Local corporations enhance the appeal and competitiveness of their areas and draw in consumers. After that, a variety of corporations should gather, and we must build a virtuous cycle in which they grow together with the region.
Kim Jeong-ju, Director General for microbusiness policy at the Ministry of SMEs and Startups, said this in an interview with ChosunBiz on the 14th. As commerce concentrates under a single-centered Seoul metropolitan system, microbusiness owners in the metro area face cutthroat competition, while non-metropolitan commercial districts face decline. In this situation, she explained that "local corporations," which add creativity to region-specific resources, can become a new growth engine for local commercial districts.
Local corporations refers to microbusiness owners or corporations based outside the Seoul metropolitan area, but it does not simply mean that business sites are located in a region. These are enterprises that create differentiated value by adding creative products, services, and content to unique resources such as a region's history and culture, nature, specialty products, and spaces.
Kim, the Director General, stressed that it is important not to stop at growing local corporations, but to expand that growth to the entire local commercial district. The idea is to build a structure in which the success of individual corporations spreads to surrounding commercial districts and again pulls consumers into the region.
Kim, the Director General, also said it is important to use K-content to consolidation local culture and tourism with local corporations. Through the recent BTS concert held in Busan, we also confirmed that K-content lifts sales for local microbusiness owners and boosts tourism spending.
Kim, the Director General, said, "We plan to strengthen measures to revitalize the economy by linking K-content with local commercial districts in coordination with related ministries, including the Ministry of Culture, Sports and Tourism and the Ministry of Land, Infrastructure and Transport." The following is a Q&A with Kim, the Director General.
―The gap between commercial districts in the Seoul metropolitan area and the provinces is widening. What is the reality for local microbusiness owners?
As commerce concentrates under a single-centered Seoul metropolitan system, the metro area is struggling with cutthroat competition, while the provinces face declining commercial districts. Looking at commercial districts nationwide, two-thirds of the core districts with high sales and foot traffic are clustered in the metro area. The average monthly sales of merchants in the metro area's commercial districts are about twice those in the provinces, and Seoul is about 3.6 times higher than the provinces.
That said, new opportunities are also emerging in provincial commercial districts. As consumption that prioritizes experiences and values over simply buying goods grows among Millennials and Gen Z, demand is increasing for consuming a region's unique appeal by seeking unconventional spaces, gastronomy, and travel with scarcity. This is why alleyway commercial districts and traditional markets are drawing attention again. Cases are also increasing in which foreign tourists move away from the past Seoul-centered pattern to travel from Seoul to provincial cities such as Busan and Daegu to enjoy local culture and food.
―Why are local corporations important?
A region's competitiveness is not determined solely by its industrial or income-generating base. If a region has a variety of self-employed businesses that provide creative products and services, residents' quality of life improves and outside consumers are drawn to the region.
Local corporations are corporations rooted in a region that add creativity to unique resources to create new value. "Local anchor corporations" such as Sungsimdang in Daejeon and Momos Coffee in Busan serve as "magnet stores" that enhance the area's own appeal and draw in consumers. Especially as the population declines, it is important how much we can attract a "stay-type consumer base" that visits, stays, and spends in the region, not just the resident population. In the end, the competitiveness of local corporations translates into the competitiveness of local commercial districts.
―What are the Ministry of SMEs and Startups (MSS)' policies to foster local corporations and commercial districts?
The growth of local corporations is the starting point. After that, local long-standing shops, residents, the government, and other merchants should work together to create a regional theme and vision and grow the commercial district into a single brand. The Ministry of SMEs and Startups (MSS) is strengthening stage-by-stage support from founding local corporations to business advancement and overseas expansion. In the first round of "Startup for All," we selected 1,000 local companies, and in the second round we plan to select and support an additional 2,000. We will discover 1,000 promising alleyway commercial districts, and also create 17 "glocal commercial districts," which are representative tourism districts of each region, along with 50 "local-themed commercial districts" equipped with themed content such as gastronomy, cultural heritage, and activities.
―For local corporations to grow, investment and funding support must also back them.
We are running the "LIPS" program for investment in local corporations. Similar to TIPS, when a private investment firm first invests in a microbusiness owner with growth potential, the government provides follow-up funding. We will also strengthen a system to discover, invest in, and nurture promising local corporations through regional investment firms. In connection with the regional growth fund, we plan to create a 200 billion won dedicated local startup fund by 2030 to underpin the growth base.
―It also seems necessary to have a strategy to draw the global popularity of K-content into local commercial districts.
We confirmed the potential at BTS's concert in Busan. During the two weeks before and after the concert on June 12–13, overall sales by microbusiness owners in Busan rose 3.6% from a year earlier, and foreign customer sales surged 71.7%. This showed that a global fandom can translate into spending at local alleyway commercial districts and by microbusiness owners. By organically combining the Ministry of Land, Infrastructure and Transport (MOLIT)'s urban regeneration, the Ministry of Culture, Sports and Tourism (MCST)'s tourism content, and the Ministry of SMEs and Startups (MSS)'s support for local startups and commercial districts, we will support K-content and local commercial districts to grow together.
―What are the ways to use AI to enhance the competitiveness of local corporations?
Many local corporations are one-person or small-scale startups, so cost reduction and productivity improvement using AI are crucial. First, we plan to equip the "Small Business 365" commercial district information system with AI so users can search foot traffic, sales, and business distribution and easily check tailored commercial district information, support programs, and labor and tax information. Furthermore, we will build an "AI navigation" system that analyzes data on similar stores in surrounding commercial districts and suggests appropriate operating hours, menu composition, and product prices. Ultimately, helping turn good ideas into businesses and combine them with local resources to grow is the way to revive provincial commercial districts and the regional economy.