2005-2162

Cover Story | Hidden Champions
Provided by the company
A full 127 Korean products held the top
spot in their respective markets last year.
Young An was founded
in 1959. Today it supplies
hats and baseball caps to
over 70 countries.
and manufacturing in 2006. This was an increase
from 46.8 percent in 2005 and 46.4 percent in
2004.
The agency said the report showed that
Korea’s economy is growing more dependent on
the few conglomerates, particularly since the crisis
of the late 1990s wiped out many smaller businesses.
The 31 conglomerates with assets of over 5
trillion won held 37.5 percent of the market for
mining and manufacturing here in Korea, with
over a quarter taken up by the top five business
groups. Those 31 conglomerates also accounted
for 76.2 percent of exports. That renders the
Korean economy especially vulnerable to problems
in these large family-owned jaebeol.
But growing small businesses may be able to
remedy the situation, and some experts have put
their hope in these “hidden champions.” In this
category are companies with strong technological
foundations or products that have the potential
to be — or already are — international hits.
An Chong-bum, an economics professor at
Sungkyunkwan University, says the Korea economy
was only able to reach where it is today
thanks to smaller companies, without whom
there would be no Samsung Electronics or Hyundai
Motor. Therefore, the success of the nation’s
economy is entwined with the success of these
firms.
Professor An believes that such small operations
are able to thrive because of their endless
efforts to innovate. Better technology and
improvements in quality are the only way small
and mid-size companies are able to survive, An
says.
The name “hidden champions” comes from
the title of a book by Hermann Simon on the
power of the small to mid-sized business.
Germany has been the largest exporter in the
world since it took that title from the U.S. in
2007. In 2000, U.S. exports accounted for 12.1
percent of the world’s overseas shipments. But
seven years later, Germany’s global market share
had grown to 9.5 percent, while U.S. fell to 8.3
percent.
The secret to Germany’s strength, Simon
argues in his book, was competitive smaller
companies. Simon claims that two-thirds of the
world’s “hidden champions,” roughly 1,300
firms, are German. He says these companies play
a vital role in Germany’s economy, and that it is
the same for the Netherlands and Belgium.
Visiting Korea in June, Simon noted that
Korea’s economy was too reliant on conglomer-
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