Key Business Trends for the Second Half of the Year

[Asia Economy Reporter Park So-yeon]Domestic companies are expected to accelerate cost-cutting and restructuring in the second half of the year to survive the novel coronavirus infection (COVID-19).

The Korea CXO Institute, specializing in corporate analysis, predicted the keywords for the business world in the second half of this year as ▲ Survival ▲ Cost Cutting ▲ Out ▲ Untact ▲ Transform based on the performance analysis of the top 2,000 listed companies as of the 13th.

According to the institute, among the top 2,000 listed companies, 230 had a debt ratio of over 200% as of the end of last year. This means that one out of ten companies has an unstable financial structure.

In particular, centered on manufacturing and service industries, not only did companies have a debt ratio exceeding 200%, but 120 companies also recorded net losses.

Considering that corporate management has become more difficult due to COVID-19 this year, it is expected that the number of high-risk companies threatened with survival has increased.

The CXO Institute stated, "If external financial support is not provided to high-risk companies, they may face existential crises," and "Companies will rush to sell assets such as land and buildings to secure cash for survival."

It is also expected that cost-cutting by companies will become more prominent in the second half of the year. Advertising and marketing expenses, training costs, welfare expenses, and entertainment expenses are identified as the main targets for reduction.

The atmosphere to freeze or cut wages to reduce labor costs is also expected to spread further.

Restructuring, which involves boldly closing unprofitable businesses and reducing personnel due to COVID-19, is also expected to accelerate further in the second half of the year.

In particular, industries such as aviation, shipping, travel, education, and accommodation, which have been restricted in movement, are classified as sectors that will prioritize restructuring.

Recently, employment in the top 30 groups increased from 1,329,200 in 2018 to 1,365,900 currently this year, but the growth rate remains in the 1% range.

The CXO Institute revealed that the possibility of employment growth rate falling into the negative has increased due to COVID-19.

In the COVID-19 era, 'untact' businesses are expected to grow even more rapidly. Representative untact sectors include IT industries such as gaming and portals, as well as video conferencing services, online distribution, and delivery.

With the increase in online orders, the paper manufacturing industry producing packaging materials is also expected to benefit accordingly.

Additionally, bio, batteries, and processed food-centered food products were identified as industries that will continue to enjoy the COVID-19 special demand.

The CXO Institute expects companies that have experienced building closures and telecommuting due to COVID-19 to make changes to disperse employees in preparation for similar situations in the future.

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