June 21, 2012 09:56
Eight out of 10 small businesses in Korea with up to five staff generate less than W100 million (US$1=W1,151) in revenues a year, according to a study released by Statistics Korea on Wednesday. Half of them were established after 2005, which suggests they are often convenience stores and small restaurants that provide a lifeline for retired baby boomers.
This is the first time data on businesses this size have been compiled. Statistics Korea said one of its most remarkable findings was how little money these businesses make. Half of them generate W10-50 million in annual revenues, and 7 percent less than W10 million. Only 2 percent make more than W500 million a year.
There are 2.56 million small businesses employing fewer than five people, accounting for three quarters of all businesses in Korea, but their annual revenues account for only 6 percent. "This shows that the domestic service industry has yet to acquire competitiveness," said Kim Joo-hoon at the Korea Development Institute.
Some 39 percent opened between 2005 and 2009 and 16 percent in 2010. "It appears that we're seeing a growing number of people opening their own businesses in order to make a living as more and more baby boomers retire," said Kang Jong-seok at the Ministry of Strategy and Finance.
Wholesale and retail accounted for 29 percent of these small businesses, followed by restaurant and hospitality (23 percent) and transportation (13 percent). Forty-two percent of the companies are headed by women.
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