"43 Years of Business at Namdaemun... Could It Be Worse Even in War?" [How Is Your Dream?]

On-Site Report on Large Commercial Districts and Alleyway Merchants

Coffee Shop Owner Operating for 10 Years Losing 10 Million KRW Monthly Since September
"Thinking This Month Is the Last Line"

Editor's NoteThe domestic economic trend is expected to draw a clear 'K'-shaped polarization curve with 2020, the year when the novel coronavirus disease (COVID-19) crisis struck, as a turning point. The prevailing view is that the upper income and asset classes will experience a rapid and strong recovery, while the lower classes will face a steep decline.

Meanwhile, the life-cycle challenges that once lined up before us are becoming 'dreams' that are hard to reach no matter how hard we try. The self-deprecating term 'lightning poor,' referring to those who suddenly became penniless despite their efforts, indicates a form of relative poverty different from the past.

Accordingly, Asia Economy diagnoses the challenges our society must solve this year, including real estate, jobs, childbirth, self-employment, and education, through the project '2021, How Is Your Dream?,' and seeks countermeasures.

[Asia Economy Reporters Kim Hyun-jung (Sejong), Ryu Tae-min, Park Joon-i] "We are surviving not by business but by debt." This is the common situation of self-employed people Asia Economy met in major commercial districts in Seoul. The novel coronavirus disease (COVID-19), ongoing for nearly a year, has pushed them to the brink.

Near Gubeundari Station in Myeongil-dong, Gangdong-gu, Seoul, a famous coffee specialty shop. Mr. Ha-mo, who has been running the store at the same location for 10 years, lamented his situation sitting on an unmanageable pile of debt. Beyond his stern expression, inside the store, dozens of tables and even more chairs were overturned. He said, "I think this month is the last line," adding, "If I want to open the store next month, I might have to beg acquaintances or take private loans." According to him, the store has been losing 10 million KRW monthly since September last year, and he barely managed to pay the overdue rent (8.5 million KRW per month) by borrowing 30 million KRW. He added, "Since the hall business was suspended again on the 24th of last month, I took out an additional 10 million KRW loan using the Yellow Umbrella Mutual Aid savings as collateral," and said, "My debt is now 40 million KRW."

Gym Owner Starts Open Protest
Monthly Rent 10 Million KRW... Taking Antidepressants

Mr. Han, who runs a gym in Seongsan-dong, Mapo-gu, started an open protest last week. His routine is to keep the 150-pyeong (approx. 495 sqm) store open without accepting customers, only doing maintenance. A notice at the entrance states, "Closed until January 17 due to the extension of social distancing level 2.5." He revealed that he had been taking antidepressants recently. Mr. Han explained, "Since the group infection in Daegu in February last year, there have been no new members, so sales are at rock bottom," adding, "The existing members, originally about 400, have shrunk to 120." Pushed to the edge by the third wave of COVID-19, he said, "The monthly rent is about 8 million KRW," and "Including staff salaries and management fees, fixed costs exceed 10 million KRW monthly, resulting in continuous losses."

The PC bang (internet cafe) industry is also staggering. Mr. Lee, who runs a PC bang in Sinchon, Seodaemun-gu, has already borrowed 50 million KRW. He said, "There used to be about 50 visitors daily, but now only about a dozen come, and sales are only 30% of usual," adding, "I have taken out loans so many times I can't count. I've borrowed until they said no more."

The situation is no different in Namdaemun Market and Myeongdong, representative commercial districts of South Korea. Merchants unanimously said that high key money and rent are breaking their backs. Mr. Kim, who runs a handicraft shop on the second floor of a building in Namdaemun Market, explained, "Sales are less than 10% compared to before COVID-19," adding, "Most merchants on the first floor have left, leaving it empty." Mr. Nam, who operates three stores selling bags, hats, and accessories in Myeongdong and has been in business for 43 years, said, "Even a war wouldn't be this serious," and added, "There are fewer people on Myeongdong street than in rural towns, and money doesn't circulate." He explained, "We barely sell one hat a day," and "I have let go of all part-time workers and run the stores with family, but two of the stores are temporarily closed."

Myeongdong Merchants' Sales Cut to One-Tenth
"Planning to Close" "Considering Closure"
One in Three Small Business Owners Responded

Severe sales slumps are driving self-employed people to close their businesses. According to a recent survey by the Korea Federation of Small and Medium Business, 25.6% of respondents said they are maintaining their business but partially considering closure. Responses such as "I would consider closure if possible" and "Planning to close" accounted for 6.1% and 0.7%, respectively, showing that one in three is thinking about closing their business.

Mr. Han, who runs a gym, lamented, "Even if I try to find another job, the situation in all industries is bad," adding, "At my age (43), reemployment is difficult, and my mind fluctuates daily."

Mr. Lee, who runs a pub in Gireum-dong, Seongbuk-gu, said, "I'm almost 60, and there's nothing I can do even if I close the store," adding, "I came this far thinking I could hold on for a month or two more, but I can no longer afford the monthly rent of 5.3 million KRW."

Meanwhile, the disaster relief funds that self-employed people feel are less than a drop in the bucket. Mr. Ha said, "I couldn't even receive previous support funds because I employ five or more staff," raising his voice, "It's a ridiculous, ineffective measure that only wastes taxes." Mr. Kim said, "I received 500,000 KRW nationwide disaster relief and 1 million KRW small business support last year, and the landlord cut the rent by 20% last fall," but added, "Still, I can't pay, so the deposit is being deducted monthly."

◆ Series Order

① Real Estate as Desire or Frustration
② Youth Who Can't Work, Middle-aged Who Can't Quit
③ A Country Where Having Children Is Difficult
④ On the Brink, Self-Employment with No Way Out
⑤ Educational Heredity, Useless 'Gabunggae'