6 out of 10 Gwangju Companies Suffer Damage Due to Russia-Ukraine Conflict

[Asia Economy Honam Reporting Headquarters Reporter Park Jin-hyung] Recently, due to the Russia-Ukraine situation, it has been revealed that local export-import companies are facing significant management difficulties and concerns.

The Gwangju Chamber of Commerce and Industry announced on the 22nd that it conducted a 'Monitoring of the Impact on Local Companies Due to the Russia-Ukraine Situation' targeting export-import companies in the Gwangju and Jeonnam regions.

This survey was conducted on 30 companies that are directly or indirectly trading with Russia or Ukraine, with major target industries including automobile parts, electrical and electronics, machinery and molds, steel and metals, and rubber and plastics.

Among the target companies, 56.7% responded that they had 'suffered damage' due to the Russia-Ukraine situation, while the remaining 43.3% answered that they had 'not suffered damage.'

Companies that suffered damage mainly experienced delays or suspension in payment settlements, logistics and supply disruptions, and difficulties in financing. In addition, they reported direct or indirect damages such as export suspension or contraction of transactions and rising raw material prices.

Company A, which exports all household goods and food products to Russia, stated, "Although we have endured the 2008 financial crisis and the economic sanctions following the 2014 annexation of Crimea, this Russia-Ukraine situation has caused the greatest impact." They added, "Due to logistics and supply chain paralysis and economic sanctions, it has become difficult to collect export payments, and the expansion of international financial risks has also caused many difficulties in financing."

Company B, which manufactures automobile parts and exports to Russia and Ukraine, also responded, "We are experiencing many difficulties such as logistics and supply shortages due to port closures, as well as transaction suspensions and holds caused by delayed payments from Russia." Company C, which exports medical supplies to Russia, said, "We faced difficulties in exports because the Russian client was unable to make payments in dollars just before product shipment."

When asked about responses to the situation among companies that suffered damage, the most common answer was "have not yet prepared countermeasures (76.5%)," followed by "suspension or hold of transactions until the situation stabilizes (29.4%)," "diversification of buyers and suppliers (17.6%)," and "securing sufficient inventory (5.9%)."

Regarding anticipated difficulties if the situation prolongs, respondent companies expressed the greatest concerns as "export-import sanctions on major items (56.7%)" and "contraction of transactions (53.3%)."

Following these were "delays or suspension of payment settlements (43.3%)," "logistics difficulties and increased logistics costs (26.7%)," "rising oil and international raw material prices (26.7%)," "expanded exchange rate volatility risk (23.3%)," and "difficulties in parts procurement (13.3%)."

As necessary support policies to respond to the Russia-Ukraine situation, respondents answered in order: "prompt provision of local information (46.7%)," "management stabilization fund support (40.0%)," and "compensation for export-import company damages (33.3%)."

In particular, companies that suffered damage from this situation said that "compensation for export-import company damages (58.8%)" and "prompt provision of local information (58.8%)" are the most urgent, while companies that did not suffer damage indicated that "management stabilization fund support (38.5%)" is most needed.

Additionally, respondent companies stated that policy support such as "support for resolving logistics difficulties (26.7%)," "extension of bank loan deadlines (23.3%)," "expansion of trade guarantee system support (13.3%)," "support for diversification of trading partners (exhibitions/consultations) (13.3%)," and "export consultation and consulting support (10.0%)" are necessary.

A representative from Gwangju Chamber of Commerce said, "With global economic instability continuing and the outbreak of the Russia-Ukraine situation, concerns among export-import companies are high due to payment collection issues and instability in oil and raw material prices." They added, "It seems urgent to prepare measures such as direct government compensation for delayed or suspended payments, prompt provision of local information, and support for management stabilization funds to minimize corporate damages and quickly normalize export-import conditions."

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