Trump fears spread to local SMEs
Although the president-elect has fired much of his trade rhetoric at major conglomerates like Samsung and Toyota, a report released by IBK Economic Research Institute on Monday showed Korea’s small and medium-sized enterprises are also worried about Trump. They cited him as one of the biggest risk factors for their business this year.
Of the 152 small and medium-sized exporters surveyed, most said they considered volatility in financial markets caused by an interest rate increase in the United States and uncertainties in the European Union as the biggest threat to the country’s exports. The next biggest concern was the spread of trade protectionism, including a possible 20 percent tariff by the Trump administration.
A changing trade environment under the president-elect, with a possible renegotiation of the free trade agreement between Korea and the United States, shared third place with shrinking exports to China as it continues to retaliate against the Korean government’s decision to deploy a controversial U.S. Terminal High Altitude (Thaad) missile defense system.
The survey comes as Korea’s exports are showing signs of recovery. The figure has seen three straight months of year-on-year growth after mostly recording declines since January 2015. The Ministry of Trade, Industry and Energy earlier this month said Korea’s exports in January saw the highest growth in four years, rising 11.2 percent thanks to improvements in semiconductor and petrochemical shipments.
But some analysts point out the recent figures are coming off of steep falls from late 2015 and early 2016, making it difficult to ascertain whether they represent a fundamental recovery. The concerns are compounded by the fact that Samsung Electronics’ smartphone business has been facing hardship since its latest model, the Galaxy Note7, suffered an inglorious downfall. In the fourth quarter, Samsung Electronics ceded its global market dominance to rival Apple.
Without a significant factor that will help boost Korea’s exports, nearly half of the SMEs surveyed speculated that this year’s exports will likely be the same as last year’s, while 27 percent expected improvement and another 27 percent projected worse performance. The optimists considered the development of new products and markets as potential for improvement, while the pessimists remained wary of trade protectionism.
BY LEE HO-JEONG [firstname.lastname@example.org]