China Reopening: Limited Impact on Changwon Economy's Business Sales and Profits

Positive Impact: 'Supply Chain Stability',

Negative Impact: 'Raw Material Price Increase'

The Changwon Chamber of Commerce and Industry in Gyeongnam announced the results of a survey conducted on 154 manufacturing companies in the Changwon area regarding "the impact of China's reopening on the Changwon economy."

This survey aimed to understand how local companies foresee the effects following China's economic reopening in December last year under the With-Corona (gradual return to normal life) policy, as China is one of Changwon's largest trading partners.

Changwon Chamber of Commerce and Industry, Gyeongnam.
Photo by Lee Seryeong

First, regarding how companies expect the reopening of China's economic activities to affect their own businesses, 8.4% of respondents answered "greatly helpful," and 48.4% answered "there are side effects, but overall helpful," indicating that 56.8% anticipated a positive impact.

On the other hand, 32.3% said "no significant impact," and 11.0% responded "helpful but with greater side effects." Notably, positive responses to China's reopening were relatively higher among large and medium-sized enterprises (71.8%) and export companies (63.9%).

Regarding the impact of China's reopening on actual business performance such as sales and profits, more than half of the respondents, 57.4%, answered "no impact," while only 32.2% said there was or would be a positive effect.

Although China's reopening is generally considered to have a positive influence on companies, respondents were relatively conservative about it immediately leading to improvements in business performance such as sales and profits.

This suggests that even if reopening occurs, exports to China may not return to previous levels, and companies are rather expecting greater benefits in supply chain stabilization, such as resolving parts supply difficulties and easing logistics disruptions.

The Changwon area is a region where intra-industry trade with China is active in products such as hot-rolled steel sheets, steel pipes, machine tool parts, automobile parts, and electrical and electronic components. It has been significantly affected by procurement difficulties and production disruptions due to the spread of COVID-19 and the resulting delays in industrial activities in China.

Conversely, when asked why companies that responded they were either unaffected or negatively affected by China's reopening felt that way, 48.3% answered that it acted as a factor in rising raw material and energy prices, and 41.7% said the effect of increased exports to China would not be significant, making up the majority. The remaining 9.2% cited the possibility of a COVID-19 resurgence in China, and 0.8% answered "other."

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