Russia-Ukraine Crisis Raises Concerns Over Widespread Corporate Damage if Prolonged

Ukrainians residing in Korea are marching on the streets near the Russian Embassy in Jung-gu, Seoul, on the 27th, condemning Russia's invasion of Ukraine.

[Asia Economy Yeongnam Reporting Headquarters, Reporter Hwang Du-yeol] The Busan Chamber of Commerce and Industry has announced the results of an urgent monitoring of the trends of local export-import companies in response to the Russia-Ukraine situation.

According to the results, companies that have direct business with Russia or Ukraine are greatly concerned about potential damage.

Since it is still early in the situation, no direct damage to companies has been confirmed yet. The trade volume with Russia and Ukraine is not large, so the impact on the regional economy is expected to be limited.

The survey targeted about 100 major local export-import companies and those with direct business with Russia and Ukraine, conducted through direct interviews.

According to the monitoring results, local companies are greatly worried about export declines due to embargo measures and payment suspensions and delays caused by financial sanctions.

Company A, which exports all its marine supplies, related equipment, and parts to Russia, expressed great concern about difficulties in collecting payments due to financial sanctions against Russia, as payments are made on a monthly basis.

Company B, which exports automotive parts to a local factory in Russia using the knockdown method, stated, "If embargo measures against Russia are implemented, production disruptions and shutdowns at the local factory could cause sales losses."

Company C Fisheries, which exports fish to Russia, said, "We have been developing sales channels in the Russian region as part of export diversification, but if the situation prolongs, we worry that such efforts may be wasted."

Small-scale trading companies or wholesale and retail businesses with a high proportion of transactions with Russia or Ukraine are expected to suffer the greatest damage if international sanctions against Russia intensify.

Company D, a seafood wholesaler that exports all its products to Russia, is closely monitoring sanctions against Russia and fears serious damage due to sales declines and delays in payment collection.

Company E, which imports frozen fish and steel products from Russia and Ukraine, anticipates unavoidable import disruptions and is busy securing alternative import sources.

Company F, which exports cosmetics to Russia and Ukraine, also stated that if the situation prolongs, business operations could become difficult, and depending on the circumstances, they are considering long-term unpaid leave for all employees.

Although difficulties and damages among related companies are expected to spread, very few companies have prepared countermeasures at the corporate level.

Many small businesses have not subscribed to export insurance, making damage relief difficult. Even among those insured, there were many inquiries due to lack of information on compensation coverage.

Companies without direct business with Russia or Ukraine also expressed concerns that if the situation prolongs, indirect damage could spread extensively due to macroeconomic impacts such as rising oil and key raw material prices, supply instability, and turmoil in international financial markets.

Company G, a local shipbuilding equipment company, lamented that if the situation prolongs and prices of key raw materials like nickel surge, they would face not only cost burdens but also supply disruptions. The company said, "If product or technology sanctions are imposed, delays in shipyard construction for Russian orders could cause delivery disruptions."

Company H also said, "There is no immediate damage, but exchange rate risks and rising raw material prices will inevitably increase management burdens in an already difficult situation due to COVID-19."

A representative from the Busan Chamber of Commerce and Industry’s Corporate Trend Analysis Center said, "Last year, exports to Russia were $320 million, accounting for 2.2% of the region’s total exports, imports were $820 million, 5.4%, exports to Ukraine were $15 million, 0.1%, and imports were $6 million, 0.04%, which are small or negligible, so the overall impact on the regional economy may be somewhat limited."

The representative added, "Indirect effects from prolonged situations cannot be ignored, and companies’ situations vary depending on whether they have direct transactions with Russia or Ukraine. It is necessary to combine long-term macro-level measures with direct and short-term support for companies facing damage."

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