[fn Editorial] Chinese Companies Grow 6 Times Faster Than Korean Ones, Need to Change Industrial Policy Framework

In the past 10 years, the growth rate of Chinese companies has been more than six times faster than that of Korean companies. This is based on an analysis by the Daehan Chamber of Commerce and Industry using the 'Global 2000' statistics from the American economic magazine Forbes. A fast growth rate means that the economy is dynamic. The growth rate of our companies lagged significantly behind not only China but also the United States. The growth rate of American companies was more than four times faster than ours. To find a way in the intensifying US-China hegemony battle, the growth momentum and speed of companies cannot remain as they are. The government must drastically change the corporate policy paradigm framework to match the changed global industrial environment. It means that tangible and intangible support measures to invigorate companies are urgently needed.

Looking at the number of companies included in the Global 2000, the United States is still dominant. The United States has over 600 companies, while China has 274. However, in the case of China, the number is less than half of the United States, but the speed is overwhelming. The United States has a 6.5% growth rate over 10 years, while China has surged by a whopping 52%. If this speed continues, China may soon overtake the United States. However, the United States is also launching a massive counterattack, so the battle for dominance will become increasingly acute. Our countermeasures are also urgently needed.

Korean companies are weak in both scale and speed. While startups in the United States and China are toppling existing Goliath companies and growing in size, we have gone in the opposite direction. Ten years ago, there were 66 companies in the Global 2000, but this year it has shrunk to 62. The gap in sales growth rates of companies is even more serious. Comparing the combined sales of the Global 2000 companies by country, China increased by a whopping 95% over 10 years. The United States also showed a high growth rate of over 60%. On the other hand, we only increased by 15%.

Innovative companies that can change the industrial landscape must emerge to have explosive growth. In the United States, advanced companies centered on artificial intelligence (AI) such as Nvidia, UnitedHealth, and Microsoft led the growth. The 10-year sales growth rates of these companies reached 2787%, 314%, and 281%, respectively. The activities of new companies such as Tesla and Uber were also remarkable. In China, not only tech companies like Alibaba, BYD, Tencent, and Xiaomi, but also companies in energy and various industries such as PowerChina and Digital China Group achieved results. In our case, the only companies newly listed in the Global 2000 are financial companies like KakaoBank. This indicates that the virtuous cycle of the corporate ecosystem is blocked.

Efforts must be made to stimulate corporate adventurousness and foster entrepreneurial spirit with institutional foundations. According to the 'Global Entrepreneurship Index' announced by the Korea Economic Association using the World Bank's entrepreneurship data on the 22nd, Korea ranks 5th after the United States, Switzerland, etc. It was predicted that the index could rise further if regulatory and manpower issues are resolved, which is a point that should be heeded.

Even if only the cobweb-like regulations and mismatched manpower supply structures are improved, the corporate environment will become much brighter. Rigid systems and regulations that do not consider corporate characteristics hold back companies and spread growth phobia. The proportion of domestic small and medium-sized enterprises (SMEs) advancing to mid-sized companies is 0.04%, and the proportion of mid-sized companies becoming large companies is only 1%. If the structure is such that companies pay a negative price for growth instead of receiving rewards, who would strive to grow? The framework of policy must be transformed into a growth support measure. Flexible systems that can respond immediately to rapidly changing environments must be devised in various ways.