Korean Companies Struggling Due to COVID-19

Amid concerns over the spread of the novel coronavirus infection (COVID-19), on the 23rd, the 55th Certified Public Accountant exam was held at the testing site set up at Hongik University in Mapo-gu, Seoul, where officials checked the examinees' body temperatures using thermal cameras. Photo by Moon Honam munonam@

[Asia Economy Reporter Park So-yeon] Six out of ten domestic companies expect business deterioration due to the novel coronavirus disease (COVID-19) outbreak.

The Korea Economic Research Institute under the Federation of Korean Industries recently commissioned market research firm Monoresearch to survey the top 1,000 companies by sales on the impact of the COVID-19 outbreak, and this result was found.

The survey showed that 61.8% of the responding companies anticipated that the COVID-19 outbreak would have an adverse effect on their management.

Among companies with production facilities in China, 83.9% expected negative impacts.

If the outbreak prolongs for more than six months, similar to the SARS (Severe Acute Respiratory Syndrome) outbreak that lasted nine months from 2002 to 2003 or the MERS (Middle East Respiratory Syndrome) outbreak that lasted eight months in 2015, this year’s sales and export volumes are expected to decrease by 8.0% and 9.1% respectively compared to last year, and exports to China are projected to decline by 12.7%.

Even if the situation is contained within six months, sales and export volumes are expected to decrease by 3.3% and 5.1% respectively, with exports to China falling by 6.8%.

In the case of prolonged outbreak, the sales decline rate by industry was highest in the order of automobiles (-13.9%), auto parts (-12.8%), petroleum products (-12.4%), and general machinery (-11.0%).

The export decline rate was expected to be highest for petroleum products (-17.8%), automobiles (-14.5%), general machinery (-11.6%), auto parts (-11.0%), and petrochemicals (-10.0%).

In the case of a short-term resolution, the sales decline rate was highest for wireless communication devices (-8.4%), automobiles (-7.3%), petroleum products (-6.0%), general machinery (-5.9%), and auto parts (-4.0%), while the export decline rate was highest for petroleum products (-10.5%), wireless communication devices (-10.1%), automobiles (-9.9%), general machinery (-7.7%), and auto parts (-4.6%).

As corporate responses to the COVID-19 outbreak, the following were cited: ▲ refraining from business trips to China (34.3%), ▲ strengthening local quarantine activities (10.5%), ▲ recalling employees domestically or implementing remote work (10.2%), ▲ reducing local business activities (6.7%), while 29.5% responded that they had no particular countermeasures.

Regarding policy support expected from the government, rapid information sharing on domestic and international infection situations (57.0%), strengthening quarantine systems to prevent spread (21.2%), intergovernmental cooperation to support corporate activities (9.5%), support for export companies in Greater China (6.4%), and expanding consumption and investment capacity of economic agents (6.0%) were cited in order.

Yoo Hwan-ik, Head of the Innovation Growth Office at KERI, said, "The government needs to actively support affected companies by strengthening export and customs clearance support, expanding financial aid and loans."

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