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Banners supporting a national boycott campaign against Japanese products and travel to Japan hang near Seoul’s Gwanghwamun Square. (Baek So-ah

Over half of South Korean companies doing business with Japanese counterparts are concerned about losses if export controls remain in place over the long term, survey results show.

More than half of companies gave “changing clients” as their response measure against the Japanese export controls, while few of them actually named independent technology development or other attempts at domestic production.

The Korea Chamber of Commerce and Industry (KCCI) released results on Sept. 3 from a survey on “industry effects of the Japanese export controls and response tasks” conducted with 500 companies that have business relationships with Japanese counterparts. The findings showed 67% responding that trust in their business relationships with Japanese companies had been weakened.

“While Japanese companies had been rated highly for trust in the past thanks to their outstanding quality and timely production system, the perception of them as stable business partners has undergone a shift since the export controls [were instituted],” said Kang Seok-gu, chief of the KCCI’s industry policy team.

In terms of measures to prepare for the possibility of Japanese export controls being intensified or dragging out into the long term, 73% of large companies said they had made or were making preparations already. In contrast, only 26% of small businesses said they had prepared or were preparing measures. At 53.3%, the most frequently named concrete response plan was to change clients, including the location of new clients and development in regions outside of Japan. Stronger cooperation with existing Japanese clients was named second at 20.3%, followed by inventory acquisition at 8.6%. Only 6.1% of respondents named domestic production and other independent technology development, which has been an area of focus by the South Korean government.

In terms of the effects of the Japanese export controls on South Korean industry, 55% of respondents, or slightly over half, predicted they would provide an opportunity for boosting industry competitiveness, while just 30.6% predicted industry competitiveness would be weakened. Fifty-five percent of respondents expressed concerns that they may suffer losses if the export controls remain in place over the long term, while 45% said they did not anticipate losses. By industry type, large losses were predicted by companies in the areas of tourism (87%) and semiconductors (85%).

Following the South Korean government’s announcement last month of measures to boost competitiveness in materials, components, and equipment, the area most frequently named as a focus for government support was increased tax deductions for research and development (37.8%), followed by the establishment of a cooperation system between large and small companies (32%) and regulatory innovations (19.4%).

By Kwack Jung-soo, Business correspondent

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