The Korean government has performed various policies to encourage the small and medium firms. Designation of industry for the small and medium business is one of those policies. In principle, it restricts new entry of large business to specific industries. However, on the contrary, the policy is said that it weakens the competitiveness of the small and medium business.

This study accompanied by an empirical study or a case study was started in order to analyze the effects of designation of industry weather it enforces the competitiveness of the small and medium business. According to this study, first, the policy works as a strong entry barrier to the large business which wants a new entry to the market. It protects the benefit of the large business which is already entered into the market rather than it does to the small medium business. Second, as the acceleration of domestic market opening under the WTO regime, the regulation on foreign investment is decreasing and imports are increasing. In current circumstances, the regulation on large business entry is unfair, and does not enhance the global competitiveness of industry. 

As a result, designation of industry does not much for the enforcement of competitiveness of small and medium business, and is loosing its effects because of the market opening. Anti-competitive designation of industry should be abolished for the competitiveness of the small and medium business.