FKI "95.7% of Korean Companies in Japan Suffer Business Impact Due to Korea-Japan Entry Restrictions"

[Asia Economy Reporter Changhwan Lee] It has been revealed that most Korean companies in Japan are experiencing difficulties in their business due to the mutual entry restrictions between Korea and Japan caused by the novel coronavirus infection (COVID-19).

The Federation of Korean Industries (hereinafter referred to as FKI) announced on the 25th that this was revealed in the "Survey on the Impact of Entry Restrictions and Deterioration of Relations between Korea and Japan on Business," conducted from the 9th to the 22nd among 94 Korean companies in Japan.

According to the FKI, 95.7% of Korean companies doing business in Japan responded that their business environment has been negatively affected by the mutual entry restrictions between Korea and Japan due to COVID-19. (Very negative 42.5% + Somewhat negative 53.2%)

The areas causing inconvenience to business were led by "difficulty in visiting and managing business sites" at 44.9%, followed by "difficulty in communication with existing clients (13.5%)" and "difficulty in exchanging professional personnel (13.5%)."

This response indicates that Korean companies in Japan are facing difficulties on the front lines as free movement and face-to-face contact in daily life between Korea and Japan have become difficult.

Three out of four companies (77.0%) that responded to the survey predicted that their sales would decrease this year compared to last year, and 99% of companies expected that if the mutual entry restrictions continue in the second half of the year, it would have a negative impact on their business.

As countermeasures to the entry restrictions between Korea and Japan, the responses were "expansion of online communication such as video conferencing (38.3%)," "no special alternatives at present (31.9%)," and "expansion of local workforce utilization (20.2%)," indicating that there are no suitable countermeasures for smooth business continuity under the entry restriction situation.

Additionally, more than two out of three Korean companies in Japan answered that the business environment in Japan has deteriorated compared to before since the mutual export regulations between Korea and Japan in July last year (Severe deterioration 13.8% + Somewhat deterioration 55.3%). This figure is more than twice the response of "no effect" (30.9%), and there were no responses indicating improvement, emphasizing that export regulations have had a very negative impact even on companies operating locally, according to the FKI.

Regarding the reason for maintaining business in Japan despite the deterioration of Korea-Japan relations, the response "importance of the Japanese market (demand)" was the highest at 47.9%, followed by "possibility of profit generation despite Korea-Japan relations" at 39.4%. This response indicates that despite the current deterioration in bilateral relations, companies believe they cannot give up the long-term importance of the Japanese market.

Korean businesspeople in Japan see "easing of entry restrictions for businesspeople" as the most urgent issue in the current situation. To improve business difficulties with Japan, the response "easing of entry restrictions for businesspeople to the level of the fast track with China" was the highest at 43.6%, followed by "refraining from political remarks and reports that make friendly relations difficult" (30.9%), "improvement of export regulations between Korea and Japan" (10.6%), and "smoothing of logistics and transportation between Korea and Japan" (7.4%).

The Japanese government plans to ease entry restrictions for businesspeople from Vietnam, Thailand, Australia, and New Zealand. In this situation, the fact that Korean businesspeople in Japan are appealing for the "easing of mutual entry restrictions between Korea and Japan" has significant implications from the perspective of exports and international competitiveness.

Kim Bongman, Director of International Cooperation at the FKI, said, "Through this survey, we were able to confirm that many of our companies are experiencing business difficulties due to COVID-19 and deteriorated Korea-Japan relations," and added, "As overcoming economic difficulties caused by COVID-19 and reconciliation and cooperation between Korea and Japan are more necessary than anything else, we urge both countries to actively work to ease mutual entry restrictions and improve relations."

He continued, "Despite the deterioration of Korea-Japan relations, companies emphasize the importance of the Japanese market as the reason for maintaining business in Japan, so from the economic sector's perspective, we will continue exchanges with the Japanese economic community to ensure smooth business continuity."

The FKI announced that it is preparing a meeting with member companies inviting the Japanese Ambassador to Korea in the second half of this year and plans to hold the "Asia Business Summit," a gathering of private economic organizations in the Asian region, with the Japan Business Federation on November 6.

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