Local businesses struggle with low patronage from foreign workers amid record ship orders in Korea

Home > National > Social Affairs

Local businesses struggle with low patronage from foreign workers amid record ship orders in Korea

Published: 18 Jun. 2025, 07:00 Updated: 18 Jun. 2025, 17:53

Audio report: written by reporters, read by AI

Korean and foreign workers at Samsung Heavy Industries in Geoje, South Gyeongsang, leave work after finishing their shifts on June 5. [JOONGANG ILBO]

On a recent afternoon in Jangpyeong-dong, Geoje, dozens of foreign workers from the nearby Samsung Heavy Industries shipyard formed a 40-meter line outside a Daiso store — not for a new gadget or luxury good, but for laundry detergent and cleaning supplies.

Inside, many used video calls to consult with family abroad as they selected daily necessities, cosmetics and toys — affordable items popular as gifts to send home.

“Toys, beauty masks, anything practical and inexpensive — that’s what they go for,” a Daiso employee said.

Next door, Asia Mart and Fresh Food Market were packed with foreign customers picking up Vietnamese rice, jackfruit, egg noodles and canned coconut milk.

“They’re buying ingredients from home to cook dinner,” said a worker at one of the markets.

Foreign workers from Samsung Heavy Industries visit the Jangpyeong branch of Daiso in Geoje, South Gyeongsang, after finishing their shifts on June 5. [JOONGANG ILBO]

But just around the corner, a beef soup restaurant sat completely empty.

“Not one customer today,” the owner said. “Foreign workers don’t come in — maybe for religious reasons.” A nearby seafood restaurant had only one dinner reservation among 17 tables. “They don’t eat raw fish,” the owner shrugged.

Foreign workers from Samsung Heavy Industries visit Asia Mart in Geoje, South Gyeongsang, to buy groceries after finishing their shifts on June 5. [JOONGANG ILBO]

A hair salon, sign lit but doors locked, told the same story.

Local business owners are growing frustrated. Despite record ship orders and packed work schedules at shipyards, they say their registers aren’t ringing.

“They call it a boom,” said one merchant. “But the money’s not circulating here. Foreign workers don’t spend locally.”

The numbers back them up. Korea’s top three shipbuilders — Samsung Heavy Industries, Hanwha Ocean and HD Hyundai Heavy Industries — pulled in $33.82 billion in orders in 2021, a sixfold jump from 2016. Between 2022 and 2024, annual orders remained strong, ranging from $22 billion to $31.5 billion. Even the U.S. Navy is paying attention — Secretary Carlos Del Toro toured shipyards in Geoje and Ulsan this spring.

But the local economy tells a different story.

Experts attribute this to several factors, including a decline in company-sponsored gatherings post-Covid-19, a general economic downturn and a significant increase in foreign workers who tend to spend less locally.

Between 2022 and 2024, the three major shipbuilders hired 18,200 new workers, of whom 10,800 or 59 percent were foreign nationals.

As of the end of 2024, foreign workers made up 16.4 percent of the work force at these companies.

In Geoje, home to Samsung Heavy Industries and Hanwha Ocean, 41,757 of the city's 73,308 workers or 57 percent are employed in shipbuilding. Including their families, a significant portion of Geoje's 230,000 residents are connected to the industry.

Foreign workers from Samsung Heavy Industries visit the Jangpyeong branch of Daiso in Geoje, South Gyeongsang, after finishing their shifts on June 5. [JOONGANG ILBO]

Over in Ulsan, 36,760 out of 156,918 workers or 23.4 percent are in shipbuilding, according to data in 2023.

The influx of foreign workers has had a noticeable impact on local economies, as in Jangpyeong-dong, where Samsung Heavy Industries is located, annual consumer spending in 2024 was 22.39 billion won ($16 million), down 1.28 billion won from 2019, a year marked by a shipbuilding slump.

In Okpo-dong, adjacent to Hanwha Ocean, spending decreased by 3.6 billion won during the same period.

Commercial vacancies have also increased.

The vacancy rates for medium and large-sized stores in Okpo-dong reached 30.7 percent and Gohyeon-dong at 13.5 percent, the highest in four years, according to the Korea Real Estate Board.

These rates surpass the national average of 13 percent. The vacancy rate for commercial complexes in Ulsan was 20.6 percent in 2023, the highest among Korea's seven major cities and double the national average of 10.1 percent.

The real estate market reflects similar challenges.

Apartment transactions dropped from 6,609 units in 2021 to 3,262 in 2024 in Geoje.

Apartment jeonse prices also declined during the same period. The apartment jeonse price index, based on a benchmark of 100 in June 2021, fell to 82.1 last year.

The number of apartment units in Ulsan scheduled for sale this year is 3,338 — a 64.3 percent drop from last year.

Jeonse is a unique housing lease system in Korea where tenants pay a large lump-sum deposit, often 50 to 80 percent of the property’s value, instead of monthly rent. The landlord returns the full amount at the end of the lease, typically two years.

But rents for small apartments used by foreign workers have slightly increased.

One-bedroom apartments near the two major shipyards in Geoje during the downturn were available for 150,000 to 200,000 won per month without a deposit, but they are now being rented for 300,000 won per month with a 1 million won deposit.

This is still below the peak rates of 500,000 won per month with a 5 million won deposit during previous booms.

“Everyone says they can't even cover their utility bills; it's harder now than during Covid-19,” said Kim Sang-cheol, head of the Jangpyeong General Market Merchants Association. “We'd rather have 100 Koreans who settle down, buy homes and spend money locally than 10,000 foreign workers.”

Lee Kyu-yong, a senior researcher at the Korea Labor Institute, noted that while foreign workers have alleviated labor shortages, their limited integration into local communities restricts their economic impact.

“Without adequate support for foreign workers to settle, their contribution to the local economy will remain limited,” Lee said. “Policy improvements, such as wage adjustments that consider living costs and housing conditions, are necessary.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY AN DAE-HUN, KIM MIN-JU, KIM YOUN-HO AND WE SUNG-WOOK [[email protected]]