May 25, 2022 08:48
Small businesses are being hit hard by soaring inflation just as they had hopes of recovering from the coronavirus lockdown.
In a quarterly survey with the Chosun Ilbo, Hana Financial Group asked 800 small business owners about their performance and 58.4 percent said their sales until April this year fell from the fourth quarter of last year -- the month of April was included in the quarterly survey to gauge the effects of COVID-19 restrictions being lifted.
That means many, especially in residential areas or traditional open-air markets are still suffering even though lockdown has been mostly lifted.
They complain that rising costs are eating into profits and if they hike their own prices it damages sales.
When asked about their forecast for the next quarter, 80.6 percent expect a further increase of consumer prices. One 37-year-old owner of a fast-food restaurant in Daegu said, "The prices of ingredients have increased so much that they negate any positive effects of staying open longer."
Small businesses in the construction sector like interior decorators or wallpaper and curtain stores seem to have been affected the most, with 83.3 percent saying they saw their peers close down over the last three months, up from 64 percent in the previous quarter.
Hana researchers attributed the increase to a slowdown in the real-estate sector combined with inflation.
In the real-estate sector, 52.6 percent felt the business will get worse over the next quarter. One realtor in his 60s in Seoul said, "I'm about to close down my business due to a dearth of apartments being sold."
Some 61.3 percent of all respondents said they are surviving on loans. The same poll in the third quarter of last year showed 52.8 percent were indebted, rising to 56.8 percent in the fourth quarter.
Also, 22.1 percent of all respondents said they were unable to pay the rent on their stores, up from 20.9 percent the previous quarter. One café owner who opened his shop eight years ago, said, "Over the last two years, I've been unable to make much of a profit, while having to pay rent, taxes and other fixed costs by borrowing money. I'm going to close down when the lease expires."
But other respondents are hopeful that earnings will return to normal because lockdown has ended. In fact, only 42.5 percent said the economy will worsen over the next quarter, down from 65.3 percent the previous quarter.
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