7 out of 10 Local Companies Feel Threatened by Regional Extinction

Survey of 513 Local Companies by Chamber of Commerce
68% Feel Threatened by Local Extinction
32% Do Not Feel Threatened

Challenges Faced by Local Companies
51% Securing Workforce, 14% Developing Sales Channels

Data provided by the Korea Chamber of Commerce and Industry

[Asia Economy Reporter Jeong Dong-hoon] About 7 out of 10 companies located in non-metropolitan areas expressed a sense of crisis regarding regional extinction.

According to a survey conducted by the Korea Chamber of Commerce and Industry (KCCI) targeting 513 companies located outside the metropolitan area on 'recent perceptions of the regional economy,' 68.4% of respondents answered that they 'feel threatened by regional extinction.' In contrast, only 31.6% responded that they 'do not feel threatened.'

The reason why companies located in non-metropolitan areas feel threatened by regional extinction is partly due to the rapid population decline, but it also appears to be influenced by heightened anxiety caused by the deepening imbalance between regions.

When asked about the imbalance between the metropolitan and non-metropolitan areas, 57.9% responded that it has 'recently expanded further,' revealing a serious awareness of regional disparities. Only 13.3% answered that it has 'decreased.'

A KCCI official pointed out, "Although successive governments have made many efforts for balanced regional development, the imbalance felt by local companies is rather intensifying," adding, "The anxiety and actual damage experienced by local companies due to this are also increasing."

The biggest difficulty for local companies is 'securing manpower'

Data provided by the Korea Chamber of Commerce and Industry

The biggest difficulty faced by companies located in non-metropolitan areas was cited as 'securing manpower' by 50.5% of respondents. With the working-age population decreasing due to low birth rates and aging, and young people moving en masse to the metropolitan area, the manpower issue at company sites has become even more severe.

According to the National Assembly Legislative Research Office, the net outflow of young people from non-metropolitan areas to the metropolitan area was about 93,000 in 2020, nearly double compared to 2010. Moreover, due to the impact of COVID-19, the number of foreign workers has decreased by nearly 60,000 over the past two years, further exacerbating the manpower shortage.

Company A located in Gangwon-do said, "While facilities are becoming increasingly smart, young people are leaving for the metropolitan area, and only elderly workers remain in the region, making factory operations very difficult." Company B in Chungnam region also lamented, "Due to COVID-19, it is difficult to hire even foreign workers, let alone domestic ones, so we are barely managing with day laborers."

In addition, local companies cited 'market development' (14.0%), 'funding' (10.9%), 'technology development' (7.2%), 'business opportunities' (7.0%), and 'logistics infrastructure' (5.1%) as other challenges.

Need for fostering region-specific industries and tax reductions

Data provided by the Korea Chamber of Commerce and Industry

As government policy tasks to strengthen regional competitiveness, 'fostering region-specific industries' (55.0%) was chosen as the top priority. It is necessary to strategically nurture region-specific industries and key companies by comprehensively considering each region’s geographical and industrial characteristics as well as the rapidly changing industrial structure.

Other key tasks included 'significant tax reductions' (38.4%), 'nurturing local talent' (38.2%), and 'expanding support for regional R&D' (34.1%).

Jeon In-sik, Director of Industrial Policy at KCCI, emphasized, "To sustain economic growth, the problem of regional imbalance must be resolved, but it is by no means an easy task," adding, "With a new government soon to be inaugurated, the central government, local governments, and companies must cooperate to seek practical solutions."

Meanwhile, KCCI plans to hold 'Regional Economic Forums' in six regions nationwide to review regional economic issues and discuss development plans. The first meeting will be held on the 4th of next month in Busan.

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