Small Giants

Small Giants (강소기업/强小企業) refer to small and strong enterprises in Korea. According to Prof. Jang-Woo Lee, small giants are small but strong company filled with the following factors differentiated from other businesses:
 * Technological edge
 * Visionary strategy
 * Marketing tactics
 * Sustainable advantage
 * Can-do spirit
 * Speedy decision-making.

Prof. Lee's S-enterprises are classified by 1) Employees less than 300, 2) Capital not exceeding 8 billion won, and 3) Number one market share at home, and Top Five in the world markets.

Generally they are called "hidden champions" across the globe. Hidden champions are relatively small but highly successful companies that are concealed behind a curtain of inconspicuousness, invisibility, and sometimes secrecy. The term hidden champion was coined by Theodore Levitt, who used it first in a discussion with Hermann Simon. Simon later on was the first to use this name as a title of a publication in a scientific German management journal. According to his definition, a company must meet three criteria to be considered a hidden champion:
 * Number one, two, or three in the global market, or number one on the company's continent, determined by market share;
 * Revenue below US$4 billion;
 * Low level of public awareness.

Key words
small and strong, spirit and speed, hidden champion, success factor, global market

In Germany
The first English book about hidden champions was Hermann Simon's Hidden Champions : lessons from 500 of the world's best unknown companies. In this book, the question is discussed of how Germany, a relatively small, European country, has for many years sustained the position of number one exporter in the world. Germany's few giant, highly visible corporations like Volkswagen, Siemens, BASF, BOSCH, and others are not substantially different from organisations like Ford, GE, DuPont, or Visteon.

Germany's export strength is clearly not wholly determined by these companies so there must be a large number of mid-size firms who are strong exporters. These smaller companies are however normally known only in their own area, by customers and suppliers, but not to the wider public or business community. When these companies are very successful on the international markets, they are hidden champions.

In Korea
Under the influence of Hermann Simon's Hidden Champions, Prof. Lee and his fellows sought small giants in Korea from:
 * Financial statements and analysis thereof;
 * Press release and other promotional booklets;
 * In-depth interview with top management of candidate companies;
 * Strategic analytical reports based upon the data and materials obtained from the above research; and
 * Presentation of the research result and group discussions with directors and officers with the company.

The output of first series totaling 24 companies are as follows:
 * Ostem Implant (오스템임플란트) : dental implant materials
 * Batech (바텍) : dental CT equipment
 * I Labo (아이레보) : digital doorlock
 * Solitech (솔리테크) : communications equipment
 * Idis (아이디스) : DVR manufacturing


 * Humax (휴맥스) : TV settop box
 * Nexon (넥슨) : graphic online games
 * M Game (엠게임) : online games
 * Ubicare (유비케어) : electronic medical records (EMR)
 * Amtechvision (엠텍비전) : fabless semiconductor


 * Corelogic (코아로직) : USB-type mobile camera chip, fabless semiconductor
 * Hangul & Computer (한글과컴퓨터) : office software
 * KTIC : venture capital
 * Unigen (유니젠) : natural herb plants
 * Dasan Networks (다산네트웍스) : broadband networking eqquipment and Internet phone terminal


 * Macrogen (마크로젠) : 자이모모나스 base sequence decoding DNA chip
 * Comtech System (콤텍시스템) : financial institution networking facilities
 * JVM (제이브이엠) : automatic pharmaceutical dispenser
 * NUC Electronics (엔유씨전자) : home kitchen appliances
 * CNS Technology (씨엔에스테크놀로지) : semiconductor one chip for navigation and communications


 * 주성엔지니어링: semiconductor SDCVD (반도체증착장비), LCD equipment
 * Wooridul Hospital (우리들병원) : spinal medical services
 * YG-1 : super precision cutting tool
 * SL (에스엘): automotive lamps

Success factors
Hidden champions are small and medium enterprises (SME). Most of them produce inconspicuous products, but in the market for these products they are ranked top in the world. Often, but not always, they are family owned. They export most of their products, and so contribute significantly to the current account of their countries, and are more successful than the average.

The idea of market leadership means more than counting market share. Leaders as employees need an "inner flame" to become, and to remain, the number one. Hidden champions normally work in small niche markets. For these markets they design unique products, which are produced with a high real net output ratio. They have to accept the risk of being a single product manufacturer. They divide between "good" and "bad" market share. The good is earned by performance and a solid foundation, the bad from price aggression and discounting.

One result of working with unique products in small niche markets is quite often the need to deal on the global market, just to be able to work on an economic scale. For this reason, hidden champions feel a strong need to work abroad early in their company's development. Hidden champions also operate extremely close to their customers, and their customers' needs are an important driver for their innovations. On the other hand, customers of hidden champions depend on their products and they cannot easily change their source. This often makes for a high level of co-dependence between the producer and the customer, a result of the one product risk.

A lot of the hidden champions established their main product as an innovation and were able to keep this single position in the market, or were at least able to keep a leading position. Their markets are mostly oligopoly with intensive competition.

Competitive advantages of hidden champions are rarely because of cost leadership, more because of quality, total cost of ownership, high performance, and consultation close to the customer. They "earn" their market leadership through performance and not through price aggression. Their high real net output ratio is often achieved by working with proprietary processes which make it hard for competitors to imitate their products. On the other hand management tasks like finance are often outsourced.

It also seems to be evident that to maintain market leadership hidden champions do business on their own, rather than depend on working in cooperation with others. Even sales in countries abroad are often organized from the parent company base. This keeps significant know-how inside, and allows attracting highly qualified staff even for a small company.

The corporate culture of hidden champions is distinctive. Their values are conservative: hard work, strict selection, intolerance of underperformance, low sickness rates and high employee loyalty — and most are based in smaller towns.

Leadership style is authoritarian on strategic issues but participative on operations level. The leaders identify themselves with the company, are focused on their products, and stay for a long time, much longer than is normal in large public corporations.

A serious problem for hidden champions, as it is for SMEs in general, is to attract international professionals. Hidden champions need people who are happy to live in a remote location, who are attracted by job content, and who do not care much for a formal and prescribed career path. In Germany the concept of hidden champion is known to some extent, and therefore hidden champions there are able to utilise this label to recruit staff.