Manufacturing companies face dark times amid downturn

"I used to buy a kilogram of plastic at 2,000 won, but the price has risen to 4,500 won. The problem is that the products don't sell because consumption has declined in every country. I've never seen this kind of situation before."

A plastic manufacturer company in Incheon is a key supplier of Korean beauty products including Kolmar Korea and Amore. The company is recently feeling the impacts of the global economic downturn.

The company has faced difficulties to the point of deciding whether it should close down its business, as it faces skyrocketing materials prices, closing down of national borders due to the pandemic and slowdown in consumption. Korea's export companies are being shaken down with high oil prices, exchange rates, interest rates and inflation - dubbed as the four highs.

Impact of large exporting companies has also taken a toll on smaller suppliers, who are driven to the point of giving up their business. According to the 'Asset Trade Brokering Space,’ run by the Korea SMEs and Startups Agency, as of Sunday, the number of second-hand items registered in the first half of this year stood at 318, 42 (or 15.2 percent), which is higher than the same period of last year (276). The Asset Trade Brokering Space is an open platform in which small businesses can sell or buy equipment or facilities after they close down their business. The data shows the growing number of companies that have shut down their business due to business challenges.

According to data obtained by the lawmaker Lee Joo-hwan from the Korea Industrial Complex Corporation, the number of companies that have closed down their business temporarily or permanently stood at 218 from the first five months of this year, 58 (36.3 percent) higher than the same period last year (36.3 percent).

"Exporting companies will continue to face tough conditions in the second half of the year,” said Deputy Prime Minister and Minister of Economy Choo Kyung-ho in a contingency meeting held at the Seoul Government Complex. “We will expand more than 40 trillion won in corporate trade financing for small exporting companies.”


Teuk-Gyo Koo kootg@donga.com · Choong-Hyun Song balgun@donga.com