Ukrainian Crisis Leaves SMEs 'Restless'... Export Inquiries Surge Fivefold in One Week

"Can't Receive Export Payments?"... Flood of Inquiries to Industry Ministry's Russia Desk
SMEs Confused by Export Controls... 80-100 Daily Complaints Received
Government Confirms Emergency Financial Support of 2 Trillion Won... "Considering Expansion of Scale and Targets"

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Junhyung] #The CEO of frozen machinery company A, who sent goods worth $250,000 (about 300 million KRW) to a Russian client, has recently been losing sleep. This is because the Ukraine crisis broke out while they had received only 40% of the contract amount as an advance payment and had not yet collected the remaining balance. It is difficult to predict when Russia, which was expelled from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), will return, so the company is effectively forced to forfeit nearly 200 million KRW in outstanding payments.

#Gas burner company B is in a similar situation. The company loaded goods to be exported to Ukraine onto a ship in mid-last month, but due to Russia’s invasion of Ukraine, the ship could not dock at the port of Odesa. Eventually, the ship diverted to Turkey, and B had to bring the goods, whose export was stalled, back to Korea. All additional logistics costs were borne by company B.

The shockwaves from the Ukraine crisis are spreading throughout the Korean economy, causing continuous damage to small and medium-sized export companies. Hundreds of inquiries from SMEs flood the dedicated export-import company helpdesk established by the government every day. The government has launched emergency financial support for affected companies.

According to the Ministry of Trade, Industry and Energy on the 5th, the ‘Russia Desk’ within the Strategic Materials Management Institute received more than 320 inquiries from export companies as of the previous day. The Russia Desk is a dedicated export control team established by the Ministry of Trade, Industry and Energy at the Strategic Materials Management Institute in response to the Ukraine crisis. The Russia Desk began operations on the 24th of last month, when Russia suddenly invaded Ukraine, and received about 60 corporate complaints by the next day.

Export Control Consultation Desk, Russia Desk Fully Operational
(Seoul=Yonhap News) Reporter Son Hyung-joo = On the 24th, the Russia Desk at the Strategic Materials Management Institute in Gangnam-gu, Seoul, was busy. As Russia's invasion of Ukraine intensified, the government launched the dedicated export control consultation desk, the "Russia Desk," starting today. The Russia Desk is a dedicated consultation window that advises domestic companies on whether their products fall under export control items when the United States strengthens export control measures against Russia. February 24, 2022
2022331@yna.co.kr
(End)


＜Copyright(c) Yonhap News Agency, Unauthorized reproduction and redistribution prohibited＞

Corporate inquiries began to surge this week. On the 28th of last month and the 2nd of this month, about 160 inquiries were received by the Russia Desk over two days. On the 3rd alone, about 100 inquiries were received, increasing the cumulative number of inquiries more than fivefold in just one week. This is due to the Korean government’s full-scale export control to Russia and the decision by major Western countries to expel some Russian banks from SWIFT.

Most of the inquiring companies were SMEs. Unlike large companies with legal departments, SMEs are relatively vulnerable to export controls. SMEs, which often have unstable cash flow, may face financial difficulties if payments are not received on time.

Accordingly, the government finalized an emergency financial support program worth 2 trillion KRW on the same day. Companies directly or indirectly affected by the Ukraine crisis are eligible for support. The government also discussed a plan to provide 15 trillion KRW in policy financing to stabilize supply chains. A government official said, "Due to international sanctions against Russia and other factors, the situation remains highly uncertain," adding, "We will also consider expanding the scale and scope of emergency financial support."

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