"Domestic Companies Highly Dependent on Overseas Markets Face Sales Warning Due to COVID-19"

Korea Economic Research Institute Analyzes Sales of Top 100 Companies Over the Past 5 Years

[Asia Economy Reporter Dongwoo Lee] A survey has revealed that domestic companies with high dependence on overseas markets are more likely to suffer significant damage to their management due to the COVID-19 pandemic. There is an urgent call for government policy support to improve the business environment for companies.

The Korea Economic Research Institute announced on the 11th that an analysis of 57 companies among the top 100 by sales last year, comparable to 2014, showed that over the past five years (2014?2019), overseas sales increased by 69.7 trillion KRW, while domestic sales actually decreased by 300 billion KRW, indicating a higher dependence on overseas markets. During the same period, total sales combining domestic and overseas markets rose from 1,108.7 trillion KRW (2014) to 1,178.1 trillion KRW (2019), an increase of 69.4 trillion KRW.

The consumer goods sector, focusing on Asia, saw overseas sales grow from 4.8 trillion KRW in 2014 to 15.2 trillion KRW last year, a 3.2-fold increase. The share of overseas sales in the consumer goods sector also rose from 23.6% to 42.7% over the same period, an increase of 19.1 percentage points in five years. This is the highest increase except for the machinery sector (22.0 percentage points), which saw a relative increase in overseas sales share due to a sharp decline in domestic sales.

The larger the company, the higher the proportion of overseas sales. Among the top 100 companies by sales last year, 69 companies with distinguishable domestic and overseas sales recorded overseas sales of 710.8 trillion KRW, accounting for 53.6% of total sales of 1,325.8 trillion KRW.

The top 10 companies by sales recorded overseas sales of 443.2 trillion KRW (61.3%) out of total sales of 723.3 trillion KRW, while the top 5 companies had overseas sales of 367.3 trillion KRW out of total sales of 520.5 trillion KRW, representing 70.6% overseas sales share.

By industry, the electrical and electronics sector had the highest overseas sales share at 79.3%. By region, the overseas sales share was highest in Asia (42.3%), followed by the Americas (30.7%) and Europe (18.8%).

The Korea Economic Research Institute warned that with the prolonged COVID-19 pandemic, demand in major consumer markets such as the U.S. and Europe has contracted, signaling a red light for the sales of Korean companies with high overseas dependence.

The Export Business Survey Index (BSI) surveyed by the Korea Economic Research Institute fell from an annual average of 94.7 last year to 84.7 in the first quarter of this year, and the average for April and May in the second quarter was 69.9, continuing the sluggish trend. Monthly export amounts also dropped by more than 20% year-on-year for two consecutive months starting in April.

The Korea Economic Research Institute forecasted that the overseas sales share in the Americas and Europe, where consumption sharply declined due to COVID-19, accounts for 49.5%, making a decrease in domestic companies’ sales inevitable due to demand contraction in major consumer markets.

Choo Kwang-ho, Director of Economic Policy at the Korea Economic Research Institute, said, "Beyond the annual sales decline, there is concern about damage to the export base of our companies, including local production and distribution networks," and added, "Urgent government policy support is needed to improve the business environment for companies."

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