AMCHAM and the Korea Federation of SMEs held a joint roundtable to celebrate the new year on Monday. It is the first time the two organizations have held the event together. More than 500 leaders from Korean conglomerates such as Samsung and Hyundai and small and medium businesses convened to align on plans to “overcome the economic crisis through collaboration.”
The business community faces the new year with determination stronger than ever before. The economic situation has been defined as “the age of great threat.” Major businesses have devised contingency business management plans and strict austerity management. New year messages by CEOs or heads of economic associations frequently mention keywords such as “crisis” and “challenges.” Many call for change and innovation, claiming that “we will not survive without change.”
Korea’s economic growth rate for 2023 is predicted to stay around 1%. Last year, Korea’s trade deficit grew to 4.72 billion U.S. dollars, reaching the highest point ever, which was impacted by a drastic reduction in semiconductor production. It is difficult to forecast when the deficit, which has lasted for nine months, will end. This year’s export volume is forecasted to shrink by 4.5% from last year. The number of new hires is expected to be one-tenth of last year's.
External conditions are challenging as well. The head of the IMF said that the slowdown of the Big 3 economies (the U.S., China, and the E.U.) would have a more negative impact on the global economy. China’s economic downturn impacted by COVID-19 is expected to deal a damaging blow. Energy and raw material prices will continue to soar, and central banks in key economies are also planning to raise interest rates. There is nowhere for Korean companies to resort to.
Collaboration between key economic players is crucial to respond to this crisis of unprecedented scale. It would be nearly impossible without cooperation from large companies which drive exports and small and medium businesses that support manufacturing. We need to drive efficiency and competitiveness based on mutual support and collaboration. It is encouraging that new approaches by large companies, such as supporting the building of smart factories for suppliers, are beginning to bear fruit. Many new policies designed to promote win-win growth between large and small companies, such as the sliding system, in which the supplier is expected to reflect an increase in raw materials price in the final delivered price, will be implemented this year. We need to double our efforts to minimize side effects and search for new growth channels for partnership. When the road gets tough, the answer is to tough it out together.