8 out of 10 Companies 'Helpless' Amid Changing Trade Environment Including US-China Conflict

86% of Companies Respond 'No Countermeasures' to Changes in Trade Environment
Expecting 'Business Deterioration' Due to Trade Environment Changes... Biggest Burden Factor is 'US-China Conflict'

[Asia Economy Reporter Hwang Yoon-joo] Recently, as the trade environment has rapidly changed centered around the United States and China, responding to these changes has become crucial for corporate survival. However, a survey found that 8 out of 10 domestic companies have no appropriate response measures to the changing trade environment.

According to a recent survey by the Korea Chamber of Commerce and Industry targeting 301 domestic companies operating in major countries such as the U.S. and China on 'Our Companies' Response Status and Challenges Amid New Trade Environment Changes,' 86% of companies answered that they have 'no response measures' to changes in the trade environment. Only 14% responded that they have 'response measures.' In particular, 92% of small and medium-sized enterprises (SMEs) said they have no response measures, indicating that SMEs are even more helpless in responding to changes in the trade environment.

Regarding the impact of recent changes in the trade environment on corporate management, 42.5% of respondent companies expected it to become 'more difficult.' Companies that believed it would have 'little impact' accounted for 48.2%, while those expecting it to 'improve' were 9.3%.

When asked about the trade issues that our companies feel most burdened by in their external activities, 40.9% of respondents answered 'U.S.-China conflict.' This was followed by 'strengthening environmental standards' (25.2%), 'strengthening non-tariff barriers' (24.3%), 'strengthening labor standards' (11.0%), 'increased tax burden such as global corporate tax' (9.6%), 'GVC restructuring' (8.3%), and 'digital transformation' (3.7%).

By region of operation, companies in the U.S. were most concerned about 'strengthening rules of origin' (24.3%). This was followed by 'strengthening non-tariff barriers' (22.2%), 'strengthening import regulations such as anti-dumping' (18.5%), 'new or strengthened regulations on environment and labor' (15.3%), 'strengthening economic cooperation focused on allied countries' (14.3%), and 'increased tax burden such as introduction of global corporate tax' (4.8%).

Companies operating in China cited 'expansion of the U.S.'s tough stance toward China' (41.7%) as their greatest burden, followed by 'strengthening security' (20.6%), 'continued impact of THAAD' (19.4%), and 'weakening of China-led GVC' (17.8%). Companies operating in the EU mentioned 'strengthening environmental standards such as the Carbon Border Adjustment Mechanism' (34.1%) and 'strengthening non-tariff barriers' (30.3%).

In this situation, the trade policy that our companies most expect from the government is 'expansion of bilateral cooperation such as FTAs' (40%). The response that 'expanding participation in multilateral trade agreements' is important also reached 10.6%, indicating that more than half of the respondent companies believe the government should further expand bilateral and multilateral trade agreements. Other policy tasks included 'strengthening response to non-tariff barriers' (24.5%), 'responding to new issues such as labor, environment, and digital transformation' (18.9%), and 'responding to major countries' GVC restructuring' (6%).

Additionally, most companies surveyed viewed South Korea's participation in the CPTPP positively. Only 2% responded that 'we should not participate,' showing that the majority believe joining the CPTPP would be beneficial. However, 36.2% of companies said 'participation is good but it is better to postpone for now,' and 23.9% responded that 'we will join if the U.S. joins,' indicating a more cautious approach.

Kang Seok-gu, head of the International Trade Division at the Korea Chamber of Commerce and Industry, said, "As the trade environment is being reshaped mainly by advanced countries such as the U.S. and the EU, the government's policy direction to pursue new trade strategies through multilateral trade agreements such as the CPTPP is desirable," adding, "Since companies have high expectations for expanding trade agreements, trade cooperation should continue to be expanded, and it is important to prepare active support measures so that companies can well prepare for the increasingly strengthened non-tariff barriers and environmental and labor standards."

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