The trade organisation published the report on March 28. It surveyed 2,166 manufacturers across industries to determine the Business Survey Index (BSI) of various industries.
The BSI measures the level of optimism of business leaders have about the economy. A BSI of above 100 indicates a positive outlook while an index of below 100 indicates a negative outlook.
According to this report, cosmetics exports scored a BSI of 123, making it the sector that was viewed as the most favourably, ahead of others like electronics, pharmaceuticals, and home appliances.
Sectors that were not rated as positively included the food and beverage industry (96) and the automobile industry (93).
In June last year, CosmeticsDesign-Asia reported that the South Korean cosmetics industry increased by 16.1% in 2020, according to data released by the Ministry of Food and Drug Safety (MFDS).
The growth advanced its position as the third-largest cosmetics exporter behind only France and the US, surpassing countries such as Japan, Italy and China.
Furthermore, the Ministry of SMEs and Start-ups (MSS) reported that Korea’s cosmetic small and medium enterprises (SMEs) reported biggest growth in exports in the past decade, making cosmetics second-largest SME export in 2021.
Risks and hurdles
The overall business environment scored a BSI of 96, up seven points from a BSI of 89 in the first quarter.
This put an end to the downward trend the KCCI has observed since the third quarter of 2021. With the easing of the COVID-19 pandemic. However, the negative outlook still prevailed at below 100.
According to KCCI, the biggest concern for companies were raw material prices. 82.5% of the companies cited ‘increase in production costs due to rising raw material prices' as a major concern.
The following concern was a recession of domestic demand (51.4%) and inflation (33%). The respondents also citied global supply chain issues (28.1%) and geopolitical tensions (17.4%) as concerns.
Nearly half (47.3%) of companies surveyed reported that profits have decreased as a result of rising oil and raw material costs, while 26.9% reported losses and 24.4% reported no impact to their bottom-line.
Of the companies that reported a dip in profits or a loss, 68.5% reported having to make cost reductions in manpower and expenses.
To resolve these economic issues, 57.3% of the respondents believed the government should focus on deregulation. More than half (56.9%) asked for improvement of labour systems and while 34% believed the government to help to resolve supply chain issues.
“The results of this survey show that the business sentiment is at a crossroads. In order to raise the basic economic strength together, it is necessary to think about improving the business environment of companies at the same time,” said Kim Hyun-soo, head of economic policy, KCCI.