4 in 10 New Businesses Close down in Less Than a Year

A record of almost a million new businesses opened in Korea last year, but many closed down again in less than a year.

Only 63.7 percent of businesses manage to stay open for more than a year and only 31.2 percent for more than five years.

According to Statistics Korea on Wednesday, 997,000 new businesses opened last year, a new record for the third year running. Their number increased 8.4 percent compared to 2018, the biggest rate of growth since 2014's 12.6 percent.

Some 76,000 were incorporated enterprises, up 10.3 percent on-year, while 920,000 were privately owned, up 8.2 percent.

But their financial prospects were weak. The one-year survival rate of new businesses declined from 65.3 percent a year earlier, mainly due to the recession. Data for this year's devastating coronavirus crisis are not yet available.

Some 893,000 were run by one person, accounting for 89.6 percent of new businesses that opened last year but also for 91.6 percent of those that closed down.

Sales data paint the same picture. Seven out of every 10 new businesses generated less than W50 million in annual sales, while 11.5 percent generated sales of W50 million to W100 million (US$1=W1,092).

About one-third of entrepreneurs were in their 40s, but people in their 60s or above accounted for a growing proportion at 17.1 percent. That means there has been an increase in small stores run by senior citizens.

The pandemic is expected to make things even worse.