South Korean companies in China are likely to show a poorer performance than those in other regions this year due mainly to intensifying competition with Chinese companies, the Korea Trade-Investment Promotion Agency (KOTRA) said in a report on Feb. 19. The report is based on a recent survey covering about 12,500 South Korean companies operating overseas.
In that survey, more than 50 percent of South Korean companies in Vietnam, the United States and Japan anticipated an increase in annual sales this year whereas the ratio stood at 39 percent for those in China, which mentioned adverse market conditions resulting from an increase in wage, difficulties in hiring, and already fierce quality and price competition.
A total of 171 companies answered that they were considering downsizing, withdrawing or relocating their business due to local market environments, with those in China accounting for 34 percent of them, the largest portion. Another 36 companies said they are considering relocating to another country, with more than 20 preferring a neighboring country and seven preferring South Korea.
Also, the survey respondents said that Vietnam, a post-China market in which South Korean companies are increasing their investments at a rapid pace, is characterized by a rapid increase in wage and a high local employee turnover rate as well as more burdensome customs clearance procedures.
With the exception of those in China, approximately 80 percent of overseas South Korean corporations answered that their sales would not decrease down the road in spite of intensifying competition. A total of 2,513 companies answered to the sales-related questions of the survey and 46 percent, 36 percent and 18 percent of them said their sales would increase, be steady and decrease, respectively.
At 3,052 corporations that answered to employment-related questions, local workers account for 99 percent of their employees when it comes to simple production jobs. In addition, South Koreans account for 13 percent (approximately 12,200 persons) of their employees as for management positions such as marketing and product development.