Home / Asia / In South Korea, small businesses get desperate
In South Korea, small businesses get desperate

In South Korea, small businesses get desperate

South Korea has announced aggressive economic measures to keep businesses ticking over, but the aid has not yet reached those in need

With South Korea having apparently “flattened its curve” — i.e. lowered the number of confirmed Covid-19 cases to the point where its medical system can operate without being overwhelmed — South Korean President Moon Jae-in, the National Assembly and local governments have been rolling out a range of  measures to revive the economy.

Last month, Moon announced emergency aid packages to keep the economy afloat, setting up a fund of 100 trillion won ($81 billion) to assist businesses. The National Assembly has also passed an emergency budget of over 11 trillion won, and is expected to pass another imminently.

Moon has also announced that 70% of Koreans will be eligible for government cash grants, and local governments are offering residents “disaster basic income.” Gyeonggi Province, the province surrounding Seoul, has announced that it will provide 100,000 won (US $80.87) to all residents in the province from April 9.

However, bringing an economy that has been firing on only one cylinder for two months back to life is no easy matter. Three self-employed businesspersons told Asia Times that they are in desperate need of aid — but no help is reaching them yet.

The tourism operator

In recent years, a common sight in the streets around Seoul’s flagship tourism icon, the restored medieval palace of Gyeongbokgung, are the droves of domestic and foreign youths embarking upon selfie odysseys while attired in faux traditional attire.

Not this year. Amid the Covid-19 disaster, travel and tourism are among the hardest hit sectors

Oh Hyo-eun, manages a faux-traditional Korean clothing rental firm in the neighborhood. Things are dire.

“Revenues have decreased by 80% this month and I can’t see foreign tourists, who are the main customers, walking the streets,” Oh said. On average, just 10 locals per day have dropping by her shop since mid-February: In the past, she said, she could not count the number of visitors

Like every small employer, Oh is desperate for support from the government.

“There are standing charges such as real-estate rental costs, gas prices, and so on,” she said. “We can pay our employees’ salary, but I am not sure all the financial issues I am handling can be solved by the government’s economic measures.”

And things are going to get worse before they get better. As of April 1, South Korea decreed that all incoming travelers must undergo a 14-day quarantine period. With the virus rampaging across the globe and killing tens of thousands, when the government will lift that measure is anyone’s guess.

The farmer

After suspending the spring semester, the Ministry of Education has announced that every school will start online classes, starting from 12th grade and 9th grade students, on April 9. When some teachers and parents may breathe a sigh of relief, those who rely on traditional offline schools face disaster.

Chae Kyung-il is one of them. A farmer in South Jeolla Province, at the southern end of the country, he has been raising crops — maqui berries, blueberries and various vegetables — for 14 years. He distributes his produce himself, with his main customers being school cafeterias.

“My revenue has decreased drastically and I have been living from hand-to-mouth for about a month,” Chae said.

His produce — which used to go to schools, adorned with an eco-friendly label — is now sitting in piles on his farm.

“I have to harvest crops and sell them during the season but if I don’t sell them within 15-20 days after harvesting, the value will fall and I won’t be able to sell them.”

With schools out of play indefinitely, Chae ne another distribution channel — and he ne it fast. Other farmers sell via the Internet, but for Chae, who is used to distributing in person, the learning curve is steep.

“How can I use social media for advertising and sales of products when I don’t even know how to use basic social media services?” he said. “It’s impossible to create a platform by myself.”

Chae wants local government agencies to train him in how to use YouTube and other social media platforms as a sales channel.  Instead, local authorities are providing courses in basic computing and Excel spreadsheets. These kind of courses are outdated, Chae and other farmers say, so he is currently learning how to use social media from family members.

The restaurateur 

Though South Korea has not instituted national or even local lockdowns, social distancing guidelines have been issued. As a result, many people are staying home, which is particularly damaging to the restaurant trade.

Lim Soo-jong, the owner of a dumpling restaurant in Daegu, the southeastern city that is South Korea’s epicenter for Covid-19, has seen his customer numbers plummet.

“We earned only 30% of normal revenues last month,” he said. March was the peak month for the novel coronavirus in the country, but even though Daegu may be past the worst of the outbreak, diners remain cautious and numbers are not returning to the level that Lim would like. “I think just 50% have come,” Lim said.

Lim’s restaurant is more than a business: it’s a family heirloom. “I have been running this restaurant for 30 years after my father handed it over to me,” he said.

He says he is determined to stay in the business. “I had to overcome worse situations a long time ago, so I can wait till the virus burns out,” he said.

What was worse than the novel coronavirus outbreak? In 2004, a number of dumpling suppliers were charged with using rotten pickled radish as fillings for dumplings. The scandal proved devastating for dumpling restaurants.

“I cannot say how much I suffered from that scandal, but you can imagine how hard we are suffering right when I mention that incident.”