Nearly half of South Korea’s small business owners in the food and hospitality sectors report direct or indirect losses due to the ongoing political crisis. (Image courtesy of Yonhap)
SEOUL, Dec. 17 (Korea Bizwire) – Nearly half of South Korea’s small business owners in the food and hospitality sectors report direct or indirect losses due to the ongoing political crisis following the December 3 martial law declaration and subsequent impeachment of President Yoon Suk-yeol.
A survey conducted by the Korea Federation of SMEs between December 10 and 12 highlights the toll on small business operators, with cancellations of year-end gatherings and travel bookings being key issues.
Widespread Cancellations and Revenue Loss
Of 505 respondents, including 248 in the dining sector and 257 in lodging, 46.9% reported experiencing losses this month. Many cited cancellations of year-end parties and guest reservations.
One restaurant owner in Sejong noted, “A reservation for eight people often results in only two or three showing up.” A lodging business in Muju reported over 40 canceled reservations, with a 20% cancellation rate since the crisis began.
Even among those yet unaffected, 46.6% expressed concern about potential future losses.
Economic Outlook and Struggles
Uncertainty over the duration of the crisis weighs heavily, with 40.4% predicting the economic disruption will last one to two years, 30.1% expecting it to end within six months, and 17.8% fearing it could persist for over two years.
To cope, 60.4% of respondents are cutting costs through measures like restructuring, while others are ramping up promotions (11.3%), seeking additional financing (8.7%), or diversifying their operations (3.2%). However, 16.4% admitted to taking no action.
Mounting Financial Strains
The survey also revealed worsening business conditions compared to last year, with 83.6% reporting difficulties. Key factors include declining sales (74.6%), rising raw material costs (41.0%), higher labor costs (40.8%), and the burden of high interest rates (34.8%).
The Korea Federation of SMEs urged the government, parliament, and the private sector to collaborate on measures to revive the domestic economy, warning that the current climate poses significant challenges for small businesses already struggling under financial strain.
Ashley Song (ashley@koreabizwire.com)
