Korea Economic Research Institute Analyzes Forbes Global 2000 Companies in 2011 and 2019
"Korean Large Corporations Are Only Small Businesses on the Global Stage," Claims
Profitability of 6 Major Manufacturing Industries (5.4%) Is Half That of Global Companies (9.4%)

[Asia Economy Reporter Changhwan Lee] It has been found that the profitability of manufacturing companies, which are our main industries, is significantly lower compared to global companies. Large corporations supporting the Korean economy are also struggling in the global market.

According to the "Analysis of Forbes Global 2000 Companies in 2011 and 2019" released by the Korea Economic Research Institute on the 6th, Korean companies showed lower profitability and lack of industry diversity compared to global companies.

Among the 23 domestic company industries included in Forbes 2000, only 4 industries had operating profit margins higher than the average of overseas companies by industry. The average operating profit margin of six representative manufacturing industries, including semiconductors, a key industry in Korea, was 5.4%, which is about half of the operating profit margin of overseas companies in the same industries (9.4%).

Industries such as utilities (-0.9%), department stores and discount marts (-0.8%), and airline services (-1.5%) recorded negative operating profits, showing a large gap compared to overseas companies that posted positive operating profits. The Korea Economic Research Institute explained that domestic companies' global competitiveness is weak not only in energy, distribution, and aviation sectors but also in key industries such as semiconductors.

Securing growth engines through entry into new industries also emerged as an urgent task for our economy. Among the total 57 industries in Forbes 2000, only 23 industries included domestic companies, accounting for just 40%, which is about half the level of the United States (55 industries), Japan (45 industries), and China (43 industries), confirming a lack of industry diversity.

Compared to 2011, the scope of activities of major domestic companies has stagnated for about eight years. The number of Korean companies included in the 2019 Forbes 2000 was 62, an increase of only one company compared to 2011 (61 companies), and the number of industries remained the same as in 2011 (23 industries).

In particular, the Korea Economic Research Institute emphasized that Korea seems unable to keep up with global food trends. Although the market capitalization of Forbes 2000 in eight new growth industries such as IT, aerospace, medical, and healthcare increased significantly compared to 2011, only three of these industries included Korean companies, with just five companies in total.

The market capitalization of domestic companies also lagged significantly behind global companies. The Korea Economic Research Institute explained that although the number of Korean companies included in Forbes 2000 (62 companies) ranks fifth in the world, the total market capitalization was $857.9 billion, ranking 12th, indicating that the absolute scale of Korean companies is relatively small.

Korea has more companies listed in Forbes 2000 than major countries such as France (57 companies, market cap $1.8 trillion) and Germany (53 companies, market cap $1.5 trillion), but the market capitalization size is about half that of these countries.

Narrowing the scope to the top 500 companies by market capitalization reveals an even more pronounced gap. Only three Korean companies are included in the top 500 by market capitalization, ranking last among the top nine countries that have produced more than 50 Forbes 2000 companies.

This is only one-seventh of France (21 companies), which has the most top 500 companies among countries with fewer Forbes 2000 companies than Korea, and one-fourth of India (12 companies), which has the second fewest.

In fact, Korea's representative companies are significantly smaller compared to the world's number one companies in the same industries. In 2019, Samsung Electronics, Korea's largest company by market capitalization ($272.4 billion), was only 28.3% of Apple ($961.3 billion), the world's largest company, and Hyundai Motor ($31.2 billion) was only 17.7% of Toyota ($176.6 billion), the world's largest automobile company.

Choo Kwang-ho, Director of Economic Policy at the Korea Economic Research Institute, said, "Korea is falling behind on the world stage due to low profitability in key manufacturing industries and the failure to produce global companies in new industries. Recently, the adverse impact of COVID-19 has further endangered the global competitiveness of our companies."

He added, "The government should take this crisis as an opportunity to lead the three major reforms in regulation, labor, and taxation to revitalize companies and enhance global competitiveness."

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