357 Corporate Complaints Received by KCCI...54% Request Financial and Quarantine Supplies Support

Reception of Corporate Difficulties by the Upper Countermeasures Team... Delivered to Relevant Ministries Daily
Types of Difficulties: Sales Decline (38%), Raw Material Supply Disruption (30%), Export Difficulties (15%), Shortage of Quarantine Supplies (5%)
Requests: Emergency Funds (35%), Quarantine Supplies (19%), Tax and Accounting Support (13%), Employment Retention Support (11%)

[Asia Economy Reporter Kim Hyewon] Amid the difficulties faced by domestic companies due to the novel coronavirus infection (COVID-19) crisis, it has been revealed that nearly 70% of companies are struggling with decreased sales and difficulties in procuring parts and raw materials. Additionally, 54% of companies requested urgent financial support and protective equipment.

The Korea Chamber of Commerce and Industry (KCCI) announced on the 8th that since February, its "COVID-19 Task Force" has been operating and, as of the 6th, a total of 357 cases of corporate difficulties have been received.

The KCCI COVID-19 Task Force collects reports of damages and difficulties from companies through its website, 73 regional chambers nationwide, 25 district chambers in Seoul, and industry-specific associations, and relays them daily to related government ministries such as the Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy.

A KCCI official stated, "As the COVID-19 crisis spreads, the number of companies appealing for help and support through the task force continues to increase. The types of difficulties are diverse, including export disruptions, raw material shortages, financial tightening, and mask shortages. Therefore, alongside quarantine activities, urgent government measures are needed to minimize economic damage."

◆Reviewing the total 357 corporate difficulties... Sales decline > Parts/raw material procurement > Export difficulties in order = An analysis of the difficulties reported to the KCCI task force so far shows that the most common problem companies face is a decline in sales (38.1%). This is followed by difficulties in parts and raw material procurement (29.7%), export difficulties (14.6%), shortage of protective equipment (5.3%), and labor and personnel management (4.8%).

By industry, manufacturing companies, which have many trade relations with China and are concentrated in industrial complexes and manufacturing-heavy regions such as Gyeonggi, Gyeongnam, and Gyeongbuk, reported many cases of sales decline and raw material procurement difficulties.

In the service sector, the spread of COVID-19 has threatened survival. As people avoid outside activities and consumer sentiment shrinks, sales declines were particularly severe in domestic and tourism sectors such as wholesale and retail, food service, and lodging.

In fact, according to KCCI surveys, service industries such as exhibition and air transportation have suffered the greatest damage, with exhibition events and airline passengers decreasing by nearly 90%. Retail distribution and academies also suffered significant impacts due to repeated school closures and restrictions on outside activities.

◆Most urgent policy? 54% of companies choose urgent financial and protective equipment support = Among the government requests received by the KCCI task force, financial support (35.1%) accounted for about one-third of the total.

Support for protective equipment such as masks and sanitizers (18.8%), tax reductions and postponement of tax audits (13.4%), employment retention support (10.9%), and deregulation in labor and environment (6.4%) followed.

In particular, more than 60% of companies requested financial, tax, and employment retention support, indicating that the COVID-19 crisis seriously threatens not only export issues but also the very foundation of small businesses and companies.

◆Daegu and Gyeongbuk request funds and protective equipment; Seoul metropolitan area and Busan-Ulsan-Gyeongnam request parts procurement; Gangwon and Jeju face tourism industry difficulties = The difficulties and requests received by the KCCI task force varied by region.

Regions with a high manufacturing ratio such as Incheon-Gyeonggi, Busan-Ulsan-Gyeongnam, and Daegu-Gyeongbuk reported many difficulties related to procuring raw materials from overseas. In contrast, Gangwon and Jeju, where the proportion of domestic and tourism industries is higher than the national average, mostly reported difficulties in the tourism sector.

In Daegu and Gyeongbuk, where COVID-19 outbreaks were concentrated, urgent financial support for survival and supply of masks and related costs for quarantine activities were requested. An auto parts company in Daegu complained that although a large purchase of masks for production sites is necessary, mask shortages due to quantity restrictions are causing anxiety among workers and worsening difficulties in factory operations and quarantine activities.

