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| AmorePacific's headquarters in Seoul / Courtesy of AmorePacific |
By Kim Hyun-bin
Nearly 90 percent of Korean companies operating in China have suffered from the latter's strict zero-COVID measures ― including lockdowns of major cities, mandatory mass testing, transportation shutdowns and travel bans ― from March to April, according to the Korea International Trade Association (KITA), Monday.
The Shanghai branch of the KITA released a report after surveying 177 Korean companies in China on the losses caused by lockdowns of large urban areas, including Shanghai.
It was found that 88.1 percent of the responding companies were negatively affected, with 97.4 of them citing their sales decreased in the first half of this year, and 31.4 percent reporting a sales decrease by more than 50 percent compared to the same period of the previous year. Among the respondents, 95.5 percent predicted that the decline in sales would continue into the second half of this year.
Companies with reduced investment and employment in the first half accounted for 69.9 percent and 66.7 percent, respectively, but more companies are expecting the second half to be worse.
"The investment and employment sectors will suffer more over time," KITA said.
The major difficulties Korean companies faced with China's zero-COVID policy included movement restrictions on sales and marketing activities and disruptions in logistics and supply chains.
"Shanghai is restricting face-to-face customer service even after the lockdowns were lifted, and there are still many inconveniences, so it will take some time for non-manufacturing businesses to normalize their operations," KITA said.
Regarding their future business plans in China, more than half ― 55.3 percent ― of companies answered that they were considering reducing, suspending, withdrawing or relocating their business.
Maintaining the existing business plan accounted for 35.9 percent and further expansion of their business accounted for only 7.3 percent of respondents operating in China. Businesses appear to want support from the Chinese government, such as improving the predictability of quarantine policies, increasing subsidies and reducing taxes and rent prices.
"In order to promote economic exchange between the two countries, the Korean government and related organizations need to inform the Chinese government of the losses and urge support for it," Shin Seon-young, head of the Shanghai branch of the International Trade Association, said. "As most foreign-funded companies, not just Korean companies, are complaining of similar difficulties and losses, it is a good way for foreign-funded companies in China to respond to the problem jointly."
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