Korean Companies in China "Expect Earnings Rebound in Q2"

[Sejong=Asia Economy Reporter Kwon Haeyoung] As demand in the Chinese market rebounds, the second-quarter performance of Korean companies operating locally is expected to see a significant recovery.

The Korea Institute for Industrial Economics & Trade, the Beijing Office of the Korea Chamber of Commerce and Industry, and the Korean Chamber of Commerce in China announced on the 18th the second-quarter Business Survey Index (BSI) outlook based on a survey of 212 Korean companies operating in China.

The second-quarter BSI exceeded 100 in both business conditions (113) and sales (126). Business conditions reached their highest level since the third quarter of 2018, and sales hit their highest since the second quarter of 2018. A BSI above 100 indicates that the number of companies reporting an increase or improvement compared to the previous quarter is relatively higher, while a BSI below 100 indicates the opposite.

The outlook for local sales (123) was the highest since the second quarter of 2018, and facility investment (111) also exceeded 100. The business environment (113) surpassed 100, marking the highest level since statistics began to be compiled. By industry, except for textiles and apparel (90), most sectors such as electrical and electronics (145), automobiles (133), and metal machinery (133) exceeded 100.

However, the first-quarter current BSI showed business conditions at 89 and sales at 84, decreasing by 4 points and 9 points respectively compared to the previous quarter. Facility investment (104) exceeded 100 for the third consecutive quarter, but local sales (86) dropped by 23 points from the previous quarter. The business environment (77) also declined by 3 points from the previous quarter, continuing its downward trend.

By industry, except for electrical and electronics (107), most sectors such as automobiles (74) and chemicals (93) were below 100. The main management difficulties faced by companies were sluggish local demand (22.6%), sluggish exports (17.0%), and labor shortages and rising labor costs (15.1%).