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SMEs take the brunt of the coronavirus outbreak

Posted February. 10, 2020 07:52,   

Updated February. 10, 2020 07:52


Samsung Group announced on Sunday that it would invest approximately 2.6 trillion won to help its suppliers that have been affected by the new coronavirus outbreak. Samsung has become the second South Korean company that has made such decision following Hyundai Motor Group, which said it would provide 1 trillion won for its 350 suppliers.

As part of its SME support program, Samsung will loan 1 trillion won at zero or low interest and spend 1.6 trillion won to make an advance payment for February. In addition, the conglomerate will reimburse logistics expenses if its partners receive freight by plane not by ship and offer consultancy for those who wish to diversify their supplies in order to expedite delivery. Samsung Electronics, Samsung Display, Samsung Electro-mechanics, Samsung SDI, Samsung SDS and Samsung C&T Corporation will participate in this program.

On Thursday, China’s Ministry of Commerce announced that Chinese companies would return to business as usual, which means Korean companies based in China as well as most Chinese businesses will resume operation on Monday. However, as a few Chinese provinces and cities still remain closed or do not allow people to leave their homes, it would take more time before all workers return to their workplace and supplies are back to normal. Moreover, the effects of dwindling demand in the Chinese market are expected to linger on for some time.

In a survey of 70 manufacturers in Busan, including car-parts makers, importers and exporters from/to China, and manufacturers that have factories in China, the Busan Chamber of Commerce and Industry found that more than half of the respondents, were concerned that they would be directly affected by the outbreak. Among respondents, 23.1 percent said their business has already taken the brunt while 30.8 percent replied their business would be inevitably hit by the outbreak.

“Many businesses have lost business opportunities as overseas buyers cancelled their business trip to South Korea over concerns of infection,” said an expert. “Last year, many Korean firms saw a decline in their revenues due to an economic slowdown, and now they are facing a bigger challenge presented by the new coronavirus.”

Dong-Il Seo dong@donga.com · Ho-Kyeong Kim kimhk@donga.com