Korean Companies Concentrated in Small Number of Industrial Sectors

Korean companies in the Fortune Global Top 500 are found to be oncentrated in only nine industrial sectors. In particular, Korean companies were poorly represented in the service industry such as finance and distribution as well as in the high-tech industries such as aerospace, defense and medicine.

The Korea Economic Research Institute (KERI) compared the performances of globalized Korean corporations with those of global corporations using data on the Fortune Global 500 companies. Last year, there were 15 Korean companies in the Fortune 500 and they were engaged in nine industrial sectors. The figure decreased by one from ten in 2015. In contrast, the number of industries which 14 Dutch Fortune Global 500 companies belonged to increased from 12 to 13 in the same period.

The number of German companies in the Fortune Global 500 club also grew from 28 in 2015 to 29 in 2017, while the number of their industries swelled by two from 17 to 19. The number of Japanese companies in the club slid from 54 to 51, but the number of their industries remained at 20.

In particular, Korean companies were found to be weak in services and high-tech industries. There were no Korean companies in such service industry as finance and communications, food and medicine distribution, trade and healthcare.  Their presence was also poor in high-tech industries such as aerospace, defense and medicine, even though Korea showed strengths in the traditional manufacturing industries such as electronics, automobiles and metals.

Korean companies' business portfolio diversity also lagged behind that of other countries as well as the US and China. The Korea Economic Research Institute (KERI) computed indices of business portfolio diversity levels based on the sales portions of industries. According to the results, Korea's diversity level was 1.88, ninth among the surveyed countries.

The Netherlands (2.24) and Switzerland (2.01), which had smaller numbers of Fortune Global 500 firms than Korea, stood at 7th and 8th, respectively, higher than Korea's standing.

China’s advance was spectacular in sales portions. The number of Chinese Fortune Global 500 firms soared from 3 in 1997 to 109 in 2017, and the proportion of their sales from 0.4% to 21.8% in the same period.

In the meantime, that of Korean Fortune Global 500 firms peaked at 17 in 2015 and dropped to 15 in 2016 and 2017, and the proportion of their sales sank to 2.7% in 2017 from 3.1%, the highest, in 1997.