Seven Out of Ten Incheon Manufacturers Expect Sales to Fall Short of Targets This Year

Factors Include Sluggish Domestic Market and Export Slowdown
Urgent Need for Labor Market Flexibility and Support to Revitalize the Local Economy

Seven out of ten manufacturing companies in the Incheon region expect their sales this year to fall short of their targets.

According to the Incheon Chamber of Commerce and Industry on October 31, a survey conducted last month of 235 companies in Incheon found that 72.7% expect their sales performance this year to be below target. Companies cited the following as the main factors hindering sales growth: a sluggish domestic market (58.7%), a slowdown in export market conditions (21.1%), intensified market competition (11.2%), and production disruptions such as supply chain issues (4.7%).

In addition, 77.9% of companies believe their operating profit this year will also fall short of targets. The main reasons cited for declining profitability were rising raw material costs (42.4%) and increased labor costs (28.6%). Some companies also pointed to higher financial costs such as interest expenses (12.5%) and increased tariffs (8.2%) as factors negatively affecting profitability.

Manufacturing companies in Incheon identified corporate financing conditions (40.3%) as the biggest challenge in production and organizational management. This was followed by workforce supply (27.7%), supply chain management such as sourcing parts (13.9%), responding to corporate regulations (13.4%), and labor-management relations (3.5%).

Despite the launch of the new government, difficult business conditions have not improved, and Incheon companies continue to feel a significant burden. In terms of the trade environment, 31.6% of respondents said that uncertainty has "increased" due to rapidly changing U.S. tariff policies on major export items from Incheon, such as steel and automobiles ("increased significantly" 14.3%, "increased somewhat" 17.3%).

Furthermore, with the strengthening of corporate regulations such as the Serious Accidents Punishment Act, the Yellow Envelope Act, and amendments to the Commercial Act, 37.6% of companies felt that the burden of laws and systems related to corporate management has "intensified" since the new government took office ("increased significantly" 16%, "increased somewhat" 21.6%).

Exterior view of Incheon Chamber of Commerce and Industry building

As the regular session of the National Assembly approaches legislative discussions, manufacturing companies in Incheon cited increases in corporate costs such as corporate tax (26.7%) as their greatest concern. This was followed by increased burdens in labor-management relations (22.1%), stronger regulations in corporate systems such as the Commercial Act and Fair Trade Act (19.3%), tighter regulations on location and environment (13.4%), increased employment burdens such as extending the retirement age (8.7%), and expanded market regulations such as the introduction of a supply price linkage system (7.7%).

Among the companies surveyed, 27% cited labor market flexibility as the most urgently needed legislative measure. Other urgent needs included support for revitalizing the local economy (17.9%), expanding incentives for investment, research, and development (16.3%), support for restructuring industries in crisis (10.0%), support for stabilizing supply chains such as parts procurement (10.0%), and support for workforce supply including foreign employment (6.8%).

An official from the Incheon Chamber of Commerce and Industry stated, "Manufacturing companies in Incheon are experiencing a complex crisis due to sluggish sales, rising raw material and labor costs, and both domestic and external economic uncertainties," adding, "Financial support and deregulation are needed so that companies can actively invest and hire."