Korean companies doing business in China expect the Chinese market to improve in the second half of this year and beyond. In particular, they expect their sales to ascend from 2023.
The largest number of the respondents (40 percent) expect an improvement in their business in China after 2024, followed by 28 percent who expect an improvement beginning from the second half of 2024, according to a survey of 217 Korean companies in China conducted by the Korea Institute for Industrial Economics & Trade (KIET) in collaboration with the Korea Chamber of Commerce and Industry’s Beijing Office and the Korea Chamber of Commerce in China.
On the other hand, only 10 to 20 percent of the companies said they are not affected by the current slump in domestic demand in China or expect the domestic demand to improve beginning from the first half of 2024. Regarding the impacts of an improvement in U.S.-China relations, while 48 percent of them said that it did not yet have a significant impact but expected a positive impact in the future, 44 percent of them expected it to have no impact.
Those surveyed said that their sales business survey index (BSI) outlook rose from 107 in 2023 to 121 in 2024. In particular, they expected their sales BSI outlook for 2024 to climb to 121 from 102 in 2022 and 2023, showing their optimism for the New Year.
By company size, large companies expected their sales BSI to reach 125 for the second consecutive year, while small and medium-sized enterprises (SMEs) expected 121, a six-year high. That of manufacturing companies was expected to continue an upward trend to hit 12, while that of distribution companies was expected to rose above the benchmark to 119 from 100.
In the manufacturing sector, electrical and electronics companies expect 135, automotive companies 135, and metal and machinery companies 133. Chemical companies expect a value of 107 and textile and apparel companies 103. This all reflects some optimism, even though they were at a lower level than in 2023.
In addition, the first-quarter outlook BSI for all of the companies rose to near 100 for business conditions (99) and sales (101), which was higher than 100 for the first time in three quarters.
The sales outlook BSI was above 100 for the first time in three quarters in manufacturing (105), with most other industries above 100 except for the automotive industry (90) and the other manufacturing industries (97), while the retail industry (81) was below 100 for the first time in four quarters.
In particular, in the manufacturing sector, the difficulties of sluggish local demand and increased competition in China were notable in automobiles and chemicals, and the difficulties of sluggish exports were salient in the textile and apparel and electrical and electronic sectors. The problems of manpower and labor costs were severe in the textile and apparel and metal and machinery sectors.
Meanwhile, the BSI for all companies in the fourth quarter of 2023 showed that the market BSI rose for the fourth consecutive quarter to hit 84 and the sales BSI also rose further to 94 following the previous quarter.