The Daegu Chamber of Commerce, in the region with the highest number of infections, stated, "47% of companies trading with China in Daegu are requesting urgent management stabilization funds," adding, "Although government support has increased, new loans or extensions are practically difficult due to loan limit exceedance, industry restrictions, and company credit issues."

They also said, "There are many industry requests to allocate and supply masks designated for the industrial sector in Daegu. While we understand that it is difficult for the general public to obtain masks, supplying masks and sanitizers to companies will help normal operations."

In Seoul, where service industries are concentrated, industries such as aviation, travel, and education reported significant sales declines. Due to reduced passenger loads on China routes, flights have been cut back, and many countries have restricted entry, blocking air routes and affecting air cargo transport.

In the Busan-Ulsan-Gyeongnam region, companies are increasingly experiencing production disruptions due to delays in raw material supply and reduced operating personnel, and they requested proactive special extended work permits rather than case-by-case approvals. Some companies also urgently need exemptions from measurement obligations for air pollutants because strengthened quarantine measures restrict fieldwork, business trips, and external visitors, making timely pollution measurement difficult.

In Incheon-Gyeonggi, many companies are experiencing production disruptions or export difficulties due to unstable raw material supply from China. This is attributed to the fact that 36% of the nation's manufacturers are located there and many companies trade with China. For example, a semiconductor equipment company in Gyeonggi, which operates on a made-to-order basis, must conduct local business trips to understand designs and specifications, requiring over 300 days annually in China. With travel blocked, sales have dropped by more than 15%, and 30 to 40 domestic partner companies are also facing a crisis.

In Jeju and Gangwon, where the tourism industry is significant, many companies reported tourism-related difficulties compared to other regions. They have proposed campaigns to alleviate anxiety and normalize consumption.

◆"Urgent need to prevent domino effect of crisis and harmonize policies," companies speak with one voice = Companies expressed concerns that as COVID-19 began spreading domestically from late February, overseas buyers might hesitate to enter Korea or business trips abroad might be blocked, causing management disruptions. They requested the government to prepare measures to prevent the crisis triggered by COVID-19 from negatively impacting the overall economy or becoming prolonged.

Calls for policy harmonization were also raised. As companies voluntarily adopt various work styles such as telecommuting, remote work, and expanded care leave amid the "social distancing" atmosphere to prevent COVID-19 spread, there were requests to expand special extended work permits to compensate for productivity declines.

Although government measures have been announced, it was pointed out that it takes a long time for companies to actually receive support and that there are many obstacles in eligibility requirements. Many cases were presented where companies were excluded due to strict damage verification standards and policies that did not consider industry characteristics. For example, a food service company supplying school meals in Busan suffered a significant sales hit in March due to school closures. When inquiring about emergency management funds, they were told that if there were no sales, it was considered that the company was not operating and thus excluded. The company was repeatedly told that damage verification documents were required to receive financial support.

With elementary, middle, and high school openings delayed by more than three weeks to prevent COVID-19 spread, delays in educational material deliveries and increased anxiety about visiting education have worsened damages in the education sector.

Professor Shin Kwanho of Korea University (KCCI advisory committee member) pointed out, "Companies are in a comprehensive crisis and urgently need support, but if support procedures are complicated and evaluation criteria remain the same as before, the perceived effect will inevitably be limited. Besides regional and industry-specific measures, burden reduction measures common to all companies, such as financial support, tax reductions, and deferrals of various investigations and payments, need to be bundled and implemented at once."

Woo Taehee, Executive Vice Chairman and head of the KCCI COVID-19 Task Force, explained, "As more companies face difficulties such as sales decline and financial shortages due to COVID-19, it is crucial that government support is implemented promptly and decisively. Speed is important to resolve on-site corporate difficulties, so KCCI currently delivers the issues received by the task force to the government daily to request follow-up actions." He added, "We plan to prepare a comprehensive proposal containing measures for COVID-19 response and economic recovery and submit it to the government soon."

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