Damages to South Korean businesses from the quake in Japan are still limited, but they may become more visible and serious if the problems facing Japanese firms become prolonged, market observers said Sunday.
The most direct damage to South Korean companies came from the loss of containers containing products awaiting delivery in Japan.
The Korea Maritime Institute estimated the country’s shipping companies lost 3,000 to 3,500 20-feet equivalent units (TEUs) in the quake and tsunami on March 11. The figures account for 2.6 to 3.1 percent of all containers or 112,000 TEUs shipped between the countries annually.
South Korean exports to Japan apparently have been little affected with the amount of goods shipped to Japan in the first 17 days of this month jumping 63 percent from the same period last year to over $1.79 billion, according to South Korea’s Ministry of Knowledge Economy.
Imports from Japan, however, only increased 6 percent on-year to little over $3.48 billion during the cited period, with Japan’s exports to South Korea expected to further drop due to a continuing suspension of key ports and businesses in Japan.
“The negative impact on local industries with an exception of only a few sectors is still limited,” a ministry official said.
“It, however, all depends on how long the crisis in Japan continues.”
Suspension of Japanese businesses is already weighing on some South Korean companies as many manufacturers here depend heavily on Japanese parts and equipment for their products.
Renault Samsung Motors Co., the South Korean unit of French automaker Renault SA, has cut all extra work hours of its employees as it is running out of auto parts from Japan with no immediate signs of resumption of supplies from Japan, company officials said earlier.
GM Korea Co., the South Korean unit of U.S. automaker General Motors Co., has also said it was considering cutting down on overtime work by its employees, noting Japanese auto parts already in its stock will only last about a month.
The situation is more serious for smaller firms in South Korea as their dependence on Japanese parts and manufacturing equipment is significantly higher than that of larger companies.
This may create a problem for larger companies as well over time as most of their South Korean suppliers, too, depend heavily on Japanese parts and equipment.
Troubles in Japan from the earthquake are also preventing new business cooperation between the countries with many businesses and economic organizations calling off planned events both in South Korea and Japan.
The Korea Management Association had monthly visits to Japanese businesses planned throughout the year for its members, but said Sunday the future of the program was now unclear.
“We were forced to call off this month’s event and we are not even sure if we will be able to hold the event next month,” an official said.