With the objective of learning from the rich experiences and lessons that other countries have gained from small- and medium-sized enterprise (SME) export assistance programs, the Asia Pacific Foundation of Canada presents a new research report series, “Going Global.” To read the entire report, please jump to the blue download tab at the end of this piece.
The Global Brand program is an initiative of the Korean Trade-Investment Promotion Agency (KOTRA), a government-funded trade and investment organization in South Korea. KOTRA was established in 1962 with the mandate of helping South Korea achieve export-driven economic development. The Global Brand program is an endorsement in which KOTRA fully vouches for the high quality and reliability of Korean small and medium-sized enterprises (SMEs) in an effort to raise their brand value in the global marketplace.
The program was first launched in 2008 as the Seal of Excellence program and then changed to its current name in 2012. It offers a variety of supports and services to selected companies, including brand capability advancement support, a customized consulting-education program, and grants to use the KOTRA logo for marketing purposes, as well as other innovative and technology-aided marketing and public relations activities. Through a systematic approach, this program helps selected SMEs create brand awareness in and penetrate overseas markets, reduce transaction time, and increase export sales and revenue streams. The ultimate objective of the Global Brand program is to enable Korean SMEs to be more self-sufficient when exporting to foreign markets.
OBJECTIVES OF THE PROGRAM
SMEs make up 99% of all Korean enterprises in number and workers, but account for just one-third of the export total. The program intends to address a key concern among most Korean SMEs: how to establish brand recognition in international markets given their lack of resources and experience. Overseas buyers often don’t trust foreign SMEs and their products/services. The program offers integrated and innovative services to methodically selected SMEs in their branding efforts, and allows them to leverage KOTRA’s credibility and subsequently to enhance their own global brands in the international marketplace.
The Global Brand program starts with a distinct three-tier rating system, as shown in Table 1. Through a screening process, the selection committee – consisting of industry experts and international trade specialists from such groups as KOTRA, K-sure (Korea Trade Insurance Corporation), and the Korea Testing Laboratory, as well as scholars – selects Korean SMEs based on their sales volumes. The blue category is the entry level for SMEs whose export sales are less than US$10M, while silver and gold categories have grossing export sales minimums of US$10M and US$20M, respectively. Additional criteria, such as market potential, brand soundness, and product/service quality, are also considered in evaluating selected companies. Selected SMEs can gradually upgrade to a higher level when they increase their export sales index. Since the rating system is aimed at making SMEs increasingly self-sufficient in the global market, it is more than a simple classification scheme. The advantage of this three-tier rating system is that KOTRA can differentiate its services and supports to Korean SMEs.
The Global Brand program supports selected SMEs in the areas of endorsement, brand development, localized consulting, and innovative promotions.
The selected companies are allowed to carry out overseas marketing activities with the KOTRA Global Brand logo attached to their business cards and promotional product catalogues for up to four years. Each company and product awarded the KOTRA Global Brand is given a unique serial number (e.g. 2014-B-001). The authenticity of the seal can be verified by entering its number or company name at korean-products.com or buykorea.org. While selected SMEs are often those that have already been accredited by domestic and international accreditors such as KS, UL, and ISO, the endorsements from this program add wings to SMEs’ export-related activities and raise their brand awareness around the globe.
STRATEGIC ASSISTANCE IN BRANDING DEVELOPMENT
The Global Brand program includes a brand capability advancement support system that consists of three stages: examination, upgrade, and utilization. In the first stage, KOTRA brand experts examine selected companies’ brand capabilities. To accomplish this, they employ a brand capability evaluation model through consultation with the SMEs. In the second stage, KOTRA co-operates with related organizations, such as the Korean Intellectual Property Office, to help selected SMEs develop their brands for the global market. KOTRA also collaborates with industry and educational institutions to improve product design for these companies. It even covers the expenses for selected SMEs to improve their product designs. In the last stage of this support system, SMEs can utilize the newly developed or updated brand and product designs in their global marketing efforts. In doing so, there could be joint marketing activities between SMEs and KOTRA’s Global Brand promotion centres. KOTRA-initiated strategic assistance helps Korean SMEs to understand where they are in the overseas market and how they can further develop their own brands in the new market.
LOCALIZED CONSULTING IN BRAND MANAGEMENT
This service offers one-to-one consulting regarding brand management in target markets. In contrast to many other export promotion programs that only introduce some basic information regarding overseas markets, KOTRA offers customized and “localized” consulting through a network of 126 overseas trade centres across 86 countries, including in-depth analysis of the SMEs’ products and brand image. The consulting is focused on driving brand awareness among potential foreign buyers who are identified by matching the product offerings with the local companies profiled by marketing specialists in KOTRA’s trade centres. With such tailored research and consulting assistance, SMEs become more effective in capitalizing on their brands, exploring potential overseas buyers, and finally penetrating selected markets.
