66% of SMEs Expect Next Year's Business Environment to Be Similar to This Year... Negative Outlook Prevails

A small to medium-sized manufacturing company located in Gimpo, Gyeonggi.
Photo by Lee Jun-hyung

[Asia Economy Reporter Junhyung Lee] 65.8% of small and medium-sized enterprises (SMEs) expect the business environment next year to be similar to this year. 18.8% of SMEs surveyed anticipated that the business environment will worsen compared to this year.

The Korea Federation of SMEs announced on the 12th that this result came from a survey conducted from the 22nd to the 26th of last month targeting 500 SMEs on the 'Current Business Conditions and 2022 Business Plans.' Only 15.4% of SMEs expected the business environment to improve next year compared to this year.

Outlook for the Business Environment of Small and Medium Enterprises Next Year.
[Photo by Korea Federation of SMEs]

About half of the SMEs (48.2%) responded that the current business environment is 'average.' While 36% of SMEs answered 'negative,' only 15.8% viewed it positively. The main reason for the negative outlook on the current business environment was 'domestic demand slump (48.9%).' This was followed by 'rising raw material prices (41.1%)' and 'difficulty in financing (22.8%).'

Additionally, 6 out of 10 SMEs (60.2%) reported having suffered direct or indirect damage due to COVID-19. 23.2% of companies responded that they were not affected.

Major Challenges for Small and Medium Enterprises Next Year.
[Photo by Korea Federation of SMEs]

The major anticipated difficulties for next year included 'rising raw material prices (39%).' This was followed by 'domestic demand slump (26%)' and 'difficulty in securing manpower (21.8%).'

About half of the SMEs (47.6%) identified 'discovering new clients and new sales channels' as their core management strategy for next year. This was followed by 'stable securing of operating funds (39.4%),' 'cost reduction and business sector restructuring (27.6%),' and 'risk management to prepare for worsening business conditions due to COVID-19 (27.4%).'

Core Management Strategies for Small and Medium Enterprises Next Year.
[Photo by Korea Federation of SMEs]

33% of SMEs said that the most useful government and local government policy this year was the 'Employment Retention Subsidy.' This was followed by 'tax and four major social insurance premium reductions and payment deferrals (30.6%),' 'COVID-19 coexistence national support fund (28.6%),' and 'loan expansion and maturity extension (27.4%).' Policies that should be promoted for SMEs next year included 'active financial and tax support (41.6%),' 'domestic demand revitalization policies (36.8%),' and 'resolving manpower shortages in SMEs (26.8%).'

Jumungap Choo, Head of the Economic Policy Department at the Korea Federation of SMEs, said, "Due to the prolonged COVID-19 pandemic, rising raw material prices, and manpower shortages, negative prospects for economic recovery prevail next year as well," adding, "Active support policies such as financial and tax support, domestic demand revitalization, manpower shortage resolution, and stabilization of interest rates and exchange rates are necessary."

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