‘Peter Pan’ SMEs loath to grow up

2013_01_SME-growthAbout one-third of SMEs are suffering from what has been dubbed the “Peter Pan syndrome,” meaning they refuse to grow into large enterprises as they hope to benefit from numerous forms of state support. Currently, the government offers SMEs up to 160 incentives and support programs.

Among 105 SMEs that are classified as being borderline large companies, 31, or 29.5 percent, said they have deliberately acted to avoid developing into larger enterprises or are planning to do so, such as by artificially adjusting their organizational structure, according to a survey by the Federation of Korean Industries (FKI).

One company with 249 employees added 80 new staff at its headquarters but falsely credited them as belonging to its overseas subsidiaries to keep it under a certain threshold that entitles it to government subsidies. If companies have over 300 domestic-based personnel on their books they are no longer ranked as SMEs.

According to the Minor Enterprises Act, if a company has over 100 billion won ($93.63 million) in equity capital and has posted average annual sales of 150 billion won or more for the past three years, it automatically loses its SME status.

For full article see Joongang Daily.