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  • Korea had 253,058 trading firms last year - a record setting figure led by record-setting total valu
    2022-08-01 hit 137

    Korea had 253,058 trading firms last year - a record setting figure led by record-setting total value of trade. 


    The number of trading firms saw a net increase of 10,030 last year compared to the previous year. 


    The number of newly established trading firms increased by 4.4% to reach approx. 67,000 whilst the number of existing trading firms that exited from their trade business decreased by 1.8% with approx. 57,000 leaving the sector.


    Gyeonggi Province contributed the most to the country’s exports and semiconductors and electric products were top export items.

     

    The Korea Customs Service released “2021 statistics on trading activities by companies” on July 27. The statistics revealed that the total number of trading firms touched a fresh all-time high to reach 253,058 in 2021, which is a 4.1% increase compared to the previous year, or equivalent to an addition of 10,030 new trading companies. Last year has seen the largest total value of trade, which contributed to the record-setting number of trading firms.


    Companies performing trading activities are defined as those either engaged in exports or imports. The total number of companies performing trading activities is smaller than the number of exporting companies and importing companies combined as a company that is both engaged in exports and imports is counted as a single trading company. The Korea Customs Service conducts an annual survey on exporting firms and importing firms to have a better understanding on the level of maturity of trading firms by grading them as one out of the following three categories ? initial operation, entry or exit. Compiled figures and findings are later published as official statistics.

    Last year’s total value of trade hit a record at USD 1 trillion 226.8 billion, which is an 28.1% increase (equivalent to USD 269.2 billion) compared to the previous year. It is assumed that post-Covid economic recovery contributed to robust trading activities, which led to an increase in firms engaged in trading activities.


    The number of exporting firms shrank by 2.5% (equivalent to 2,500 firms) to 95,640 whereas the number of importing firms increased by 5.3% (equivalent to 10,594 firms) to 212,302. Newly established trading firms that entered the trading business increased by 4.4% (equivalent to 2,844 firms) to 67,236. Companies that exited from their trading business decreased by 1.8% (equivalent to 1,023 firms) to 57,206.


    Entry ratio and exit ratio figures were also released. Entry ratio is calculated by dividing the number of newly established trading firms by the total number of this year’s active trading firms and exit ratio is calculated by dividing the number of trading firms that exited from their trading business by the total number of active trading firms of the previous year. It turned out that entry ratio slightly rose by 0.1%p to 26.6% and exit ratio decreased by 1.0%p to 23.5%. Entry ratio and exit ratio figures were also analyzed by item ? specifically ten most popular items that are handled by a bulk of exporting firms and importing firms. Miscellaneous textile was named as an export item ? a core material used to produce Covid masks ? that both posted the highest entry ratio and exit ratio for two years in a row at 48.7% and 64.4% respectively.


    This is attributable to multiple companies entering and exiting the mask producing business ? a business with a low entry barrier ? as the demand for masks skyrocketed during the Covid pandemic. The entry ratio of leather products was the highest among all imported items at 49.5% whereas miscellaneous textile posted the highest exit ratio among all imported items at 53.8%.


    One-year survival rate is an indicator that shows how many firms maintain their trading activities among all firms that established their trading business in 2020. The rate for exporting firms slightly dropped to 46.7% - a 1.2%p decrease compared to last year’s figure. The rate for importing firms saw a slight increase to reach 50.9% - a 0.8%p increase compared to last year’s figure. Five-year survival rates of trading firms that established their business in 2016 were also released. It was revealed that 16.3% of exporting firms and 18.9% of importing firms managed to maintain their business for at least five years.


    Another version of one-year survival rate and five-year survival rate of trading firms was released, which factors in the type of products these firms handle. Exporting firms that handle minerals posted the highest one-year survival rate at 53.7% and those handling medical products posted the highest five-year survival rate at 16.9%. Importing firms that specialize in purchasing meat both posted the highest one-year survival rate and the five-year survival rate at 65.3% and 27.1% respectively. Statistics also revealed that the number of Emerging Exporting Companies totalled 4,111 last year ? exporting firms that post higher export growth rates compared to the average export growth rate of all firms over the last three years ? which is down by 21.7% compared to last year’s figure.


    The number of Gazelles Companies saw a 14.9% decline with 1,315 Gazelles Companies currently in the market. Gazelles Companies refer to newly established companies among Emerging Exporting Companies that have been engaged in the trading business for less than five years. Statistics on how much each region contributes to exports was also released. It turned out that Gyeonggi Province contributes 21.4% to Korea’s exports followed by South Chungcheong Province with 16.2%, Ulsan Metropolitan City with 11.5%, Seoul Metropolitan City with 10.6% and Incheon Metropolitan City with 7.1%. The share taken up by the capital region, including Gyeonggi Province, Seoul and Incheon Metropolitan cities, was 39.1%.


    Three key items that contribute to Korea’s exports are electronic products, including semiconductors, which take up 31.2% of the country’s exports followed by machinery and computers with 11.8% and automobiles with 10.4%. Once the share of these three items is combined, it reaches 53.4%, which means more than a half of products that are exported are top three popular export items. Lastly, the statistics revealed that Leading Companies ? trading firms with annual export size exceeding USD 10 million in value ? contributed to 91.5% of Korea’s total exports.

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