At the Palace Hotel on the 20th, the Export-Import Bank of Korea (Korea Eximbank) concluded an MOU with Samsung C&T, Doosan Heavy Industries, and Doosan Infracore for cooperation in the shared growth with SMEs program.
The shared growth program is comprised of 1) a partnership program supporting exporting SMEs which have advanced abroad with large corporations and 2) a sustainability program supporting Korean SMEs participating in export transactions with large corporations.
While Korean commercial banks usually limit their shared growth funds to domestic activities of SMEs, Korea Eximbank extended support to also encompass joint overseas activities of SMEs with large corporations.
(Case Example 1)
An SME expanding into China with a large corporation that had established a subsidiary in China is unable to secure loans from local financial institutions due to its low recognition and weak networks. The situation is aggravated by China’s foreign currency loan regulations for payment of imported materials.
Through the Partnership Program of Korea Eximbank, the overseas subsidiary of such SMEs would be provided with funds at preferred rates (up to 0.5% reduction) for establishment and operation.
Simultaneously, large corporations would provide partner SMEs with management consulting, technological advisory services, and overseas expansion support to enhance their competitiveness and early establishment.
In particular, Korea Eximbank plans to support local subsidiaries with exchange risk management by providing local currency loans through the Bank’s extensive networks in the Middle East, Southeast Asia, CIS, and Central and South America.
(Case Example 2)
An SME with a patent for power generator equipment concludes a supply contract with a large corporation for an overseas generator project but is unable to secure funds for production due to poor financial status caused by investment in R&D.
The Sustainability Program of the MOU concluded on the 20th would facilitate fund procurement for such companies (with leading technological capacities and participating in export projects of large corporations) despite their low credit ratings.
The large corporation would offer its partner SME finance support recommendations, technological support, and management consulting.
Korea Eximbank will simplify its review process to focus more on the technological capacities and profitability of the SMEs, providing financial support at favorable rates to enable shared growth of large corporations and SMEs.
Dr. Yong Hwan Kim, chairman and president of Korea Eximbank, commented upon signing the MOU, “This MOU is based on mutually held goals to increase exports and support long-term growth of construction and plant sectors by fostering SMEs with leading technological capacities. In tandem with assistance of large corporations, we will help exporting SMEs by providing management, finance, and technological support."
A participant of the signing ceremony commented, “We have long strived to resolve the financial difficulties of SMEs but it continues to be a chronic problem. Hopefully, through the signing of this partnership MOU, SMEs will gain the funds they need at favorable terms and technological support to be successful in overseas projects.
The Bank plans to expand this partnership MOU between large corporation and SME in the areas of shipbuilding, automobiles, and IT industries.
In particular, briefing sessions and meetings will be held in Central and South Africa this coming March in order to communicate with exporting SMEs of their difficulties. The Bank will then request cooperation from large corporations to meet those needs.
Meanwhile, the Bank signed an MOU with Korea Hydro & Nuclear Power to support export SMEs on February 14 and plans to provide KRW 1 trillion to exporting SMEs for shared growth.
