Four out of ten Korean companies operating in China are considering exiting, relocating, or scaling back their operations within the next five years, according to a joint survey conducted by three research institutes.
The Korea Institute for Industrial Economics and Trade, the Beijing Office of the Korea Chamber of Commerce and Industry, and the Korean Chamber of Commerce in China polled 500 Korean companies in China from July to September.
The results released on Dec. 29 show that 37% of surveyed companies are contemplating withdrawing (8.8%), relocating (3.6%), or downsizing (24.6%) their businesses in China over the next five years. Around 31% are considering similar measures within two to three years.
The primary reasons cited include intensifying local competition (28.3%), the U.S.-China conflict (24.5%), and rising local production costs (17%). Southeast Asia emerged as the preferred alternative destination, with 36% of companies considering relocating to the region.
The survey also revealed that 67% of companies said China’s domestic business environment is deteriorating. Key reasons behind this sentiment include changing market demand (24%), Chinese government policies (21%), rising production costs (18%), political sanctions (15%), restrictions on foreign companies (11%), and unfair competition (11%).
Companies identified the U.S.-China conflict as the most pressing global issue affecting Korean businesses in China (35%), followed by geopolitical crises (24.2%), Korean Peninsula tensions (23.6%), supply chain disruptions (6.8%), and currency fluctuations (5.6%).
