The Gyeonggido Business and Science Accelerator (GBSA) has diagnosed structural limitations facing small and medium-sized enterprises (SMEs) in the province and called for a shift in policy direction.
GBSA announced Tuesday the publication of its "2026 Gyeonggi SME Trends Report." According to the report, the growth foundation of SMEs in the province is weakening amid changes in the internal and external environment, including global supply chain restructuring, prolonged high interest rates and inflation, and the acceleration of digital transformation.
As of 2023, the number of SMEs in Gyeonggi Province stood at 2,216,650, accounting for 26.7% of the national total. The province maintained its status as the country's largest SME cluster, with a 26.6% share of employees and a 28.2% share of revenue. However, the average number of employees per company fell from 2.49 in 2020 to 2.30 in 2023, and average revenue also declined. While the number of firms increased, their scale has shrunk.
Shifts in industrial structure are also evident. The manufacturing sector saw declines in both the number of firms and revenue, while SMEs in the information and communications industry grew at an average annual rate of 18.6% from 2020 to 2023, and the professional and scientific services industry grew at an annual average of 15.0%. The industrial structure is being reshaped around knowledge-based service industries.
However, both sectors saw declines in the average number of employees and revenue per company, exposing the vulnerability that an increase in startups is not translating into scale-ups.
The weakening dynamism of the ecosystem is another concern. The business birth rate fell from 16.8% in 2020 to 13.0% in 2024. The manufacturing sector's birth rate of 5.7% was lower than its death rate of 6.2%.
Dedicated R&D organizations and corporate research institutes also showed a downward trend. The proportion of high-growth firms fell below the national average, and export growth also lagged the national average. SMEs' operating profit margins and interest coverage ratios have continued to decline. The unfilled vacancy rate at firms with fewer than 300 employees has remained in the 8% range since 2024, with manufacturing, information and communications, and professional and scientific services all facing difficulties securing manpower.
GBSA proposed that the focus of SME policy should shift from quantitative expansion to qualitative growth. It emphasized the need for policy design based on qualitative indicators such as revenue growth sustainability, R&D continuity, and the proportion of high-growth firms.
To restore manufacturing competitiveness, the report analyzed the need for AX (AI transformation), strengthened capabilities to respond to future industries such as advanced semiconductors, future mobility, bio, and robotics, and expanded support for manufacturing startups. To scale up the information and communications and professional and scientific services industries, it also proposed strengthening linkages across R&D, demonstration, overseas expansion, talent development, and follow-on investment. The report also mentioned the need to expand industrial foundations and corporate support infrastructure in growth regions in northern Gyeonggi.
"SMEs in Gyeonggi Province have grown quantitatively, but limitations are emerging in terms of growth potential and innovation capacity," said Hyun Chang-ha, standing director of GBSA's Future New Industries Division. "We will strengthen policy support centered on restoring manufacturing competitiveness and scaling up knowledge-based service industries."
