If COVID-19 Crisis Is Prolonged
The Federation of Korean Industries and market research firm Mono Research recently conducted a survey, from March 10 to 16, with 150 foreign-invested companies each with at least 100 employees in South Korea.
In that survey, 48 percent of the companies answered that they would consider modifying their global production and logistics networks in the event of a prolonged spread of COVID-19. In addition, 86.1 percent of those that answered so said that they would reduce their production and logistics functions in South Korea. In other words, 41.3 percent of foreign-invested companies in South Korea are considering cutting back on their business in South Korea.
The federation explained that foreign-invested companies are likely to reorganize their production and logistics networks in South Korea and worldwide alike. As of the end of 2019, the foreign direct investment in South Korea totaled US$23.3 billion.
Approximately 74 percent of the respondents predicted a decline in sales in the wake of the spread of the virus. Their estimated decline is 12.4 percent on average. According to them, retail, wholesale and product distribution are likely to take the biggest hit and the estimated decline in those sectors is 22.4 percent as compared with the previous year.