Manufacturing Crisis
LG Economic Research Institute analyst Lee Han-duk released a report on Oct. 21, pointing out that Korean manufacturers are losing steam at a rapid pace to the point of falling behind non-Korean manufacturers in terms of growth rate since 2012.
According to the report, Korean manufacturers’ asset growth rate plummeted from 11.5 percent to 1.2 percent and 3.3 percent between 2011 and 2013, and their tangible asset growth rate has been limited to below 1 percent since 2012. Their sales growth rate plunged from 15.8 percent to 0.9 percent between 2010 and the first half of this year, too.
In contrast, the asset growth rate of non-Korean manufacturers showed a gradual recovery from 3.7 percent to 5.1 percent between 2012 and 2013 and reached 4.8 percent in the first half of 2014, when they recorded a sales growth rate of as high as 6.0 percent.
The decline in Korean manufacturers’ international competitiveness is partly attributable to the sluggish performance of Korean exporters caused by the appreciation of the won. Companies engaged only in domestic business posted a sales growth of 3.7 percent in H1 this year, but exporters have remained below 0 percent all the way since last year.
“Tangible assets account for just 10 percent or so of the total assets of American, German and Israeli enterprises,” the analyst pointed out, adding, “Korean companies have to focus on efforts for innovation in order to fare better in the global market.”