Bemoaning of Industry with the “Big Five”

Enterprises are suffering from what is known as the "big five" adverse conditions such as the Iraq war, stagnant domestic demand, rampant unknown disease, U.S. trade retaliation and unstable financial market.

The major industrial enterprises in electronics, automotive, shipbuilding and steel are, today on April 2, greatly surprised by the U.S. Government`s decision to levy 57% tax on Hynix Semiconductor and raise their antennas regarding the background and its aftershocks. Business circles suggest that the U.S. Government took these measures to protect its own industry with Micron Technology struggling in the world DRAM market and concern about possible expansion of trade retaliation further to other sectors.

The automotive industry is worrying about pressure in the future imposed to Korean- made automobiles which are concentrated almost all on the North American region, up to 50% of its total exports.

Kim So-rim, director of the Association of the Automobile Industry remarked, "It is quite difficult to understand this levy decision of countervailing duty only in view of practice or common sense. We are carefully scrutinizing the probability of any association with political and social issues such as infiltrating anti-America sentiment other than from an economic standpoint.”

Since no one knows how long and how far the aftermath of the unknown disease is in Asian regions, the industries exposed to are feeling the effects.

Sales of Samsung Electronics have rapidly slipped since the disease was unearthed, while the export share to the Sino area including China and Hong Kong for the company amounts to 25% of total exports or $5 billion.

A Samsung staff member explained that consumption has been subtracted to the extent that people aren`t going to such places as department stores or shopping centers. It is even impossible to forecast the repercussions of the Iraq war along with the disease.

The airline industry has also come into certain damage due to reductions by 10% in boarding rates and the canceling of reservations by group travelers from Southeast Asia and China. This industry`s net number of reservations has decreased by approximately 2/3 due to the war and the disease.

Further, enterprises are experiencing difficulties in funding because the financial market is still unstable and bleak, having already tumbled right after the SK Global accounting scandal.

Lee Sung-chun, head of research at the National Industry Association said that the liquidity condition and effective finance index of the industries has been at its worst in the past two years. They are desperate to acquire some funds to meet future requirements.

Due to subtracting domestic demand from the end of last year, installment sale with no interest for cars will begin in 6years. Domestic shipment of refrigerators decreased in February by 65.3% as compared to last year, and finally, department store and shopping center sales also are seeing the weaker side of the coin.

Hwang In-sung, chief research fellow at Samsung Economic Research pointed out that overall sentiment among consumers as well as industries has depressed further for such reasons as the prolonged Iraq war, the NK nuclear stand-off and vulnerable credit card claims. Therefore, the vicious circle caused by the acceleration of the general economic down-turn is attributed to instability in the minds of consumers.

Yeon-Su Shin ysshin@donga.com