Korean Businesses Lag Behind Overseas Rivals

Leading Korean businesses lag behind their U.S., Chinese and Japanese rivals in terms of growth and profitability, the state-run Korea Development Institute said Thursday.

In 2010, Korea's electronics industry grew at a rate of 25.6 percent to rank ahead of rivals in the U.S., China and Japan. But that growth rate fell to 4.1 percent in 2014, the lowest in the group.

U.S. electronics companies posted 5.9-percent growth, Japanese 6.7 percent and Chinese 9.8 percent.

Samsung's sales fell from W229 trillion in 2013 to W206 trillion last year and are forecast to drop even lower this year (US$1=W1,180). Rival Apple, by contrast, achieved record sales and operating profits in the third quarter of this year.

Korea's automotive industry was the only one among the four nations where sales declined last year. Operating margin also lagged behind foreign rivals by two to five percentage points.

Analysts attribute this to a high proportion of fixed expenses among production costs.

Shin Hyun-han at Yonsei University said, "Product prices are declining globally due to excess supply, but Korea has a high proportion of fixed expenses like wages and is losing in competition. This needs to be addressed if competitiveness is to improve."

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