Large firms pull further away from small firms

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Large firms pull further away from small firms

The net income gap between Korea’s big corporations and small-sized firms has widened in the first half of this year from one year ago, indicating a deepening polarization in the country, according to market data yesterday.

A combined net profit of 527 small- and medium-sized firms with less than 300 workers stood at 838.5 billion won ($745 million) in the January-June period, the Korea Listed Companies Association said in a report.

The combined net income of the small firms represents a fraction of what Samsung Electronics, Korea’s largest company by market capitalization, chalked up in the same period.

Samsung earned 4.82 trillion won in the six month period, about six times as much as the combined income of the 527 companies.

Other big-cap companies also racked up a higher net profit than that of the roughly 500 small and medium firms combined.

Hyundai Motor, the country’s biggest vehicle maker, earned 2.56 trillion won in the first half of this year, and the top steel maker Posco posted 2.17 trillion won in net income in the same period. Hyundai Heavy Industries, the world’s biggest shipyard, logged 1.44 trillion won in net profit during the six months and Kia Motors earned 1.18 trillion won.

The net profit gap between Korea’s 20 largest cap companies and around 500 smallest companies listed on the bourse has been expanding almost every year recently. In 2006, the difference in combined net income of big and small firms stood at 23 trillion won.

The gap declined to 19 trillion won in 2008 during the global financial crisis but scaled up to 29 trillion won in 2009 and then mushroomed to 39 trillion won in 2010.


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