Korea Inc.'s overseas sales plummet in second quarter
Overseas sales for large local companies in the second quarter declined almost 20 percent on year as the pandemic hit foreign economies and global demand.
Overseas sales include both exports and sales by foreign subsidiaries of Korean companies.
The Federation of Korean Industries (FKI) released an analysis on Monday of the 2019 financial statements of the 100 most profitable Korean companies. According to the report, overseas sales dropped by 19.8 percent on year to 146.3 trillion won ($123.1 billion) during the second quarter. In the first quarter, companies raked in 170.4 trillion won from sales abroad.
The effects of the pandemic were only apparent in sales in China through mid-February, but they soon thereafter extended worldwide.
The rise of remote work and online education during the pandemic led to a relatively moderate drop for the electronics sector, which recorded 71 trillion won in overseas sales, a 5.1 percent decline from the same period in 2019. The automotive industry suffered a 36.5 percent decrease, as major car manufacturers halted production, and the international demand declined sharply.
The overseas sales of the energy and chemical industry dropped by 30.9 percent. As oil prices nosedived at the onset of the pandemic, the business of oil refineries took a direct hit. The steel industry’s foreign revenue went down by 80.1 percent. This drop is mainly attributed to the reduction in demand for steel plates for automobiles.
Data of 20 firms that have disclosed their regional performance showed that sales in Asia went down by 24 percent and in North, South and Central America by 12.6 percent. Sales in the European market fell 11.2 percent.
Second quarter sales in China for Samsung Electronics, Hyundai Motor, LG Electronics, SK hynix and Hyundai Mobis rose 5.9 percent on year. The FKI attributed the expansion in sales to an improving Chinese economy, which recorded 3.2 percent on-year growth in GDP during the second quarter.
The FKI urged government measures to ease the speed of decline of local company sales abroad, lobbying with foreign governments to allow the special entry of local employees into investor and partner nations.
“The environment for international business is in a worse situation than the Asian economic crisis in the 1990s and the 2008 global financial crisis,” said Kim Bong-man, secretary general of FKI’s international management institute. “Measures that promote cooperation with foreign governments are urgent for local companies that have entered foreign markets.”
BY LEE SOO-KI [firstname.lastname@example.org]