Faltering Korean Companies
According to the Federation of Korean Industries (FKI) and the Supreme Court of South Korea,
a total of 401 South Korean corporations filed for bankruptcy between January and July this year whereas the number had been 214 during the same period of 2012. The number had been 396 in 2012 and increased to 461 in 2013, 539 in 2014 and 587 in 2015. It is estimated to top 600 this year.
Also on the increase is the ratio of those in which interest costs exceed operating profits for three years in a row. Specifically, the ratio and number of such companies rose from 14.3% and 3,239 to 14.7% and 3,278 between 2014 and last year. In particular, the ratio of such companies in the group excluding large corporations increased from 14.4% to 15% during the period.
The growth potential of South Korean companies as a whole is on the decline, too. For example, the number of fast-growing companies hit 23,400 in 2010 but fell to 20,637 in 2011, 20,212 in 2012, 17,349 in 2013 and 16,410 in 2014. According to the FKI, the fast-growing companies mentioned here means those not new, having at least 10 regular employees and recording an annual average increase of at least 20% in sales or the number of regular employees in the three most recent years.
Conditions of industrial complexes in the country are getting worse as well. The number of companies housed in the industrial complexes increased from 45,065 to 50,464 between the end of 2011 and the end of 2015, but their total exports dropped from US$20.336 billion to US$14.803 billion during the same period.