INNOVATIVE AND TECHNOLOGY-AIDED PROMOTION
KOTRA conducts a variety of innovative and technology-aided marketing and public relations activities for selected SMEs. It promotes the selected companies through its government-accredited global B2B market website, buykorea.org, and hosts export consultation fairs for SMEs that seek to launch products on eBay. It encourages SMEs to take advantage of the booming e-commerce market and to explore other technology-enabled new trade platforms. KOTRA also conducts joint marketing and PR activities for Korean SMEs as part of its offline support program; helps create a Global Brand directory, brochures, and leaflets for selected SMEs; and publishes technical magazines targeting the potential foreign buyers. KOTRA integrates its various resources, especially through its offices in many major international trading hubs and countries, to optimize the efficiency and effectiveness of its overseas promotions of Korean SMEs.
OUTCOMES ATTRIBUTABLE TO THE PROGRAM
The Global Brand program has produced impressive outcomes since its formation, including the following:
- SMEs served: The program supported 454 companies between 2008 and 2014, of which 81% were in the blue category. The number of companies in the silver and gold categories reached 36 and 49, respectively, at the end of 2014.
- Export growth: KOTRA set a goal of a 3% increase in export volume among supported companies, and this has often been exceeded. For example, one SME was able to increase its exports by over 100% each year after participating in the program.
- Brand awareness: A survey from KOTRA in 2012 revealed that overseas buyers’ preference for and reliability perception of products/services by Korean SMEs increased 80.8% and 84.9%, respectively, between 2008 and 2011.
- Marketing effectiveness: The time lag between initial business meetings and contract signing has shortened by 69.8%.
- Market penetration: A number of SMEs have penetrated new foreign markets with support from this program.
APPLICATION TO CANADA
Canada has two key programs that provide similar services to its exporting SMEs. For example, the Global Market Action Plan, launched in 2013, offers financing, information, business expansion, and education programs. However, the Global Market Action Plan is market-oriented, prioritizing markets and sectors to facilitate exports. Taking another example, the Enterprise Canada Network, operated by Canadian Manufacturers & Exporters, is a platform linking Canadian businesses and researchers to global opportunities, which is opportunity-oriented. Unlike such initiatives, Korea’s Global Brand program is firm-oriented. While the Canadian programs may have the advantage of reaching out to a broader spectrum of SMEs, firm-level interventions may lead to more concrete results. Canada may consider adapting the following best practices from the Korean experience:
- Differentiated services through SME classification: As seen in its three-tier rating system, the Global Brand program selects SMEs based on their export sales volume. This allows KOTRA to differentiate its services and supports to Korean SMEs. In a way, the classification serves as an “exports school” in which designated brand experts help selected SMEs upgrade to a higher level with their improved performance in exports. Unlike Canada’s Global Market Action Plan, which differentiates its supports based on company size, Korea’s “pick the winner” approach could be more effective because it rewards growth and is tailored to SMEs’ actual position in the marketplace.
- Leveraging government creditability with technology: KOTRA not only assists Korean SMEs in developing their own brands, but also helps them display their products on the government-accredited global B2B market website (buykorea.org) as well as on social network websites such as Facebook. This enables resource-poor and legitimacy-lacking SMEs to promote themselves and their products at low cost and with confidence. People may not appreciate the heavy-handed Korean approach, but this is just one of the ways Korea has excelled in export performance as a nation.
- Growth-oriented strategic assistance: In Canada, there are abundant resources available to help launch a small business, but very little to help grow SMEs. In contrast, Korea’s Global Brand program takes a long-term, step-by-step approach and assists SMEs along the way toward ultimate success in export marketing. As shown in its brand capability advancement support system, SMEs are “hand-held” through a process until they are capable of entering a foreign market utilizing their fully developed brands.
- Co-ordinated effort: To offer effective, focused services to exporting SMEs (e.g. supporting brand/design development and upgrading among SMEs) requires co-ordinated efforts among not only government agencies but also industry and educational partners. This is exactly what KOTRA has been able to do in executing its Global Brand program. Ultimately, Korea’s success hinges on its collectivistic culture toward a common goal of growing business for Korean companies. It’s time for Canada to learn from Korea to co-ordinate better among “various parties in the international trade portfolio.”
Interviews with Mr. Hyungsuk Yoon, Deputy Director and Mr. Jehyuk Lee, Marketing Research Manager of KOTRA Toronto Office on April 26, 2016
Korea Trade-Investment Promotion Agency (KOTRA)
Korea Trade-Investment Promotion Agency (KOTRA) http://english.kotra.or.kr/kh/index.html
 Allam, O. Nine Ways to Improve Canada’s International Trade Strategy. Canadian Business. Accessed July 11, 2016, at http://www.canadianbusiness.com/economy/nine-ways-to-improve-canadas-international-trade-strategy