Small Businesses on Brink of Bankrupty

  • By Park Soon-chan, Choi Won-woo

    August 21, 2020 13:33

    Small businesses have seen their precarious situation made worse by a recent resurgence of coronavirus in the wake of the longest monsoon on record.

    Internet cafés, karaoke bars and restaurants as well as merchants in the markets have been devastated, and record numbers could go out of business.

    Ryu Pil-sun of the Korea Federation of Micro Enterprise said, "Some 48 percent of 6.3 million small businesses nationwide are clustered in the capital region, the hotbed of the recent coronavirus resurgence."

    "Many of them have had their business suspended," he added. "They're more psychologically devastated than during the first spike of the virus."

    Seoul's Namdaemun Market is deserted on Thursday.

    There is criticism that the government is sending confused messages that have given small businesses false hope by handing out food and travel discount coupons and encouraging people to eat out and travel around.

    Monday's makeup holiday for Liberation Day failed to bring the hoped-for fillip for small businesses. "The holiday contributed nothing to sales. It only ended up encouraging people to travel around and helped the virus spread more," complained a 65-year-old man who has been running a restaurant in Namdaemun Market in downtown Seoul for 40 years. "I used to have more than 200 customers a day, but only five came today."

    He was then shushed by another merchant who overheard him and thought such talk was bad for business.

    One study suggests that many small businesses are now on the brink of bankruptcy. The average monthly operating profit of restaurants across the country plummeted from W1.65 million in May last year to zero this May, according to the Korea food Industry Research Institute on Thursday (US$1=W1,188).

    Average sales of restaurants stood at just W7.79 million in May, down 46.3 percent from last year's W14.53 million.

    Internet cafés and karaoke bars, which the government singled out as high-risk facilities and shut down last Wednesday, take up a large proportion of small businesses.

    Cha Nam-soo of the KFME said, "Small business owners, who have managed to barely stay afloat with bank loans since the first spike of coronavirus in February, are now at a crossroads where they have to decide whether to close their business." 

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