Concerns Over Russia's Invasion of Ukraine Rise... 23% of Companies "Unprepared to Respond"

Trade Suspension Likely and Raw Material Supply Shortages Inevitable if Situation Worsens

[Asia Economy Reporter Park Sun-mi] As Russian forces continue to reinforce their troops around the Ukraine border area, a survey revealed that about 23% of our export-import companies within the sphere of influence have not prepared countermeasures. In the event of a worsening Russia-Ukraine situation, not only will trade with the affected region be suspended, but an increase in manufacturing costs due to raw material supply shortages is inevitable, necessitating close monitoring and support measures.

According to the Korea International Trade Association's report titled "Current Status of the Russia-Ukraine Situation and Its Impact on Our Companies" released on the 19th, an emergency survey was conducted targeting 86 export-import companies in Eastern Europe. The results showed that companies are most concerned about "trade contraction" (22.7%), "ruble exchange rate risk" (21%), and "logistics difficulties" (20.2%) if the situation worsens.

Regarding responses, only 53.7% of companies said they are actively responding through methods such as "diversification of supply sources" (30.5%), "strengthening trade insurance" (17.1%), and "forward exchange contracts for payment" (6.1%). On the other hand, one out of four respondent companies (23.2%) reported that they are observing the situation without any special countermeasures. In response to financial sanctions on Russia, 49.3% of companies answered that they would "suspend or halt transactions until the situation stabilizes," accounting for half of the total.

Companies identified the most needed policy support as "trade insurance support" (25.4%), "prompt information provision" (21.3%), and "support for diversification of trading partners" (17.2%).

Russia ranks as our country's 10th largest trading partner, and if the Russia-Ukraine situation worsens, our export-import companies concentrated in sectors such as cosmetics (444 companies), other plastics (239 companies), and automobile parts (201 companies) could suffer direct impacts. Although Russia has been pursuing de-dollarization since 2014, the proportion of dollar-denominated payments still exceeds 50%. Therefore, if Russia is excluded from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment network due to the current situation, delays or suspensions in payment settlements for our companies are inevitable.

Furthermore, if the Russia-Ukraine situation deteriorates, disruptions in the supply of imported raw materials or increases in import prices could exacerbate the import burden on domestic manufacturing companies. Although the trade volume between our country and Ukraine is only $900 million annually (ranked 68th among trading partners), the import dependency on Ukraine for items such as neon, krypton, and xenon is relatively high at 23%, 30.7%, and 17.8%, respectively.

Meanwhile, concerns about Russia's invasion of Ukraine are growing. On this day, clashes between Ukrainian government forces and rebels continued, resulting in casualties. U.S. President Joe Biden expressed concern that he has evidence President Vladimir Putin has decided to invade Ukraine, warning that an attack could occur within days or next week.

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