Japan's Retaliation Taking a Toll on Korean Firms' Sales
Major South Korean companies’ sales and operating profits for next year are forecast to decrease 2.8 percent and 1.9 percent due to Japan’s export curbs, respectively. Especially, general machinery manufacturers’ sales are estimated to fall more than 10 percent and petroleum product and semiconductor manufacturers’ sales are predicted to decrease at least 5 percent. Besides, some companies’ profits are forecast to dip below zero.
The Korea Economic Research Institute recently conducted a survey with 153 South Korean companies. 51.6 percent of the respondents answered that Japan’s export restrictions would adversely affect their business.
In the survey, large corporations said the curbs would result in a 2.8 decline in sales next year. The percentage is 5.7 percent in the group of respondents anticipating the adverse effects. The estimated rate of decrease is 13.6 percent in the general machinery sector, 7 percent in the petroleum product manufacturing sector, 6.6 percent in the semiconductor industry, 3.9 percent in the steel product manufacturing sector, and 2.7 percent in the wireless communication equipment industry.
Those in that group answered that their operating profit would fall 3.7 percent next year due to the curbs. Specifically, the estimated fall is 7.9 percent, 5.4 percent, 5.1 percent, and 2.4 percent in general machinery, petroleum product, semiconductor, and display, respectively.
The survey respondents mentioned more business with alternative suppliers as the most important short-term and long-term countermeasures alike. They also stressed the importance of domestic component and material supply for less dependence on Japanese suppliers.
When it comes to government support, 30.9 percent answered that assistance for finding new business partners is the most urgent. The answer was followed by financial assistance for domestic component and material development (23.9 percent), tax benefits for affected industries (23 percent), and deregulation to facilitate the production of chemical substances, industrial components, and the like (16.6 percent). Over 40 percent of the survey respondents said the most desirable is a diplomatic solution between the South Korean and Japanese governments.