Since July 2019, when Japan's export restrictions were implemented, the decline in dependence on Japan for 10 key items has accelerated threefold, with the import value of hydrogen fluoride, which was subject to Japanese export restrictions, falling to one-sixth of its original value. Furthermore, growth is becoming visible, with sales of our small and medium-sized enterprises increasing by approximately 20.1%.

The Ministry of Trade, Industry and Energy (Minister Moon Seung-wook) announced on the 1st the “2-year Results of Strengthening Competitiveness in Materials, Parts and Equipment” on the second anniversary of Japan’s export restrictions, and stated that based on these results, it will continue to pursue policies to strengthen competitiveness without wavering in the future in order to leap forward as a global small, part and equipment powerhouse.

He also emphasized that the achievements in strengthening the competitiveness of small and medium-sized enterprises (SMEs) over the past two years were achieved jointly by the public and our companies, and that he expects to see further achievements in securing and commercializing more core SME technologies in the future.

Since the export restrictions in 2019, public-private efforts have been made to stabilize the small business supply chain. Just over a month after the announcement of the export restrictions, an immediate response system was established, including a supply and demand response support center, a supplementary budget, and measures to strengthen the competitiveness of small and medium-sized enterprises.

In addition, approximately 3 trillion won was invested in R&D of small and medium-sized businesses centered on 100 core technologies, and the supply chain was strengthened through various means, such as import diversification (94 cases), domestic supply replacement (129 cases), new facilities/expansion (96 cases), foreign investment attraction (7 cases), and M&A (16 cases) for 100 major items imported from Japan, including the three major items subject to export restrictions.

As a result, the amount of hydrogen fluoride imported from Japan was reduced to 1/6, and the amount of fluorinated polyimide imported from Japan was virtually reduced to 0 through the adoption of alternative materials (UTG), thereby escaping dependence on specific countries.

In a short period of two years, the dependence on Japan for 100 key items (based on HS code) decreased by approximately 6.5 percentage points, from 31.4% to 24.9%.

The dependence on Japan for 100 key products has been steadily decreasing, but the decline accelerated by approximately three times starting in 2019.

For the entire small business industry, the dependence on Japan fell by 0.9 percentage points from 16.8% to 15.9%, and the proportion of imports from China also decreased by 3.1 percentage points, indicating progress in supply chain diversification.

The 'solidarity and cooperation ecosystem' born from the small business demand-supply cooperation model has rapidly spread based on the consensus of all small business owners.

Large companies have shown a forward-looking shift in their perception by opening their previously closed production lines to small and medium-sized enterprises (SMEs) to allow them to verify new technologies and boldly apply technologies that pass the tests to final products.

Through this, at least 239 direct and indirect sales were generated and 119 demand company certifications were made for technologies developed by domestic small and medium-sized enterprises since July 2019.

Also, the demand-supply periodThrough government R&D projects in which the company participated, the company achieved sales of KRW 330.6 billion, investment of KRW 445.1 billion, employment of 3,291 people, and 1,280 patent applications.

Not only companies, but also public research institutes and universities with technology, human resources, and equipment are actively participating in improving the technological competitiveness of small and medium-sized enterprises. A total of 26,000 pieces of equipment and 11,000 personnel from 37 public research institutes are being utilized to support small and medium-sized enterprises (SMEs) in addressing their technological challenges. Twelve universities possessing key manufacturing technologies, such as welding and heat treatment, have formed a "University SME Advisory Group" to provide focused support for improving corporate productivity.

In addition, the amount of funds raised for the Small Business Policy Fund, which focuses on investing in small and medium-sized enterprises, has exceeded 1 trillion won as of June 2021.

The total sales of small and medium-sized listed companies increased by 20.1% in the first quarter of 2021 compared to the same period in 2019, significantly exceeding the average sales growth rate of all listed companies (12.7%).

Furthermore, as exports by small and medium-sized enterprises (SMEs) are showing a positive trend, free from Japan's export restrictions and the impact of the coronavirus, the SMEs' trade surplus is 2.69 times that of the entire industry (2.01 times in 2020), leading the economic recovery.

Minister of Trade, Industry and Energy Moon Seung-wook emphasized, “The process of overcoming the materials, parts and equipment crisis over the past two years has three major meanings: the people, businesses, and the government worked together as one to perfectly respond to Japan’s unjust economic attacks targeting our core industries and established a stable supply chain; innovative changes took hold in our materials, parts and equipment ecosystem; it served as an opportunity for small and medium-sized companies in the materials, parts and equipment industry to grow significantly; and it became the foundation for our materials, parts and equipment industry to advance beyond the domestic market and into the global market.” He added, “Based on our experience overcoming the crisis over the past two years, we will continue to make efforts so that our country can take the lead in the global supply chain and leap forward as a world-leading advanced industrial powerhouse.”