Thousands of SMEs Moved Factories Overseas Last Year
02 December, 2020
Thousands of little and mid-sized Korean companies moved production overseas this past year prior to the coronavirus epidemic struck.
In line with the Export-Import Bank of Korea, foreign direct expenditure by simply SMEs grew steadily from US$6.9 billion in 2016 to an archive $15.4 billion in 2019.
Over the same period, the number of branches Korean SMEs established abroad increased from 1,684 to 2,063. Which means they were construction a lot more than 2,000 factories abroad every year.
In the first half a year of this year, their investment abroad still accounted for $6.1 billion, down around 20 percent on-year as a result of epidemic but still brisk.
The trend is nothing new. Factories have already been moving to China and Vietnam for decades because of soaring costs here. They determined it increasingly difficult to make a income while wages rose and reddish tape remained obstructive.
The Korea Trade-Investment Advertising Agency polled 1,028 SMEs last year, and simply 4.2 percent said they considered downsizing their overseas functions.
Asked why they were not moving back to Korea, 66.7 percent cited mounting production costs, 58.3 percent unfavorable labor conditions, 33.3 percent red tape, and 25 percent a shortage of employees as Koreans simply do not want to work for more compact companies.
One business insider said, "The government must have drastically eased regulatory barriers and created favorable circumstances but instead hiked the minimum amount wage and shortened the functioning week. At this specific rate, we is only going to see increasingly more small and mid-sized corporations leaving Korea."
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