One in Three Small and Medium Enterprises Reports Direct Business Impact from COVID-19

Due to the impact of the novel coronavirus infection, the Myeongdong shopping street in Seoul is showing a quiet scene despite it being the weekend on the 9th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Moon Hyewon] Regarding the novel coronavirus infection (Wuhan pneumonia) situation, it was found that one out of three domestic small and medium-sized enterprises (SMEs) is directly experiencing business impacts.

According to the results of the "Survey on Damage Status and Opinions of SMEs Related to the Novel Coronavirus" conducted by the Korea Federation of SMEs on the 10th, 34.4% of 250 domestic SMEs with sales under 500 million KRW responded that they are suffering damage due to the novel coronavirus situation.

By industry, the proportion experiencing impacts was 31.0% in "manufacturing" and 37.9% in "services." In particular, the response rate indicating damage in "accommodation, food, and other services" was high at 61.4%.

Regarding whether companies engage in import/export with China, "import/export companies" (40.7%) showed a 12.4 percentage point higher rate of impact compared to "companies without import/export" (28.3%).

Among manufacturing companies, the most significant business impact due to the spread of the novel coronavirus was "disruption in raw material supply" at 56.4%. This was followed by "disruption in parts supply" (43.6%), "cancellation of contract volumes (order volumes, etc.)" (23.1%), and "reduced order opportunities due to cancellation of export exhibitions" (20.5%).

In the service sector, "reduced sales due to decreased visitors" was the highest at 76.6%, followed by "disruption in business activities due to refusal of meetings" (8.5%) and "reduced sales due to temporary closure" (4.3%).

Other responses included "contraction in on-site deliveries" and "cancellation of exhibitions."

When asked about the overall perceived economic condition compared to before the first confirmed domestic case of the novel coronavirus (on the 20th of last month), 43.2% responded that it had "worsened." Responses of "similar" and "improved" were 56.0% and 0.8%, respectively.

It was particularly found that smaller enterprises with fewer employees tended to feel a greater deterioration in the economic climate. Among SMEs with "fewer than 10 employees," 53.7% responded negatively, while 38.9% of those with "20-49 employees" and 29.4% of those with "100 or more employees" responded similarly.

The negative impact of the novel coronavirus on the domestic economy was expected to last "1 to 3 months" by 45.2% of respondents, the highest proportion. This was followed by "3 to 6 months" (39.6%), "within 1 month" (7.2%), "6 months to 1 year" (6.4%), and "more than 1 year" (1.6%).

By industry, manufacturing companies most frequently expected the impact to last "3 to 6 months" (46.0%), while service companies most frequently expected it to last "1 to 3 months" (47.6%).

Meanwhile, regarding the areas the government should prioritize, "rapid preparation and promotion of measures to alleviate public anxiety" was the highest at 61.2%. This was followed by "support for business activities such as tax payment deferrals for affected companies" (50.0%), "early execution of government finances to revitalize domestic demand" (34.8%), and "emergency business stabilization fund support for affected companies" (34.0%).

This content was produced with the assistance of AI translation services.