Most Smaller Businesses Devastated by Epidemic

Major conglomerates have managed to weather the brunt of the coronavirus epidemic, but the vast majority of small and mid-sized companies have been devastated.

In a survey by the Korea Chamber of Commerce and Industry of 302 businesses published Sunday, 75.8 percent of respondents said they suffered damage from the epidemic, while 8.3 percent said their very existence came under threat.

Only 15.9 percent said the epidemic opened up new opportunities for them.

When asked how they coped with the epidemic, 71.9 percent said they had to slash wages and send workers on unpaid leave, 50 percent said they had to shut down temporarily, 42.1 percent said they laid off workers and 14.9 percent said they suspended investment.

SMEs are also pessimistic about the future. The business survey index for February announced by the Korea Federation of SMEs based on a survey of 3,150 small and mid-sized companies led to a reading of 69.3. Any reading below 100 means pessimists outnumber optimists.

The reading edged up slightly from 65 in January.

Many small businesses have gone belly up. According to court records, 1,069 businesses went bankrupt last year, a five-year high, and 892 applied for court receivership, down from 1,003 in 2019. That means fewer businesses bothered to seek another chance at survival.

Conditions for small merchants are also dismal. According to Statistics Korea, the number of mom-and-pop stores stood at 5.53 million in 2020, down 1.3 percent or 75,000 from a year earlier. That means closures outnumbered new openings by 75,000.