Business Outlook Survey in South Korea for 2021

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AJ Marketing Blog

6 min readJan 21, 2021

The Korean Enterprises Federation (KEF) just released the highly anticipated results of their annual “2021 Business Outlook Survey.” They went straight to the source, surveying 212 domestic companies of varying sizes to get the inside scoop on the future of businesses after the tumultuous economic crisis caused by COVID-19.

Hold onto your seats because the outlook for 2021 is in, and it’s not all rainbows and sunshine. It turns out that many companies are feeling a bit cautious this year, with less of a structured plan coming from top management. In fact, a staggering 52.8% of the respondents believe that their operating profit is going to take a dip in 2021.

Why the sudden change in attitude, you ask? Well, economic uncertainty has been wreaking havoc on businesses, leading them to tighten their belts and scale back on investments. These companies are implementing strict austerity measures to tackle budget deficits and bounce back from the financial damage inflicted by the dreaded COVID-19.

If you’re eager to learn more about the impact of the COVID-19 crisis on Korea’s domestic companies and the lasting imprint it has left on the economy, you’re in for a treat. Keep reading, and we’ll delve deeper into the fascinating details.

1. Establishing a Management Plan for 2021

Let’s dive into some intriguing details about the management plans for 2021. When asked whether companies have established a management plan for the year, 14.3% of the larger companies with more than 300 employees confessed that they haven’t even drafted one yet. On the other hand, a whopping 57.0% of smaller companies with less than 300 employees admitted to not having a draft in place. It seems like some businesses still have some work to do in the planning department!

Now, let’s talk about the companies that did manage to come up with a draft. Among the larger companies, 36.3% claimed to have a draft, but interestingly, it hasn’t been confirmed yet. Similarly, for smaller companies, 23.1% reported the same situation. It looks like there’s some uncertainty hanging in the air when it comes to finalizing those management plans.

Moving on, let’s explore the final proposals for the management plans. When asked if a proposal has been submitted and confirmed, 49.5% of the larger companies with more than 300 employees responded with a confident “yes.” As for the smaller companies, 19.8% joined the “yes” club.

Data from KEF, Chart Made by | www.ajmarketing.io

Now, let’s take a step back and look at the big picture. Regardless of a company’s size, the majority of respondents showed a strong preference for “strict management.” A whopping 47.4% of larger companies and 51.9% of smaller companies favored this approach. It’s interesting to note that these companies are prioritizing reducing new investments and streamlining their workforce to tackle the uncertainties both within and outside their organizations.

It’s clear that businesses are navigating through challenging times, and it’s fascinating to see the different strategies they are adopting. Stay tuned as we uncover more captivating insights that will give you a deeper understanding of the current business landscape.

2. Investment and Recruitment Plan in 2021

Let’s delve into the insights from a survey conducted on investment and hiring plans for 2021. It turns out that when companies were asked about their business plans, over 60% expressed a strong desire to incorporate “reduction” strategies into their business models.

Digging deeper, among the respondents who favored “reduction,” 60.0% showed a clear preference for “austerity management” over business expansion. This is a remarkable increase compared to last year, in 2020, where only 30.0% of respondents leaned towards reduction. It’s clear that businesses are shifting gears and opting for a more conservative approach.

Now, let’s go to the relationship between company size and new recruitment. Note that the highest favorability for “reduction” strategies was observed among companies when it comes to employee size and new recruitment. 65.4% of respondents indicated a preference for reducing their workforce. In contrast, last year in 2020, only 28.5% of respondents were in favor of reducing employee size.

These findings reveal that businesses are taking a cautious approach in 2021, focusing on reducing expenses and optimizing their operations.

3. Recovering Management Conditions to pre-COVID19 Crisis

Let’s take a closer look at what the respondents had to say about the recovery of their management conditions after the COVID-19 crisis.

It turns out that 37.3% of the respondents believe that their management conditions will take some time to recover, specifically “after the year 2023.” That’s quite a significant portion of businesses who are expecting a longer road to full recovery.

The Korean Enterprises Federation (KEF) sheds some light on this matter, explaining that the lingering economic and financial uncertainty caused by the crisis has led many companies to believe that they will continue to face management difficulties for a considerable period of time. It’s understandable that businesses are proceeding with caution given the unpredictable nature of the situation.

An optimistic 17.9% expressed that they have already recovered, which is fantastic news for those companies. Additionally, 23.1% believe they will bounce back in the second half of 2021, showing a glimmer of hope on the horizon. Looking ahead, 13.2% anticipate recovery in 2022, while 8.5% are optimistic about a quicker turnaround, expecting recovery in the first half of 2021.

4. Expected Operating Profit in 2021

Let’s dive into some exciting findings about the expected operating profit for 2021, as reported by the respondents.

According to the survey, a notable 52.8% of the respondents believe that the operating profit in 2021 will experience a decline compared to this year, 2020. On the other hand, there’s a positive outlook from 27.8% of the respondents who expect the operating profit to increase from this year. It’s great to see that some businesses are optimistic about their financial performance moving forward.

Interestingly, 19.3% of the respondents expect the operating profit for 2021 to be similar to this year, 2020. They anticipate a steady continuation of their current financial situation.

These diverse perspectives on the expected operating profit for 2021 demonstrate the range of expectations and outlooks within the business community. It’s fascinating to see how different companies foresee their financial performance in the upcoming year.

Conclusion

This survey conducted by the Korean Enterprises Federation offers insights for how domestic companies in Korea feel about the current business conditions. After the economic crisis caused by COVID-19, companies are wary to make big investments or tackle large scale projects per usual. Rather, they are slowly entering back into the market with careful strategy.

Austerity measures are the most common approach from surveyed companies as they try to cut budgets in any area that they can. Investment and recruitment plans have been held off, at least for so that businesses can first recover.

Recovering from the economic damages in 2020 won’t be an easy one, but many Korean companies are determined to return stronger than ever. Keep an eye out for companies like KIA, Samsung and Coupang, who all have big plans for 2021.

To learn more about business trends and market insights in South Korea, check out the AJ Marketing Blog.

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