Over Half of South Korean Companies in China Seek to Reduce Operations or Withdraw: Survey

A woman buys food from a shop next to a fenced off business area and residential compound that has been locked down due to a COVID-19 outbreak on June 16, 2022 in Beijing, China. Kevin Frayer/Getty Images

Over half of South Korean companies are preparing to either reduce or withdraw businesses from China over its stringent zero-COVID measures, according to a recent survey. Meanwhile, some 40 percent of the respondents urged the South Korean government to intervene by informing the Chinese regime of their losses and providing solutions.

In mid-June, the Shanghai branch of the Korea International Trade Association (KITA) surveyed 177 South Korean companies in China on the effects of Beijing’s zero-COVID policy on their businesses and their plans.

The survey results, published on June 27, showed that 88.1 percent of the companies reported “[significant] damage or negative impact” on their businesses. While 97.4 percent responded that their sales decreased in the first half of this year, 31.4 percent said their sales fell by more than 50 percent compared to the same period last year.

Regarding their plans in China, 55.3 percent of the companies said they were considering “business reduction, suspension, withdrawal, or relocation,” 24.8 percent said they would reduce their business in China, 11.1 percent said they would start investing outside of China, 8.0 percent said they would withdraw businesses from China, 7.6 percent said they would temporarily suspend their business in China, and 3.85 percent said they would transfer relevant business back to South Korea.

On the other hand, 35.9 percent of respondents said they have no countermeasures and are maintaining their existing business plans, while only 7.3 percent said they would expand their business in China.

When the companies were asked what support they would want from the Chinese regime, 20 percent said they wanted “more transparency and predictability in the country’s COVID-19 measures,” while 18.2 percent and 17.9 percent said they would want subsidies and reduced taxes and rents from the regime.

Stacked containers line a shipping port in Gwangyang, South Korea, on June 14, 2022. Kim Dong-ju/AP

‘Straightforward Diplomacy’

In addition, 40.4 percent urged the South Korean government to conduct “straightforward diplomacy” and inform the Chinese regime of their losses and work out a solution.

Meanwhile, 76.8 percent believe Beijing’s COVID-19-clearing policies will continue until the end of this year or beyond.

The Director of KITA’s Shanghai branch, Shin Sun-young, who was in charge of the survey, said it is necessary for the South Korean government to intervene diplomatically and help the Korean companies in China.

Shin added that most foreign-funded companies in China are experiencing the same difficulties and losses. Therefore, it is also a good solution for foreign-funded companies to jointly seek out a resolution from the Chinese regime.

The United States and Europe have also conducted similar investigations.

In early June, the American Chamber of Commerce Shanghai surveyed 133 members about their investment plans in China. The results showed that 25 percent of consumer and service companies, and 20 percent of manufacturing companies, have scaled back their investment plans, with only one company expressing its intention to increase investment in China.

Another report published in May by the European Union Chamber of Commerce indicated that 23 percent of European companies expressed willingness to withdraw from China, more than double the number of companies considering such a move in early 2022, reaching a 10-year high.