European firms less confident of business in Korea

Gov't urges foreign companies to boost investments

By Park Jae-hyuk

Business confidence among European firms in Korea has fallen below 50 percent for the first time since 2018, when it stood at 48 percent.

Fewer companies also view Korea as an increasingly important part of their global strategies.

These findings were revealed Monday in an annual survey conducted between January and February by the European Chamber of Commerce in Korea (ECCK), the Korean-German Chamber of Commerce and Industry (KGCCI) and nine other European business chambers.

Among the 139 CEOs of European companies operating in Korea, only 45 percent expressed satisfaction with their business performance in 2024, continuing a steady decline from 71 percent in 2021, 68 percent in 2022 and 58 percent in 2023.

While 34 percent rated their performance as "average," 22 percent responded that they were either "discontent" or "very discontent" — a significant increase from 12 percent in 2023 and 9 percent in 2022.

"This trend is also reflected in revenue performance. In 2024, only 27 percent of companies achieved year-on-year earnings before interest and taxes growth of over 5 percent, down from 42 percent in 2023 and 54 percent in 2022," the ECCK and the KGCCI stated.

"Market share trends indicate a highly competitive business environment — 62 percent of companies reported no change in their market share in 2024, while only 24 percent experienced growth, compared to 38 percent in 2023 and 53 percent in 2022."

Regarding Korea's significance in global strategies, only 36 percent of respondents expected the country's importance to increase, a drop from 62 percent in 2021, 59 percent in 2022 and 53 percent in 2023.

Conversely, 12 percent anticipated a decline in Korea's importance, up from 8 percent in 2023 and 7 percent in 2022 and 2021.

This year, the European chambers did not ask whether their members plan to increase investments and operational costs in Korea.

However, they surveyed specific sectors targeted for investment in 2025. According to the results, 53 percent of respondents cited employment, followed by facility investment at 22 percent and research and development at 12 percent. Among the 13 percent that selected "other," some indicated they had no specific investment plans.

Regulatory and legislative issues remained the most pressing challenges for European firms.

Despite the government's pledge to promote foreign investment, 48 percent of respondents expressed skepticism about meaningful reforms.

On the day the survey results were released, Industry Minister Ahn Duk-geun met with foreign business leaders in Seoul to encourage continued investment in Korea.

During the meeting, business representatives reportedly urged the government to improve residential conditions, increase investment incentives and ease regulations on electric vehicles, health care and offshore wind power generation.

The ministry said global companies, including Singapore-based renewable energy firm Vena Energy and U.S.-based glass manufacturer Corning, announced their plans to invest more than a combined $300 million in offshore wind power and advanced materials industries in Korea.