[Asia Economy Reporter Moon Chaeseok] Korean companies operating in China are concerned that the economic indicators for the first quarter of this year will worsen compared to the fourth quarter of last year. All industries are expected to either deteriorate or remain similar to the previous quarter.
According to the Korea Institute for Industrial Economics and Trade on the 19th, a survey of 217 Korean companies (across 7 industries) operating in China showed that the Business Survey Index (BSI) for the first quarter was 83 for market conditions and 84 for sales. These figures are lower than the third quarter of last year ('97, 102') and the fourth quarter ('86, 93').
The fact that the BSI indicators are generally below 100 means that more companies expect the situation to worsen compared to the previous quarter.
The BSI is a metric calculated between 0 and 200 based on business performance, sales, costs, business environment, and difficulties. A value above 100 indicates that more companies responded that conditions have improved compared to the previous quarter, while a value below 100 means the opposite.
Companies anticipated that not only overall market conditions and sales but also the on-site work atmosphere would deteriorate. Local sales scored 87, facility investment 94, and business environment 75, all below 100.
Management difficulties cited included ▲continued sluggish local demand (manufacturing) ▲intensified competition (electrical and electronics, automotive, metal machinery, etc.) ▲export downturn, sluggish local demand, and intensified competition (distribution industry).
Looking specifically by industry, among the seven surveyed sectors, six industries except electrical and electronics are expected to continue declining. Overall manufacturing performance is expected to remain sluggish.
The BSI outlook for electrical and electronics maintained last year's fourth quarter level of 97, but with the decline in the other six industries, the manufacturing outlook BSI dropped from 99 to 85, a 14-point decrease. The automotive sector fell sharply from 127 to 83, a 44-point drop, and the distribution industry also declined from 94 to 80, a 14-point decrease.
However, when looking at the entire year, the situation is expected to improve somewhat. The overall corporate sales outlook rose by 4 points from 100 last year to 104.
Manufacturing and distribution industries are also expected to exceed 100. Within manufacturing, automotive (130), metal machinery (113), other manufacturing (113), and chemicals (103) are expected to see increased performance, while electrical and electronics (91) and textiles and apparel (73) are projected to continue experiencing poor results.
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