Corporate Life-span: Newly Established Korean Companies Have Low Chance of Survival | BusinessKorea

Monday, January 22, 2018

Newly Established Korean Companies Have Low Chance of Survival
Newly Established Korean Companies Have Low Chance of Survival
21 September 2017 - 11:45am
Jung Suk-yee

The Korea International Trade Association announced on September 20 that the ratio of newly established companies to those actually doing business was 14.6% in 2015 in South Korea whereas the average of Germany, France, Britain, Spain and Italy stood at 9.6% during the same period. It added that the newly established companies in South Korea accounted for 6.7% of the jobs newly created in the same country in 2015 and the percentage was the highest among those of the six countries.

Meanwhile, the ratio of those going out of business amounted to 14% in South Korea, six percentage points higher than the average of the five European countries. Besides, the ratios of those surviving for one year and five years were as low as 62.4% and 27.3%, respectively. The ratio of newly established companies surviving for five years averaged 42% in 2015 on the part of the European countries.

According to the association’s report, the service sector represented a large portion of the South Korean economy as a whole in 2015 but the sector employed a relatively small number of people that year. Specifically, the sector accounted for 84% of the total number of South Korean companies in 2015, when the sector represented only 65.8% of the country’s total employment. The ratios were the highest and the lowest among those of the six countries, respectively. “The South Korean service sector has a very low level of contribution to employment as most firms in the sector are small in size, to the point of employing 2.6 persons on average, and self-employed persons take up a very large portion of the sector,” the association explained.

The association also said that firms with less than 10 employees accounted for 96.1% of the total in South Korea, the highest among the six it compared. These firms represented 42.6% of South Korea’s total employment while companies of the same size represented 45.8% and 40.8% of Italy’s and Spain’s total employment, respectively.


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