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Half of all small biz owners expect economic conditions to worsen in 2014: poll

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(Globalpost/GlobalPost)

SEOUL, Jan. 8 (Yonhap) -- Half of all small business owners in South Korea expect business conditions to worsen in 2014 compared to last year, despite government predictions that the economy will likely expand at a faster pace, a poll showed Wednesday.

The poll carried out on 800 small entrepreneurs by the Korea Federation of Small and Medium Business (Kbiz) showed 51.2 percent bracing for more difficult times in the coming months.

The latest findings also revealed 39.3 percent of the respondents expecting business conditions to remain unchanged from the year before, with only 9.5 percent believing things will improve.

The views are not in sync with estimates by the government and many economists who have said Asia's fourth-largest economy may be able to pull off growth in the mid-3 percent range in 2014, compared to about 2.8 percent growth that may have been achieved in 2013.

Kbiz said the main reason for the poor estimate reflects concerns that domestic consumption will remain sluggish this year.

Of those polled, 46.6 percent said weak local demand for goods and services will adversely affect the overall economic environment. Unlike big companies that trade with foreign countries, small firms and businesses rely almost entirely on the home market to generate sales and profits.

Other concerns cited were inflation, a rise in wages and inability to attract qualified workers, and growing intrusion of conglomerates into their business areas.

Reflecting such worries, 59 percent of business owners said they were bracing for a drop in sales, with 64.5 percent predicting less ordinary profit vis-a-vis the year before. They also said securing sufficient funds may become a problem.

On business plans for the new year, 82.7 percent said they were not considering any changes compared to last year, with 13.3 saying they will cut back or pull out of non-performing sectors.

Meanwhile, 30.9 percent of business owners asked the government to do more to stimulate the domestic economy, with 26.2 percent calling for measures to curb inflation. A further 9.5 percent demanded policymakers enforce a stricter fair competition regime on the market.

"The latest poll shows greater need by the government to tackle polarization of wealth issues and introduce more measures to breathe new life into the domestic economy," a Kbiz official said.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/140108/half-all-small-biz-owners-expect-economic-conditions-worsen-