GTC stands for General Trading Company which deals with imports and exports of many different types of stuff. In Korea, GTC was large enough to attain economies of scale in trade volume, specialized enough in exports to gain international competitiveness and capable of systematic overseas marketings. GTC was created in 1970s, when Korean government was making a strong commitment to an export-oriented growth strategy. The criteria for becoming a GTC were followings: 1. Minimum capital of $2.5million 2. GTC must offer public stock 3. Annual export $50million 4. 7 Products with an export value in excess of $500,000 each 5. 10 Countries with an export value of over $1million each 6. 10 Overseas branch offices In return, government offered low-cost financing for each dollar exported. In order to benefit from the special status granted to GTCs by the government many Korean chaebols started to form GTCs. First, Samsung then Ssangyong, Daewoo, Sunkyong, Hyundai followed. They focused on their international marketing functions in the GTCs by reorganizing the export department. The government kept increasing minimum line of export requirement annually and restricted investment in domestic business. Korean GTCs Japanese GTCs Year Started 1975 1870s Requirement 6 criteria above (By 1996, only #2 and #3 remained) None Incentives Tax benefits, preferential financing, allocation of foreign exchange, waivers for certain administrative regulation (By 1980s all abolished) Tax benefits Exports(1995) 61.8 billion 122 billion GTCs share of national exports 47.7% 30.3% Sales Exports Imports Employees Oversea Branches Korean GTCs 12.54 7.53 3.27 1,059 59 Japanese GTCs 107.81 13.56 16.03 5,847 139 Gap 8.6 1.8 4.9 5.5 2.4 The differences between Korean GTCs and Japnese GTCs are that; 1. Korean GTCs were more strongly supported by their government than Japanese GTCs were supported by their government. (Look at incentives provided by Korean government) 2. Korean GTCs focused more on exports rather than on imports however Japanese GTCs' imports take more parts in their trading. 3. Korean GTCs started much later than their counterpart, almost 100 years difference. Therefore, their overall size is much smaller than that of Japanese GTCs. 4. Korean GTCs have more tight relationship within their group (chaebol) than Japanes GTCs have within their group(keiretsu). For example, Ssangyong corporation, one of the biggest chaebol in Korea, derived 51% of sales in 1995 which was _base_d on the support from Ssangyong Oil Refining Company.