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2019 European Business in Korea Confidence Survey

Last year was a challenging year for Korea with an economic growth level of 2% amidst a concerning global trade environment affected by the US-China and the Korea-Japan trade conflicts. However, Korea is and remains an attractive market for European businesses. Every year, new European companies are entering the Korean market and 41% of participating companies already being here intend expanding their business operation even further, as the 2019 European Business in Korea Confidence Survey showed.

122 European company executives, representing companies with a combined workforce exceeding 53,000 employees and a total turnover of more than EUR 40 billion, answered the survey.

An attractive market for European businesses...

Korea with its population of 50 million people but also with its globally leading companies, is and remains an important market and gateway to Asia for European companies seeking to get a foothold in Asians markets. The majority of the respondents (83%) replied that Korea holds at least the same or even a higher level of importance in their company’s global strategy. Indeed, European companies consider Korea as a key market as 51% of responding companies have experienced a higher turnover compared to 2018. The majority of European enterprises (71%) have generated a profit in 2019, and only 14% reported a loss position.  About their prospects, 48% of company representatives are still positive about the growth perspectives of their businesses for the next two years in Korea, while 25% have a rather have a neutral view. In addition, 48% of company representatives are still positive about the growth perspectives of their businesses for the next two years in Korea and 25% rather have a neutral view.

 

Which poses challenges...

Despite of its attractiveness, Korea is also a challenging market. The ‘Income led growth policy’ – including job creation and minimum wage increases – has been a key pillar of Moon’s government’s economic policy. European companies affirm they do support this policy, but only 35% of European companies has hired additional permanent employees while 22% have reduced their workforce. The areas where the highest need for a betterment is seen are labor costs, ambiguous rules & regulations, and discretionary enforcement of regulations / market access barriers.

65% of business leaders stated that reforms implemented by the Korean government have not helped their business and also the outlook for the next two years is not much better as 57% of business leaders do not think that the administration will come up with meaningful reforms related to business. A key area of high concern is the rising labor costs as pointed out by 69% of company representatives. 

The European business community is committed to further investment in Korea. Nevertheless, it is likely to take a review of some policies to ensure further economic growth. A change can only be reached due to a constant and constructive dialogue with stakeholders, which is seen by the European business community as the key to success.

 

About the Business Confidence Survey

Since 2014, the purpose of the Business Confidence Survey of European Businesses in Korea is to take an annual snapshot of European companies' perceptions, successes and challenges in Korea. It is jointly led by the French, European, British and German Chambers of Commerce and Industry in Korea, with the contribution of the other European Chambers in Korea.

 

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