
Even then, the minister stressed that the Korean government will continue to support the countries SMEs.
“We will continue to monitor the risks and difficulties our SME exporters are facing through regional export support centres, while further strengthening cooperation by holding regular meetings with related institutions,” Hong said. “We will focus all our policies so SME companies can enjoy export growth in 2019.”