European Firms Say Doing Business Korea Got Worse
27 February, 2019
European companies say business conditions in Korea have grown significantly worse. The European Chamber of Commerce in Korea polled 129 CEOs of European companies based in Korea last month, and most said doing business here has gotten worse since 2017.
When the poll was first conducted in 2015, just over half complained, but now the proportion is over two-thirds. Businesspeople everywhere, big or small, always tend to say business is bad at the moment, but two-thirds is a significant proportion.
The ECCK was established in 2012 and has around 350 member companies that employ some 50,000 workers between them here, generating W71 trillion in combined revenues (US$1=W1,119). Mercedes-Benz is the chair, and members include Bayer, BASF, BNP Paribas, BMW, Deutsche Bank, DHL, GSK, IKEA, Louis Vuitton and Nestlé.
An ECCK staffer said, "Korea's economic growth rate has slowed, while labor costs are rising."
The poll showed that labor costs were their biggest concern. Due to rising wages, the number of new hires by European companies here declined 15 percentage points last year. Since it is difficult to lay off workers here, they opted instead to hire fewer staff.
Another question is what lies ahead. About one-fifth of the CEOs said they plan to decrease new hires over the next two years. But about one-third said they will increase hiring, compared to more than half in 2017.
There were also complaints about regulatory constraints, which about half said cost them business opportunities, and a significant group said Korea has been bumped down in terms of their priorities.