70.8% of Exporting SMEs Say "Overseas Entry Restrictions Negatively Affect Exports"

Panorama of the Korea Federation of Small and Medium Business

[Asia Economy Reporter Kim Daeseop] Seven out of ten small and medium-sized enterprises (SMEs) expressed concerns about the deterioration of exports due to entry restrictions related to the spread of the novel coronavirus infection (COVID-19).

According to the results of the "Survey on the Impact of COVID-19 Spread and Entry Restrictions on Exporting SMEs" announced by the Korea Federation of SMEs on the 12th, 70.8% of respondents answered that "export conditions are expected to worsen due to entry restrictions." The responses were divided into "very much worsened" (26.6%) and "somewhat worsened" (44.2%).

The survey was conducted on 312 export SMEs nationwide. The most common opinion was that export volume would decrease by "10-30%" (40.1%) compared to last year due to worsening trade conditions caused by COVID-19. This was followed by "less than 10%" (34.9%) and "30-50%" (15.7%).

By country, the export impact was greatest for Japan (81.8%), followed by China (78.2%), Vietnam (71.9%), and the United States (63.8%).

Regarding the expected damages caused by entry restrictions due to COVID-19 (multiple responses allowed), the most frequently cited were "reduced order opportunities due to cancellation of overseas exhibitions" (73.8%) and "restrictions on business activities within the affected countries due to entry bans" (62%). This was followed by "contract cancellations due to difficulties in securing parts and raw materials" (18.6%) and "export decline due to deterioration of the image of Korean products" (15.4%).

As for the tolerable duration of continued overseas entry restrictions, 35.9% chose "1-3 months," the highest proportion. This was followed by "3-6 months" (34.3%), "6 months to 1 year" (10.3%), "within 1 month" (9.9%), and "more than 1 year" (9.6%). If restrictions last more than six months, eight out of ten SMEs (80.1%) indicated they would find it difficult to endure.

In response to worsening trade conditions (multiple responses allowed), "strengthening management of existing clients" (44.2%) was the most common measure. This was followed by "enhancing non-face-to-face marketing such as online" (32.7%), "discovering alternative markets" (26.9%), "no separate countermeasures" (18.3%), "tightening management such as wage cuts and unpaid leave" (17.3%), and "business closure and restructuring" (6.4%).

Regarding government priority tasks to overcome management difficulties of export SMEs (multiple responses allowed), "preferential financial support for export-damaged companies" (42.9%) and "tax benefits such as deferred customs payments" (37.8%) were the top responses. Financial pressure due to export damage was the greatest concern.

This was followed by "strengthening government diplomatic responses to lift entry restrictions" (33.7%), "supporting costs related to export-import disputes caused by delivery delays and contract cancellations due to entry restrictions" (20.8%), and "expanding support projects for non-face-to-face marketing such as online export enhancement" (17.6%).

Kim Gi-moon, Chairman of the Korea Federation of SMEs, stated, "The trade environment has deteriorated due to the spread of COVID-19 and entry restrictions, causing difficulties for export SMEs. Since exports can be a pillar that revitalizes the Korean economy after the COVID-19 crisis, the government must strengthen all diplomatic capabilities and prepare extraordinary measures that can be felt on the ground."

Chairman Kim also said, "The Korea Federation of SMEs will strive to resolve difficulties faced by export SMEs through joint purchasing of imported raw materials and export consortiums."

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