Korea Federation of SMEs Announces '2023 SME Export Outlook and Trade Difficulties Survey'
[Asia Economy Reporter Kwak Min-jae] More than half (54.9%) of exporting small and medium-sized enterprises (SMEs) identified rising raw material prices as the biggest export risk, according to a survey.
The Korea Federation of SMEs announced the results of the "2023 SME Export Outlook and Trade Difficulties Survey," conducted on 514 exporting SMEs, on the 6th.
According to the survey, 44.7% of exporting SMEs responded that their export outlook for 2023 is "average." Meanwhile, 28.6% said it is "good," and 26.7% said it is "bad."
Exporting SMEs viewed the export environment for the coming year more negatively compared to last year. Compared to the 2022 SME export outlook survey released in November last year, the percentage of "good" responses dropped by 11.8 percentage points from 40.4% to 28.6%, while the "bad" responses increased by 21.5 percentage points from 5.2% to 26.7%.
Among SMEs, 54.9% identified "rising raw material prices" as the biggest export risk. This was followed by "exchange rate fluctuations" (44.4%) and "logistics difficulties" (37.5%).
Due to rising raw material prices, 52.9% of the responding companies reported experiencing difficulties, and operating profits decreased by an average of 13.9%. Regarding government support measures for rising raw material prices, "financial and guarantee support for raw material purchases" (48.6%) was identified as the most needed.
46.7% of the respondents confirmed that they have suffered damage due to recent sharp exchange rate increases. Companies reporting little impact accounted for 30.2%, and those that gained profits were only 23.2%. The types of damage caused by the sharp exchange rate rise included "cost increases due to raw material price hikes" (85.4%) and "increased burden due to higher logistics costs" (50.0%).
Due to logistics difficulties, 55.0% of the responding companies experienced hardships. The main difficulties cited were "increased shipping and air freight costs" (79.6%), "shipment delays" (45.3%), and "container shortages" (19.6%).
Half (50%) of the companies mainly utilize government support programs to manage export risks. This was followed by "diversification of export countries" (19.6%) and "export insurance" (19.1%).
Regarding key tasks the government should focus on to expand SME exports, "expanding support for export marketing such as overseas exhibitions" (30.4%) ranked highest. This was followed by "securing export ships and aircraft and supporting freight costs" (25.7%) and "support for export diversification such as pioneering new markets" (14.6%).
Choo Moon-gap, head of the Economic Policy Division at the Korea Federation of SMEs, said, "Since cost burdens such as raw material procurement and logistics freight are cited as the biggest difficulties, measures should be prepared to enhance the export competitiveness of domestic SMEs, and support should be provided to secure and maintain stable trading partners through marketing and information provision."
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