EU firms feel optimisticMost European companies operating in Korea said they plan to expand their operations after revenues increased last year and out of optimism about growth, according to the European Chamber of Commerce in Korea (ECCK).
But European companies were concerned about rising labor costs and the slowdown in both Korea’s economy and the global economy.
The ECCK and consulting firm Roland Berger surveyed a total of 139 CEOs of European companies in December and released the results on Tuesday. Companies that plan to expand their business in Korea increased to 57 percent last year from 49 percent in 2014.
Some 75 percent of the companies in expansion mode said they would focus on organic growth while 11 percent said they were pursuing partnerships with local partners.
A full 73.2 percent said the most significant business challenge was economic growth in Korea. That was followed by global economy growth, local currency volatility and rising labor costs.
Some 44.6 percent of respondents viewed growth potential optimistically for at least two years. On the other hand, 44.1 percent said Korea’s high labor costs will be their biggest concern in the next two years.
The survey found that many companies face difficulties with changes in government regulations.
“If the product costs more than 2 million won ($1,660), the special consumption tax for luxury items is levied, and the Korean government raised it to 5 million won last year and then lowered the ceiling again to 2 million won in the same year,” said Christoph Heider, Secretary General of the ECCK, at a press conference held in central Seoul on Tuesday. “Companies need to have a reliable environment.”
The government raised the ceiling to boost consumption, but lowered it again when it didn’t have much effect on the economy.
Representatives of a number of European countries’ chambers of commerce and business associations in Korea attended Tuesday’s meeting. Many agreed that North Korean risk factors do not affect them much.
Meanwhile, 68.3 percent of the companies surveyed have been operating more than 10 years in Korea and 4.3 percent entered the Korean market in the past two years.
57.9 percent of respondents saw their revenue increase last year, which rose from 49.5 percent in 2014. Additionally, 90.4 percent consider Korea an important place in their global strategy.
BY KIM YOUNG-NAM [firstname.lastname@example.org]