"Ukraine War, Raw Material Price Surge Hits Korean Companies Hard"

FKI Surveys Corporate Impact of Russia-Ukraine Crisis
Raw Material Price Hikes → Product Price Increase... "Average 6.1% Rise Expected"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Jin-ho] Concerns have been raised that the prolonged Russia-Ukraine war and the resulting rise in raw material prices will directly hit Korean companies. In particular, it is analyzed that the increase in raw material prices will lead to product price hikes, significantly impacting inflationary pressures.

According to the Federation of Korean Industries on the 15th, a survey on the 'Impact of the Russia-Ukraine Situation on Companies' found that six out of ten companies responded that it negatively affects their management. Especially in terms of investment and trade relations, nine out of ten companies reported adverse effects.

Companies cited the following negative factors: ▲increased cost burden due to rising prices of major raw materials (50.5%) ▲increased exchange rate volatility and difficulties in financing (17.9%) ▲difficulties in parts supply and production disruptions (15.1%) ▲contraction of exports to Russia, Ukraine, and neighboring countries (11.5%).

Among the responding companies, one quarter (25.1%) said they have no special countermeasures for the Russia-Ukraine situation.

There are also concerns that the rise in raw material and parts prices triggered by the Russia-Ukraine situation could lead to product price increases, thereby exerting inflationary pressure. 93.5% of companies responded that the purchase prices of raw materials and parts will rise compared to the previous year due to the Russia-Ukraine situation.

Among companies expecting purchase price increases, 53.8% said they would raise product prices in response to the rising costs of raw materials and parts. The average product price increase rate among companies planning to raise prices was 6.1%.

Meanwhile, more than half of the companies (57.5%) responded that the Russia-Ukraine situation has a negative impact on parts imports and supply chains.

Regarding necessary government support measures in response to the Russia-Ukraine situation, companies answered that ▲rapid acquisition and sharing of information on sanctions against Russia (30.5%) ▲stabilization of financial and foreign exchange markets (28.1%) ▲support for supply chain diversification (19.6%) are needed.

Kim Bong-man, head of the International Headquarters at the Federation of Korean Industries, stated, “What companies are currently struggling with the most is that the sanctions imposed by the U.S. and other Western countries against Russia are extensive and complex,” adding, “The government should promptly and accurately share related information with companies to help them respond smoothly to the situation.”

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