Major Japanese firms doing business in South Korea have seen sales plunge as Japan’s export restrictions on the country led to a boycott of products, the latest data showed on Sunday.
Local corporate tracker CEO Score compared the business performance of 31 Japanese consumer goods companies in South Korea before and after Japan imposed export curbs on Korea in July last year.
The comparison found that average revenue fell 6.9 per cent and operating profit plunged 71.3 per cent last year compared to a year earlier.
The food and beverage sector marked the biggest decline, seeing sales drop by 19.5 per cent year-on-year last year. Both the food and beverage sector’s operating profits and net profits turned to losses.
Lotte Asahi Liquor Co Ltd, the local distributor of Japan’s leading beer brand Asahi, saw its sales cut in half in Korea during the period. Its sales dropped 50.1 per cent, or 62.4 billion won ($52 million), last year, and suffered an operating loss of 30.8 billion won.
Sales of Japanese food company Ajinomoto Co Inc, known for instant soup Vono, also fell 34.2 per cent, or 10.9 billion won.
Alongside food and beverage, revenues of automobiles and auto parts, clothing and household goods shrank more than 10 per cent from a year ago.
FRL Korea Co Ltd, which operates Japanese casual clothing brand Uniqlo in South Korea, saw its revenue drop by more than 30 per cent.
Revenue at convenience store Ministop Korea Co Ltd fell 3.1 per cent. Ministop Korea is 96.06 per cent owned by Japan’s Ministop Co Ltd and 3.94 per cent by Mitsubishi Corp, which has been labelled in South Korea as a “war crime company”.
Japanese automaker Honda Korea Co Ltd’s sales fell 22.3 per cent, or 104.1 billion won, to 14.6 billion won in net losses last year.
Meanwhile, Korea’s materials, parts and equipment sectors were also not free from trade restrictions.
Since Japan tightened export controls of three major high-tech raw materials – hydrogen fluoride, fluorinated polyimides and photoresists – in July last year, Korean companies have suffered greater damage than their Japanese counterparts.
According to CEOScore’s comparison on companies affected by the export curbs, sales of eight Korean companies fell 6.4 per cent while revenues of eight Japanese companies rose 4.6 per cent during the July-December period last year from a year earlier.
Profitability deteriorated for both Korean and Japanese companies in the materials, parts and equipment industries.
During the period, eight Korean firms saw their operating profits and net profits fall 34.3 per cent and 42.9 per cent, respectively, year-on-year. Eight Japanese companies saw their operating profits drop 14.3 per cent and net profits drop 15.8 per cent.
THE KOREA HERALD/ASIA NEWS NETWORK