More than half of Korea's small and midsize businesses rated this year's business environment as "difficult." It suggests businesses strongly feel the impact of the economic downturn on the ground.
The Korea Federation of Small and Medium Enterprises announced on the 15th the results of a survey titled "Survey on SME Management Conditions and 2026 Management Plans," conducted from the 1st to the 5th on 1,000 small and midsize businesses.
According to the survey, 56.8% of small and midsize businesses said this year's business environment was "difficult." Only 9.6% of corporations said the business environment was not difficult.
The biggest reason small and midsize businesses cited for this year's management difficulties was sluggish domestic demand. About 80% of responding corporations pointed to the domestic slump as a key factor. Rising labor costs, difficulty securing financing, and higher raw material prices also increased management burdens.
Small and midsize businesses said they responded to the management crisis through expense cuts and productivity gains. They also cited channel expansion and improved marketing as key response strategies. Some corporations were found to be diversifying their funding sources.
The most helpful government policy this year was tax cuts and payment deferrals (33.3%). Policies for business stabilization such as working capital support and loan maturity deferrals and extensions followed at 25.1% and 14.0%, respectively.
Regarding next year's business environment, 63.1% of responding corporations expected difficulties similar to this year to continue. Only 21.7% said the business environment would improve, and 15.2% expected it to worsen.
As a core management strategy for next year, "expense cuts and productivity gains" accounted for 61.4%. Strategies to maintain the status quo focused on channel expansion, improved marketing, and risk management were also presented. Small and midsize businesses cited "expanded financial support and eased tax burdens" (77.7%) as the most needed policy tasks next year, and there was also strong demand for research and development (R&D) and investment support, and stabilization of raw material supply and demand.
In the mid-to-long term, preparing for labor shortages and changes in the work environment was identified as the most urgent task. Regulations lagging behind industrial change and global supply chain risks were also expected to weigh on SME management.
Chu Moon-gap, head of economic policy at the Korea Federation of Small and Medium Enterprises, said, "As small and midsize businesses work to improve the business environment through expense cuts and productivity gains, the government should also strengthen policy support for obstacles such as financing difficulties and labor shortages."